Papnasam Labour Union Vs. Madura Coats
Ltd. [1994] INSC 658 (8 December 1994)
RAY, G.N. (J) RAY, G.N. (J) HANSARIA B.L. (J)
CITATION: 1995 AIR 2200 1995 SCC (1) 501 JT
1995 (1) 71 1994 SCALE (5)153
ACT:
HEADNOTE:
The Judgment of the Court was delivered by
G.N. RAY, J.-
1.
This
appeal is directed against the order dated 9-4-1981 passed by the Division
Bench of the High Court of Madras in Writ Petition No. 11 19 of 1977. The said
writ petition was moved by Respondent 1 Madura Coats Ltd., for a declaration that
Section 25-M of the Industrial Disputes Act, 1947 as it stood under the
Industrial Disputes (Amendment) Act, 1976 insofar as it required prior
permission to be obtained to effect layoff is ultra vires and void. The writ
petitioner Respondent I also prayed that the State of Tamil Nadu represented by
the Secretary to Government, Labour and Employment Department, Madras should be
restrained from enforcing the provisions of the said Industrial Disputes
(Amendment) Act in respect of the lay- off application being Application No. 4
of 1976 made by the petitioner. The petitioner also prayed for a writ in the
nature of certiorari calling for the records of the Joint Commissioner of
Labour, Madras, for quashing the order dated 11 -9-1976 by which the said
lay-off application was rejected by the Joint Labour Commissioner. Along with
the said Writ Petition No. 11 19 of 1977, a number of similar writ petitions
challenging the vires of Section 25-M of the Industrial Disputes Act and
consequential prosecutional penalty for the lay-off in contravention of Section
25-M were heard by the Division Bench of the Madras High Court and by one
common judgment, all the said writ petitions were disposed of.
2.
The
Division Bench of the Madras High Court inter alia held that Section 25-M as it
stood under the said Amendment Act, 1976 was constitutionally invalid for the
reasons given by this Court in invalidating Section 25-0 of the Industrial Disputes
Act in the decision rendered in Excel Wear v. Union of India 1. The Madras High
Court further held that in view of its finding that Section 25-M was
constitutionally invalid, it was unnecessary for the court to go into the
validity or otherwise of the orders passed by the authorities which had been
impugned in some of the cases before the High 1 (1978) 4 SCC 224: 1978 SCC
(L&S) 509 :(1979) 1 SCR 1009 505 Court. The High Court also rejected the
prayer for granting leave to appeal to this Court by indicating that as the
High Court had followed the judgment of the Apex Court in Excel Wear case1,
there was no occasion to hold that the impugned decision involved a substantial
question of law of general importance which was required to be decided by the
Apex Court.
3.
For
the purpose of appreciating the respective contentions of the parties in this
appeal, the provisions of Section 25- M of the Industrial Disputes Act as
amended by the Industrial Disputes (Amendment) Act, 1976 is set out as
hereunder:
"25-M. Prohibition of lay-off.- (1) No
workman (other than a badli workman or a casual workman) whose name is borne on
the muster-rolls of an industrial establishment to which this Chapter applies
shall be laid off by his employer except with the previous permission of such
authority as may be specified by that appropriate Government by notification in
the Official Gazette, unless such lay-off is due to shortage of power or to
natural calamity.
(2)Where the workman (other than badli
workman or casual workman) of an industrial establishment referred to in
sub-section (1) have been laid off before the commencement of the Industrial
Disputes (Amendment) Act, 1976 and such lay-off continues at such commencement,
the employer in relation to such establishment shall, within a period of
fifteen days from such commencement, apply to the authority specified under
sub-section (1) for permission to continue the lay-off.
(3) In the case of every application for
permission under sub-section (1)or sub- section (2), the authority to whom the
application has been made may, after making such inquiry as he thinks fit,
grant or refuse, for reasons to be recorded in writing, the permission applied
for.
(4)Where an application for permission has
been made under sub-section(1) or sub- section (2) and the authority to whom
the application is madedoes not communicate the permission or the refusal to
grant the permission to the employer within a period of two months from the
date on which the application is made, the permission applied for shall be
deemed to have been granted on the expiration of the said period of two months.
(5)Where no application for permission under
sub-section (1) is made, or where no application for permission under
sub-section (2) has been made within the period specified therein, or where the
permission for the lay- off or the continuance of the lay-off has been refused,
such lay-off shall be deemed to be illegal from the date on which the workmen
have been laid off and the workmen shall be entitled to all the benefits under
any law for the time being in force as if they had not been laid off.
506 (6) The provisions of Section 25-C (other
than the second proviso thereto) shall apply to cases of lay-off referred to in
this section.
Explanation.- For the purposes of this
section, a workman shall not be deemed to be laid off by an employer if such
employer offers any alternative employment (which in the opinion of the
employer does not call for any special skill or previous experience and can be
done by the workman) in the same establishment from which he has been laid off
or in any other establishment belonging to the same employer, situate in the
same town or village, or situate within such distance from the establishment to
which he belongs that the transfer will not involve undue hardship to the
workman having regard to the facts and circumstances of his case, provided that
the wages which would normally have been paid to the workman are offered for
the alternative appointment also."
4.
Mr
Kumar, learned counsel appearing for the appellant has contended that the
decision rendered in Excel Wear case1 is clearly distinguishable and the High
Court has gone wrong in relying on the said decision and accepting the reasons
which weighed with this Court in striking down the constitutional validity of
Section 25-0 of the Industrial Disputes Act by holding that the said reasons
are equally applicable in considering the validity of the Section 25-M and on
such premises declared Section 25-M as ultra vires the Constitution. Mr Kumar
has submitted that in the decision in Excel Wear case1, this Court noticed the
distinguishing features in Section 25-M and Section 25-N, when compared with
Section 25-0 of the Industrial Disputes Act. This Court noticed that: (SCC p.
238, para 16) "Section 25-M dealt with the imposition of further
restrictions in the matter of lay-off.
Section 25-N provided for conditions
precedent to retrenchment of workmen. In these cases the vires of neither of
the two sections were attacked. Rather, a contrast was made between the said
provisions with those of Section 25-0 to attack the latter. The main difference
pointed out was that in sub-section (3) of Section 25-M, the authority while
granting or refusing permission to the employer to layoff was required to
record reasons in writing and in sub-section (4) a provision was made that the
permission applied for shall be deemed to have been granted on the expiration of
the period of two months. The period provided in sub-section (4) enjoins the
authority to pass the order one way or the other within the said period.
Similarly, in sub-section (2) of Section 25-N reasons are required to be
recorded in writing for grant or refusal of the permission for retrenchment and
the provision for retrenchment and the provision for deemed permission was made
in subsection (3) on the failure of the governmental authority to communicate
the permission or the refusal within a period of three months."
5.
In
Excel Wear' decision this Court analysed the provisions of Section 25-0 and it
has been indicated that under Section 25-0, if in the opinion of the
appropriate Government, the reasons for the intended closure are not 507
adequate and sufficient or if the closure was prejudicial to the public
interest, permission to close down could be refused. It was pointed out by this
Court that reasons given for the closure by the employer might be correct yet
permission could be refused if they were thought to be not adequate and
sufficient by the State Government and no reason was required to be given in
the order granting the permission or refusing it. It was also pointed out that
the appropriate Government was not enjoined to pass the order in terms of
sub-section (2) and Section 25-0 within 90 days' period of the notice. It was
indicated in Excel Wear case' that even though a situation might arise both
from the point of view of law and order and financial aspect that employer
would find it impossible to carry on business any longer, permission could be
refused even when the reasons for intended closure were bona fide but the
authority concerned felt that the closure was against public interest, which
reason would be universal in all cases of closure. Such provision with
potentiality to pass unreasonable order was held to be beyond the pale of
reasonable restriction permitted by Article 19(6) of the Constitution.
6.
The
learned counsel has submitted that Section 25-M and Section 25-N have common distinguishing
features which make the said two provisions different from Section 25-0 the
validity of which was considered by this Court in Excel Wear case'. In the
aforesaid circumstances, the decision rendered in Excel Wear case1 is not
applicable for deciding the constitutional validity of Section 25-M.
7.
The
learned counsel for the appellant has strongly relied on the decision of this
Court in the case of Workmen v. Meenakshi Mills Ltd.2 In the said decision, the
constitutional validity of Section 25-N as it stood prior to the substitution
by Industrial Disputes (Amendment) Act, 1984 was taken into consideration and
it has been held by this Court that conferment of power on appropriate
Government authority to grant or refuse permission for retrenchment is not
vitiated on the ground of absence of provision for appeal or revision against
or review of the order passed by the Government or authority as the order is
required to be a speaking order to be passed on objective considerations. It
has also been held that sub-section (2) of Section 25-N is not vitiated on the
ground of non- prescription of guidelines for exercise of the power because
exercise of the power under Section 25-N being quasi- judicial in nature and
not purely administrative and discretionary, guidelines are not required.
Moreover, the power has to be exercised not only by indicating reasons but also
in accordance with the objective indicated in the Statement of Objects and
Reasons given in the said Amending Act, 19'/6 as also the basic idea of
settlement of industrial disputes and promotion of industrial peace. It has
also been held in the decision in Meenakshi Mills case2 that Section 25-N as it
stood prior to the Amending Act, 1984, though imposed restriction on employer's
right to retrench workmen, but such retrenchment were imposed in consonance
with 2 (1992) 3 SCC 336: 1992 SCC (L&S) 679 508 the Directive Principles of
the Constitution and in general public interest and therefore should be
presumed to be reasonable.
8.
The
learned counsel has also submitted that in Meenakshi Mills case2 this Court has
specifically pointed out that the decision in Excel Wear case1 is not
applicable for considering the constitutional validity of the Section 25-N. It
has been pointed out in distinguishing the decision made in Excel Wear case1
that sub-section (2) of Section 25-0 provided for an order being passed by the
State Government refusing to grant permission to close the undertaking on its
subjective satisfaction and there was no requirement for recording of reasons
in the said order and in these circumstances, this Court held that the absence
of a right of appeal or review or revision rendered the restriction as
unreasonable. The learned counsel has therefore submitted that in view of the
decision in Meenakshi Mills case2, the constitutional validity of Section 25-M
cannot be challenged and Section 25-M and Section 25-N having common features
and being clearly distinguishable from Section 25-0 of the Industrial Disputes Act,
the reasons indicated in Meenakshi Mills case2 for upholding the constitutional
validity of Section 25-N fully applies for upholding the constitutional
validity of Section 25-M. The learned counsel has therefore submitted that the
appeal should be allowed by holding that Section 25-M as it stood prior to
Amending Act, 1984 was valid and orders passed under Section 25-M cannot be
held illegal and void.
9.
Dr
Shankar Ghosh, learned Senior Advocate appearing for Respondent 1, Madura Coats
Ltd., has however submitted that for appreciating the question of unreasonable
restriction imposed on the fundamental right to carry on trade or business
under the guise of protecting public interest, it is necessary to consider
whether or not the restriction imposed under the statute is consistent with and
limited to the extent of control required for achieving the purpose for which
the restriction was sought to be imposed. In this connection, Dr Ghosh has
referred to an earlier decision of this Court in Chintaman Rao v. State of
M.p3. In the said decision, Sections 3 and 4 of the Central Province and Berar
Regulation of Manufacture of Bidi (Agricultural Purposes) Act, 1948 were taken
into consideration. Under Section 3 of the said Act, the Deputy Commissioner
was empowered to issue notification thereby fixing a period to be an
agricultural season with respect to such villages as may be specified therein.
Under sub-section (1) of Section 4 of the said Act, the Deputy Commissioner was
empowered to issue an order in respect of such villages as he may specify
thereby prohibiting the manufacture of Bidi during the agricultural season.
Sub-section (2) of Section 4 provided that no person residing in a village
specified in such order, shall during the agricultural season, engage himself
in the manufacture of Bidis and no manufacturer shall during the said season
employ any person for the manufacture of Bidis.
In Chintaman Rao case3 this Court has held:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
3
1950 SCR 759 : AIR 1951 SC 11 8 509 "The phrase 'reasonable restriction'
connotes that the limitation imposed on a person in enjoyment of the right
should not be arbitrary or of an excessive nature, beyond what is required in
the interests of the public. The word 'reasonable' implies intelligent care and
deliberation, that is, the choice of a course which reason dictates.
Legislation which arbitrarily or excessively
invades the right cannot be said to contain the quality of reasonableness and
unless it strikes a proper balance between the freedom guaranteed in Article
19(1)(g) and the social control permitted by clause (6) of Article 19, it must
be held to be wanting in that quality." 10.It has been held by this Court
in the said decision that the object of the statute is to provide measures for
the supply of adequate labour for agricultural purposes in Bidi manufacturing
areas of the Province and it could be achieved by legislation restraining the
employment of agricultural labour in the manufacture of Bidis during the
agricultural season. Even in point of time, a restriction may have been
reasonable if it amounted to a regulation of the hours of work in the business.
But the aforesaid provisions of the Act have no reasonable relation to the
object in view but the said provisions are drastic in scope that they go in
much excess of the object.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Dr
Ghosh has also referred to another decision of this Court in Dwarka Prasad
Laxmi Narain v. State of Up4 In the said case, constitutional validity of
clause 43 of U.P Coal Control Order, 1953 was taken into consideration and it
has been held in the said decision that the licensing authority may grant,
refuse to grant, renew or refuse to renew a licence and may suspend, cancel,
revoke or modify any licence or any term thereof granted by him under the order
for reasons to be recorded for the action he takes. Not only so, the power
could be exercised by any to whom the State Coal Controller may choose to
delegate the same. Such wide power including the power to delegate to any
person of the choice of the Controller without any guiding principle was held
to be unreasonable and far in excess of the reasonable restriction required to
achieve the purpose.
12.
Dr
Ghosh has further referred to the decision of this Court in Pathumma v. State
of Kerala5. In the said decision, the constitutional validity of Section 20 of
the Kerala Agriculturists Debt Relief Act was taken into consideration by a
larger Bench of seven Judges. It has been held in the said decision by
upholding the validity of Section 20 of the Kerala Act that in interpreting the
constitutional provision, the court should keep in mind the social setting of
the country so as to show a complete consciousness and deep awareness of the growing
requirements of the society, the increasing needs of the nation, the burning
problems of the day and the complex issues facing the people which the
Legislature in its wisdom through beneficial legislation, seeks to solve. The
judicial approach should be dynamic rather than static, pragmatic and not
pedantic and elastic rather than rigid. It has 4 1954 SCR 803 : AIR 1954 SC 224
5 (1978) 2 SCC 1 : AIR 1978 SC 771 510 also been indicated that Article 19
guarantees all the seven freedoms to the citizens of the country including the
right to hold, acquire and dispose of property. But Article 19 also provides
reasonable restrictions to be placed by Parliament or the Legislature in public
interest. It has been further indicated that in judging the reasonableness of
the restrictions imposed by clause (6) of Article 19, the Court has to bear in
mind the directive principles. It has also been indicated that restriction to
be reasonable must not be arbitrary or in excessive nature so as to go beyond
the requirement of the interest of general public.
13.
Dr
Ghosh has finally referred to the decision of this Court in Management of
Kairbetta Estate v. Rajamanickam6.
In this decision, this Court considered the
import of the expression "any other reason" in the definition of
"lay-off' under Section 2(kkk) of Industrial Disputes Act. It has been
held that:
"Any other reason to which the
definition refers, must, we think, be a reason which is allied or analogous to
reasons already specified." Dr Ghosh contends that the definition of
lay-off clearly indicates a number of contingencies which may justify lay-off.
He has submitted that in Meenakshi Mills case2, this Court has also noted the
distinctive features of "lay-off'.
14.
Dr
Ghosh has contended that the decision rendered in Meenakshi Mills case2 has not
laid down any absolute proposition that unfettered restriction on the right to
hold and acquire property and carry on trade and business activity can be
imposed only on the score of social interest. He has also submitted that in
Meenakshi Mills case2, the provisions for retrenchment under Section 25-N of
the Industrial Disputes Act were taken into consideration but retrenchment is a
crystallised or frozen occasion and the same should not be held on a par with
the provisions for lay-off under Section 25-M. It has been contended by Dr
Ghosh that if the distinction between lay-off and retrenchment and different
types of problems associated with lay-off and retrenchment are considered in
their proper perspective the reasonings for upholding the validity of Section
25-N should not be made applicable in deciding the vires of Section 25-M. Dr Ghosh
has submitted that for the purpose of upholding the constitutional validity of
a statute, upon a challenge on account of unreasonable restriction, the Court
is required to look into the facts and circumstances and the ground realities
under which the offending provision of the statute is to be applied. No
strait-jacket formula, therefore, can be laid down for deciding the question of
reasonable restriction in each and every statute. He has submitted that in the
matter of lay- off under Section 25-M, excepting in the case of power failure
and natural calamity, in all other cases, even if there are genuine urgent
grounds for immediate action of lay-off, a prior permission is required to be
obtained. It is permissible under Section 25-M to defer disposal of an
application for such permission for approval up to a period of two months from
the date of application even if ultimately such permission is accorded. Such
outer limit 6 (1960) 3 SCR 371 : AIR 1960 SC 893 511 of two months in a given
case, may be wholly unreasonable thereby frustrating the very purpose for which
an immediate action for lay-off was warranted. Dr Ghosh has submitted in
support of his contention that even if in a given case there is breakdown of
essential components of a machinery without which the productive activity in a
particular factory cannot be carried on and even if it so happens that any
attempt to run the factory involves substantial risk even in respect of other
plants and also the labour force involved in operational activity, the
management though has a bona fide and urgent need to immediately lay-off the
labourers whose service cannot be gainfully utilised until the productive
activities can be effectively restored on some future date, cannot resort to
lay-off lawfully unless permission is accorded by the authority concerned. Dr
Ghosh has submitted that it may not be unlikely that in some cases such
machinery being imported and highly sophisticated may not be repaired and
commissioned in near future and a case of immediate lay-off was essentially
necessary, but the rigid provisions of Section 25-M do not provide for taking
immediate action in such and similar contingency. The provisions of Section
25-M requiring formal approval in all circumstances except in the case of power
failure or natural calamity must be held to be absolutely undesirable and
harsh. The restriction imposed in Section 25-M is far in excess of reasonable
restriction necessary to achieve the object of preventing improper action of
the employer in resorting to lay-off. The unreasonable compulsion in retaining
a large labour force without any service being rendered by them may lead to
closure of the unit being sick and economically not a viable unit. Such
undesirable result brought on the employer on compulsion cannot be held to be a
normal incidence of a reasonable restriction on the employer's right to
lay-off. Such provision may not even serve the interest of labour force because
in the event of closure,, the job opportunity is bound to be affected and the economic
interest of the nation is bound to be in jeopardy. Dr Ghosh has submitted that
the problems associated with "lay-off' have their special features and
incidence and the principle underlying the restriction imposed on retrenchment
under Section 25-N as considered in Meenakshi Mills case2 is not applicable on
all fours in considering the reasonableness of the restrictions imposed in
Section 25-M. Dr Ghosh has submitted that the broad features which weighed with
this Court in holding Section 25-0 as unconstitutional in Excel Wear case1 are
applicable in deciding the constitutional validity of Section 25-M. In the
aforesaid facts, the impugned decision holding Section 25-M before amendment in
1984 as unconstitutional should not be interfered with and the appeal should be
dismissed.
15.
After
considering the respective submissions of the learned counsel for the parties
and considering various decisions of this Court in deciding the question of
reasonableness of the restriction imposed by a statute on the Fundamental
Rights guaranteed by Article 19 of the Constitution of India (reference to
which would be made hereinafter), it appears to us that the following
principles and guidelines should be kept in mind for considering 512 the
constitutionality of a statutory provision upon a challenge on the alleged vice
of unreasonableness of the restriction imposed by it:
(a) The restriction sought to be imposed on
the Fundamental Rights guaranteed by Article 19 of the Constitution must not be
arbitrary or of an excessive nature so as to go beyond the requirement of felt
need of the society and object sought to be achieved7.
(b) There must be a direct and proximate
nexus or a reasonable connection between the restriction imposed and the object
sought to be achieved8.
(c) No abstract or fixed principle can be
laid down which may have universal application in all cases. Such consideration
on the question of quality of reasonableness, therefore, is expected to vary
from case to case9.
(d) In interpreting constitutional provisions,
courts should be alive to the felt need of the society and complex issues
facing the people which the Legislature intends to solve through effective
legislation10.
(e) In appreciating such problems and felt
need of the society the judicial approach must necessarily be dynamic,
pragmatic and elastic 11.
(f)It is imperative that for consideration of
reasonableness of restriction imposed by a statute, the Court should examine
whether the social control as envisaged in Article 19 is being effectuated by
the restriction imposed on the Fundamental Rights 12.
(g) Although Article 19 guarantees all the
seven freedoms to the citizen, such guarantee does not confer any absolute or
unconditional right but is subject to reasonable restriction which the Legislature
may impose in public interest. It is therefore 7 Chintaman Rao v. State of M.P,
1950 SCR 759 : AIR 1951 SC 118; Dwarka Prasad Laxmi Narain v. State of U.P.,
1954 SCR 803 : AIR 1954 SC 224; Excel Wear v. Union of India, (1978) 4 SCC 224:
1978 SCC (L&S) 509: (1979) 1 SCR 1009 8 O.K. Ghosh v. E.X. Joseph, AIR 1963
SC 812; Pathumma v. State of Kerala, (1978) 2 SCC 1 AIR 1978 SC 771; Workmen v.
Meenakshi Mills Ltd., (1992) 3 SCC 336: 1992 SCC (L&S) 679 9 Kavalappara
Kottarathil Kochuni v. State of Madras & Kerala, AIR 1960 SC 1080 : (1960)
3 SCR 887 : Jyoti Pershad v. Administrator.for Union Territory of Delhi, AIR
1961 SC 1602 (1962) 2 SCR 125; Pathumma v. State of Kerala, (1978) 2 SCC 1 :
AIR 1978 SC 771 10 Jyoti Pershad v. Administrator.for Union Territory of Delhi,
AIR 1961 SC 1602 (1962) 2 SCR 125; Pathumma v. State of Kerala, (1978) 2 SCC 1
: AIR 1978 SC 771 11 Jyoti Pershad v. Administrator.for Union Territory of
Delhi, AIR 1961 SC 1602 (1962) 2 SCR 125; Fatehchand Himmatlal v. State of
Maharashtra, (1977) 2 SCC 670 : AIR 1977 SC 1825; Pathumma v. State of Kerala,
(1978) 2 SCC 1 :
AIR 1978 SC 771 12 State of Madras v. VG.
Row, AIR 1952 SC 196 : 1952 SCR 597; State of U.P v. Kaushailiya, AIR 1964 SC
416 : (1964) 4 SCR 1002; Pathumma v. State of Kerala, (1978) 2 SCC 1 : AIR 1978
SC 771 513 necessary to examine whether such restriction is meant to protect
social welfare satisfying the need of prevailing social values13.
(h) The reasonableness has got to be tested
both from the procedural and substantive aspects. It should not be bound by
processual perniciousness or jurisprudence of remedies 14.
(j) Restriction imposed on the Fundamental
Rights guaranteed under Article 19 of the Constitution must not be arbitrary,
unbridled, uncanalised and excessive and also not unreasonably discriminatory.
Ex hypothesis therefore, a restriction to be reasonable must also be consistent
with Article 14 of the Constitution.
(k) In judging the reasonableness of the
restriction imposed by clause (6)of Article 19, the Court has to bear in mind
Directive Principles of State Policy15.
(l)Ordinarily, any restriction so imposed
which has the effect of promoting or effectuating a directive principle can be
presumed to be a reasonable restriction in public interest16.
16.
In
Meenakshi Mills case2, the contention that Section 25-N has imposed
unreasonable restriction on the fundamental right to hold property and to carry
on business activities has been rejected by indicating that the object
underlying the enactment of Section 25-N by introducing prior scrutiny of the
reasons for retrenchment is to prevent avoidable hardship to the employees
resulting from retrenchment by protecting existing employment and to check the
growth of unemployment which would otherwise be the consequences of
retrenchment in industrial establishment employing a large number of workmen.
It has also been indicated in the said decision that the restriction imposed in
Section 25-N on the , right of retrenchment of the employer is intended to
maintain higher tempo of production and productivity by preserving industrial
peace and harmony, and in that sense, Section 25-N seeks to give effect to the
mandate contained in the Directive Principles of the Constitution as contained
in Articles 38, 39(a), 41 and 43. It has been indicated in Meenakshi Mills
case2 that ordinarily any restriction so imposed which has the effect of
promoting or effectuating a directive principle can be presumed to be
reasonable restriction in public interest and a restriction imposed on the employer's
right to terminate the service of an employee is not alien to the
constitutional scheme 13 State of Madras v. VG. Row, AIR 1952 SC 196 : 1952 SCR
597; State of U.P. v. Kaushailiya, AIR 1964 SC: 416: (1964) 4 SCR 1002; Bachan
Singh v. State a Punjab, (1971) 1 SCC 712 AIR 1971 SC 2164; Pathumma v. State a
Kerala, (1978)2 SCC 1 : AIR 1978 SC 771 14 Fatehchand Himmatlal v. State of
Maharashtra, (1977) 2 SCC 670: AIR 1977 SC 1825; Excel Wear v. Union of India,
(1978) 4 SCC 224: 1978 SCC (L&S) 509 :(1979) 1 SCR 1009 15 Kesavananda
Bharati Sripadagalvaru v. State of Kerala, (1973) 4 SCC 225 : AIR 1973 SC 146
1; State of Kerala v. N.M. Thomas, (1976) 2 SCC 310 : 1976, SCC (L&S) 227 :
AIR 1976 SC 490; Pathumma v. State of Kerala, (1978) 2 SCC 1 :
AIR 1978 SC 771 16 Workmen v. Meenakshi Mills
Ltd., (1992) 3 SCC 336: 1992 SCC (L&S) 679 514 which indicates that the
employer's right is not absolute.
We may indicate here that even in Excel Wear
case1 it has been held that:
17.
"the
right to close a business is an integral part of the fundamental right to carry
on a business. But as no right is absolute in its scope so is the nature of
this right. It can certainly be restricted, regulated or controlled by law in
the interest of general public." (emphasis supplied) 17.In Meenakshi Mills
case2, it has been held that the power to grant or refuse permission for
retrenchment of workmen conferred under sub-section (2) of Section 25-N has to
be exercised on an objective consideration of the relevant facts after affording
an opportunity to the parties having an interest in the matter and reasons have
to be recorded in the order that is passed. The enquiry which has to be made
under sub-section (2) before an order granting or refusing permission for
retrenchment of workmen is passed, would require an examination of the
particulars which are required to be supplied by the employer. Such decision
being quasi-judicial, is justiciable before High Court. In view of the
time-limit of three months prescribed in sub- section (3) of Section 25-N,
there is need for expeditious disposal which may not be feasible if the
proceedings are conducted before a judicial officer accustomed to the judicial
process. Moreover, during the course of such consideration, it may become
necessary to explore the steps that may have to be taken to remove the causes
necessitating the proposed retrenchment which may involve interaction between
the various departments of the Government. This can be better appreciated and
achieved by an Executive Officer rather than a Judicial Officer. It has also
been indicated in Meenakshi Mills case2 that in the matter of exercise of the
power conferred by sub-section (2) of Section 25-N, the power has to be
exercised keeping in view the provisions of the Act and the object underlying
the Amending Act of 1976 whereby Section 25-N was inserted in the Act. The
object underlying the requirement of prior permission for retrenchment of
workmen introduced by Section 25N as indicated in the Statement of Objects and
Reasons for the Amending Act of 1976, is to prevent avoidable hardship to the
employees resulting from retrenchment by protecting employment to those already
employed and maintain higher tempo of production and productivity by preserving
industrial peace and harmony. The said consideration coupled with the basic
idea underlying the provisions of the Act, namely, settlement of industrial
disputes and promotion of industrial peace, gives a sufficient indication of
the factors which have to be home in mind by the appropriate Government or
authority by exercising its power to grant or refuse permission for
retrenchment under sub-section(2).
18.
In
our view, the aforesaid observations in upholding the validity of Section25-N
squarely apply in upholding the validity of Section 25-M. It is evidentthat the
Legislature has taken care in exempting the need for prior permission for
lay-off in Section 25-M if such lay-off is necessitated on account of power
failure or natural calamities because such reasons being grave, sudden and
explicit, no further scrutiny is called for. There may be various other
contingencies justifying an immediate action of lay-off but 515 then the
Legislature in its wisdom has thought it desirable in the greater public
interest that decision to lay-off should not be taken by the employer on its
own assessment with immediate effect but the employer must seek approval from
the authority concerned which is reasonably expected to be alive to the
problems associated with the industry concerned and other relevant factors, so
that on scrutiny of the reasons pleaded for permitting layoff, such authority
may arrive at a just and proper decision in the matter of according or refusing
permission to lay-off. Such authority is under an obligation to dispose of the
application to accord permission for a lay-off expeditiously and, in any event,
within a period not exceeding two months from the date of seeking permission.
It may not be unlikely that in some cases an employer may suffer unmerited
hardship up to a period of two months within which his application for lay- off
is required to be disposed of by the authority concerned but having undertaken
a productive venture by establishing an industrial unit employing a large
labour force, such employer has to face such consequence on some occasions and
may have to suffer some hardship for sometime but not exceeding two months
within which his case for a lay-off is required to be considered by the
authority concerned otherwise it will be deemed that permission has been
accorded. In the greater public interest for maintaining industrial peace and
harmony and to prevent unemployment without just cause, the restriction imposed
under sub- section (2) of Section 25-M cannot be held to be arbitrary,
unreasonable or far in excess of the need for which such restriction has been
sought to be imposed.
19.
It
may be pointed out that sub-section (3) requires recording of reasons for the
decision taken, and a copy of the order is required to be communicated to all
concerned.
Further, by force of sub-section (4),
permission sought for shall be deemed to have been granted, if the decision is
not communicated within the mentioned period. Procedural reasonableness has
been taken care of by these provisions.
As regards substantive reasonableness, we
feel satisfied, as the power in question would be exercised by a specified
authority and as it can well be presumed that the one to be specified would be
a high authority who would be conscious of his duties and obligation. If such
an authority would be informed that lay-off is reuired because of, any sudden
breakdown of machinery, which illustration was given by Dr Ghosh to persuade us
to regard the restriction as unreasonable, we have no doubt that the authority
would act promptly and see that the establishment in question is not put to
loss for no fault on its part. As every power has to be exercised reasonably,
and as such an exercise takes within its fold, exercise of power within
reasonable time we can take for granted that the statutory provision requires that
in apparent causes (like sudden breakdown) justifying lay-off, the authority
would act with speed.
20.
As
already indicated, the distinguishing features between Section 25-M and Section
25-N on one hand and Section 25-0 on the other have been noticed in the
decision in Excel Wear case1.
21.
In
our view, the reasonings indicated in Excel Wear case1 in striking down Section
25-0 are not applicable for considering the constitutional 516 validity of'
Section 25-M(2). On the contrary, it appears to us that the reasonings
indicated in Meenakshi Mills case1 in upholding the validity of Section 25-N
squarely apply in upholding the vires of Section 25-M. It also appears to us
that the impugned provision of Section 25-M satisfies various aspects of
scrutiny for upholding reasonable restriction on the fundamental right when
tested in the context of guidelines and principles indicated hereinbefore.
The restriction appears necessary to us in
larger public interest and to protect the interest of workmen, who, but for the
restriction may be subjected to uncalled for lay- off. The application of this
restriction to industrial establishments specified in Section 25-K duly takes
care of the hardship which could otherwise be caused to small establishments.
Directive Principles do require placing of the restriction on large industrial
establishments employing large number of workmen. The impugned decision of the
Madras High Court, therefore, must be held to be erroneous and the same is, set
aside by upholding the vires of Section 25-M of the Industrial Disputes Act,
1947 which was introduced under the Amending Act of 1976. This appeal is,
therefore, allowed without, however, any order as to costs.
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