Court ruled that financial conditions and strained employer-employee relations justified compensation over reinstatement, emphasizing entitlements must adapt to changing circumstances.

ORDER :

1. Assailing the order passed by the Tribunal holding that the lockout declared by the petitioner is illegal and unjustified with a further direction to reinstate the workmen in service, the present petition has been filed by the petitioner.

2. It is the case of the petitioner that it is engaged in the manufacture of bearings in joint venture with Tamil Nadu Industrial Development Corporation as co-promoter and it started commercial production in the year 1982. The petitioner was employing around 700 employees. However, due to severe power cut, project cost escalation and labour unrest and other unforeseen problem, the petitioner suffered heavy loss, which exceeded its paid up capital and the company was declared as a sick unit u/s 3 (1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 by the Board for Industrial and Financial Reconstruction (for short ‘BIFR’) vide order dated 19.08.1988. The labour unrest continued even after sanction of scheme by BIFR including physical attack using lethal weapons, culminating in declaration of lockout between 3.2.1992 and 14.7.1992. Thereafter, fresh scheme was sanctioned and the company began its operations and started honouring its obligations to its customers.

3. It is the further case of the petitioner that during 1999, due to severe setback for the automobile industry, the companies like the petitioner were gravely affected and the petitioner faced difficulties resulting in losses and further during the said period the workmen were also on strike for about six months, resulting in loss of customers and as the manufacturing cost spiralled, the petitioner could not even pay the statutory and contractual dues resulting in stoppage of electricity. BIFR suggested a package but inspite of the same, the petitioner could not show much progress and, therefore, BIFR passed orders winding up the company in the year 2003. As against the said order, appeal was filed before the appellate authority, which appeal is pending as on the date of existence of the appellate authority. In view of the formation of the National Company Law Tribunal and the enactment of the Insolvency and Bankruptcy Code, all proceedings pending before the appellate authority stood abated and the matters were to be dealt with by the National Company Law Tribunal.

4. It is the further case of the petitioner that on 9.12.2000, suspension of operation was enforced with effect from 11.12.2000 to 17.12.2000 initially, which was further extended till 16.9.2001 and, thereafter also periodically extended. The suspension was lifted in a phased manner providing work at the instance to about 85% of the workmen and the circulars issued in this regard were accepted by the workmen. Inspite of the same, the workmen raised an industrial dispute in I.D. No.50 of 2004 challenging the suspension of operation.

5. In the year 2005, the suspension of operation was fully lifted and all the workmen were called for work inspite of the fact that there was not sufficient workload. The financial difficulties persisted resulting in difficulties in disbursement of wages. Inspite of the request made by the petitioner to the workmen, the workmen resorted to strike, thereby paralyzing the functioning of the company and prevented the officers and executives from entering the factory premises and discharging their functions, which resulted in the petitioner having no other option than to declare lockout on and from 9.1.2006. The lockout declared was only on the basis of the afores