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PETITIONER: PRIYA LAXMI MILLS LTD.

       Vs.

RESPONDENT: MAZDOOR MAHAJAN MANDAL, BARODA

DATE OF JUDGMENT23/09/1976

BENCH: GOSWAMI, P.K. BENCH: GOSWAMI, P.K. CHANDRACHUD, Y.V. GUPTA, A.C.

CITATION:  1976 AIR 2584            1977 SCR  (1) 709  1977 SCC  (1)  28

ACT:             Bombay     Industrial    Relations     Act,     1946--S.         98(1)(a)--Schedule  III item 6(ii)--Scope  of--Workmen  laid         off--Lock-out     declared    later     alleging      unruly         behaviour--Lockout if illegal.

HEADNOTE:             According to s. 98(1)(a) of the Bombay Industrial  Rela-         tions  Act, 1946 a lock-out shall be illegal if it  is  com-         menced. or continued in cases where it relates to any indus-         trial  matter specified in Schedule III, Item  6(ii).   Item         6(ii)  states "employment including unemployment of  persons         previously employed in the industry concerned".             On  account  of  financial and  other  difficulties  the         appellant laid off workers in some departments of the  mill.         After. a few days the management declared a lock out  alleg-         ing  that  the workers gheraoed some officers in  the  mill,         started ’dharna’ and behaved in an unruly manner.             The  Labour  Court, to which the dispute  was  referred,         held that there was no evidence of violence or of  gheraoes,         that  the  situation in the mills was not of  such  a  grave         nature  as  called for a lock-out and  that  the  management         resorted  to  the lock-out on the slightest  opportunity  in         order  to  avoid payment of compensation, since  it  was  in         continuous financial difficulties heading towards a  closure         and  closure would have put the company under obligation  to         pay compensation.         Dismissing the appeal,             HELD: (1) A lock-out can be declared for reasons similar         to  those described in the present notice of  lock-out.   In         that  case although it will be lock-out in another sense  it         may not be a lock-out within the meaning of s. 3(24) of  the         Act.   That kind of lock-out with the avowed object of  pre-         venting  violence  and threat to life and  property  may  be         justified on facts in a given case.  In such a situation  it         may  be  difficult to prove that it is an  illegal  lock-out         since  in an illegal lock-out the sole object is  to  compel         the  workmen to accept the terms of the employer  which  the         workers consider as unreasonable and oppressive. [713 F--G]             But  in the instant case though the views of the  Labour         Court  that threats and gheraoes "are the  normal  behaviour

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       when  an  occasion like this takes place" should  be  disap-         proved,  the ultimate conclusion after appreciation  of  the         evidence  was not such as would call for interference in  an         application under Art. 136 of the Constitution. [713 H]             (2)  Though  the  Act has not  defined  ’lay-out’,  even         according  to the dictionary meaning, lay-off means to  dis-         continue  work or activity; to dismiss or  discharge  tempo-         rarily.   When workers are in employment and they  are  laid         off,  that immediately results in their unemployment, howso-         ever  temporary. and such an unemployment will clearly  come         under item 6(ii) in Schedule III of the Act. Since unemploy-         ment  is an industrial matter under item 6(ii)  of  Schedule         Iii  of  the Act, the lock-out which had been found  by  the         Labour  Court  to  have direct connection with  lay  off  is         clearly illegal under s. 98(1)(a) of the Act. [715 BC]

JUDGMENT:         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 511 of 1976.             (Appeal by Special Leave from the order dated  19-8-1975         of the First Labour Court Ahmedabad in Appln. 493/75).             R.P. Bhatt, D.K. Agarwal, K. K. Jain and Bishamber  Lal,         for the Appellant.         710         V. M. Tarkunde, K.L. Hathi, P.C. Kapur and Miss M. Tarkunde,         for the Respondent.         The Judgment of the Court was delivered by             GOSWAMI, J.--A complaint was made to the Labour Court by         the respondent, Mazdoor Mahajan Mandal, Baroda (briefly  the         union)  alleging the lock-out declared by the  appellant  to         be  illegal.  The appellant, Priya Laxmi Mills Ltd. (briefly         the management) resisted the petition.  After examining  the         oral  and documentary evidence the Labour Court came to  the         conclusion  that the lock-out was illegal under clauses  (a)         and  (h)  of  sub-section (1) of section 98  of  the  Bombay         Industrial Relations Act, 1946 (briefly the Act).         A  brief reference to the facts will be appropriate at  this         stage.             The  present appellant purchased this textile mill  from         M/s. Sayaji Mills Ltd. in 1972 when it had about 2500  work-         men  besides officers. It is said that in 1974  the  textile         industry suffered adverse market conditions, accumulation of         stocks, shortage of raw materials and bank credit squeeze in         consequence  of  which the management  started  experiencing         acute  financial  difficulties which were  aggravated  by  a         spate  of litigation between the appellant and the  previous         owners.  The appellant somehow continued to pay the wages of         the  workmen  upto February 1975 although  in  an  irregular         manner.             The  mill works in three shifts.  By a notice  of  April         13,  1975, the management notified a lay off from the  first         shift  of April 14, 1975, till further notice.  The lay  off         was  in the departments of spinning, weaving,  grey  folding         and engineering as per the lists containing the names of the         workmen  and the members of the staff  connected  therewith.         Other departments, however, were allowed to continue to work         as usual.  It was mentioned in the notice. of lay off that a         workman, if eligible, shall be paid lay off compensation  as         provided  under the law.  The permanent workmen of  laid-off         departments who were eligible  to  get  compensation   under         the   law   were   required  to present  themselves  in  the         respective  departments  at the start  of  their  respective         shifts and get themselves marked as "laid-off".   Naturally,         therefore,  although, the workmen were laid off they had  to

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       attend  the  mill premises for being marked present  at  the         time of the commencement of the shift in order to be able to         claim lay off compensation.  In view of the mounting tension         on account of irregular payment of wages for quite some time         and  the  subsequent lay-off, negotiations were  also  afoot         between the management and the union without much headway.             According  to  the  management the  workmen  refused  to         accept the decision of lay off and they continued to  remain         inside  the mill premises even after getting their  presence         marked.   Some employees remained in the department while  a         large  number of them collected outside the  department  and         refused to go out of the mill premises.  It is said that the         workmen started staging a ’dharna’ daily in the administra-         711         tive  office of the mills thereby disrupting its normal  and         smooth working.  This state of affairs continued from  April         14,  1975, to April 21, 1975.  The workmen did not  pay  any         head to the request of the management to leave the  premises         after  they had been marked present. In this background,  on         April 21, 1975, at about 4.00 P.M. a section of the  workmen         forcibly entered the Guest House No. 2, and trespassed  into         the living room of Shri L. Grover, Establishment Officer  of         the mills, dragged him out of the  room and  took him   into         the administrative office and kept him there under restraint         and  illegal  confinement for about 24 hours.   The  workmen         also removed  the personal belongings of Shri Grover.   They         also gheraoed and kept under restraint and illegal  confine-         ment  the  Deputy Executive Director, Shri V.K.  Bagla,  the         Deputy  Chief Executive (Works) Shri S.C. Gandhi  and  other         senior  officers in the mill premises with effect from  7.00         P.M.  on April 21, 1975.  The officers were kept in  illegal         confinement  without food and other basic amenities of  life         continuously  for  21 hours.  It is said that  the  officers         were  abused  and  humiliated. The  workers  also  held  out         threats  to  their lives.  The management also  referred  to         other  alleged  unruly and undisciplined  behaviour  of  the         workmen.  The officers were ultimately brought out with  the         help  of the police authorities at about 4.00 P.M. on  April         22,   1975.   The  employees,  however,  continued  ’dharna’         inside  the mill premises on April 22 and the night  between         April  22 and April 23.  It is, thus, the management’s  case         that  under the .circumstances mentioned above  the  company         was compelled to declare a lock-out from the first shift  of         April 23, 1975:             It  may  be appropriate to set out the  lock-out  notice         dated April 23, 1975:                        "We hereby give notice to all concerned  that                  a lock-out is declared with effect from the  begin-                  ning  of  l  st shift commencing at  7.00  a.m.  on                  23-4-1975 in our mills for the following or any  of                  the reasons given below:                        (a)  On  or about 4.30 p.m.  on  21-4-1975  a                  section  of the workmen forcibly entered  into  the                  mill Guest House No. 2 and trespassed into the room                  in which Shri L. Grover, the Establishment  Officer                  of  the mills resides, dragged him out of the  room                  and  took him to the Administrative Office  of  the                  mills  and  kept  him  there  under  restraint  and                  illegal confinement for about 24 hours.  The  work-                  ers also removed personal belongings of Shri  Grov-                  er.                        (b)  The workers gheraoed, kept in  restraint                  and  illegal confinement. our Dy. Executive  Direc-                  tor,  Shri V.K. Bagla, Dy. Chief Executive  (Works)                  Shri S.C. Gandhi, and other senior officers in  the

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                mill premises with effect from 7.00 p.m. of Monday,                  the  21st  April 75.  Those officers were  kept  in                  illegal  confinement without food and  other  basic                  amenities of life continuously for 21 hours.                        (c)  The  workers  not only  kept  the  above                  mentioned  officers  under wrongful  restraint  but                  also abused and humiliat-                  712                  ed  them.   Threats were advanced to  the  life  of                  these  officers  and to the effect  that  the  mill                  property will also be damaged.                        (d)  The  workers employed in  spinning   and                  weaving  departments including their  preparatories                  and  partly engineering department have  been  laid                  off  with effect from 14-4-75. These  workmen,  in-                  stead  of leaving the factory  premises  after  lay                  off attendance staged dharana daily in the adminis-                  trative office of the mills thereby disrupting  its                  normal and smooth working.                        (f) The workers have also arrested the  move-                  ment   of  cloth bales from  mill  godowns  thereby                  disrupting the bales of the finished goods.                        The  lock-out hereby declared will cover  all                  the  departments of the mills except the Watch  and                  Ward  and essential service which will continue  to                  function as usual and will not be affected by  this                  notice."                  X               X               X               X           The union denied, the various allegations made against the         workmen, and stated that the lock-out was carried out with a         view  to pressurise the union and the workmen to accept  the         management’s  terms  with regard to the mode of  payment  of         their salary as well as the lay off arrangements  introduced         by the management.             Both  sides  produced documentary evidence  as  well  as         examined witnesses.  The management examined four  witnesses         whereas   the union examined two witnesses on their  behalf.         After examining the entire evidence the Labour Court came to         the  conclusion  that the lockout was an  illegal  lock-out.         Hence this appeal by special leave.             The  question  that falls for decision  is  whether  the         lock-out   in question is illegal under section 98(1)(a)  of         the Act.  We are not required to consider whether it is also         illegal under section 98(1)(h) of the Act as referred to  by         the Labour Court.             According  to  section 98(1)(a), "a  lock-out  shall  be         illegal  if it is commenced or continued in cases  where  it         relates  to any industrial matter specified in Schedule  III         or  regulated  by any standing order for the time  being  in         force".  We are not required to consider the second part  of         section 98(1)(a) which refers to the standing order.  Sched-         ule III enumerates seven items out of which we are  required         to consider only item 6(ii) which reads as follows :--                        "Employment including unemployment of persons                  previously employed in the industry concerned".                      Before we  proceed further we may take note  of                  the  definition of lock-out which is found in  sec-                  tion 3 (24) of the Act:                        "’Lock-out’  means the dosing of a  place  or                  part  of  a  place of employment or  the  total  or                  partial suspension Of                  713                  work by an employer or the total or partial refusal                  by  an employer to continue to employ  persons  em-                  ployed  by him, where such closing, suspension,  or

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                refusal  occurs  in consequence  of  an  industrial                  dispute and is intended for the purpose of---                  (a)  compelling any of the employees  directly  af-                  fected  by such closing, suspension or  refusal  or                  any other employees of his, or                    (b)  aiding  any  other  employer  in  compelling                  persons  employed  by him, to accept  any  term  or                  condition of or affecting employment."                  This definition-is differently worded from what  is                  there  in  the Industrial Disputes Act.  1947.  We,                  however, find that in the Trade Disputes Act, 1929,                  lock-out  is  similarly defined as in  the  present                  Act.                  By  section  2(1) of the Industrial  Disputes  Act,                  lock-out                        "means the closing of a place of  employment,                  or  the  suspension of work, or the refusal  by  an                  employer  to continue to employ any number of  per-                  sons employed by him".                  This  Court, while interpreting the  above  defini-                  tion,  in Management of Kairbetta Estate,  Kotesiri                  v. Rajamanickam and others, C) observed as  follows                  :--                        "Even so, the essential character of a  lock-                  out continues to be substantially the same.   Lock-                  out can be described as the entithesis of a strike.                  Just  as  a  strike is a weapon  available  to  the                  employees for enforcing their industrial demands, a                  lock-out  is a weapon available to the employer  to                  persuade by a coercive process the employees to see                  his point of view and to accept his demands."                      It should, however, be made clear that lock-out                  can  be declared also for reasons similar to                  those described in the present notice  of lock-out.                  In that case although it will be lock-out in anoth-                  er  sense,  it  may not be a  lock-out  within  the                  meaning of section 3 (24) of the Act.  That kind of                  a  lock-out  with the avowed object  of  preventing                  violence  and threat to life and property may  even                  be  justified on facts in a given case.  In such  a                  situation ’it may be difficult to prove that it  is                  an  illegal lock-out since in an  illegal  lock-out                  the sole object is to compel the workmen to  accept                  the terms of the employer which the workers consid-                  er as unreasonable and oppressive.                      In the instant case although we do not  approve                  of the Labour Court’s observations in the order  to                  a  possible effect that threats and  gheraoes  "are                  the  normal  behaviour when an occasion  like  this                  takes  place",  we  cannot say  that  its  ultimate                  conclusion after appreciation                  (1) [1960] 3 S.C.R. 371.                  714                  of the evidence is such that it may call for inter-                  ference in an application under Article 136 of  the                  Constitution.                        The  Labour  Court  has given  a  finding  at                  paragraph 15 of the as follows :--                        "Coming now to the other important ingredient                  viz.  intention on the part of ’the  management  to                  compel the workers directly affected by such  clos-                  ing  to  accept  any term  or  condition  affecting                  employment,  it  appears  that there  was  such  an                  intention  on  the  part of  the  management.   The                  opponent  company, because of the financial  diffi-

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                culties  which they were facing wanted the  workers                  to agree to accept lay-off and also agree to accept                  wages not on the specified days as per the existing                  awards,  etc. but as and when the management  could                  pay   ......  In my opinion, therefore it could  be                  said that all the ingredients of an illegal  ’lock-                  out’ were present in this case".         The  Labour Court has taken note of the fact that there  was         no evidence of any violence being caused to the property  of         the  mill notwithstanding the presence of a huge crowd  said         to  be in a riotous mood.  The tribunal also took  the  view         that the officers were not confined in. their rooms as  such         as represented but they themselves did not like to come  out         perhaps due to apprehension.  The Labour Court was of  opin-         ion that the situation was not of such a grave nature  which         called for such a drastic step like a lock-out.  The  Labour         Court seems to be of the further view that since the manage-         ment  has been in continuous financial difficulties  heading         towards a closure and closure would have put the  management         under an obligation to pay compensation under section 25 FFF         under  the  Industrial Disputes Act, 1947,  opportunity  was         taken  to declare a lock-out on the  slightest  opportunity.         It  is  not possible for us to reappraise the  evidence  and         come to a different conclusion on the facts in this  appeal.         We  are  also  unable to hold that the  conclusions  of  the         Labour  Court  are perverse or even against  the  weight  of         evidence on record.             The  only question, therefore, that survives is  whether         on the finding of the Labour Court the lock-out is illegal.             It  is  contended on behalf of the appellant  that  item         6(ii)   in  Schedule  Iii to the Act which  deals  with  the         unemployment of persons previously employed in the  industry         concerned  cannot  govern a case of lay off.   According  to         counsel  lay off is not unemployment since the  relationship         of  master  and servant is not snapped.  We  are  unable  to         accept  this contention.  Lay off is not defined in the  Act         but  has  been defined in section (KKK)  of  the  Industrial         Disputes Act:                        "’lay-off’  (with its grammatical  variations                  and cognate expressions ) means the failure, refus-                  al or inability of an employer on account of short-                  age of coal, power or raw materials                  715                  or ’the accumulation, of stocks or the breakdown of                  machinery  or for any other reason to give  employ-                  ment to a workman whose name is borne on the muster                  rolls  of his industrial establishment and who  has                  not been retrenched".                  X                         X                       X                  X              X                  Even  according to the dictionary meaning, lay  off                  means  to discontinue work or activity; to  dismiss                  or  discharge  temporarily.  When  workers  are  in                  employment  and they are laid of, that  immediately                  results in their unemployment, howsoever temporary,                  and  such an unemployment will clearly  come  under                  item  6(ii) in Schedule III of the Act. It  is  not                  disputed  that  "unemployment"  is  an   industrial                  matter  as defined under section 3(18) of the  Act.                  Since  unemployment is an industrial  matter  under                  item 6(ii) of Schedule III to the Act, the lock-out                  which  has been found by the Labour Court  to  have                  direct  connection with lay of is  clearly  illegal                  under section 98(1)(a) of the Act.                       In  the  result the appeal fails and  is  dis-

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                missed with costs.         P.B.R                                           Appeal  dis-         missed.         --1234SCI/76         716