Letters Patent App. No. 6 of 1999,Letters Patent App. No. 111 of 1999,L.P.A. No.111 of 1999

2nd March, 2001

Petitioner Counsel: Mr. T.R.ANDHYARUJINA,Mr. C.U.SINGH,COLIN GONSALVES , Mr. L.M.ACHARYA
Respondent Counsel: Mr. K.S.BAPAT , Mr. KAMAL BUDHIRAJA , Mr. ARUN CHAUDHARY,Mr. SHEKHAR NAPADE , Mr. L.M.ACHARYA,Mr. C.U.SINGH , Mr. K.S.BAPAT

Cases Cited:
Maharashtra General Kamgar Union Vs. Balkrishna Pen Pvt.Ltd., 1987 I CLR 374 [Para 11]
M/s. Billion Plastics (P) Ltd. Vs. Dyes & Chemicals Workers Union, 1983 Mh.L.J. 573 [Para 11]
Mafatlal Engineering Industries Ltd. Vs. Association of Engineering Workers, 1983 Lab. I.C. 777 [Para 11,29]
General Labour Union Vs. B.V.Chavan & ors, AIR 1985 SC 297 [Para 12]
Shankarprasad s/o Gopalprasad Pathak Vs. Lokmat Newspapers Pvt.Ltd., 1997(3) ALL MR 58=(1997) I CLR 212 [Para 12]
The Premier Automobiles Employees Union Vs. The Premier Automobiles Ltd., 1987 I CLR 302 [Para 13]
S.G.Chemicals & Dyes Trading Employees Union Vs. S.G.Chemicals & Dyes Trading Ltd., (1986) 2 SCC 624 [Para 14]
Mumbai Mazdoor Sabha Vs. Bennet Coleman & Co. Ltd., 1980 I LLJ 112 [Para 15]
Universal Luggage Mfg. Company Ltd. Vs. General Employees Union., 1993 I CLR 421 [Para 16]
Subhash Silk Mills Ltd. Vs. Mill Mazdoor Sabha Mumbai., 2000(3) ALL MR 424=2000 II LLJ 716 [Para 17]
Hindustan Lever Ltd. Vs. Ashok Vishnu Kate, 1995 II CLR 823 [Para 18]
Oswal Agro Mills Vs. Oswal Petrochemicals Employees Union, 1999(3) ALL MR 400=1999(2) Mh.L.J. 449 [Para 19]
Contract Laghu Udyog Kamgar Union Vs. K.K.Desai., 1994 II CLR 537 [Para 20]
Standard Vacuum Vs. Workmen, AIR 1960 SC 948 [Para 20]
Industrial Perfumes Ltd Vs. Industrial Perfumes Workers Union, 1998 II CLR 273 [Para 20]
G.O.C. In C & anr Vs. Dr. Subhash Chandra Yadav & anr., AIR 1988 SC 876 [Para 21]
Syndicate Bank & anr. Vs. K.Umesh Nayak etc, (1994) 5 SCC 572 [Para 22]
Siemens Ltd Vs. Gajanan Vithal Konde, 1993 I CLR 337 [Para 23]
The Statesman Ltd Vs. Their Workmen, 1976 2 SCC 223 [Para 23]
HAL Employees Union Vs. The Presiding Officer., 1996 I LLJ 930 [Para 24]
Lakshminarayanapuram Subramanian Natarajan Vs. A.P.Lakhanikar or his successors, 2000(3) ALL MR 275=2000(2) Bom.C.R. 164 [Para 25]
Mazdoor Congress Vs. Shri. S.A.Patil, 1992 I CLR 408 [Para 26]
Mafatlal Engineering Industries Ltd Vs. Association of Engineering Workers, 1983 Lab.I. C. 777 [Para 29]
Management of Kairbetta Estate Kotagiri P.O. Vs. Rajamanickam, AIR 1960 SC 893 [Para 29]
Industrial Tubes Manufacturing Co.Ltd. Vs. S.R.Samant, 1980 II LLJ 444 [Para 30]
Indian Overseas Bank Vs. I.O.B. Staff Canteen Workers Union, 2000 II CLR 268 [Para 31]
Statesman Ltd Vs. Workmen, 1976 1 LLJ 484 [Para 33]
Baburao P. Tawade & ors. Vs. HES Ltd., 1995 II CLR 81 [Para 34]
Tata Davy Ltd Vs. State of Orissa, 1997 II LLJ 989 [Para 35]
Deputy Commissioner Tax Officer Vs. Corromandal Pharmaceuticals., 1997(2) SCALE 640 [Para 35]
Girni Kamgar Sangharsha Samiti Vs. Khatau Mackanji Spinning & Weaving Co.Ltd., 1998 I CLR 997 [Para 35]

JUDGMENT

P.S. PATANKAR, J. :- Being aggrieved by the Judgment and Order dated 27th November, 1998 passed by the learned Single Judge in Writ Petition No.1021 of 1998, these Letters Patent Appeals are filed. L.P.A. No.6 of 1999 has been filed by the Modistone Ltd. (hereafter, referred to as 'Company') while L.P.A. No.111 of 1999 is filed by the Modistone Employees Union (hereafter, referred to as 'Union') as wages were denied to the workers from the date of alleged lock out i.e. 8.10.98 till 1.3.99. In these Letters Patent Appeals, mainly, the following points arise :-

(1) Whether the lock out was justifiable or not can be gone into by the Industrial Court under item 9 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (hereafter referred to as "MRTU & PULP Act") ? and

(2) What is the effect of he Company being before the B.I.F.R. and declared sick on 15.4.98 under the Sick Industries Companies (Special Provisions) Act, 1985 ?

(3) Was the learned Single Judge right in denying wages to the employees from 08-10-1998 till 01-03-1999 ?

2. On 28.8.97, the Union filed Complaint (ULP) No.766 of 1997 for a declaration that the Company has engaged in unfair labour practices under Item 6 of Schedule II and Items 9 & 10 of Schedule IV of the MRTU & PULP Act and for a direction not to declare any lock out, or temporary or permanent closure or suspension or discontinuance of operation and not to terminate services of the workmen without following the due process of law. On 2.9.97, the Company issued the lock out notice under Section 24(2) of the MRTU & PULP Act covering factory, central office, office at Sewree and godown at Fesberry Road, Sewree. Without prejudice, the Management's case was that discontinuance of manufacturing and other operations have gone beyond the control of the management and due to reasons wholly attributable to the workmen, it is not a lock out in the legal sense. However, by way of abundant caution, the notice to discontinue manufacturing and other operations i.e. to effect a lock out with effect from 8.10.97 for the reasons stated in the Annexure "A" was given. The statement of reasons mentioned 10/11 reasons. Hence, another Complaint (ULP) No.857 of 1997 came to be filed by the Union. The said complaint came to be filed under Section 28 read with Item 6 of Schedule II and Items 9 and 10 of Schedule IV of the MRTU & PULP Act. It was alleged in the said Complaint that though it was alleged in the notice that it was not a lockout, yet lock-out notice is given resulting in cessation of work. This is contrary to the arbitration agreement/award dated 21.1.95 published on 4.7.96 and particularly, clause 16(b) thereof. In view of the Award, the Company is bound to pay wages and other benefits as per the Award. But it is denied. This amounts to unfair labour practice under Item 9 of Schedule IV and Item 6 of Schedule II. The refusal of work to employees in contravention of the settlement/award is illegal and it also amounts to contravening Item 10 of Schedule IV as workers are forced to remain idle and out of employment by force. It is averred that it is not a lock-out in the legal sense. Lockout has to be by way of retalitation to the workers demands. In the present case, there was no demand of the workmen. The reasons for the lock-out mentioned in the lock-out notice are totally false. They are invented and are not existing. The various documents and the actions of the Company showed that the Company is not interested in continuing the production and in order to avoid the legal liabilities of payment to workmen, farce of lock-out is made. The Company has not taken any legal steps for lay-off, retrenchment temporary or permanent closure, etc. by making necessary application and getting permissions. This was required under Sections 25-M, 24-N and 25-O of the Industrial Disputes Act, 1947 (hereafter, referred to as the "I.D.Act"). The Company is acting with malafide intention to undermine the bargaining power of the Union and to break workers unity and with this ulterior motive the lock out is declared.

3. The Company filed written statement. It denied commission of any unfair labour practice. It was contended that the Company is not guilty of any of the alleged unfair labour practices. Lock-out cannot be deemed to be illegal unless it is declared by the Competent Court and 48 hours notice is given in view of Item 6 of Schedule II. It is denied that it has failed to implement any of the award/settlement or agreement. It is contended that there was no violation of clause 16(b) of the Jamdar Award dated 21.1.1995 in not paying wages of the month of August, 1997. It has no bearing whatsoever on the issue of lock-out notice issued by the Company. It is contended that the allegations made of unfair labour practices are all vague. It is contended that after giving notice of lock-out the Company has dispensed with the attendance of the workmen in the interest of safety of the Company's property, plant and machinery and safety of the officers. The said notice is given without prejudice to the management's contention that discontinuance of manufacturing and other operations is not a lock-out in the legal sense as the circumstances clearly emerged beyond the control of the Management and for reasons wholly attributable to the workers. The Union/workers were responsible for disruptive activities and stoppage of production and their activities increased the financial difficulties of the Company. It was denied that there was any malafide intention or ulterior motive in declaring the lock-out. It was denied that the Company has effected any lay-off, retrenchment or temporary or permanent closure. It was, therefore, contended that the provisions of Sections 25-M, 25-N and 25-O of the I.D. Act are not attracted.

4. On behalf of the Company, 9 witnesses were examined while on behalf of the Union, its Secretary Mr.Fereira was examined. The documents were also produced on record on both sides.

5. The learned Member of the Industrial Court, Mumbai, by Order dated 12.2.1998 came to the conclusion that the Union has failed to establish commission of any unfair labour practice by the Company. The lock-out declared by the Company cannot be said to be illegal. It was held that during the course of lock-out, there will not be any work or wages as the contract of service stands suspended. There was no violation of any of the terms of the Jamdar Award dated 21.1.1995 and of the alleged term 16(b) thereof which reads as follows :-

"Workmen and Company will resolve all disputes by peaceful negotiation and failing which negotiation by resorting to legal machinery."

The lock-out is not declared for any demand in respect of service conditions available to the workmen under the Jamdar Award. The learned Member concluded from the deposition as under :-

"Almost all witnesses confirmed the statement of reasons attached to the lockout notice. In fact it is not required to go into the details of the reasons but in the concluding paragraph it is stated by the respondent that the disruptive and indiscipline activities resorted to by the workmen/union. Their action of giving threats obstructing, conserted refusal to work, gherao, wrongful confinement, intimidation forcible extraction of confidential information and company's funds without authorisation of the management and creation of atmosphere of scare and fear psychosis amongst the officers of the company have resulted in the total disruption of the working at company's factory and the workmen/Union have virtually taken control of the company's factory. Even the supervisors whose services have been terminated and who have no right to enter the factory have been unauthorisedly entering the factory premises at the instance of the union. There is thus total break down by the company's administrative machinery and control of the factory. In the aforesaid situation, the atmosphere created by the workmen/union the working of the company's factory and officer situated in the factory premises and godown has become impossible and there is a serious threat to the company's capital intensive and costly plant and machinery as also safety of the company's officers and their family members. The company has therefore no option but to discontinue its manufacturing and other operations at its factory premises at Sewree, Central Office, Bombay District Office, Godown and to give notice of lockout. To support this contention for each and every days incidence it is proved by the respondent by examining the concerned officer and it is established that the reasons in the statement of reason of lockout appears to be in existence at the time of issuing lockout notice."

It was conceded on behalf of the Union, if the lock-out declared by the Company is not deemed to be illegal under the M.R.T.U. and P.U.L.P. Act, the question about justification does not arise. Hence, the complaint came to be dismissed. This was challenged by the Union by filing the Writ Petition.

6. The learned Single Judge considered the case law cited and appreciated the evidence and came to the conclusion that merely because lock out 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 was held that it was open for the Industrial Court to lift the veil in order to ascertain the real intention of the Management and whether it was justifiable. Thus, there is no prohibition under Item 9 from lifting the veil and ascertain whether the lock out is genuine or bogus. Whether it is a lock out or closure or whether in fact it is a lock out. Though the learned Single Judge did not specifically hold that the Company is guilty of unfair labour practice under Item 9 of Schedule IV, in para 25 considered some of the circumstances, in para 26 notice of lock out and held that there is considerable substance in the contention of the Union that the lock out notice is merely a sham or pretence and that the Company has virtually closed the unit under the guise of lock out. However, as it was pointed out on behalf of the Company that it is before BIFR, it was ordered that the Company should pay wages to the workers from 2.3.98 i.e. the date on which the petition was admitted. The Company was also directed to lift the lock out on or before 1.1.1999. The workers were ordered to be paid in two instalments as arrears of wages. Liberty was granted to the Union to take appropriate steps to get wages for the period prior to 2.3.98.

7. It is first contended that the respondent Union has not pleaded the case that the appellant Company wanted to effect closure in the guise of lock-out and the pleading was in the context of Item 1(b) of Schedule II and not under Item 9 of Schedule IV of the Act. In respect of Item 9 of Schedule IV, the case only pleaded was that there was a breach of clause 16(b) (cited earlier) of the Jamdar Award dated 21-1-1995 and about failure to supply raw materials and maintaining level of production. Therefore, it was an error to hold that there was closure in the guise of lock-out. However, it is not possible to accept this contention for more than one reason. Though the averments in the complaint are vague and generally emphasise the violation of the terms of the Jamdar Award, it has been pleaded that the reasons for the lock-out mentioned in the notice are totally false. It has also been pleaded that the company has not taken any legal steps for lay-off, retrenchment, temporary or permanent closure etc. contemplated by Sections 25-M, 25-N and 25-O of the Industrial Disputes Act, 1947. It is also stated that the facts and the documents establish that the Company is not interested on continuing the production and to avoid the legal liabilities of the workmen, a farce of lock-out is made. Though the complaint specifically mentions that the Company is guilty of unfair labour practice under Item 9 of Schedule IV of the M.R.T.U. Act, as it has violated the binding Award between the parties. Though it is correct that the said Award is not germane as far as this controversy is concerned, it can be stated that there were averments that there was closure effected by the Company. There was a reference made about the case of M/s. S.G.Chemicals, decided by the Supreme Court relating to closure. In addition, the learned Counsel for the Union is right in pointing out that such a complaint was not made when the Writ Petition was heard by the learned Single Judge and such a point is not even taken in an Appeal Memo. Hence, we reject it.

8. It is next submitted by the learned counsel for the Company that Item 6 of Schedule II is attracted only after the Labour Court on reference gives a declaration under Section 25 that the lockout is deemed to be illegal. Further, assuming that the Industrial Court can give a declaration of deemed illegality, it has to follow the requirement of Section 25. As against this, the learned Counsel for the Union has submitted that the Industrial Court can go into the question of deemed illegality of lockout under Item 6 of Schedule II and it need not wait for a declaration from the Labour Court. It is submitted that the workers are not required to refer to I.A. Act first for declaration of deemed illegality and then resort to provisions of the M.R.T.U. & P.U.L.P. Act. This would defeat the very purpose of the M.R.T.U. and P.U.L.P. Act. It is submitted that Item 6 of Schedule II is attracted if the lock-out is illegal and it is not necessary to follow the other requirements of Section 25.

9. It is then submitted on behalf of the Company that in a strike or lock-out the contract of employment stands temporarily suspended and, therefore, the M.R.T.U. and P.U.L.P. Act makes elaborate provisions for defining the legality of strikes and lockouts. Illegal lockout will fall only within Item 6 of Schedule II and cannot be said to be covered by Item 9 of Schedule IV. It is further submitted that in any case justifiability of reasons for declaration of lockout cannot be gone into by the Industrial Court under Item 9 of Schedule IV and what can be seen under the said Item is whether there was any violation of the provisions of law. It is submitted that justifiability can only be gone into under the I.D. Act under which apportionment of blame can be gone into and decided. As against this, it has been submitted by the learned Counsel for the Union that justifiability of reasons for declaration of lockout can also be gone into under Item 9 of Schedule IV to find out whether there was really a lockout or merely a device to throw out the employees.

10. We shall have first the bird's eye-view of the relevant provisions of law.

Item 6 of Schedule II reads as under :-

"6. Proposing or continuing a lock-out deemed to be illegal under this Act."

Item 9 of Schedule IV reads as under :-

"9. Failure to implement award, settlement or agreement".

Section 3(16) of the M.R.T.U. and P.U.L.P. Act defines "unfair labour practices" to mean those which are defined in Section 26 of the Act. Section 26 in turn mentions those which are listed in Schedules II, III and IV. Section 24(1) of the M.R.T.U. and P.U.L.P. Act mentions about what is "illegal strike".

Section 24(2) mentions what is "illegal lock-out". It gives clauses (a) to (h), due to which commencement or continuation of a lockout can be said to be illegal. We may quote sub-sec.2(a) and 2(h) of Section 24 as under:-

(2) "illegal lock-out" means a lock-out which is commenced or continued -(a) without giving to the employees, a notice of lock-out in the prescribed form or within fourteen days of the giving of such notice".

"(h) during any period in which any settlement or award is in operation, in respect of any of the matters covered by the settlement or award".

Section 25 of the M.R.T.U. and P.U.L.P. Act deals with Reference to Labour Court for declaration whether strike or lock-out is illegal. Under Sec.25(2) the State Government or the recognised Union or, where there is no recognised Union, any other Union of the employees in the undertaking may make a reference to the Labour Court for a declaration whether such lock-out will be illegal. Under Sec.25(4) declaration given is binding and is required to be followed in all proceedings under the Act. Sec.25(5) reads as under :-

"25.(5) where any strike or lock-out declared to be illegal under this section is withdrawn within forty-eight hours of such declaration, such strike or lock-out shall not, for the purposes of this Act, be deemed to be illegal under this Act."

Section 5 deals with the duties of Industrial Court and Section 5(d) imposes duty upon the Industrial Court to decide complaints relating to unfair labour practices, except those falling in Item 1 of Schedule IV. Sec.30(1) gives power to Industrial and Labour Court to declare illegal if a party has engaged in or is engaging in any unfair labour practice. Sec.30(2) gives power to the Court to grant interim relief,including a direction to withdraw temporarily the practice complained of during the pendency of the complaint.

"2(cc) "closure" means the permanent closing down of a place of employment or part thereof."

Section 2(1) defines "lock-out" as under:-

"2(1) "lock-out" means the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him".

Section 10 deals with the power of the appropriate Government to refer the dispute to Boards, Courts or Tribunals for adjudication. Sec.10(3) gives power to the appropriate Government whenever an industrial dispute is referred, to pass an order prohibiting the continuance of the strike or lockout in connection with such a dispute. Chapter VC deals with unfair labour practices. It consists of Section 25-T and Section 25-U. Section 25-T prohibits unfair labour practices and Section 25-U provides for penalty for committing unfair labour practice. Section 26 deals with penalty for illegal strikes and lock-outs. The Fifth Schedule, which came to be added by Act 46 of 1982 with effect from 21.8.1984 provides for unfair labour practices. Part I thereof deals with unfair labour practices on the part of employers. Item 13 relates to failure to implement award, settlement or agreement. Item 16 is proposing or continuing a lock-out deemed to be illegal under this Act. Section 24 deals with "illegal strikes" and "lock-outs". Sec.24(1)(i) says that a strike or a lock-out shall be illegal if it is commenced or declared in contravention of Sec.22 or Sec.23. Sec.22 relates to public utility service and we are not concerned with it. Section 23 lays down general prohibition of strikes and lock-outs, the circumstances under which no strike shall be undertaken by the workers or lock-outs by the employers.

11. As far as the contentions about the jurisdiction of the Industrial Tribunal of giving declaration of deemed illegality under Item 6 of Schedule II while investigating the complaint of unfair labour practice and whether the provisions of Sec.25 are required to be complied with or not for giving such declaration are concerned, it is concluded by the Judgment of the Division Bench in the matter of Maharashtra General Kamgar Union & Ors. Vs. Balkrishna Pen Pvt.Ltd. & ors. (1987 I CLR 374). In that case the complaint was filed before the Industrial Court for a declaration that the Union had committed unfair labour practice under Item 1 of Schedule III. The Division Bench considered the provisions of Sections 5(d), 24,25,28,30 and 32 of the MRTP & PULP Act. It was held as under :-

"To discharge its duty to deal with such complaint, the Industrial Court will have necessarily to decide whether the strike is deemed to be illegal under the Act. In order to come to that decision, the Court must first come to the conclusion whether the strike is legal or illegal, and if it holds that it is illegal, it has thereafter to decide whether it is deemed to be illegal under the Act. Unless the Court assumes jurisdiction to decide the said question, the provisions of sections 5 and 30 read with the said item would be rendered nugatory; a consequence which is not warranted by any rules of interpretation of statutes. Hence, it will have to be held notwithstanding the provisions of section 25, the Industrial Court also has the jurisdiction to decide whether the strike is deemed to be illegal under the Act. Since the Industrial Court decide it unless it follows the procedure laid down under sub-sections (2), (3) and (5) of section 25, it will have to be held that the said procedure will apply mutatis mutandis to the Industrial Court while dealing with such complaints under section 30 of the Act. The Industrial Court will therefore have first to decide whether the strike is legal or illegal and if it comes to the conclusion that it is illegal, make a declaration of the said fact in the open Court. The court will have then to give 48 hours for withdrawal of the strike. In case it is not withdrawn during that period, it will have to proceed to decide whether it is deemed to be illegal under the Act. What applies to strikes will equally apply to lock-outs. The Industrial court assumes this power as incidental to its power to investigate the complaint under section 39 of the Act. The said power is implicit in it and should be read and deemed to have been vested in the court under section 30 read with section 5(d) and item 1 of Schedule III and item 6 of Schedule II."

"12. That this is the avowed intention of the legislature is further evidenced by the provisions of section 32 of the Act, which have been reproduced above. The language of this section is crystal clear and no further and other argument is necessary to vest the Industrial Court with the said incidental power. What is latent is made explicit by the aforesaid provisions. The section begins with the non obstante clause and thus first negates the argument of the so-called exclusive jurisdiction of the Courts and proceeds to vest in them the power to decide all matters arising out of any application or complaint referred to it for decision under any of the provisions of the Act."

"14. Since we are informed that in view of the conflicting judgments of this court, the Courts below are experiencing difficulties in dealing with such complaints under section 30 of the Act, we feel it necessary to outline broadly the procedure the Courts should follow in such cases. If there is an application for interim relief the Court will have to dispose it of on the basis of its prima facie view of the matter. The second stage will be the stage when the Court records its finding whether the strike or the lock-out is legal or illegal. If it comes to the conclusion that it is legal, it will proceed to dispose of the complaints forthwith accordingly. However, where the conclusion is that it is illegal, it should make a declaration in the open court as required by sub-section (3) of section 25 and give 48 hours time to the party concerned to withdraw it as required by sub-section (5) of the said section. It is only if the strike or the lock-out is not withdrawn during the said period, that it should proceed to decide whether it is "deemed to be illegal under the Act" as required by item 1 of Schedule III and item 6 of Schedule II as the case may be. The last stage is the stage where the court proceeds to find out whether, in the case of strike, there was active support or instigation and by whom and in the case of lock-out whether it was proposed or continued. If this procedure is followed, there should ordinarily be no difficulty in trying the complaints".

The Division Bench of this Court also made a reference to two Judgments of the Single Judges of this Court in the matter of M/s. Billion Plastics (P) Ltd. and Dyes and Chemicals Workers Union & Ors., reported in 1983, Mh.L.J., 573, and in the matter of Mafatlal Engineering Industries Ltd. Vs. Association of Engineering Workers and another, reported in 1983, Labour Industrial Cases, 777 and approved the view taken therein. Thus, it is not necessary to await final declaration in respect of deemed illegality from the Labour Court under Section 25. Such a procedure of approaching two Courts is not at all conducive for industrial peace and for early settlement of the disputes. This would not advance the object of the legislature in enacting the M.R.T.U. and P.U.L.P. Act. Therefore, we agree with the view taken by the Division Bench that the Industrial Court is having the jurisdiction to grant final relief, but only after following the requirement of Section 25. In the present case, no such requirements under Section 25 were followed by the Industrial Court and hence, Item 6 of Schedule II is not attracted.

12. The next question is what is the scope of Item 9 of Schedule IV and whether the Industrial Court can go into the question of justifiability of reasons. The learned Counsel for the Union relied upon large number of cases or observations made in some cases, but we find that many of them are not relevant. For example, A.I.R. 1985, S.C., 297, General Labour Union (Red Flag), Bombay Vs. B.V.Chavan and others. The Apex Court held "To accept the view that closure has to be irrevocable, final and permanent and lockout is necessarily temporary or for a period would lead to a starling result in that if an employer who has resorted to closure, bona fide wants to re-open, revive and re-start the industrial activity cannot do so on the plea that the closure would be adjudged a device or pretence." In view of the amendment to Section 2(cc) "closure" and Section 2(1) "lock-out" by Act 46 of 1982 which came in force on 21.8.84, the said Judgment is not a good law. The said provisions now are as under :-

"2(cc) "closure" means the permanent closing down of a place of employment or part thereof".

Section 2(1) defines "lock-out" as under :-

"2(1) "lock-out" means the temporary closing of a place of employment or the suspension of work, or the refusal by an employer to continue to employ any number of persons employed by him".

Reliance was also placed on the Judgment reported in 1997 (I) CLR 212 : [1997(3) ALL MR 58] (Shankarprasad S/o Gopalprasad Pathak Vs. Lokmat Newspapers Pvt.Ltd. Nagpur). In the said case, the retrenchment of an employee was held to be in violation of the conditions of service and hence, violating Section 9A of the I.D. Act. It was held that this attracted Item 10 of Schedule IV of the M.R.T.U. and P.U.L.P. Act. The employee was held entitled for back wages till the date of superannuation.

13. The learned Counsel for the Union relied upon 1987 I CLR 302, The Premier Automobiles Employees Union & Ors. vs. The Premier Automobiles Ltd. & Ors. The Respondent-Company had three plants, one at Manpada one at Wadala and one at Kurla. By a notice the Company suspended the work at Kurla and Wadala Plants on account of agitation and go-slow tactics resorted to by the workers at Manpada plant. No wages were paid to the workers during the period of suspension as lock-out was declared at Manpada Plant. The Petitioner-Union filed a complaint before the Industrial Court under Item 9 of Schedule IV of the Act praying for a declaration that the notice dated 2.1.78 suspending the work was unlawful and bad in law and the Company is bound to pay wages to the workers at Kurla & Wadala Plants for the period of suspension. Lock out was declared at Manpada plant (Dombivli). The Company's contention that the company was required to suspend the work at Kurla and Wadala Plants as they were not getting feeding material from the Manpada Plant was not accepted. It was held that the Company was liable to pay to the workers at Wadala and Kurla Plants as the Company has failed to implement the agreement and hence guilty of unfair labour practice mentioned at Item 9 of Schedule IV. Obviously, this has no application in this case. It is a case where suspension of work at Wadala and Kurla Plants was illegal.

14. The next reliance is placed on (1986) 2 SCC 624, S.G.Chemicals and Dyes Trading Employees; Union Vs. S.G.Chemicals and Dyes Trading Limited and another. In this case, the Company effected closure of its sales and marketing division at Churchgate. The Union of the workmen filed a complaint before the Industrial Court under Section 28 read with Item 9 of Schedule IV of MRTU & PULP Act contending that the closure was contrary to Section 25-O of the I.D. Act and, therefore, the employees continued to be in service of the Company notwithstanding the said notice of closure and were entitled to full wages and allowances as provided under the Settlement dated February 1, 1997 entered into between the Company and the Union. The relevant observations for our purpose are as follows:-

"...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 workman 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 25-0 of the Industrial Disputes Act."

In the facts of our case, again this has no application.

15. Reliance is placed on 1980 I L.L.J. 112 Mumbai Mazdoor Sabha Vs. Bennet Coleman and Co.Ltd. & Ors. The learned Single Judge of this Court was concerned with granting of interim relief. The question involved was whether the Union was entitled to an interim relief of restraining the employer from effecting lock-out during the pendency of the complaint before the Industrial Court under the provisions of MRTU & PULP Act. Prima facie, it was found that there was a collusion between the company and the other union of which only a small section of employees have gone on illegal strike. The majority of workers belonging to the other union, which has filed the complaint, have not resorted to such a strike. The learned Judge, therefore, felt that lock out was prima facie not legal and the reason given in the proposed lock-out notice was not in existence. Hence, it was held that the Union was entitled to get interim relief. This has no application in the present case.

16. The next reliance is placed on 1993 I CLR 421, Universal Luggage Mfg. Company Ltd. vs. General Employees Union & Ors. In this case, the Company had declared V.R.S. Some of the employees accepted the same. All the remaining employees were transferred from Bombay to Aurangabad. The Company had issued lock-out notice under Section 24(2). The Union alleged that the company was guilty of unfair labour practice under Item 6 of Schedule II and Items 9 and 10 of Schedule IV of the MRTU & PULP Act as the notice of lock-out was a subterfuge to circumvent the provisions relating to closure under Section 25-O of the I.D.Act. Considering the above facts, the Division Bench, prima facie, found that the Company wanted to close down the Bombay Unit without following the provisions of Section 25-O of the I.D. Act and it was not a lock-out. Considering this, it was held that Item 9 of Schedule IV of MRTU & PULP Act is attracted. Hence, it was held that the Union was entitled to get the interim relief of directing the company to lift the lockout and restraining the company from transferring the workmen to Aurangabad. Again, this has no application in the present case as the lockout notice was prima facie found to have been given for oblique motive.

17. Reliance is also placed on 2000 II LLJ 716 : [2000(3) ALL MR 42], Subhash Silk Mills Ltd. Vs. Mill Mazdoor Sabha, Mumbai and others. In the said case, 20 workers resorted to legal proceedings. Hence, lock out was effected by the company. Complaint came to be filed under Items 9 and 10 of Schedule IV of the MRTU & PULP Act by the Union. It was held that resorting to legal proceedings could not be ground to impose a lock-out. Therefore, it was held to be a case of commission of unfair labour practice under Items 9 and 10 of Schedule IV. Obviously, this will have no application in the present case as the notice was malafide given and for a cause not germane to the employer - employee relationship.

18. In 1995 II CLR 823 Hindustan Lever Ltd. Vs. Ashok Vishnu Kate & Ors. the question arose as to whether the workmen apprehending discharge or dismissal by way of unfair labour practice as contemplated by relevant clauses of item 1 of schedule IV of the MRTP & PULP Act can file the complaints even prior to the actual passing of orders of discharge or dismissal. The Division Bench Judgment of this Court was upheld by the Apex Court holding that they were maintainable and they were not premature. It was held that interim relief can be granted if the court comes to the conclusion that prima facie there was unfair labour practice. It was held that prevention of unfair labour practice is possible under the MRTU & PULP Act and it is not possible to prevent discharge or dismissal after it takes place and hence, injunction can be granted. There is no dispute about this proposition.

19. In 1999(2) Mh.L.J. 449 : [1999(3) ALL MR 400], Oswal Agro Mills vs. Oswal Petrochemicals Employees Union & Ors. In this case, complaint was filed under Item 6 of Schedule II and Item 9 of Schedule IV of the MRTU & PULP Act by the Union. It also filed an application under Section 30 of the Act for getting interim order. It challenged the action of shut down effected by the company. In this case, the Company has initially effected a shut down on 19.9.98 for 45 days. The Union filed complaint on 26.11.98 and on 28.11.98, the Company issued a notice of lock-out. The Union amended the complaint and also prayed for interim order. The case of the Company was that the lock-out was effected to cut the cost of labour. Considering the fact that the earlier shut down notice was issued and the production was stopped, it was prima facie held to be a case not of lock-out but a closure without following the provisions of Section 25-O. Therefore, it was held that the workers were entitled to get interim relief of lifting the lock-out and to get work. If the work is not provided then to pay monthly wages. A direction was also given to pay the arrears of wages since 28.11.98. It was specifically observed in para 39 that whatever stated was only for disposal of the petition and has no bearing on the complaint pending before the trial Court which was to be decided on merits. The Division Bench of this Court by order dated 16th April, 1999 in Appeal No. 376 of 1999 dismissed the Appeal. We may point out in this very matter the Apex Court has directed that the workers be paid 50% of the wages during the interim period. In addition, this is a case where lock-out notice was found to be prima facie illegal.

20. The learned Counsel for the Union are right in submitting that the Court can lift the veil for finding out whether there is violation of any provision of law and hence, implied terms of the Agreement. They have rightly relied upon the Judgment in 1994 II CLR 537, Contract Laghu Udyog Kamgar union Vs. K.K.Desai & Ors. The Union of contract labour workers filed a complaint under Item 9 of Schedule IV of MRTU & PULP Act alleging that the Company was engaged in unfair labour practice as the so called contracts entered with the contractors are bogus and subterfuge and contract labour are direct employees of the Company. Relying upon the various judgments, including that of the Apex Court in the matter of Standard Vacuum vs. Workmen, AIR 1960 SC 948, it was held that if the Industrial Court finds that the contract between the principal employer and the contractor is a sham, bogus and malafide contract then the Industrial Court is not powerless. It can 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. If the relationship of the employer and the employee is sought to be defeated by subterfuge of such contracts, then the Industrial Court will certainly be entitled to go behind the sham and bogus contract and ascertain the real relationship. It is a clear case of defeating service agreement by innovating a subterfuge and has no application here. They also relied upon 1998 II CLR 273, Industrial Perfumes Ltd. vs. Industrial Perfumes Workers Union. The learned Single Judge relying upon the Judgment of the Apex Court in the case of S.G.Chemicals (cited supra) etc. held that the Court can consider whether in fact the closure is real or genuine and whether in fact there is a closure at law. Therefore, if there is only a closure of the establishment, but there is no closure of business, this is not a closure at law. It was held that Court can lift the veil and see what lies behind it. In this case, on lifting veil, it was found that the Company has only closed down manufacturing unit without closing down its business. Hence, it was held that it was not closing of factory. Therefore, the Company's contention that there was closure was not accepted and it was held that the Item 9 of Schedule IV of the MRTU & PULP Act was attracted. If the action is sham, bogus or fraudulent, that is doing something in the guise of another or the target is different, then on lifting of veil it is possible to find out whether action is illegal.

21. The M.R.T.U. and P.U.L.P. Act is essentially meant for prevention of unfair labour practice. The Statement of Objects shows that it is for declaring certain strikes and lockouts as illegal, to define and provide for prevention of certain unfair labour practices. If a lockout is imposed not complying with the provisions of Section 24(2), then it can be called as illegal in nature. If it is shown by the Union that it is illegal in nature, 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". The notice is required to be accompanied by an annexure containing the statement of reasons. Thus, it is the non-compliance with the requirement of the above clause (a) that makes the lockout illegal. Under the above clause (a), lockout will be illegal if it is :-

(i) commenced or continued without giving notice in the prescribed form; and

(ii) or within 14 days of the giving of such notice.

The Statement of Reasons is required to be annexed to the Notice so as to bring to the notice of the employees their actions to change their stand. The reasons are, thus, integral part of the notice. It is therefore clear that the requirement of giving reasons is a requirement of Rule 23 which prescribes that a notice of lock-out should be in Form "J". It is settled law that Rules form part of the statute vide G.O.C. in C & Anr. V/s. Dr. Subhash Chandra Yadav & Anr., AIR 1988 Supreme Court, 876. It must therefore, follow that a lock-out, in order that it is legal, must be based on reasons which are relevant. Therefore, it is necessary that the reasons should not be irrelevant i.e. not relating to the industrial relationship or germane to the employer- employee relationship or non-existent or sham reasons. If the employees are able to prove this, then the Company can be said to be guilty of unfair labour practice as it is acting illegally. Even if this is prima facie shown, the employees are entitled to get interim relief of a direction to the Company to withdraw such unfair labour practice. However, sufficiency or insufficiency or adequacy or inadequacy of reasons cannot be gone into for consideration of unfair labour practice. The learned Counsel for the Company is right in submitting that Item 9 of Schedule IV cannot be interpreted in a wide manner, as sought to be done by the learned Single Judge. This would result into anomalous situation. While justifiability and underlining reasons could be examined in a lockout, no such examination would be possible in a strike as Schedule IV applies only to unfair labour practice on the part of the employer, though the weapons of strike and lockout are said to be antithesis of each other. Therefore, while considering Item 9 of Schedule IV i.e. failure to implement award, settlement or agreement, the Industrial Court has no jurisdiction to go into the justifiability of the lockout. The word "Agreement" is already interpreted by the Apex Court to include the violation of any legal provision and hence, implied term in the service contract. Thus, if it is shown that the employer wanted to close down without following necessary legal requirements, then there is violation of the implied term of the contract and Item 9 of Schedule IV is attracted. But the said Item 9 is not wide to include every refusal to give work by the employer to amount to a breach of law. It cannot also be considered as a residuary item or to interpret it in such a manner to make it omnibus to cover every refusal or denial on the part of the employer to give work. It is not possible to accept the contention on behalf of the Union that it is sufficient to point out that the employees are ready to work and the employer is not prepared to give work and wages for attracting Item 9 of Schedule IV. It is also not possible to accept the submission that the lockout must be both legal and justified as otherwise Item 9 of Schedule IV is attracted or that the Company must establish legality and justifiability for denying the work for getting out of the clutches of Item 9. It is not possible for us to accept the said broad interpretation suggested by the Union and accepted by the learned Single Judge. It is to be seen that Schedule IV only deals with unfair labour practice by the employer and not by the employees or their union. If the employees go on illegal strike, it is not possible for the employer to force them to work. If the strike is illegal or unjustifiable, he can refuse wages. There is a parallel between Item 6 of Schedule II and Item 1 of Schedule III in that respect. The cases cited above would show that whenever the court found that the Company has acted illegally or violated any provisions of law or given reason which is not existent or not germane or irrelevant to employer employee relationship, it was held that Item 9 of Schedule IV was attracted.

22. In (1994) 5 SCC 572, Syndicate Bank and another vs. K.Umesh Nayak, etc. the provisions of Sections 22, 23(a) and 24 of the Industrial Disputes Act, 1947 were for consideration. The question involved was whether merely because the strike was legal, the employees were entitled to get the wages for the strike period or not. It was held wages are payable only if strike is both legal and justified, but not payable if strike is legal but not justified or justified but illegal. The Apex Court relied upon its earlier Judgment in Bank of India v. T.S.Kelawala (1990) 4 SCC 744 It was held that strike resorted to by the Bank employees during the conciliation proceedings, despite Bank's circular for deduction of wages on Bank's failure to implement immediately the settlement arrived at between the parties conferring additional benefits to the employees on the ground of seeking Government's approval, cannot be said to be legal. It was also held that strike was not justifiable. It was observed:-

"25. We, therefore, hold endorsing the view taken in T.S. Kelawala that the workers are not entitled to wages for the strike period even if the strike is legal. To be entitled to the wages for the strike period, the strike has to be both legal and justified. Whether the strike is legal or justified are questions of fact to be decided on the evidence on record. Under the Act, the question has to be decided by the industrial adjudicator, it being an industrial dispute within the meaning of the Act."

"27. It has to be remembered in this connection that a strike may be illegal if it contravenes the provisions of Sections 22, 23 or 24 of the Act or of any other law or of the terms of employment depending upon the facts of each case. Similarly, a strike may be justified or unjustified depending upon several factors such as the service conditions of the workmen, the nature of demands of the workmen, the cause which led to the strike, the urgency of the cause or the demands of the workmen, the reason for not resorting to the dispute resolving machinery provided by the Act or the contract of employment or the service rules and regulations etc. an enquiry into these issues is essentially an enquiry into the facts which in some cases may require taking of oral and documentary evidence. Hence such enquiry has to be conducted by the machinery which is primarily invested with the jurisdiction and duty to investigate and resolve the dispute. The machinery has to come its findings on the said issue by examining all the pros and cons of the dispute as any other dispute between the employer and the employee."

"30. 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 is whether there has been a 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 resolutions 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 party concerned 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 it is 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."

Therefore, the workers were held not entitled to wages during the period even if the strike was legal. It was also held whether the strike is legal or justified are questions of fact to be decided on the evidence on record by the industrial adjudicator, it being an industrial dispute within the meaning of the Act.

23. In 1993 I CLR 337, Siemens Ltd. Thane vs. Gajanan Vithal Konde & Ors. the company gave a notice to the employees on 19.12.90 of lock-out under Section 24(2) of the MRTU & PULP Act. The reasons mentioned were that the workmen had indulged in continuous agitation from or about April 1990 and had resorted to several acts of indiscipline which made the employer impossible to run the factory. It became effective from 5th January, 1991. The workers claimed wages from 5th January on the ground that they were ready to work, but the work was not provided. They filed an application under Sec.33(C)(2) of the I.D.Act. The learned Single Judge relied upon the locus classics in the case of Kairbetta (Cited supra). He also relied upon the observations of the Apex Court in the case of India Marine Service (Private) Ltd. vs. Their workmen 1963 I LLJ 122 which are to the following effect :-

"We would like to make it clear that in a case where the strike is unjustified and the lockout is justified the workmen would not be entitled to any wages at all. Similarly where the strike is justified and the lockout is unjustified, the workmen would be entitled to the entire wages for the period of strike and lockout. Where, however, a strike is unjustified and is followed by a lockout which becomes unjustified, a case for apportionment of blame arises."

Hence, the application of the employees was dismissed.

23. In (1976) 2 SCC 223 The Statesman Ltd. vs. Their Workmen. In the said case, the workers went on illegal strike and the Management declared lock-out. The very next day, the workers wrote to the Management requesting lifting of the lock-out, assuring peaceful resumption of work. The Company was not satisfied with the earnestness of the assurance and refused to lift it. The company lifted the lockout on 08-11-1966. The workers raised an industrial dispute claiming wages for the period from their readiness till lifting of lockout. The Industrial Tribunal apportioned the blame equally between the workers and the Management and passed the award. The said award came to be challenged before the Supreme Court directly and the Apex Court approved the award.

24. In 1996 I LLJ 930 (S.C.) HAL Employees Union and The Presiding Officer and Anr. it was a case where strike was illegal and in consequence lock-out was declared in view of Sec.24(5) of the MRTU & PULP Act. The Apex Court relied upon its earlier judgment in Syndicate Bank & Anr. vs. K.Umesh Nayak (cited supra). It was held to be a case of legal lockout.

25. In 2000(2) Bom.C.R.164 : [2000(3) ALL MR 275], Lakshminarayanapuram Subramanian Natarajan vs. A.P.Lakhanikar and his successors & anr. the learned Single Judge of this Court was considering whether the Labour Court can give a declaration about the legality of lock-out in an application under Sec.33-C(2) of the I.D.Act. In that connection, it was observed as under :-

".....Such a dispute regarding legality and validity and justifiability of a lockout will be a subject matter of full-fledged adjudication under section 10(1) of the Industrial Disputes Act, 1947 and it cannot be decided under section 33-C(2) of the Act which is more or less akin to executory jurisdiction....."

".....The appropriate remedy for the Union and the petitioner was to raise an industrial dispute under section 10(1) of the Act for determination of the issue that the lockout was not justified, and therefore, claim wages for the relevant period. The question of justifiability of a strike or lockout can always be gone into in the adjudication proceedings in the form of a reference under section 10(1) of the Act and not under any other provision of Act......."

26. In 1992 I CLR 408, Mazdoor Congress vs Shri. S.A.Patil & Ors. it was held that lock-out was not illegal. Therefore, there is no question of giving finding of any commission of unfair labour practice under Item 6 of Schedule II. It was observed as under:-

".......If there is no unfair labour practice during that period, there can arise no question of entitlement for wages during the said period under its Act. The jurisdiction under the Act is limited. It is concerned with the finding of unfair labour practices covered by the Act. It concerns the grant of consequential reliefs in respect of the period covered by the unfair labour practice held to have been proved. It is, therefore, not open to the workers to contend about justifiability or otherwise of the lock-out...."

27. The consepectus of decisions would show that the question of justifiability of reasons can be gone into in an industrial adjudication and on consideration of facts and circumstances. The employees are free to decide whether to seek a reference under Section 10 of the Industrial Disputes Act or to go under the M.R.T.U. and P.U.L.P. Act. But justifiability can only be gone into in an industrial dispute under the I.D. Act. The apportionment of the blame can be decided and the right to receive the wages considered. Justifiability in the facts and circumstances necessarily brings in consideration of adequacy or sufficiency of reasons. Whether the reasons given in the lockout notice were justifiable or not requires consideration of various factors and causes. Host of facts are required to be considered, but they cannot be gone into while considering Item 9 of Schedule IV. The Industrial Adjudicator under the Industrial Disputes Act shall have jurisdiction to decide whether the lockout is justified and whether having regard to the conduct of the parties, how much wages to be paid to the workers during the unjustified lockout as compensation or loss of wages. If the employees claim that the lockout is unjustifiable and hence, they are entitled to get wages for the period of lockout and direction for joining employment, they have to approach the Industrial Adjudicator under the Industrial Dispute Act. The Industrial Adjudicator shall decide considering all the factors and apportion the blame and decide to what wages they are entitled to. But the width and the scope of Item 9 of Schedule IV is not so wide to include justifiability of the lock-out.

28. In the result, we hold that while deciding a complaint under the provisions of the MRTU & PULP Act, the Industrial Court:

(a) can decide whether the lockout is legal or illegal i.e. whether it is in accordance with the provisions of the MRTU & PULP Act, 1971:

(b) can decide whether the reasons stated in the notice of lockout are non-existent or sham or irrelevant i.e. not germane to the employer - employee relationship or not relating to the industrial relationship.

(c) However, it cannot go into the question of sufficiency or adequacy of the reasons:

(d) the Industrial Court cannot go into the question whether the lockout is justified. This question can only be agitated before the appropriate Court under the provisions of the Industrial Disputes Act, 1947.

29. The learned Counsel for the Union submitted that this cannot be called as a "lock-out" as there was no demand made of any nature. He submitted that lock-out necessarily involves retaliation and/or has to be imposed to make the Union see reasons It is submitted that in the present case there was no industrial dispute between the parties, nor there was any demand and, therefore, there was no question of the Company making the Union to see reasons. It is submitted that it is only a case of the Company suffering from financial difficulties and hence, gates of the company for the workers were closed. It was illegal. In that context, he relied upon the Judgment reported in 1983 Labour Industrial Cases 777, Mafatlal Engineering Industrial Ltd. vs. Association of Engineering Workers and another, inspite of the injunction issued by the Industrial Court on the application of the Company, the workmen indulged in violent actions. Therefore, the company issued notice of lock-out dated 4.12.81 effective from 18-21-81 in accordance with sub-section (2) of Section 24 of the MRTU & PULP Act. The Company filed application under Sec.30 of the M.R.T.U. and P.U.L.P. Act. One of the contentions raised by the Union was that there was no demand made by the workers and hence closure of the company was not a legal lock-out. Reliance was placed on the judgment of the Apex Court in AIR 1960 SC 893 (Management of Kairbetta Estate. Kotagiri P.O. v. Rajamanickam). in which the Supreme Court in para 11 observed as under :-

"Lock out can be described as the antithesis 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 employee to see his point of view and to accept his demands. The use of both the weapons by the respective parties must, however, be subject to the relevant provisions of the Act."

In our opinion, this cannot help the Union in the present case considering that the Company was required to declare the lock-out for preventing violence and threat to life and property of the Company. It is no doubt true that just as strike is a weapon available to the employees for enforcing the demand, a lock-out is a weapon available to the employees to persuade by coercive process the employees to see his point of view and accept his demands. The Notice of lock-out dated 22nd September 1997 contains the Statement of Reasons. It mentions various acts of indiscipline and disruptive activities carried on by the employees. They indicate that grave and serious agitational methods were adopted by the workmen such as gherao of officers, their illegal confinement, threats of violence, forcible stoppage of trucks loaded with material, forcible unloading of trucks containing processed raw materials due for despatch. Instances of 10 or 11 of such kind on the part of the employees are given which had taken place in the month of August/September 1997. Even in the written statement, which is filed on behalf of the Company, it has been pointed out that the lock-out has been effected for the reasons mentioned in the lock-out notice and one of the reasons contributing to the bad financial position, including break in the flow of cycle of funds, was the disruptive activities resorted to by the workmen. Therefore, notice was given in view of indiscipline and disruptive activities on the part of the workmen. It was not because of only financial crunch or difficulty faced by the Company. Therefore, the said notice cannot be faulted.

30. The learned Counsel for the Company is right in relying upon 1980 II L.L.J. 444, Industrial Tubes Manufacturing Co.Ltd. V/s. S.R.Samant, Judge, Industrial Court and others. In the said case, the relations between the employer and the employees became strained because of demand for better service conditions. The workmen were alleged to have indulged in go-slow tactics, threats to the officers and acts of assault on the members of the managerial staff and loyal workmen. The workers ultimately went on illegal strike and the complaint was filed by the employer complaining unfair labour practice on the part of the workmen under various Items of Schedule III of the MRTU & PULP Act. The employer also initiated proceeding for a declaration that strike was illegal and the Labour Court granted the requisite declaration. The workmen reported for duty within the stipulated period, but the employer showed reluctance to permit them to join duty unless they executed a bond or undertaking to terminate the strike and assuring that on resumption of work/duties will be performed sincerely and diligently and the normal output would be given and the discipline would be observed. The workmen refused to execute such bond and insisted on joining duty unconditionally and the employer refused to permit them to do so. The Union thereupon filed a complaint alleging unfair labour practice under items 1 and 6 of Schedule II of the MRTU & PULP Act and made an application for interim relief for direction to the employer to allow the workmen to resume duties pending the hearing of the complaint. The question arose whether this amounted to illegal lockout. It was challenged before the Division Bench. The Division Bench held as it became indispensable to enforce lockout due to attitude and actions of workmen and in addition resorting to illegal strike, the employer was justified in insisting upon the bond and hence, the action of the employer does not amount to unfair labour practice.

31. The learned Counsel for the Company submitted that the learned Judge has committed an error in re-appreciating the evidence on record while exercising the writ jurisdiction. In that context, he relied upon the Judgment of the Apex Court in 2000 II CLR 268 Indian Overseas Bank Vs. I.O.B. Staff Canteen Workers Union & Anr. In this case, the question was about status of canteen workers. The canteen was closed and employees thrown out of employment. This was challenged as violative of Section 25-O of the I.D.Act in a reference under Sec.10. The Industrial Tribunal held them to be employees of the Bank and not of the Contractor, Reinstatement of 33 canteen employees was ordered. In Writ Petition, the learned Single Judge set aside the said order. The Division Bench in Appeal restored the order passed by the Industrial Tribunal. The Apex Court approved the same. It was observed in para 17 as under :-

"17. The learned Single Judge seems to have undertaken an exercise, impermissible for him in exercising writ jurisdiction, by liberally reappreciating the evidence and drawing conclusions of his own on pure questions of fact, unmindful, though aware fully, that he is not exercising any appellate jurisdiction over the awards passed by a Tribunal, presided over by a Judicial Officer. The findings of fact recorded by fact finding authority duly constituted for the purpose and which ordinarily should be considered to have become final, cannot be disturbed for the mere reason of having been based on materials or evidence not sufficient or credible in the opinion of the writ Court to warrant those findings, at any rate, as long as they are based upon some material which are relevant for the purpose or even on the ground that there is yet another view which can reasonably and possibly be taken...."

It is to be seen that the learned Single Judge has considered certain circumstances in para 25 for holding whether the Company has acted malafide or the lock-out notice was a colorable device for closure. It was observed that the lock-out notice was issued because the Company was facing serious financial problems, it was pointed out that before the lock-out notice 180 Supervisors and managerial staff were terminated and only few were retained to assist the company in fighting litigation. However, to our query, the learned Counsel for the employees was unable to point out any material as to how many were retained and for what purpose they were retained. It has also not been pointed out which witness has admitted that it was not possible for the Company to run without the said staff. It has also been pointed out that the Company was required to refuse to purchase the raw-materials because of the agitational attitude adopted by the employees leading to financial difficulties. Further, it has also been pointed out that the Company proposed to sell-off the plant and machinery in the Annual General Meeting on 26-9-1997 since it wanted to set-up new type of plant of radial tyres in collaboration with contiential tyres.

32. Then, there is a reference made to para 26 about the reasons given in the lock-out notice. However, on behalf of the Company 8 witnesses were examined who had submitted different reports to substantiate the reasons. On behalf of the employees, only one witness i.e. their Secretary Mr.Pereira was examined. One reason given was that on 18th August 1997 and 23rd August 1997, the workmen of contractors were engaged to load tyres, tubes etc. for despatch for sale, but they were obstructed by the workmen. This was not accepted because the contractors were not examined or the names of the workers who indulged in these acts were not mentioned and, further, no notice or charge-sheet was issued to them. It is further observed that there was no criminal complaint of violence or assault has been lodged in the case. The lock-out notice mentions about giving of threats and the contractor requiring to unload the goods. Similarly, on 23-08-1997 workmen threatened the contractor's workmen for doing the loading work and because of which finished goods could not be dispatched from the factory to the customers. This has affected the flow of funds to the Company and its operations. On 23-08-1997 itself sorting of tyres from bonded warehouses could not be done due to threats to contractor's workmen. On 26-8-1997 the workers refused to fill the carbon black in the bunkar and instigated other workmen not to do the work. The learned Single Judge held that under the settlement this was to be done by the contractor's workers and not by the Company's workmen. However, the evidence on record clearly shows that this work was done by the Company workers earlier. The learned Single Judge mentions about the reports of the Managers submitted and observed that they were prepared to create a case for lock-out. He felt that reports of Site Supervisors should have been submitted. With respect, we find no basis for this. Even it was not the case of the Union that the report should have been submitted by a Site Supervisor. On 27th August 1997, a group of workmen forcibly entered the cabin of the Company's Financial Controller and used abusive language. On 29th August 1997, at 11.30 the Union representative along with 30-40 workmen went to the despatch area and prevented the transporter's workmen from loading the processed material belonging to the CEAT tyres, which was received by the Company for job work. The learned Single Judge after mentioning this observed that there was no allegation of resorting to violence made and hence declined to consider it as a ground. Further, the notice stated that the Company's Chief Executive Officer was receiving threatening telephone calls on Intercom in the factory, as well as his residence threatening him of his life. In this respect, it is observed that this is vague and cannot inspire confidence. But this cannot be accepted. When the said Chief Executive Officer was examined in the Court, he deposed to that effect. Again, there is a mention about two serious incidents which have taken place on 16th September and 20th September, 1997. In the first case, the Union representative entered in the cabin of the Manager (Accounts & Finance) in a threatening manner and asked him to make arrangement for canteen provision as he has allowed the material belonging to M/s. Balkrishna Tyres and CEAT Tyres to be lifted. The said Manager was also threatened that he would not be allowed to leave unless the provisions for canteen were made and he was illegally confined and was allowed to leave when payment of Rs.8500/- was made to the Canteen Supervisor, though there was no authorisation for it. The evidence of the Manager supports this. This has been ignored. In the second incident, 25 to 30 workmen gheroed the cashier in his cabin and forced him to give confidential information regarding receipt and expenditure. The cashier's evidence supports this. In this respect, the learned Single Judge held that there was no physical assault on any of the Supervisor and managerial/administrative personnel. Therefore, he has not accepted this. However, by examining the witnesses and the various reports of the concerned officers, it was proved. It was not necessary to have physical assault by the workmen on the supervisor and administrative staff. Therefore, the conclusion drawn by the learned Single Judge that lock-out was nothing but sham for closure cannot be accepted. The learned Judge has committed an error in appreciating the evidence.

33. It is next submitted that justifiability is of two kinds; at the inception or due to continuation (Statesman Limited and the Workmen - 1976 (1) L.L.J., 484). It is submitted that it was offered before the Industrial Court and before the learned Single Judge that the employees were prepared to give an undertaking of good behaviour. It is submitted that the Industrial Court disregarded this and the learned Single Judge has rightly accepted this. It is submitted that the lock-out has become illegal in view of the said offer. We may note that even before this Court an offer was made by the employees that they are prepared to give up the wages from the date of lock-out till today, but they should be provided immediately with work. It is submitted by the Company that there is a valid reason or justification to refuse the offer. The learned Counsel pointed out that the Company is now a sick industrial Company under the Sick Industrial Companies (Special Provisions) Act 1985 and registered as such (Case No.34 of 1998) before the Board of Industrial and Finance Reconstruction vide Order dated 15-4-1998. The Company has accumulated losses for the period ending 30th September 2000 of about Rs.100 crores and the Company's liability, including contingent liability is to the tune of Rs.200/- crores. The B.I.F.R. on 12-01-2000 directed the operating agency I.F.C.I. to issue advertisement in the newspaper for rehabilitation of the Company. Thereafter, the Report is to be submitted. There is one proposal for rehabilitation submitted to the operating agency. It is under process. Therefore, it is submitted that the Company due to its sickness and total financial inability is not in a position to lift the lock-out without receiving duly sanctioned rehabilitation proposal from the B.I.F.R. It is submitted that the B.I.F.R. may be directed to expedite the hearing and sanction the proposal for rehabilitation without any delay to enable the Company to lift the lock-out in accordance with the sanctioned proposal of the B.I.F.R.

34. Reliance is placed on 1995 II CLR 81. Baburao P.Tawade & Ors. vs. HES Ltd. In this case, workers filed an Application under Section 33-C (2) of the I.D. Act to the Labour Court claiming that they were entitled to get Rs.400/- each as ex-gratia as per the Settlement dated 30.10.82 as they have given production as per norms settled by the Agreement dated 22.9.1979. The contention was raised on behalf of the Company that it has made an application to the B.I.F.R. under Section 15 of the SICA Act in June 1989 and the Scheme for revival of the Company has been sanctioned by the B.I.F.R. on 17.3.1994. Hence, in view of Section 22(1) of the SICA Act, they cannot make the claim. This was negatived by the learned Single Judge of this Court mainly relying upon the Judgment of the Apex Court in the matter of Chamundi Mopedes and other Judgments of the learned Single Judges of this Court reported in AIR 1992 SC page 1439. The Apex Court observed as under :-

"......The Parliament while putting Section 22 of the Act, 1985 could never have intended that the industrial unit under the garb of sickness or for any like difficulty may be allowed to shirk its liability to pay the wages to its workers for the work they have done."

It was held that they were entitled to get the said ex-gratia amount. However, in the present case, there is no question of earned wages involved. During the period of legal lock out or strike the contract between the employer and the employees stands suspended temporarily and there is no question of payment of wages.

35. The learned Counsel for the Company relied upon 1997 II L.L.J. 989, (Supreme Court) Tata Davy Ltd. etc. vs. State of Orissa and Ors. It was held that when the company was declared a sick company under the SICA Act and a scheme was sanctioned by the BIFR, proceedings for attachment of the company's property for arrears of Sales Tax dues can proceed. The question arose whether such proceedings would also be suspended under Section 22(1) of the Act. It was held that those proceedings were also covered and arrears of Sales Tax could not be recovered from the company without first seeking the consent of the BIFR in this behalf. He then relied upon 1997 (2) SCALE 640, Deputy Commissioner Tax Officer & ors. Vs. Corromandal Pharmaceuticals & Ors., 1998 I CLR 997, Girni Kamgar Sagharsha Samiti & 2 Ors. Vs. Khatau Mackanji Spinning & Weaving Co.Ltd. & 8 Ors. It is not necessary to discuss them.

36. Taking into consideration the ratio laid down by the Apex Court, as mentioned above, no direction can be given to lift the lock-out and allow the workers to start working. Further, no direction can be given for payment of wages during the period of lockout in these proceedings. We can only direct the B.I.F.R. to expedite the proposal so that rehabilitation takes place early.

37. In view of the above, it is not necessary to go into the question whether the learned Single Judge was right in denying the wages to the employees for the period from 1-8-1998 to 1-3-1999.

38. Hence, we pass the following Order :-

L.P.A. No.6 of 1999 is allowed. The impugned Judgment and Order is set aside. The application filed by the Union is dismissed. However, the B.I.F.R. is directed to expedite the proposal for rehabilitation.

L.P.A. No.111 of 1999 is dismissed.

A simple copy of this Judgment, duly authenticated by the Sheristedar of this Court, be given to the parties.

Appeal allowed.