Madras High Court
Swadeshi Panchalai Thozilalar vs The Secretary on 27 April, 2021
W.P.Nos.5360 and 5365 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Pronounced on
02.11.2021 31.12.2021
Coram
THE HONOURABLE Mr. JUSTICE S.VAIDYANATHAN
W.P.Nos.5360 and 5365 of 2021
and W.M.P.Nos.5953, 5954, 5957 & 5958 of 2021
W.P.No.5360 of 2021
Swadeshi Panchalai Thozilalar
Urimai Padukappu Sangam
No.23, 1st Floor, Middle Street,
Veeman Nagar, Thilaspet,
Puducherry-605 009.
Rep. By its President
Mr.K.Mohandass ... Petitioner
-vs-
1. The Secretary,
Industries and Commerce,
Government of Puducherry,
Puducherry.
2. The Secretary (Labour),
Government of Puducherry,
Puducherry.
3. M/s.Pondicherry Textile Corporation Limited,
A Government of Puducherry Undertaking
AFT Mill Premises, Cuddalore Road,
Pondicherry-605 004.
Rep. by its Director
4. M/s.Swadeshee-Bharathee Textile Mills Ltd.,
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
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W.P.Nos.5360 and 5365 of 2021
Maraimalai Adigal Salai,
Pudduchery-605 004
Rep. by its Managing Director
5. The Managing Director
M/s.Swadeshi Cotton Mill
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
Maraimalai Adigal Salai,
Pudduchery-605 004
6. Thiru. E.Vallavan, I.A.S.,
The Secretary to Government (Industries and Commerce),
Chief Secretariat, Puducherry-605 001. ... Respondents
(R6 suo motu impleaded by an order dated 27.04.2021)
Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying
for the issuance of a Writ of Certiorarified Mandamus, calling for records relating
to the impugned notice dated 29.09.2020 issued by the 5th Respondent and quash
the same and consequently, direct the Respondents to take appropriate steps to
make the 5th Respondent Mill operative.
W.P.No.5365 of 2021
Sri Bharathi Mills Thozilalar
Urimai Padukapppu Sangam
No.23, 1st Floor, Middle Street,
Veeman Nagar, Thilaspet,
Puducherry-605 009.
Rep. by its President Mr.K.Mohandass ... Petitioner
-vs-
1. The Secretary,
Industries and Commerce,
Government of Puducherry,
Puducherry.
2. The Secretary (Labour),
Government of Puducherry,
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Puducherry.
3. M/s.Pondicherry Textile Corporation Limited,
A Government of Puducherry Undertaking
AFT Mill Premises, Cuddalore Road,
Pondicherry-605 004.
Rep. by its Director
4. M/s.Swadeshee-Bharathee Textile Mills Ltd.,
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
Maraimalai Adigal Salai,
Pudduchery-605 004
Rep. by its Managing Director
5. The Managing Director
M/s.Sri Bharathi Mills,
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
Maraimalai Adigal Salai,
Pudduchery-605 004
6. Thiru. E.Vallavan, I.A.S.,
The Secretary to Government (Industries and Commerce),
Chief Secretariat, Puducherry-605 001. ... Respondents
(R6 suo motu impleaded by an order dated 27.04.2021)
Prayer: Writ Petition filed under Article 226 of the Constitution of India, praying
for the issuance of a Writ of Certiorarified Mandamus, calling for records relating
to the impugned notice dated 29.09.2020 issued by the 5th Respondent and quash
the same and consequently, direct the Respondents to take appropriate steps to
make the 5th Respondent Mill operative.
For Petitioners : Mr.Anil Relwani
For R1 & R2 : Mr.G.Djenary
Govt. Advocate
For R3 to R5 : Mrs.N.Mala
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Govt. Pleader (Puducherry)
*****
COMMON ORDER
These Writ Petitions have been filed, seeking to quash the impugned notice
dated 29.09.2020, by which a notice was issued by the 5th Respondent with regard
to closure of two Mills, namely, M/s.Swadeshi Cotton Mill and M/s.Sri Bharathi
Mills. The Petitioner / Union also sought a direction to the Respondents to take
appropriate steps to make the 5th Respondent Mill operative.
2. The Petitioners / Sangam are the registered Unions under the Trade
Unions Act, 1926. According to Sangam, the Mills are in existence for more than 90
years and on account of loss, it has been decided to wind up the Mills by means of
filing a closure application under Section 25-O of the Industrial Disputes Act, 1947
(in short 'the I.D.Act, 1947'). The Management has issued a closure notice dated
29.09.2020, indicating that the Mills would be closed with effect from 30.09.2020.
3. According to the Sangam, the notice under Section 25(O) of the I.D.Act,
1947 was issued in the prescribed format only on 02.06.2020 and as there was a
defect in the application, the said application was returned, which was re-
submitted on 01.07.2020. In the closure application dated 02.06.2020, it was
decided to close Mills with effect from 01.09.2020. The Mills were closed on
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30.09.2020 and according to the Sangam, no notice of enquiry was issued for
making objection before the Authority concerned and without taking up the matter
for hearing, the Government has replied stating that there is a deemed closure
after 60 days in terms of Section 25(O) of the I.D.Act, 1947. The stand of the
Government was that if no orders were passed within 60 days from the date of
receipt of application, the closure will come into effect and that Mills have been
closed with effect from 30.09.2020.
4. The grievance of the Sangam was that when a specific provision is
stipulated under the Act, it is the duty cast upon the Authority concerned to hear
necessary and proper parties, including the aggrieved parties, and pass orders on
the application in respect of closure of Mills. Keeping the application under lock
and seal, and thereafter informing that the period had already expired is not the
real intention of the fairness of the I.D.Act, 1947, and therefore, the closure is bad
in law. According to them, the closure was to be given effect with effect from
01.09.2020 and strangely, without assigning any reason, the date was fixed as
30.09.2020.
5. The Management contended that the Workers have been paid
compensation in part and stages, which have been accepted without any protest
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and that when there was a genuine reason to close down the Mills, the Workers
have no right to question it, more so, in the light of the deemed provision.
According to the Government, the Mill is a part of Government of Puducherry and
that there was a huge loss and therefore, the question to revive the Mill at this
stage is not possible. The reasons given by the Mill in the closure application are
perfectly valid and that the documents produced before the Authorities would
reveal that there was a loss and that they are unable to cope up with the situation.
Since private Sector Entities cater the demands more efficiently than the
Management Mill, they were unable to regain the financial wealth even under the
Chairmanship of an IAS Officer and therefore, it has been decided to close down
the Mill by giving compensation under Section 25(FF) of the I.D.Act, 1947. The
stand of the Management was that they have no financial resources for
procurement of raw materials to operate the Mills and the machineries have
become faulty due to frequent breakdown and it cannot be repaired any further.
6. Thiru.E.Vallavan, I.A.S., who has been suo motu impleaded as R6, has
filed a counter affidavit dated 08.06.2021, wherein, it has been inter alia stated as
follows:
i) Swadeshee and Bharathee Textile Mills Limited, Puducherry were two
separate Mills and they started functioning during the French Colonial Period. In
1985, Swadeshee Cotton Mill was taken over by the National Textile Corporation
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(NTC), whereas the Bharathee Mill, which was started in the year 1897, was taken
over by NTC during 1974. The Management of NTC decided to close down these two
Mills in 2005 and the Government of Puducherry had taken over these two Mills
from NTC;
ii) It was stated that SITRA, Coimbatore was requested to study the techno-
economic viability of Swadeshee-Bharathee Textile Mills Limited in the year 2007,
which, in turn concluded that these two Mills were operating below the standard
industry norms on account of outdated technology and therefore, recommended for
closure of Mills. Subsequently, Government of Puducherry has constituted an Expert
Committee to study for restoration of financial health of the Mills under the
Chairmanship of one Thiru.B.Vijayan, I.A.S. (retired) and the said Committee also
recommended for closure of the Mills under Section 25(FF) of the I.D.Act, 1947,
which was placed before the Cabinet;
iii) It was further stated that Cabinet, vide Resolution dated 13.01.2019,
approved the implementation of Voluntary Retirement Scheme (VRS), which was
issued to Anglo French Textiles by an order dated 02.01.2013 to Swadeshi
Bharathee Textile Mills. There was a difference of opinion between the Lieutenant
Governor and Chief Minister/Council of Ministers in implementation of the
recommendations of the Committee and therefore, the subject was referred to the
Home Ministry, New Delhi and the Board of Directors concluded that the
continuance of operation of the Mill is not feasible;
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iv) It was also stated that the Managing Director, Swadeshee-Bharathee
Textile Mills Ltd., filed Form O-3 dated 13.09.2019 and thereafter, filed a letter
dated 11.10.2019 along with lay-off notice in Form O-3 and sought permission to
lay off 135 Workmen employed in M/s.Sri Bharathi Mill, Puducherry. As per
G.O.Ms.No.177/80-Lab dated 01.09.1980, the Secretary to Government, Labour
Department, Puducherry is the 'Specified Authority' to exercise the powers and
perform the functions in connection with grant of permission for lay-off. The
Sangams filed a joint representation dated 30.12.2019 and raised their objections
to give permission for lay-off and requested to run the Mill effectively. The
Managing Director, Swadeshee-Bharathee Textile Mills Ltd., filed Form O-3 dated
11.10.2019 along with lay-off notice in Form O-3 and sought permission to lay off
70 Workmen employed in M/s.Swadeshi Cotton Mill, Puducherry. As per Section 25-
A & 25-C of the I.D.Act, 1947, an industrial establishment employing 50 to 100
workmen shall pay 50% of the total of the basic wages and dearness allowance for
all days during which he is so laid off. Further, as per Rule 75-A of the Industrial
Disputes (Central) Rules, 1957, if any workman employed in an industrial
establishment as defined in Section 25-A of the Act, is laid off, the employer shall
given notice of commencement and termination of such lay-off i Form O-1 and O-2
respectively within seven days of such commencement or termination. Hence, Form
O-3 dated 11.10.2019 was returned to file the same in Form O-1 in accordance with
the relevant provisions of the Act and Rules;
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v) In the counter affidavit, it was stated that accordingly, two separate
Closure notices in Form QA dated 02.06.2020 were filed for permission in respect
of the proposed closure of M/s.Sri Bharathi Mill and M/s.Swadeshee Cotton Mill,
Puducherry and the number of workmen, whose services will be terminated on
account of closure of undertaking is 119 and 68 respectively. Since there were
certain discrepancies, it was returned for rectification. It was stated that Section
25(O) of the I.D.Act, 1947 is not applicable to M/s.Swadeshi Cotton Mill and Section
25FFA (Chapter V-A) of the I.D.Act, 1947, alone will be applicable to them.
However, it was further stated that though two separate Factory License under the
Factories Act, 1948 were obtained, they were registered as a Single entity as
M/s.Swadeshee-Bharathee Textile Mills Ltd., Puducherry under the Companies Act
and therefore, the provisions of Chapter V-B will be applicable only if single Form
QA in respect of Mills is filed together and only then, a reasonable opportunity of
being heard may be provided to the Workmen. As per Sub-Section (1) of Section 25-
O of the Act, the employer, who intends to close down an undertaking shall apply
for prior permission at least ninety days before the date of intended closure;
vi) It was also stated that the appropriate Government for granting or
refusing to grant permission of closure under Section 25(O) of the Act is the
Administrator and on 01.07.2021, the file was submitted for orders of the
Lieutenant Governor, Puducherry and subsequently, the Labour Minister had
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returned the file on 08.07.2020 for want of a copy of Board Resolution and the
Chief Secretary minuted to bring on record quickly, thereby the Management of
Mills was requested to furnish necessary reply immediately, in response to which,
the Management had enclosed the following documents:
a) Copy of the Board Resolution for closure of SBTML Mills, viz., M/s. Sri
Bharathi Mill, Puducherry and M/s. Swadeshi Cotton Mill, Puducherry.
b) Copy of the I.D. Note of the Lieutenant-Governor's Secretariat,
Puducherry, vide No.1141/LGS/2019 pertaining to the interim direction for filing
notice of closure of SBTML, Mills under Section 25(O) of the Industrial Disputes Act,
1947.
c) Copy of the I.D. Note of the Directorate of Industries & Commerce,
Puducherry vide No.01/GEN/SNTML/2019-20/498 pertaining to the action taken
upon the above mentioned interim direction of the Lieutenant Governor of
Puducherry.
vii) It was further stated in the counter affidavit that though the file was re-
submitted on 14.07.2020 for orders of the Lieutenant Governor, Puducherry for
making an enquiry under Section 25(O)(2) of the I.D.Act, 1947, it was help up with
the Office of the Welfare Minister, Puducherry till 19.11.2020 and subsequently, it
was decided to implement VRS, which was issued to Anglo French Textiles dated
02.01.2013. Though the Bharathiya Labour Union, Puducherry wanted to close down
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the Mill and sought for a fair settlement, the Lieutenant Governor stated that the
elected Government chose not to submit the file of Labour Department to the
competent authority, viz., Lieutenant Government in respect of closure notice
dated 02.06.2020 of SBTML and therefore, directed to close Mill with effect from
30.09.2020 as per statute and the Department of Industries sanctioned an amount
of Rs.1.71 Crore as grant-in-aid to M/s.SBTML towards part payment of closure
compensation to workers;
viii) It was also stated that since the decision of appropriate Government
was not received from Labour Department, Puducherry, the Management presumed
the grant of permission and closed the Mills officially on 30.09.2020 and returned
the file to the Labour Department on 27.11.2020, with a direction to ensure timely
payment of closure compensation to the workers. It was finally stated that there
was no delay on his part and he was not aware of the closure notice dated
29.09.2020 issued by the 4th Respondent, as he was not allocated with the subject
at the time of closure of the Mills.
7. According to Mrs.N.Mala, learned Government Pleader (Puducherry), in
terms of Section 25(O)(6), in case no application is filed for permission as
contemplated under sub-section (1) within the period specified therein or where
the permission for closure has been refused, then only the closure becomes illegal
and the employees would be entitled to all the benefits. In this case, the
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application has been made and the defects were rectified and thereafter, the
closure has taken effect in the subsequent date and therefore, the submission put
forth by the Writ Petitioners that there is a violation of Section 25(O) of the
I.D.Act, 1947 cannot be accepted. It was further contended that since there was no
order passed, the deeming provision has come into effect.
8. Heard the learned counsel for the Petitioners, learned Government
Pleader (Puducherry) for R3 to R5 and the learned Government Advocate for R1 &
R2, Thiru.E.Vallavan, I.A.S. (R6) and perused the material documents available on
record.
9. It is seen that the closure application has been made on 02.06.2020 to
close down the Mills with effect from 01.09.2020. Pursuant to the return of the
application, it was re-submitted on 01.07.2020 after complying with the defects
mentioned therein and subsequently, it was decided to close down the Mills with
effect from 30.09.2020.
10. De hors the change in the date of closure, the issue to be decided is as to
whether the provisions of Section 25(O) of the I.D.Act, 1947 has been complied
with in its strict sense. For the sake of convenience, Section 25(O) of the I.D.Act,
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1947 is extracted hereunder:
“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:
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 (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 refused 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:
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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 (1) 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 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.]]”
11. In terms of the aforesaid Section, it is mandatory on the part of
Employer to issue notice to close down the Undertaking by giving three months'
notice and specify the date of closure by simultaneously making an application
before the Authorities concerned for closing down the Undertaking. The concerned
Authority, after scrutinizing the records and after rectification of defects will have
to decide the application within 60 days from the date of original application for
closure or within 60 days from the date of re-presentation.
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12. In this case, admittedly, the Authority concerned did not conduct any
enquiry / hearing and allow the period to automatically get lapsed, thereby,
deeming provision has come into operation. The core issue involved is whether the
deeming provision can be read in isolation, when the Authorities have not
discharged their statutory obligation mentioned therein. After receipt of the
application for closure under Section 25(O) of the I.D.Act, 1947, especially when
more than 100 workmen were employed on an average per working day for the
preceding twelve months, the issuance of notice to the Workmen or their
representative and hearing all the parties, who are interested and likely to be
affected, is obligatory before closing down an Undertaking within a period of 60
days as mentioned supra. In case of any adverse order, the employees are entitled
to seek for reference under Section 25(O)(3) of the I.D.Act, 1947 and the Tribunal
shall pass an Award within 30 days from the date of receipt of Reference and that
the Government cannot refuse to refer the matter for adjudication.
13. In this case, not even a hearing has been conducted and no reference has
been made. When the Authorities fail to discharge their duties, it is obligatory on
the part of the Government to refer the matter for adjudication before appropriate
Tribunal. As stated supra, the Government cannot keep the application for closure
in a cold storage and wake up from slumber and say that deeming provision has
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come into play. The purpose of deeming provision provided under the Act is for a
different aspect and not for sending a communication about the receipt of
application by the Government and hearing thereafter.
14. If the contention of Mrs.N.Mala, learned Government Pleader
(Puducherry) is accepted, it will make mockery of the entire provisions of Section
25(O) of the I.D.Act, 1947. Admittedly, in this case, an application has been filed,
seeking permission for closure and the same was re-presented after curing the
defects. If the Authority is allowed to operate the deeming provision without
conducting any enquiry, the very purpose of the provisions of the Act itself will be
defeated, as there is not even an attempt to conduct enquiry, which is mandatory
on the part of the concerned Authority under Section 25(O)(2) of the I.D.Act, 1947.
Though the Government and the 6th Respondent have filed counter affidavits,
narrating several details, including financial loss, etc, all these particulars should
have been referred to in detail in an order after conducting an enquiry by the
authority concerned and not after effecting the closure, which would amount to
putting a cart before a horse.
15. The Supreme Court in the case of Orissa Textile & Steel Ltd. vs. State
of Orissa and Others, reported in AIR 2002 SC 708 held that the appropriate
Government exercising quasi-judicial function cannot pass orders arbitrarily or
whimsically. For the sake convenience, the relevant paragraphs of the said
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judgment are extracted hereunder:
“5. In Excel Wear's case, this Court negatived a submission that a right to
close down a business was not a fundamental right and that it was merely a right
appurtenant to ownership of property. This Court held that the right to close down a
business was an integral part of the fundamental right to carry on business as
guaranteed under Article 19(1)(g) of the Constitution. It was held that there could
be a reasonable restriction on this right under Article 19(6) of the Constitution. It
was held that the law could provide to deter reckless, unfair, unjust and mala fide
closure. A challenge under Article 14 of the Constitution was negatived. It was held
that Chapter V-V dealt only with comparatively bigger undertakings and of a few
types only and thus the classification was reasonable. It was held that
reasonableness of the restrictions must be examined both from procedural and
substantive aspects of the law. This Court then considered whether the restrictions
imposed by Section 25-O (as it then stood) were reasonable and saved by Article
19(6) of the Constitution. It was held that the restrictions imposed by Section 25-O
were unreasonable for the following reasons:
“(i) Section 25-O did not require giving of reasons in the order. Even if the
reasons were adequate and sufficient, permission to close could be denied in the
purported public interest of labour as it had been left to the whims and caprice of
the authority to decide one way or the other. Thus the order could be whimsical and
capricious.
(ii) No time limit was fixed whilst refusing permission to close down.
(iii) That there was no deemed provision for according approval in the
Section. It was held that the result would be that if the Government order was not
communicated to the employer within 90 days, strictly speaking, the criminal
liability under Section 25-F may not be attracted if on the expiry of that period the
undertaking is closed, but the civil liability under Section 25-O(5) would come into
play on the expiry of period of 90 days.
(iv) The order passed by the authority was not subject to any scrutiny by any
higher authority or tribunal either in appeal or revision and the order could not be
reviewed even after some time.
(v) The employer was compelled to resort to the provision of Section 25-N
even after approval of closure.
(vi) The restriction imposed was more excessive than was necessary for the
achievement of the object and thus highly unreasonable. It was suggested that
there could be several other methods to regulate and restrict the right of closure
e.g. by providing for extra compensation over and above the retrenchment
compensation.
“11....Under the unamended Section 25-O, the order as to be passed on a
subjective satisfaction of the appropriate Government. Now, in amended Section 25-
O the words used are “the appropriate Government may, after making such enquiry
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as it thinks fit, and after giving a reasonable opportunity of being heard to the
employer, the Workmen and persons interested in such closure may, having regard
to the genuineness and adequacy of the reasons stated by the employer, interest 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.” Thus now the
appropriate Government before passing an order is bound to make an enquiry. Now,
the order passed by the appropriate Government has to be in writing and contain
reasons. As in the case of retrenchment so also in closure, the employer has to give
notice by filing up a form in which he has to give precise details and information.
The requirement to make an enquiry postulates an enquiry into the correctness of
the facts stated by the employer in the notice served by him and also all other
relevant facts and circumstances including the bona fide of the employer. Now an
opportunity to be heard would have to be afforded to the employer, workmen
and all persons interested. The detailed information which the employer gives
would enable the appropriate Government to make up its mind and collect
necessary facts for the purposes of granting or refusing permission. The
appropriate Government would have to ascertain whether the information
furnished is correct and whether the proposed action is necessary and, if so, to
what extent. The making of an enquiry, the affording of an opportunity to the
employer, the workmen and all interested persons and the necessity to pass a
written order containing reasons envisages exercise of functions which are not
purely administrative in character but quasi-judicial in nature. The words "the
appropriate Government, after making such enquiry, as it thinks fit" does not
mean that the Government may dispense with the enquiry at its discretion. These
words only mean that the Government has discretion about the nature of the
enquiry it is to make.”
22. Again, in the case of Premium Granites v. State of Tamil Nadu
MANU/SC/0466/1994 : [1994]1SCR579 , it has been held that the phrase "public
interest" finds place in the Constitutional and in many enactments and has since
been noted and considered by this Court in various decisions. It has been held that
the said expression is of a definite concept and that there is nothing vague about it.
Undoubtedly, in Maneka Gandhi's case it had been held that a fundamental right had
not been breached. However, that would make no difference to the understanding
of the term "in the interest of the general public". In our view, the phrase "in the
interest of the general public" is the phrase of a definite connotation and a known
concept. This phrase, as used in amended Section 25-O, has been bodily lifted from
Article 19(6) of the Constitution of India. As stated in Maneka Gandhi's case if it is
not vague in the Constitution, one fails to see how it becomes vague when it is
incorporated in amended Section 25-O.
23. It was submitted that the restriction in order to be valid must be
imposed by law made by the Government. It is admitted that such law could include
delegated legislation or subordinate legislation. It is submitted that mere executive
order or mere executive determination was not permissible. It was submitted that
the law itself must define the content of the restriction. It was submitted that the
Parliament cannot leave it to the executive to determine the content of the
restriction. It was submitted that the object of the restriction must be
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differentiated from the restriction itself. It was submitted that Articles 19(2) to (6)
of the Constitution lay down the grounds or objects of the restriction. It was
submitted that the actual restriction had to be defined by "law". It was submitted
that otherwise it would not be possible to say whether the restriction laid down by
the specific law conforms to the standards specified in the Constitution and/or
whether it was proximate thereto and reasonable. It was submitted that if the
content of the restriction was not laid down by the law but was left to be decided by
the executive on a case by case basis then there would be an impermissible
delegation of legislative functions.
24. We see no substance in these contentions. Amended Section 25-O is the law
which lays down the restriction. As has been set out above, there is nothing vague
or ambiguous in its provision. It is Section 25-O which gives the power to grant or
refuse permission. It would be impossible to enumerate or set out in Section 25-O all
different contingencies or situations which may arise in actual practice. Each case
would have to be decided on its own facts and on the basis of circumstances
prevailing at the relevant time. All that can be set out, in the Section, are
guidelines. These have been set out in amended Section 25-O.”
From the above observation of the Supreme Court, it is clear that enquiry is
mandatory. Though the nature of enquiry vests with the Government, it does not
mean that enquiry can be dispensed with in view of the judgment of the Apex
Court, especially Paragraph No.11. If the present employer is allowed to stick on
the deeming provision alone, it will set a bad precedent to other employers to
follow the same and ensure that the Authority concerned does not pass any order
within 60 days and thereafter, would extend the benefit of compensation on the
ground that no order has been passed within 60 days and to say that in the light of
deeming provision the closure has come into effect. At this moment, it is useful to
refer to the preamble of the I.D.Act, 1947, which states as follows:
“An Act to make provision for the investigation and the
settlement of industrial disputes, and for certain other purposes.”
16. The purpose of the I.D.Act, 1947 is for a speedy remedy and that is why,
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an outer time limit has been prescribed for passing an award for the appropriate
Forum to decide the issue within a time frame. Even though the I.D.Act, 1947
prescribes an outer time limit, such provision is only directory in nature and not
mandatory. Merely because an award has not been passed within time, it will not
make the reference made by the Government is bad or the powers of the Court are
extinguished / functus officio, whereas the time limit prescribed under Section
25(O)(3) is mandatory and it has got to be complied with in its entirety. The
Authority must render a finding about the genuineness and adequacy of the reasons
stated by the Employer. The interest of the Public will have to be taken into
consideration before arriving at any conclusion with regard to closure. By closing
down a Government Establishment, there is a deprivation of livelihood, which is in
violation of Article 21 and 39 of the Constitution of India.
17. This Court cannot go into the factual aspects regarding the genuineness
of the closure and the veracity of the loss (whether true or created one) can be
decided only by the Authority / Tribunal. This Court cannot adjudicate the
disputed question of facts and hold (or put a rubber stamp) that the Authority's
decision in not performing the duties cast upon him is correct. There was an
interim order passed by this Court, directing the Government to pay 50% of the
balance amount without prejudice to the rights of the parties on 29.04.2021.
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18. The Government has produced a copy of the Report of the Expert
Committee, wherein in Page No.2 under the head 'Methodology', it has been
mentioned as follows:
“......Further, a detailed stakeholder consultation with the trade unions,
associations, individual labourers and the mill management were also carried out
and in the process eliciting opinions regarding the health of the company.”
In the report, though it has been described that trade unions were heard, it cannot
be construed that it is an hearing under Section 25(O) of the I.D.Act, 1947, firstly
for the reason that Expert Committee is not an Authority and secondly, when there
is a notice issued under Section 25(O) of the I.D.Act, 1947, the parties ought to
have been heard. Therefore, it is crystal clear that there is a procedural
irregularity in the light of the judgment of the Apex Court (referred to supra),
which entitles the employees to get all the benefits as if there is no closure in the
eye of law. If the closure of an establishment is illegal and not justified, even an
individual workman can raise an Industrial Dispute, stating that there is non
employment on account of the illegal closure and the concerned Labour Forum is
empowered to adjudicate the same and render an award. The period of limitation
under Section 2-A will commence only after the issue in these Writ Petitions is
resolved and not earlier.
19. In the present case on hand, Thiru.E.Vallavan, I.A.S., Secretary, who has
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been suo motu impleaded as R6 by this Court in this case has come forward for the
first time, saying that he was not the Authority. Till he was impleaded, the issue
was proceeded on the assumption that he was the concerned Authority. When this
Court insisted that he should file a counter, he has narrated several details, but
however, stated that he was not the Authority to decide the issue and the
Administrator was the Authority, who is dealing with the matter. When the
Industrial Disputes Act was enacted in 1947, the powers have been conferred on the
Government Officials to decide the quasi judicial matters and almost all the
Establishments have obeyed the orders of the Authority under the various Labour
Enactments. Now, they are under various pressure. The Appropriate Government
must think of amending the provisions of the Act to ensure that the powers are
vested with the Industrial Tribunal, thereby the Review provisions can be deleted.
The above suggestion for amendment has been made based on the decision of the
Supreme Court in the case of Krishna District Co-operative Marketing Society
Limited vs. N.V.Purnachandra Rao, (1987) 4 SCC 99, wherein suggestion for
amending the provisions of the Industrial Disputes Act was made and the relevant
paragraph is extracted hereunder:
"11. We may incidentally observe that the Central Act itself
should be suitably amended making it possible to an individual
workman to seek redress in an appropriate forum regarding illegal
termination of service which may take the form of dismissal,
discharge, retrenchment etc. or modification of punishment imposed
in a domestic enquiry. An amendment of the Central Act introducing
such provisions will make the law simpler and also will reduce the
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delay in the adjudication of industrial disputes. Many learned authors
of books on industrial law have also been urging for such an
amendment. The State Act in the instant case has to some extent met
the above demand by enacting section 41 providing for a machinery
for settling disputes arising out of termination of service which can be
resorted to by an individual work- man. In this connection we have
one more suggestion to make. The nation remembers with gratitude
the services rendered by the former Labour Appellate Tribunal which
was manned by some of our eminent Judges by evolving great legal
principles in the field of labour law, in particular with regard to
domestic enquiry, bonus, gratuity, fair wages, industrial adjudication
etc. The Industrial Disputes (Appellate Tribunal) Act, 1950 which
provided for an all-India appellate body with powers to hear appeals
against the orders and awards of Industrial Tribunals and Labour
Courts in India was repealed in haste. If it had continued by now the
labour jurisprudence would have developed perhaps on much more
satisfactory lines than what it is today. There is a great need today to
revive and to bring into existence an all- India Labour Appellate
Tribunal with powers to hear appeals against the decisions of all
Labour Courts, Industrial Tribunals and even of authorities constituted
under several labour laws enacted by the States so that a body of
uniform and sound principles of Labour law may be evolved for the
benefit of both industry and labour throughout India. Such an
appellate authority can become a very efficient body on account of
specialisation. There is a demand for the revival of such an appellate
body even from some workers' organisations. This suggestion is worth
considering. All this we are saying because we sincerely feel that the
Central Act passed forty years ago needs a second look and requires
a comprehensive amendment."
20. Thiru.E.Vallavan, I.A.S. had already invited the wrath of this Court. In an
Industrial Dispute, pertaining to suspension, he, as a Conciliation Officer, revoked
the suspension and ordered for reinstatement, when he has no powers to do so in
the capacity as a Conciliation Officer. In yet another case, this Court warned him
and thereafter, granted time to withdraw the wrong order passed by him and to
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refer the matter for conciliation. Since some of the IAS Officers are not familiar
with the provisions of certain enactments, I have made the above suggestion for
amendment.
21. In the typeset of papers at Page No.36, a reply dated 21.12.2020 to the
query raised under RTI Act has been annexed, wherein it was stated that the
Labour Department of Puducherry had not issued any order granting permission for
closure in respect of the Mills. Thus, it is obvious that there is no order of closure
as such and hence, the Government is harping upon the deeming provision.
22. It is seen that even though two separate Writ Petitions have been filed
by the Sangam, as per the Status Report on Swadeshee-Bharathee Textile Mills Ltd.,
Puducherry dated 27.11.2018 (annexed at Page No.15), both Swadeshi Cotton Mills
and Sri Bharathi Mills were taken over by Pondicherry Textile Corporation (A
Government of Puducherry Undertaking) with effect from 01.04.2005, thereby both
Mills were brought under one umbrella and therefore, fresh application to comply
with the provisions of Section 25(O) of the I.D.Act, 1947 will have to be filed in
respect of all the employees, namely, 119 and 68. There appears functional
integrity between the two Mills of NTC, which was jointly vested with the
Government of Puducherry.
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23. Once the closure is held to be illegal in terms of Section 25(O)(6) of the
I.D.Act, 1947, Workmen are deemed to be in service and therefore, they are
entitled to wages. It is made clear that this order is applicable only to those, who
questioned the closure and will not apply to those, who received benefits and left.
That apart, in the interim order dated 29.04.2021, this Court has already made it
clear that a Five Man Committee can raise a dispute or Seven Workmen can join
together, form a Trade Union, questioning the closure. Since the Workmen have
been deprived of their employment, they are entitled to question the non-
employment, on account of illegal closure individually by raising a dispute under
Section 2-A of the I.D.Act, 1947, which is maintainable. The other provisions of the
I.D.Act, 1947, namely, Section 25(F), 25(FF) and the like have also not complied
with and therefore, the Workmen before this Court should be construed to be in
employment.
24. The Hon'ble Supreme Court in the case of Jaipur Zila Sahakari Boomi
Vikas Bank Ltd vs. Ram Gopal Sharma and others, reported in (2002) 2 SCC 244
held
“13...It is well-settled rule of interpretation that no part of
statute shall be construed as unnecessary or superfluous. The proviso
cannot be diluted or disobeyed....”
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The Apex Court in the aforesaid decision clearly held that the interpretation of
statute must be such that it should advance the legislative intent and serve the
purpose for which it is made rather than to frustrate it. The decision has been
rendered in the context of interpretation to Section 33(2)(b) of the I.D.Act, 1947,
to decide as to whether it was mandatory on the part of the employer to comply
with the said provision or to allow the employee to take recourse to a complaint
under Section 33-A of the I.D.Act. The Apex Court in Paragraph No.15 of the said
case made it very clear that when no application is made or the one made is
withdrawn, the contention of the Management, that there is no order of refusal of
such application on merit and as such the order of dismissal or discharge does not
become void or inoperative unless such an order is set aside under Section 33A, was
rejected therein. It was further made clear by the Apex Court that the conditions
stipulated under Section 33(2)(b) has got to be complied with in letter and spirit,
which is mandatory.
25. Similarly, insofar as the provisions of Section 25(O) are concerned, a
duty is cast upon the Government / Authority / Tribunal to decide the application,
when it is filed under the said provision. The contra contention of the respondents,
that there is a deeming provision, which will enable the employer to close down an
Undertaking, will not hold good. Admittedly, the Mills belong to the Government
and the Authority and Management should be a model employer to comply with the
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mandatory provisions prescribed under the I.D.Act, 1947. That being the case, if
the contention of the respondents is accepted, then the provisions of Section 25(O)
will get diluted and the employer cannot be allowed to gain any advantage over
the default committed on account of non-consideration of the application within
the time prescribed.
26. Normally, this Court would direct the Authorities to consider the
application afresh, but, in terms of Section 25(O)(4) of the I.D.Act, 1947, the order
will be in force for a period of one year. Of course, in this case, there is no order in
the eye of law, as, on account of inaction of the Government, the closure can be
given effect to from the prospective date, after an order is passed in terms of
Section 25(O) of the I.D.Act, 1947. Hence, the employer need to file afresh
application, seeking for closure of the Establishment based on the existing number
of employees as on date, including those, who have accepted the compensation
under protest and not other employees, who have already received the
compensation without protest. In case the total number of employees is less than
100 as on date after excluding those employees, who have accepted the
compensation without protest, then there is no requirement to file an application
under Chapter V-B, but of course, other mandatory provisions of Chapter V-A will
have to be complied with, if applicable. A Division Bench of this Court in The
Management of Chandra Textiles Private Limited Coimbatore vs.
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N.Palaniswami and Others, reported in (1987) I LLJ 458 Mad observed as
follows:
“26. Mr.Venkataraman, learned counsel for the first Respondent,
referred to the definition of the words, "under protest" in the Law
Lexicon of Venkataramiah, Vol. II. Besides that, he referred to Supdt.
(Tech, I) Central Excise, I. D. D., Jabalpur v. Pratap Rai (1978) II S.C.J.
490 which has considered the meaning of the words, "without
prejudice". In the view which we have taken on the facts of the case, it
is not necessary for us to consider those decisions. We rest content by
pointing out that the conduct of the first respondent is not one from
which it can be inferred in any matter that he had accepted the award
of the Labour Court to be correct. On the other hand, he was been
unequivocally pointing out the other way.
27. In the view which we have taken on the facts of this case, the
authorities relied upon by the learned counsel for the appellant will not
apply to this case. Each case will have to depend on its own facts. In the
present case, the conduct of the appellant was not such that he became
disentitled to the discretionary relief under Article 226 of the
Constitution of India by the doctrine of approbation and reprobation or
any other principle of law. The decisions cited by learned counsel for
appellant will not help him in the present case.
28 & 29 ........
30. In view of the fact that the first respondent had been kept out
of employment for nearly fifteen years by the fault of the Management
and the fact that the Management has failed to place before the Labour
Court or his Court any material for refusal of back-wages, we think it
just and proper to grant the consequential relief of back-wages.”
From the above judgement, it is clear that the Authority concerned / Labour Court
/ Tribunal will have to look into the the doctrine of approbation and reprobation
and in case an employee accepted any amount under protest, then he is entitled to
agitate his grievance before the appropriate Forum. In all fairness, the demand
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raised by the Sangam in these Writ Petitions is valid and hence, the impugned
notice is liable to be interfered with.
27. In fine, these Writ Petitions are allowed and both the impugned notice
dated 29.09.2020 is hereby set aside. The amount already received under protest
shall be adjusted and the remaining amount shall be paid within a period of six
months from the date of receipt of a copy of this order. In the meanwhile, it is
open to the employer to make afresh application for closure of the Undertaking in
terms of the provisions of the Act, if so advised, after complying with the
mandatory statutory provisions and after the waiting period, if any provided under
the Act, the matter may be taken up by the Authority concerned. This Court is of
the view that Corporation is a part of the Government of Puducherry and in case
any closure application is filed, it can be scrutinized by the concerned Authority
and the matter can be straight away referred to a Tribunal, so that, instead of two
adjudications, namely, one before the Authority and the other one before the
Tribunal, a comprehensive decision can be taken. The I.D.Act, 1947 need to be
amended to enable a Labour Court or Tribunal to decide the issue, as the IAS
Officers, who are entrusted with such quasi judicial work, lacks familiarity with the
strict provisions of the Act on account of their other administrative / official
duties. It is made clear that if any of the Workmen have already settled the dispute
and accepted the monetary benefits, they will not be entitled to any relief. The
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employees, whose claims have already been settled, cannot be allowed to have the
best of both the benefits. No costs. Consequently, connected miscellaneous
petitions are closed.
31.12.2021
Index: Yes / No
Internet: Yes / No
Speaking Order: Yes / No
ar
S.VAIDYANATHAN, J.
ar
To:
1. The Secretary,
Industries and Commerce,
Government of Puducherry,
Puducherry.
2. The Secretary (Labour),
Government of Puducherry,
Puducherry.
3. The Director
M/s.Pondicherry Textile Corporation Limited,
A Government of Puducherry Undertaking
AFT Mill Premises, Cuddalore Road,
Pondicherry-605 004.
4. The Managing Director,
M/s.Swadeshee-Bharathee Textile Mills Ltd.,
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
Maraimalai Adigal Salai,
Pudduchery-605 004
5. The Managing Director
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M/s.Swadeshi Cotton Mill
A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,
A Government of Puducherry Undertaking
Maraimalai Adigal Salai,
Pudduchery-605 004
6. Thiru. E.Vallavan, I.A.S.,
The Secretary to Government (Industries and Commerce),
Chief Secretariat, Puducherry-605 001.
PRE-DELIVERY ORDER IN
W.P.Nos.5360 and 5365 of 2021
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