DAMODARAM SANJIVAYYA

NATIONAL LAW UNIVERSITY

SABBAVARAM, VISAKHAPATNAM, A.P., INDIA

PROJECT TITLE

Lock Out - Judicial Approach

SUBJECT
Labour Law- I

NAME OF THE FACULTY

Assistant Professor – Mr. R. Bharat Kumar

Name of the Candidate – Sai Suvedhya R.

Roll No. – 2018LLB076
Semester – 5th

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ACKNOWLEDGEMENT
The final outcome of this project required a lot of guidance and assistance from many people
and I am extremely fortunate to have got this all along the completion of my project work.
Whatever I have done is only due to such guidance and I would like to thank them for the
same.

I thank my respected Labour Law - I Professor - Mr. R. Bharat Kumar Sir, for giving me an
opportunity to do this project and for his unfailing support and guidance which enabled me to
finish it on time.

I would like to express my gratitude to DSNLU for providing me with all the required
materials.

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ABSTRACT

Lockout means temporary shutdown of the factory by the employer, but not winding up
(permanent) of the factory. Lockout of the factory maybe happened due to the failure in the
management affected by internal disturbances or maybe by external disturbances. Internal
disturbances maybe caused when the factory management goes in to financial crisis or got
succumbed into financial debts, disputes between workers and workers, disputes between
workers and management or may be caused by ill-treatment of workers by the management. 

Sometimes factory lockouts may be caused by external influences, such as unnecessary

political parties involvement in management of workers union may be provoked for
unjustified demands that may be unaffordable by the management, which may ultimately lead
to lockout of the factory. 

Factory lockout is procedural aspects governed by the labour legislation of that

country. Lockout of the factory is a major issue, which affects workers as well as
management and cannot be initiated for a simple reason. Unlike the strikes, lockout is
declared by the management out of the consequences of clashes between management and
the workers, due to unjustified demands by the workers.

This project aims to understand the judicial approach towards lock outs and the manner in
which cases relating to lock outs were decided and the legality and justification used for such
lock outs.

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TABLE OF CONTENTS

 LOCK OUT- INTRODUCTION ----------------------------------------------------------- 05

 STATUTORY DEFINITION --------------------------------------------------------------- 05
 JUDICIAL RESPONSE ---------------------------------------------------------------------- 05
 DISCIPLINARY MEASURE NOT LOCK OUT ---------------------------------------- 07
 SECURITY MEASURE NOT LOCK OUT ---------------------------------------------- 07
 LAY OFF NOT LOCK OUT ---------------------------------------------------------------- 08
 CLOSURE NOT LOCK OUT -------------------------------------------------------------- 09
 DISCHARGE OF LOCK OUT ------------------------------------------------------------- 10
 RIGHT TO LOCK OUT --------------------------------------------------------------------- 10
 ILLEGAL LOCK OUT ---------------------------------------------------------------------- 11
 JUSTIFIED LOCK OUT -------------------------------------------------------------------- 12
 UNJUSTIFIED LOCK OUT ---------------------------------------------------------------- 12
 EFFECT OF LOCK OUT ON PAYMENT OF WAGES ------------------------------- 13
 CONCLUSION --------------------------------------------------------------------------------
13
 BIBLIOGRAPHY -----------------------------------------------------------------------------
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LOCK-OUT - INTRODUCTION

The use of the term "lock-out" to describe employer's instruments of economic coercion dates
back to 1860 and is younger than its counterparts in the hands of workers, strike by one
hundred years. Formerly the instrument of lock-out was resorted to by an employer or group
of employers to ban union membership: the employers refused employment to workers who
did not sign a pledge not to belong to trade union.

Later the lock-out was declared generally by a body of employers against a strike at a
particular work by closing all factories until strikers returned to work. India witnessed lock-
out twenty-five years after the "lock-out" was known and used in the arena of labour
management relations in industrially advanced countries. Karnik reports that the first known
lock-out was declared in 1895 in Budge Jute Mills.

THE STATUTORY DEFINITION

Section 2(1) of the Industrial Disputes Act, 1947 defines "Iock-out" to mean: The temporary
closing of employment or the suspension of work, or the refusal by an employer to continue
to employ any number of persons employed by him. 1 A delineation of the nature of this
weapon of industrial warfare requires description of:

(i) the acts which constitute it;

(ii) the party who uses it;

(iii) the party against whom it is directed; and

(iv) the motive which prompts resort to it.

JUDICIAL RESPONSE

Early decision makers Judicial and quasi-judicial) generally 2 declined to treat lock-out merely
as an Instrument of economic coercion. They emphasised deliberate omission of the objective
clause from the defintion of lock- out and gave a catch-all meaning of Section 2(1) of
Industrial Desputes Act. However, there is a catena of cases in which appropriate decision-
makers stressed that lock-out is essentially an instrument of economic coercion and the
1
The Industrial Disputes (Amendment) Act, 1982provides that in section 2(1) for.the words "closing of a place
of employment" the words "temporary closing of a place of employment" be substituted.
2
Empire of India LIfe Insurance Co. Ltd. v, Their Empoloyees, Labour Gazette, October, 1947 p.187, II, SUn
Rolling Mill. v. Their Workmen, (1949) L.U. 696, Ganges Jute Manufacturing Company Ltd. v. their
Employees, (1950) LLJ.10; Bengal Jute Mills v. Their Workmen, (1950) LL.J.437 (I.T.)

5
omission of the objective clause did not change its meaning. The observation of the Labour
Appelate Tribunal in Presidency Jute Mills Co. Ltd.v. Presidency Jute Mills Co. Employees
Union3 is significant:

“The definition of strike as given in the(Industrial disputes) Act is the same as that given in
the Trade Disputes Act of 1929.Those definitions do not in expressterms refer to any reason
behind the concerted action of the workmen, but the very conception of strike is that it is a
recognised weapon in the hands of the workmen for enforcing their collective demands. The
use of the term "strike" necessarily implies that it has relation to a collective demand which
has not been acceded to by the employer. Lock- out is the counter-part of strike, the
corresponding weapon in the hands of the employer to resist the collective demands of
workmen or to enforce his terms.”

Earlier the Supreme Court in Kairbetta Estate v. Rajmanickam4 upheld the interpretation
given in the Presidency Jute Mills case. In the instant case, the manager of the estate was
assaulted by some of the workmen as a result of which he suffered fracture and was
hospitalised for a month. Other members of the staff were also threatened and they wrote to
the management stating that they were afraid to go to the affected division of the estate as
their lives were in. danger. On receiving this communication, the management notified that
the affected division would be closed until such time as workmen gave an assurance that
there would not be any further trouble and that the members of the staff would not be
assaulted. In due course of time, on the intervention of Labour Commissioner, the concerned
workmen gave the requisite undertaking and work was resumed. However, the affected
workers claimed lay-off compensation for the period they had been locked-out. The Industrial
Tribunal having granted the compensation, the management appealed to the Supreme Court.
Justice Gajendragadkar referred to the omission of the objective clause from the 1947-
definitionand added:

“Even so, the essential chracter of a lock-out continues to be substanially the same. Lock-out
can be described as the antithesis of a strike. Just as a strike is a weapon available to the
employees for enforcing their industrial demands. In the struggle between capital and labour
the weapon of strike is availableto labour and is often used by It, so is the weapon of lock-out
available to the employer and can be used by him. The use of both the weapons by the

3
Presldeny Jute Milia Co. Ltd. v. Presidency Jute Mills Co. Employees Union, (1952) 1 L.L.J. 796 (L.A.T.).
4
Kalrbetta Estate v. Rajmanickam, (1960) 2 L L J. 275 (S.C.).

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respective parties must, however, be subject to the relevant provisions of the (Industrial
Disputes) Act.”

He concluded that this was a case of lock-out.

DISCIPLINARY MEASURE NOT LOCK-OUT

Cases of indiscipline, misconduct and violation of the provision of the certified standing
orders frequently occur in Indian Industrial and business undertakings. Disciplinary measures
adopted by the management range from adverse entry in the character roll to the termination
of employment. We are concerned here with only those management actions which result in
suspension of the concerned workmen during the pendency of investigatory proceedings as a
punishment or otherwise either on payment of emoluments, or otherwise and all other cases
resulting into refusal by an employer to continue to employ any number of persons employed
by him such as orders prohibiting late-coming workmen to resume work and marking them
absent for the day. The question here is whether these disciplinary measures which come
within the literal meaning of Section 2(1) of the Industrial Disputes Act, amount to a lock-out
or not.

In Ram Naresh Kumar v. State of West Bengal 5 the management found certain ash-coolies
guilty of adopting go slow tactics, disobedience and assaulting the chief Engineer. Since an
adjudication proceeding was pending. the management suspended the concerned workmen
and applied to the Tribunal for permission to terminate their services. The concerned ash-
coolies claimed. in a writ petition. that the suspension amounted to a lock-out. that such lock-
out was illegal under Section 23 and that the Tribunal had no jurisdiction to entertain the
application. However, the Calcutta High court rejected the petition on the ground that
suspension of workers in this case would not amount to a lock- out.

SECURITY MEASURE NOT LOCK-OUT

Dicta in certain cases6 indicate that "the closing of a place of employment, or the suspension
of work or the refusal by an employer to continue to employ any number of persons
employed by him" may be a security measure and yet the conduct of the employer may fall
within the amibit of Section 2(1) of the Industrial Disputes Act, 1947. For instance. In

5
Ram Naresh Kumar v. State of West Bengal (1958) 1 L. L.J. 667 (Calcutta).
6
Jute Workers Federation v, CliveJute Mills (1951) 1 L.L.J. 663.(L.A.J) Lakshml Devl SUgar MRlsv. Ram "rup
(1957) 1 L.L.J. 17 (S.C.); Lord KrIshna sugar Mills ltd. v. State of Uttar Pradesh (1964) 2 L.L.J.76 (Allahabad).

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Lakshmi Devi Sugar Mills v. Ram Sarup 7 Justice Bhaqwati, summarising the views
expressed by Labour Appellate Tribunal in Jute Workers Federation v. Clive Jute Mills,8
observed that "lock-out is generally adopted as a security measure."

This is unacceptable. Lock-out is an instrument of economic coercion and not a security

measure. Lock-out is not an end in itself but a means to an end. The particular means adopted
are the putting of economic pressures on recalcitrant workmen. Further, in harmony with the
view: "no work no pay", "the closing of a place of employment, or the suspension of work, or
the refusal by an employer to continue to employ any number of persons employed by him"
is the means adopted to put the requisite economic pressure. The emphasis here is due as
much on the means adopted as on the object sought to be achieved.

LAY-OFF NOT LOCK-OUT

In Prabhoo Pandey v. J.K. Jute Mills Co. Ltd. 944 the Labour Appellate Tribunal observed
that:

“The closure being only temporary and due to reasons beyond the control of the management,
namely, the shortage of jute at the time as notified by the management. it is clearly not a case
of lock-out which ordinarily involves an element of malice or iIl will…”

Following Annamalal Timber Trust. v. V.P. Chakhu 10, it held that temporary suspension of
work for want of raw materials was not a lock-out. The view of the Labour Appellate
Tribunal that lock-out involves an element of "malice or ill-will" is unacceptable. We have
already stressed that lock-out is an instrument of economic coercion and so long as the
management is acting with a view to achieve this objective by putting economic pressure on
its workmen it can hardly be said that they are activated by "malice" or "ill-will."

The observation of Justice Aiyar in Shri Ram Chandra spinning Mills Ltd. v. State of
Madras 11 is more pertinent:

“The lock-out is the corresponding weapon in the armoury of the employer. 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 that may
7
Lakshmi Devi Sugar Mills v. Ram $erup, Optcit.
8
Jute Workers's Federation v. Clive Jute Mills, Optcit.
9
Prabhoo Pandey v. J.K. Jute Mills Co. Ltd. (1956) 1 l.L.J. 588 (LAT.).
10
Anname'a' Timber Trust v. V.P. Chakhu. (1952) 2 L.L.J. 684 (LAT.).
11
Shri Ram Chandra spinning Mills Ltd. v. State of Madras (1957) 1 L.L.J. 90 (Madras)

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be called an act of belligerency there would be a lock-out. If, on the other hand, he shuts
down his work because he cannot for instance get 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 lock-
out.”

The Kalrbetta Estate Case12 raised the reverse problem, namely whether lay-off included
lock-out so that locked-out workmen could claim lay-off compensation. The Supreme Court
after discussing the scope of the expression "any other reason" occurring in Section 2 (KKK)
and the provisions relating to lay- off compensation under Section 25C and Section 25E (iii)
of the Industrial Disputes Act observed:

“Stated broadly, lay-off generally occurs in a continuing business, where as a lock-out is the
closure of the business. In the case of a lay-off owing to the reasons specified in Section
2(KKK) the employer is unable to give employment to one or more workmen. In the case of
lock-out, the employer doses the place of the business and Iocks-out the whole body of
workmen for reasons which have no relevance to causes specified in section 2(kkk).”

The court concluded that lay-off compensation could not be granted to lock-out workmen.

CLOSURE NOT LOCK-OUT

In Express Newspaper Ltd. v. Industrial Tribunal13 Justice Gajendragadkar indicated that:

“(T)he main point which the Tribunal will have to consider is whether the strike of the
(workmen) on 27th April 1959 was justified and whether the action of the (management)
which followed the said strike is either a lock-out or amounts to a closure. The (workmen)
will contend that it is a lock-out which is in the nature of an act of a reprisal on the part of the
(management) where as the (management) will contend that it is nota lock-out but a closure,
genuine and bonafide.”

And such inquiry, his Lordship held, was within the competence of the Industrial Tribunal.

The Supreme Court in General Labour Union (Red Flag) v. B.V. Charvan 14 was invited to
determine the distinction between lock- out and closure. The court laid down the following
tests :-
12
Kalrbetta Estate cas. op. cit.
13
Express Newspaper Ltd. v. Industrial Tribunal, (1962) 2 L.L.J. 227 (S.C.).
14
(1985) 1 L.L.J: 82

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“(W)here the parties are at variance whether the employers have imposed a lock-out or have
closed the establishment it is necessary to find out what was the intention of the employer at
the time when it resorts to lock-out or claims to have closed down the industrial undertaking.
It is to be determined with accuracy whether the closing down of the industrial activity was a
consequence of imposing lock-out or the owner/employer had decided to close down the
industrial activity.”

In lock-out the employer refuses to continue to employ the workmen employed by him even
though the business activity was not closed down nor intended to be closed down. The
essence of lock- out is the refusal of the employer to continue to employ workmen. There is
no intention to close the industrial activity. Even if the suspension of work is ordered it would
constitute lock-out. On the other hand closure implies closing of industrial activity as a
consequence of which workmen are rendered lob-less.

DISCHARGE OF LOCK-OUT

In Feroz Din v. State of West Bengal 15 Justice Sarkar who delivered the judgment for the
Supreme Court observed:

“(T)he words 'refusal by an employer to continue to employ any number of persons employed
by him' in Section 2(1) do not include the discharge of an employee. We feel no difficulty in
taking this view, for it does not seem to us that the words "refusal to continue to employ" in
Section 2(1) plainly include a discharge. These words have to be read with the rest of the
definition and also the word "Lock-out". The other parts of the definition contemplate no
severance of the relation of employer and employee.” and held that discharge was not
covered in Section 2(1) of the Act.

RIGHT TO LOCK-OUT

Since 1950 the Constitution guaranteed the right to acquire, hold and dispose of property. The
Constitution also guarantees the right to carry on any occupation, trade or business. Is the
employer's right to lock- out workmen guaranteed under any or both of these Constitutional
provisions (with the result that a law regulating lock-out) violates the Constitutional
guarantee unless it imposes reasonable restrictions in the interest of general public? This

15
Feroz Din v. State of West Bengal, (1960) 1 L.L.J. 244 (S.C.).

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question was answered in negative by the Andhra Pradesh High Court, in A. P. Electrical
Equipment Corporation v. Its Staff Union. 16The Court observed:

“(T)he right to lock-out is now controlled by Sections [(10) (3)], 10-A (4A) ..... 22 and 23 of
the Act and the penal action is engrafted for disobedience of the prohibition of lock-out u/s
24. If it is held that the petitioner has a fundamental right to declare lock-out, then naturally
the provisions referred to earlier would be rendered atiose.”

The Court accordingly held that right to lock-out is a statutory right controlled by the relevant
provisions of the Act and must be exercised in conformity therewith.

ILLEGAL LOCKOUT

Section 24 of the Industrial Disputes Act, 1947 defines “illegal strikes and lock-outs.” Sub-
Section (1) provides that a strike or a lock-out shall be illegal if:

(i) it is commenced or declared in contravention of Section 22 or 23;

(Ii) it is continued in contravention of prohibitory order issued under Section 10(3)or Section
10A (4A).

Further, Sub-Section(2) says that where a strike or lock-out in pursuance of an industrial

dispute has already commenced and is in existence at the time of the reference of the dispute
to adjudication or arbitration authorities, the continuance of such strike or lock-out “shall not
be deemed to be illegal”, if:

(i) such strike or lock-out was not at its commencement in contravention of the provision of
the Industrial Disputes Act, 1947.

(ii)the continuance of such strike or lock-out was not prohibited under .Sub-Section (3) of
Section 10, or Sub- Section 4A of Section 10A of the Act.

Under Sub-Section (3) of Section 24 a lock-out is not illegal if it is declared in consequence

of an illegal strike. Similarly, a strike is not illegal if declared in consequence .of an illegal
lock-out.

JUSTIFIED LOCK OUT

16
1986 Lab. I.C. 1851.

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In collective bargaining, the question of employment of striking employees and wages for the
strike or lock-out period can form the subject of negotiation in the settlement of a dispute. In
adjudication system that possibility being closed, refusal to award wages for strike or lock-
out period might lead to further unrest. To avoid this unhappy situation and at the same time
to protect the interest of working class and industry, Tribunals and Courts have evolved the
concept of "justified" and "unjustified" strike and Jock-out. In a seriesof decisions the Courts
and Tribunals have provided guidelines for determining whether a strike or lock-out is
justified or not.

A lock-out is held to be justified if :

(i) it was neither actuated nor occasioned by any unfair labour practice on the part of
employer;17

(ii) it was adopted due to security measure;18

(iii) it was necessitated by the conduct of the workmen,19

(iv) it was in consequence of strike which was unreasonable,20

(v) was declared after a tool down strike was staged.21

UNJUSTIFIED LOCK OUT

Like Justified strike or lock-out an unjustified strike or lock-out is a varying concept. No

attempt has been made to give an exhaustive description of the situation which would give
rise to an "unjustified" strike or lock-out.

A Lock-out was held to be unjustified if ; it was with a view to oblige workmen to accept the
lower wages22, or the management refused to allow workers to enter the factory 23 or it was
declared on account of an unfair labour practice on the part of the management 24 or it was not
inevitable and was unjustified.25

17
5 Amblka Jute Mills v. their Workers, (1954). 1LW 835 (LAT)
18
Hanuman Juta Mills v. their Workmen (1953) 2LW 684 (LAT) Govlnd Sheet Metal Works and Foundary,.
(1956) F.J.R. 363 (LAT)
19
Mahalaxml Cotton Mills v. their Workmen, (1952) 1LLW 68.
20
Highway Group of Estates. v. Industrial Tribunal (1978) 2 LW 251 (I.T.)
21
Pioneer Match Factory v. Their Workmen, (1951) 1LW 43 (L.T.)
22
Shrl Ram SilkMillsv. Their Workmen, (1952) 2 L.L.J. 862 (I.T.)
23
Bharat Barrel and Drum mfg. Co. v. Their Workmen, (1952) 2 L.L.J. 532 (I.T.)
24
Indian Machinery Co. Ltd. (1956) e L.L.J. 408 (L.A.T.).
25
Poineer Match. Factory v. theirWorkmen (1951) 1L.L.J. 43 (I.T.).

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EFFECT OF LOCK-OUT ON PAYMENT OF WAGES

The Courts26 have held that. If the lock-out is illegal full wages for the period of lock-out
shall have to be paid to workers. Tribunals and Courts have generally awarded wages to
workmen when a lock-out was legal but unjustified.

In Bharat Barrel and Drum Mfg. Co. v. Their Workmen27 certain workmen turned up for
work at the appointed hour on a certain date. Finding the doors locked, waited half an hour
and then left. Thereupon the management locked its door and demanded explanation from
workmen for not attending the work on concerned day. The Tribunal held that workmen were
entitled to wages for the lock-out period. The Labour Appellate Tribunal in ltalkholic Tea
Estate v..Their Workmen28179 decided that workmen cannot be denied wages on the ground
of their failure to report for work every day during the lock-out period. According to the
Labour Appellate Tribunal:

"Lock-out implies that the employer would not allow the workmen concerned in the dispute
to work. That, the act of the employer, in declaring lock-out amounted to an anticipatory
breach of contract on his part. The workmen thereafter were not under any obligation to
present themselves for work."

CONCLUSION

The following are the main reasons for lock outs today:

 Disputes or clashes in between workers and the management.

 Unrest, disputes or clashes in between workers and workers.
 Illegal strikes, regular strikes or continuous strikes by workers may lead to lockout of
factory or industry.
 External environmental disturbance due to unstable governments, may lead to
lockouts of factories or industries.
 Continuous or accumulated financial losses of factory or industry, may lead to opt
lockout by the management. 
 Maybe lockout, if any company involves in any fraudulent or illegal activities.

26
Statesman Ltd. v. Their Workmen, (197) 1 L.L.J. 484 (S.C.), North Brook Jute Co. Ltd. v. Their Workmen,
(1960) 1 L.L.J. 4SO (S.C.).
27
Bharat Barrel and Drum Mfg. Co. v. Their Workmen, (1952) 2 L.l.J. 532 (I.T.)
28
Italkhoollc Tea Estate v. Their Workmen, (1954) 2 L.L.J. 717 (LAT.).

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  Failure in maintaining proper industrial relations, industrial peace and harmony.

Lockout of the factory is regarded as major issue which affects both management of the
factory and their employees. Management should always monitor employees behaviour and
relationship between employees and relationship in between management and employees To
avoid disputes which leads to lockouts. 

BIBLIOGRAPHY

 http://www.whatishumanresource.com/lockouts#:~:text=According%20to
%20Industrial%20Disputes%20Act,is%20the%20antithesis%20of%20strike.
 http://www.legalserviceindia.com/article/l455-Strikes-and-Lockouts.html
 https://www.mondaq.com/india/workforce-management/24797/right-to-strike-under-
industrial-dispute-act-1947
 https://www.ourlegalworld.com/strikes-and-lockouts-under-industrial-disputes-act-
1947/
 https://www.legalbites.in/strikes-and-lockouts/

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