General Labour Unlon (Red Flag) Bombay
Vs. B. V. Chavan & Ors [1984] INSC 213 (16 November 1984)
DESAI, D.A.
DESAI, D.A.
ERADI, V. BALAKRISHNA (J) KHALID, V. (J)
CITATION: 1985 AIR 297 1985 SCR (2) 64 1985
SCC (1) 312 1984 SCALE (2)749
ACT:
Industrial Disputes Act,
1947-'Lock-out'-Definition of- Explained. Closure-Meaning of-To find out
whether it is lock-out or closure court must find out intention of employer at
the time when it resorts to lock-out or closure.
HEADNOTE:
The appellant trade union filed two
complaints against the employees. The complaints were that the employers were
guilty of imposing and continuing a lock-out and had thus committed unfair
labour practice. The employers contended that they had finally and irrevocably
closed the industrial under taking and were not guilty of any unfair labour
practice. The Industrial Cc.Court dismissed the complaints.
The union's appeals were dismissed by the
High Court. Hence these appeals by special leave.
Disposing of the appeals,
HELD . Lock-out has been defined in Sec. 2(L)
of the Industrial Disputes Act, 1947 to mean the closing of a place of
business, or the suspension of work or the refusal by an employer to continue
to employ any number of persons employed by him. In lock-out the employer
refuses to continue to employ the workmen employed by him even though the
business activity was not closed down nor intended to be closed down. The
essence of lock-out is the refusal of the employer to continue to employ
workmen. There is no intention to close the industrial activity. Even if the
suspension of work is ordered it would constitute lock-out.
On the other hand closure implies closing of
industrial activity as a consequence of which workmen are rendered jobless.[67
G-H; 68 Al The true test to find out whether the employer has imposed a lock
out or has closed the industrial establishment, is that when it is claimed that
the employer has resorted to closure of industrial activity, the Industrial
Court in order to determine whether the employer is guilty of unfair labour
practice must ascertain on evidence produced before it whether the closure was
a device or pretence to terminate services of workmen or whether it is bonafide
and for reasons beyond the control of the employer. The duration of the closure
may be a significant fact to determine the intention and bonafides of the
employer at the time of the closure but is not decisive of the matter. When it
is claimed that the employer is not guilty of imposing a lock-out but has
closed the industrial activity, the Industrial Court before which the action of
the employer 65 is questioned must keeping in view all the relevant
circumstances at the time of A closure decide and determine whether the closure
was a bonafide one or was a device or a pretence to determine the services of
the workmen. Answer to this question would permit the Industrial Court to come
to the conclusion one way or the other. [68 F-H; 69A]
CIVIL, APPEALATE JURISDICTION: Civil Appeal
Nos. 6092 & 6093 of 1983 Appeals by Special leave from the Judgment and
order dated the 4th February, 1983 of the Bombay High Court in W.P. No. 173 of
1983 M.K Ramamurthi and Urmila Sirur for the Appellant.
Gobind Das, P.H. Parekh and Indu Malhotra for
the Respondent The Judgment of the Court was delivered by DESAI, J. General
Labour Union (Red Flag) Bombay filed two complaints, one against M/s. Delta
Wires Pvt. Ltd. and second against M/s. Delta Spokes Manufacturing Company, two
sisters concerns ('employers' for short) under Sec. 28 read with Items l(a),
l(b), 2, 4(a), 4(f) and 6 of Schedule II of the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act, 1971 ('Act' for
short).
Broadly stated the complaints were that the
employers were guilty of imposing and continuing a lock-out and had thus
committed unfair labour practice. The employers contended that they had finally
and irrevocably closed the industrial undertaking and were not guilty of any
unfair labour practice. The complaints were filed in the Industrial Court,
Maharashtra, Bombay.
The learned Judge framed an issue whether the
employers had committed an unfair labour practice by imposing and continuing a
lock-out as provided in Item 6 of Schedule II of the Act.
After hearing the parties, the learned Judge
answered the issue in negative and dismissed the complaints.
The appellant-Union filed two special civil
applications in Bombay High Court under Art. 226 of the Constitution
questioning the correctness of the decision of the Industrial Court. Both the
applications were dismissed in limine. The Union thereupon filed these two
appeals by special leave.
66 At the hearing of the appeals, Mr. Govind
Dass, learned counsel for the employers stated that the employers have re-
opened the industrial units and there is partial resumption of manufacturing
process. He further stated that the employers are willing to take back all the
old workmen and in order to satisfy the court about the bonafides of the employers
he pointed out that nearly 16 old workmen, who responded to the advertisement
in a local newspaper, have already been re-employed. Mr. Govind Dass stated
that the employer will put on record an unconditional undertaking as affidavit
in these appeals that no new workman will be recruited in afore-mentioned two
industrial undertakings who had not been in previous employment with them
without giving first preference to the workmen who were in employment of the
two concerns on April 8, 1980 when they were closed down. Mr. M. K. Ramamurthy
learned counsel for the appellant union, on the other hand, contended that the
industrial undertakings of the employers had never been closed or at any rate
have resumed working in full and that the old workmen are not being re-employcd
and new hands arc being recruited.
We record the unequivocal undertaking given
on behalf of the employers by the learned counsel Shri Govind Dass that all the
old workmen who were in service of the employers at the time of the alleged closure,
that is upto and inclusive of April 8, 1980, will be re-inducted in service as
resumption of work is gradually expanding and that till all the old workmen are
re-inducted in service no new hand will be recruited. An undertaking to that
effect by Dr. P. D. Meghani s/o Dharam Chand Meghani has been placed on record
and is treated as an integral part of this judgment. In order to be assured
that the undertaking is carried out in letter and spirit we direct the
Industrial Court Maharashtra Bombay to depute its senior ministerial officer to
visit the industrial undertakings of the employers and to satisfy itself that
the old workmen are being re-inducted in service and that as resumption of
production is gradually expanded, the old workmen will be re-inducted in
service. There will be a continuous watch by the ministerial officer to be
appointed by the Industrial Court till all the old workmen who are willing to
be re- inducted in service are taken back in service.
In fact this undertaking should have concluded
the matter. But there is a statement of law made by the Industrial Court while
rejecting the complaints filed by the appellant-union which does not command to
us and to avoid any such error being repeated in future, we, with a view to set
right the matter proceed to examine the same in this judgment.
67 The complaints of the union were that the
employers were guilty of imposing and continuing a lock-out which under the law
was illegal. On the other hand, the submission on behalf of the employers was
that there was a closure of the industrial undertaking and it was not a case of
lock- out. In such a situation there the parties are at variance whether the
employers have imposed a lockout or have closed the establishment it is
necessary to find out what was the intention of the employer at the time when
it resorts to lock-out or claims to have closed down the industrial
undertaking. It is to be determined with accuracy whether the closing down of
the industrial activity was a consequence of imposing lock-out or the owner
employer had decided to close down the industrial activity.
Lock-out is generally an employer's response
to some direct action taken by the workmen. Closure may be on account of
various reasons which may have necessitated closing down of the industrial
undertaking. In this case the issue was whether the employer had imposed a
lock-out or has closed down the business. In examining this aspect, the
Industrial Court observed as under: D "It is not necessary to refer to
each and every decision pointed out by Mr. Bhatt on the point of lock- out and
closure, since now it is well established that in case of a lockout there is
only closure of the place of business where as in case of a closure there is a
closure of the business itself permanent and irrevocable. Whether the closure
is brought about malafide and whether it could have been avoided are matters
irrelevant and what is to be seen is whether in fact and in effect there is a
closure or not." We fail to appreciate both the approach and the reasons
in support of the approach.
Lock-out has been defined in Sec. 2(L) of the
Industrial Disputes Act, 1974 ('lD Act' for short) to mean the closing of a
place of business, or the suspension of work or the refusal by an employer to
continue to employ any number of persons employed by him. In lockout the
employer refuses to continue. to employ the workmen employed by him even though
the business activity was not closed down. The essence of lock-out is the
refusal of the employer to continue to employ workman. There is no intention to
close the industrial activity. Even if the suspension of work is ordered it
would constitute lock-out. On the other hand closure implies closing of
industrial activity as a 68 consequence of which workmen are rendered jobless.
Sec. 22(2) of the ID Act prohibits an employer in a public utility service from
locking out any of his workmen without giving notice as provided therein. Sec.
23 prohibits an employer from declaring a lock-out in any of the eventualities
mentioned therein. Lockout in contravention of Sec. 23 is declared illegal.
Section 26 of the ID Act provides that any of the practices listed in Schedule
11, III and IV would be an unfair labour practice. Imposing and continuing a
lock-out deemed to be illegal under the Act is an unfair labour practice.
While examining whether the employer has
imposed a lock-out or has closed the industrial establishment, it is not
necessary to approach the matter from this angle that the closure has to be
irrevocable, final and permanent and that lockout is necessarily temporary or
for a period. The employer may close down industrial activity bonafide on such
eventualities as suffering continuous loss, no possibility of revival of
business or inability for various other reasons to continue the industrial
activity. There may be a closure for any of these reasons though these reasons
are not exhaustive but are merely illustrative. To say that the closure must
always be permanent and irrevocable is to ignore the causes which may have necessitated
closure.
Change of circumstances may encourage an
employer to revive the industrial activity which was really intended to be
closed. Therefore the true test is that when it is claimed that the employer
has resorted to closure of industrial activity, the industrial court in order
to determine whether the employer is guilty of unfair labour practice must
ascertain on evidence produced before it whether the closure was a device or
pretence to terminate services of workmen or whether it is bonafide and for
reasons beyond the control of the employer. The duration of the closure may be
a significant fact to determine the intention and bonafides of the employer at
the time of closure but is not decisive of the matter. To accept the view taken
by the Industrial Court would lead to a startling result in that an employer
who has resorted to closure, bonafide wants to re-open, revive and re-start the
industrial activity he cannot do so on the pain that the closure would be
adjudged a device or pretence. Therefore the correct approach ought to be that
when it is claimed that the employer is not guilty of imposing a lockout but
has closed the industrial activity, the Industrial Court before which the
action of the employer is questioned must keeping in view all the relevant
circumstances at the time of closure decide and determine whether the closure
was a bonafide one or was a device or a pretence to determine 69 the services
of the workmen. Answer to this question would permit A the Industrial Court to
come to the conclusion one way or the other.
Having clarified the position in law, we
dispose of the appeals in terms of the undertaking of Dr. P.D. Meghani as
recorded in this judgment.
Both the appeals are disposed of accordingly.
H.S.K.
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