Laxmi Starch Limited vs The State of A.P. and Others

T.N.C. Rangarajan, J.—These appeals arise from the order of our learned brother G. Bikshapathy J., declining to entertain the writ petitions challenging G.O.Rt.No.1959 and G.O.Rt.No.1960 both dated 23-8-1995, made under Sections 10(1) and 10(3) respectively of the Industrial Disputes Act.

The appellant is a company having a plant for manufacture of starch at Kundara in Kerala, a processing plant for dextrine at Cochin, a liquid glucose manufacturing plant at Kundara and a plant for manufacture of starches and dextrines at Hyderabad. Due to several adverse conditions, the company became sick in April 1989 and approached BIFR which framed a scheme for rehabilitation appointing ICICI as the operating agency. The proposals did not succeed and a fresh rehabilitation scheme was being considered. By that time the accumulated loss of the company was Rs. 22.78 crores as on 31-3-1994 of which the accumulated loss of Hyderabad Unit alone was Rs. 14.17 crores. Hence, on 9-6-1995 the company put up a notice stating that in spite of its best efforts it was impossible to keep the factory at Hyderabad open, since the power supply had been disconnected on 29-3-1995 and water supply on 25-5-1995 for non-payment of bills. It, therefore, declared a temporary closing-down of the factory and suspension of the manufacturing activity amounting to lock-out of the workmen other than administrative and technical staff and watch and ward. On 30-6-1995 the lock-out was extended to the other managerial and technical staff also. The employees'' union made a representation to the Conciliation Officer on 14-7-1995 claiming that the lock-out was not bona fide and should be lifted. The Concilation Officer reported failure of the conciliation. Thereupon the Government issued the impugned notification by which the following question was referred to the Industrial Tribunal for adjudication. G.O.Rt.No.1959 referred the following question:

"Whether the Laxmi Starch Employees'' Union (Regd. No.B-l96), Nacharam, Hyderabad, is justified in demanding wages for the lock-out period effective from 10-6-1995 ? If so, to what relief the workmen are entitled to?"

Consequently, G.O. Rt. No. 1960 prohibited the further continuance of the lockout.

The management thereupon approached this Court by the said writ petitions contending that the real dispute as to whether The Workers and Staff employed under the Express Newspapers (Pr.) Ltd. and Others Vs. The Management of the Express Newspapers (Pr.) Ltd. Madras and Others, the lock-out was justified, not having been referred, the G.O. prohibiting the continuance of the lock-out was untenable, and relied on the decision of a Bench of this Court in Writ Petition No. 9101 of 1993 dated 2-2-1995. However, the learned single Judge was of the view that a dispute having been already referred, the notification u/s 10(3) of the Act did not suffer from any infirmity and declined to interfere.

In these appeals it was submitted by the learned counsel for the appellant that the learned single Judge had not considered the effect of the decision of the Bench, relied on by him when it had actually followed the decision of the Madras High Court in The Workers and Staff employed under the Express Newspapers (Pr.) Ltd. and Others Vs. The Management of the Express Newspapers (Pr.) Ltd. Madras and Others, which was affirmed by the Supreme Court in The Management of Express Newspapers Ltd. Vs. Workers and Staff Employed under it and Others, . In view of this, we admitted the writ appeals and set down the same for orders. The learned counsel for the respondent-Union submitted that the lock-out is always understood as a retaliatory action of the employer and since the notices issued by the management itself stated that there was no dispute or disharmony between the workmen and the management, this was not a lock-out but a lay-off, which required payment of 50% of the wages.

The position with respect to an order u/s 10(3) of the Act prohibiting the strike or lock-out has been succinctly set out by Krishna Iyer, J., in Delhi Administration, Delhi Vs. Workmen of Edward Keventers and Another, as follows:

"In regard to such disputes as are not referred u/s 10(1), Section 10(3) cannot operate."

The Madras High Court in the case of The Workers and Staff employed under the Express Newspapers (Pr.) Ltd. and Others Vs. The Management of the Express Newspapers (Pr.) Ltd. Madras and Others, observed:

"...............The situation may, of course, be different if the enquiry by the Industrial Tribunal establishes that what has really occurred is a reprisal "lock out" disguised as a closure. But until that is done, the Government should not really use this weapon against the subject and it should be confined to those cases where both the employer and the workmen agree that a strike and consequent lockout have occurred but where each side contends that its action in striking or locking out, as the case may be, is justified and legal."

The Supreme Court affirmed that decision and held:

"............Whenever a serious dispute arises between an employer and his employees in regard to a closure which the employees allege is a lockout, the enquiry which follows is likely to be long and elaborate and the ultimate decision has always to depend on a careful examination of the whole of the relevant evidence. That being so, it seems to us that the course adopted by the Appellate Court in the present proceedings is both proper and appropriate."

In the light of this settled position that unless the real and live dispute is referred an order u/s 10(3) cannot be made. In other words, an order u/s 10(3) is in the nature of an interlocutory direction to effectuate the decision to be given in the dispute that is referred. Even if the question, as referred, is answered in favour of the workmen, it would not lead to the prohibition of the lock-out because the question refers only to the demand of wages and not to the justification for the lock-out. If the question is taken as it is, as held by the Delhi High Court in I.T. Development Corporation v. Delhi Administration (FB)4, both the reference of the question as well as the prohibition of the lock-out u/s 10(3) would have to be struck down.

However, we must take note of the observation of the Supreme Court in Express Newspapers Case (2 supra):

".................Even so, when the question of this kind is raised before the Courts, the Courts must attempt to construe the reference not too technically or in a pedantic manner, but fairly and reasonably."

We are of the considered opinion that if the question referred does not bring out the real issue, it would be appropriate for the Tribunal to reframe the question as was done in that case by the Suprem Court and it is necessary to see whether the question referred in the present case as reframed would justify the issue of the order u/s 10(3). We are, therefore, of the opinion that the question that has been referred must be reframed as follows:

"Whether the suspension of the manufacturing activities of M/s. Laxmi Starch Limited amounted to a closure, lock-out or a lay-off and, consequently, to what relief the workmen are entitled to ?"

Until this question is decided, the order made u/s 10(3) has to be kept in abeyance because the jurisdiction to issue an order u/s 10(3) itself depends upon the finding that the suspension of operations was an unjustified lock-out. Hence, we direct the Industrial Tribunal to adjudicate the above question and give its decision within two months from the date of receipt of this order, and G.O.Rt.No.1960 should be kept in abeyance until then. However, the workmen are entitled to approach the Industrial Tribunal for interim relief, if so advised. With this direction, the writ appeals are disposed of. No costs.