Karnataka High Court
The Mysore Kirloskar Limited vs State Of Karnataka, Rep. By Its ... on 3 February, 2004
Equivalent citations: [2004(102)FLR167], ILR2004KAR2158, 2004(5)KARLJ599, 2004 AIR - KANT. H. C. R. 1838, (2004) 106 FJR 209, (2004) 5 KANT LJ 599, (2004) 3 LAB LN 1183, 2004 LABLR 637, (2004) 6 SERVLR 634, (2004) 3 CURLR 954, (2004) 3 SCT 760
Author: N. Kumar
Bench: N. Kumar
ORDER PASSED BY THE GOVERNMENT -- APPLICATION OF MIND -- Government proceeded to pass the impugned order by looking into the factual report, which contains both claims and counter -- claims and other aspects of both the parties -- If the Government, on consideration of the materials placed before it has come to the conclusion that in order to preserve industrial peace, they are satisfied that an order prohibiting continuance of lock out is necessary, it cannot be said that the impugned order is passed without application of mind or without there being any material to substantiate the exercise of such power under the Act. (D) CONSTITUTION OF INDIA -- ARTICLES 226 AND 227 -- Dismissal of Writ Petition -- Dismissal of Writ Petition does not enable the respondents to indulge either in strike or in any violent activities as the dispute between the parties is pending adjudication before the appropriate forum. Writ Petition dismissed. ORDER N. Kumar, J.
1. The petitioner is a Company registered under the provisions of the Companies Act 1956. It has its manufacturing activity, namely, the foundry unit as well as its machine tool unit both at Harihar and it had employed about 1740 workmen. There were three unions in the said industrial establishment. The said three unions are arrayed as Respondent Nos. 3, 4 and 5. Respondent No. 3 is a majority union. On account of general industrial recession in machine tool industry and also due to various severe competition for the products manufactured by the company both from the domestic manufacturers and also from imports of machines from abroad, the company suffered loss. They could not meet the statutory obligations. Power supply was disconnected for non-payment of electricity bills which brought the activities of the company to a total standstill. Petitioner- company was forced to layoff all its workmen on 21.10.2000 and 23.10.2000 with the consent of the workmen/union. Thereafter, the petitioner company was able to carry on its production activities partially by using diesel-generating set and by operating light machines only. Subsequently as that was not working economically all the workmen were laid off. After several rounds of talk between the trade union and the petitioner certain understandings were reached to try out from the difficult situation. The petitioner sought the Co- operation of the workmen in this regard. Subsequently, the workmen indulged in arm twisting tactics like digging up trenches measuring 3 feet in depth and 2 feet in width in front of two gates of the company, one on the northern side and the other on the southern side with a view to forcibly prevent the movement of men material, vehicles and other essential food articles, ingress and egress into the establishment including the residential colony area thereby affecting not only the normal production activities during the said layoff period but also the normal life of the inmates in the residential colony of the petitioner-company. Subsequently, the agitating workmen took law into their hands and indulged in violent activities. The petitioner was constrained to approach Civil Court seeking an order of temporary injunction against the workmen. They were also constrained to file Writ Petition before this Court as Public Interest Litigation seeking urgent interim orders which were granted. In order to prevent any further damage to the properties of the company and other persons who are confined the petitioner-company had to effect a lockout in all departments with immediate effect from 1st January 2001. Then there was a conciliation meeting with the Second respondent authority. Parties appeared before them, putforth their respective cases and the Conciliation Officer reported to the Government that Conciliation has failed. On the basis of the said report, Government passed order under Section 10(1) of the Industrial Disputes Act 1947 (for short hereinafter referred to as the Act), referring the dispute between the parties, namely, whether the lockout dated 1.1.2001 declared by the Management is legal, acceptable, for adjudication to the labour court by their order dated 23.1.2001 as per Annexure-T. On the very same day the Government proceeded to pass order under Section 10(3) of the Act prohibiting the lockout with immediate effect, a copy of which is produced at Annexure-S. The petitioner being aggrieved by the order passed under Section 10(3) of the Act prohibiting lockout as per Annexure-S has preferred this Writ Petition.
2. Petitioner contends, when the lockout declared by the management was referred for adjudication to the labour court under Section 10(1), the Government had no jurisdiction to prohibit the very same subject matter of reference by exercising power under Section 10(3) of the Act. Secondly it is contended that the Government without application of mind, without there being any material before it to justify such an action has passed the impugned order, therefore the same is liable to be set aside.
3. Respondents have filed detailed counter admitting the facts but denying the allegations made against them and contend that the lockout declared by the management is illegal and the conciliation having failed the Government had no other option except to refer the dispute for adjudication to the labour Court which they are obliged to do under Section 10(1) of the Act. After making such a declaration it was well within the power of the Government to pass order under Section 10(3) of the Act prohibiting lockout in order to maintain industrial peace in the industrial establishment and therefore the action of the Government in passing the impugned order prohibiting the lockout cannot be found fault with. Therefore, they have prayed for rejection of the Writ Petition.
4. Learned Counsel appearing for the petitioner assailing the impugned order sought quashing of the same on two grounds. Firstly, he contended that the lockout declared by the management is in response to the violent activities indulged by the workmen in the industry and in order to protect the plant and machinery as well as the residence of the industrial township the lockout was declared. The Government without going into the question of the illegal activities indulged by the workmen has referred only the act of the management in declaring the lockout for adjudication to the labour Court. Therefore, the Government while exercising power under Section 10(3) of the Act can only prohibit continuance of any strike or lockout in connection with such dispute and not strike or lockout itself which is the subject matter of reference. Therefore, the order passed under Section 10(3) is one without jurisdiction and liable to be quashed. Secondly it was contended, merely because Government has power to pass order under Section 10(3) prohibiting lockout it cannot be exercised mechanically. Before such power could be exercised there should be application of mind to the facts of the dispute in hand and only on being satisfied that there are sufficient material which justify such an order the Government could pass an order prohibiting lockout. In the instant case the failure report submitted by the Conciliation Officer clearly discloses that there were no justifiable material before the Government to pass an order under Section 10(3). Even otherwise without application of mind the impugned order has been passed and therefore the impugned order is liable to be quashed.
5. Per contra, learned Counsel appearing for the respondents contends that the dispute between the parties is whether lockout declared was legal and valid and when the conciliation failed Government was under obligation to refer the dispute for adjudication to the labour court under Section 10(1) of the Act which has been done by the Government in exercise of power conferred under such provision. The language employed under Section 10(3) makes it very clear that it is only lockout or strike which is the subject matter of reference which can be prohibited and if it is not the subject matter of reference the Government has no power to pass any order under Section 10(3) of the Act. In that view of the matter, Government was well within its jurisdiction to prohibit lockout which is the subject matter of the reference. The factual report submitted by the Conciliation Officer clearly shows the rival contention of the parties, the failure on the part of the Officer in arriving at the settlement, and the Government by looking into the said report being satisfied that a case for passing an order under Section 10(3) is made out has exercised such power and therefore the contention of the other side that no ground exists and that the Government has not applied its mind before passing the impugned order are without any substance and contrary to the material on record.
6. In the light of the aforesaid facts and rival contentions, the points that arise for consideration are as under:
1) Whether the Government under Section 10(3) of the Act has a power to prohibit the continuance of any strike or lockout which is the subject matter of reference under Section 10(1) of the Act ?
2) Whether the impugned order suffers from vice of either no application of mind or want of material on record justifying the exercise of such power ?
7. POINT NO. (1) : In order to answer this point first we have to look into the statutory provisions governing the power of the Government to pass a prohibitory order prohibiting continuance of strike or lockout. Section 10(3) of the Act reads as under:
"Where an industrial dispute has been referred to a Board, Labour Court, Tribunal or National Tribunal under this Section, the appropriate Government may by order prohibit the continuance of any strike or lock out in connection with such dispute which may be in existence on the date of the reference".
For the application of the aforesaid section, the following conditions must exist:
(a) There should be industrial dispute in existence. (b) Such dispute must have been already referred for adjudication. (c) There should be strike or lock out in connection with such dispute. (d) Such strike or lock out should be in existence on the date of reference.
It is only when the aforesaid conditions are fulfilled, the Government gets the power under the said section to pass an order prohibiting continuance of strike or lock out.
8. The learned Counsel for the petitioner relying on a Judgment of the Rajasthan High Court in the case of MAHARAJA KISHANGARH MILLS LTD., v. STATE OF RAJASTHAN, contended that if strike or lock out itself is the subject matter of reference, then the Government cannot prohibit such strike or lock out. In the aforesaid Judgment dealing with the said question, it has been held as under:
"11. It is true that a lock-out itself may be the subject matter of a dispute which might be referred to an Industrial Tribunal under Section 10(1) or 10(2) of the Industrial Disputes Act. It is also clear that Section 10(3), Industrial Disputes Act leaves it within the discretion of the Government to prohibit the continuance of a strike or lock out in connection with a dispute which might have been referred by it to an Industrial Tribunal. Where, therefore, a lock-out or a strike has been resorted to by any one of the parties to an industrial dispute and where such strike or lock-out is in connection with such dispute an order under Section 10(3) might be made for prohibiting the continuance of such strike or lock-out. But where the strike or lock-out is not in connection with any dispute but is itself a dispute it cannot be said that an order under Section 10(3) could be made within its meaning.
In order that the strike or lock-out may be in connection with a dispute it is necessary that the strike or lock out should be something different from the dispute itself. A strike or lockout which is the subject matter of the dispute itself cannot be termed to be a strike or lock-out in connection with such a dispute within the meaning of Section 10(3). A strike or lockout which is itself a dispute would not justify an order under Section 10(3) for its prohibition because the language of Section 10(3) requires that a strike or lock-out should be in connection with a dispute in order that an order for its prohibition might be made by the Government. Where the strike is not in connection with a dispute but is itself a dispute the matter is quite different and would not justify an order of prohibition. The discretion of the Government therefore which has been exercised in the present case in making an order of prohibition is beyond the scope of Section 10(3).
9. As against this, the learned Counsel for the petitioner brought to my notice, the Judgment of the Bombay High Court in the case of DIGVIJAY CEMENT COMPANY LTD., v. STATE OF MAHARASTHRA AND ORS. 1995 III LLJ (SUPPL) 491. In the aforesaid Judgment, para-7 is extracted hereunder:
"7. The second submission urged by the learned Counsel is about the validity of the order of" the State Government prohibiting the continuance of the lock out in connection with the dispute referred. It was urged by the learned Counsel that the power conferred on the State Government under Sub-section (3) of Section 10 of the Act enables the State Government to restrain the continuance of the strike or the lock out provided the cause which gave rise to the lock out is referred for adjudication to the Tribunal. It was urged that the cause which led the Company to declare lock out has not been referred for adjudication and, therefore, the exercise of power was defective. It is not possible to accede to the submission advanced by the learned Counsel.
After referring to the Sub-section (3) of Section 10 of the Act, it was held as under:
The plain reading of this Section makes it clear that the power could be exercised by the State Government, provided an industrial dispute has been referred to the Tribunal. The contention urged is that the lock out could be prohibited provided such lock out is in connection with the dispute which is referred. It was contended by Shri Shetye that the lockout was declared because of go-slow tactics and the violence resorted by the workmen and the question as to whether the workers indulged in such activities has not been referred and, therefore, the powers under Sub-section (3} were wrongly exercised. The submission is entirely misconceived. The dispute which is referred is in respect of the action of the petitioner Company in suspending the work and declaring the lock out and such dispute has a direct connection to the action of the petitioner Company and, therefore, the State Government had ample powers to prohibit the continuance of lock out.
The Supreme Court in the case of DELHI ADMINISTRATION v. WORKMEN, EDWARD KEVENTERS AND ANR., 1978 LAB.I.C. 706 dealing with the power of the Government under Section 10(3) of the Act, has held as under:
"3.There is a distinction between strikes being illegal under other Sections of the Act and penalties being available against such illegal strikes on the one hand and strikes being contrary to Section 10(3) of the Act and liable to be prohibited thereunder. This distinction once grasped, the baselessness of the submission on behalf of the appellant necessarily follows.
4. Shri Aggarwal pressed before us a ruling reported in Keventers Karmachari Sangh v. Lt. Governor of Delhi, (1971) 2 Lab LJ 375 decided by the Delhi High Court. Although the ratio there is contrary to the same High Court's ruling which is the subject matter of the present appeal, we are obviously inclined to adopt the reasoning of the judgment under appeal. Imagine twenty good grounds of dispute being raised in a charter of demands by the workmen and the appropriate Government unilaterally and subjectively deciding against the workmen on nineteen of them and referring only one for adjudication. How can this result in the anomalous situation of the workmen being deprived of their basic right to go on strike in support of those nineteen demands. This would be productive not of industrial peace, which is the objective of the Industrial Disputes Act, but counter-productive of such a purpose. If Government feels that it should prohibit a strike under Section 10(3) it must give scope for the merits of such a dispute or demand being gone into by some other adjudicatory body by making a reference of all those demands under Section 10(1), Section 10(3) cannot operate. This stands to reason and justice and a demand which is suppressed by a prohibitory order and is not allowed to be ventilated for adjudication before a Tribunal will explode into industrial unrest and run contrary to the policy of industrial jurisprudence.
5. Thus, on principle and the text of the law, we are convinced that Section 10(3) comes into play when the basis of the strike is covered by Section 10(1). Reference of a dispute and prohibition of a strike on other demands is impermissible.
The aforesaid Judgment has been followed by a Division Bench of the Orissa High Court in the case of STATE TRANSPORT EMPLOYEES' FEDERATION, ORISSA 1995 (III) LLJ (Suppl) 422 dealing with Section 10(3) of the Act.
A plain reading of the aforesaid provision clearly indicates that to invoke the power under the said sub-section for making an order prohibiting a strike, two conditions must exist: first, there must be an industrial dispute in existence and secondly, such dispute must have been already referred for adjudication. Obviously, therefore Section 10(3) of the Act cannot operate in regard to disputes which are not referred under Sub-section (1) of Section 10. Under the industrial law a workman cannot be deprived of his basic right to go on strike in support of his demand as the right to strike is integral to a collective bargain. When the Government unilaterally decides against the workman not to refer several disputes for adjudication and refers only a few, the workman cannot be deprived of the right to strike. If the Government feels that it should prohibit a strike under Sub-section (3) of Section 10, then it must afford a scope for a dispute or demand being decided on merits by adjudication in a reference of all those demands under Sub-section (1) Section 10.
10. A reading of the aforesaid section and the Judgments of the various Courts makes it clear that the aforesaid provisions empowers the Government to prohibit the commencement and continuance of strike and lock out in certain circumstances for achieving the object of settlement of Industrial Disputes in a peaceful atmosphere. The power therefore has to be exercised by the Government in its discretion. The said power is exercised by the Government during the pendency of the dispute referred for adjudication. Even when the dispute referred is the question regarding the legality of the strike or lockout, the Government can prohibit the very same strike or lockout which is the subject matter of reference. Existence of the strike or lockout is what confers the power on the Government to pass a prohibitory order. When the said strike or lockout itself is referred for adjudication, it cannot be said that the said strike or lockout can continue pending adjudication, and only strike or lockout in connection with the subject matter of reference only could be prohibited. The said order will be in force till the appropriate authority to whom the dispute is referred adjudicate the dispute on merits. In other words, it is in the nature of interim order passed pending disposal of the resolution of the dispute by the adjudicating authority. The sole object behind passing such an order is to maintain industrial peace which is the basic policy underlying the Industrial Disputes Act.
11. However the Rajasthan High Court has taken the view that "such dispute" has to be necessarily a dispute other than what is referred to for adjudication. If we keep in mind the object with which the provision is enacted, then whether the dispute pertains to the validity of the strike or lock out or whether the strike or lock out is continued in connection with such dispute, makes no difference. Any other interpretation is accepted it leads to absurdity. The Rules of interpretation in this regard are well settled. Though meaning has to be given to the words used in the statute, if literal interpretation of that provision leads to absurdity it has to be avoided. The object sought to be achieved by such provision has to be necessarily kept in mind, while placing interpretation on these provisions. If such a literal interpretation as placed by the Rajasthan High Court is accepted, it would not serve the purpose. I find it difficult to persuade myself to accept the reasoning adopted in the said Judgment. In fact, in the Delhi Administration case the Supreme Court has gone to the extent of saying only in respect of matters which are referred to adjudication, the Government has got the power to pass an order prohibiting strike or lock out. Therefore, when the validity of the lock out or strike is the subject matter of reference, certainly the Court has the power to prohibit continuance of such strike or lock out which is the subject matter of the reference, pending disposal of the said dispute being adjudicated. Such an interpretation would serve not only the cause of justice but also the object with which the legislation is passed. In the absence of any express words prohibiting continuance of strike or lock out, which is the subject matter of reference itself, the only interpretation that can be placed on this provision is the Government has the power to prohibit the continuance of any strike or lock out which itself is the subject matter of reference and continuance of any strike or lock out in connection with dispute referred for adjudication which is in existence on the date of reference. In that view of the matter, I am of the view that the order passed by the Government prohibiting the continuance of lock out which is the subject matter of reference itself under Section 10(1) of the Act is valid and legal and do not suffer from any illegality.
12. POINT NO. (2) The learned Counsel for the respondent next contended even if the order passed under Section 10(3) of the Act is held that the Government had power to pass such an order, as the said order is passed without application of mind, without there being sufficient material on record to satisfy itself as to the necessity to pass such an order, the impugned order is liable to be quashed on those grounds. In support of his contention, he has relied upon the Judgment of the Supreme Court in the case of BARIUM CHEMICALS LTD., AND ANR., v. COMPANY LAW BOARD AND ORS. 1967 SC 295 (V 54 C 59). In the aforesaid Judgment, a Constitution Bench of the Supreme Court was trying to find out the meaning of the word under Companies Act, 1956. In that context it was held that formation of the opinion is subjective process but existence of circumstances suggesting interference of what has been set out in Sub-clauses (i) (ii) or (iii) must be made out. In that context they proceed to held as under:
"....Though an order passed in exercise of power under a statute cannot be challenged on the ground of propriety or sufficiency, it is liable to be quashed on the ground of malafides, dishonesty or corrupt purpose. Even if it is passed in good faith and with the best of intention to further the purpose of the legislation which confers the powers, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it, it did not apply its mind to the relevant facts."
13. In the aforesaid Judgment, the Supreme Court has laid down that an order passed by the Government could be quashed on the grounds of malafides, dishonesty or corrupt purpose. Further, it is held such an order should be within the limits of that legislation and it should not be passed on grounds extraneous to the legislation or there are no grounds at all for passing such an order or the grounds are such no one can reasonably order for information or statutes to the person to the legislation or if he does not applies his mind.
14. In the instant case, the attack to the impugned order is on two grounds, namely, that it is passed without there being an application of mind and also on the ground that no grounds exist for passing such order. In order to appreciate this contention one has to look into the contents of the order which is produced at Annexure-R. The reading of the aforesaid order points out that the conciliation officer has set out the dispute between the parties and the contents of the document on which the parties relied upon. In respect of the respective contentions, he has recorded a finding that the efforts made to resolve the dispute having failed is sending the Factual report under Section 12(4) of the Act for passing appropriate orders. It is by looking into this Factual report, the Government has proceeded to pass the impugned order. The said report gives a clear picture of the dispute between the parties, the claims and counter claims made by them, the havoc created by the employees by taking law to their own hands, the litigation between the parties and also refers to the orders passed by Courts and the Factual report and the efforts to arrive at the settlement. If the Government, on consideration of these materials has come to the conclusion that in order to preserve industrial peace, they are satisfied that an order prohibiting continuance of lock out is necessary, it cannot be said that the impugned order is passed without application of mind or without there being any material to substantiate exercise of such power under the Act. I am satisfied not only the circumstances exist for exercise of power under Section 10(3) of the Act but also such power has been exercised after applying its mind to the circumstances and facts of the case. Therefore, I do not find any substance in the said contention also.
15. The learned Counsel for the petitioner submitted that as the impugned order was stayed by this Court the workers did not take law to their hands. With the dismissal of this Writ Petition there is likely chance of the respondents resorting to strike and take law to their own hands and indulge in violent activities. I do not find any substance in the said contention also because dispute between the parties is already referred for adjudication to the Government. During pendency of the said adjudication, both the parties have to maintain peace and harmony in the Industry. Merely because this Writ Petition is dismissed and the order prohibiting the lock out is to upheld by this Court, that does not enable the respondents to indulge either in strike or in any violent activities as the dispute between the parties is pending adjudication before the appropriate forum.