Priya Laxmi Mills Ltd. Vs. Mazdoor
Mahajan Mandal, Baroda  INSC 237 (23 September 1976)
CITATION: 1976 AIR 2584 1977 SCR (1) 709 1977
SCC (1) 28
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.
According to s. 98(1)(a) of the Bombay
Industrial Relations Act, 1946 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, 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 alleging 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 preventing 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
disapproved, 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 discontinue work or
activity; to dismiss or discharge temporarily. When workers are in employment
and they are laid off, 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. Since unemployment 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]
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 workmen 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 layoff 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
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 administrative 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 confinement 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 beginning 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 workers also removed personal
belongings of Shri Grover.
(b) The workers gheraoed, kept in restraint
and illegal confinement. our Dy. Executive Director, 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 humiliated
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, instead
of leaving the factory premises after lay off attendance staged dharana daily
in the administrative office of the mills thereby disrupting its normal and
(f) The workers have also arrested the movement
of cloth bales from mill godowns thereby disrupting the bales of the finished
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. Schedule 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 section 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 employed 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 affected 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
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 persons employed by him".
This Court, while interpreting the above
definition, in Management of Kairbetta Estate, Kotesiri v. Rajamanickam and
others, C) observed as follows :-"Even so, the essential character of a
lockout continues to be substantially the same. Lockout 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
another 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 consider as unreasonable
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)  3 S.C.R. 371.
714 of the evidence is such that it may call
for interference 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 closing 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 difficulties 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 'lockout' were present in this
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 opinion 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
management 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
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, refusal or inability of
an employer on account of shortage of coal, power or raw materials 715 or 'the
accumulation, of stocks or the breakdown of machinery or for any other reason
to give employment 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 dismissed
P.B.R Appeal dismissed.