Bombay High Court
Dnyandeep Co-Operative Credit ... vs Harinagar Sugar Mills ... on 17 February, 2023
Bench: Sandeep V. Marne
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rrpillai
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 3447 OF 2019
1. Harinagar Sugar Mills Ltd.
(Biscuit Division) conducting
business at unit at L.B.S. Road,
Bhandup (W), Mumbai-400 078
2. Mr. Vedang V. Pittie
Age : 30, Authorized Signatory &
Shareholder of Harinagar Sugar
Mills Ltd. (Biscuit Division)
having his office at World Trade
Centre, 10th floor, Centre 1, Cuffe
Parade, Mumbai-400 005
... Petitioners
Versus
1. State of Maharashtra, through
The Principal Secretary
Industries, Energy & Labour
Department, Government of
Maharashtra, having his office at
Madam Cama Road, Mantralaya,
Mumbai-400 032 Service through
Government Pleader, High Court
(O.S.), Order XXVII Rule 4 CPC
Digitally signed
by having his Office at PWD Building,
RAJESHWARI RAJESHWARI
RAMESH
RAMESH PILLAI High Court Annexe, Fort, Mumbai
PILLAI Date:
2023.02.17
17:02:45 +0530
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2. Deputy Labour Commissioner
Mumbai Suburban East Office
Kamgar Bhavan, C-20, E-Block
Bandra Kurla Complex,
Bandra (E), Mumbai-400 051
3. Maharashtra Rajya Rashtriya
Kamgar Sangh (INTUC),
Recognised workers union of
Harinagar Sugar Mills (Biscuit
Division) Having its office at
Mazdoor Manzil,
... Respondents
Mumbai-400 012
WITH
WRIT PETITION NO. 3397 OF 2019
1. Shangrila Food Products Ltd,
Having its factor at L.B.S. Road,
Bhandup(W), Mumbai - 400 078.
2. Vivek Madhavlal Pittie
Inhabitant, Director of Shangrila
Food Products Ltd, having his office
at World Trade Centre, 10th floor,
Centre 1, Cuffe Parade,
... Petitioners
Mumbai - 400005.
Versus
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1. State of Maharashtra, through the
Principal Secretary, Industries,
Energy and Labour Department,
Government of Maharashtra, having
his office at Madam Cama Road,
Mantralaya, Mumbai - 400 032.
2. Deputy Labour Commissioner,
Mumbai Sub-Urban East Office,
Kamgar Bhavan, C-20, E-Block
Bandra-Kurla Complex, Bandra(E),
Mumbai - 400 051.
3. Kamgar Suraksha Sangh(Regd.)
Recognized workers union of
Shangrial Food Products ltd., having
its office at 37-B, Sagar Bonanza
Shopping Centre, J.V. Road,
... Respondents
Ghatkopar(W), Mumbai - 400 086.
WITH
INTERIM APPLICATION NO.197 OF 2020
IN
WRIT PETITION NO. 3397 OF 2019
Uday Raghunath Jathar and Ors ...Applicants
Versus
State of Maharashtra and Ors. ... Respondents
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WITH
INTERIM APPLICATION (L)NO. 221 of 2022
IN
WRIT PETITION NO. 3447 OF 2019
Dnyandeep Co-operative Credit Society. ... Applicant
In the matter between
Harinagar Sugar Mills Ltd., & Anr ... Petitioners
Versus
State of Maharashtra & Ors ... Respondents
WITH
INTERIM APPLICATION NO. 3184 of 2021
IN
WRIT PETITION NO. 3447 OF 2019
Harinagar Sugar Mills Ltd ... Applicant
(Biscuit Division)
Versus
Vedang V. Pittie and Ors ... Respondents
WITH
INTERIM APPLICATION (L)NO. 28278 of 2021
WITH
INTERIM APPLICATION (L)NO. 5261 of 2021
IN
WRIT PETITION NO. 3447 OF 2019
Maharashtra Rajya Rashtriya Kamgar ... Applicant
Sangh(INTUC)
Versus
Harinagar Sugar Mills Ltd(Biscuit
Division) and Ors. ... Respondents
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WITH
INTERIM APPLICATION (L)NO. 3457 of 2020
IN
WRIT PETITION NO. 3447 OF 2019
The Hindustan Co Operative Bank Ltd. ... Applicant
Versus
Harinagar Sugar Mills Ltd
(Biscuit Division) and Ors. ... Respondents
WITH
INTERIM APPLICATION (L)NO. 225 of 2022
IN
WRIT PETITION NO. 3397 OF 2019
Dnyandeep Co-op. Credit Society Ltd. ... Applicant
Versus
Shangrila Food Products Ltd and Ors. ... Respondents
WITH
INTERIM APPLICATION NO. 3183 of 2021
IN
WRIT PETITION NO. 3397 OF 2019
Shangrila Food Products Ltd and Ors ... Applicants
Versus
Vivek M. Pittie an Ors. ... Respondents
Mr. S. C. Naidu a/w. Mr. Abhay Jadega, Mr. Arun Unnikrishnan
i/b. M/s. Jadega & Satiya for the Petitioners in WP/3447/2019
and WP/3397/2019.
Mr. L. T. Satelkar, AGP for Respondent nos. 1 and 2 in
WP/3447/2019,IA/3184/2021,IAL/221/2022,IAL/28278/2021
and IAL/3457/2020.
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Ms. Jyoti Chavan, AGP for Respondent nos. 1 and 2 in
WP/3397/2019, IAL/225/2022, IAL/3183/2021, IA/197/2020.
Mr. S. B. Gore, AGP for State in IAL/5261/2021.
Mr. Shailesh Pathak a/w. Mr. Jay Vora for Respondent no. 3 in
WP/3447/2019 and Applicant in IAL/28278/2021 and
IAL/5261/2021.
Mr. Mohd. Moin Khan i/b. Mr. Vishal Ghosalkar for the
Applicant in IAL/3457/2020 in WP/3447/2019.
Mr. Pradeep Gole for the Applicant in IAL/221/2022 in
WP/3447/2019 and IAL/225/2022 in WP/3397/2019.
Mr. Arshad Shaikh a/w. Mr. Sunil Kharwar for Respondent no.
3 in WP/3397/2019.
CORAM : S.V. GANGAPURWALA, ACJ. &
SANDEEP V. MARNE, J.
RESERVED ON : 7 FEBRUARY 2023
PRONOUNCED ON : 17 FEBRUARY 2023
JUDGMENT (Per Sandeep V. Marne, J) :-
The Challenge
1. Petitioners are aggrieved by the action of the State
Government in not treating their establishments as deemed to
have been closed under provisions of Section 25-O(3) of the
Industrial Disputes Act, 1947 ("ID Act"). The deeming fiction is
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invoked alleging non decision of applications seeking
permission for closure of establishments within 60 days. The
petitioners assail communications dated 4 November 2019
calling upon the petitioner to resubmit application for closure
as well as letters dated 20 November 2019 and 22 November
2019 directing them not to close their establishments.
Petitioners also seek a declaration that their establishments
are deemed to have been granted permission for closure on
expiration of period of 60 days from the date of applications of
closure dated 28 August 2019 under section 25-O(3) of the ID
Act.
Facts
2. Facts in both the Writ Petitions are identical. The
petitioners are companies incorporated under the provisions of
Companies Act, 1956 and were engaged in manufacturing of
biscuits for Britannia Industries Limited ("BIL") under Job
Work Agreements. It is averred that BIL terminated the Job
Work Agreements with effect from 20 November 2019.
Petitioners accordingly intimated to all its workmen as well as
Unions about termination notice by BIL. Petitioners decided to
apply for closure of their manufacturing activities at Bhandup
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and submitted applications for permission for closure on 28
August 2019 in Form XXIV-C prescribed under Rule 82-B(1) of
the Industrial Disputes (Maharashtra) Rules read with Section
25-O(1) of the ID Act. Petitioners simultaneously informed its
workmen and the recognised trade unions about applications
for closure by giving them closure notices dated 28 August
2019.
3. Petitioners received letters dated 25 September 2019
from the office of the Deputy Secretary Labour, Government of
Maharashtra intimating that they failed to disclose the efforts
made by them for closure of the manufacturing business nor
cited complete and cogent reasons for closure. Petitioners were
therefore called upon to resubmit applications by disclosing
efforts to prevent closure and by furnishing valid and complete
reasons for closure.
4. Petitioners responded to letters dated 25 September
2019 vide their letters dated 10 October 2019 disclosing the
reasons for closure as well as efforts made to prevent closure.
Period of 60 days provided for under Section 25-O(3) of the ID
Act expired on 27 October 2019. However, it is the case of the
petitioners, that no order granting or refusing permission for
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closure was passed/communicated by the State Government
and therefore upon expiration of period of 60 days, closure
permission was deemed to have been granted in view of
provision of Section 25-O(3) of the ID Act.
5. On 4 November 2019, petitioners received letters from
Deputy Secretary, Government of Maharashtra in response to
their letters dated 10 October 2019 stating that their response
did not cover the aspect of possibility of petitioners absorbing
the employees in other manufacturing divisions as well as
possibility of petitioners indulging in manufacturing of other
items instead of biscuits. Petitioners were directed to submit
fresh applications after considering such options with valid
and cogent reasons. It was communicated that it was not
possible to take any action on the request of petitioners in the
prevailing circumstances. The letters dated 4 November 2019
are subject matter of challenge in the present petitions.
6. Petitioners responded vide letters dated 22 November
2019 relying on provisions of Section 25-O(3) of the ID Act
taking a position that the permission to have closure is deemed
to have been granted and that the authority had become
functus officio to deal with applications dated 28 August 2019.
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In the meantime, Petitioners also received letters dated 4
November 2019 from Unions alleging ulterior motive and lack
of bonafide reasons for closure of the undertakings. Petitioners
responded on 22 November 2019 clarifying their position. The
Deputy Commissioner, Labour sent letter dated 20 November
2019 calling upon petitioners to remain present for a meeting
on 26 November 2019. By another letter dated 22 November
2019, the Deputy Commissioner Labour conveyed to
petitioners that the State Government had not granted
permission for closure and that therefore petitioners should
not close the establishment with effect from 27 November
2019. The letters dated 20 November 2019 and 22 November
2019 are also subject matter of challenge in the present
petitions filed on or about 26 November 2019. On the same day,
one the Unions filed proceedings before Industrial Tribunal
seeking restraint order against closure and an ad interim
order was passed retraining Petitioners from closing their
establishments.
Submissions
7. Appearing for Petitioners, Mr Naidu the learned counsel
would submit that there is a deeming fiction in Section 25-O(3)
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of the ID Act, under which failure on the part of appropriate
Government to communicate the order granting or refusing to
grant permission for closure within a period of 60 days
automatically entails deemed permission on expiration of the
said period of 60 days. He would further submit that the
appropriate authority for the present case is the State
Government, meaning thereby the Minister for Labour and the
Deputy Secretary in the Department of Labour, Industry and
Energy does not have any jurisdiction to take decision on
application for closure under section 25-O of the ID Act. He
would submit that no communication / order /decision taken
by the Minister for Labour on petitioners' closure application
has been communicated. That the communications addressed
by the Deputy Secretary and Deputy Commissioner of Labour
are therefore inconsequential cannot and do not partake
character of an Order refusing to grant closure permission.
8. Mr Naidu would further contend that the right to close an
establishment is a fundamental right and since a restriction is
put on such fundamental right in the form of Section 25-O(1) of
the ID Act, the same has to be reasonable. Therefore the
legislation has made a conscious provision of deeming fiction
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under section 25-O(3) of the ID Act in order to safeguard
establishments in respect of situations where the appropriate
Government sit over the application for indefinite period of
time. Mr. Naidu would rely upon judgment of the Apex Court in
State of Haryana and Another vs. Hitkari Potteries Ltd. and
Anr.1 wherein the Apex Court has upheld judgment and order
of Punjab and Haryana High Court recognizing deemed
permission for closure under section 25-O(3) of the ID Act.
9. Mr. Naidu would also take us through the judgment and
order of the Punjab and Haryana High Court in Hitakari
Potteries (supra) in support of his contention that once all
conditions required under the Act and the Rules are satisfied,
the Government is under obligation to pass an order granting
or refusing to grant permission. Mr. Naidu would then take us
through the Constitution Bench decision in Excel Wear vs.
Union of India and Ors.2 to demonstrate that under the
unamended ID Act, no time limit was prescribed to decide
application for closure. He would then take us through the
Constitution Bench decision in Orissa Textile and Steel Limited
vs. State of Orissa and Ors.3 to demonstrate that after
1 (2001) 10 SCC 74
2 (1978) 4 SCC 224
3 (2002) 2 SCC 578
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amendment was effected to Section 25-O of the ID Act, the
defect non-prescription of time limit had been cured. He would
also take us through paragraph 13 of the judgment which takes
into consideration the provision of Sub-Section (3) of the
amended Section 25-O of the ID Act creating deeming fiction.
10. Mr. Naidu would also rely upon the judgment of the Apex
Court in Ashok Leyland Ltd. vs. State of Tamil Nadu and Anr. 4
in support of his contention that whenever a legal fiction is
created by statute, the same shall be given full effect. He would
then place reliance on the judgment of the Apex Court in Vazir
Glass Works Ltd. vs. Maharashtra General Kamgar Union and
Anr.5 in support of his contention that the permission for
closure is to remain operative for a period of one year and that
therefore provision has been made for deemed permission on
expiration of period of 60 days. He would rely upon judgment
of Full Bench of this court in Britannia Industries Ltd. vs.
Maharashtra General Kamgar Union and Anr.6 in support of
his contention that right to close a business is a fundamental
right and that the legislature in its wisdom has introduced
restriction of time in filing, entertainment and time of decision
4 (2004) 3 SCC 1
5 (1996) 2 SCC 118
6 (2009) 3 Mah LJ 968 (FB)
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on such applications to protect the interest of any of the
affected parties.
11. Inviting our attention to the additional affidavit dated 6
February 2023 filed by the State Government and particularly
to the file noting, Mr. Naidu would contend that the application
of mind and endorsement about absence of complete and
cogent reasons in the application is made by Desk Officer and
not by the Hon'ble Minister, who alone is empowered to take
decision on application for closure. He would submit that no
hearing was granted to petitioners while approving the file
noting by the Minister. He would rely upon the judgment of the
Apex Court in Ramchandra Keshav Adke (Dead) by Lrs. & Ors.
vs. Govind Joti Chavare and Ors.7 in support of his contention
that where a power is given to do a certain thing in a certain
way, the thing must be done in that way alone.
12. Mr. Naidu would then rely upon the judgment of the Apex
Court in Raghunath Rai Bareja and Anr. vs. Punjab National
Bank and Ors.8 in support of his contention that provisions of
statute must be literally interpreted and that literal rule of
interpretation would really mean that there should be no
7 (1973) 1 SCC 559
8 (2007) 2 SCC 230
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interpretation. He would also rely upon the judgment of the
Apex Court in Rohitash Kumar and Ors. vs. Om Prakash
Sharma and Ors.9 in support of his contention that mere cause
of hardship to an individual cannot be a ground for not giving
effective and grammatical meaning to every word of the
statute. Lastly Mr. Naidu would rely upon judgment of the
Apex Court in Satwant Singh Sawhney vs. D. Ramarathnam,
Assistant Passport Officer, New Delhi and Ors.10 in support of
his contention that every executive action must be supported
by some legislative authority.
13. The petitions are resisted by Ms. Chavan, the learned
Assistant Government Pleader. She would submit that the
point of Deputy Secretary not having jurisdiction to issue
impugned communication is not pleaded in the petitions. She
would submit that the State Government has taken a decision
on Petitioners' applications within the statutory period of 60
days. Relying on letter dated 25 September 2019, she would
submit that petitioners were called upon to file fresh
applications for closure and that this direction essentially
meant rejection of earlier applications. She would then invite
9 (2013) 11 SCC 451
10 (1967) 3 SCR 525
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our attention to letter dated 10 October 2019 by which
petitioners acted on the requisition for filing of fresh
applications and indeed filed fresh applications on 10 October
2019. She would then invite our attention to letters dated 4
November 2019 in support of her contention that even fresh
applications dated 10 October 2019 were rejected directing
petitioners to file fresh applications once again. She would
therefore assert that the State Government has taken a
decision by rejecting Petitioners' application for closure within
the period of 60 days and that therefore there is no question of
deemed permission under provision of Section 25-O(3) of the
ID Act. That the State Government has recorded detailed
reasons while rejecting their applications by due application of
mind. That petitions filed on 26 November 2019 are premature
as petitioners were called upon to file fresh applications. She
would draw our attention to Form XXIV prescribed under the
Maharashtra Rules for giving notice for closure of an
establishment and would submit that the annexure to the form
must mandatorily contain statement of reasons, which were
absent in the applications dated 28 August 2019.
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14. Ms. Chavan has placed on record additional affidavit
dated 6 February 2023 and thereby produced copies of file
noting leading to issuance of letter dated 25 November 2019.
On the basis of those file noting, she would urge that the
Hon'ble Minister took a decision on petitioners' application for
closure of establishments.
15. Mr. Shaikh, the learned counsel appearing for
respondent no. 3 - Union in Writ Petition No. 3397 of 2019
(Shangrila Food Products Ltd.) has opposed that petition
contending that the direction to resubmit application for
closure would itself mean rejection of petitioners' applications
dated 28 August 2019. He would further submit that
Petitioners' main grouse is non-following of procedure laid
down under Section 25-O(2) of the ID Act while entertaining
its applications for closure, for which they have remedy of
seeking review and/or reference of State Governments'
decision under Section 25-O(5) of the ID Act.
16. Mr. Shaikh would further submit the ID Act is a
beneficial legislation and in the event of possibility of two
interpretations, one that favours working class is required to
be accepted. This submission is raised by Mr Shaikh on the
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premise that even if confusion exists as to whether decision of
rejection of closure application was taken or not, benefit of
doubt must be given to working class and not to the
establishments. He would submit that even if this court comes
to a plausible conclusion, that decision was indeed taken, there
would not be closure by deeming fiction.Mr. Shaikh would take
us through the communication dated 25 September 2019 and
4 November 2019 in which petitioners were called upon to
re-submit applications for closure citing deficiencies in the
earlier applications. He would further submit that since
authority informed petitioners that unless fresh applications
were submitted, the State Government was not in a position to
take decision for closure, communication dated 25 September
2019 would clearly constitute a decision rejecting the
petitioners' closure application. He would contend that the
petitioners application for closure were returned by the State
Government on 25 September 2019 and having returned the
said application there was no question of taking any decision
thereof. Mr. Naidu would invite our attention to the provisions
of Section 82(B) of the Industrial Disputes (Maharashtra)
Rules, 1957("Maharashta Rules") in support of his contention
that all the modalities prescribed in Rule 82 (B) were
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scrupulously followed by the petitioners while making
application dated 28 August 2019 and that there was not even
a single defect in the application.
17. Mr. Shaikh would further submit that this court is
required to gather the real intention behind the action of the
State Government rather than giving too much importance to
the words used in the communication. He would submit that
the State Government has taken a stand on affidavit that it
intended to reject the petitioners application for closure. Mr.
Shaikh would seek to rely upon the very judgments cited by
Mr. Naidu contending that they actually favour his clients.
Lastly, Mr Shaikh would rely upon the judgment of this court
in Maharashtra General Kamgar Union vs Vazir Glass Works
& Ors.11.
18. Mr. Pathak learned counsel appearing for respondent no.
3 in Writ Petition no. 3447 of 2019 would also oppose the
petition submitting that on the date of filing of the present
petition i.e 26 November 2019 the respondent-union secured
an ad-interim order from the Industrial Court restraining
petitioners from closing down its manufacturing activities. He
11 1996 II CLR 990
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would submit that since the issue relating to closure of
establishment of petitioners is already sub-judice before the
Industrial Court this court would be loath in entertaining the
present petition. He would submit that the petitioners have not
challenged letters dated 25 September 2019 by which they
were appraised of rejection of their closure applications. He
would submit that petitioners have efficacious remedy of
seeking review/reference under section 25-O(5) of the ID Act.
He would take us through list of various companies of the
petitioners in support of his contention that petitioners are
otherwise financially sound to operate manufacturing units.
Mr. Pathak would rely upon judgment of this court in Eurotex
Industries and Exports Limited vs. Additional Commissioner
of Labour-cum-Specified Authority & Ors.12 decided on 25
February 2020. Lastly, Mr. Pathak would contend that any
communication made by the State Government under Section
25-O(2) of the ID Act would obviate closure by deeming fiction
under Section 25-O(3).
19. In rejoinder, Mr. Naidu would submit that the remedy of
review/reference under section 25-O(5) is available only in
respect of an 'order' granting or refusing to grant closure. In
12 Writ Petition no. 10345 of 2019
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the present case there is no such 'order' as contemplated
under Section 25-O(2) and mere communications addressed by
the State Government not constituting 'order' would not
prevent automatic closure by deeming fiction under section 25-
O(3) of the ID Act. He would dispute contention of Mr. Shaikh
that petitioners' application for closure was 'returned'. In so
far as the contention of Mr. Pathak about communication dated
25 September 2019 is concerned, Mr. Naidu would submit that
for triggering the deeming fiction under section 25-O(3), what
is needed is absence of an 'order' and mere
communications/letters would not constitute an 'order'
Reasons and analysis
20. Petitioners are seeking a declaration that their
establishments are deemed to have been closed under
provisions of Section 25-O(5) of the ID Act. It would therefore
be necessary to reproduce provisions of Section 25-O as under:
25-O. Procedure for closing down an undertaking
(1) An employer who intends to close down an undertaking of
an industrial establishment to which this Chapter applies
shall, in the prescribed manner, apply, for prior permission at
least ninety days before the date on which the intended
closure is to become effective, to the appropriate government,
stating clearly the reasons for the intended closure of the
undertaking and a copy of such application shall also be
served simultaneously on the representatives of the workmen
in the prescribed manner:
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Provided that nothing in this sub-section shall apply to an
undertaking set up for the construction of buildings, bridges,
roads, canals, dams or for other construction work.
(2) Where an application for permission has been made under
sub-section(l),the appropriate government, after making such
enquiry as it thinks fit and after giving a reasonable
opportunity of being heard to the employer, the workmen and
the persons interested in such closure may, having regards to
the, genuineness and adequacy of the reasons stated by the
employer, the interests of the general public and all other
relevant factors, by order. and for reasons to be recorded in
writing, grant or refuse to grant such permission and a copy
of such order shall be communicated to the employer and the
workmen.
(3) Where an application has been made under sub-section
(1) and the appropriate government does not communicate
the order granting or refusing to grant permission to the
employer within a period of sixty days from the date on which
such application is made, the permission applied for shall be
deemed to have been granted on the expiration of the said
period of sixty days.
(4) An order of the appropriate government granting or
refusing to grant permission shall, subject to the provisions of
sub-section (5), be final and binding on all the parties and
shall remain in force for one year from the date of such order.
(5) The appropriate government may, either on its own
motion or on the application made by the employer or any
workman, review its order granting or refusing to grant
permission under sub-section (2) or refer the matter to a
Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal
under this sub-section , it shall pass an award within a period
of thirty days from the date of such reference.
(6) Where no application for permission under sub-section (l)
is made within the period specified therein, or where the
permission for closure has been refused, the closure of the
undertaking shall be deemed to be illegal from the date of
closure and the workmen shall be entitled to all the benefits
under any law for the time being in force as if the undertaking
had not been closed down.
(7) Notwithstanding anything contained in the foregoing
provisions of this section, the appropriate government may, if
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it is satisfied that owing to such exceptional circumstances as
accident in the undertaking or death of the employer or the
like it is necessary so to do, by order, direct that the
provisions of sub-section (1) shall not apply in relation to such
undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down
under sub-section (2) or where permission for closure is
deemed to be granted under sub-section (3), every workman
who is employed in that undertaking immediately before the
date of application for permission under this section, shall be
entitled to receive compensation which shall be equivalent to
fifteen days' average pay for every completed year of
continuous service or any part thereof in excess of six
months.
21. The scheme of section 25-O of the ID Act envisages
making of an application by the employer to the appropriate
Government seeking prior permission at least 90 days before
date on which the intended closure is to become effective. The
application must state clearly the reasons for intended closure
of undertaking. On receipt of application for closure under
Section 25-O(1), the appropriate Government, which in the
present case means the Hon'ble Minister for Labour, is
required to make an inquiry and give reasonable opportunity
of hearing to the employer, a workmen and persons interested
in closure. He would also keep in mind the interest of general
public as well as all other relevant factors and then take a
decision either to grant or refuse to grant permission for
closure by recording reasons in writing. Section 25-O(3)
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contains deemed fiction under which upon failure of the
appropriate Government to communicate an order granting or
refusing to grant permission to the employer within a period of
90 days of making of the application, the permission for
closure is deemed to have been granted on expiration of period
of 60 days. Section 25-O(4) seeks to give finality to the order of
the appropriate Government and further directs that the order
passed would remain in force for a period of one year. Section
25-O(5) provides remedy to the aggrieved party to seek review
of the order of the State Government or to seek reference to
the Industrial Tribunal for adjudication. The power of review
under Section 25-O(5) can also be exercised by the appropriate
Government suo moto. Section 25-O(6) casts a liability on the
employer to pay all the benefits payable under the law in the
event of permission for closure being refused.
22. Petitioners have come up with a case that their
applications have not been decided by passing orders as
envisaged in Section 25-O(2). Therefore the entire controversy
revolves around the issue as to whether petitioners'
applications for closure submitted on 28 August 2019 have
been decided or not. What is contemplated by Section 25-O(2)
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of the ID Act is making of an order granting or refusing to
grant permission for closure. The deeming fiction under
Section 25-O(3) would be triggered only in the event of the
appropriate Government failing to pass an order within a
period of 60 days. It is common ground that the State
Government has not granted permission for closure. Therefore
it is necessary to find out whether the State Government has
passed any order refusing to grant permission for closure.
23. As observed above, petitioners filed application for
closure under Section 25-O(1) in the format prescribed under
section 85(B) of the Maharashtra Rules on 28 August 2019
and a copy thereof was also served upon the workmen-Unions.
The period of 60 days would come to an end on 27 October
2019. However, before 27 October 2019, the State Government
issued communications dated 25 September 2019 to
Petitioners and according to the State Government, that
constitutes 'order' refusing to grant permission for closure. On
the contrary petitioners contend that those communication did
not convey any decision refusing permission for closure. It
would be appropriate to reproduce the communication dated
25 September 2019 as under :
26 / 42 901-wp-3447-3397-2019+.doc
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dye 25¼vks½¼1½ vUo;s fn- 28-08-2019 jksth 'kklukl vtZ lknj dsyk vkgs-
2- lnjgw vtkZps voyksdu dsys vlrk] vkiY;k daiuhus es-fczVkfu;k baVLVªht
fy- ;kapslkscr fcLdhV mRiknu dj.;klkBh dsysyk tkWc djkj fn- 27-11-2019 iklwu jÌ
gks.kj vlY;keqGs] lnjgw foHkkxkdMs dks.krsgh dke f'kYyd jkgr ukgh] vls dkj.k uewn d#u
lnjpk fcLdhV foHkkx (Biscuit Division) can dj.;kl ijokuxh ns.;klkBh fn-28-08-2019
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24. The first objection of Mr Naidu is that even if
communications dated 25 September 2019 were to be assumed
as decisions, the decisions are not taken by the authority, viz.
Hon'ble Minister for Labour but the same is taken by the
27 / 42 901-wp-3447-3397-2019+.doc
Deputy Secretary. To counter the contention, the State
Government has placed on record the file noting on the basis of
which the communications dated 25 September 2019 were
issued. The file noting would indicate that note was prepared
by Desk Officer on 30 August 2019 stating that as per
notification dated 25 June 2013, the powers under Section 25-
O(2) are conferred upon the Hon'ble Minister for Labour. It is
further stated that the petitioners' applications were required
to be forwarded to the Hon'ble Minister for further action.
However, there appears to be an endorsement in hand writing
towards the end of the noting to the effect that petitioners
failed to furnish complete and cogent reasons in their
applications. The noting was approved by various officers in
the hierarchy and finally came to be approved by Hon'ble
Minister with a remark accepting hand written endorsement
with further direction that the establishment should be
intimated to file application with cogent reasons. In accordance
with the above decision of the Hon'ble Minister, the letters
dated 25 September 2019 were addressed to petitioners. We
therefore repel the objection of the petitioners that the
decision in communications was not taken by the Hon'ble
Minister.
28 / 42 901-wp-3447-3397-2019+.doc
25. Different interpretations are placed by the parties about
the letters dated 25 September 2019. The State Government
has contended that the letters would constitute decision/order
refusing to grant permission for closure under Section 25-O(2)
of the ID Act. Mr. Shaikh would construe the letters meant
'return' of closure application, which was deficient. Mr. Naidu,
on the other hand, would submit that the letters do not contain
any decision at all, much less a decision refusing to grant
permission for closure.
26. It is the petitioners' case that the applications for closure
submitted by them on 28 August 2019 were complete in all
respects. However, when the State Government directed them
to resubmit applications by adducing complete and cogent
reasons and also to disclose the efforts taken to prevent
closure of operations, petitioners responded by letter dated 10
October 2019 seeking to adduce reasons for closure as well
disclosing efforts taken to prevent closure of operations. The
letter dated 10 October 2019 reads thus:
Ref. No. 76/19-20 Date : 10.10.2019
To,
Shri S.M.Sathe,
The Dy.Secretary
State of Maharashtra
Mantralaya Mumbai
29 / 42 901-wp-3447-3397-2019+.doc
Sub : Permission sought under Section 25-O(1) of I.D.Act
for closure of M/s. Harinagar Sugar Mills Ltd.
(Biscuit Division)
Ref : Your letter dated 25.09.2019.
Dear Sir,
On 01.10.2019 we have received your letter dated 25.09.2019 with regard
to the aforesaid subject.
It is a fact that for last 32 years, the Company used to do job work of
manufacturing biscuits only for Britannia Industries Ltd. For
manufacturing biscuits for Britannia Industries Ltd., the raw material as
well as necessary plant and machinery used to be provided and installed
by Britannia Industries Ltd. After receiving termination of job work
agreement from BIL, the Company immediately persuaded the
management of BIL to continue the agreement and the job work with the
Company. However, said persuation did not work or yield any result. The
Company had then approached other biscuit manufacturers such as M/s.
Mondelez India Limited and M/s. ITC Ltd. On 15.07.2019, the top
management of the Company had meeting with Mr. T. Arunkumar, CMO,
Manager of M/s. Mondelez India Limited and then as per his requirement
had forwarded e-mail on 24.07.2019. However, thereafter there was no
response. Similarly the top management of the Company had discussed
with Mr. Divi of M/s. ITC Foods. However, on 17.07.2019 Mr. Divi replied
that there is no requirement of contract manufacturing unit to them at
present. Once again on 24.07.2019 mail was forwarded to Mr. Divi of M/s.
ITC Foods but there was no response to the said mail. We enclose copies of
e-mails forwarded to M/s. Mondelez India Ltd. and M/s. ITC Foods, The
management of the Company had also talked and discussed with Mr. Ajay
Chauhan of Parle Biscuits to provide job work to the Company. However,
there was no positive response even from Parle Biscuits.
The reason for closing down the manufacturing activities is there is no job
work which can be done in the said factory. As stated in the closure
application the company for last 32 years was doing only the job work for
Britannia Industries Ltd and the efforts mentioned hereinabove will
support the contention of the Company that there is no other way out but
to close its manufacturing operations.
FOR HARINAGAR SUGAR MILLS LTD
(BISCUIT DIVISION)
(AUTHORISED SIGNATORY)
30 / 42 901-wp-3447-3397-2019+.doc
Thus petitioners' did not take a stand that the reasons and
efforts were already furnished/disclosed in the closure
applications.
27. Ms. Chavan has suggested that the petitioners' letter
dated 10 October 2019 would therefore constitute fresh
applications as per liberty granted in letters dated 25
September 2019, thereby annulling earlier applications dated
28 August 2019. We may not completely agree to the
suggestion of Ms. Chavan, as letters dated 10 October 2019 are
not in the prescribed form under the Maharashtra Rules.
However, it does appear that far from taking a plea that they
had already furnished reasons for closure in the applications,
petitioners' did adduce reasons and disclosed efforts made to
prevent closure of operations in the letters dated 10 October
2019. By this conduct, petitioners' acquiesced in the position
that their earlier applications dated 28 August 2019 were
deficient.
28. No doubt, right to close an establishment is a
fundamental right under Article 19 of the Constitution of India.
A reasonable restriction is put on that right in the form of
31 / 42 901-wp-3447-3397-2019+.doc
Section 25-O of the ID Act. Since fundamental right is sought to
be restricted, the legislature has made special provisions in the
form of Section 25-O(3) by creating a deeming fiction in the
event of appropriate Government failing to decide the
application for closure within 60 days. The full bench of this
court in Britannia Industries (supra) has considered the
objective behind creation of deeming fiction under Section 25-
O(5). The objective is to prevent the appropriate Government
from keeping closure applications pending indefinitely.
Another objective is limited life of one year for operation of
order of closure under Section 25-O(5).
29. In the present case, appropriate Government did not
keep petitioners' applications for closure pending indefinitely.
Within two days of receipt of applications, the Desk Officer put
up a file noting on 30 August 2019 apprising the Hon'ble
Minister on requirement of taking decision. The Desk Officer
further made an endorsement in handwriting that the
petitioners had failed to disclose complete and cogent reasons
for seeking permission of closure. Since this endorsement is in
handwriting, Mr. Naidu did seek to suggest it as a 'subsequent
interpolation', but we would not be able to accept the same as
32 / 42 901-wp-3447-3397-2019+.doc
taking of decision on a file involves deliberations at different
hierarchical levels and mere appearance of an endorsement in
handwriting would not be a sufficient reason to hold that there
is subsequent interpolation. Also, the Hon'ble Minister has
approved that handwritten endorsement. The suggestion
therefore deserves to be rejected.
30. The Hon'ble Minister further directed that the
petitioners' should submit applications with complete and
cogent reasons. Petitioners' applications were thus found
defective or deficient. It is not that petitioners' disputed this
position, rather they acquiesced in the same and sought to
adduce reasons by letters dated 10 October 2019. Since
petitioners themselves accepted the position that the
applications dated 28 August 2019 were not complete in all
respect, the deeming fiction would not kick in. On deficient
applications for closure, the State Government was not
expected to pass order thereon by following procedure
contemplated under Section 25-O(2). The appropriate
Government could have simply rejected the applications
holding the same to be incomplete/deficient. Petitioners' would
then had to adopt remedy of review or reference under Section
33 / 42 901-wp-3447-3397-2019+.doc
25-O(5). Thus without there being any decision on merits, the
matter would have proceeded further. The Government
therefore granted an opportunity to the petitioners' to adduce
reasons for closure as well as to disclose efforts taken by it to
prevent closure. In these circumstances, it is difficult to hold
that the deeming fiction created under Section 25-O(3) would
trigger. Failure to communicate an order refusing to grant
permission for closure on an incomplete/deficient application
would not entail deemed permission under Section 25-O(3).
The fact that authority was not convinced with the application
of the petitioner and had communicated that cogent reasons
are not spelt out in the application would be sufficient to
conclude that the authority did not grant the application for
closure. What was contemplated by letter dated 25 September
2019 was "re-submission" of the application. Petitioners
however chose to add reasons to the pending applications on
10 October 2019. Petitioners failed to submit fresh applications
by providing statement of reasons as directed by State
Government vide letters dated 25 September 2019. This is the
reason why the State Government was once again required to
convey to petitioners that they were required to resubmit the
applications by subsequent communications dated 4 November
34 / 42 901-wp-3447-3397-2019+.doc
2019. It is only after receipt of letters dated 4 November 2019
petitioners took a stand of deemed permission under section
25-O(3) of the ID Act in their letters dated 22 November 2019.
31. We are therefore unable to accept the contention raised
on behalf of the petitioners that the closure applications filed
by them on 28 August 2019 were complete in all respects so as
to trigger deemed permission under provisions of Section 25-
O(3) on expiration of period of 60 days. Petitioners themselves
accepted the position that the closure applications were
incomplete by seeking to adduce reasons for closure by letters
dated 10 October 2019. It therefore cannot be held that the
establishments of the petitioners are deemed to have been
closed on expiration of period of 60 days from the date of
submission of closure applications dated 28 August 2019.
32. The objection on behalf of Respondent-Unions about
maintainability of Petitions on account of pendency of same
dispute with Industrial Tribunal deserves summary rejection.
It is stand of State Government that the Petitioners'
applications for closure are not granted. We therefore fail to
comprehend as to what is the occasion for Respondent-Unions
35 / 42 901-wp-3447-3397-2019+.doc
to approach the Industrial Tribunal. Also scheme of Section
25-O envisages approach to Industrial Tribunal only through a
reference made by appropriate Government under Section 25-
O(5). The Respondent-Unions have also urged before us that
Petitioners have several other divisions/companies where
manufacturing activities are still under progress. We are
afraid, we cannot go into these issues at this stage as the same
would touch upon merits of entitlement of Petitioners to close
their operations.
33. What remains now is to deal with various judgments
cited by Mr. Naidu:
(i) In Hitkari Potteries (supra) the application for closure
was made on 15 January 1998 and a letter was sent on behalf
of the Government on 2 April 1998 to the effect that
application was defective in certain aspects and it was
rejected. Thus, communication that the application was
defective as well as rejection thereof was made after expiry of
period of 60 days. On facts therefore the judgment is clearly
distinguishable. Even otherwise, the Apex Court has not
discussed or interpreted provisions of Section 25-O(3) of the
ID Act and the order of the Apex Court cannot be considered as
36 / 42 901-wp-3447-3397-2019+.doc
a binding precedent for present case where communication
about application being deficient was made within 60 days.
(ii) Ashok Leyland Ltd (supra) is relied upon in support of
the contention that whenever a legal fiction is created by a
statute the same is required to be given full effect. There can be
no dispute about this proposition. In the present case however,
petitioners' application for closure was incomplete and so also
the same was communicated within 60 days therefore deemed
fiction under Section 25-O(3) of the ID Act would not be
triggered on expiration of period of 60 days. In fact, the
respondent-union has relied upon paragraph 72 and 73 of the
judgment in support of their contention that the object of the
Act must be taken into consideration. ID Act, being beneficial
provision for workmen, keeping that object of the Act in mind,
it is difficult to hold that there is deemed closure in the present
case.
(iii) Excel Wear (supra) and Orissa Textiles & Steel Ltd
(supra) are relied upon essentially to demonstrate as to how
the twin deficiencies of absence of obligation to record reasons
and non-prescription of definite time limit for deciding
37 / 42 901-wp-3447-3397-2019+.doc
application for closure, came to be cured by amendment to ID
Act by insertion of amended section of 25-O. The judgments are
relied upon essentially to highlight the importance and
objective behind insertion of provision laying down definitive
time limit for deciding closure applications. Though the
objective cannot be disputed, it cannot at the same time be
contended that even a incomplete/deficient application would
entail deemed closure on expiration of period of 60 days,
especially when the appropriate Government conveys
deficiencies within 60 days. Both the judgments therefore do
not throw any light about the controversy involved in the
present petitions.
(iv) In Vazir Glass Ltd. (supra) is relied upon in support of
contention that the period of 60 days is consciously prescribed
under section 25-O(3) so that an employer does not suffer any
hardship on account of failure on the part of the State
Government to dispose of such application for permission for
closure expeditiously. It is pertinent to note that the word used
by the Apex Court in paragraph 29 of the judgment is "dispose
of". In the present case the petitioners' application for closure
was found to be incomplete/deficient which position is accepted
38 / 42 901-wp-3447-3397-2019+.doc
by the petitioners themselves. The judgment therefore would
be of little assistance to the petitioners.
(v) The full bench judgment of this court in Britannia
Industries Ltd (supra) is relied upon in support of the
contention that restriction of time is imposed with a view to
protect interest of affected parties. Again, there can be no
dispute on this proposition. The State Government cannot keep
the application for closure pending indefinitely and must act on
the same within a period of 60 days. In the present case after
the application was filed on 28 August 2019, cognizance
thereof was immediately taken by placing file noting by the
desk officer within two days on 30 August 2019. The Hon'ble
Minister took the decision to direct the petitioners to submit
fresh application with complete and cogent reasons on or about
30 September 2019 and the said decision was communicated to
the petitioners vide letter dated 25 September 2019. The
objective behind imposing time limit under Section 25-O(3) of
the ID Act, in our view, is fully met with.
(vi) In Ramchandra Keshav Adke (supra) the celebrated
decision in Taylor vs Taylor13 is referred in support of
13 (1876) 1 Ch D 426
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proposition that where power is given to do a certain thing in a
certain way, the thing must be done in that way or not at all
and that other methods of performance are necessarily
forbidden. Again, there can be no dispute about this
proposition. The facts of the present case indicate that the
State Government promptly acted on petitioners' application
for closure and communicated its decision to the effect that the
applications were incomplete calling upon them upon to
resubmit the same with complete and cogent reasons. The
State Government could have simply rejected the applications
on the ground that they were unsupported by reasons,
however with a view to give opportunity to them to furnish
complete and cogent reasons, it was granted liberty to file fresh
applications. The petitioners' did act upon that direction, but
instead of filing fresh applications, it chose to adduce reasons
for closure as well as disclosed efforts to prevent closure by
way of its letters dated 10 October 2019. It therefore cannot be
stated the State Government did something in a way that is not
prescribed under the Act.
(vii) Raghunath Rai Bareja (supra) and Rohitash Kumar
(supra) relate to the principles of interpretation of statute. The
40 / 42 901-wp-3447-3397-2019+.doc
language of Section 25-O is simple and clear and there is no
need to interpret the same. It is incumbent upon the
petitioners' to disclose reasons for closure under the heading
"Statement of Reasons" as required under Form XXIV-C
prescribed by Rule 82-B of the Industrial Disputes
(Maharashtra) Rules, 1957. The State Government was of the
opinion that petitioners did not furnish complete and cogent
reasons for closure in their applications. After receipt of
communications dated 25 September 2019, petitioners did not
maintain that the reasons were already supplied, on the
contrary they chose to add reasons by way of letters dated 10
October 2019. In such a scenario, the irresistible conclusion
that emerges is that the petitioners' applications for closure
were incomplete and the deeming fiction under Section 25-O(3)
would come into effect on expiration of period of 60 days.
(viii) Satwant Singh Sawhney (supra) is relied upon by
petitioners in support of their contention that every executive
action must be supported by some legislative authority. We fail
to comprehend as to how reliance on this judgment would be of
any aid to the case of the petitioners. We are unable to hold
that action of the State Government in addressing
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communication dated 25 September 2019 to them is
unsupported by legislative authority. If the State Government
is of the opinion that the applications were incomplete, it is
entitled to call upon petitioners to file proper and complete
applications for its decision on merits.
34. It must also be borne in mind that the permission for
closure operates for a period of one year only. Petitioners have
every right to make a fresh application for closure which can
be decided on merits. Even if the petitioners' application for
closure were to be rejected on merits, they could have made
fresh applications after expiration of period of one year. In the
present case petitioners could have filed fresh applications for
closure, as directed by the State Government, which could
have been decided on merits. Even now petitioners would be
entitled to file fresh applications for closure of their respective
establishments and the State Government is bound to decide
the same on merits as per scheme of Section 25-O of the ID Act.
35. Resultantly, we are of the considered view that
petitioners' establishment cannot be deemed to have been
closed under the provision of Section 25-O(3) of the ID Act. The
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Writ Petitions are devoid of merits. They are dismissed without
any orders as to costs.
36. In view of the dismissal of the petitions, interim
applications do not survive and the same are also disposed of.
(SANDEEP V. MARNE, J.) (ACTING CHIEF JUSTICE)
37. At this stage, the learned counsel for the petitioners
submits that the initial order passed on 28 November 2019
recording statement of the learned Advocate for respondent
no.3 that employees shall maintain peace and harmony, so also
the statement made by the petitioners and accepted, be
continued for a period of eight weeks.
38. The same is opposed by the learned counsel for the
respondents.
39. Considering that the statements made by respondent no.
3 and the petitioners exist since 28 November 2019, the same
shall continue for a period of two weeks from today.
40. Needless to state that on lapse of two weeks, said
statements would come to an end.
(SANDEEP V. MARNE, J.) (ACTING CHIEF JUSTICE)
