General Labour Union (Red Flag) Bombay v. B. V. Chavan & Ors.

The appellant trade union filed two complaints against the employees. The comi>Iaints 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. bad finally and inevocably closed the industrial under taking and were not guilty of any unfair labour practice. The Indwtrial Court dismissed the complaints. The union9S appeals were dismissed by the High Court. Hence these appeals by special Jeave. Disposing of thC appe3.Is, \ ' HELD : Lock-out has been defined in Sec. 2(L) of the Industrial Dis putes 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 aay number or persons employed by him......, In lock-0ut the employer refuses to continue to employ the workmen employed by him even though the business activity was not .TP.c essence of lock-out is the closed down nor intended to be closed down. refusal of the employer to continue to emplo:t-Workmen. There is no intention to close the industrial activity. Even it ·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 arc.rendered jobless.[67 G-H; 68 A] r' The true te$t to find out whether the employer has imposed a tock-0ut or has closed the industrial establishment, is th1t 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 ot 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 indus\rial activity, tbe Industrial CQ~rt bef9re wbi~b !he ac\i•n of !be employer ·1 I LABOUR UNION v. B. v. CHA VAN (Desai. J.) 65 is que~tioned 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 de,·ice or a pretence to determine the services of the \vorkmen. 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 Urmi/a Sirur for the Appellant. Gob ind Das, P.H. Parekh and lndu M a/hotra 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 sisiers 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 Recog· nition 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. A B c D E F G • • ,. . ' ;., • A B c D E F G 66 SUPREME COURT REPORTS [1985) 2 S.C.R. 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 work men, 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 allidavit in these appeals that no new workman will be recruited in afore-mentioned two industrial undertakings who had not been in previons employ· ment with them without giving first preference to the workmen who were in employment of tho two concerns on April 8, 1980 \\hen 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-employed and new hands are 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 Mejhani 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 1atisfy itself that the old workmen arc being re-inducted in service and that a1 resumption of production is gradually expanded, the old workmen will be re-inducted in service. There will be a continuous watch b} 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 conclnded the matter. But there is a statement of law made by the Industrial Court while reject· ing the complaints filed by the appellant-union which does not commend 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 --------------------- LABOUR UNION v. v. n. CHAVAN (Desai, J.) 67 I ' The complaints of the union were that the employers were ;•.uilty of imposing and continuing a lock-out \vhkh under the law ,, as i!!egal. On the other band, the submission on behalf of the employers was that there was a closure of the industrial undertaking In such a situation v.here the and it was not a case of lock-out. partie. 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 cons~quence of imposing lock-out or,, the, owner employer had decided to close down the industrial _activity. · Lock-out is ~enerally an employer's response to some direct action taken by the workmen. Closure may be on. account of vario1ls reasons which may have necessitated closing down of the industrial' undertaking. In this case the issue was whether the employer bad In examining impoied a lock~out or has closed down the business. this aspect, the Industrial Court ob~erved _as under : · · '') . ·. "It is not necessary to refer to each and every decision pointed out by Mr. Bhatt on the, p~int or' lock-out and closure, since now it is v.ell established that in case of a .. lockout there is only closure of tho place of business wbe.re~ , .. as in case of a closure there is a Closure of the business itself · · permanent and irrevocable. Whether the closure is brought about nialafide 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 tho reasons in. support of the approach. Lock-out has been defined in Sec. 2(L) of the Industrial Dis putes Act, 1974 ('ID 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 lock· out the employer refuses to continu~ 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 v.ork is ordered it would constitute lock-out. On the other hand closure implies closini: of industrial activity as a · A B c D E F H ---------------------------- 68 SUl'REMB COURT REFORTS [1985] 2 S.C.R. A B cons,~quence 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 gi;'ing notice as provided therein. Sec. 23 prohibits an employer from declaring a lock-out ia any of the eventualities mentioned therein. Lockout in contravention of Sec. 23 is declared iliegal. Section 26 of the ID Act provides that any of the practices listed in Schedule II, 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 ex~mining 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 clomre has to be irrevo cable, 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 possi- .· bility 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 thatthe 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 can not do so on the pain that the closure '~ould be adjudged a device or pretence. There- - fore the correct approach ought to be that when it is claimed that the employer is not guilty of imposing -a lockout but bas closed the industrial activity, the Industrial Court before which the action of the employer is questioned must keeping in view all the relevant circum stances at the time of closure decide and determine whether the closure was a bonafide one or was a device or a pretence to determine D E F G H LABOuR iJNiON v. ii. v. CSA VAN ( b~sai, J.) 69 the services of the workmen. Answer to this question would permit the Industrial Court to come to the conclusion one way or the other. A 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. B Both the appeals are disposed of accordingly. H.S.K . •