*THE HONOURABLE SRI JUSTICE C.V. RAMULU +W.P. No. 18316 of 2009 %12-03-2010 #Chittivalasa Jute Mills Ltd. ….petitioner Vs. $ The Principal Secretary to Government, Labour Employment Training & Factories Dept., Govt. of A.P. Hyderabad & others. …. Respondents !Counsel for the petitioner: Sri Dammalapati Srinivas Counsel for the Respondents: Sri N. Ashwani Kumar representing Learned Advocate General <Gist : >Head Note: ? Cases referred: 1. 1953 SC Rajasthan 188 2. 1999 (3) LLN 365 3. 1995 (3) ALT 883 (D.B) 4. 2004 (102) FLR 167 THE HON’BLE SRI JUSTICE C.V. RAMULU W.P. No. 18316 of 2009 O R D E R: This writ petition is filed seeking a Mandamus declaring the action of 1st respondent in issuing the impugned G.O.Rt.No.1265 Labour Employment Training and Factories (Lab.I) Department dated 20.8.2009, prohibiting lockout declared by the petitioner-Company in its factory at Chittivalasa village, Bheemunipatnam Mandal, Visakhapatnam District as arbitrary, illegal and violative of principles of natural justice; consequently, to set aside the said G.O. Petitioner is the Management of M/s Chittivalasa Jute Mills Limited, Chittivalasa, Bheemunipatnam Mandal, Visakhapatnam District. According to the petitioner, it manufactures jute products and about five thousand workers are employed in it. The financial position of the jute mill is not so sound. They are in crisis in view of competition with polythene bags. There are various industries, which were previously using jute bags for package of the products manufactured by them, now using polythene bags. Thus, the financial position of the jute industry has become precarious. Only the most efficient and low cost production mills are likely to survive. Further, there is acute shortage of raw material – jute and multi-fold rise in the price of raw- material year after year. Whereas, there is no proportionate increase in the unit price of finished product, to commensurate with the increase in the cost of raw-material. Thus, the petitioner-company was incurring heavy losses, year after year. Therefore, it became imperative on the part of the petitioner-company to reduce overheads including cost of production in all fronts, by taking various remedial measures by way of reorganization, re-engineering, rationalization etc. on par with other jute mills in India, to compete with the market and survive in the business. While that being so, the Eastern Power Distribution Company Limited (EPDCL) imposed power cuts for the industries, with effect from 9.3.2009, including the petitioner-company, with proposal to give power holidays for two days continuously and also imposed restrictions not to consume power between 18.00 hours and 23.00 hours daily, until further orders. In order to overcome the power cut imposed by EPDCL, petitioner-company was left with no other option but to reorganize the shifts in the factory, for the optimum utilization of manpower and machinery during the time of supply of power. It is very costly affair to carry manufacturing operation with alternative fuel in the absence of power supply. Therefore, in order to minimize the losses, the petitioner-company reorganized the shifts in the factory by reducing the shifts, from three to two, w.e.f. 20.4.2009, in accordance with Section G (1) of Certified Standing Orders of the Company and also as per Clause 4 of the Settlement under Section 12(3) of the I.D. Act, 1947 between the petitioner-company and the then recognized Union, dated 23.8.1996. Accordingly, the petitioner-Company displayed a notice about reduction of shifts from three to two, by notice dated 18.4.2009 i.e. Saturday. On Monday i.e. 20.4.2009, the workmen, instead of reporting to duty as per the revised shift timings, reported as per the earlier shift timings, created unruly situation and attempted the following acts: 1. Stopped working after reporting to duty by marking their attendance. 2. Threatened the Supervisory and Managerial Staff when they were asked to work and stop stay-in- strike. 3. The workers, who were not on duty, forcibly entered the factory by crashing and damaging the gate. 4. Threatened to cause damage to the property of the petitioner-Company. 5. Created violent, scare and fearful atmosphere, causing serious threat to the lives of the staff and management; and at the request of the petitioner-Company, police were deployed to control the violent and errant workmen, to restore peace and tranquility and protect the property and personnel of the petitioner-Company. Since the workmen were on strike, petitioner-Company was left with no other option but to take a decision to declare lockout, to prevent the posed damage and threat to the property and personnel of the petitioner-Company and also to protect the property of the petitioner- Company from sabotage and damage, on 20.4.2009 with effect from 10 p.m. The circumstances under which it was compelled to declare lockout were categorically explained in the notice dated 20.4.2009. Criminal Prosecution was launched against six workers in C.C. No. 98 of 2009 on the file of the learned Judicial First Class Magistrate, Bheemunipatnam. 4th respondent intervened and convened conciliation meeting between the management of the petitioner- Company and the Union, to restore peace and promote amicable settlement. Since the conciliation failed due to adamant attitude of office bearers of the Union, the failure report was sent to 3rd respondent and, in turn, 3rd respondent referred the matter for industrial adjudication, to the Industrial Tribunal-cum-Labour Court, Visakhapatnam, vide proceedings No.L1/6510/09 dated 6.8.2009. The issue that was referred for industrial adjudication was: “Whether the lockout reported to have been declared by the management of Chittivalasa Jute Mills Private Limited, Chittivalasa, Visakhapatnam District vide their lockout order dated 20.4.2009 from 10.00 a.m. onwards on the plea that the workmen resorted to stay in strike from 10.00 a.m. to 2.00 p.m. on the same day is illegal and arbitrative and unjustified as contended by the Union? To what relief the workmen are entitled to?” During pendency of the said adjudication by the Industrial Tribunal, while exercising the powers under Section 10(3) of the I.D.Act, the Government of Andhra Pradesh, vide G.O.Rt.No.1265 [Labour, Employment, Training and Factories (Lab.I)] Department dated 20.8.2009, prohibited continuance of lockout in Chittivalasa Jute Mill Private Limited, Chittivalasa, Visakhapatnam, to safeguard the interest of the workers of the petitioner-Company. This G.O.Rt.No.1265 dated 20.8.2009 is impugned in the present writ petition. The respondents have filed counter affidavit denying the allegations made by the petitioner. Further it is stated that pursuant to the notice issued by the petitioner on 18.4.2009 regarding change in shift timings and another notice of lockout on 20.4.2009 declaring lockout of the petitioner-Company, the Joint Commissioner of Labour, Visakhapatnam, intervened and conciliated the matter with the parties and accordingly submitted report to the Addl. Commissioner of Labour, Andhra Pradesh, requesting the latter to refer the issue relating to lockout for reference and to take steps to prohibit the lockout. Accordingly, 3rd respondent – Addl. Commissioner of Labour referred the issue of lockout for adjudication to the Industrial Tribunal-cum- Labour Court, Visakhapatnam, as noticed above. The 2nd respondent submitted proposals to 1st respondent to issue orders prohibiting continuance of lockout in petitioner-Company with immediate effect. Accordingly, 1st respondent issued impugned orders prohibiting continuance of lockout under Section 10(3) of the I.D. Act, with immediate effect. Thus, the issue referred for adjudication is as to whether the declaration of lockout by the petitioner is arbitrary and illegal as contended by the Union, whereas, the impugned order is for prohibition of continuance of lockout. Therefore, the impugned order, which relates to continuance of lockout, is proper and justified and it is within the ambit of Section 10(3) of the Industrial Disputes Act. Heard both sides and perused the impugned order and other material made available on record. While reiterating the averments as noticed above in the affidavit filed in support of the writ petition, Sri Dammalapati Srinivas, learned counsel for the petitioner, submitted that invocation of powers under Section 10(3) of the I.D. Act by the Government was unwarranted and not permissible in the facts and cir facts and circumstances of the case. Once the dispute is referred to the Industrial Tribunal for its adjudication by framing an issue, during pendency of that adjudication, invoking the provisions of Section 10(3) of the I.D. Act does not arise. The provisions of Section 10(3) of the Act can be invoked only in a case where the dispute (issue) referred to and the lockout are not one and the same. In this case, the issue referred to the Labour Court for its adjudication is as to the justification of the lockout and, unless and until the said issue is decided by the Labour Court, the Government cannot invoke its powers under Section 10(3) of the Act and prohibit continuance of lockout. The purport of Section 10 (3) of the Act is not so. According to the learned counsel for the petitioner, the provisions of Section 10(3) of the Act can be invoked only in a situation where some other dispute was referred for industrial adjudication and in the meanwhile lockout was declared by the Management. Only under such circumstances, Section 10(3) can be invoked and not otherwise. On the other hand, it is contended by the learned counsel Sri N. Ashwani Kumar, representing the learned Advocate General appearing for the respondents, that the issue that was referred to the Industrial Tribunal for adjudication is altogether different from that of the lockout. In this case, the lockout had arisen in view of stay- in-strike by the members of the Union. Further, 4th respondent conducted conciliation proceedings and on its failure, submitted a report to the Government and, in turn, the Government had referred the mater for industrial adjudication, framing the above noticed issue. Thus, the issue before the Labour Court is as to the justification in declaring such lockout on the plea that the workmen resorted to stay- in-strike from 10 a.m. to 2 p.m. on 20.4.2009. Thus, first the workmen resorted to stay-in-strike and, thereafter, lockout was declared. This lockout was not declared on account of any financial crisis or other reasons furnished in the affidavit filed by the petitioner-Company. The strike was emanated in view of sudden change in the working hours of the employees and shift timings, which was never discussed with the Union, nor any notice as required under Section 9-A of the I.D. Act was issued. The petitioner-Company has five thousand workers and if it wanted to change the timings, firstly it could have discussed the matter with the Union. Secondly, it could have even got permission from the Government to reduce the work force, wherever necessary. Instead of that, the petitioner-Company has adopted a novel method of changing shift timings by itself on the ground of cut in the power supply. When there was unrest, the Management had decided to do away with the workers by declaring lockout. Therefore, there are no merits in the writ petition and the same is liable to be dismissed. In support of his contention, the learned counsel for the petitioner relied upon the following decisions and submitted that the subject matter of the referred dispute and the lockout were one and the same and therefore the Government ought not to have invoked Section 10(3) of the I.D. Act. 1. M.K. Mills v. State of Rajasthan[1]. 2. Badri Narayan saha and another v. Union of India[2] 3. W.A. No. 777 of 2007 & Batch dated 10.12.2007of Madras High Court. Whereas, Sri N. Ashwani Kumar, learned counsel representing the learned Advocate General, relied upon the following decisions in support of his contentions: 1. Laxmi Starch Ltd. V. State of A.P.[3], wherein it is held: 5. The position with respect to an order under Section 10(3) of the Act prohibiting the strike or lock-out has been succinctly set out by Krishna Iyer, J., in Delhi Administration v. Workmen of Edward Keventers and Anr., (1978)IILLJ209SC as follows: "In regard to such disputes as are not referred under Section 10(1), Section 10(3) cannot operate." The Madras High Court in the case of Express Newspapers, 1960 (1)LLJ 351 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 under Section 10(3) cannot be made. In other words, an order under Section 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 under Section 10(3) would have to be struck down”. 2. W.A. No. 777 of 2007 and Batch dated 10.12.2007, para 10, of Madras High Court, wherein it is held: “From the plain language of Section 10(3) and the observation made by the different Courts and the Supreme Court, it will be evident that the State Government has power to invoke Section 10(3) if an industrial dispute has been referred and in connection with the referred dispute a strike or lockout is in existence on the date of reference. If the competent Government feels necessity to prohibit a strike or lockout for maintaining industrial peace and for proper adjudication of the dispute, it can do so on deliberation of merit of such disputed demand, but such order being administrative in nature, no prior notice is called for before issuance of such order under Section 10(3) of the Act”. In M.K. Mills’s case (supra), it was held that a strike or lock-out which is itself a dispute would not justify an order under Section 10(3) for its prohibition because the language of Section 10(3) requires that a strike or lock-out should be in connection with a dispute, that an order for its prohibition might be made by the Government. Where the strike is not in connection with a dispute but is itself a dispute the matter is quite different and would not justify an order of prohibition. The discretion of the Government therefore which has been exercised in that case in making an order of prohibition is beyond the scope of Section 10(3). Likewise, in Badri Narayan saha’s case (supra), wherein the judgment of Madras High Court was relied upon, it was held that the action of Government under Section 10(3) of the Act was misconceived in this peculiar case. Clearly, what the Legislature intended by enacting this sub-section was to clothe the Government, with emergency powers, where the continuance of the strike or lock- out, as the case may be, threatened public safety. Where the very fact of lock-out is in dispute, and the employer claims to have closed down his business for good, the use of this power is clearly improper and erroneous; virtually it amounts to a coercion of the employer to continue in his business, notwithstanding his intention to close down, and that is contrary to law. In Laxmi Starch Ltd.’s case (supra), the proposition is that an order under Section 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 under Section 10(3) would have to be struck down. Further, as per the judgment of the Madras High Court in W.A. No. 777 of 2007 and Batch dated 10.12.2007, if the competent Government feels necessity to prohibit a strike or lockout for maintaining industrial peace and for proper adjudication of the dispute, it can do so on deliberation of merit of such disputed demand, but such order being administrative in nature, no prior notice is called for before issuance of such order under Section 10(3) of the Act. It may be apt to notice here the commentary from the book “The Law of Industrial Disputes” by Mr.O.P. Malhotra, Vol.2, IV Edn. at page 639, which reads as under: “Sub-Section (3) of Section 10 of I.D. Act prohibits the commencement and continuance of strikes and lockouts in certain circumstances for achieving its object, viz., the investigation and settlement of ‘industrial disputes’ in a peaceful atmosphere. S.10(3) and S.10-A(4-A) empower the appropriate Government to prohibit the continuance of strikes. The pre-conditions to the exercise of the power under this sub- section are: (i) an ‘industrial’ dispute should have been referred to a Board, Labour Court, Tribunal or National Tribunal under Section 10 or Arbitrator under Section 10-A, and (ii) on the date of the reference there should be a strike or lockout in existence in connection with such dispute. When these two conditions are existing, the appropriate Government has the power to prohibit by order the continuance of such strike or lockout. The words “the appropriate Government may by order”, indicate that unless the appropriate Government makes the prohibitory order, the strike or lockout will not be automatically prohibited. The power, therefore, has to be exercised by the Government in its discretion. Further, it may be necessary to examine the Statement of Objects and Reasons (Act 14 of 1947) for the purpose of understanding the true intention of Section 10(3) of the I.D. Act, wherein it is stated; “Another important new feature of the Bill relates to the prohibition of strikes and lock-outs during the pendency of conciliation and adjudication proceedings of settlements reached in the course of conciliation proceedings and of awards of Industrial Tribunals declared binding by the appropriate Government. The underlying argument is that where a dispute has been referred to conciliation for adjudication, a strike or lock- out in furtherance thereof, is both unnecessary and inexpedient. Where on the date of reference to conciliation or adjudication, a strike or lock-out is already in existence, power is given to the appropriate Government to prohibit its continuance lest the chances of settlement or speedy determination of the dispute should be jeopardized.” As seen from the aims and objects of the Act, it is clear that the underlying intention of Sub-section (3) of Section 10 of the I.D. Act is that where a dispute has been referred to conciliation for adjudication, a strike or lock-out in furtherance thereof is both unnecessary and inexpedient. Where on the date of reference to conciliation or adjudication, a strike or lock-out is already in existence, power is given to the appropriate Government to prohibit its continuance lest the chances of settlement or speedy determination of the dispute should be jeopardized. Section 10(3) of the Industrial Disputes Act says that “where an industrial dispute has been referred to a Board, (Labour Court, Tribunal or National Tribunal under this Section, the appropriate Government may by order prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference”. From a bare look at Sub-Section (3) of Section 10 of the Act, it is clear that a lockout or a strike is liable to be prohibited, if the same was continuing as on the date of referring a matter for industrial adjudication and being continued thereafter. Such lockout can never be said to be in the interest of industrial peace. Therefore, what is to be seen is, that an industrial dispute should have been referred to a Board, Labour Court, Tribunal or a National Tribunal under Section 10 or Arbitrator under Section 10-A of the Industrial Disputes Act, and, as on the date of reference, there should have been a strike or lockout in existence in connection with such dispute. Thus, the substance of sub-section (3) of Section 10 is as to prohibition of continuance of lock-out or strike which was existing on the date of reference of the dispute. In this case, admittedly, as on the date of reference to the Labour Court by the Government, lock-out was in existence. The Government examined as to whether the continuance should be allowed or should be prohibited in the interest of industrial peace. The prohibition of continuance of a lock- out is the purpose of the Act. Further, the existence of an industrial dispute as on the date of reference to the Industrial Tribunal and continuation of lock-out at that point of time is important to consider for invocation of Section 10(3) of the I.D. Act. Further, in the instant case, the reference was whether the lock-out reported to have been declared by the management on the plea that the workmen resorted to stay in strike from 10 a.m. to 2 p.m. on 20.4.2009 was arbitrary, illegal and unjust as contended by the Union. Thus, what was referred to was, as to whether the declaration of lock-out on the plea that the workmen resorted to stay in strike was justified or not. Therefore, it cannot be said that under Section 10(3) of the I.D. Act, the Government cannot prohibit continuation of lock-out during the pendency of dispute. I am further of the considered opinion that even if the subject matter of reference was the adjudication as to the validity of declaration of lock-out by the management, even then the Government cannot be restrained from prohibiting the continuance of such strike, which was in existence as on the date of reference. Particularly, in the case on hand, wherein the lock-out was ordered on 20.4.2009 and it is about a year now, the Government in its discretion has issued G.O.Rt.No.1265 dated 20.8.2009 prohibiting continuation of strike. This cannot be said to be not in the interest of industrial peace and is not in consonance with Sub-section (3) of Section 10 of the I.D. Act. In the case on hand, admittedly, in view of sudden change in the working conditions, the strike was organized and that resulted in declaration of lockout. Except this, no other plausible reason was furnished to justify the lockout. Such lockout as stated by the respondents, has emanated from change in shift timings and stay- in-strike by the workers and it was not the lockout which was first declared by the Management. The Management declared lockout after all these incidents, to avoid further complications, but it cannot be countenanced to say that the Management, in view of financial crises and suffering of losses as such has declared the lockout. In view of pendency of reference and to bring an amicable settlement and industrial peace, the Government has rightly prohibited the lockout by invoking the powers vested in it under Section 10 (3) of the Act. It is very interesting to notice that a similar question as to whether the Government