Bombay High Court
Modi Stone Employees Union vs Modi Stone Limited And Ors. on 27 November, 1998
Equivalent citations: (1999)101BOMLR668
Author: A.P. Shah
Bench: A.P. Shah
JUDGMENT A.P. Shah, J.
1. This petition under Articles 226 and 227 is directed against the judgment and order dated 16th February, 1998 passed by the Industrial Court, Mumbai, dismissing Complaint (ULP) No. 857 of 1997 filed by the petitioner union under Section 28 of the M.R.T.U. and P.U.L.P. Act, 1971. This Act will hereinafter be referred to for short as the said Act.
2. The material facts leading to the petitioner's complaint must be set out briefly as follows. The respondent is a Company engaged In manufacture of tyres, tubes and flaps. By notice dated 22nd September, 1997, the respondent Company declared its intention to effect lockout with effect from 8th October, 1997. Even before the lockout notice was issued the recognised petitioner union had filed Complaint (ULP) No. 766 of 1997 in the Industrial Court, Mumbai, apprehending lockout and/or closure of the Company's factory at Sewree. On 28th August, 1997, the Industrial Court by an ad interim order restrained the respondent Company from declaring lockout, closure or suspension of operation or termination of services of the workmen without following due process of law. The Company discontinued production from 22nd September, 1997 dispensing attendance of the workmen by issuing lockout notice dated 22nd September, 1997. The petitioner union, therefore filed complaint (ULP) No. 857 of 1997 under Items 6, 9 and 10 of Schedule IV and Items 1 and 6 of Schedule II of the said Act complaining of unfair labour practices on the part of the respondent Company. The said complaint was presented on 25th September, 1997, i.e. before the lockout was given effect to.
3. In the earlier complaint (ULP) No. 766 of 1997 as well as present Complaint (ULP) No. 857 of 1997, the case of the petitioner union was that the impugned lockout notice is only a pretence and the real intention of the respondent Company was to close down the undertaking without following the mandatory provisions under Sections 25-N and 25-O of the Industrial Disputes Act, 1947. It was alleged by the union that in the lockout notice dated 22nd September, 1997, it is stated by the Company that this is not lockout in the legal sense. Yet the lockout notice was given resulting in cessation of work and keeping all the employees numbering about 1600 out of employment. If there is no lockout, the illegal refusal of work in contravention of the binding settlement/award amounts to unfair labour practice under Item 9. of Schedule IV of the Act. The action of the Company declaring lockout is contrary to the award dated 21st January, 1995 particularly Clause 16(b) thereof. It also amounts to unfair labour practice under Item 10 of Schedule IV inasmuch the workers were forced to remain idle, out of employment by force. The reasons for the lockout mentioned in the lockout notice are also totally false. The respondent is using this as pretext for closing the operation of the company. It was alleged that the Company is acting with mala fide intention to undermine the collective bargaining of the union and the workers' unity. It was therefore prayed that a declaration be granted that the Company has engaged in unfair labour practices and direction is sought against the Company to cease and desist from engaging in such unfair labour practices.
4. The respondent Company resisted the complaint filed by the petitioner vide its written statement, Exhibit 8. While denying commission of unfair labour practice on its part, the Company inter alia contended that none of the items of Schedule IV or Schedule II to the Act relied upon by the petitioner union is attracted. The Company submitted that it has declared lockout after following the procedure prescribed under the Act and a lockout cannot be deemed to be an illegal lockout unless it is declared to be an illegal lockout by the Competent Court and it is not lifted within 48 hours. It was also submitted by the Company that Item 9 of Schedule IV to the Act provides that the failure to implement any award/settlement or agreement is an unfair labour practice. Since the averments made by the petitioner do not show that the Company has failed to implement any award, settlement or agreement, Item 9 of Schedule IV of the Act was not attracted. It was submitted that when lockout as unfair labour practice is specifically covered under Items 1 and 6 of Schedule II of the Act, the said lockout is not covered as unfair labour practice under Item 9 of Schedule IV of the Act. The Company also submitted that the averments made in the complaint do not show that the Company has indulged in any act of force or violence within the meaning of Item 10. Similarly Item 1 of Schedule II is also not attracted considering the pleadings in the complaint. It was submitted that the union/workmen were responsible for disruptive activities and stoppage of production and their activities contributed to the financial difficulties of the company. It was also submitted that in the absence of any order declaring such lockout illegal, a complaint under Items 6 and/or 9 is not maintainable. With this, the respondent Company prayed for dismissal of the complaint with costs.
5. By the impugned order, the Industrial Court negatived the case of the petitioner union that the Company is guilty of unfair labour practices under Items 1 and 6 of Schedule II of the Act. The Industrial Court held that In the absence of evidence, unfair labour practice under Items 1 of Schedule II was not established. Similarly as far as Item 6 of Schedule II and Item 10 of Schedule IV are concerned, the Industrial Court held that the union has not substantiated the case under the aforesaid Items. The Industrial Court further held that since the lockout declared by the respondent is not deemed to be illegal under the Act, it is not permissible for the Industrial Court to consider the genuineness, adequacy and bonafides of the reasons of statement to the lockout. In this connection, the Industrial Court relied upon the decision of this Court in Maharashtra General Kamgar Union v. Solid Containers Limited and Ors. 1996 (1) CLR 106, It was held by the Industrial Court that the lockout was legal and in a proceeding under the Act, the Industrial Court is not called upon to go into the question whether the lockout was justified and accordingly the complaint was dismissed by the impugned order dated 16th February, 1998.
6. It is contended by Mr. Cama appearing on behalf of the petitioner that if facts and circumstances are any indication, the action of the respondent Company amounts to a closure. It is contended that the Company has virtually effected closure under the garb of lockout. Merely because the lockout may be legal by itself would not mean that the lockout is justified. To deny wages to the respondent Company would have to show that the lockout apart from being legal is justified. It is contended that although the evidence was recorded, the same was not examined to ascertain the intention of the company. It is also contended that under Item 9 of Schedule IV, the Industrial Court has the widest possible jurisdiction to investigate and determine an unfair labour practice. It is contended that Item 9 of Schedule IV was clearly attracted and as such the workmen would be entitled to wages even during the period of lockout.
7. On behalf of the respondent, it is contended by Mr. Singh whether lockout is justified or not cannot be gone into by the Industrial Court under Item 6 of Schedule II and as such, the order of the Industrial Court is legal and proper. It is further contended that Item 9 would only be attracted in the event there was an agreement, settlement or award whereby the workers were entitled to be paid wages even during the pendency of the lockout. There was no such agreement or settlement and as such Item 9 would not be attracted. Apart from that, the complaint could not lie under the M.R.T.U. and P.U.L.P. Act but the aggrieved union or employees would have to resolve to industrial adjudication. It is further contended that the issue has been concluded by judgments of this Court and on this count also, the petition should be rejected.
8. Item 6 of Schedule II reads as under:
Proposing or continuing a lockout deemed to be illegal under this Act.
Item 9 of Schedule IV reads as under:
Failure to implement award, settlement or agreement.
Illegal strikes and lockouts are dealt with in Chapter 5 of the Act. Section 24(1) defines "Illegal strike" and Section 24(2) defines "illegal lockout". As far as the present enquiry is concerned, the same pertains to illegal lockout. Section 24(2) in so far as is relevant to the present enquiry provides, as follows:
Illegal lockout means a lockout which is commenced or continued, - (a) without giving to the employees, a notice of lockout in the prescribed form or within 14 days of the giving of such notice.
Under Rule 23 of the M.R.T.U. and P.U.L.P. Rules, 1975, notice of lockout is required to be given in Form J and is required to be sent by registered post. Notice is required to be accompanied by an annexure containing statement of reasons. On a plain reading of Item 6 of Schedule II read with Section 24(2), lockout can be deemed to be illegal under the Act only if it has been declared to be illegal pursuant to a declaration under Sub-section (5) of Section 25. Thus all that is required to be determined is as to whether the management has given the requisite notice in the prescribed form accompanied by an annexure containing the reasons for the lockout. The further enquiry which is required to be made, is whether the lockout has or has not been commenced within 14 days notice period. Once it is found that the requisite notice in the prescribed form has been given and the notice is accompanied by an annexure containing, the reasons for the lockout and the lockout has not commenced prior to the notice period of 14 days, the enquiry is complete. On the aforesaid finding being given, the only conclusion that follows is that the lockout is not illegal and hence no offence can be said to have been committed under Item 6 of Schedule II of the Act. If a Court were to find that the lockout is illegal, it will make a declaration to that effect. It is only after the management fails to lift the illegal lockout within a period of 48 hours under Section 25(5), lockout will be deemed to be illegal lockout. It is only in such a case that the provisions of Item of Schedule II will come into operation. This legal position is not disputed by the petitioner union.
9. As far as the question of applicability of Item 9 is concerned, the argument of the respondent Company is that Item 9 would only be attracted in the event there was an agreement, settlement or award whereby the workers were entitled to be paid wages even during the pendency of the lockout. The question of justifiability of the lockout cannot be gone into the proceedings under the Act, but the aggrieved union or the employees would have to resort to industrial adjudication. Reliance is placed by the respondent on the case of Mazdoor Congress u. S.A. Patil and Ors. 1992 1 CLR 408 : 1992 (64) FLR 928 : 1991 (2) LLJ 548, wherein a Single Judge of this Court while considering the complaint filed under Item 6 of Schedule II has taken a view that the Industrial Court would have no jurisdiction to go into the question whether the strike was justified or not. The learned single judge relied on a judgment in the case of Billion Plastics Pvt. Ltd. v. Dyes and Chemicals Workers Union 1983 (43) FLR 98. In the case of Mazdoor Congress v. S.A. Patil and. Ors., what was directly in issue was Item 6 of Schedule II of the Act. In that case, on 3rd April, 1977, the Company declared lockout with effect from 4th April, 1977. On 25th April, 1977, the complaint was filed that the Company had committed unfair labour practice as defined under Item 6 of Schedule II. Pending the complaint, the Company on 4th May, 1977 issued fresh notice effecting lockout with effect from 19th May, 1977. The Industrial Court held that the Company was guilty of effecting lockout for the period 4th April, 1977 to 18th May, 1977. It was further held that the lockout for subsequent period from 19th May, 1977 to 3rd August, 1977 (when the services of the workers were terminated) was not illegal as the same was resumed after 4th May, 1977. Agarwal, J. held that though lockout was illegal for the period from 4th April, 1977 to 18th May, 1977, lockout cannot be termed as illegal for the period subsequent to 19th May, 1977. The learned Judge relied upon the judgment in the case of Premier Automobiles Limited v. G.R. Sapre 1981 Lab. I.C. 221 : 1980 (1) LLN 116 (DB) : 1979(39) FLR 440 : 1981 LIC 221, and the judgment in the case of Billion Plastics Put. Ltd. (supra). The learned Judge expressed that the scope of enquiry under the Act is however limited with regard to the unfair labour practice as defined under the Act. It is clearly seen from the reading of the judgment that Item 9 was not an Issue before the learned Judge and in so far as the said judgment is concerned, it cannot be said to have concluded the issue.
10. In the case of Billion Plastics Put. Ltd. (supra) the petitioner Company had filed an application for interim relief under Section 30(3) of the Act restraining the workmen from going on an illegal strike. Rejection of this interim relief was the subject-matter of the writ petition before the learned Single Judge. The learned Single Judge while dismissing the petition observed as under:
What is covered by Item 1 of Schedule III is the strike which is deemed to be illegal under the said Act. If the strike is legal under the Act then obviously it is not covered by Item 1 of Schedule III. Even while continuing the strike, if the employees indulged in the acts of force and violence and hold out threats or intimidation in connection with the strike either against non-striking employees or against managerial staff, the same is treated as an unfair labour practice as per Schedule III, Entry 2(b). Other items of the Schedule III enumerate the practices which can be treated as unfair labour practice on the part of the trade union. It is needless to say that when the Schedule describes unfair labour practices on the part of the trade union, it must include in its import members of the trade union. Trade union is after all a representative of the employees and therefore the Industrial Court was not wholly right in saying that it had no jurisdiction to restrain workmen from resorting to strike. It only meant that it cannot restrain workmen from resorting to a legal strike. It is not disputed before me even by the learned Counsel for the union that if the workmen or union resort to an illegal strike then obviously it is covered by Item 1 of Schedule III. But while deeming the question of unfair labour practice, what the Court has to see is whether the strike is deemed to be illegal under the Act or not and the Court cannot adjudicate upon its justifiability or propriety. The said area is not covered by Section 30 of the Act, which confers a limited power upon the Courts to deal with the complaints regarding unfair labour practice. It is needless to say that if a particular controversy is not triable within the purview of the Act, then the jurisdiction of the Courts referred to in Section 59 or Section 60 of the Act is not barred.
Thus the learned Judge observed that what is covered by Item 5 of Schedule III is strike which is deemed to be illegal under the Act. If the strike is legal under the Act, then it is obviously not covered by Item 1 of Schedule III. It is in that context, the Court has observed that the justifiability of the strike is beyond the scope of Section 30 of the Act. This judgment can therefore be of no assistance for the proposition which is sought to be canvassed by the respondent.
11. In the case of Maharashtra General Kamgar Union v. Solid Containers Limited and Ors. 1991 (1) CLR 1061, the Company declared lockout with effect from 21st January, 1986. On 18th June, 1986, the union filed a complaint alleging that the Company has committed offence under Item 6 of Schedule II and Items 9 and 10 of Schedule IV of the Act. Pending the complaint a settlement dated 15th April, 1987 was arrived at between a substantial number of workers and the Company. Under the settlement, 190 workers were permitted to rejoin the Company after they had given undertaking of good behaviour. Hence, the lockout in so far as they are concerned was lifted. The Company left only 27 workers who had chosen not to sign undertaking and hence they were not permitted to join duties. The said 27 workers through the union filed a second complaint which came lo be dismissed and the order of dismissal became final. Thereafter, the first complaint was also dismissed and the said order was challenged by the union before the Division Bench. In para 9 of the Division Bench Judgment, it is clearly indicated that the argument advanced on behalf of the counsel for the union was that the reasons which are contained in the annexure to the notice of lockout were non-existent. It was argued that when the reasons stated in the notice are found to be non-existent, notice must be held to be without reasons required to be stated by law and to be violative by statutory obligation and therefore a notice is not as required under Section 24(2)(a) of the Act. The Division Bench after referring to the definitions of illegal strikes and lockouts and Section 24(2) observed as under:
Thus, all that a Court is required to determine is as to whether the management has given the requisite notice in the prescribed form accompanied by an annexure containing the reasons for clamping a lockout. The further enquiry which is required to be made, is whether the lockout has or has not been commenced within the 14 days' notice period. These are the parameters of the inquiry. Once it is found that the requisite notice in t e prescribed form has been given and that notice is accompanied by an annexure containing the reasons for the lockout and the lockout has not been commenced prior to the notice period of 14 days, the enquiry is complete. On the aforesaid findings being given the only conclusion that follows is that the lockout is not illegal and hence no offence can be said to have been committed under Item 6 of Schedule II of the Act. The Court, in proceeding under the Act, is, therefore, not required or in other words it is not open to the Court to go into the truth or otherwise or the justification or otherwise of the reasons which have led the management to clamp a lockout. The enquiry is beyond the scope and ambit of the relevant provisions of the Act. If a Court were to find that the lockout is illegal, it will make a declaration to that effect. It is only after the management fails to lift the illegal lockout within a period of 48 hours that under Sub-section (5) of Section 25 the lockout will be deemed to be an illegal lockout. It is only in such a case that the provisions of Item 6 of Schedule II will come into operation. The said item provides that proposing or continuing a lockout deemed to be illegal under this Act is made an unfair labour practice on the part of the employers. The aforesaid provision, therefore, does not contemplate an inquiry into the justification or otherwise of the reasons which have led to the clamping of a lockout. That does not form part of the inquiry under the M.R.T.U. and P.U.L.P. Act, 1971.
12. It is clearly seen from the aforesaid observations in Solid containers case that the Division Bench was mainly dealing with the scope and ambit of Item 6 of Schedule II and not Item 9. The Division Bench thereafter referred to the judgment in the case of Premier Automobiles Limited and Ors. v. G.R. Sapre (supra), Maharashtra General Kamgar Union v. Balkrishna Pen Pvt. Ltd. and Ors. and Syndicate Bank and Anr. v. K. Umesh Nayak and Billion Plastics Pvt. Ltd. v. Dyes & Chemicals Workers Union and Ors. (supra) and observed in para 18 as follows:
18. The aforesaid decisions make it abundantly Clear that as far as proceedings under the M.R.T.U. and P.U.L.P. Act, 1971 are concerned, the Court is only required to decide whether the strike or a lockout is illegal or otherwise as contemplated under the Act. The Court is not called upon to adjudicate upon the justifiability or otherwise of the strike or lockouts Hence, we have no hesitation in holding that the Tribunal is justified in arriving at its finding that the lockout in the instant case is not illegal and hence no offence under the M.R.T.U. and P.U.L.P. Act. 1971 is made out.
The aforesaid observations of the Division Bench will have to be read in the context of Item 6 of Schedule 11. No doubt a reference is made to Item 9 of Schedule II in para 21 of the judgment. The issue in the present petition was not directly in issue and apart from the passing reference to Item 9, there is no discussion or reasoning as to why Item 9 is not attracted. It is therefore difficult to accept the submission of the respondents that the issue is concluded by the Division Bench judgment in the case of Maharashtra General Kamgar Union v. Solid Containers Ltd.
13. On the contrary, Mr. Cama, learned Counsel for the petitioner drew my attention to the decision of the Supreme Court In General Labour Union v. B.V. Chavan and Ors. 1985 (1) CLR 42 : 1985 (50) FLR 16. There the complaint of the union was that the employers were guilty of imposing and continuing a lockout 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 lockout. In examining this aspect, the Industrial Court observed as under:
It is not necessary to refer to each and every decision pointed out by Mr. Bhat on the point of lockout and closure since now it is well established that in case of a lockout there is only closure of the place of business whereas in case of a closure there is a closure of the business itself permanent and irrevocable. Whether the closure is brought about mala fide 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.
The Supreme Court expressly disapproved the reasoning of the Labour Court. It was held that in such a situation, where the parties are at variance whether the employers have imposed 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 lockout or claims to have closed down the industrial undertaking. It is also to be determined whether the closing down of the industrial activity was a consequence of imposing the lockout or the owner/employer had decided to close down the industrial activity. The following observations of the Supreme Court are extremely material for the purpose of this case:
While examining whether the employer has imposed a lockout 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 bona fide on such eventualities as suffering continuous loss, on 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 bona fide and for reasons beyond the control of the employer. The duration of the closure may be a significant fact to determine the intention and bona fides 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, bona fide 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 bona fide 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.
14. In S.G. Chemicals and Dyes Trading Employees Union v. S.G. Chemicals and Dyes Trading Limited and Anr. 1986 1 CLR 360 : 1986 (52) FLR 661, the respondent Company was operating in Bombay through three divisions, namely Pharmaceuticals Division at Worli, Laboratory and Dyes Division at Bombay and Marketing and Sales Division at Express Building, Churchgate. The respondent Company closed down its Churchgate Division without permission from 13th September, 1984. Therefore the Union filed a complaint under Section 28 of the Act read with Item 9 of Schedule IV. The contention of the union in the said complaint was that the closure of the Churchgate Division of the Company was contrary to the provisions of Section 24 of the Industrial Disputes Act, 1947 and therefore the employees continued to be in the service of the Company notwithstanding the said closure and were entitled to full wages and all allowances as provided under the settlement entered into between the Company and the union which was not paid to them and therefore the Company had committed unfair labour practice under Item 9 of Schedule IV. It was argued before the Supreme Court that though the Company might have acted in contravention of the provisions of Section 25-O, it nevertheless would not amount to failure to implement the settlement. In support of this argument, reliance, was placed on the judgment of the Single Judge of this Court in the case of Maharashtra General Kamgar Union v. Glass Containers Pvt. Ltd. and Anr. The argument was rejected by the Supreme Court with the following observations:
It is not possible to accept as correct the view taken in the said case. It is an implied condition of every agreement, including a settlement, that the parties thereto will act in conformity with the law. Such a provision is not required to be expressly stated in any contract. If the services of a workman are terminated in violation of any of the provisions of the Industrial Disputes Act, such termination is unlawful and ineffective and the workmen would ordinarily be entitled to reinstatement and payment of full back wages. In the present case, there was a settlement arrived at between the Company and the union under which certain wages were to be paid by the Company to its workmen. The Company failed to pay such wages from September 18, 1984, to the eighty-four workmen whose services were terminated on the ground that it had closed down its Churchgate Division. As already held, the closing down of the Churchgate Division was illegal as it was in contravention of the provisions of Section 25-O, of the Industrial Disputes Act. Under Sub-section (6) of Section 25-O, where no application for permission under Sub-section (1) of Section 25-O is made, the closure of the undertaking is to be deemed to be illegal from the date of the closure and the workmen are to be entitled to all the benefits under any law for the time being in force, as if the undertaking had not been closed down. The eighty-four workmen were, therefore, in law entitled to receive from Sept. 18, 1984, onwards their salary and all other benefits payable to them under the Settlement dated Feb. 1, 1979. These not having been paid to them, there was a failure on the part of the Company to implement the said Settlement and consequently the Company was guilty of the unfair labour practice specified in Item 9 of Schedule IV to the Maharashtra Act, and the Union was justified in filing the complaint under Section 28 of the Maharashtra Act complaining of such unfair labour practice.
15. In Universal Luggage Mfg. Co. Ltd. v. General Employees Union and Anr. 1992 1 CLR 267 : 1992 (64) FLR 879 Bom., the petitioner Company gave notice of lockout stating therein that lockout would be lifted only if 533 workmen listed would agree to forthwith retire and rest agree to transfer to Aurangabad, The union approached the Industrial Court with a complaint for unfair labour practice and sought interim relief which was granted. In the writ petition, the learned Single Judge (Tipnis, J.) accepted the argument of the union that it was a case of closure, in the guise of lockout and the same was being done without obtaining permission as required under Section 25-O of the Industrial Disputes Act and therefore it would amount to unfair labour practice as envisaged under Item 9 of Schedule IV of the Act. The learned Judge referred to the Supreme Court decision in S.G. Chemicals and Dyes Trading Employees Union, (supra), while confirming the order passed by the Industrial Court. The order of Tipnis, J. was challenged in appeal before the Division Bench which cane to be dismissed. The Division Bench observed that the statement of reasons clearly indicate prima facie that the lockout was to continue till such time as the workmen concerned concede the demands of the Company. The demands of the Company itself indicate that 533 workmen shall accept voluntary retirement and the remaining shall agree to work at Aurangabad. Therefore, prima facie the Industrial Court was right in coming to the conclusion that the intention of the Company was to close down the Bombay unit and in the absence of permission under Section 25-O of the Industrial Disputes Act, closure could not have been effected.
16. In Mumbai Mazdoor Sabha v. Bennet Coleman and Co. Ltd. and Ors., only a small section of employees were on illegal strike, while majority was willing to work. In these circumstances, question arose before the learned Single Judge whether the union is entitled to interim relief restraining the employer from effecting lockout during the pendency of the complaint before the Industrial Court. That was a complaint under Items 1(b), 2, 3 and 6 of Schedule II and Item 5 of Schedule IV of the Act. The learned Judge observed as under:
The respondents Nos. 1 and 2 also claim that it is their inherent right to declare lockout and it is not bound to adopt proceedings to declare the strike as illegal or compel few striking workers to return to work. This attitude of the employer reflects unawareness of the modern principles governing the relation of master and servant. In the changing milieu, it cannot be overlooked that industry is run not only for the benefit of the employer and employees, but also for an unseen and uncared for third force, represented by society at large. That requires that an employer must take reasonable steps to enable smooth running of industry and only after the failure to achieve that goal the last fatal step of lockout should be resorted to.
17. A reference may also be made to the observations of Bharucha J. (as he then was) in Premier Automobiles Employees Union and Ors. v. Premier automobiles Limited:
It is the most basic, though it may be implicit term of an agreement between an employer and his employee that the employee shall make himself available to the employer to do his work and that the employer shall pay the employee wages for doing so. Failure to pay wages, when an employee has made himself available to do the employer's work, is a breach of the agreement between them. That the employer has no work for the employee to do does not cause a suspension of his obligation to pay wages to the employee. When even in such circumstances, the employer does not pay wages to the employee and particularly, where the failure is regarding his employees en masse, the employer is guilty of the unfair labour practice of not implementing his agreement with the employee.
18. In D.S. Kharde and Ors. v. Executive Engineer Chief Gate Erection Unit No. 2, Nagpur and Anr. 1994 1 CLR 1022, the scope of Item 9 Schedule IV was considered by the Division Bench of this Court. It was argued on behalf of the Company that in the draft of the Act considered by the Committee on unfair labour practices constituted by the Government of Maharashtra, reference was made specifically to breach of "statutory or legal rights", under the then proposed Item 9 but these words were dropped in the final enactment and that therefore Item 9 Schedule IV was never intended, when finally enacted, to cover breach of statute. It was, therefore, argued that Item 9 should be read narrowly so as to be restricted only to breach of settlement, agreement or award. This argument was negatived by the Division Bench. It was observed:
54. It is thus clear that the legislative history of the Act, viz. the report of the Committee on unfair labour practice in the instant case is only useful for ascertaining the evil sought to be remedied, but is not useful in determining the meaning of the enacted provision. It may however, be seen that the Act was clearly enacted as a law to supplement the provisions of the I.D. Act and the B.I.R. Act and it was, therefore, clear to the legislative mind when the Act was enacted that the concept of a contract of employment in industrial law particularly as developed under the existing legislation viz., the I.D. Act and the B.I.R. Act was wider in the sense that it would include as implied terms in an individual contract of employment the terms and conditions of service which may not be expressly contained in the individual's contract of employment but may be contained in the collective agreement, awards or settlements or the provisions of the Statutes regulating such terms and conditions of service. We cannot, therefore, give effect to the submission on behalf of the respondents that, because the Item 9 in Schedule IV of the Act is not worded in the manner in which it was recommended by the Committee on unfair labour practices viz., Item 7 in its list III which refers to the encroachment upon the statutory or legal or contractual rights or in accordance with the suggestions made to the committee viz., para C in Appendix 7 of the report relating to the implementation of labour laws, agreements, settlements or awards, the Legislature did not intend to include the violation or non-implementation of labour laws in Item 9 of Schedule IV of the Act. Reliance upon the report of the Committee on unfair labour practices is not therefore, of any assistance to the respondents in construing Item 9 of Schedule IV of the Act. The above contention raised on their behalf that in view of the recommendations of the Committee on unfair labour practices the word "Agreement" used in Item 9 of Schedule IV of the Act needs to be construed narrowly cannot be accepted.
55, We have already observed that the Act has a social objective and it therefore, needs to be construed purposively to prevent the mischief and advance the remedy. It may be seen that the Act provides for an effective remedy and relief under Sections 28 and 30 against the employer who engages himself in an unfair labour practice given in Schedules II and IV of the Act. Section 30 of the Act shows that affirmative action by way of reinstatement and payment of back wages or compensation in lieu of back wages can be directed thereunder if the unfair labour practice, is one of illegal or improper termination of service. We cannot therefore, hold by adopting a narrow construction that the employee is deprived of the above effective remedy under the Act although there is non-compliance with the most vital condition of service laid down under Sections 25-F and 25-G of the I.D. Act on the ground that there is breach of the provisions of law and not of an agreement constructed stricto sensu.
It is clear from the above observations that Item 9 of Schedule IV has a very wide concept and the scope of the said Item cannot be whittled down by adopting narrow and pedantic interpretation. It is required to be stated that in the instant case, Mr. Singh advanced similar arguments relying upon the report of the Committee on unfair labour practices. It was argued by Mr. Singh that under the draft Act declaring or resorting to unjustified lockout with a view to depriving the workers of their right to work was declared as unfair labour practice on the part of the employer. However, in the final enactment, said Item under the caption "Right to work" was deleted. Therefore, Mr. Singh argued that the Industrial Court has no power to consider the justifiability of lockout. I am unable to accept the submission of Mr. Singh. It has been consistently held that Item 9 of Schedule IV has got the widest possible amplitude. Under Item 9 of Schedule IV, there is ample power vested in the Industrial Court to determine whether the lockout is a genuine lockout or merely a pretence or a sham to deprive the workers of their right to work. In this behalf, it would be necessary to refer to two recent decisions in the case of Contract Laghu Udyog Kamgar Union v. K.K. Desai and Ors. 1994 II CLR 537 and Industrial Perfumes Limited v. Industrial Perfumes Workers Union 1998 II CLR 237.
19. In the case of Contract Laghu Udyog Kamgar Union (supra), the learned Single Judge was also considering a case under Item 9 of Schedule IV. In that case the question was whether the Industrial Court had jurisdiction to enquire whether the contract workers are the direct workers of the employer. The learned Single Judge held that the Industrial Court under Item 9 could go into the said issue. The said view has been reiterated by the Division Bench of this Court in the case of Maharashtra General kamgar Union v. CIPLA Limited and Ors. 1996 II CLR 770. In Contract Laghu Udyog Kamgar Union, the learned Single Judge observed in para 15 that if the Industrial Court finds that the contract between the principal Company and the contractor is sham, bogus and mala fide contract, then the Industrial Court is not powerless. It can always lift the veil and find out as to whether the arrangement was a genuine arrangement between the Company and the Contractor or whether it was only on paper. In the same para after referring to the decision of the Division Bench in D.S. Kharde v. Executive Engineer Chief Gate Erection Unit No. 2, Nagpur and Anr. (supra), the learned Single Judge observed that the word agreement which finds place in item 9 Schedule IV to the Act must not be read as a mere contract under the Contract Act. It has a very wide concept. It is part of collective bargaining which is a very important part of industrial adjudication. If that be the case, then it is clear that if there is a relationship of employer and employee which is sought to be defeated by a subterfuge then the Industrial Court will certainly be entitled to go behind the sham or bogus contract and ascertain as to whether the sham or bogus contract and ascertain as to whether the relationship of employer and employee was there or not. Where the employees have proved that it is a bogus contract; that it is subterfuge; that it is entered into by the Company to defeat their rights, the Industrial Court has a right to declare that there was a relationship of employer and employee and the workmen were denied the benefit of award or settlement which normally takes place between the Company and the permanent employees. Merely because there is an agreement existing between the principal Company and the Contractor will not prevent the Industrial Court from lifting the veil and ascertain as to whether such a relationship existed or not.
20. In the case of Industrial Perfumes Limited another learned Single Judge was dealing with the complaint of the union under Item 9 that the closure declared by the Company is not bona fide and in fact there was no closure. In para 8 of the judgment, the learned single judge observed:
8. In the instant case we may note that the Industrial Court has dealt with the issue that the closure was effected on account of safety, environmental and other reasons. True, even if the Court should not go into the sufficiency or adequacy of the material the Court can still consider whether in fact the closure is real or genuine and whether in fact there is a closure at law. The Industrial Court in para 24 has dealt with the contentions of the employer that closure was effected because of safety, health and environment. The Directors annual report for the year 31st December, 1996 was considered wherein it was set out that the Company had made arrangement to source the material on contract basis and operations have now started. Therefore, there is only a closure of the establishment, but there is no closure of business. As laid down by the Apex Court in Express Newspapers Ltd. (supra) this is not a closure at law. I am, also, unable to accept the contentions on behalf of the employer that the closure being real the Court cannot go into the reasons for the closure. Courts today can lift the veil to see what lies behind it. It is no longer a secret room which cannot be entered into. On lifting the complete veil the unmistakable conclusion is that the Company in the instant case has only closed down the manufacturing unit without closing its business which is being carried on. This cannot be said to be closing down of a part of the establishment/factory. In fact the profits are on the increase. The work is being done in the plant at Taloja belonging to Hindustan Lever Ltd., of which the petitioner Company is a subsidiary and in the contract with another.
In the light of the aforesaid decision, I have no hesitation to hold that in so far as the issue of lockout is concerned, merely because the lockout is legal did not mean that the workers are not entitled to wages or that the Company is bound to refuse payment of wages. It is open for the Industrial Court to lift the veil in order to ascertain the real intention of the management. Thus, in law there is no prohibition under Item. 9 from lifting the veil and ascertaining whether the lockout is genuine or bogus; whether it is a lockout or closure or whether in fact it is a lockout.
21. In Shankarprasad s/o. Gopalprasad Pathak v. Lokmat Newspapers Pvt. Ltd. Nagpur 1997 I CLR 212, the Division Bench held that the powers of the Labour Court in the complaint under Section 28, Item 1 of Schedule IV are the same like that of the reference under Section 10 and/or a complaint under the old Section 33-A and/or under the amended Section 33-A(b). It was held that the Labour Court has power to find out whether the order of discharge or dismissal is justiciable on merits while considering the alleged unfair labour practice. In para 26 of the judgment, the learned Judges observed:
The object of the M.R.T.U. and P.U.L.P. Act is to desist the employer from the commission of the unfair labour practices and to remedy the employee suffered from the commission of the unfair labour practices. The M.R.T.U. and P.U.L.P. Act is to supplement the I.D. Act and to cover the field for which the concerned industries covered under the I.D. Act did not get any coverage and that the field was obviously amongst other fields pertaining to prevention of unfair labour practices as defined in M.R.T.U. and P.U.L.P. Act.
22. In Kairbetta Estate v. Rajamanickam AIR 1960 SC 893 lockout was described as the anti-thesis of the strike. Just as a strike is a weapon available to the employees for enforcing their industrial demands, a lockout is a weapon available to the employer to pursuade by coercive process to see the point of view and accept the demand. This legal position was again reiterated in the case of Priya Laxmi Mills Ltd. v. Mazdoor Mahajan Mandal , A Division Bench of this Court in E.M. Sabha Bombay v. S.T. Belgrami 1970 Lab and I.C. 1373, observed in para 8 as under:
The question which is raised on behalf of the workmen does not relate in our view, to the question of the lockout being illegal but to the question of the Company having proved facts which absolved the Company from payment of any wages to the workmen for the period of the lockout. When the Tribunal held that the lockout was justified it was aware that the lockout was illegal. The word justified was used by the Tribunal in connection with the question of relief which the workmen should be entitled to for the period of the lockout. Now it is true, in law, what is illegal can never be held to be justified, but it is not true that the consequence of a lockout being declared illegal must be that, for the period of that illegal lockout, workmen must be entitled to payment of wages. It is true that, ordinarily when workmen are, against their consent and desire, not allowed to enter factory premises, it should be held in their favour that, for the period during which, against their consent and desire they are not allowed to enter the factory, they should be entitled to wages. It is at the same time permissible for an employer to prove that an illegal lockout was the result of such misdemeanor and misconduct of the workmen as left no option to the employer but to declare a lockout. It is permissible for an employer in connection with claims made against him for wages for the period of an illegal lockout, to prove misdemeanor and misconduct of employees sufficient to absolve him from the liability to pay wages for the period of such illegal lockout. That it was the correct question which arose for decision before the Tribunal. In connection with that question, the Tribunal made findings of facts which we have already recited above.
23. In the case Statesmen Limited v. Their Workmen , it was observed in para 15 as under:
But the management cannot behave unreasonably merely because the lockout is born lawfully. If by subsequent conduct, imaginatively interpreted, the Unions have shown readiness to resume work peacefully, the refusal to restart the Industry is not right and the initial legitimacy of the lockout loses its virtue by this unblemished sequal. Nor can any management expect, as feelings run high, charge-sheets in Criminal Courts are laid against workers and they are otherwise afflicted by the pinch of unemployment, to get proof of good behaviour beyond their written word.
24. In the case of Syndicate Bank and Anr. v. K. Umesh Nayak and Ors. , the Supreme Court clearly laid down that the issue whether the strike or lockout is legal or illegal is one aspect; the issue whether it is justified or not is another aspect. In para 9 of the judgment, it was observed that:
The question whether a strike or lockout is legal or illegal does not present much difficulty for resolution since all that is required to be examined to answer the question to be examined to answer the question is whether there has been breach of the relevant provisions. However, whether the action is justified or unjustified has to be examined by taking into consideration various factors some of which are indicated earlier. In almost all such cases, the prominent question that arises is whether the dispute was of such a nature that its solution could not brook delay and await resolution by the mechanism provided under the law or the contract or the service rules. The strike or lockout is not to be resorted to because the Concerned party has a superior bargaining power or the requisite economic muscle to compel the other party to accept its demand. Such indiscriminate use of power is nothing but assertion of the rule of "might is right". Its consequences are lawlessness, anarchy and chaos in the economic activities which are most vital and fundamental to the survival of the society. Such action, when the legal machinery is available to resolve the dispute, may be hard to justify. This will be particularly so when its resorted to by the section of the society which can well await the resolution of the dispute by the machinery provided for the same. The strike or lockout as a weapon has to be used sparingly for redressal of urgent and pressing grievances when no means are available or when available means have failed, to resolve it. It has to be resorted to, to compel the other party to the dispute to see the justness of the demand. It is not to be utilised to work hardship to the society at large so as to strengthen the bargaining power. It is for this reason that industrial legislation such as the Act places additional restrictions on strikes and lockouts in public utility services.
The ratio of this judgment was explained m the case of H.M.T. Ltd. v. H.M.T. Head Office Employees' Association and Ors. , the Apex Court has observed as under:
23 A. Constitution Bench of this Court in Syndicate Bank v. K. Umesh Nayak, has held that the workmen would be entitled to wages for the strike period if the strike was both legal and justified, In other words, if the strike was only legal and not justified or if the strike was illegal and justified, the workers were not entitled to wages for the strike period. Therefore, in so far as both the issues of strike and lockout are concerned, merely because the strike is legal or the lockout is legal would not mean that the workers are entitled to wages or that the Company is bound to refuse payment of wages.
25. The question to be determined in the present case is not whether the lockout is legal or illegal but whether it is a colourable or mala fide device for closure. In the instant case the grievance of the petitioner union is that the Company had in effect closed the unit under the garb of imposing lockout. My attention was drawn to some glaring circumstances which are brought on record. It seems that the Company is facing serious financial problems. Lockout notice was issued by the Company on 22nd September, 1997 alleging various incidents of obstruction by the workers. It is pertinent to note that even before lockout notice was issued the entire 180 supervisory and managerial stall was terminated by the Company and only few were retained to assist the Company in fighting litigation. It has been admitted by the witness examined on behalf of the Company that it is not possible to run the Company without supervisory and managerial staff. Raw material purchases were brought down to a mere 75000 kgs from 10,00,000 kgs in May, 1997 and the production was completely stopped after 30th August, 1997 and no work was given to the workmen. It seems that the electricity bills for July and August were also not paid due to financial problems. Even the Contractor's bills remained outstanding although the Company is trying to put blame on the workers for lack of cooperation from the contractors. It has also come on record that retirement dues of many retired workers are not paid. Power department was closed on 4th August, 1997. This has dune with the consent of the union but the union has pleaded that it was not aware of the real intention of the management. It is also interesting to note that only after 4 days of issuance of lockout notice, the Company proposed to sell off the plant and machinery in the extraordinary general meeting. It appears that during the negotiations before the Deputy Labour Commissioner, Bombay, on 23rd September, 1997 the workers had shown willingness to give appropriate undertakings and showed their willingness to resume work forthwith. Even during the course of hearing, Mr. Cama stated that the union is willing to undertake to maintain law and order and the workers are willing to give an undertaking before this Court and/or sign any other undertaking and the union is also willing to give an undertaking before this Court on their behalf and sign any other undertaking on behalf of the workmen. In view of the statement made by Mr. Cama when I asked Mr. Singh for the Company as to whether the Company is prepared to lift the lockout, Mr. Singh expressed Company's inability to do so. I also enquired from Mr. Singh whether the Company can re-start the factory if reasonable time is granted to commence the operation. However, Mr. Singh was unable to give any assurance in this behalf. On a careful scrutiny of evidence on record, I am satisfied that the Company has effected closure under the pretext of lockout. As a result of this action nearly 1600 workmen have been completely deprived of their wages since September, 1997. The question involved in this petition is of right to life and livelihood of 1600 workmen and their families and their legitimate claim for wages cannot be denied on spacious plea that they ought to have resorted to remedy under the Industrial Disputes Act. Indeed it would be a mockery of justice to ask the workmen to resort to industrial adjudication thereby defeating their right to earn livelihood.
26. I have carefully gone through the statement of reasons Annexure 'A' to the notice. No actual incidence of any violence or assault on any office or other employee has been set out. It is alleged that on 18th August, 1997 and 23rd August, 1997, the workmen of the Contractors who were engaged to load the tyres, tubes and flaps for despatch, etc. were obstructed by the workmen. The concerned contractors are not examined. The names of the workers who allegedly indulged in these acts are not mentioned. No notice or charge-sheet is issued to the workmen. On the other hand, it has been revealed in the cross-examination of the Company's witness that the Contractors payments were not paid and therefore the Contractors refused to carry the work for the Company. Then there is allegation that on 23rd August, 1997, transfer of finished tyres from the sorting area of the bonded warehouse could not be carried out due to the workmen threatening the Contractors' workmen, thereby obstructing transfer of finished tyres, causing congestion in the work place and disrupting operations of the Company posing safety hazards. Again no incident of violence or assault has been alleged. The next incident is of 26th August, 1997, when the workers allegedly refused to fill carbon black in the bunker and instigated other workmen also not to do the work. It is pertinent to note that under the settlement, this work is required to be carried out by the contractors workers and not by the Company's workmen. It is difficult to see how Company can make any grievance for alleged failure of the workmen to fill in carbon black in the bunker. It is also required to be noted that in respect of aboyementioned incidents of obstructions by the workmen the Company sought to rely upon reports of Managers. There is no report of any obstruction by the site supervisors and it seems that reports have been prepaied oniy to create a case for lockout, Then there is allegation that on 27th August, 1997, a group of workmen forcibly entered the cabin of the Company's Financial Controller and used abusive language. There is one more incident cited at Clause (f) of the statement namely that on 29th August, 1997 at about 11:30 a.m., the union representative along with 30-40 workmen allegedly went to the despatch area and prevented the transporters workmen from loading the processed material belonging to Ceat Tyres which had come for job work and prevented the material from being taken out of the factory. Again no allegation of resorting to violence is made. It is also said that the Company's Chief Executive Officer had been receiving threatening telephone calls on Intercom in the factory as well as on the telephone at his residence threatening him to take care of his life. Evidence in this behalf is too vague and does not inspire confidence. Lastly reliance is placed on two incidents of 16th September, 1997 and 20th September, 1997. In the first incident, the union representative allegedly entered the office of the Manager-Accounts and Finance in a threatening manner and questioned him as to when he would make arrangement for canteen provisions as they had allowed removal of material belonging to M/s. Balkrishna Tyres and Ceat Limited. He also allegedly threatened the Manager that he would not be allowed to leave unless he made provisions for canteen and by threatening him of illegal confinement they forced him to pay Rs. 8500/- to the canteen supervisor knowing fully well that the payment had no authorisation. Second incident is of 20th September, 1997 when 25-30 workers allegedly gheraoed the cashier in his cabin and forced him to provide information regarding the receipts and expenditure for the month of August-September, 1997 and other confidential information of accounts. From the reading of the above, it is seen that there is no physical assault by the workmen on any of the supervisory, managerial and administrative personnel. The workmen in their complaint have alleged that the lockout is nothing but sham for closure and this is borne out from the various factors indicated earlier. The management has taken a stand that the unit has become totally unviable. Mr. Singh stated before the Court that in view of the precarious financial position of the Company and in view of the fact that the Company is before B.I.F.R., it is not possible for the Company to resume its operation. Surely, this is no ground for refusing the wages to the workmen when they have shown their willingness to carry the work assigned to them. In my opinion, there is considerable substance in the contention of the union that the lockout notice is merely a sham or pretence and that the Company has virtually closed the unit under the garb of lockout. In the above circumstances, it is necessary to direct the respondent Company to forthwith lift the lockout. Mr. Singh pleaded helplessness in starting the operation with immediate effect in view of the financial problems faced by the Company. Having regard to the facts and circumstances of the case, I direct the Company to lift the lockout on or before 1st January, 1999. I also direct the respondent Company to pay wages to the workmen from 2nd March, 1998, i. e., the date on which the petition was admitted. I am restricting the claim of arrears of wages having regard to the financial condition of the Company. The Union is at liberty to take appropriate proceedings/steps for claim of wages in respect of the period prior to 2nd March, 1998. The arrears with effect from 2nd March, 1928 shall be payable in two equal installments, first installment shall be payable on or before 31st March, 1999 and the second installment on or before 30th June, 1999. Wages for the month of December, 1998 shall be payable on or before 31st December, 1998. Rule is accordingly made absolute. No order as to costs.