1990 PLP 750 (PLC)

This Constitutional petition is directed against the order dated 30‑9‑1989 of IIIrd Sindh Labour Court at Karachi whereby overruling the preliminary objections filed by the petitioner and directing the petitioner to file written statement. The facts leading to the tiling of the above petition are that the petitioner is a registered partnership firm dealing in the manufacture and export of garments. It owns a factory which has different sections for preparation of garments. It is the case of the petitioner that it is a 100% export oriented organization. In the beginning of 1989, there was cancellation of bulk export orders which forced the petitioner into a serious crisis. The production had therefore to be cut down. 1t is the further case of the petitioner that the business exigency further demanded cessation of a part of the productivity. It is the further case of the petitioner that it, therefore, closed down its male Stitching Section and started getting this work done from outside on contract basis. As a result 45 workers became surplus and were retrenched. The respondent No. 3 which is a registered trade union of the workers employed with the petitioner made a complaint dated 30‑3‑1989 under section 46‑A of Industrial Relations Ordinance, 1909 (hereinafter referred to as the Ordinance) to Joint Director, Labour stating that Stitching Section of male workers was closed down and services of several workers were terminated. The Union wanted that action should be taken against the petitioner for gate stopping the workers although according to the contents of their complaint, no such case was made out. It is the case of the petitioner that although, as already submitted, the complaint did not disclose a case of gate stop and was ex facie not competent, the respondent No. 1 illegally decided to proceed under section 46‑A of the Ordinance and accordingly issued notice dated 8‑4‑1989 to the petitioner which submitted detailed reply to the allegations of the respondent No.3. It is the further case of the petitioner that despite the plausible and satisfactory explanation, respondent No. 1 through Labour Officer/Factory Inspector got inspected the premises where according to respondent No. 3 work was being done by the petitioner. The Factory Inspector reported that the work of Stitching was being done at different places. It is the case of the petitioner that these Factory Inspectors never visited the factory premises of the petitioner and submitted their report at the instance of respondent No.

3. It is the further case of the petitioner that respondent No. 1 totally relied upon the statement of the Labour Officer/Factory Inspector and prepared a report under section 46‑A of the Ordinance wherein unlawfully concluded that the petitioner indulged into lock‑out. The respondent No. 1 submitted his report to respondent No.

2. According to the petitioner, this report wrongly stated that the petitioner did not attend the proceedings despite notice. The case of the petitioner is that it was not given opportunity to explain the factual position as the reports of the Factory Inspectors were not shown to the petitioner. The petitioner submitted detailed objections to this report. It is the further case of the petitioner that workers whose services were terminated, riled petitions under section 25‑A of the Ordinance. It is the further case of the petitioner that report of respondent No. 1 even if it is taken to be correct, does not at all make out a case of lock‑out and as such respondent No. 2 had no jurisdiction to proceed with it. It is alleged that it objected to the jurisdiction of respondent No. 2 but despite the clear legal position that no case of lock‑out was made out, respondent No. 2 decided to try the complaint and dismissed the objection of the petitioner.The petitioner has challenged this order in the above petition, I have heard Mr. Shahenshah Hussain, learned counsel in support of the petition and Mr. Raja Shamsuzzaman counsel appearing for respondent No.

3. I have perused the report and other material available on the record. The respondent No. 1 concluded that the action taken by the petitioner amounted to lock‑out. The respondent No. 1 stated in his report that an inquiry from the Union representatives who disclosed that the termination of 45 workers of Juki Male Stitching Section was a false pretext and as a garb. According to the Union representatives, the petitioner has arranged two residential places where woven material is taken for further processing of stitching and then brought back to the establishment for finishing i.e. the same work which was being performed by 45 removed workers. According to Union, the petitioner appoints apprentices under the Apprenticeship Act, 1962 and the stitching work is being taken from them. The respondent No. 1 deputed Labour Officer/Factory Inspectors to inspect and inquire about two places in the city where the alleged work was being carried out by the petitioner and also in respect of apprentices. The Labour Officer/Factory Inspectors submitted their reports wherein it is alleged that the work was being carried on unauthorisedly as the factories being run at the two places were not registered. It was also found that there were 37 apprentices employed at fixed wages/stipends of Rs. 682 to 7511. In that view of the matter, he found that there was sufficient work of stitching with the petitioner but large portion of it was regularly diverted to other unauthorised places and lesser is being carried on with the workers as apprentices. Mr. Shahenshah Hussain contended that the approach of the respondents 1 and 2 to the determination of lock‑out has not been altogether correct. According to him the essential and basic question was whether the petitioner had closed down the Juki Male Stitching Section or retrenched 45 workers. The question of a lock‑out could only arise if the first question was answered in the negative. According to Mr. Raja Shamsuzzaman even if it were to be found that the section had not been closed down, the respondent No. 2 has to determine the same after recording the evidence of the parties. Section 2 (xvi) defines "lock‑out" which means the closing of a place of employment or part of such place of the suspension, wholly or partly, of work by an employer, or refusal, absolute or conditional, by an employer to continue to employ any number of workmen employed by him where such closing, suspension or refusal occurs in connection with an industrial dispute or is intended for the purpose of compelling workmen employed to accept certain terms and conditions of or affecting employment. Section 46‑A of the Ordinance relates to the procedure for reference to and adjudication by the Labour Court of an illegal strike or lock‑outs. The definition of lock‑out is already reproduced in earlier part of this judgment. A lock‑out will be illegal if it is declared, commenced or continued otherwise than in accordance with the provisions of the Ordinance. Mr. Shahenshah Hussain submitted that the petitioner is a 100 per cent export‑oriented organization. In the beginning of 1989 there was cancellation of bulk export orders which forced the petitioner into a serious crisis. The production had, therefore, to be cut down. The business exigency further demarked cessation of a part of the production activity. The petitioner, therefore, closed down its male Stitching Section and started getting this work done from outside on contract basis. As a result, 45 workers became surplus and were retrenched. In order to bring a situation within the definition of "illegal lock‑out", I must see whether the said lockout was "(i) in connection with an industrial dispute or (ii) intended for the purpose of compelling workmen employed to accept certain terms and conditions of or affecting employment". The first point is not available in the instant case as there was no industrial dispute pending between the parties. On the second point, there was assertion of the respondent Union that all of a sudden the petitioner closed down Juki Stitching Section of Male workers and when the workers reported for duty in the morning, they were not allowed to enter and contended that their services had been terminated for which letters were sent through posts. The respondent Union alleged that three workers have been refused to be continued in employment in order to compel them to accept low terms and conditions of employment and for doing this, the petitioner has arranged three new places where the work has been diverted which places are not registered factories. In re: An Arbitration between Messrs Richardson and Samual and Co (Law Times Reports, Volume 77 page 479), the facts were that by a charter party, it was agreed that the ship should proceed to a certain port and there load from the charterer's agents a cargo of petroleum in cases at a certain rate per day. Long day loading were to commence twenty‑four hours after receipt by the charterer's agents of written notice of the steamer's readiness in berth to receive it, "strikes, lock‑outs, accidents to railway .... or other causes beyond charterers' control always excepted". The railway by which only oil for loading could be brought to the port was partially destroyed by floods, and, there being no oil at the port, the charterers' agents dismissed from their factory the workmen employed in packing the oil in cases. The question was whether the delay in loading which occurred after the recommencement of the supply of oil by rail was covered by the exception clause, and that the charterers were liable to damages for detention. Mr. Smith, L.J. held that 'the exception of "strikes and lock‑outs" apply here. Those words have in this charter‑party their ordinary well‑known meaning, and are used with reference only to what commonly results from trade disputes. They do not apply to a simple case of a master dismissing his servants. Bnito discharged the workmen for his own benefit because he had no work for them to do, and the case bears no analogy to what is ordinarily known as a lock out. The defendants cannot, in my opinion, rely on any exceptions in this clause to relieve them from liability consequent on delay in loading the ship after the 17th April." Mr. Rigby, L.J. agreed in the conclusion. He further held that "the case is not at all analogous to a strike or lock‑out. Those are well‑known words, and seem to me to involve an idea of something imposed upon an employer almost of necessity". Mr. Collins, L.J. held as follows:‑ "I fully agree with what has been said. A lock‑out seems to me to imply something forced upon a person, but apart from that I have no hesitation in saying that what took place at Bnito's factory was not a strike, nor a lock‑out, nor ejusdem generis with a strike or lock‑out." In Naeemuddin v. The Sindh Labour Court No. IV, Nazimabad, Karachi and 2 others 1979 P L C 59, Mr. Z.A. Channa, J. held as follows:‑ "

6. Whereas Standing Order 11 deals with cases of temporary stoppages of work, and that too for specified reasons, and consequent laying off of workmen for the duration of such stoppages, it is obvious that there can be closure of shifts or sections or Departments in an establishment for other cogent reasons, such as reduced supply of raw material required by the factory, reduced demand of the factory's produce, consistent lossess suffered by the establishment etc. Mr. Shahenshah Hussain was unable to refer me to any bar in the Standing Orders to closure of any shifts or sections of an establishment for such or similar reasons and the consequent "retrenchment" of workers, on a more permanent basis than is envisaged in the case of stoppage work under Standing Order

11. It may be pointed out that according to the Shorter Oxford Dictionary, one of the meanings of the word "retrenchment" is act of economizing or cutting down expenditure. "

7. It is noteworthy that Standing Order 11‑A, which was added by Central Act XXIII of 1973, prohibits only the closing down of the whole of an establishment, save with the prior permission of the Labour Court. The inference thus is clear that there is no bar under the Standing Orders to the closure of a shift section or Department, without the permission of the Labour Court, where such closure and consequent retrenchment of workmen does not constitute illegal lock‑out for the purposes of I.R.O. It may also be mentioned that specific provision for retrenchment of workmen is contained in Standing Orders Nos. 13 and

14. In the case of retrenchment, which in my humble view should be clearly distinguished from lay off provided under Standing Order 11, only the workmen last in the category to which they belong are to be retrenched, and in the case of subsequent re‑employment, they have first preference, of course in the category to which they belong. Further, as provided in clause (1) of Standing Order 12, in the case of termination of employment of a permanent workman, for any reasons other than misconduct, he is to be given either notice of one month or pay for the period of notice." The respondent No. 1 travelled into an extraneous and irrelevant field when it look into account that the petitioner has two places in Nazimabad area where the stitching work was being carried on and there were engaged 35 and 18 workers. This was based on the inspection reports submitted by the Labour Officers. The respondent No. 1 was apparently laboured under the impression that he can depute Labour Officer/Factory Inspector to any place within the local limits for which he is appointed. Subsection (8) of section 46‑A of the Ordinance provides that the officer may, for the purpose of inquiry under subsection (1) within the limits for which he is appointed, enter with such assistants, if any, in a factory where he has reason to believe an illegal strike or lock‑out to be in progress and make such examination of the premises and plant and of any registers maintained therein four carrying out the purposes of this section. The approach of the respondents 1 and 2 is not correct on more than one reason. Firstly, the Labour Officer/Factory Inspectors could not inspect those places. Secondly, the reports were not supplied to the petitioner. Thirdly, the reports were not at all annexed to the report of the respondent No.

1. In that view of the matter, the very basis on which the report of respondent No. 1 was based, goes away. It is well‑established that in the case of a closure, the employer does not merely close down the place of business but he closes the business finally and irrevocably. The closure has to be genuine and bona fide in the sense that it should be a closure in fact and not a mere pretence of closure. A lock‑out on the other hand indicates the closure of the place of business and not closure of the business itself. The respondent No. 1 has come to a finding that this is a case of lock‑out. As regards the cancellation of bulk export orders which forced the petitioner into a serious crisis, the production of a part of the production activity and the closure of the Male Stitching Section there is no finding given by the respondent No.

1. Mr. Shahenshah Hussain urged in the first place that the respondent No.2 had jurisdiction to go into the question whether a case of lock‑out or retrenchment, is made out or not. The contention was that the respondent having found that it had jurisdiction to go into the question whether it was a case of lock out or retrenchment, is not correct. The respondent No. 2 has rejected the legal objections merely on consideration of the report of respondent No.

1. The respondent No. 2 had not taken into consideration the legal objections and had not taken into consideration all points which require a thorough scrutiny before jurisdiction under section 46‑A could be invoked by the Labour Court and unless 1 jurisdictional facts are resolved, the order, as at present, passed by respondent No. 2 cannot be sustained. The respondent No. 2 has found that the petitioner was not right in its contention that this was a case of retrenchment due to cancellation of export orders which forced the petitioner into a serious crisis. The respondent No. 2 has rejected this submission on the ground of non‑production of order under section 12(3) of the Standing Orders Ordinance, 1968. The petitioner produced copy of the petition under section .25‑A of the Ordinance filed by the retrenched employees. The respondent No. 2 has not at all considered this aspect that the workers had already challenged the termination orders. In my opinion, the finding of the respondent No. 1 on this point is defective in law. As the worker themselves challenged their termination to be illegal, the respondent No. 2 had no jurisdiction to consider this report. Mr. Raja Shamsuzzaman submitted that the order of the respondent No.2 is within jurisdiction and even it is wrong that I, in constitutional jurisdiction under Article 199, am entitled to interfere with the same. In the instant case, there is patent illegality in the order made by the learned Labour Court inasmuch as he dismissed the legal objections filed by the petitioner on the ground that it is clear case of lock‑out as the petitioner is getting the same work of Stitching at three different places on the incorrect assumption. As upshot of the above discussion, the impugned order is declared to be without lawful authority and of no legal effect. The respondent No. 2 is restrained from proceeding with the complaint. In the circumstances of the case, the parties are directed to bear their own costs. A.A./E‑43/K Petition accepted.