CWP No.17452 of 2006 1 IN THE HIGH COURT OF PUNJAB & HARYANA, CHANDIGARH CWP No.17452 of 2006 Date of decision October 13, 2009 M/s Inde Enterprises Pvt. Ltd. Chandigarh ....... Petitioner Versus The Presiding Officer, Industrial Tribunal, Ambala and another ........ Respondents CORAM: HON'BLE MR. JUSTICE K. KANNAN Present:- Mr. Arun Jain, Senior Advocate with Mr. Amit Jain, Advocate and Mr. Pawan Kumar Mutneja, Advocate with Mr. S. S. Sudan, Advocate for the petitioner. Mr. Dinesh Kumar, Advocate for the respondents. **** 1. Whether reporters of local newspapers may be allowed to see the judgment ? Yes 2. To be referred to the reporters or not? Yes 3. Whether the judgment should be reported in the digest? Yes **** K. Kannan, J. I The subject of reference for adjudication and the respective contention of parties. 1. By the impugned award, the Labour Court answered the reference in favour of the 'Worker's union' granting the relief of reinstatement with continuity of service and back wages to seven workmen belonging to the said Union. The reference was whether the claim by the workmen made in the general demand notice dated 7.7.2000 was justified or not and further whether the lock out dated 19.8.2000 was justified or not and if not, to what relief were they entitled. As regards the CWP No.17452 of 2006 2 first subject of reference no evidence had been placed by the workmen relating to the demands in the notice dated 7.7.2000. The whole focus for consideration before the Labour Court was whether the lock out dated 18.8.2000 was justified or not. The specific contention made by the workmen in the claim statement was that the services of several workmen had been illegally terminated and the Management was indulging in illegal victimization of the workmen. The workmen had in the general body meeting decided on a strike and issued 14 days clear cut notice on 19.8.2000 informing the Management of their decision to resort to strike if the demands had not been acceded to. The strike was to be effective from 2.9.2000 if the demands were not met. It was merely an expression of possible course of action but according to the workmen they had themselves not indulged in any strike. The contention of the workmen was that the Management had immediately resorted to lock out effective from 19.8.2000 and falsely putting the blame on the workmen that they had resorted to strike. The claim statement was to declare that the lock out dated 19.8.2000 was illegal and unjustified. The contentions raised by the Management in the written statement were that the workers who were prosecuting the claim through Unions were actually third parties and all the 'concerned workmen' had already taken the full and final dues. The Company was lying closed and hence the workmen could not demand reinstatement as no work existed with the respondent. II. Continuation of Lock out ordered to be prohibited; Management's plea was that the factory was already closed. 2. It is a matter of record which is not disputed that the reference had been made by the Government to the Labour Court by its proceedings on 3.2.2001. A day earlier to the order of reference under Section 10 (3) of the Industrial Disputes Act, 1947 (hereinafter referred to as the 'Act'), i.e on 2.2.2001 the Government had also passed an order CWP No.17452 of 2006 3 prohibiting the continuation of lock out declared by the Management. It is a matter of record that the Management did not itself deny that there had been no lock out. It was contending for a still worse situation that the factory had actually been closed and several workmen had received compensation and had left. The Government had treated the continuation of the lock out as a further aggravation of the express directions given under Section 10 (3) and proceeded to pass an order on 13.8.2001 authorizing the Labour Inspector, Panchkula to lodge a complaint in the Court of competent jurisdiction under Section 22 (6) (2) read with Section 24 (i) (ii) of the Act against the Management being responsible for violation of provisions of the Act. Proceedings had indeed been taken up before the Chief Judicial Magistrate, Panchkula and it was in evidence that the Management had admitted the offence and also paid some fine. III Disposition before the Labour Court 3. The Labour Court found that there had been no justification for continuation of lock out and considering the position that the Management had also admitted guilt before the Chief Judicial Magistrate, the Labour court found that the contention of the Management that they had closed the factory was illegal and unjustified. It found further that such a closure which had been made without resort to the provisions under Section 25 (O) of the Act was bad and directed the workmen to be reinstated under Section 25 (o) (6) of the Act. IV. Grounds of challenge by Management. 4. The award passed by the Labour Court is assailed before this Court on grounds inter alia; i) the prosecution of the petition before the Labour Court by an unregistered Trade Union was no competent and a direction given in favour of the seven workmen was therefore, not justified; ii) The reference before the Labour Court by the Government was with regard to the justification or otherwise of the lock out alleged to CWP No.17452 of 2006 4 have been made on 19.8.2000 and the Labour Court was acting in excess of jurisdiction by entering a finding that the closure had been illegal and directing the reinstatement of the workmen under Section 25 (O) (6) of the Act. iii) that the Management had taken up in defence the plea that the factory itself had been closed. The Labour Court ought not to have continued the reference and must have closed it and left to the liberty of the workmen to seek for an adjudication whether the closure was justified or not. The finding rendered by the Labour Court that the closure was illegal was clearly beyond competence of Labour Court. (a) Reference through unregistered Union- Maintainability 5. As regards the maintainability of the reference and the prosecution of the case at the instance of the unregistered Union, learned counsel relies on the decision of the Hon'ble Supreme Court in B. Srinivasa Reddy Vs. Karnataka Urban Water Supply and Drainage Board Employees' Union 2006 (8) JT 293 (SC) that the writ petition filed at the instance of an unregistered Union is not maintainable. It should be noticed that in the decision of the Hon'ble Supreme Court, the prosecution of a writ petition under Article 227 of the Constitution by an unregistered Union was found to be incompetent. In this case, it is the Management which is in the writ challenging the award and the union is not the petitioner prosecuting the writ petition. Again the said decision was rendered in the context of interpreting Section 36 of the Act read with Section 2 (qq) which defines a Trade Union to be registered Trade Union under the Trade Union Act. The power to represent which Section 36 contemplates the conduct of proceedings before the Labour Court as an authorized representative. In my view, there is a lot of difference between a right to seek reference which is under Section 10 (2) of the Act and the representation under Section 36 of the Act. Section 2 (qq) which was CWP No.17452 of 2006 5 introduced in the statute through Act 49 of 1984 did not contemplate all types of situation which Section 10 specifically contemplates. The latter Section makes provision for reference to disputes to Board, Courts or Tribunals. Section 2 (k) of the Act defines an industrial dispute and reading it with Section 10, the Government will be competent to refer an industrial dispute for adjudication before a Labour Court on Tribunal or Board any matter connected with employment or non-employment or the terms of employment or with the condition of labour, of any person. The satisfaction of the appropriate government under Section 10 (2) shall depend on the satisfaction that the persons applying represent the majority of each party. In this case, Union although was unregistered it had specifically convassed the grievance of 82 workmen all of whose names find mention in the demand notice. At all times, the Management had been dealing only with representations of Union although it was unregistered. The issue that the unregistered Union could not have sought for a reference or the case could not have been prosecuted by the Union was itself not taken as an objection by the Management only because it knew at all times that the Union was espousing the cause of a sizeable specified number of workmen the details of whom were well known to the Management. 6. A reference of a dispute under Section 10 will not in any way be rendered invalid by the fact that the Union which is named as a party is unregistered Union. The amendment Act 49 of 1984 did not invalidate or set a new paradigm for the manner of raising a dispute or the power of government to make a reference at the instance of an unregistered Union. A four member judgment of the Hon'ble Supreme Court in State of Bihar Vs. Kripa Shakar Jaiswal 1961 (1) LLJ 334 laid down, “ It would be an erroneous view if it were said that for a dispute to constitute an industrial dispute it is a requisite condition that it should be sponsored by a recognized union or that all the workmen of an industrial CWP No.17452 of 2006 6 establishment should be parties to it. A dispute becomes an industrial dispute even where it is sponsored by a Union which even where it is sponsored by a union which is not registered as in the instant case or where the dispute raises is by some only of the workmen because in either case the matter falls within Ss 18 (3) (a) and 18 (13) (d) of the Act.” The binding nature of an award or a settlement as contemplated under Section 18 includes, inter alia all parties to the Industrial dispute that include all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. 7. Still later, a 3 member judgment of the Hon'ble Supreme Court held in Pradip Lamp Works, Patna Vs. Workmen of Pradip Lam Works, Patna and another 1972 (I) LLJ 507, following its own earlier judgment in Workmen of Indian Express Vs. Management 1969 (1) SCC 228, said, “ it cannot be said that merely because the dispute was not sponsored b the registered union it was not an industrial dispute. Even though the new union was not registered there was evidence to show that substantial number of workmen who are members of the new union espoused the dispute relating to the dismissal of ten workmen and that legal position is that espousal of a dispute before a reference is made even by a minority union having a membership of substantial number of workmen is sufficient to make such a dispute an industrial dispute. It was therefore held that the dispute espoused by the new unregistered union was an industrial dispute and the reference was competent. To the same effect was the decision of an earlier judgment of the Hon'ble Supreme Court in Newpapers Ltd. Allahabad Vs. State Industrial Tribunal reported in 1960 (II) LLJ 37 . 8. The essential difference under Section 10 and CWP No.17452 of 2006 7 Section 36 is the former contemplates the circumstances, factors and scope of reference of an Industrial dispute, while Section 36 deals with a post-reference scenario and a right of representation before the Court or Tribunal or Board. An interdict that the Hon'ble Supreme Court finds in B. Srinivasa Reddy's case (supra) is with reference to prosecution of a writ petition under Article 226/227 by unregistered Union and it is not same as participation in a proceedings as a respondent and as a party that obtained reference by the Government. The objection regarding maintainability of filing the claim statement before the Labour Court at the instance of an unregistered Union is therefore without any substance. The reference to the decision of the Hon'ble Supreme Court in B. Srinivasa Reddy's case (supra) such a context is irrelevant. The other decisions of the Hon'ble Supreme Court in Kripa Shankar Jaiswal, Express News papers and Pradip Lamp's cases (supra) still govern the field. (b) Lock-out, validity and justification 9. Learned counsel sought to contend that there was no lock out at all and that further the Labour Court had not adjudicated anywhere about the justification for the lock out on 19.8.2000. According to the learned counsel appearing for the petitioner the Labour Court had misdirected itself into the status of the industrial establishment as having been closed illegally and proceeded to award relief to the workman under Section 25(O) (6) of the Act. The learned counsel refers to a decision of the Hon'ble Supreme Court in Pottery Mazdoor Panchayat Vs. Perfect Pottery Co. Ltd. And another (1979) 3 SCC 762 for the proposition that controversy cannot go beyond the terms of reference made under the Act and if the reference was whether the lock out was justified or not, the Labour Court could not have decided on the alleged legality of the closure. Learned counsel also convasses for a position that as soon as a case of closure was put up in defence the Labour Court ought to have closed the CWP No.17452 of 2006 8 reference and directed the parties to seek an adjudication on whether the closure was justified or not. He cites in support of his contention the decision of the Hon'ble Supreme Court in J.K. Synthetics Vs. Rajasthan Trade Union Kendra and others (2001) 2 SCC 87. (c) Extent of traversal in a reference- reference regarding lock-out whether Court could discuss closure. 10. The reference to the latter decision in J.K.Synthetics is rather strange because it sets out the law quite contrary to the proposition convassed by the counsel for the petitioner. In J.K.Synthetics'case (supra) the Court was considering the issue whether the retrenchment complained of was illegal. The Management had contended in defence that there had been a closure of one Unit of the establishment and wanted to justify the retrenchment on such a ground. The Labour Court and the High Court refused to consider the issue of closure as pleaded in defence by an approach that a point that was not referred to could not have been adjudicated upon. It was in that context that the Hon'ble Supreme Court held that if the justification for retrenchment was a point in reference and the Management was trying to prove its justification by the fact that it was closed, the Labour Court was not without authority to render an adjudication on what was an obvious corollary to a point referred to the Labour Court. If at all, this judgment makes untenable the argument of the learned counsel for the petitioner that the Labour Court could not have decided on the illegality of closure in a case where the workman had been pleading for the unjustifiable conduct of the Management in declaring the lock out. It was not as if the workman were contending for position that the Management had closed the factory and sought for adjudication whether such closure was justified or not. On the other hand, in a case where the lock out was sought to be justified, the Management stated in defence a further precipitative fact that the CWP No.17452 of 2006 9 Company had even closed and that therefore it was not possible to reinstate the workmen. The Labour Court was again not rendering an adjudication on a point that was irrelevant. It had to consider the unjustifiablility of the lock out by pointing out that even the closure as contended by the Management had not been done by following any of the relevant provisions under Section 25 (O) of the Act. 11. If the point for an adjudication was whether the lock out was justified or not, the Management had by their own explicit conduct made otiose the need for any roving enquiry for arriving at the conclusion. In fact it is a matter of admission that their conduct resulted in the government to take action by a complaint before the Chief Judicial Magistrate for violation of order of the Government under Section 10(3) and for continuing the lock out in violation of Section 24 (i) & (ii). Prosecution had been taken against the Management under Section 34 of the Act. All this made clear the fact that the lock out did subsist and that it was being continued without any justification. Even if the Labour Court had not stated so in as many words, on the admitted facts through documents, I have no difficulty in upholding the reference in favour of the workman that there was no justification in the lock out on 19.8.2000. I have already pointed out that the Management had not denied that there was lock out on 19.8.2000. On the other hand, it sought to contend i) that the workmen had resorted to illegal strike which was evident effective from a Civil Court injunction order restraining the workman from doing any acts of sabotage within a radius of 100 yards from the factory. ii) by the fact that the factory itself had been closed and several workman had received compensation. Both the statements in defence were untenable. The order of injunction that the Civil Court granted in favour of the Management against workman from causing any acts of sabotage will not mean that the workman had resorted to any illegal strike. The illegality of strike itself was not shown to be a CWP No.17452 of 2006 10 point of adjudication before the Civil Court. Indeed it should not have even been a point of adjudication which was essentially a jurisdictional issue only before the Labour Court. Even the contention that many other workman had received compensation after the closure is not necessarily a consequence to the justification of a lock-out. If some of the workman had received some compensation by treating the factory as closed it might bind them but not the workman who had no part to such a compromise or settlement. 12. At some stage of proceedings on 13.7.2009 the Management made an offer to give some compensation to the workman to consider the claim of the workman. After a few hearings, the offer of compensation was not accepted by the workman and even before the commencement of the proceedings, in view of the stand taken by the Management that they had closed the factory, I had sought the counsel to examine the issue whether the workman could not be reasonably compensated. The Management pressed for an adjudication on merits on issues which are simply unacceptable on contentions which are lame; on legal statements that have no legs to stand. After the case was reserved for judgment, the Management came up with some offers which were not acceptable by the workmen. So much, for the seriousness of approach for the Management. 13. The award of the Labour Court is fully jsutified but it shall only suffer a modification to the extent that the workman's right of reinstatement does not obtain through any relief under Section 25 (O) (6) but on the basis that there is no closure in the eye of law. The workman shall be paid the full wages for all the period when they have been denied their employment. Admittedly, there is no order of the Government for closure and the workmen therefore are entitled to treat themselves to be in employment as such. The writ petition is a wholly vexatious exercise CWP No.17452 of 2006 11 and not a bona fide one. 14. The seven workmen who have presented their claims through the Union shall be paid the amounts that stand due, as if they continue in employment till date with interest at 9% per annum from the respective dates when their respective salaries fell due and the liability shall subsist so long as the legal relationships of master and servant subsist, provided however, death or lawful termination precedes the event. The writ petition is dismissed with costs assessed at Rs.10,000/-. (K. KANNAN) JUDGE October 13, 2009 archana