PETITIONER:
PRIYA LAXMI MILLS LTD.
Vs.
RESPONDENT:
MAZDOOR MAHAJAN MANDAL, BARODA
DATE OF JUDGMENT23/09/1976
BENCH:
GOSWAMI, P.K.
CHANDRACHUD, Y.V.
GUPTA, A.C.
CITATION:
1976 AIR 2584 1977 SCR (1) 709
1977 SCC (1) 28
ACT
Bombay Industrial Relations Act, 1946--S.
98(1)(a)--Schedule III item 6(ii)--Scope of--Workmen laid
off--Lock-out declared later alleging unruly
behaviour--Lockout if illegal.
HEADNOTE
According to s. 98(1)(a) of the Bombay Industrial Rela-
tions Act, 1946 a lock-out shall be illegal if it is com-
menced. or continued in cases where it relates to any indus-
trial matter specified in Schedule III, Item 6(ii). Item
6(ii) states "employment including unemployment of persons
previously employed in the industry concerned".
On account of financial and other difficulties the
appellant laid off workers in some departments of the mill.
After. a few days the management declared a lock out alleg-
ing that the workers gheraoed some officers in the mill,
started ’dharna’ and behaved in an unruly manner.
The Labour Court, to which the dispute was referred,
held that there was no evidence of violence or of gheraoes,
that the situation in the mills was not of such a grave
nature as called for a lock-out and that the management
resorted to the lock-out on the slightest opportunity in
order to avoid payment of compensation, since it was in
continuous financial difficulties heading towards a closure
and closure would have put the company under obligation to
pay compensation.
Dismissing the appeal,
HELD: (1) A lock-out can be declared for reasons similar
to those described in the present notice of lock-out. In
that case although it will be lock-out in another sense it
may not be a lock-out within the meaning of s. 3(24) of the
Act. That kind of lock-out with the avowed object of pre-
venting violence and threat to life and property may be
justified on facts in a given case. In such a situation it
may be difficult to prove that it is an illegal lock-out
since in an illegal lock-out the sole object is to compel
the workmen to accept the terms of the employer which the
workers consider as unreasonable and oppressive. [713 F--G]
But in the instant case though the views of the Labour
Court that threats and gheraoes "are the normal behaviour
when an occasion like this takes place" should be disap-
proved, the ultimate conclusion after appreciation of the
evidence was not such as would call for interference in an
application under Art. 136 of the Constitution. [713 H]
(2) Though the Act has not defined ’lay-out’, even
according to the dictionary meaning, lay-off means to dis-
continue work or activity; to dismiss or discharge tempo-
rarily. When workers are in employment and they are laid
off, that immediately results in their unemployment, howso-
ever temporary. and such an unemployment will clearly come
under item 6(ii) in Schedule III of the Act. Since unemploy-
ment is an industrial matter under item 6(ii) of Schedule
Iii of the Act, the lock-out which had been found by the
Labour Court to have direct connection with lay off is
clearly illegal under s. 98(1)(a) of the Act. [715 BC]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 511 of 1976.
(Appeal by Special Leave from the order dated 19-8-1975
of the First Labour Court Ahmedabad in Appln. 493/75).
R.P. Bhatt, D.K. Agarwal, K. K. Jain and Bishamber Lal,
for the Appellant.
710
V. M. Tarkunde, K.L. Hathi, P.C. Kapur and Miss M. Tarkunde,
for the Respondent.
The Judgment of the Court was delivered by
GOSWAMI, J.--A complaint was made to the Labour Court by
the respondent, Mazdoor Mahajan Mandal, Baroda (briefly the
union) alleging the lock-out declared by the appellant to
be illegal. The appellant, Priya Laxmi Mills Ltd. (briefly
the management) resisted the petition. After examining the
oral and documentary evidence the Labour Court came to the
conclusion that the lock-out was illegal under clauses (a)
and (h) of sub-section (1) of section 98 of the Bombay
Industrial Relations Act, 1946 (briefly the Act).
A brief reference to the facts will be appropriate at this
stage.
The present appellant purchased this textile mill from
M/s. Sayaji Mills Ltd. in 1972 when it had about 2500 work-
men besides officers. It is said that in 1974 the textile
industry suffered adverse market conditions, accumulation of
stocks, shortage of raw materials and bank credit squeeze in
consequence of which the management started experiencing
acute financial difficulties which were aggravated by a
spate of litigation between the appellant and the previous
owners. The appellant somehow continued to pay the wages of
the workmen upto February 1975 although in an irregular
manner.
The mill works in three shifts. By a notice of April
13, 1975, the management notified a lay off from the first
shift of April 14, 1975, till further notice. The lay off
was in the departments of spinning, weaving, grey folding
and engineering as per the lists containing the names of the
workmen and the members of the staff connected therewith.
Other departments, however, were allowed to continue to work
as usual. It was mentioned in the notice. of lay off that a
workman, if eligible, shall be paid lay off compensation as
provided under the law. The permanent workmen of laid-off
departments who were eligible to get compensation under
the law were required to present themselves in the
respective departments at the start of their respective
shifts and get themselves marked as "laid-off". Naturally,
therefore, although, the workmen were laid off they had to
attend the mill premises for being marked present at the
time of the commencement of the shift in order to be able to
claim lay off compensation. In view of the mounting tension
on account of irregular payment of wages for quite some time
and the subsequent lay-off, negotiations were also afoot
between the management and the union without much headway.
According to the management the workmen refused to
accept the decision of lay off and they continued to remain
inside the mill premises even after getting their presence
marked. Some employees remained in the department while a
large number of them collected outside the department and
refused to go out of the mill premises. It is said that the
workmen started staging a ’dharna’ daily in the administra-
711
tive office of the mills thereby disrupting its normal and
smooth working. This state of affairs continued from April
14, 1975, to April 21, 1975. The workmen did not pay any
head to the request of the management to leave the premises
after they had been marked present. In this background, on
April 21, 1975, at about 4.00 P.M. a section of the workmen
forcibly entered the Guest House No. 2, and trespassed into
the living room of Shri L. Grover, Establishment Officer of
the mills, dragged him out of the room and took him into
the administrative office and kept him there under restraint
and illegal confinement for about 24 hours. The workmen
also removed the personal belongings of Shri Grover. They
also gheraoed and kept under restraint and illegal confine-
ment the Deputy Executive Director, Shri V.K. Bagla, the
Deputy Chief Executive (Works) Shri S.C. Gandhi and other
senior officers in the mill premises with effect from 7.00
P.M. on April 21, 1975. The officers were kept in illegal
confinement without food and other basic amenities of life
continuously for 21 hours. It is said that the officers
were abused and humiliated. The workers also held out
threats to their lives. The management also referred to
other alleged unruly and undisciplined behaviour of the
workmen. The officers were ultimately brought out with the
help of the police authorities at about 4.00 P.M. on April
22, 1975. The employees, however, continued ’dharna’
inside the mill premises on April 22 and the night between
April 22 and April 23. It is, thus, the management’s case
that under the .circumstances mentioned above the company
was compelled to declare a lock-out from the first shift of
April 23, 1975:
It may be appropriate to set out the lock-out notice
dated April 23, 1975:
"We hereby give notice to all concerned that
a lock-out is declared with effect from the begin-
ning of l st shift commencing at 7.00 a.m. on
23-4-1975 in our mills for the following or any of
the reasons given below:
(a) On or about 4.30 p.m. on 21-4-1975 a
section of the workmen forcibly entered into the
mill Guest House No. 2 and trespassed into the room
in which Shri L. Grover, the Establishment Officer
of the mills resides, dragged him out of the room
and took him to the Administrative Office of the
mills and kept him there under restraint and
illegal confinement for about 24 hours. The work-
ers also removed personal belongings of Shri Grov-
er.
(b) The workers gheraoed, kept in restraint
and illegal confinement. our Dy. Executive Direc-
tor, Shri V.K. Bagla, Dy. Chief Executive (Works)
Shri S.C. Gandhi, and other senior officers in the
mill premises with effect from 7.00 p.m. of Monday,
the 21st April 75. Those officers were kept in
illegal confinement without food and other basic
amenities of life continuously for 21 hours.
(c) The workers not only kept the above
mentioned officers under wrongful restraint but
also abused and humiliat-
712
ed them. Threats were advanced to the life of
these officers and to the effect that the mill
property will also be damaged.
(d) The workers employed in spinning and
weaving departments including their preparatories
and partly engineering department have been laid
off with effect from 14-4-75. These workmen, in-
stead of leaving the factory premises after lay
off attendance staged dharana daily in the adminis-
trative office of the mills thereby disrupting its
normal and smooth working.
(f) The workers have also arrested the move-
ment of cloth bales from mill godowns thereby
disrupting the bales of the finished goods.
The lock-out hereby declared will cover all
the departments of the mills except the Watch and
Ward and essential service which will continue to
function as usual and will not be affected by this
notice."
X X X X
The union denied, the various allegations made against the
workmen, and stated that the lock-out was carried out with a
view to pressurise the union and the workmen to accept the
management’s terms with regard to the mode of payment of
their salary as well as the lay off arrangements introduced
by the management.
Both sides produced documentary evidence as well as
examined witnesses. The management examined four witnesses
whereas the union examined two witnesses on their behalf.
After examining the entire evidence the Labour Court came to
the conclusion that the lockout was an illegal lock-out.
Hence this appeal by special leave.
The question that falls for decision is whether the
lock-out in question is illegal under section 98(1)(a) of
the Act. We are not required to consider whether it is also
illegal under section 98(1)(h) of the Act as referred to by
the Labour Court.
According to section 98(1)(a), "a lock-out shall be
illegal if it is commenced or continued in cases where it
relates to any industrial matter specified in Schedule III
or regulated by any standing order for the time being in
force". We are not required to consider the second part of
section 98(1)(a) which refers to the standing order. Sched-
ule III enumerates seven items out of which we are required
to consider only item 6(ii) which reads as follows :--
"Employment including unemployment of persons
previously employed in the industry concerned".
Before we proceed further we may take note of
the definition of lock-out which is found in sec-
tion 3 (24) of the Act:
"’Lock-out’ means the dosing of a place or
part of a place of employment or the total or
partial suspension Of
713
work by an employer or the total or partial refusal
by an employer to continue to employ persons em-
ployed by him, where such closing, suspension, or
refusal occurs in consequence of an industrial
dispute and is intended for the purpose of---
(a) compelling any of the employees directly af-
fected by such closing, suspension or refusal or
any other employees of his, or
(b) aiding any other employer in compelling
persons employed by him, to accept any term or
condition of or affecting employment."
This definition-is differently worded from what is
there in the Industrial Disputes Act. 1947. We,
however, find that in the Trade Disputes Act, 1929,
lock-out is similarly defined as in the present
Act.
By section 2(1) of the Industrial Disputes Act,
lock-out
"means the closing of a place of employment,
or the suspension of work, or the refusal by an
employer to continue to employ any number of per-
sons employed by him".
This Court, while interpreting the above defini-
tion, in Management of Kairbetta Estate, Kotesiri
v. Rajamanickam and others, C) observed as follows
:--
"Even so, the essential character of a lock-
out continues to be substantially the same. Lock-
out can be described as the entithesis of a strike.
Just as a strike is a weapon available to the
employees for enforcing their industrial demands, a
lock-out is a weapon available to the employer to
persuade by a coercive process the employees to see
his point of view and to accept his demands."
It should, however, be made clear that lock-out
can be declared also for reasons similar to
those described in the present notice of lock-out.
In that case although it will be lock-out in anoth-
er sense, it may not be a lock-out within the
meaning of section 3 (24) of the Act. That kind of
a lock-out with the avowed object of preventing
violence and threat to life and property may even
be justified on facts in a given case. In such a
situation ’it may be difficult to prove that it is
an illegal lock-out since in an illegal lock-out
the sole object is to compel the workmen to accept
the terms of the employer which the workers consid-
er as unreasonable and oppressive.
In the instant case although we do not approve
of the Labour Court’s observations in the order to
a possible effect that threats and gheraoes "are
the normal behaviour when an occasion like this
takes place", we cannot say that its ultimate
conclusion after appreciation
(1) [1960] 3 S.C.R. 371.
714
of the evidence is such that it may call for inter-
ference in an application under Article 136 of the
Constitution.
The Labour Court has given a finding at
paragraph 15 of the as follows :--
"Coming now to the other important ingredient
viz. intention on the part of ’the management to
compel the workers directly affected by such clos-
ing to accept any term or condition affecting
employment, it appears that there was such an
intention on the part of the management. The
opponent company, because of the financial diffi-
culties which they were facing wanted the workers
to agree to accept lay-off and also agree to accept
wages not on the specified days as per the existing
awards, etc. but as and when the management could
pay ...... In my opinion, therefore it could be
said that all the ingredients of an illegal ’lock-
out’ were present in this case".
The Labour Court has taken note of the fact that there was
no evidence of any violence being caused to the property of
the mill notwithstanding the presence of a huge crowd said
to be in a riotous mood. The tribunal also took the view
that the officers were not confined in. their rooms as such
as represented but they themselves did not like to come out
perhaps due to apprehension. The Labour Court was of opin-
ion that the situation was not of such a grave nature which
called for such a drastic step like a lock-out. The Labour
Court seems to be of the further view that since the manage-
ment has been in continuous financial difficulties heading
towards a closure and closure would have put the management
under an obligation to pay compensation under section 25 FFF
under the Industrial Disputes Act, 1947, opportunity was
taken to declare a lock-out on the slightest opportunity.
It is not possible for us to reappraise the evidence and
come to a different conclusion on the facts in this appeal.
We are also unable to hold that the conclusions of the
Labour Court are perverse or even against the weight of
evidence on record.
The only question, therefore, that survives is whether
on the finding of the Labour Court the lock-out is illegal.
It is contended on behalf of the appellant that item
6(ii) in Schedule Iii to the Act which deals with the
unemployment of persons previously employed in the industry
concerned cannot govern a case of lay off. According to
counsel lay off is not unemployment since the relationship
of master and servant is not snapped. We are unable to
accept this contention. Lay off is not defined in the Act
but has been defined in section (KKK) of the Industrial
Disputes Act:
"’lay-off’ (with its grammatical variations
and cognate expressions ) means the failure, refus-
al or inability of an employer on account of short-
age of coal, power or raw materials
715
or ’the accumulation, of stocks or the breakdown of
machinery or for any other reason to give employ-
ment to a workman whose name is borne on the muster
rolls of his industrial establishment and who has
not been retrenched".
X X X
X X
Even according to the dictionary meaning, lay off
means to discontinue work or activity; to dismiss
or discharge temporarily. When workers are in
employment and they are laid of, that immediately
results in their unemployment, howsoever temporary,
and such an unemployment will clearly come under
item 6(ii) in Schedule III of the Act. It is not
disputed that "unemployment" is an industrial
matter as defined under section 3(18) of the Act.
Since unemployment is an industrial matter under
item 6(ii) of Schedule III to the Act, the lock-out
which has been found by the Labour Court to have
direct connection with lay of is clearly illegal
under section 98(1)(a) of the Act.
In the result the appeal fails and is dis-
missed with costs.
P.B.R Appeal dis-
missed.
--1234SCI/76
716