D.D. Gears Limited vs Labour Commissioner Cum ...
2015 Latest Caselaw 2078 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+                    W.P.(C) No. 3069/2001
%                       Judgement reserved on: 21.01.2015
                        Judgement pronounced on: 11.03.2015

      D.D. GEARS LIMITED                                    ..... Petitioner
                              Through:    Mr.Lalit Bhasin, Advocate alongwith
                                          Ms.Ratna D.Dhingra and Ms.Bhawna
                                          Dhami, Advocates.
                     versus

      LABOUR COMMISSIONER CUM SECRETARY (LABOUR)
      & ANOTHER                       ..... Respondents
                 Through: None.

CORAM:
HON'BLE MS. JUSTICE DEEPA SHARMA
JUDGMENT

1. Vide this writ petition, the petitioner has challenged the order dated

15.12.2000 of Labour Commissioner-Cum-Secretary (Labour) whereby the

their application dated 18.10.2000, seeking permission for closing down the

industrial establishment, was rejected.

2. The petitioner vide its application dated 18.10.2000 had applied for

closing down the undertaking at A-34, G.T.Karnal Road Industrial Area

with effect from 18.01.2001 for several reasons. In the application they had

disclosed that about 336 workers were in their service and undertook to pay

compensation to every workman in the undertaking covered under sub-

Section (8) of Section 25-O. The closure was sought on the ground that the

establishment was virtually closed due to illegal strike with effect from

13.12.1999 and consequent lock out with effect from 13.01.2000 and the

production was down due to the general recession in the market and

continuous labour problems for the last three years. The denial of

permission to retrench 156 workers under Section 25 (N) of the Industrial

Dispute Act (hereinafter referred to as 'the Act') vide order dated

30.07.1999 and then subsequent dismissal of review application vide order

dated 14.06.2000 is also shown as one of the reasons for inability to run the

establishment. Along with the said application the balance sheet of the years

ending 1998 and ending 1999 were also submitted. Annexure showing

financial position and the losses suffered by the applicant was annexed to

show the comparative study of profits and losses of establishment during

this period. Vide a separate statement the applicant had also pleaded that the

establishment was undergoing irretrievable financial crises which had put

the establishment to heavy financial burden and despite taking all possible

steps during the year 1997 to 2000 for efficient and good management of the

company and despite infusion of more capital and finances, the

establishment was not showing any improvement. Other reasons affecting

the functioning of establishment are claimed to be the illegal activities by its

workers such as illegal strikes since 1997, indiscipline, insubordination,

demonstrations, gherao, assault, tool down strike, declaring holidays by the

workers. In the application, reference is also made of letters written by

petitioner, asking the Labour Commissioner to intervene to sort out the

issues of illegal strike etc, which the authorities failed to do in time.

3. This application of the petitioner was contested by the workers before

the labour commissioner wherein the workers had blamed the

management/petitioner for everything. It is submitted that the workers were

forced to sit outside the factory during the period 24.04.1997 to 22.08.1997

and were not paid wages for that period. An industrial dispute with regard to

the wages for that period had been raised and pending before the

P.O.I.T.No.III, Delhi. It was stated that the management started handing

over its work to contractors and started claiming that it had no work for the

workers and also manipulated its balance sheets and engineered the loses in

the said balance sheets through its expert chartered accountant. That the

management had recently installed latest machineries in its work units

making it compatible to other manufacturers of motor parts; that it had

invested around 15 crores in the said plant and machinery and so there was

no reason for incurring losses and the losses shown were artificial with the

object to victimize the workers. The workers in the reply had also given the

list of the outsider agencies from whom the management was getting its

work done. It was also alleged that the management was selling its goods in

the market through its other firms like D.B.Axle, D.B.A. etc.

4. The commissioner however, vide the impugned order dated

15.12.2000 rejected the said application and declined the closing down of

the establishment.

5. The said order has been challenged by the management on the

grounds that the labour commissioner had not applied his mind to the

relevant factors and reports and had passed the order in mechanical manner.

That the material on record had not been considered and the order is

influenced by extraneous factors. It is submitted that the refusal of the

permission to close down the establishment has made the provisions under

Section 25-O of the I.D.Act redundant and the employer has been forced to

run a sick company despite incurring fall in production due to the illegal

activities resorted to by the workmen and general recession in the market. It

is argued that commissioner is a quasi judicial body and is required to do

enquiry into the matter and then pass a speaking order. That the impugned

order being non-speaking and arbitrary, is liable to be set aside. Reliance has

been placed on the finding of the Supreme Court in Workmen of Meenakshi

Mills Ltd. and Others vs. Meenakshi Mills Ltd. and Another.

6. This petition has been challenged by the workmen. It is submitted

that the petitioner is guilty of violating the orders dated 05.02.2001 in CWP

No.3401/2000 passed by the court wherein the petitioner was directed to pay

25% of wages to the workers for the period of lockout within one month and

the petitioner had paid only Rs.5 lakhs which were deposited under the

directions of this court in CWP No.2997/2001. It is submitted that the

petition is liable to be dismissed since the same is vague and misleading.

7. However, during the trial the workers conceded to the closure of

establishment with condition of expeditious payment of statutory dues. The

ordersheet dated 25.04.2003 as reproduced reads as under:

"Learned counsel for respondent no.2 states that he has no objection to the writ petition being allowed and the closure permission is granted, if the statutory dues pursuant to the closure are paid expeditiously Learned counsel for the petitioner seeks time to obtain instructions.

List the matter on 5th May, 2003."

This offer was subsequently withdrawn by the workers on 29.05.2003.

8. The workers, however, stopped attending the proceedings of the court

since January 2015.

9. The arguments on behalf of the petitioner have been heard. I have

perused the record and have given due consideration to the contentions of

the parties and material on record.

10. Under Section 25-O (2) of the I.D.Act, the appropriate Government

while dealing with the request to close down a unit is required to give its

reasons. The relevant provision is reproduced as under:

"25 (O) Procedure for closing down an undertaking (1) .....

(2) Where an application for permission has been made under sub-section (1), 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 regard 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 workman."

11. While interpreting this provision, this court, in case of D.C.M. Ltd. vs.

Lt.Governor, Delhi and Others: 1989 LAB.I.C. 1652, in para 11 has held

as under:

11. .... .... .... The procedural safeguard of recording of reasons has now been incorporated in Section 25-O(2) of ID Act by Act 46 of 1982. The reason are now required to be set

out and should not only be intelligible which determine the right of the petitioners to close the Mill but should also deal with the substantial points that have been urged. Reasons are required to be recorded in writing in granting or refusing to grant permission for closure. We do no not expect a reasoned judicial decision but the Lt. Governor must indicate how his mind worked and what was his basis to reject the ground of mandatory provisions of the Master Plan requiring the Mill to be permanently closed at the present site with effect from January 18, 1989. When an adjudicating authority is called upon to decide a question and is obliged to record his reasons in writing, but advances no reasons, the necessary inference is that he has no good reasons to advance. In "Padfield v. Minister of Agriculture & Fisheries", 1968 AC 997, it was held that "if he does not do so, the court may infer that he has no good reasons". The impugned order is thus capricious and entitled to be struck down on this short ground."

12. The Supreme Court in The Workmen of Meenakshi Mills Ltd. and

Others vs. Meenakshi Mills Ltd. and Another: AIR 1994 SC 2696 has held

as under:

"29. .... ..... In sub-section 2 of section 25-N, Parliament has used terminology which is different from that used in sub-section (2) of section 25-O. In sub-section (2) of Section 25- O, Parliament had used the expression "the appropriate Government may, if it is satisfied that the reasons for intended closure of the undertaking are not adequate or sufficient or such closure is prejudicial to the public interest" which implied that the order refusing to grant permission to close down the undertaking was to be passed on a subjective satisfaction of the appropriate Government about the adequacy or the sufficiency of the reasons for the intended closure or the closure being prejudicial to the public interest. In sub-section (2) of

section 25-N, the words used were "the appropriate Government or authority may, after making such enquiry as such Government or authority thinks fit, grant or refuse, for reasons to be recorded in writing" which indicates that the appropriate Government or authority, before passing an order granting or refusing permission for retrenchment, is required to make an enquiry though the precise nature of the enquiry that is to be made is left in the discretion of the appropriate Government or authority and further that the order that is passed by the appropriate Government or authority must be a speaking order containing reasons. ..... ... ... .

30. It would thus appear that the employer is required to furnish detailed information in respect of the working of the industrial undertaking so as to enable the appropriate Government or authority to make up its mind whether to grant or refuse permission for retrenchment. Before passing such order , the appropriate Government or authority will have to ascertain whether the said information furnished by the employer is correct and the proposed action involving retrenchment of workmen is necessary and if so, to what extend and for that purpose it would be necessary for the appropriate government or authority to make an enquiry after affording an opportunity to the employer as well as the workmen to represent their case and make a speaking order containing reasons. This necessarily envisages exercise of functions which are not purely administrative in character and are quasi-judicial in nature. The words "as such government or authority thinks fit" do not mean that the government or authority may dispense with the enquiry at its discretion. These words only mean that the government or authority has the discretion about the nature of enquiry which it may make.... ...."

13. Thus, it is established principle of law that the order must show the

application of mind by the authority and also the basis of rejection while

refusing or granting permission for closure.

14. In the present case from the application of closure it is apparent that

that the petitioner had applied for closure on account of non production in

the factory due to illegal strike with effect from 13.12.1999 and consequent

lockout with effect from 13.01.2000 which position continued till filing of

the application. Other ground was continuous labour problem for the last

three years and fall in production and the losses suffered by the applicant

during the years 1997 to 2000. It has also placed on record the copies of the

balance sheet of three years. The undisputed facts are that there was an

industrial dispute between the applicant and its workers claiming wages for

the period 24.04.1997 to 22.08.1997 which were not paid due to illegal

strike and the said industrial dispute was pending disposal before the labour

court. The workers union in its reply had claimed that the balance sheets

have been manufactured and manipulated. They had also raised the

contention that the management had invested about Rs.15 crores in the plant

and machinery and had installed latest machinery in its work units and also

that it had been handing over its work to the several other contractors. The

order of the labour commissioner shows no inquiry into these factors before

it had rejected the application. It has passed a cryptic order to the effect

"that the management has no cogent reason for seeking permission". The

order also does not show that the labour commissioner had made any

enquiry into the contention of the management that it had been incurring

losses due to recession in market or non-production in the unit. The order

also does not show that the labour commissioner had applied its mind on the

possibility of the revival of the establishment on its refusal to close down.

The impugned order shows that the permission was declined on the ground

that earlier vide order under Section 10 (3) dated 10.02.2000 the applicant

was prohibited from continuing with the lockout (started on 13.01.2000). It

is pertinent to mention here that the said order of the labour commissioner

under Section 10 (3) of the I.D.Act was held illegal by the Division Bench

of this court in L.P.A.No.658/2004.

15. The impugned order also does not show that any enquiry was done to

find out if the contention of the management that there was no production in

the factory for the last three years was right or wrong. The provisions of

Section 25-O (2) of the I.D.Act require the enquiry into the genuineness

and adequacy of the reasons, but the order does not show any inquiry being

done into the reasons showing that the labour commissioner had applied its

mind. The impugned order also does not show that the facts on which

closure was sought, existed or did not exist. It does not even say that the

claim of the management was not genuine or was inadequate. The

impugned order does not show that it had considered the contention of the

union that the management had manipulated the balance sheet. There is no

enquiry being done into the balance sheets. The impugned order does not

show that the labour commissioner before passing the impugned award

made any enquiry and applied its mind. The impugned order shows that the

mind of the Labour Commissioner was influenced by the fact that it had

earlier refused the permission of retrenchment of 156 workers sought by the

petitioner and also that vide order dated 10.02.2000 under Section 10 (3) of

the Act he prohibited the continuance of lock out. In L.P.A.No.658/2004,

the Division Bench has clearly held that the petitioner was justified in

continuing with lock out. It is also a fact that the workers had resorted to

strike before the petitioner declared a lock out. The admitted facts remain

that due to the strike in the establishment, the management had declared a

lock out which continued despite order of the Labour Commissioner dated

10.02.2000 under Section 10 (3) of I.D.Act and the lockout was declared

justified by the division bench of this court in L.P.A. No.658/2004.

Undisputedly the factory is lying closed with effect from 13.01.2000 and

thus is dysfunctional for the last so many years.

16. In the light of above discussion, it is apparent that the impugned order

since being in violation of Section 25-O (2) of the I.D.Act is not sustainable

and the same is hereby set aside.

17. The writ petition stands disposed of with directions to the petitioner to

comply with the provisions of Section 25-O Sub Section (8) of the I.D.Act

within eight weeks from the date of this order.

DEEPA SHARMA (JUDGE) MARCH 11, 2015 rb