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A.K. Kallappa Chettiar and Sons (Represented by Its Managing Partner, A.K. Karuppuswami) Vs. State of Kerala (Represented by Chief Secretary to Government) and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1970)ILLJ97Ker
AppellantA.K. Kallappa Chettiar and Sons (Represented by Its Managing Partner, A.K. Karuppuswami)
RespondentState of Kerala (Represented by Chief Secretary to Government) and ors.
Cases Referred and Ors. v. Expert Newspapers
Excerpt:
.....complaining of the failure of the state to give protection to the life and property of the partners of the petitioner-firm and seeking directions for police protection, were pending. it is well-established on judicial authority that every closing is not lookout; the business itself is relinquished clearly and unmistakably, and the legal personality of the concern comes to an end. 232: the theoretical distinction between a closure and a lookout is well-settled......the lookout. the word closure is not defined in the act. section 2(1) defines the word ' lookout':'lookout' means the closing of a place of employment, or the suspension of work, or the refusal of an employer to continue to employ any number of persons employed by him.it is well-established on judicial authority that every closing is not lookout; and there is clear distinction between closure and lookout. ballentin's ' law dictionary' gives the following definition to ' lookout':a proceeding by an employer of labour, the purpose of which is to bring his employees to his terms, by shutting them off from employment and persuading other employers engaged in a similar business not to employ them thereby forcing them to return to work for him on his terms.10. in sri ramachandra.....
Judgment:

M.U. Isaak, J.

1. The petitioner is a partnership-firm, herein represented by its managing partner. It started an industry in 1959 under the style 'Cochin Metals and Alloys' and another industry in 1962 under the style 'Cochin Hollow Wares.' The former was engaged in non-ferrous sheet rolling, while the latter was manufacturing hollow wares, hospital wares, etc. The workers in these two Industries are represented by respondent 2, the Chemical and Engineering Workers' Union, Palluruthy. Disputes arose in 1967 between the management and the workers; and they were settled by an agreement dated 16 December 1967, which was to remain in force for one year. But in July 1968, respondent 2 again raised disputes on matters already settled; and in order to force the management to accept the fresh demands made by them, which according to the management were highly unreasonable and impossible of compliance, the workers led by respondent 2 started ' go-slow ' tactics, and began to indulge in violent demonstrations and other unlawful activities. The management instituted a domestic enquiry about the 'go-slow ' tactics. On 9 November 1968, the workers kept the enquiry officer and one of the partners of the petitioner in confinement by use of criminal force within the factory of the Cochin Metals and Alloys by a process of what is nowadays known as 'gherao.' They were relieved from confinement by the intervention of the police, late in the evening.

2. On 8 November 1968, respondent 2 had approached the District Labour Officer, Always, for intervention and settlement of the disputes. Accordingly, he issued notice to the parties, convening a conference of the management and the union on 20 November 1968. On 11 November 1968, the petitioner put up notices in both factories notifying retrenchment of all workers with effect from the said date, consequent on its decision to close down these establishments. The reason for the closure was stated to be high cost of raw materials, non-availability of scarce raw materials, trade recession, non-feasibility of running the business on economic grounds, and consequent difference of opinion among the partners regarding the continuation of the business. Notice in the prescribed form was also given to the District Labour Officer, who received it admittedly on 12 November 1963. Apparently on receiving information about the closure of factories, he issued telegraphic notice to the management advancing the date of the conference on 12 November 1968. On that date, the District Labour Officer received a telegram from the managing partner of the petitioner, stating that he was unable to attend the conference, as he was under ' gherao ' in his residence by the workers, The conference was adjourned to 13 November 1968, which was attended by both parties. The petitioner stated in very clear terms that it had closed down the factories and was not intending to reopen or work them any longer, and that there was, therefore, no scope for any conciliation proceedings. The matter was accordingly reported by the District Labour Officer to the Government as per Ex R. 1 dated 14 November 1968. He also wrote to the Government as per Ex. R. 2 of even data recommending a reference of the dispute to the industrial tribunal, Calicut, for adjudication. Exhibits R. 1 and R. 2 were forwarded to the Government by the Labour Commissioner, with his letter Ex. R. 3 dated 25 November 1968, which endorsed the recommendation of the District Labour Officer for reference, Accordingly, a reference was made by the Government under Section 10(1)(d) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act), to the above tribunal, by order Ex. p. 1 dated 30 November 1968. According to the petitioner, this reference is incompetent, as there was no industrial dispute in view of the closure of the industry. The matter is pending adjudication.

3. In the meanwhile, the illegal and lawful activities of the workers represented by respondent 2 continued. They 'gheraoed' the managing partner of the petitioner for one full day in his residence. It is alleged that himself and the members of his family were forcibly prevented from getting out of the house even for answering calls of nature, that the children were not allowed to go to the schools, and that the police intervened and removed the workers only late in the day. It is also alleged that, thereafter, the workers continuously and without interruption started a sit-down strike, coupled with violent demonstrations and abusive slogans in front of the houses of all the partners of the petitioner-firm and its shop at Broad way, Ernakulam. The petitioner filed Original Suit No. 673 of 1963 in the Munsif's Court, Ernakulam, to restrain the workers by an injunction from preventing the ingress and egress of the partners of the petitioner and the members of their families to and from their houses. Relief was granted by that Court. It is further alleged in she affidavit of the petitioner that the partners sought police protection for their person and property, that there was no response from the authorities, in spite of repeated communications addressed to high police officers, that the petitioner filed Original Petition No. 6266 of 1968 in this Court for directions, and that it was disposed of on 10 January 1969 in the light of the assurance given by the Public Prosecutor that police protection would be continued to be given to the petitioner, if and when necessary. The workers are said to be still indulging in their criminal activities; and a criminal complaint was also filed in the local Magistrate's Court as Calendar Case No. 2406 of 1868 in respect of the wrongful restraint and other criminal acts committed by them. However, on 7 January 1969, the Government issued an order Ex. P. 2 in exercise of the powers under Section 10(3) of the Act; prohibiting the continuance of lockout in the two industries of the petitioner. Exhibit P. 2 reads as follows:

Whereas the Government of Kerala have by their order Rt. No. 986 of 1968 dated 30 November 1968 of the Labour and Social Welfare (H) Department issued, in exercise of the powers conferred by Section 10(1)(d) of the Industrial Disputes Act, 1947 (Central Act 14 of 1947), referred the industrial dispute between the management represented by the managing partner, the Cochin Hollow Wares and the Cochin Metals and Alloys, P.B. No. 131, Ernakulam-1, and the workers of the said concern to the industrial tribunal, Kozhikode, for adjudication ;

And whereas the lookout in the concern in connexion with the said dispute which was in existence on the date of reference is continuing;

Now, therefore, in exercise of the powers conferred by Sub-section (3) of Section 10 of the said Act, the Government of Kerala hereby prohibit the continuance of lookout in the said concern in connexion with the said dispute.

This original petition has been filed to quash the above order, to strike down Section 10(3) of the Act as unconstitutional and to restrain the respondent, the State of Kerala, from taking any steps pursuant to Ex. P. 2 or implementing it in any manner.

4. The main ground of attack against Ex, P. 2 apart from the question of constitutional validity of Section 10(3) of the Act under which it was issued, is that, in so far as the establishments ware closed down on 11 November 1968, there was no soope for an order prohibiting the continuance of any ' lockout.' According to the petitioner, respondent 2 is a trade union controlled by one of the constituent political parties of the present United Front Government, and Ex. P. 2 has been issued mala fide at the instance of that political party without any regard to the facts of the case. It was also contended that the power vested in the Government under Section 10(3) of the Act is a quasi Judicial power and that Ex P. 2, as it was made without hearing the petitioner and behind its back, is violative of natural justice and null and void. Respondent 1 has filed a counter-affidavit in reply to the allegations in the petitioner's affidavit, and justifying the order, Ex. P. 2.

5. I shall first consider the contention that Ex. P. 2, is violative of natural Justice, as it was passed without hearing the petitioner. The learned Government Pleader submitted that Ex. P. 2 is only an administrative order, that the Government had sufficient materials before them to pass the said order, and that in such a case no question of hearing the party arises. The question whether the power vested in the Government made under Section 10(3) of the Act is administrative or quasi-Judicial depends on the construction of that provision. Section 10(3) reads as follows:

Where an industrial dispute has been referred to a board, labour court, tribunal or national tribunal under this section, the appropriate Government may by order prohibit the continuance of any strike or lookout; in connexion with such dispute which may be in existence on the date of the reference.

The above provision shows that, for the appropriate Government to determine whether an order thereunder should be passed or not, the following foots must be established. They are-

(1) that a strike or lookout is in existence;

(2) that the strike or lookout is in connexion with the dispute referred for settlement or adjudication under Section 10(1) of the Act; and

(3) it must be in existence on the date of reference.

Whether on the above facts, an order prohibiting the continuance of the strike or lockout should be made must again depend on a number of other facts and the circum stances of the case. To refer to an obvious instance, suppose the lookout was made due to the unlawful and criminal activities of the workers, and these activities are continuing or would be continued if the work is restored, the Government would not prohibit the continuance of the lookout. Again suppose a case where the industry has cased to exist, there would be no meaning in passing an order under Section 10(3) of the Act. Similarly, if for any valid reason, it has become impossible to continue the industry, or the employer has disposed of the same, an order prohibiting the continuance of a lookout becomes incapable of implementation and consequently invalid. So an order under Section 10(3) of the Act requires a finding on facts and an adjudication thereon. In my view, it is a quasi Judicial power; and an order thereunder cannot be passed without giving a reasonable opportunity to all those who would be affected by the order, to state and establish their case.

6. In the nature of the power conferred under Section 10(3) of the Act, it makes no difference on the applicability of the principles of natural Justice, even if the power is administrative in character as contended by the learned Government Pleader. An order under Section 10(3) prohibiting the continuance of a lookout involves serious civil consequences to the employer. Non compliance with such an order is illegal under Section 24(1)(ii) of the Act, and is punishable with imprisonment and/or fine under Section 26, Therefore, it also involves serious criminal consequences. There can be little doubt that such an order cannot be passed without giving a reasonable opportunity to the person, who would be affected thereby, to state and establish his case. In State of Orrisa v. Dr. (Miss) Binapani Dei and Ors. 1967-IT L.L.J. 266, the Supreme Court said at p. 270:. It is true that the order is administrative in character, but even an administrative order which involves civil consequences as already stated, must be made consistently with the rules of natural justice after informing respondent 1 of the case of the State, the evidence in support thereof and after giving an opportunity to respondent 1 of being heard and meeting or explaining the evidence ....

Admittedly, no such opportunity was given to the petitioner before passing Ex. P. 2 and It is liable to be quashed on this short ground.

7. The learned Counsel for the petitioner pressed the contention that Ex. P. 2 is a mala fide order. Regarding the allegations made by the petitioner about wrongful confinement under the style of 'gherao' of the enquiry officer and one of the partners of the petitioner-firm within the factory on 9 November 1968 of the managing partner in his residence on 12 November 1968, and of all the partners and the members of their family in their houses on several days thereafter, without even allowing them to go out to attend the calls of nature, and the allegations about the continued sit-in strike coupled with violent demonstrations and abusive slogans in front of its Broadway shop, the counter-affidavit states that

respondent 1 is not aware of any demonstrations of a violent character having been indulged in by the workmen in the business premises of the partner,

and that it does not admit the allegation

that gherao was organized and forced attempts ware made calculated to harass the partners of the firm to yield to unreasonable and illegal demands of the workers,

The counter-affidavit also adds that only respondent 2 is in a position to answer the averment whether 'the workmen are indulging in wrongful restraint and other unlawful activities. 'Respondent 2 has not filed any counter-affidavit denying the above allegations. To say the least, the attitude of respondent 1 is regrettable. When such serious allegations affecting law and order are made against workers belonging to trade union under the control of one of the political parties in power, and an order passed by the Government is attacked as mala fide on the basis of the said allegations, the Government cannot escape responsibility by saying that they are not aware whether the allegations are true, or that they do not admit that the alleged acts were done by the workers with the object attributed to them. Such an attitude amounts to indifference to the problem of law and order. As regards this case is concerned, I have to proceed on the assumption that the allegations in the petitioner's affidavit are true to the extent that they are not denied.

8. In answer to the charge of mala fides respondent 1 has stated in its counter-affidavit that the Government were satisfied, on receiving Exs. R. 1 and R. 2 from the District Labour Officer through the Labour Commissioner along with his letter Ex. R. 3, that the discontinuance of the industry with effect from 11 November 1968 was not a bona fide closure, but a lockout, and that Ex. P. 2 was passed - in bona fide exercise of their power under Section 10(3) of the Act, as the lookout continued even after the reference of the dispute for adjudication. It is difficult to accept the Government's plea. The factories were admittedly closed down on 11 November 1968. Exhibit R. 1 expressly stated that the management complained to the District Labour Officer of the illegal and criminal activities of the workers, and It also told him clearly that It had no intention of reopening and running the factories any longer. If there was any dispute regarding the true character of the closure, that matter could also have been referred for adjudication ; but this was not done. If, as the Government now say, they were bona flde satisfied that the closing of the factories was really a lookout, it needs explanation why an order under Section 10(3) was not passed while referring the dispute for adjudication as per Ex. P. 1. It also needs explanation what prompted or pursuadad the Government to pass Ex P. 2 one month and a week after passing the order, Ex. P 1. All the materials that the Government have in this matter are contained in Exs. R. 1, R. 2 and R. 3 and they had them when passing the order for reference. It is remarkable that neither the District Labour Officer nor the Labour Commissioner has recommended the passing of as order under Section 10(3) of the Act. It has in this context to be remembered that at the time of passing Ex. P. 2, a criminal complaint and a civil suit instituted by the management against the workers in respect of their alleged criminal and illegal acts, as well as a writ petition complaining of the failure of the State to give protection to the life and property of the partners of the petitioner-firm and seeking directions for police protection, were pending. It is not disputed that these workers belong to a trade union controlled by one of the political parties cow ruling the State. The order, Ex. p. 2, was passed without any enquiry or relevant facts and without notice to the petitioner. In these circumstances, the petitioner's contention that it is a mala fide order is not without force.

9. The next question for consideration is whether the closing down of the factories on 11 November 1968 was a closure, and not a lookout. If it was a closure, there was no basis for passing the order. Ex. P. 2, prohibiting the petitioner from continuing the lookout. The word closure is not defined in the Act. Section 2(1) defines the word ' lookout':

'Lookout' means the closing of a place of employment, or the suspension of work, or the refusal of an employer to continue to employ any number of persons employed by him.

It is well-established on judicial authority that every closing is not lookout; and there is clear distinction between closure and lookout. Ballentin's ' Law Dictionary' gives the following definition to ' lookout':

A proceeding by an employer of labour, the purpose of which is to bring his employees to his terms, by shutting them off from employment and persuading other employers engaged in a similar business not to employ them thereby forcing them to return to work for him on his terms.

10. In Sri Ramachandra Spinning Mill v. State of Madras and Anr. 1953-1 L.L.J. 216, Balakrishna Ayyar, J., described ' lockout ' as follows at p. 218:. If an employer shuts down his place of business as a means of reprisal or as an instrument of coercion or as a mode of exerting pressure on the employees, or, generally speaking, when his act is what may be called an act of belligerency, there would be a lookout. If, on the other hand, he shuts down his work because he cannot, for instance, get the raw materials or the fuel or the power necessary to carry on his undertaking, or because he is unable to sell the goods he has made, or because his credit is exhausted, or because he is losing money, that would not be a lockout ....

In Express Newspapers, Ltd., Employees' Union (by its secretary) and Ors. v. Expert Newspapers (Private), Ltd., Madras, and Ors. 1960-1 L.L.J. 351, a Division Bench of the Madras High Court said at p. 360:. In the case of a closure, it is not merely the closing down of the place of business. The business itself is relinquished clearly and unmistakably, and the legal personality of the concern comes to an end. The essence of the ' lookout,' on the contrary, is that the place of business is closed down, that the workers are shut out, that the employer does certain acts with the intention of forcing the workers to terms, and is either continuing the business really throughout, or intends to recommence his activities as soon as his object has been achieved.

The above decision was approved by the Supreme Court in appeal in Express News-papers, Ltd. v. their workers and staff and Ors. 1962-II L.L J. 227 and it said at p. 232:. The theoretical distinction between a closure and a lookout 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 .... Lookout, on the other hand, indicates the closure of the place of business and not the closure of the business itself ....

11. Therefore, whether the closing down of a place of business is a 'closure' or ' lookout' is essentially a question of fact. While it is true that it is the fundamental right of an employer to dispose of his business by sale or otherwise, or close it down for reasons of his own, his assertion that he has disposed of it or closed it down permanently is not the last word on the matter. Ordinarily this Court would not examine that question if it were one of (he matters referred for adjudication; but, as already stated, it is not so. The learned Counsel for the petitioner submitted that it was not disputed that both the factories were closed with effect from 11 November 1968, and that notice was given to all the workers on the same date stating that the industry has been permanently stopped and asking them to receive the compensation payable to them under the Act. He drew my attention to the averment in the petitioner's affidavit to the effect that pursuant to the closure of the business, the licences under the Factories Act and the Central Excise and Salt Act, which expired in October 1968, was not renewed, and that the machinery and plants were sold away on 28 November 1968. He also submitted that the above averments are not denied in the counter-affidavit, and that in these circumstances, there was no basis for any controversy on this matter. I agree with the above submission, and hold that, on the undisputed facts of this case, the closing of the petitioner's places of business with effect from 11 November 1968 is a closure. The order, Ex. P. 2, passed under Section 10(3) of the Act, is, therefore, misconceived.

12. In the light of my above findings, it is not necessary to consider the petitioner's contention regarding the constitutional validity of Section 10(3) of the Act; and I leave that matter open. Accordingly, I quash the order Ex, P. 2 and restrain respondent 1 from taking any steps pursuant thereto or from implementing the same in any manner. The petitioner will get his costs from respondent 1. Counsel's fee is fixed at Rs. 250.


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