Union of India and Anr Vs. Shree Shankar Textiles Ex-Employees Union and Ors  Insc 930 (14 September 2007)
Arijit Pasayat & D.K. Jain
APPEAL NO. 5495 OF 2000 Dr. ARIJIT PASAYAT, J.
Challenge in this appeal is to the judgment of the Karnataka High Court
dismissing the Writ Appeal filed by the appellants.
Background facts in a nutshell are as follows:
No.1-Union filed a writ petition before the Karnataka High Court for a
declaration that the conditions imposed under the Textile Workers
Rehabilitation Fund Scheme (in short the 'TWRFS') to the effect that the mill
should have been closed under Section 25-O of the Industrial Disputes Act, 1947
(in short the 'Act') or the official liquidators should have been appointed
offend Articles 14 and 16 of the Constitution of India, 1950 (in short the
'Constitution') and for directing the appellants by a writ of mandamus to
extend the benefits of TWRFS to the members of the Union with all consequential
reliefs including monetary benefits.
writ petition was allowed and it was held that the afore-noted conditions were
unconstitutional, discriminatory and therefore, were arbitrary.
writ appeal was also dismissed on the ground that the order of the learned
Single Judge did not suffer from any infirmity.
support of the appeal, learned counsel for the appellants submitted that both
the learned Single Judge and the Division Bench lost sight of the fact that
four conditions were to be satisfied in order to attract eligibility under the
Scheme. Undisputedly, two of the conditions were not fulfilled by the members
of the Union. Additionally, it was submitted
that no reason has been indicated as to how the stipulations regarding closure
in terms of Section 25-O of the Act and/or the appointment of the official
liquidators were constitutionally unsustainable.
Learned counsel for the respondents on the other hand supported the order.
a part of the Statement on Textile Policy 1985 in Chapter I, it was provided as
textile industry has a unique place in the economy of our country. Its
contribution to industrial production, employment and export earnings is very
significant. This industry provides one of the basic necessities of life. The
employment provided by it is a source of livelihood for millions of people,
most of whom live in rural and remote area. Its exports contribute a
substantial part of our total foreign exchange earnings. The healthy
development and rapid growth of this industry is therefore of vital importance.
the past few years, the development of the textile industry has been guided by
the policy framework announced in March 1981.
considerable progress has since been achieved in several areas under this
policy framework, the objectives of the textile policy outlined in the Textile
Policy statement have not been fully achieved. Thus the per capita availability
for and the per capita consumption of cloth, of our growing population still
remain at a very low level. There is evidence of an increase in the incidence
of sickness, particularly in the organised mill sector, reflected in a large
number of closed units.
is a large unsatisfied demand for durable synthetic and blended fabric at
cheaper prices which is not being met by indigenous production. The full export
potential of textile products remains to be realised.
textile industry has experienced fluctuations in its fortunes in the past also.
an analysis of the current difficulties faced by the industry reveals that the
present crises of the industry is neither cyclical nor temporary, but suggests
deeper structural weaknesses, therefore, the Government have reviewed the
present textile policy and after careful consideration have formulated this new
policy for the restructuring of the textile industry in India with a longer
present dispute relates to the legality of the stipulations. The eligibility
criteria of four conditions as spelt out for payment of relief under the TWRFS
dated 1.5.1991, according to the appellants, are as follows:
The Unit must be a medium scale.
There must be a complete grinding halt.
There must be a closure of unit in terms of Section 25-O of the Act.
An illegal strike as defined under the Act leading to closure of the mill
either under Section 25-O of the Act or by an order of the High Court upon
which the official liquidator is appointed makes the scheme inapplicable.
is pointed out that the conditions are cumulative and in the instant case
conditions (ii) and (iii) are not fulfilled. The closure was essentially in
terms of conciliation under Section 12(3) of the Act and the production had
come to grinding halt before 5.6.1985. In the writ application there was no
challenge to the policy on the ground that conditions (ii) and (iii) suffered
from irrationality and discrimination.
The High Court has not indicated any reason as to why it was held that the
conditions stipulated relating to Section 25- O were in any way violative of
Articles 14 and 16 of the Constitution.
The policy decision should not have been held to be illegal without even
is pointed out that a Memorandum of Settlement was arrived at on 30.5.1986 and
it was clear from all documents placed on record that the mill was closed on
Learned counsel for the respondent-Union submitted that there was no rational
connection between Section 25-O of the Act and as such offended Articles 14 and
16 of the Constitution. A scheme being beneficial in nature is intended to
benefit the workers and same was the object of the scheme.
pointed out that all the workers who are members of the Union are employed in a closed textile mill on the date of
its closure. They had been continuously working for five years or so and were
earning wages upto Rs.1600/-p.m. They were not on any illegal strike when the
closure took place. According to them, though the Memorandum of Settlement was
signed on 30.5.1986, it was given effect much later and the relevant date,
therefore, should be 30.10.1986. Since the management agreed to pay terminal
benefits w.e.f. 30.5.1986 and the same was to be paid within 90 days it cannot
be said that the production had found to be a grinding halt before 5.6.1985.
find that the High Court has not indicated any plausible reason for holding
that the condition relating to Section 25-O of the Act was illegal, contrary
and in any way irrational. As a matter of fact, the policy decision is not
likely to have beneficial effect unless the same is sustainable on the
touchstone of rationality.
rightly contended by learned counsel for the appellants, it has not been shown
by the respondent No.1- Union as to why the conditions impugned were irrational
or violative of Articles 14 and 16 of the Constitution. In addition, the
documents on record clearly established that the stoppage of the work in mill
was w.e.f. 9.10.1984. In fact the mill's letter dated 21.6.1989 addressed to
the Regional Office, Coimbatore in the annexed proforma stated that
date and time of stoppage was 10.10.1984 and the stoppage was complete. The
fact of closure of the Unit was stated in the application and had already been
informed to the State Government. It was further stated that the question of
spindle utilization for the last six months did not arise as the mill was
closed since 10.10.1984.
disentitles the employees from the benefits under the scheme. Though the
Memorandum of Settlement was signed on 30.5.1986 and the closure under
conciliation in terms of Section 12(3) of the Act was w.e.f. 30.5.1986, in the
documents it was clearly indicated that the factual date of closure is
9.10.1984 i.e. the date on which the mill had come to a grinding halt. The High
Court erred in holding to the contrary. On that ground alone, the orders of the
learned Single Judge and Division Bench cannot be maintained.
Additionally, in the absence of any reason having been indicated by the learned
Single Judge and the Division Bench as to how the conditions stipulated
relating to Section 25-O of the Act are arbitrary, the orders are
unsustainable. It may be noted here that there was no challenge to parts of
conditions stipulated in the scheme. The view of the High Court was that though
there was physical closure in 1984, the formal closure would be the date on
which the agreement was signed. This view is contrary to the clear terms of the
policy mentioning the date on which the mill came to a grinding halt.
view of the above-noted position the appeal deserves to be allowed which we
direct. The orders of the learned Single Judge and the Division Bench are set
aside. The writ application filed by the respondent No.1 is dismissed. There
will be no order as to costs.