# M/S. EMPIRE INDUSTRIES LTD v. STATE OF MAHARASHTRA & ORS

- **Citation:** [2010] 3 S.C.R. 687
- **Court:** Supreme Court of India
- **Decided:** 2010-03-17
- **Case number:** Civil Appeal No. 3003 of 2005
- **Bench:** Aftab Alam, Dr. B.S. Chauhan
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-empire-industries-ltd-v-state-of-maharashtra-ors-26775
- **Pages:** 27

## Headnote

Industrial Disputes Act, 1947 - ss. 10(1) and (3) and 25N
- Lock-out of Industry - On the basis of three demands i.e.
agitational activities of workmen, ceiling on dearness c
allowance and retrenchment - Complaint made in respect of
agitationa/ activities under the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act
-
Order of Government prohibiting Jock-out -
Order
challenged on the ground that Jock-out was prohibited without
D
referring the disputes viz. agitational activities of workmen and
retrenchment, for adjudication uls. 10(1) - Held: Appropriate
Government empowered and competent to issue the order
prohibiting Jock-out - On facts, there was no dispute on the
basis of demand in respect of retrenchment - Retrenchment
E
can be effected only after following statutory provisions
provided therefor-A reference uls. 10(1) cannot be used to
bypass the Scheme u/s. 25N - Once having taken resort to
Maharashtra Act with regard to agitational activities any
proceeding under ID Act barred by s. 59 of Maharashtra Act
F
- Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 - s. 59.
,
ss. 10(1) and 25N - Distinction between - Explained.
Respondent-State passed order in exercise of the G
power u/s. 10(3) of Industrial Disputes Act, 1947,
prohibiting continuance of the lock-out in the factory of
the appellant. The order was challenged in writ petition
which was dismissed by Single Judge of High Court. The
687
H
688
SUPREME COURT REPORTS
(2010] 3 S.C.R.
A order was further confirmed in writ appeal by Division
Bench of High Court.
In appeal to this Court, appellant contended that the
State Government derives the legal authority to prohibit
8 a lock-out in terms of section 10(3) only after it had
referred for adjudication all the disputes leading to the
lock-out u/s. 10(1); that the closure of the factory being
on three demands viz., agitational activities of the
workmen (ii) imposition of ceiling on dearness allowance
C and (iii) reduction of the workforce and retrenchment, and
out of the three demands, Government having referred
only one, concerning the ceiling on dearness allowance,
it was not permissible to prohibit the lock-out.
.Respondent contended that in respect of agitational
D activities complaint already having been filed under
Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 resort to
proceedings under Industrial Disputes Act, 1947 was
barred, by virtue of s. 59 of the Maharashtra Act.
E
Dismissing the appeal, the Court
HELD: 1. In regard to the alleged agitational activities
of the workmen, the appellant had already filed a
complaint u/s. 26 r/w. Item Nos. 5 and 6 of Schedule Ill of
F the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971. Once
having taken resort to the provisions of this Act, any
proceeding under the Industrial Dispute Act, 1947 was
barred by Section 59 of the Maharashtra Act and,
G therefore, there was no question of any reference of this
particular demand by the petitioner u/s. 10(1) of ID Act.
[Para 13] [700-G-H; 701-A-C]
2.1. The subject of retrenchment is fully covered by
H the statute. It is not left open for the employer to make a -
EMPIRE INDUSTRIES LTD. v. STATE OF
689
MAHARASHTRA & ORS.
demand in that connection and to get the ensuing
A
industrial dispute referred for adjudication in terms of
Section 10(1) of ID Act. To say that even without following
the provisions of Section 25N of ID Act, it is open to the
employer to raise a demand for retrenchment of workmen
and to ask the Government to refer the ensuing dispute
B
to the Industrial Tribunal for adjudication, would
tantamount to substituting a completely different
mechanism in place of the one provided for in the Act to
determine the validity and justification of the employer's
request for retrenchment of workers. It is true that u/s. c
25N, the authority to grant or refuse permission fo

## Text

_Characters 0–38,769 of 52,251. This is a partial read: ask again with offset=38769 for what follows._

[2010] 3 S.C.R. 687
M/S. EMPIRE INDUSTRIES LTD.
A
v.
STATE OF MAHARASHTRA & ORS.
(Civil Appeal No. 3003 of 2005)
MARCH 17, 2010
B
[AFTAB ALAM AND DR. B.S. CHAUHAN, JJ.]
Industrial Disputes Act, 1947 - ss. 10(1) and (3) and 25N
- Lock-out of Industry - On the basis of three demands i.e.
agitational activities of workmen, ceiling on dearness c
allowance and retrenchment - Complaint made in respect of
agitationa/ activities under the Maharashtra Recognition of
Trade Unions and Prevention of Unfair Labour Practices Act
-
Order of Government prohibiting Jock-out -
Order
challenged on the ground that Jock-out was prohibited without
D
referring the disputes viz. agitational activities of workmen and
retrenchment, for adjudication uls. 10(1) - Held: Appropriate
Government empowered and competent to issue the order
prohibiting Jock-out - On facts, there was no dispute on the
basis of demand in respect of retrenchment - Retrenchment
E
can be effected only after following statutory provisions
provided therefor-A reference uls. 10(1) cannot be used to
bypass the Scheme u/s. 25N - Once having taken resort to
Maharashtra Act with regard to agitational activities any
proceeding under ID Act barred by s. 59 of Maharashtra Act
F
- Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 - s. 59.
,
ss. 10(1) and 25N - Distinction between - Explained.
Respondent-State passed order in exercise of the G
power u/s. 10(3) of Industrial Disputes Act, 1947,
prohibiting continuance of the lock-out in the factory of
the appellant. The order was challenged in writ petition
which was dismissed by Single Judge of High Court. The
687
H
688
SUPREME COURT REPORTS
(2010] 3 S.C.R.
A order was further confirmed in writ appeal by Division
Bench of High Court.
In appeal to this Court, appellant contended that the
State Government derives the legal authority to prohibit
8 a lock-out in terms of section 10(3) only after it had
referred for adjudication all the disputes leading to the
lock-out u/s. 10(1); that the closure of the factory being
on three demands viz., agitational activities of the
workmen (ii) imposition of ceiling on dearness allowance
C and (iii) reduction of the workforce and retrenchment, and
out of the three demands, Government having referred
only one, concerning the ceiling on dearness allowance,
it was not permissible to prohibit the lock-out.
.Respondent contended that in respect of agitational
D activities complaint already having been filed under
Maharashtra Recognition of Trade Unions and Prevention
of Unfair Labour Practices Act, 1971 resort to
proceedings under Industrial Disputes Act, 1947 was
barred, by virtue of s. 59 of the Maharashtra Act.
E
Dismissing the appeal, the Court
HELD: 1. In regard to the alleged agitational activities
of the workmen, the appellant had already filed a
complaint u/s. 26 r/w. Item Nos. 5 and 6 of Schedule Ill of
F the Maharashtra Recognition of Trade Unions and
Prevention of Unfair Labour Practices Act, 1971. Once
having taken resort to the provisions of this Act, any
proceeding under the Industrial Dispute Act, 1947 was
barred by Section 59 of the Maharashtra Act and,
G therefore, there was no question of any reference of this
particular demand by the petitioner u/s. 10(1) of ID Act.
[Para 13] [700-G-H; 701-A-C]
2.1. The subject of retrenchment is fully covered by
H the statute. It is not left open for the employer to make a -
EMPIRE INDUSTRIES LTD. v. STATE OF
689
MAHARASHTRA & ORS.
demand in that connection and to get the ensuing
A
industrial dispute referred for adjudication in terms of
Section 10(1) of ID Act. To say that even without following
the provisions of Section 25N of ID Act, it is open to the
employer to raise a demand for retrenchment of workmen
and to ask the Government to refer the ensuing dispute
B
to the Industrial Tribunal for adjudication, would
tantamount to substituting a completely different
mechanism in place of the one provided for in the Act to
determine the validity and justification of the employer's
request for retrenchment of workers. It is true that u/s. c
25N, the authority to grant or refuse permission for
retrenchment is vested in the appropriate Government
which in this case would be the State Government or the
authority specified by it. Under Section 10(1) too, it is the
State Government that would make a reference of the
0
industrial dispute. But the two provisions are not
comparable. The nature of the power of the State
Government and its functions under the two provisions
are completely different. In making the reference (or
declining to make the reference) u/s. 10(1) of the Act, the
E
State Government acts in an administrative capacity
whereas u/s. 25N(3) its power and authority are evidently
quasi judicial in nature. [Paras 26 and 27) [709-G-H; 710A-E]
2.2. Though Section 25N(6) has the provision to refer
F
the matter to the tribunal for adjudication, that provision
is completely different from Section 10(1). A reference u/
s. 10(1) of the Act cannot be used to circumvent or
bypass the statutory scheme provided u/s. 25N of the
Act. This is, however, not to say that there cannot be any G
dispute on the subject of retrenchment that can be
referred to the tribunal for adjudication. A dispute may
always be raised by or on behalf of the retrenched
workmen questioning the validity of their retrenchment.
Similarly, the employer too can raise the dispute in case
H
690
SUPREME COURT REPORTS
[2010) 3 S.C.R.
A denied permission for retrenchment by the Government.
It is another matter that the chances of the disputes being
referred for adjudication are quite remote. But the point
to note is that the occasion to raise the demand/dispute
comes after going through the statutory provisions of
B Section 25N of ID Act. [Para 27] [710_-F-H; 711-A-B]
2.3. In the instance case, on the material date, there
was no dispute on the basis of any demand raised by the
appellant with regard to retrenchment of any workers in
C the factory. Secondly, and more importantly, any
retrenchment of worker(s) can only be effected by
following the provisions laid down under ID Act, and the
Rules. It follows that it is not open to the management to
make a demand/proposal for retrenchment of workmen
and disregarding the' provisions of the Act ask the
D Government to refer the demand/dispute under section
10(1) to the tribunal for adjudication. The only demand
raised by the management regarding imposition of ceiling
on dearness allowance was already referred to the
Industrial Tribunal. Hence, the appropriate Government
E was fully competent and empowered to issue the
impugned order prohibiting closure of the factory. There
was no illegality or infirmity in the closure notice. [Para
29] [713-B-E]
F
Workmen of Meenakshi Mills Ltd. and Ors. vs.
Meenakshi Mills Ltd. and Anr. (1992) 3 SCC 336, followed.
Oswal Agro Furane Ltd. and Anr. vs. Oswal Agro Furane
Worl<ers Union and Ors. (2005) 3 sec 224, relied on.
G
State of Madras vs. C.P. Sarathy and Anr. 1953 (4) SCR
334, held inapplicable.
Delhi Administration, Delhi vs. Workmen of Edward
Keventers (1978) 1 SCC 634; The Management of Express
H Newspapers Ltd. vs. Workers and Staff Employed Under It
and Ors. 1963 (3) SCR 540; Management of Kairbetta Estate,
EMPIRE INDUSTRIES LTD. v. STATE OF
691
MAHARASHTRA & ORS.
Kotagiri vs. Rajamanickam and Ors. 1960 (3) SCR 371; D.D.
A
Gears Ltd. vs. Secretary (Labour) and Ors, 2006 Lab. I. C.
1462; Meal Box India Ltd. vs. State of Tamil Nadu and Ors.
1995 II L.L.N. 814, referred to.
Case Law Reference:
(1978) 1 sec 634
referred to.
Para 4
1963 (3) SCR 540
referred to.
Para 5
1960 (3) SCR 371
referred to.
Para 5
2006 Lab. I. C. 1462
referred to.
Para 6
1995 II L.L.N. 814
referred to.
Para 6
1953 (4) SCR 334
held inapplicable. Para 19
(1992) 3 sec 336
followed.
Para 27
(2005) 3 sec 224
relied on.
Para 28
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3003 of 2005.
From the Judgment & Order dated 1.4.2005 of the High
Court of Judicature at Bombay in Letters Patent Appeal No.
70 of 2001.
Shanti Bhushan, K.M. Naik, Arun R. Pedneker, V.N.
Raghupathy for the Appellant.
Colin Gonsalves, Jayshree Satpute, Jyoti Mendiratta,
Chinmoy Khaladkar, Sanjay Kharde (for Asha G. Nair) for the
Respondents.
The Judgment of the Court was delivered by
AFTAB ALAM, J. 1. The appellant, which is a public
limited company incorporated under the Companies Act, 1956
seeks to challenge the order dated September 23, 1992 issued
B
c
D
E
F
G
H
692
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A by the Government of Maharashtra in exercise of the powers
conferred by sub-section (3) of section 10 of the Industrial
Disputes Act, 1947 (for short 'the Act') prohibiting continuance
of the lock-out in its factory, Garlick Engineering at Ambernath,
Thane.
B
2. The appellant first challenged this order before the
Bombay High Court in Writ Petition No.6051/1995. The writ
petition was dismissed by a learned single judge of the court
by judgment and order dated February 9, 2001. Against the
judgment of the single judge, the appellant preferred an internal
C court appeal (LPA No. 70 of 2001) which too was dismissed
by a division bench of the court by judgment and order dated
April 1, 2005. The appellant has now brought the matter in
appeal before this Court.
o
3. It may be stated here that during the course of this
protracted litigation the factory was closed down on April 26,
1999 and since then it remains closed. The validity of the
factory's closure is not in issue. This means that the relevance
of the present appeal is only for the period September 23, 1992
E (the date on which the prohibition order was issued) to April
26, 1999 (when the factory was finally closed down). In case,
the impugned prohibition order is held legal and valid and the
appeal is dismissed the lock-out in the factory after September
26, 1992 would be illegal in terms of section 24(0) of the Act
and the appellant would be liable to face the legal
F consequences. If, on the other hand the appeal succeeds and
the prohibition order is struck down as illegal and invalid, that
would be the end of the matter.
4. Mr. Shanti Bhushan, learned Senior Advocate,
G appearing for the appellant assailed the government order
prohibiting the continuance of lock-out in its factory, Garlick
Engineering by raising a simple point. With reference.to the
closure notice, he submitted that the closure of the factory was
in connection with three demands, namely, (i) the workmen
H
EMPIRE INDUSTRIES LTD. v. STATE OF
693
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
should abjure agitational activities and desist from intimidation
A
and acts of violence, (ii) the workmen should accept a ceiling
on dearness allowance and (iii) the workmen should agree to
reduction of the workforce and retrenchment of a number of
workers. He further submitted that out of the three demands the
government had referred only one concerning the ceiling on
B
dearness allowance for adjudication to the Industrial Tribunal
and yet issued the notice prohibiting closure of the factory. Mr.
Shanti Bhushan contended that as long as all the demands
leading to the strike or the lock-out were not referred to
adjudication under section 10(1) of the Act, it was not open to c
the government to prohibit the strike or the lock-out, as the case
may be. Learned counsel submitted that the government would
derive the legal authority to prohibit a strike or a lock-out in
terms of section 10(3) only after it had referred for adjudication
all the disputes leading to the strike or the lock-out, as the case
D
may be. He further submitted that it was not open to the
government to refer selectively only a few out of several
demands for reference and yet prohibit the lock-out or the strike
in connection with those demands and, thus, close all doors for
the concerned party for realization of the demands that were
left out of reference. He submitted that this position would be
E
clear from a plain reading of section 10(3) of the Act which is
as follows:
10(3): Where an industrial dispute has been referred to
a Board, Labour Court, Tribunal or National Tribunal under
F
this section, the appropriate government may by order
prohibit the continuanc.e of any strike or lockout in
connection with such disputes which may be in existence
on the date of the reference."
(Emphasis added)
Learned counsel submitted that the power and the authority to
prohibit a strike or lock-out could be exercised only in respect
of such dispute(s) that had been referred to a Board, Labour
G
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694
SUPREME COURT REPORTS
[2010) 3 S.C.R.
A Court, Tribunal or National Tribunal. It necessarily followed that
in case some of the disputes that had led to the strike or lock- .
out, as the case may be, were left out of the reference made
under section 10( 1) of the Act, the precondition for invoking
section 10(3) would not be satisfied and it would not be
B permissible for the government to issue the prohibition order
under that provision. In support of the submission, he relied
upon a decision of this Court in Delhi Administration, Delhi 171
03/2010vs. Workmen of Edward Keventers, (1978) 1 SCC
634. In paragraphs 2, 4 and 6 of the decision on which reliance
c was placed by Mr. Shanti Bhushan the Court observed as
follows:
D
E
F
G
H
"2. A plain reading of the sub-section leaves no room for
doubt in our minds that the High Court has correctly
interpreted it. Indeed, the learned Judges have gone into
details, although we in this affirming judgment desire to
express ourselves only briefly. Two conditions are
necessary to make Section 10(3) applicable. There must
be an industrial dispute existing and such existing dispute
must have been referred to a Board, Labour Court, Tribunal
or National Tribunal under this section, namely, Section
.1.lli.1l. Section 10 stands as a self-contained code as it
were so far as this subject-matter is concerned. The
prohibitory power springs into existence only when such
dispute has been made the subject of reference under
Section .1.lli.1l. What then is such dispute? The suchness
of the dispute is abundantly brought out in the preceding
portion of the sub-section. Clearly, there must be an
industrial dispute in existence. Secondly, such dispute
must have been already referred for adjudication. Then,
and then alone, the power to prohibit in respect of such
referred dispute can be exercised.
4. Shri Aggarwal pressed before us a ruling reported in
Keventers Karmachari Sangh v. Lt. Governor of Delhi
(1971) 2 LLJ 375, decided by the Delhi High Court.
EMPIRE INDUSTRIES LTD. v. STATE OF
695
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
Although the ratio there is contrary to the same High Court's A
ruling which is the subject-matter of the present appeal, we
are obviously inclined to adopt the reasoning of the
judgment under appeal. Imagine twenty good grounds of
dispute being raised in a charter of demands by the
workmen and the appropriate Government unilaterally and
B
subjectively deciding against the workmen on nineteen of
them and referring only one for adjudication. How can ~his
result in the anomalous situation of the workmen beihg
deprived of their basic right to go on strike in support of
those nineteen demands. This would be productive not of c
industrial peace, which is the objective of the Industrial
Disputes Act, but counter-productive of such a purpose. If
Government feels that it should prohibit a strike under
Section 10(3) it must give scope for the merits of such a
dispute or demand being gone into by some other D
adjudicatory body by making a reference of all those
demands under Section .1Q(1) as disputes. In regard to
such disputes as are not referred under Section .1Q(1),
Section 10(3) cannot operate. This stands to reason and
justice and a demand which is suppressed by a prohibitory
order and is not allowed to be ventilated for adjudication
E
before a Tribunal will explode into industrial unrest and run
contrary to the policy of industrial jurisprudence.
6. While we appreciate the strenuous efforts made by Shri
Aggarwal to support the judgment and perhaps sympathise
F
with him on the particular facts of this case, we cannot
agree that hard cases can be permitted to make bad law.
The appeal is dismissed, but since the workmen for
obvious reasons have not been able to represent
themselves in this Court, the normal penalty of costs G
against the appellant who loses cannot follow. The appeal
is dismissed, but for the reasons above stated, there will
be no order as to costs. "
5. Mr. Shanti Bhushan submitted that though the decision H
696
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
in Workmen of Edward Keventers was rendered in a case of
strike by workmen, for the present case the court should read
it by substituting the word "lock-out" for "strike". Learned
counsel submitted that lock-out was the obverse of strike and
in industrial law strike and lock-out were the two sides of the
a same coin. The. decision in Workmen of Edward Keventers
would, therefore, equally apply to a case of lock-out. In support
of the submission he relied upon two decisions of the Supreme
Court, one in The Management of Express Newspapers Ltd.
vs. Workers & Staff Employed Under It and Ors., 1963 (3) SCR
c 540 and the other in Management of Kairbetta Estate, Kotagiri
vs. Rajamanickam and Ors., 1960 (3) SCR 371.
D
E
F
In Management of Express Newspapers Ltd., it was
observed as follows:
" ... The theoretical distinction between a closure and a
lockout is well settled. In the case of a closure, the
employer does not merely close down the place of
business, but he closes the business itself; and so, the
closure indicates the final and irrevocable termination of
the business itself. Lockout, on the other hand, indicates
the closure of the business itself. Experience of Industrial
Tribunals shows that the Lockout is often used by the
employer as a weapon in his armoury to compel the
employees to accept his proposals just as a strike is a
weapon in the armoury of the employees to compel the
employer to accept their demands ... ."
And in Management of Kairbetta, it was observed as
follows:
G
" ... Even so, the essential character of a lock-out continues
to .be substantially the same. Lock-out can be described
as the antithesis of a strike. Just as a strike is a weapon
available to the employees for enforcing their industrial ·
demands, a lock-out is a weapon available to the employer
H
to persuade by a coercive process the employees to see
EMPIRE INDUSTRIES LTD. v. STATE OF
697
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
his point of view and to accept his demands. In the struggle A
between capital and labour the weapon of strike is
available to labour and is often used by it, so is the
weapon of lock-out available to the employer and can be
used by him. The use of both the weapons by the
respective parties must, however, be subject to the relevant
B
provisions of the Act. Chapter V which deals with strikes
and lock-outs clearly brings out the antithesis between the
two weapons and the limitations subject to which both of
them must be exercised .... "
6. Apart from the decisions of the Supreme Court, Mr. c
Shanti Bhushan also relied upon a decision of the Delhi High
Court in D.D. Gears Ltd. vs. Secretary (Labour) and Ors., 2006
Lab. I. C. 1462 and another of the Madras High Court in Metal
Box India Ltd. vs. State of Tamil Nadu & Ors., 1995 II L.L.N.
814. In the two High Court decisions the notices issued by the D
respective governments under section 10(3) prqhibitiRg-ttle
locit-.out of the faGtopt-by--themanagermmtwere held to be bad
and illegal under similar circumstances, by applying the same
reasoning as advanced by Mr. Shanti Bhushan and relying upon
the decisions of this Court in Workmen of Edward Keventers E .
and Management of Expre~s Newspapers Ltd.
7. On the basis of the submissions made above, it was
submitted that the prohibition notice coming undefr challenge in
the present appeal was equallylfable to be struck down.
F
8. The point so carefully crafted by Mr. Shanti Bhushan
appears to be quite unexceptionable and there may not be any
quarrel with the proposition that in a case where the strike or
the lock-out is in connection with a number of disputes, the
appropriate government would derive the authority and the G
power to prohibit, the lock-out or the strike, as the case may
be, only if alt the disputes are referred for adjudication under
section 10(1) of the Act.
..
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[2010] 3 S.C.R.
A
9. But let us see, how fa'r the proposition applies to the
present case.
10. We must begin with a brief summary of the facts of the
present case. The appellant company had a division called
B
Garlick Engineering at Ambernath which was engaged in the
manufacture and sale of E.O.T. cranes. The undertaking
maintained its own profit and loss account separately. Before
the present conflict started between the parties, the employer
and the workmen of the undertaking were bound and governed
by the last settlement arrived at between the two sides on
C
December 24, 1986. This settlement expired in June 1989 and
on its expiry the third respondent submitted a charter of
demands to the appellant. At that time the undertaking was in
dire straits, so much so that at the end of 1990 its overhead
losses for the past twenty seven months roughly worked out to
D
Rs.9.89 crores as against the paid up public capital of
Rs.5,99,99,980/-. It was not in a position even to pay the
electricity charges and the provident fund dues of the
employees. The appellant responded to the workmen's charter
of demands by letter dated September 15, 1990, stating that
E
it would be impossible to agree to any increase in wages and
further that the only way forward was to impose a ceiling on the
dearness allowance. This letter was followed by a notice dated
November 24, 1990 given under section 9A of the Act. In this
notice, the appellant proposed to peg the amount of dearness
F
allowance of monthly and daily rated workmen at the cost of
living index number 4524 worked out for the month of October
1990. In the notice, the appellant declared its intention to "effect
the change to the effect that irrespective of the rise in the level
of CPI over the CPI No.4524 as worked out in the month of
G October 1990, no workman shall receive DA over and above
the CPI No.4524.". The workmen rejected the proposal and
refused to accept any ceiling on dearness allowance. The
dispute which, thus, arose between the employer and the
workmen was taken up for conciliation under sections 11 and
H
12 of the Act. The conciliation, however, ended in failure on
EMPIRE INDUSTRIES LTD. v. STATE OF
699
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
September 10, 1991 and the failure report submitted by the
A
conciliation officer concluded by stating as follows:
"During the conciliation proceeding the Management did
not attend the hearings most of the time & also did not put
up any documents to show its worsening financial position
since there was no possibility of settlement the failure was
recorded and the conciliation proceedings were concluded
on 10.9.1991."
B
In this connection, Mr. Colin Gonsalves, learned Senior
Advocate for respondent no. 3, also invited our attention to the
C
affidavit-in-reply filed by the State in the LPA filed by the
petitioner before the division bench of the High Court from which
the present appeal arises. In paragraph 3 of its affidavit, the
State stated as follows:
" .. ,. During conciliation proceedings, the Management did
D
not attend the hearing most of the time and also has not
shown any documents to show its worsening financial
position. Since there was no possibility of settlement,
failure was recorded and the conciliation proceedings were
E
concluded. Hereto annexed and marked as EXHIBIT- "3"
is the copy of the failure report dt.27.3.1992 submitted to
the Government and copy was given to the respective
parties ... "
11. On receipt of the failure report of the conciliation
F
proceedings, the state government referred the dispute
concerning the ceiling on dearness allowance to the Industrial
Tribunal, Thane under section 10(1) of the Act vide order dated
February 12, 1992 which gave rise to Reference (IT) 3 of 1992.
12. Even before its demand concerning imposition of
ceiling on dearness allowance was referred by the state
government for adjudication to the Industrial Tribunal, the
appellant issued the lock-out notice on September 28, 1991.
In the notice, the reason for the proposed lock-out was stated
G
H
700
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(2010] 3. S.C.R.
A as follows:
B
c
D
E
'The Management endeavoured to impress upon the office
bearers/members of the said Association that the
Management is not at all in a position to concede any
further demands and they should agree for ceiling on DA.
In addition to this, the office bearers/members of the
Association were during several meetings, advised by the
representatives of the Management that they should also
agree for reduction of surplus, labour as it is not
economically viable to run the said factory with the existing
manpower/labour force. The office bearers/members of
the said Association were sought to be taken into
confidence from time to time by the Management and
explained to them that the very existence/survival of the
Undertaking is at stake and that they should see the
reasons and realities and give up their Charter of
Demands and they should agree to the ceiling of reduction
in DA and reduction of surplus labour as also give up
unlawful/agitational activities. However, no wiser counsel
prevailed upon them. On the contrary, they resorted to
various agitations/illegal/unlawful activities from time to
time."
Here, it needs to be made clear that it was on the basis of the
above passage in the lock-out notice that Mr. Shanti Bhushan
F argued that the lock-out was in connection with three materially
separate demands. One, relating to the agitational activities of
the workmen and the alleged intimidations and acts of violence
committed by them, the other in respect of the imposition of
ceiling on dearness allowance and the third, with regard to the
G reduction in the workforce and the retrenchment of a number
of workers.
13. In reply, Mr. Colin Gonsalves, submitted that in regard
to the alleged agitational activities of the workmen, the
appellant had already filed a complaint under section 26 read
H with Item Nos.5 and 6 of Schedule Ill of the Maharashtra
EMPIRE INDUSTRIES LTD. v. STATE OF
701
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
Recognition of Trade Unions and Prevention of Unfair Labour
A
Practices Act, which was registered as Complaint (ULP)
No.368 of 1991 in the Industrial Court of Maharashtra, Thane,
titled Mis Garlick Engineering Ambemath vs. Association of
Engineering Workers and Ors. On July 24, 1991, the date of
filing of the complaint, the appellant had also obtained an ex
8
parte order of injunction against the workmen. The complaint
was eventually dismissed because the appellant stopped taking
any steps in the proceeding but once having taken resort to the
provisions of Maharashtra Recognition of Trade Uriions and
Prevention of Unfair Labour Practices Act, any proceeding c
under the Industrial Dispute Act was barred by section 59 of
the former Act and, therefore, there was no question of any
reference of this particular demand by the petitioner under
section 10( 1 ) of the Act.
14. Mr. Gonsalves is undoubtedly right insofar as the
D
appellant's grievance/demand with regard to the workmen's
alleged activities are concerned. But in fairness to Mr. Shanti
Bhushan it must be said that he did not much refer to this
particular demand. His grievance was mainly with regard to the
demand concerning retrenchment of a number of workers for
E
reduction of the workforce and the state government's omission
to refer it for adjudication.
·
15. In so far as the demand concerning retrenchment of
workers is concerned, Mr. Gonsalves countered that it was
F
equally a false alibi. He pointed out that the section 9A notice
given by the management was only about putting a ceiling on
dearness allowance paid to the daily rated and the monthly rated
workers and there was no mention in it of any proposal for
retrenchment of workers. Further, in the conciliation proceeding
G
that took place in pursuance of the section 9A notice it was
perfectly open to the management to raise any additional
demand concerning retrenchment of workers but the appellant
did not even properly take part in the protracted proceedings
that continued for about 10 months, much less raising any
H
additional demand.
.A
B
702
SUPREME COURT REPORTS
[2010] 3 S.<;.R.
..
C.oming then to the lock-out notice in which the matter of
retrenchment of workers was mentioned for the first time, Mr.
Colin Gonsalves pointed out the manner in which it was put: ·
" ... In addition to this, the office bearers/members of the
Association were during several meetings, advised by the
representatives of the Management that they should also
agree for reduction of surplus, labour as it is not
economically viable to run the said factory with the existing
..
manpower/labour force."
C
16. Mr. Gonsalves submitted that the matter of reduction
of surplus labour was, thus, at best an advice by the appellant.
He contended that the retrenchment of workers was never
presented to the workmen as a demand by the appellant, the
non-acceptance or rejection of which could give rise to an
D industrial dispute. In other words, on facts there was no
industrial dispute concerning the retrenchment of workers in the
factory that could form the subject matter of any reference for
adjudication under section 10( 1) of the Act.
E
17. From the legal point of view, Mr. Gonsalves argued that
in the matter of retrenchment, the initiative always lies :n the
hands of the employer and the employer can, at all times, take
steps for retrenchment of workers subject of course to the
provisions of the Act. Hence, the mere fact that the matter of
·F retrer:ichment of workers was not referred for adjudication under
section 10(1) cannot be taken as a plea to defy the prohibition
order issued under section 10(3) of the Act.
18. In short, learned counsel submitted that so far as the
issue of retrenchment of workers is concerned, as a matter of
G fact, no such dispute between the parties had crystallised and
come into existence for reference; further a dispute of such
nature was not required to be referred for adjudication under
section 10( 1) of the Act because the retrenchment of workmen
was always within the power of the employer. Hence, its non
.H
EMPIRE INDUSTRIES LTD. v. STATE OF
703
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
reference would not vitiate or invalidate the impugned closure
A
notice.
19. In reply to the submission of Mr. Gonsalves that no
dispute concerning retrenchment of workmen ever came into
existence, Mr. Shanti Bhushan submitted that for reference for
B
adjudication it was not necessary that a dispute should come
into existence but an apprehended dispute could also be
referred under section 10(1) of the Act. In support of his
submission he relied upon a Constitution Bench decision of this
Court in State of Madras vs. C.P. Sarathy and Anr., 1953 (4)
C
SCR 334. He cited the following passage from the decision:
"Moreover, it may not always be possible for Government,
on the material placed before it, to particularise the dispute
in its order of reference, for situations might conceivably
arise where public interest requires that a strike or a
D
lockout, either existing or imminent, should be ended or
averted without delay, which under the scheme of the Act,
could be done only after the dispute giving rise to it has
been referred to a Board or a Tribunal (vide sections 10(3)
and 23). In such cases Government must have the power,
E
in order to maintain industrial peace and production, to set
in motion the machinery of settlement with its sanctions
and prohibitions without stopping to enquire what specific
points the contending parties are quarrelling about, and it
would seriously detract from the usefulne~s of the statutory
machinery to construe section .1Qill as denying such
power to Government. We find nothing in the language of
that provision to compel such construction. The
Government must, of course, have sufficient knowledge of
F
the nature of the dispute to be satisfied that it is an
G
industrial dispute within the meaning of the Act, as, for
instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the
Government to ascertain particulars of the disputes before
making a reference under section .1Q(1} or to specify them
H
704
SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
in the order."
The proposition that an apprehended dispute can also form the
subject matter of a reference under section 10( 1) of the Act is
well established, but we do not see any application of the
8 principle or of the Constitution Bench decision relied upon by
Mr. Shanti Bhushan in the facts of the case.
20. In reply to Mr. Gonsalves' second submission that since
in the matter of retrenchment the initiative always remained in
the hands of the employer, there was no need to make any
C _reference of the demand of retrenchment made by the
employer, Mr. Shanti Bhushan submitted that the employer
might be free to carry out retrenchment of workers on its own
but that would not prevent it to have the legal confirmation of
its action in advance by raising a demand for retrenchment and
D getting it referred for adjudication under section 10(1) of the Act.
The submission though apparently reasonable, is quite
fallacious as it would nullify and render meaningless a whole
lot of provisions of the Act.
E
21. Retrenchment is defined in the Act to mean termination
of the service of a workman by the employer for any reason
whatsoever, otherwise than as punishment for any misconduct
and further subje~t to the four exceptions enumerated in clauses
(a), (b), (bb) and (c) of section 2(oo) of the Act. Retrenchment
F being termination of service for no fault on the part of the
workman is likely to visit the concerned worker(s) and his/their
families with disastrous consequences. Retrenchment is an
important and serious issue in industrial law since its wanton
and improper use can become a major source of industrial
G unrest and disharmony. The issue of retrenchment is, therefore,
not left uncontrolled but is regulated in great detail by the law.
The Industrial Disputes Act lays down not only certain inflexible
preconditions that must be satisfied before an employer can
resort to retrenchment but also a detailed procedure following
H which retrenchment can be carried out. Section 9A provides
EMPIRE INDUSTRIES LTD. v. STATE OF
705
MAHARASHTRA & ORS. [AFTAB ALAM, J.]
that no employer proposing to effect any change in the
A
conditions of service applicable to any workman in respect of
any matter specified in the Fourth Schedule shall effect such
change without giving twenty one days notice in the prescribed
manner of the nature of change proposed to be effected. Item
No.11 of the Fourth Schedule deals With any increases or
B
reduction (other than casual) in the number of persons
employed or to be employed in any occupation or process or
. department or shift (not occasioned by circumstances over
which the employer has no control).
22. Then, we come to Chapters VA and VB of the Act
C
which were inserted with effect from October 24, 1953 and
March 5, 1976 respectively. Chapter VA contains sections 25A
to 25H dealing with lay-off and retrenchment. Section 25A
excludes the application of sections 25C to 25E to certain
industrial establishments, including those covered by the
D
provisions of Chapter VB. Section 25B gives the definition of
continuous service. Section 25F lays down the conditions
precedent to retrenchment of workmen and requires the
employer to give notice to the appropriate government/
prescribed authority apart from giving one month's notice in
E
writing or one month's wages in lieu of the notice and payment
of retrenchment compensation to the concerned workman(en).
Section 25FF provides for compensation to workmen in case
of transfer of undertakings. Section 25FFF provides for
compensation to workmen in case of closing down of
F
undertakings. Section 25G lays down the procedure for
retrenchment and provides that retrenchment should follow the
principle of last come, first go. Section 25H deals with reemployment of retrenched workers. Section 25J has the nonobstante clause and lays down that the provisions of chapter
G
VA would have effect notwithstanding anything inconsistent
therewith contained in any other law, including standing orders
made under the Industrial Employment (Standing Orders) Act,
1946.
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SUPREME COURT REPORTS
[2010] 3 S.C.R.
A
23. Chapter VB has "Special Provisions" relating to layoff, retrenchment and closure in certain establishments. The
provisions of chapter VB (from section 25K to section 25S)
apply to industrial establishments (not of a seasonal character
or in which work is performed only intermittently) in which not
B less than one hundred workmen were employed on an average
per working day in the past 12 months. It is not in dispute that
the number of workers employed by Garlick Engineering was
in excess of hundred and, therefore, the industrial establishment
was covered by the provisions of Chapter VB]. Section 25L
C contains the definitions. Section 25M prohibits lay-off except
under certain conditions. Section 25N lays down the conditions
precedent for the retrenchment of workmen and it is as follows:
D
E
F
G
H
"25N. Conditions precedent to retrenchment ofworkmen.-
(1) No workman employed in any industrial establishment
to which this Chapter applies, who has been in continuous
service for not less than one year under an employer shall
be retrenched by that employer until,-
(a) the workman has been given three months
notice in writing indicating the reasons for
retrenchment and the period of notice has expired,
or the workman has been paid in lieu of such notice,
wages for the period of the notice; and
(b) the prior permission of the appropriate
Government or such authority as may be specified
by that Government by notification in the Official
Gazette (hereafter in this section referred to as the
specified authority) has been obtained on an
application made in this behalf.
(2) An application for permission under sub-section (1)
shall be made by the employer in the prescribed manner
stating clearly the reasons for the intended retrenchment
and a copy of such application shall also be served
EMPIRE INDUSTRIES LTD. v. STATE OF
707
MAHARASHTRA & ORS.