# PRIY A LAXMI MILLS LTD v. 1 MAZDOOR MAHAJAN MANDAL, BARODA

- **Citation:** [1977] 1 S.C.R. 709
- **Court:** Supreme Court of India
- **Decided:** 1976-09-23
- **Case number:** Civil Appeal No. 511 of 1976
- **Bench:** Y. V. Chandrachud, P. K. Goswami, A. C. Gupta
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/priy-a-laxmi-mills-ltd-v-1-mazdoor-mahajan-mandal-baroda-6950
- **Pages:** 7

## Headnote

Bombay industrial Relations Act, 1946-S. 98(1)(a)-Schedule Ill item
6 (ii)--Scope of-Workmen laid off-Lock-out declared later
alleg111g
unruly
behaviour-Lockout if illegal.
.
According to s. 98(1)(a) of the Bombay Industrial Relations Act •. 1946 a
lock-out shall be illegal if it is commenced or continued in cases where 1t relates
to any industrial matter specified in Schedule III, Item 6(ii). Item 6(ii). states
"employment including unemployment of persons previously employed m the
industry concerned".
On account of financial and other difficulties the appellant laid off worker~
in some departments of the mill.
After a few days the management declared
a lock out alleging that the workers gheraoed some officers in the mill, started
'dharna' and behaved in an unruly manner.
The Labour Court, to which the dispute was referred, held that there WM
no evidence of violence or of gheraoes, that the situation in the mills was not
of such a grave nature as called for a lock-out and that the management
resorted to the lock-out on the slfghtest opportunity in order to avoid payment
of compensation, since it was in continuous financial difficulties heading towards
a closu:re and closure would have put the company under obliga!ion to pay
compensation.
Dismissing the appeal,
HELD : (1) A lock-out can be declared for reasons similar to those described
'in the present notice of lock-out.
In that case although it will be lock-out in
another sense it may not be a lock-out within the meaning of s. 3 (24) of the
Act. That kind of lock-out with the avowed object of preventing violence and
threat to life and property may be justified on facts in a given case.
In such
a situation it may be difficult to prove that it is an illegal lock-out since in an
illegal lock-out the sole object is to compel the workmen to accept the terms
of the employer which the workers consider as unreasonable n,nd oppressive.
[713 F-G]
But in the instant case though the views of the Labour Court th,at threats
and gheraoes "are the normal. behaviour when an occasion like this takes place"
should be disapproved, the ultimate conclusion· after appreciation of the evidenco
was not such as would call for interference in an application under Art. 136
of the Constitution. [713' HJ
(2) Though the Act has not defined 'lay-out', even according to the dictionary
meaning, lay-off means to discontinue work or activity; to dismiss or discharge
temporarily.
When workers are in employment and they are laid
off,
that
immediately results in their unemployment, howsoever temporary. and such an
unemployment will clearly come under item 6(ii) in Schedule III of the Act.
Since unemployment is an industrial matter under item 6(ii) of Schedule Ill
of the Act, the lock-out which had been found by the La.hour Court to have
direct connection with lay off is clearly illegal under s. 98(1)(a) of the Act.
[715 BC]

## Text

r
•
709
PRIY A LAXMI MILLS LTD.
v.
--1
MAZDOOR MAHAJAN MANDAL, BARODA
September 23, 1976
[Y. V. CHANDRACHUD, P. K. GOSWAMI AND A. C. GUPTA, JJ.]
Bombay industrial Relations Act, 1946-S. 98(1)(a)-Schedule Ill item
6 (ii)--Scope of-Workmen laid off-Lock-out declared later
alleg111g
unruly
behaviour-Lockout if illegal.
.
According to s. 98(1)(a) of the Bombay Industrial Relations Act •. 1946 a
lock-out shall be illegal if it is commenced or continued in cases where 1t relates
to any industrial matter specified in Schedule III, Item 6(ii). Item 6(ii). states
"employment including unemployment of persons previously employed m the
industry concerned".
On account of financial and other difficulties the appellant laid off worker~
in some departments of the mill.
After a few days the management declared
a lock out alleging that the workers gheraoed some officers in the mill, started
'dharna' and behaved in an unruly manner.
The Labour Court, to which the dispute was referred, held that there WM
no evidence of violence or of gheraoes, that the situation in the mills was not
of such a grave nature as called for a lock-out and that the management
resorted to the lock-out on the slfghtest opportunity in order to avoid payment
of compensation, since it was in continuous financial difficulties heading towards
a closu:re and closure would have put the company under obliga!ion to pay
compensation.
Dismissing the appeal,
HELD : (1) A lock-out can be declared for reasons similar to those described
'in the present notice of lock-out.
In that case although it will be lock-out in
another sense it may not be a lock-out within the meaning of s. 3 (24) of the
Act. That kind of lock-out with the avowed object of preventing violence and
threat to life and property may be justified on facts in a given case.
In such
a situation it may be difficult to prove that it is an illegal lock-out since in an
illegal lock-out the sole object is to compel the workmen to accept the terms
of the employer which the workers consider as unreasonable n,nd oppressive.
[713 F-G]
But in the instant case though the views of the Labour Court th,at threats
and gheraoes "are the normal. behaviour when an occasion like this takes place"
should be disapproved, the ultimate conclusion· after appreciation of the evidenco
was not such as would call for interference in an application under Art. 136
of the Constitution. [713' HJ
(2) Though the Act has not defined 'lay-out', even according to the dictionary
meaning, lay-off means to discontinue work or activity; to dismiss or discharge
temporarily.
When workers are in employment and they are laid
off,
that
immediately results in their unemployment, howsoever temporary. and such an
unemployment will clearly come under item 6(ii) in Schedule III of the Act.
Since unemployment is an industrial matter under item 6(ii) of Schedule Ill
of the Act, the lock-out which had been found by the La.hour Court to have
direct connection with lay off is clearly illegal under s. 98(1)(a) of the Act.
[715 BC]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 511 of 1976.
(Appeal by Special Leave from the order dated 19-8-1975 of the
First Labour Court Ahmedabad in Appln. 493 /75).
R. P. Bhatt, D. K. Agarwal, K. K. Jain and Bishamber Lal, for the
Appellant.
A
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
710
SUPREME COURT "REPORTS
[1977] 1 S.C.R.
V. M. Tarkunde, K. L. Hathi, P. C. Kapur and Miss M. Tarkunde
for the Respondent.
'
The Judgment 'of the Court was delivered by
GOSWAMI, J.-A complaint was made to the Labour Court by the
respond~nt,. Mazdoor Mahajan Manda!, Baroda (briefly the union)
alleging the lock-out declared by the appellant to
be illegal.
The
appellant, Priya Laxmi Mills Ltd. (briefly the management) resisted the
petition.
After examining the oral and documentary evidence the
Labour Court came to th<~ conclusion thM the lock-out was illegal under
clauses (a) and (h) of sub-section (1) of section 98 of the Bombay
Industrial Relations Act, 1946 (briefly the Act).
A brief reference to the facts will be appropriate at thi~ stage.
The present appellant purchased this textile mill from M/s. Sayaji
Mills Ltd. in 1972 when it had about '.~500 workmen besides officers.
Jt is said that in 197 4 the textile industry suffered adverse ma1'ket
conditions, accumulation of stocks, shortage of raw materials and bank
credit squeeze in conse<i4ence of which the management started experiencing acute financial difficulties which were aggravated by a
spate of litigation between the appellant and the previous owners. The
appellant somehow continued to pay foe wages of the workmen upto
February 1975 although in an irregular manner.
The mill works in three shifts.
E:y a notice of April 13, 1975,
the management notified a lay off from the first shift of April 14, 1975.
till further notice.
The lay off was in the departments of spinning.
weaving, grey folding and engineering as per the lists containing the
names of the workmen and the members of the staff connected therewith.
Other departments, however, were allowed to continue to work
as usual. It was mentioned in the notic!O! of lay off that a work1rnrn.
if eligible, shall be paid lay off compensation as provided under th,:
law. The permanent workmen of laid--off departments who were eligible to get
compensation
under the
law were
required to
present themselves in the respective: departments at the start of
their respective shifts and get themselves marked as "laid-off". Naturally, therefore, although the workmen were laid off they had to attend
the mill premises for being marked present at the time of the commencement of the shift in order to be able to claim lay off compensation.
In view of the mounting tension on account of irregular p:•vment of wages for quite some time and the sub'sC<Iuent lay-off, negotiations were also afoot between the management and the union without
much headway.
According to the management the• workmen refused to accept the
decision of lay off and they continued to remain inside the mill premises even after getting their presence marked.
Some employees remained in the department while a large number of them collected outside the department and refused to go out of the mill premise's. It is
said that the workmen started staging 1 'dharna' daily in the administra-
(
r
,
...
FKlYA LAXMJ MILLS v. MAZDOOR M. MANDAL (Goswami, J.) 711
tive office of the mills thereby disrupting its normal and smooth working.
This state of affairs continued from April 14, 1975, to April
21, 1975. The workmen did not pay any head to the request of the
management to leave the premises after they had been marked present.
In this background, on April 21, 1975, at about·4.00 P.M. a section
of the workmen forcibly entered the Guest House No. 2, and trespassed into the living room oti. Shri L. Grover, Establishment Officer
-0f the mills, dragged him out of the room and took him into the
administrative office and kept him there under restraint and illegal
·Confinement for about 24' hours.
The workmen also removed the
personal belongings of Shri Grover. They also ghernoed and kept
un<le~ restraint and illegal confinement the Deputy Executiv~ Director,
Shri V. K. Bagla, the Deputy Chief Executive (Works) Shri S. C.
Gandhi and other senio11 officers in the mill premises with effect from
7.00 P.M. on April 21, 1975 .. The officers were kept in illegal confinement without food and other basic amenities of life continuously
for 21 hours.
It is said that the officers were abused and humiliated.
The workers also held out threats to their lives.
The management also
referred to other alleged unruly and undisciplined behaviour of the
workmen.
The officers were ultimately brought out with the help of
the police authorities at about 4.00 P.M. on April 22, 1975. The
employees, however, continued 'dhama' inside the mill premises on
April 22 and the night between April 22 and April 23. It is, thus,
the management's casfl that under the circumstances mentioned above
the company was compelled to declare a lock-out from the first shift
of April 23, 1975:
A
B
c
D
It may be appropriate to set out the lock-out notice dated April 23,
1975 :
E
"We hereby give notice to all concerned that a lock-out
is declared with effect from the beginning of 1st shift commencing at 7.00 a.m. on 23-4-1975 in our mills for the following or any of the reasons given below :
(a) On or about 4.30 p.m. on 21-4-1975 a section of
the workmen forcibly entered into the mill Guest House No. 2
and trespassed into the room in which Shri L. Grover, the
Establishment Officer of the mills resides, dragged him out
of the room and took him to the Administrative Office of
the mills and kept him there under restraint and
illegal
confinement for about 24 hours.
The workers also removed
personal belongings of Shri Grover.
(b) The workers gheraoed, kept in restraint and illegal
confinement our Dy. Executive Director, Shri V. K. Bagla,
Dy. Chief Executive (Works) Shri S. C. Gandhi, and other
senior officers in the mill premises with effect from 7.00 p.m.
of Monday, the 21st April 75.
Those officers were kept
in illegal confinement without food and other basic amenities of life continuously for 21 hours.
(c) The workers not only kept the above mentioned
officers under wrongful re~aint but also abused and humiliatF
H
A
8
712
SUPREME COURT REPORTS
(1977] 1 S.C.R.
ed them.
Threats were advani;ed to the life of these ofllcers
and to the effect that the mill property will also be damaged.
(d) The workers employed in spinning and weaving
departments including their preparatories and partly engineering department have been laid. off with effect from 14-4-75.
These workmen, instead of leaving the factory
premises
after lay off attendance staged dharana daily in the administrative office of the mills thereby disrupting its normal and
smooth working.
(f) The workers have also arrested the movement of
cloth bales from mill godowns thereby disrupting the bales of
the finished goods.
C
The lock-out hereby declared will cover all the departD
E
F
G
ments of the mills except the Watch and Ward and essential
service which will continue to function as usual and will not
be affected by this notice."
x
x
x
x
x
The union denied the various allegations made against the workmen and stated that the lock-out was carried out with a view to pressurise the union and the workmen to accept the management's terms
with regard to th~ mode of payment of their salary as well as the
lay off arrangements introduced by the management.
Both sides produced documentary evidence as well as examined
witnesses.
The management examined four witnesses whereas·
the
union examined two witnesses on their behalf.
After examining the
entire evidence the Labour Court came ta the conclusion that the lockout was an illegal lock-out.
H1mce this appeal by special leave.
The question that falls for decision is whether the lock-uut
in
question is illegal under section 98(1) (a) of the Act.
We arc not
required to consider whether it is also illegal under section 98(1) (h)
of the Act as referred to by the Labour Court.
According to section 98(0 (a), "a lock-out shall 'be illegal if it
is commenced or continued in cases where it relates to any industrial
matter specified in Schedule HI or regulated by any standing order
for the time being in force".
We are not required to consider the
second part of section 98(1) (a) wliich refers to the standing order.
Schedule III enumerates seven items out of which we are required
to consider only item 6(ii) which reads as follows :-
"Employment including unemployment of persons
previously employed in the kdustry concerned".
.
Before we
proceed further we may take note of the definition
of lock-out which is found in section 3(24) of the Act:
"'Lock-out' means the closing of a place or part of a
place of employment or the total or partial suspension of
~.
l
t •
f
PRIYA LAXMI MILLS v. MAZDOOR M. MANDAL (Goswumi, J.)
713
work by an employer or the total or partial refusal by. an
A
employer to continue to em_ploy persons employed_ by him,
where such closing, suspenston, or refusal occurs m consequence of an industrial dispute and is intended for the purpose of-·-
(a)
(b)
compelling any of the employees directly affected by
such closing, suspension or refusal or any other employees of his, or
aiding any other employer in compelliug persons employed by him, to accept any term or condition of or
affecting employment."
B
This definition is differently worded from what is there in the Industrial
C
Disputes Act, 1947. We, however, find that in the Trade Disputes Act,
1929, lock-out is similarly defined as in the present Act.
·
By section 2(1) of .the Industrial Disputes Act, lock-out
"means the closing of a place of employment, or· the suspension of work, or the refusal by an employer to continue
D
to employ any number of persons employed by him".
This Court, while interpreting the above definition, in Management of
Kairbetta Estate, Kotesiri v. Rajamanickam and others,(') observed
as follows : -
"Even so, the essential character of a Jock-out continues .
to be substantially the same.
Lock-out can be described as
the entiiliesis of a strike. Just as a strike is a weapon available to the employees for enforcing their industrial demand~,
a lock-out is a weapon available to the employer to persuade
by a coercive process the employees to see his point of view
and to accept his demands."
It should, however, be made clear that lock-out can be declared
also for reasons similar to those described in the present notice of
lock-out.
In that case although it will be lock-out in another sense,
it may not be a lock-out within the meaning of section 3(24) of the
Act.
That kind of a lock-out with the avowed object of preventing
violence and threat to life and property may even be justified on facts
in a given case.
In such a situation it may be difficult to prove that
it is an illegal lock-out since in an illegal lock-out the sole object is!
to compel the workmen to accept the terms of the employer which the
workers consider a·s unreasonable and oppressive.
E
F
G
In the instant case although! we do not approve of the Labour
Court's observations in the order to a possible effect that threats and
gheraoes "are the normal behaviour when an occasion like this takes
H
place", we cannot say that its ultimate conclusion after appreciation
(1) (1960] 3 S.C.R. 371 •.
714
SUPREME COURT REPORTS
[1977) J S.C.R.
A
of the evidence is such that it may call for interference in an applic:ttion under Article 136 of the Constitution.
B
c
D
F
The Labour Court has given a finding at paragraph 15 of the order
as follows :-
"Coming now to the other important ingredient viz. intention on the part of the management to compel the workers
directly affected by such closing to accept any term or condition affecting employment, it appears that there was such an
intention on the part of the management.
The oppol).cnt
company, because of the financial difficulties which they were
facing wanted the workers to agree to accept lay-off and
also agree to accept wage~ not on the specified days as per
the existing awards, etc. but as and when the management
could pay ...... In my opinion, therefore it could be said
that all the ingredients of an illegal 'lock-out' were present
in this case".
The Labour Court has taken note of the fact that there was no evidence
of any violence being caused to the property of the mill notwithstanding the presence of !l huge crowd said to be in a riotous mood. The
tribunal also took the view that the officers were not confined in their
rooms as such as represented but they themselves did not like to come
out perhaps due to apprehension.
The Labour Court was of opinion
that the situation was not of sud-. a grave nature which called for
such a drastic step like a lock-out.
The Labour Court seems to be of
the. further view that since the management has been in continuous
financial difficulties heading towards a closure and closure would have
put the management under an o'bliga;t.ion to pay compensation under
section 25 FFF under the Industrial Disputes Act, 1947, opportunity
was taken to declare a lock-out 0:1 the slightest opportunity. It is not
possible for us to reappraise the evidence and come to a different conclusion on the facts in this appeal.
We are also unable to hold that
the conclusions of the Labour Court are perverse or even against the
weight of evidence on record.
The only question, therefore, that survives is whether on the finding
of the Labour Court the lock-out is illegal.
It is contended on behalf of the appellant that item
6(ii)
in
G
Schedule III to the Act whicl:\ deals with the unemployment of persons
previously employed in the industry concerned cannot govern a case
of lay off.
According to counsel lay off is not unemployment since
the relationship of master and senrant is not snapped.
We are unable
to accept this contention.
Lay off is not defined in the Act but has
been defined in section (kkk) of the Industrial Disputes Act :
fl
" 'lay-off' (with its grammatical variations and cognate
expressions) means the failure, refusal or inability of an em-
·ployer on account of shortage of coal, power or raw materials
'
,,
\
f
t
fRIYA LAXM! MILLS v. MAZDOOR M. MANDAL (Goswami, !.) 715
or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched".
x
x
x
x
x
A
Even according to the dictionary meaning, lay off means to discontinue
B
work or activity; to dismiss or discharge temporarily. When workers
arc in employment and they are laid off, that immediately results in ,
their unemployment, howsoever temporary, and such an unemployment wil~ clearly come under item 6(ii) in Schedule III o~ the Act. It
is not disputed that "une,mployment" is an industrial ma~ter as defined
under section 3 ( 18) of the Act. Since unemployment is an industrial
matter under item 6 (ii) of Schedule III to the Act, the lock-out which
C
has been found by the Labour Court to have direct connection with
lay off is clearly illegal under section 98(1) (a) of the Act.
In the result the appeal fails and is dismissed with costs.
;P.B.R
Appeal dismissed.
-1234SCI/76