Judgment

CHANDRACHUD, CJI.:- The respondent, M/s. Perfect Pottey Co. Ltd. was engaged in the manufacture of stoneware pipes and other refractory material at its factory known as Perfect Pottery Works, where it employed about 900 workmen. For the purposes of its factory, respondent had taken a lease of Poly Pather Clay Mines, wherein about 81 workmen were employed. On April 24, 1967 respondent issued a notice of closure of the factory and the Mines stating, that the management had decided to close down the business on account of financial difficulties and other reasons.

2. Consequent upon the notice of closure, the appellant herein, the Pottery Mazdoor Panchayat, applied for initiation of conciliation proceedings to the Deputy Labour Commissioner, Madhya Pradesh and to the Regional Labour Commissioner (C), Jabalpur. The reason for initiation of two different conciliation proceedings was that Perfect Pottery Works was an industry to which the Madhya Pradesh Industrial Relations Act, 1960, applied, whereas poly pather Clay Mines was an industry governed by the Industrial Disputes Act, 1947. We will refer to these two Acts as the State Act and the Central act respectively.

3. Conciliation proceedings having failed, the Madhya Pradesh State Government, on June 26, 1960, referred an industrial dispute to the arbitration of the Industrial Court under Section 51 of the State act. The main questions referred to the Industrial Court were:

Whether the proposed closure by the management of the perfect Pottery Co. Ltd,. Jabalpur, of their pottery factory at Jabalpur, with effect from July 1, 1967, is proper and justified? and

To what retrenchment compensation are the employees entitled, if it is decided that the proposed closure is proper and justified?

4. The reference was evidently made in order, in the first instance, to avert the closure of the factory. The industrial Court was therefore also asked to consider whether any interim relief should be granted by restraining the management from closing down the factory until the reference was finally adjudicated upon. The Industrial Court by an interim Award dated June 30, 1967, having declined to issue a prohibitory injunction, the appellant filed Writ Petition No. 337 of 1967 in the Madhya Pradesh High Court. That petition became infructuous after the closure of the factory and was not pressed.

5. On July, 1, 1967 the respondent purported to close down the business. We say "purported", because whether the business was, truly and in fact, closed or not is a matter on which the parties have joined issue. The case of the appellant is that the respondent had closed the place of business and not the business itself. After the closure, or shall we say the alleged closure, the Central government on September 16, 1967, made a reference under Section 10 (1) (d) of the Central Act to the Central Government Industrial Tribunal-cum-Labour Court, Jabalpur, on the following question:

Whether the employers in relation to the Poly Pather Clay Mines of Perfect Pottery Co. Ltd., Jabalpur, were justified in closing down the said mine and retrenching the following 81 workers with effect from July 1, 1967. If not, to what relief are the workmen entitled?

6. In the two references one before the Industrial Court and the other before the Central Government Industrial Tribunal-cum-Labour Court, the respondent contended that the respective Tribunals had no jurisdiction to consider the question as regards the propriety or justification of the managements decision to close down the business. On the other question, the respondent did not dispute its liability to pay retrenchment compensation to the workmen but it contended that neither of the two Tribunals had jurisdiction to go into that question.

7. The appellants case before the Tribunals was that the so-called closure of the business was merely a camouflage and was in substance and essence, a lock-out. In support of this contention the appellant pleaded that the respo