*THE HONOURABLE SRI JUSTICE SANJAY KUMAR +W.P.NO.19703 OF 1999 %27-02-2009 # Mangement of Assam Carbon Products Limited. Represented by its Commercial Manger, Patancheru, Hyderabad. … Petitioner Vs. $ Industrial Tribunal-I, Rep by its Presiding Officer, Hyderabad, and others. … Respondents <GIST: >HEAD NOTE : ! Counsel for petitioner: Smt.Kalpana Ekbote ^ Counsel for respondents : G.Vidya Sagar G.P. for Labour ? CASES REFERRED : 1. (1990) 4 SUPREME COURT CASES 744 2. (1996) 11 SUPREME COURT CASES 319 3. AIR 1976 SUPREME COURT 758 4. AIR 1963 SC 528 5. 1998(79) FLR 343 6. (1999) 101 BOMLR 668 7. 2001(91) FLR 469 8. AIR1960 SC 893 IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY SEVENTH DAY OF FEBRUARY TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE SANJAY KUMAR WRIT PETITION No.19703 OF 1999 Between: Mangement of Assam Carbon Products Limited. Represented by its Commercial Manger, Patancheru, Hyderabad. ..... PETITIONER AND 1 Industrial Tribunal-I, Rep by its Presiding Officer, Hyderabad. 2 The General Secretary, Assam Carbon Employees Union No.19, Patancheru, Medak District. 3 State of A.P., Rep by its Secretary, Labour, Employment Training Factories (Lab-1) Department, Secretariat, Hyderabad. .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed herein the High Court may be pleased to issue a writ, order or direction in the nature of Certiorari or otherwise, calling for the records of the first respondent relating to I.D.No.7 of 1998 dated 11.05.1999 and further be pleased to declare the same as ultra virus the Industrial Disputes Act and unenforceable and be pleased to pass such other order or orders as the Honourable Court may deem fit and proper in the circumstances of the case. Counsel for the Petitioner : SMT.KALPANA EKBOTE Counsel for the Respondents: SRI G.VIDYA SAGAR GP FOR LABOUR The Court made the following : THE HONOURABLE SRI JUSTICE SANJAY KUMAR WRIT PETITION NO.19703 OF 1999 O R D E R The Management of Assam Carbon Products Limited, Patancheru, Hyderabad, (for brevity, ‘the Management’), assails the Award dated 11.05.1999 passed by the Industrial Tribunal-I, Hyderabad, (for brevity, ‘the Tribunal’), in I.D.No.7 of 1998. By the said Award the Tribunal answered the reference made to it under Section 10(1)(d) of the Industrial Disputes Act, 1947 (for brevity, ‘the Act of 1947’) holding that the Management was liable to pay wages to the workmen belonging to the Assam Carbon Employees Union, Patancheru, (for brevity, ‘the Union’) for the lock-out period, that is, from 03.10.1996 to 11.12.1996. The facts in brief: The earlier wage settlement entered into by and between the Management and the Union came to an end in the year 1995. Thereafter, there appear to have been negotiations and agitational activities with regard to various demands raised by the Union for the benefit of the workmen. A Memorandum of Understanding (for brevity, ‘the MoU’) was entered into on 30.04.1996 by the Management and the Union on the basis of the conciliation by the Assistant Commissioner of Labour, Patancheru. Various terms and conditions were embodied in the said MoU. Clauses 5 and 6 of the said terms and conditions read as hereunder: “Clause - 5 : The workmen have assured that they will continue normal production and the Union/Workmen have further assured the Management that they will, with full effort, make good the loss of production caused due to go-slow tactics by giving extra production during normal working hours within a reasonable time. Clause – 6 : It is agreed by the Union/Workmen that they will maintain total discipline regarding production and will not take any decision without prior information to the Management and work according to instruction of the superiors and they will individually fill-up the daily production reports and handover to the supervisors duly signed at the end of the working hours and the Management will also cooperate with the workmen to achieve the normal production and all other allied matters.” The above MoU was marked as Ex.M.2 in the proceedings before the Tribunal. Thereafter, according to the Management, the workmen continued to resort to various agitational measures contrary to the above clauses of the MoU dated 30.04.1996 while the Union denied the same and made allegations against the Management. Be that as it may, the Management declared a lock-out under its ‘Notice of Lock-Out’ dated 03.10.1996, which was marked as Ex.M.3 before the Tribunal. The Management stated therein that the agreement entered into by it with the Union in April, 1996 was not being honoured by the workmen and more specifically, Clause-5 thereof which required them to work towards normal production and to make up the past production losses. The Management stated that go-slow tactics were still being resorted to by the workmen leading to a loss in production stretching over the period January, 1996 to September, 1996, details of which were furnished therein. Reference was made to the correspondence in this regard addressed to the Labour Authorities and the Union by the Management. Stating so, the Management opined that having failed in its persuasions and negotiations and having waited for a long period of nine months, it had decided to declare lock-out of the factory. The notice specifically stated that the workmen would not be entitled to any wages during the period of lock-out and went on to lay down seven separate conditions/demands of the Management. The notice concluded with the Management voicing the sentiment that the workmen should think over the situation and that good sense should prevail over them, so that the factory may be reopened with no further loss of man-days. It appears that the Union made a representation about the lock- out before the Assistant Commissioner of Labour, Patancheru, and after several rounds of discussions and negotiations the Management and the Union came to an understanding, which was reduced into the settlement dated 11.12.1996 (Ex.W.6), in the presence of the Deputy Commissioner of Labour, Ranga Reddy District. Clause-8 of the terms of this settlement provided that the Union would not raise a demand for payment for the lock-out period and that they may refer the case to the appropriate authority. In pursuance of the said clause, a reference was made to the Tribunal under Section 10(1)(d) of the Act of 1947 vide G.O.Rt.No.754, Labour, Employment, Training and Factories (Labour- I) Department, dated 22.04.1998. The terms of the reference were as hereunder: “Whether the Assam Carbon Employees Union of Assam Carbon Products Limited, Patancheru, is justified in demanding the wages for lock-out period from 03.10.1996 to 11.12.1996? If so, to what extent of relief the workmen are entitled?” The said reference was taken on file by the Tribunal as I.D.No.7 of 1998. The Union examined its Joint Secretary and Working President as W.Ws.1 and 2, while the Management examined its Production Manager and Commercial Manager as M.Ws.1 and 2. Exs.W.1 to 6 and M.1 to M.43 were marked in evidence by the parties. After considering the matter, the Tribunal answered the reference holding that the Management was liable to pay wages to the workmen belonging to the Union for the lock-out period. Hence, the present writ petition. Heard Smt.Kalpana Ekbote, learned counsel appearing for the Management and Sri G.Vidya Sagar, learned counsel appearing for the Union. Smt.Kalpana Ekbote contended that the voluminous evidence marked by the Management clearly indicated that there was lack of cordial relations between the Management and the workmen even earlier which led to the settlement embodied in Ex.M.2 dated 30.04.1996. But, even thereafter, the same situation continued and the workmen continued to resort to go-slow tactics and other unfair labour practices whereby the Management had to sustain a continuous loss of production constraining it to declare a lock-out under Ex.M.3 dated 03.10.1996. The learned counsel pointed out that Section 22 of the Act of 1947 had no application to the facts of the present case as the subject company was not a public utility service and on facts, the provisions of Section 23 of the Act of 1947 had no application. Accordingly, she attacked the finding of the Tribunal with regard to the violation of the aforesaid provisions by the Management in declaring the lock-out. The learned counsel stressed on the fact that in spite of the settlement dated 30.04.1996 the workmen continued with their tactics to pressurize the Management leading to continued loss of production and in view thereof the Management had no option but to declare the lock-out specifying its conditions and demands, so that the workmen would cease their pressure tactics. She therefore submitted that the workmen were not entitled to any wages during the lock-out period and that the Tribunal erred in coming to a finding on facts that there were no justifiable or valid grounds for declaring the lock-out. Refuting the said contentions, Sri G.Vidya Sagar, learned counsel for the Union, contended that there was no evidence to show that there was any unrest on the part of the workmen after the settlement under Ex.M.2 and on the other hand, there was sufficient material on record to show that there was a short fall in the supply of raw-material which was the main reason for reduction in the rate of production. He contended that it was owing to this situation that the Management resorted to the lock-out so as to deny the workmen their rightful wages. He placed reliance upon the reply dated 04.10.1996 (Ex.W.1) given by the Union one day after the declaration of lock-out asking the Management to come forward with positive proposals to clinch a mutually acceptable wage agreement and to lift the lock-out. In spite of this, the lock-out continued for an inordinately long period, i.e., 70 days, till it was resolved by way of a settlement on 11.12.1996 (Ex.W.6). He fairly conceded that the finding of the Tribunal with regard to the applicability of Sections 22 and 23 of the Act of 1947 was erroneous in law and on facts. His contention is that the lock-out, even though legal in terms of Sections 22, 23 and 24 of the Act of 1947, was wholly unjustified and accordingly the Tribunal was correct in directing payment of wages to the workmen belonging to the Union for the lock- out period. Both the counsel relied on precedential law in support of their contentions. The Judgment of the Supreme Court in BANK OF INDIA V/s. T.S.KELAWALA AND OTHERS[1] relied upon by Smt.Kalpana Ekbote, learned counsel for the Management, may be of no assistance in the fact situation of the present case. The said decision dealt with a case where the workers deliberately abstained from work and the Court held that deliberate abstention from work, whether by resort to strike or go-slow or any other method, legitimate or illegitimate, resulting in no work being done, entitled the Management to deduct wages of such workmen on the principle that it is merely not enough for employees to attend the place of work, but they must put in the work allotted to them. In the present case the Management had itself declared a lock-out, a unilateral action on its part requiring no consent or participation by the workmen and the issue falling for consideration is whether the said action was justified and if not, consequently requiring a further determination as to the entitlement of the workmen for wages during the said period. The said decision therefore has no application to the present case. The Judgment of the Supreme Court in H.M.T. LTD. V/s. H.M.T. HEAD OFFICE EMPLOYEES’ ASSOCIATION AND OTHERS[2] relied upon by the learned counsel for the Management is also found to be of no assistance in the present adjudication. That was a case where the Court found that even after calling off the illegal strike the workmen continued their agitational disruptive and violent activities. Thereby, the lock-out declared thereafter by the Management was held to be legal by virtue of Section 24(3) of the Act of 1947. In such a situation the Court rightly held that no wages were payable for the period of such legal lock-out. In the present case, the issue is with regard to the justification for the declaration and continuance of the lock-out by the Management from 03.10.1996 to 11.12.1996. It is not the case of the Management that the lock-out was necessitated by a strike, legal or otherwise, by the workmen. The said judgment is therefore of no avail to the Management. The Judgment of the Supreme Court in THE STATESMAN LIMITED V/s. THEIR WORKMEN[3] is relied upon by Sri G.Vidya Sagar, learned counsel for the Union. That was also a case where an illegal strike was resorted to by the workmen resulting in a legal lock- out by the Management. However, the Court observed that though the lock-out was born lawfully, its initial legitimacy lost virtue by the subsequent unreasonable behaviour of the Management. The entitlement of workmen for wages in such a situation was dealt with by the Court in paragraph 17 of the Judgment, which reads as hereunder: “17. If the strike is illegal, wages during the period will ordinarily be negatived unless considerate circumstances constrain a different course. Likewise, if the lock-out is illegal full wages for the closure period shall have to be ‘forked out’, if one may use that expression. But in between lies a grey area of twilit law. Strictly speaking, the whole field is left to the judicious discretion of the Tribunal. Where the strike is illegal and the sequel of a lock-out legal, we have to view the whole course of developments and not stop with examining the initial legitimacy. If one side or other behaves unreasonably or the over-all interests of good industrial relations warrant the Tribunal making such directions regarding strike period wages as will meet with justice, fair play and pragmatic wisdom, there is no error in doing so. His power is flexible.” Reliance was placed by the Supreme Court on its earlier judgment in INDIA MARINE SERVICE PRIVATE LTD., V/s. THEIR WORKMEN[4], wherein the Court found that a justified lock-out born out of an unjustifiable strike ceased to be so in view of its continuance for 53 days. The Court observed therein that in a case where a lock- out which has, because of its long duration, become unjustified it would not be proper to direct payment of the whole of the wages for the period of such lock-out. The Court summed up that where a strike was unjustified and is followed by a lock-out which becomes unjustified, a case for apportionment of blame arises. In the facts of that case the Court found the apportionment, roughly half and half, between the company and its workers was justified thereby entitling the workmen to get only half of their wages for the period of the lock-out. The same principle was followed by the Supreme Court in the STATESMAN LIMITED’s case (3 supra) in apportioning the blameworthiness equally between the parties and directing that the workmen should get half the wages for the disputed period. Another judgment relied upon by Sri G.Vidya Sagar, learned counsel for the Union, is that of the Bombay High Court in BHARATIYA KAMGAR KARMACHARI MAHASANGH V/s. G.K.W. LTD AND OTHERS[5]. In that case the argument of the workmen was that the lock-out was a sham and that the Management was trying to close down the undertaking under the garb of declaring a lock-out. The Court dealt with the issue as to whether the Industrial Tribunal could have gone into the question of justifiability of the lock-out and relying upon various judgments, came to the conclusion that there was no prohibition against the Court from lifting the veil and ascertaining whether the lock-out was genuine or bogus or whether in fact it was a lock-out. Similar was the Judgment of the Bombay High Court in MODI STONE EMPLOYEES UNION V/s. MODI STONE LIMITED AND OTHERS[6]. I n METAL BOX INDIA LIMITED V/s. ASSOCIATION OF ENGINEERING WORKERS UNION AND OTHERS[7], the Bombay High Court found that the lock-out in response to an illegal strike, being lawful and legal in its inception, ceased to be so in view of the subsequent unjustified actions of the Management. The Court accordingly held that in the totality of the facts and circumstances of that case, the grant of apportionment of blame was called for and directed 50% of the wages for the disputed period to be paid. It would be relevant at this stage to note how the Act of 1947 defines the term ‘lock-out’. Section 2(l) defines lock-out as follows: “ “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;” It is not in dispute that the lock-out declared by the Management under Ex.M.3 does not fall foul of the provisions of Sections 23 and 24 of the Act of 1947 and cannot therefore be categorized as an illegal lock-out. However, as per the terms of the reference made to the Tribunal under G.O.Rt.No.754, dated 22.04.1998 the issue is whether the demand by the Union for wages during the lock-out period is justified. This would in turn require a finding as to whether the lock-out itself was justified. It is only in the event of there being no justification for the Management to declare and continue such a lock-out that the entitlement of the workmen for wages during the said period would arise. The Company, Assam Carbon Products Limited has its head office at Gauhati, Assam with a Unit at Patancheru, Medak District. It was involved in the manufacture of Industrial Carbons and other allied products. The Unit at Patancheru got its raw-material from Gauhati. These are admitted facts. It is also not in dispute that the Management and the Union came to a settlement by way of the MoU dated 30.04.1996 (Ex.M.2). In that view of the matter, Exs.M.8 to M.27 marked by the Management pertaining to the period anterior to Ex.M.2 may not be relevant for the purpose of adjudicating the present issue and were correctly eschewed from consideration by the Tribunal. The issue would revolve around whether the action of the workmen subsequent to the said MoU justified the imposition of the lock-out by the Management under Ex.M.3. It is the case of the Management that the workmen continued to resort to go-slow tactics and other unfair labour practices effecting the production in the Unit. Further, the Management contended that it had brought the said conduct of the workmen to the notice of the Labour Authorities and the Union through correspondence and reports, marked as Exs.M.28 to M.43. These exhibits were disputed by the Union and it was contended by the Union’s witnesses that the workmen did not resort to any such tactics and on the other hand, the Management resorted to unfair labour practices by issuing charge-sheets, memos and by laying of and removing workers. They further stated that subsequent to Ex.M.2 agreement there was, in fact, an increase in production. But there was a shortage in supply of raw-material and thus, they could not be held responsible for any loss of production. It is pointed out that the Union immediately responded to Ex.M.3 lock-out notice by addressing letter dated 04.10.1996 (Ex.W.1) requesting the Management to lift the lock-out. The Tribunal commented on the fact that Exs.M.28 to M.43 were not put to the Union’s witnesses and that most of these exhibits were photostat copies. It found that there was no explanation forthcoming from the Management as to why originals of these exhibits were not filed and as to why they were not put to the Union’s witnesses. The Tribunal held that the Management failed to prove issuance of its correspondence and reports to the Labour Authorities. In the light of these findings, the Tribunal did not attach any importance to these exhibits. On this aspect, the Tribunal seems to have erred as will be demonstrated hereinafter. Be that as it may, the finding of the Tribunal that merely because the Union had entered into the MoU (Ex.M.2) on 30.04.1996, it could not be believed that the workmen resorted to go-slow tactics or acts of indiscipline thereafter is not borne out by the record. In coming to this finding, the Tribunal placed reliance on Exs.W.2 and W.3 – the annual reports of the Company for the years 1996-1997 and 1997-1998 which indicated that the Company had made profit during the said financial years. Basing on this fact, the Tribunal opined that the situation in the factory at Patancheru must have been normal prior to the declaration of the lock-out. This finding is a non-sequitur. The Tribunal was also influenced by the fact that Exs.M.4 to M.6 supported the version of the Union that the production was affected by shortage of raw-material. It may be true that there was shortage of raw-material which led to loss of production but the said fact by itself would not mean that there was no unrest amongst the workmen which would also contribute to the loss of production. The Tribunal went on to conclude that the lock-out was declared without obtaining permission of the Government as required under Sections 22 and 23 of the Act of 1947 and held the lock-out to be unjustified and invalid. As regards the applicability of these provisions, the counsel are ad idem that the Tribunal misdirected itself and this aspect needs no further belabouring by this Court. Apropos the issue of unrest on the part of the workmen even after Ex.M.2 dated 30.04.1996, it is relevant to note that the Management addressed letter dated 04.07.1996 to the Assistant Commissioner of Labour, Patancheru, marked as Ex.M.28. Though a photo copy of the said letter has been marked and not the original, the same bears the signature and stamp in evidence of receipt of the said communication by the Office of the Assistant Commissioner of Labour, Patancheru, on 04.07.1996. In the said letter, the Management referred to the fact that the negotiations with the workmen had failed and that the workmen were indulging in unfair labour practices such as wearing badges at the work place without permission, resorting to hunger strikes without notice, stoppage of working overtime, voicing slogans against the Management and pasting posters against the Management etc. The Management informed the Labour Authorities that in such circumstances it may be forced to take disciplinary action against such workmen. Ex.M.32 is the photocopy of a letter addressed by the Management to the Assistant Commissioner of Labour, Patancheru, on 15.07.1996. In the said letter. the Management reiterated that the workmen were continuing relay hunger strike and other unfair labour practices such as were mentioned in the earlier letter dated 04.07.1996 (Ex.M.28). The Management also stated that the said action of the workmen and the Union was causing grave hardship to the health of the industry and that the Management may be forced to take necessary action and even declare closure if such unfair labour practices were not stopped. The Management called upon the Labour Authorities to intervene in the matter and arrange for an amicable and a reasonable settlement lest matters get out of hand. This letter also bears a signature and stamp in proof of receipt by the addressee on 16.07.1996. Ex.M.37 is a photocopy of the letter dated 20.07.1996 addressed by the Management to the Assistant Commissioner of Labour, Patancheru. This letter also bears the signature and stamp in proof of the receipt thereof by the addressee and states to the effect that the workmen, in addition to the unfair labour practices mentioned in the earlier letter dated 15.07.1996 (Ex.M.32) had resorted to go-slow and were whiling away time, so much so, that they were not prepared to listen to the Production Supervisor. The reports of the Production Manager and Supervisor were also enclosed with the said letter. The Management drew the attention of the Labour Authorities to the MoU