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MADRAS HIGH COURT
BALAKRISHNA AYYAR
Sri Ramachandra Spinning Mills, Pandalapaka
Versus
Province of Madras
Civil Suit No. 448 of 1949
Decided On : 31 July, 1955
INDUSTRIAL DISPUTES ACT - LOCKOUT - DEFINITION - SHUTDOWN OF MILL DUE TO FINANCIAL LOSSES - NOT A LOCKOUT - INDUSTRIAL DISPUTES ACT, 1947, S. 2(1).
Fact of the Case:
The plaintiff, a textile mill, closed its mill from 1-7-1947 to 31-3-1948 due to financial losses. The Government referred the dispute between the plaintiff and its workers to an industrial tribunal, and the tribunal held that the closure of the mill was not justified and recommended that the workers be paid wages and dearness allowance for the period of closure. The plaintiff filed a suit challenging the validity of the Government's order and the award of the tribunal.
Finding of the Court:
The court held that the closure of the mill was not a lockout as defined in Section 2(1) of the Industrial Disputes Act, 1947. The court found that the plaintiff had suffered financial losses in the previous years and that the closure of the mill was a bona fide business decision. The court also held that the Government's order and the award of the tribunal were based on a misconception of facts and were therefore null and void.
Issues: 1. Whether the closure of the mill was a lockout as defined in Section 2(1) of the Industrial Disputes Act, 1947. 2. Whether the Government's order and the award of the tribunal were valid. 3. Whether the Madras Act 12 of 1949, which amends the Industrial Disputes Act, 1947, bars the suit. 4. Whether this court has jurisdiction to try the suit.
Ratio Decidendi: The court held that the closure of the mill was not a lockout because it was a bona fide business decision and not an act of belligerency against the workers. The court also held that the Government's order and the award of the tribunal were based on a misconception of facts and were therefore null and void. The court further held that the Madras Act 12 of 1949 does not bar the suit and that this court has jurisdiction to try the suit.
Final Decision: The court declared that the closure of the mill was not a lockout and that the plaintiff was not liable to pay wages and dearness allowance to its workers for the period of closure. The court also directed the defendants to pay the costs of the plaintiff.
JUDGMENT :- The plaintiff is a firm of partners called Sri Ramachandra Spinning Mill, Pandalapaka. The first defendant is the State of Madras. The second defendant is one Venkata Reddi who was an employee in the plaintiffs mill. In September 1946 the first defendant appointed Mr. Sherfuddin, the then District Judge of East Godavari, as an adjudicator to report what rates of dearness allowances the plaintiffs mill (as well as another) should be required to pay to its employees.
While Mr. Sherfuddins enquiry was in progress, Government referred to Mr. Venkataramiah the wider question of the wage structure of the textile mills in the Province. Mr. Venkataramiah made an interim report recommending that the rates of pay should be on a certain basis, and on 18-12-1946 Government issued G.O. No. 4637 giving effect to his proposals. Mr. Sherfuddin made his report on 23-12-1946 and Government accepted the recommendations contained in it and directed that this should be given effect to - vide G.O. Ms. 39 dated 4-1-1947.
On 19-6-1947 Mr. Venkataramiah gave his final award and in G.O. No. 3080 Development dated 15-7-1947 Government directed that the rates mentioned in Mr. Venkataramiahs award should be implemented. The order of Government provided that the award should be in operation for a period of one year from 1-4-1947. The plaintiff paid wages and dearness allowance as laid down in the various orders of Government till the end of June 1947.
It is alleged in the plaint that it was then found that the Mill was working at a loss and could not any longer carry on its business. Therefore, on 11-6-1947 the management of the plaintiff Mill wrote to the Inspector of Factories notifying that they intended to shut down from 1-7-1947 until more favourable conditions appeared. Accordingly the Mill was closed on 1-7-1947 and remained closed till 1-4-1948 when it was reopened.
On 10-7-1947 Government issued a G.O. bearing No. Ms. 2991 in which it was mentioned that an industrial dispute had arisen between the workers and the management of the plaintiffs mill "on the question of closure of the mill" and referred "the said industrial dispute" for adjudication to Mr. Markandeyulu. On 11-7-1947 Government issued a further order G.O. No. Ms. 3031 under S. 10(3) of the Industrial Disputes Act (Act 14 of 1947) prohibiting the continuance of what they called the lockout in the mill.
The plaintiff applied to Government on 28-7-1947 asking that the G.O. be recalled, but they declined to do so. In the award which he made on 5-1-1943 Mr. Markandeyulu took the view that the closure of the Mill was not justified and recommended that Mr. Venkataramiahs final award might be given effect to. The case of the plaintiff is that there was really no industrial dispute at all because the closure of the Mill could in no sense of the term be treated as an industrial dispute within the meaning of the Act and as such G.O. No. 2991 dated 10-7-1947 and the reference to the Industrial Tribunal thereunder was ultra vires, without jurisdiction and void.
The plaintiff states that G.O. No. 3031 based as it was on the previous G.O. was equally ultra vices, without jurisdiction and void. However, the second defendant filed a suit, O. S. No. 349 of 1948, on the file of the Court of the District Munsif of Ramachandrapuram against the partners of the plaintiff firm claiming a sum of Rs. 497-14-6 as wages and dearness allowance for the period between July 1947 and March 1948 at the rate fixed in Mr. Venkataramiahs award.
The Collector of East Godavari on behalf of the Government also filed a criminal complaint against the plaintiff under S. 29 of the Industrial Disputes Act. In these circumstances the plaintiff prayed for (1) a declaration that G.O. Nos. Ms. 2991 dated 10-7-1947 and Ms. 3031 dated 11-7-1947 issued by the first defendant are ultra vires, without jurisdiction and void, (2) an injunction against the second defendant restraining him from proceeding with the suit in the co
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