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PETITIONER: GENERAL LABOUR UNlON (RED FLAG) BOMBAY

       Vs.

RESPONDENT: B. V. CHAVAN AND ORS.

DATE OF JUDGMENT16/11/1984

BENCH: DESAI, D.A. BENCH: DESAI, D.A. ERADI, V. BALAKRISHNA (J) KHALID, V. (J)

CITATION:  1985 AIR  297            1985 SCR  (2)  64  1985 SCC  (1) 312        1984 SCALE  (2)749

ACT:      Industrial Disputes Act, 1947-’Lock-out’-Definition of- Explained. Closure-Meaning  of-To find  out  whether  it  is lock-out  or  closure  court  must  find  out  intention  of employer at the time when it resorts to lock-out or closure.

HEADNOTE:      The appellant  trade union filed two complaints against the employees.  The complaints  were that the employers were guilty of  imposing and  continuing a  lock-out and had thus committed unfair  labour practice.  The employers  contended that they  had finally and irrevocably closed the industrial under taking  and were  not  guilty  of  any  unfair  labour practice. The  Industrial Cc.Court dismissed the complaints. The union’s  appeals were dismissed by the High Court. Hence these appeals by special leave.      Disposing of the appeals, ^      HELD .  Lock-out has  been defined  in Sec. 2(L) of the Industrial Disputes Act, 1947 to mean the closing of a place of business,  or the suspension of work or the refusal by an employer  to  continue  to  employ  any  number  of  persons employed  by  him.  In  lock-out  the  employer  refuses  to continue to  employ the  workmen employed by him even though the business activity was not closed down nor intended to be closed down.  The essence  of lock-out is the refusal of the employer  to   continue  to  employ  workmen.  There  is  no intention to  close the  industrial activity.  Even  if  the suspension of  work is ordered it would constitute lock-out. On the  other hand  closure implies  closing  of  industrial activity as  a consequence  of which  workmen  are  rendered jobless.[67 G-H; 68 Al      The true  test to  find out  whether the  employer  has imposed  a   lock  out   or  has   closed   the   industrial establishment, is  that when it is claimed that the employer has  resorted   to  closure   of  industrial  activity,  the Industrial Court  in order to determine whether the employer is guilty  of  unfair  labour  practice  must  ascertain  on evidence produced before it whether the closure was a device or pretence  to terminate  services of workmen or whether it is bonafide  and for  reasons  beyond  the  control  of  the

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employer. The  duration of  the closure may be a significant fact  to  determine  the  intention  and  bonafides  of  the employer at  the time  of the closure but is not decisive of the matter.  When it  is claimed  that the  employer is  not guilty of  imposing a lock-out but has closed the industrial activity, the  Industrial Court  before which  the action of the employer 65 is  questioned   must  keeping  in  view  all  the  relevant circumstances at  the time of A closure decide and determine whether the  closure was a bonafide one or was a device or a pretence to determine the services of the workmen. Answer to this question  would permit  the Industrial Court to come to the conclusion one way or the other. [68 F-H; 69A]

JUDGMENT:      CIVIL, APPEALATE JURISDICTION: Civil Appeal Nos. 6092 & 6093 of 1983      Appeals by  Special leave  from the  Judgment and order dated the  4th February,  1983 of  the Bombay  High Court in W.P. No. 173 of 1983      M.K Ramamurthi and Urmila Sirur for the Appellant.      Gobind Das,  P.H. Parekh  and  Indu  Malhotra  for  the Respondent      The Judgment of the Court was delivered by      DESAI, J.  General Labour Union (Red Flag) Bombay filed two complaints,  one against  M/s. Delta Wires Pvt. Ltd. and second against  M/s. Delta Spokes Manufacturing Company, two sisters concerns  (’employers’ for short) under Sec. 28 read with Items l(a), l(b), 2, 4(a), 4(f) and 6 of Schedule II of the Maharashtra  Recognition of  Trade Unions and Prevention of Unfair  Labour Practices  Act, 1971  (’Act’  for  short). Broadly stated  the complaints  were that the employers were guilty of  imposing and  continuing a  lock-out and had thus committed unfair  labour practice.  The employers  contended that they  had finally and irrevocably closed the industrial undertaking  and  were  not  guilty  of  any  unfair  labour practice. The complaints were filed in the Industrial Court, Maharashtra, Bombay.              The  learned Judge  framed an issue whether the employers  had   committed  an  unfair  labour  practice  by imposing and  continuing a lock-out as provided in Item 6 of Schedule II of the Act.      After hearing  the parties,  the learned Judge answered the issue in negative and dismissed the complaints.      The   appellant-Union    filed   two    special   civil applications in  Bombay High  Court under  Art. 226  of  the Constitution questioning  the correctness of the decision of the Industrial  Court. Both  the applications were dismissed in limine.  The Union  thereupon filed  these two appeals by special leave. 66      At the hearing of the appeals, Mr. Govind Dass, learned counsel for the employers stated that the employers have re- opened the  industrial units and there is partial resumption of  manufacturing   process.  He  further  stated  that  the employers are  willing to  take back all the old workmen and in order  to satisfy  the court  about the  bonafides of the employers he  pointed out  that nearly  16 old  workmen, who responded to  the advertisement  in a  local newspaper, have already been  re-employed. Mr.  Govind Dass  stated that the employer will  put on record an unconditional undertaking as affidavit in  these appeals  that no  new  workman  will  be

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recruited in afore-mentioned two industrial undertakings who had not been in previous employment with them without giving first preference  to the  workmen who  were in employment of the two  concerns on  April 8,  1980 when  they were  closed down. Mr. M. K. Ramamurthy learned counsel for the appellant union, on  the other  hand, contended  that  the  industrial undertakings of  the employers  had never  been closed or at any rate  have resumed  working in  full and  that  the  old workmen are  not being  re-employcd and  new hands arc being recruited.      We record  the unequivocal  undertaking given on behalf of the  employers by  the learned  counsel Shri  Govind Dass that all  the  old  workmen  who  were  in  service  of  the employers at  the time  of the alleged closure, that is upto and inclusive  of April  8, 1980,  will  be  re-inducted  in service as  resumption of  work is  gradually expanding  and that till  all the old workmen are re-inducted in service no new hand will be recruited. An undertaking to that effect by Dr. P.  D. Meghani  s/o Dharam Chand Meghani has been placed on record  and is  treated  as  an  integral  part  of  this judgment. In  order to  be assured  that the  undertaking is carried out  in letter  and spirit  we direct the Industrial Court Maharashtra  Bombay to  depute its  senior ministerial officer  to   visit  the   industrial  undertakings  of  the employers and  to satisfy  itself that  the old  workmen are being re-inducted  in service  and  that  as  resumption  of production is  gradually expanded,  the old  workmen will be re-inducted in  service. There will be a continuous watch by the ministerial  officer to  be appointed  by the Industrial Court till  all the  old workmen  who are  willing to be re- inducted in service are taken back in service.      In fact  this undertaking  should  have  concluded  the matter. But  there  is  a  statement  of  law  made  by  the Industrial Court while rejecting the complaints filed by the appellant-union which  does not  command to  us and to avoid any such  error being repeated in future, we, with a view to set right  the matter  proceed to  examine the  same in this judgment. 67      The complaints  of the  union were  that the  employers were guilty  of imposing  and continuing  a  lock-out  which under the law was illegal. On the other hand, the submission on behalf  of the  employers was that there was a closure of the industrial  undertaking and  it was  not a case of lock- out. In  such a  situation there the parties are at variance whether the  employers have imposed a lockout or have closed the establishment  it is  necessary to find out what was the intention of  the employer  at the  time when  it resorts to lock-out or  claims  to  have  closed  down  the  industrial undertaking. It  is to  be determined  with accuracy whether the  closing   down  of   the  industrial   activity  was  a consequence of  imposing lock-out  or the owner employer had decided to close down the industrial activity.      Lock-out is  generally an  employer’s response  to some direct action  taken by  the  workmen.  Closure  may  be  on account of  various  reasons  which  may  have  necessitated closing down of the industrial undertaking. In this case the issue was whether the employer had imposed a lock-out or has closed down  the business.  In examining  this  aspect,  the Industrial Court observed as under: D           "It is  not necessary  to refer  to each and every      decision pointed out by Mr. Bhatt on the point of lock-      out and  closure, since now it is well established that      in case of a lockout there is only closure of the place      of business  where as  in case  of a closure there is a

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    closure  of   the   business   itself   permanent   and      irrevocable.  Whether  the  closure  is  brought  about      malafide and  whether it  could have  been avoided  are      matters irrelevant and what is to be seen is whether in      fact and in effect there is a closure or not."      We fail to appreciate both the approach and the reasons in support of the approach.      Lock-out  has   been  defined   in  Sec.  2(L)  of  the Industrial Disputes  Act, 1974  (’lD Act’ for short) to mean the closing  of a  place of  business, or  the suspension of work or the refusal by an employer to continue to employ any number of  persons employed  by him. In lockout the employer refuses to  continue. to  employ the workmen employed by him even though  the business  activity was not closed down. The essence of  lock-out is  the  refusal  of  the  employer  to continue to  employ workman.  There is no intention to close the industrial  activity. Even  if the suspension of work is ordered it  would constitute  lock-out. On  the  other  hand closure implies closing of industrial activity as a 68 consequence of  which workmen  are  rendered  jobless.  Sec. 22(2) of  the ID  Act prohibits  an  employer  in  a  public utility service  from locking out any of his workmen without giving notice  as provided  therein. Sec.  23  prohibits  an employer  from   declaring  a   lock-out  in   any  of   the eventualities mentioned therein. Lockout in contravention of Sec. 23  is declared  illegal. Section  26  of  the  ID  Act provides that  any of  the practices  listed in Schedule 11, III and  IV would be an unfair labour practice. Imposing and continuing a  lock-out deemed to be illegal under the Act is an unfair labour practice.      While examining  whether the  employer  has  imposed  a lock-out or  has closed  the industrial establishment, it is not necessary  to approach  the matter  from this angle that the closure  has to  be irrevocable, final and permanent and that lockout  is necessarily  temporary or for a period. The employer may close down industrial activity bonafide on such eventualities as  suffering continuous  loss, no possibility of revival  of  business  or  inability  for  various  other reasons to  continue the industrial activity. There may be a closure for  any of  these reasons  though these reasons are not exhaustive  but are merely illustrative. To say that the closure must  always be  permanent  and  irrevocable  is  to ignore the  causes  which  may  have  necessitated  closure. Change of  circumstances may encourage an employer to revive the industrial  activity which  was really  intended  to  be closed. Therefore  the true  test is that when it is claimed that the  employer has  resorted to  closure  of  industrial activity, the industrial court in order to determine whether the employer  is  guilty  of  unfair  labour  practice  must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bonafide and for reasons beyond the control of the  employer.   The  duration  of  the  closure  may  be  a significant fact to determine the intention and bonafides of the employer  at the  time of closure but is not decisive of the matter. To accept the view taken by the Industrial Court would lead to a startling result in that an employer who has resorted to  closure, bonafide  wants to re-open, revive and re-start the  industrial activity  he can  not 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

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is  questioned   must  keeping  in  view  all  the  relevant circumstances at  the time  of closure  decide and determine whether the  closure was a bonafide one or was a device or a pretence to determine 69 the services  of the  workmen. Answer to this question would permit A  the Industrial Court to come to the conclusion one way or the other.      Having clarified the position in law, we dispose of the appeals in  terms of  the undertaking of Dr. P.D. Meghani as recorded in this judgment.      Both the appeals are disposed of accordingly. H.S.K. 70