C.W.P No.7243 of 2002 (O&M) -1- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH C.W.P No.7243 of 2002 (O&M) Date of Decision: 15.07.2009 Bata Shoe Workers' Union (Regd.) .....Petitioner Versus Presiding Officer, Industrial Tribunal-cum-Labour Court-I, Faridabad Haryana and another ....Respondents Present: Mr. I.K. Mehta, Sr. Advocate with Mr. Ranjit Mehta, Advocate and Mr. R.K. Dogra, Advocate for the petitioner. Mr. Chetan Mittal, Sr. Advocate with Mr. Puneet Gupta, Advocate and Mr.Vishal Garg, Advocate for respondent No.2. 2. C.W.P. No.7932 of 2008 3. C.W.P. No.7973 of 2008 Bata India Limited ......Petitioner Versus The Appellate Authority and others ....Respondents Present: Mr. Chetan Mittal, Sr. Advocate with Mr. Puneet Gupta, Advocate and Mr.Vishal Garg, Advocate for the petitioner. None for the respondent-caveator. CORAM:HON'BLE MR. JUSTICE K. KANNAN 1. Whether Reporters of local papers 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 -.- C.W.P No.7243 of 2002 (O&M) -2- K. KANNAN J. I. Subject of reference 1. On a reference from the Government for an adjudication, the Industrial Tribunal took up for consideration whether the strike resorted to by workers on 24.02.1999 was justified, whether the continuation of lockout from 25.02.1999 by the management was justified and to what reliefs the respective parties were entitled to. II. Circumstances leading to reference 2. The stand-off between the workers and the management of M/s Bata India Limited arose on account of varying perceptions of what the workmen and the management respectively made out of the non- observance of the terms of settlement that had been brought about through a memorandum dated 30.04.1998. The workmen found (i) that the management had unjustifiably effected some deductions from their salaries; (ii) it had closed several departments and were transferring workmen from one department to another without any rhyme and reason and (iii) it undermined their productivity and the entitlement of workers to higher wages by deliberately outsourcing some jobs from out of the factory. The workers, through a letter dated 08.01.1999, warned the management of direct action by resort to strike. 3. The management sought to quell the threat by responding to them that the strike was unjustified and exhorting them to realise their sense of responsibility and refrain from creating tensions in bilateral relations. The workers, however, went on strike on 24.02.1999 as previously informed through notice. The management slapped a C.W.P No.7243 of 2002 (O&M) -3- lockout immediately on 25.02.1999 and closed down the factory. The entry of workers/employees to the premises of the factory had been stopped. This according to management was in response to the illegal strike on 24.02.1999 started by the workers from 7.30 A.M. without any reason whatever. The workers were informed that they were not entitled to any payment of wages for the period of strike and warned them of imminent disciplinary action. Tripartite meeting was held under the aegis of the Labour Commissioner, Haryana on 21.04.1999 where the representatives of the management and workmen had participated. The workers were reported to have indicated that for the lifting of lockout and payment of wages during the lockout period were pre-requisite for starting a dialogue on productivity and discpline. The management found this pre-condition to be unreasonable. The workers were reported to be in a state of turmoil at the lockout and the denial of wages that it entailed. There had been notices by the management on 17.05.1999, 20.05.1999 and 24.05.1999 referring to the state of tension that was prevailing in or around the factory and the quarters of the managerial staff. Parleys for peaceful resolution of disputes went side by side where demands like changing the working hours, observance of punctuality and discipline were discussed. 4. The first positive turn of events was marked through a communication on 08.07.1998 when the Management notified the change of service conditions w.e.f. 28.07.1998, that altered the shift timings from 7.15 A.M.- 4.30 P.M. to 7.45 A.M.-5.00 P.M. The marginal change in the commencement and ending of the shift periods C.W.P No.7243 of 2002 (O&M) -4- was to synchronize the arrival and departure timings of passenger trains by which many workers were said to be commuting to the factory. There were other minor irritants which were not still solved; namely, the alleged sabotage of a machinery by breaking of the lock of the central panel of kneader No.1. Issues of discipline and productivity could not be still sorted out and reports were secured also from the Assistant Labour Commissioner. The Government declared the lockout to be illegal but the management filed Writ Petition No.11866 of 1999 before this Hon'ble Court challenging the direction for withdrawal of the lockout and an interim stay was also ordered by this Court on 05.08.1999. However, further talks progressed that yielded to a settlement arrived at between the workers and the management on 25.10.1999 when the lockout was lifted and the workers resumed work. Independent action had been taken by the workers claiming wages for the period from 19.08.1999 till 24.10.1999 when the lockout continued demanding their entitlement to wages. The issue for adjudication before the Labour Court was, therefore, confined to the respective contentions of the workmen and the management regarding the legality or otherwise of the strike and the lockout respectively and the entitlement of the workmen to wages during the period from 24.02.1999 to 19.08.1999. III. The Labour Court's findings 5. Before the Labour Court the attempt of the respective parties was to show the legality of the strike and lockout and also the justification or otherwise of its continuation. The Labour Court found that the strike carried on by the workers on 24.02.1999 was illegal in C.W.P No.7243 of 2002 (O&M) -5- view of the fact that proceedings were pending before the Conciliation Officer but it also went on to observe that the lockout was not illegal on account of the fact that the strike was illegal and the lockout was, therefore, protected by the provisions of Section 23 (2) of the Industrial Disputes Act, 1947. The Labour Court set out several instances of alleged misconduct of the workmen that vitiated the industrial atmosphere and found a jusitification for the continuation of lockout. The Labour Court ultimately, therefore, found that the strike resorted to by the workers on 24.02.1999 was illegal and unjustified and they were not entitled to get any wages for that day and that continuation of lockout of the management was legal and justified and the workers were not entitled to wages for the period of lockout also namely from 25.02.1999 to 19.08.1999 that is, the days when the lockout was prohibited by the Government through its notification No.45341/46 dated 19.08.1999 but which was stayed by the operation of this Hon'ble Court in C.W.P. No.11866 of 1999. IV. Contentions on behalf of the workmen 6. The contention on behalf of the workmen through Sh. I.K. Mehta, Senior Counsel was that the declaration of strike as illegal was founded on a reasoning that conciliation was in progress but the Labour Court was in error in assuming that the conciliation that could make illegal a strike as contemplated by the Industrial Disputes Act was a conciliation before the Board and seven days after the conclusion of such proceedings as per Section 23-A of the Industrial Disputes Act. Admittedly, there was no conciliation pending before the Board and therefore, the assumption of the Labour Court was C.W.P No.7243 of 2002 (O&M) -6- clearly a serious legal flaw. The strike was observed after a due notice as required by law and therefore, the lockout that was declared the following day on 25.02.1999 was unjustified and illegal. The denial of wages to them was also, therefore, not tenable. As an alternative statement, the learned Senior Counsel submitted that even if the strike was illegal the lockout was unjustified for the labourers had volunteered to resume work but the management prolonged the lockout. Continuation of lockout for a one-day-strike upto 24.10.1999 was a clear case of victimisation and grossly disproportionate to the action resorted to by the workmen. The workmen themselves had no reason to go slow on production for an increase in production was assured to them by the terms of settlement already entered into a higher wage and the allegations of sabotage of a kneader machine was not true. The reliance by the Labour Court on the report of the Deputy Commissioner of Labour was equally unjustified and the report had not been established by examining the Deputy Labour Commissioner. None of his findings in the report attributing unruly conduct of the workmen could be justified or relied upon. 7. The learned Senior Counsel relied on the decision of the Hon'ble Supreme Court in Northern Dooars Tea Company, Ltd. Vs. Workmen of Dem Dima Tea Estate 1964 (1) LLJ 436 that when the workmen were willing to report for work after the expiry of the token strike but the management refused to open the gates, the Industrial Tribunal was justified in finding that the management in continuing lockout had not been fair or bona fide. Under such circumstances, the Hon'ble Supreme Court modified direction of the Industrial Tribunal C.W.P No.7243 of 2002 (O&M) -7- for payment of half the wages for the period between the day of expiry of the strike and the date on which the workmen were permitted to resume the work as a result of the settlement. In yet another decision of the Hon'ble Supreme Court in India Marine Service (Private) Ltd. Vs. Their Workmen 1963 I LLJ 122, the Hon'ble Supreme Court had held that where the management directing lockout as a result of the workmen going on strike, which was found unjustified, such lockout though originally justified but its continuance for an unreasonably long period was found to be a justification enough for the workmen to claim half the wages for the period of such lockout. V. Contentions on behalf of the management 8. In response to the contention made by the learned Senior Counsel appearing for the petitioners, Sh. Chetan Mittal, learned Senior Counsel appearing on behalf of the management conceded that there was indeed no conciliation before the Board for application of Section 23(a) of the Industrial Disputes Act but it referred to the provision of Section 23(c) as governing the issue. Referring to the sub-section that makes reference to a strike as being illegal when it is during the subsistence of a settlement, the learned Senior Counsel pointed out that three essential demands on the basis of which the workmen resorted to strike were all fully covered under the terms of settlement and therefore, the strike was illegal. Delineating further, he would expound that there had been no deduction of wages but on account of fall in production which was assured in the settlement dated 30.04.1998, some deduction in salary had been applied as per the terms of settlement. Adverting to the grievance of the workmen C.W.P No.7243 of 2002 (O&M) -8- that some departments had been closed, the learned Senior Counsel would refer to Clause 17 of the agreement that enabled the closure of non-viable operations and to abolish uneconomical operations or departments. Adverting to the grievance of the workmen that the management was deliberately outsourcing jobs to reduce the entitlement to higher wages, the learned Senior Counsel would refer to Clause 18 of the agreement that spelt out the need of management's representatives to apply flexibility in production as well as deployment of people on the ground that changes in market requirements and demands necessitate frequent changes in pattren of production. Components of job technically and economically not feasible to produce in the factory were permitted to be sourced from outside as per Clause 17 of the agreement. According to learned Senior Counsel, therefore, the strike which had the genesis in the grievances had all been covered under the settlement dated 30.04.1998 which was put in operation for a period of three years that was upto 03.05.2001 and the section 23(c) debarred the petitioners from declaring the strike. 9. Learned Senior Counsel made elaborate references to the vitiating atmosphere that prevailed around the factory by the conduct of the workmen and sought to draw support from the reports of the Deputy Labour Commissioner on 23.03.1999 and 12.07.1999. The report detailed instances of the workmen adopting an adamant attitude that the management should first remove the lockout without any condition and draw full salary to the workmen and thereafter, the Union would only talk on the pending issues. It also expatiated on C.W.P No.7243 of 2002 (O&M) -9- instances of alleged gherao said to have been made on 17.05.1999- 20.05.1999 at the office for two hours and when they gathered at the residential places of the officers using filthy and abusive language. According to him, the management had adopted every reasonable approach to end the dispute and even when they had the benefit of order of stay of the direction of the Government to lift the lockout, they had still pursued diligently for bringing about an early end to the differences and worked out a fresh memorandum on 25.10.1999 when admittedly the lockout was lifted. According to him, even if the strike was legal and the lockout was bad in law, it was still justified and the denial of wages as found by the Labour Court was proper. 10. Learned Senior Counsel also pointed out that it would be wrong to characterise the incident of 24.02.1999 alone as a day when the strike was carried out but it was merely a continuation of the conduct that began even earlier by reducing the number of hours of work by persistently coming late and causing fall in production. The temporary absence or late arrival of some workmen who were to commence the operations on machines initially had a cascading effect of the whole assembly line not being able to complete the work that fell in the assembly and consequently the incident must be seen as a continuous period of strike indulged by the workmen even prior to 24.02.1999 and causing a loss of over Rs.2 lacs per day to the management on its inability to meet the commitments to their consumers. Competition was already emerging in the market with new brands vying with each other to capture place in the consumer- oriented market. C.W.P No.7243 of 2002 (O&M) -10- 11. The learned Senior Counsel referred to several decisions of the Hon'ble Supreme Court and of this Court to drive home the point that even before the complete cessation of work on any one day, even go slow tactics adopted by workmen could qualify for the definition of strike and if it was unjustified, the lockout declared by the management or the denials of the wages to the workmen could not be complained of. He referred to a decision in Workmen of Motipur Sugar Factory (Private) Ltd. Vs. Motipur Sugar Factory (Private) Ltd. 1965 II LLJ 162 (SC) to the effect that go slow attitude adopted by the workmen could be a basis for taking appropriate action and even a demand of undertaking from the workmen to maintain discipline and failure to give such undertaking could justify the management from taking appropriate action and a Court would be justified in looking at the attitude of the workmen under such circumstances. Referring to the decision of Bombay High Court reported in Engineering Mazdoor Sabha, Bombay and others Vs. S. Taki Belgrami and another AIR 1970 Bombay 402, learned Senior Counsel would urge that where misdemeanour and misconduct of workmen went to the length of endangering lives of loyal workmen and officers of company and had the effect of heavy financial losses to company and of destroying credit with its customers, the company would be absolved from paying wages for period of illegal lockout, since lockout in such case could be seem to be justified. In The Workmen of M/s Sur Iron and Steel Co. Pvt. Ltd. Vs. M/s Sur Iron & Steel Co. Pvt. Ltd. and aother 1971 I LLJ 570 (SC), the Hon'ble Supreme Court had held that the strike by workmen protesting against C.W.P No.7243 of 2002 (O&M) -11- change in weekly off and the refusal to work would be illegal if in a case where the management changed the weekly off from Sunday to Saturday only on account of electricity cut effected by the State Government. If a lockout declared under the circumstances by the management in response to an illegal strike, was held to be justifed, the Hon'ble Supreme Court also dealt with the situation of how the factory was required to be closed when the Union refused to sign a settlement at the time of lifting of lockout containing a clause in draft settlement that some of the workmen who had been suspended during the lockout should tender unconditional apology to the management. The closure of the factory, under such circumstances, was also held to be justified. The decisions relating to the instances of the management to give undertakings were cited by the learned Senior Counsel as an answer to the plea urged on behalf of the workmen that undertakings sought for by the management from the workmen assuring good conduct would not amount to any 'unfair trade practice'. It was the contention of learned Senior Counsel appearing for the management that undertakings sought from workmen when their prior incidents of miconduct could even afford a justifiction for closure of the company, not to speak of continuous lockout or denial of wages during such lockout instituted by the conduct of the workmen. Bank of India Vs. T.S. Kelawala and others (1990) 4 SCC 744 was a decision that had laid down that even in the absence of provision in the contract of employment for deduction of wages for no work done, management would be entitled to deduct wages taking guidance from Payment of Wages Act or Shops and Establishment Act even if the C.W.P No.7243 of 2002 (O&M) -12- respective enactments did not apply. The Hon'ble Supreme Court held that deductibility or extent of deductibility would depend on each case. This was in response to an argument that the deductions which were made for no work done or by following go slow tactics that resulted a fall in production could be perfectly justified. The Hon'ble Supreme Court also held that mere physical presence in office was not enough. Employees must perform work for payment of wages. The dispensation in Bank of India's case found another definition in a subsequent decision of the Hon'ble Supreme Court in Syndicate Bank and another Vs. K. Umesh Nayak (1994) 5 SCC 572 that held that strike resorted by bank employees during conciliation proceedings, despite bank's circular for deduction of wages, the bank would be even justified in deducting the whole day's wage for absence of work for some hours only. In para 24 and 25 of the judgment, the Hon'ble Supreme Court had held that: "...There is, therefore, nothing in the decisions of this Court in Churakulam Tea Estate and Crompton Greaves cases or the other earlier decisions cited above which is contrary to the view taken in T.S. Kelawala. What is held in the said decisions is that to entitle the workmen to the wages for the strike period, the strike has both to be legal and justified. In other words, if the strike is only legal but not justified or if the strike is illegal though justified, the workers are not entitled to the wages for the strike period. In fact, in India General Navigation case the Court has taken the view that a strike which is illegal cannot at the C.W.P No.7243 of 2002 (O&M) -13- same time be justifiable. According to that view, in all cases of illegal strike, the employer is entitled to deduct wages for the period of strike and also to take disciplinary action. This is particularly so in public utility services. 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." H.M.T. Ltd. Vs. H.M.T. Head Office Employees' Association and others (1996) 11 SCC 319 was another decision of the Hon'ble Supreme Court which held that if the strike was found justified but illegal, wages for such period of illegal strike will not be payable. VI. No scope for dilating point of reference 12. On the issue whether the strike dated 24.02.1999 was illegal or justified, the attempt of learned Senior Counsel for the respondent to dilate the reference to the conduct of the workmen in adopting a go slow course may not be justified and the point for adjudication that the Labour Court had framed itself referred to only the character of the strike that was resorted to on 24.02.1999. That the workers had been adopting a go slow course may be independently relevant while examining the issue whether the management was justified in the C.W.P No.7243 of 2002 (O&M) -14- lockout or its continuance but the issue of the illegality of the strike on 24.02.1999 itself could not be tested with reference to any other day preceding it as constituting a strike. Further none of the decisions referred to by learned Senior Counsel for the management referred to go slow activity itself as constituting a strike. It may result in other consequences, which were examined in decision of the Hon'ble Supreme Court such as departmental action or specific charges levelled against workmen for misconduct as was done in Workmen of Motipur Sugar Factory case referred to supra and in the subsequent case in Engineering Mazdoor Sabha, Bombay and others. In the Bombay High Court case, the decision for lockout was examined in the context of the workers' go slow act but did not itself state that such activity would constitute a strike. VII. Illegality of strike cannot be tested on ground not pleaded 13. Even as regards the contention that although there was no conciliation proceedings before the Board that could attract the bar of Section 23(a) of the Industrial Disputes Act, the learned Senior Counsel appearing for the respondent sought to urge that there was a violation of Section 23 (c). The illegality of the strike had never been urged at any point of time on such a basis and though it is only a legal issue still it required a specific focus through a specific pleading. The Labour Court was clearly in error in applying Section 23 (a) and entering a finding that the strike was illegal. It would be wrong to assume that workers were going on a strike only for matters, which were covered wholly under the agreement. If that was so, the parties must have been put on notice of such defence so that adequate C.W.P No.7243 of 2002 (O&M) -15- evidence could have been placed on behalf of workmen. In the absence of specific plea in that regard, it would be unwise to characterise the strike as illegal by projecting a case that the issues regarding deduction of wages, closure of departments and outsourcing were all fully covered by the settlement and therefore, there could not have been a justification for the strike. 14. Learned Senior Counsel appearing for the workmen also pointed out that there were several other issues like change of factory hours which became necessary on account of the fact that the train timings were such that most of the employees who would arrive at the factory that was situate directly opposite the railway