Skip to content


K. Gurumurthy, Authorised Representative of CertaIn Workmen, Etc., Etc. Vs. Simpson and Co., Madras and ors., Etc., Etc. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Case NumberW.A. 44, etc., etc., of 1977
Judge
Reported in(1981)IILLJ360Mad
ActsIndustrial Disputes Act, 1947 - Sections 2, 25C, 25D, 25-E, 25-F, 25-FFF, 25-G, 25-H, 25-K, 25-M, 25M(1), 25M(2), 25M(4), 25N, 25-N(1), 25-O, 25-O(1), 25-O(2), 25-O(3), 25-R; Industrial Disputes (Amendment) Act, 1976; Constitution of India - Articles 14, 19(1) and 19(6)
AppellantK. Gurumurthy, Authorised Representative of CertaIn Workmen, Etc., Etc.
RespondentSimpson and Co., Madras and ors., Etc., Etc.
Cases ReferredExcel Wear v. Union of India
Excerpt:
.....the other are (i): the authority to whom the application for permission is made has to record the reasons in writing either for the grant or for refusal of the permission and (ii), if the application is not disposed of within two months the permission should be deemed to have been granted. the question is whether the said two feature alone are sufficient for upholding section 25-m to be a reasonable restriction.; the requirement as to recording reasons in the order is not a sufficient safeguard as it is hardly effective, for there is no higher authority prescribed in the order who could examine the property of the reasons and revise or review the decisions of the authority and that the reasons to be recorded are only for his personal and subjective satisfication and not for furnishing..........the other are (i) the authority to whom the application for permission is made has to record the reasons in writing either for the grant or for refusal of the permission and (ii) if the application is not disposed of within two months the permission should be deemed to have been granted. the question is whether the said two features alone are sufficient for upholding s. 25m to be a reasonable restriction.13. it has been held in messrs. dwaraka prasad laxmi narain v. the state of uttar pradesh and 2 others, (1954) s.c.r. 803, that the requirement as to recording reasons in the order is not sufficient safeguard as it is hardly effective, for there is no higher authority prescribed in the order who could examine the propriety of the reasons and revise or review the decision of the.....
Judgment:
1. As all these writ appeals and the writ petitions raise a common question, they are dealt with together. However, it is unnecessary to set out the facts in all the cases as the facts are substantially the same and it is sufficient to refer to the facts in the first case, viz., Writ Appeal No. 44 of 1977.

2. Messrs. Simpson & Co., Ltd., Madras filed an application on 19-5-1976 under S. 25M(2) of the Industrial Disputes Act. 1947 as amended, hereinafter referred to as the Act to the Joint Commissioner of Labour, Madras seeking permission to continue the lay-off of 139 of 432 workmen employed in the establishment with effect from 5-3-1976, for the reason set out in Item 21 of the Annexure to the application. The reasons set out in the said Annexure were (1) non-availability of essential raw materials to run the operations in the Carriage department and the Light Engineering section, (2) acute power shortage, (3) no possibility of procuring orders due to non-availability of raw materials and (4) the company lost its market for the products manufactured in those departments necessitating the closure of the sales department and there was not possibility of procuring orders in the foreseeable future and there is no possibility of revival of the operations in those departments pending final retrenchment of the workmen in those departments in accordance with the provisions of law.

3. Copies of the said application were also served on the concerned workmen. In a letter dated 5-7-1976 signed by 52 workmen, they represented that the lay-off of workmen by the management was not justified nor was there any justification for continuance of the same. The Workers' Union also objected to the grant of permission to continue the lay-off of workmen as prayed for by the management.

4. The Joint Commissioner of Labour heard the representatives of the management and the workmen represented by the union on 26-7-1976. It was submitted by the management that the application filed on 19-5-1976 should have been disposed of before 19-7-1976 and that having regard to the fact that no order has been passed on the application, the deeming provision contained in S. 25M(4) had come into operation, and that since the rules under the Act had been published and the authority was actually constituted only on 22-3-1976, the application filed on 19-5-1976 should be taken to be in time as provided in S. 25M(2). The workmen, apart from opposing the application for lay-off on merits contended that the application was belated and that the deeming provision contained in S. 25M(4) will not come into operation.

5. The Joint commissioner of Labour held that the lay-off application filed by the management has not been made to the specified authority within a period of 15 days from the date of the commencement of the Amending Act of 1976 as required under S. 25M(2) and cannot, therefore, be entertained and that in view of that finding the question of justification or otherwise for the continuation of the lay-off at the commencement of the Amending Act does not arise for determination. He also held that the deeming provision contained in S. 25M(4) does not arise as the lay-off application itself has been held to be out of time. In this view the Joint Commissioner of Labour ultimately dismissed the application as not maintainable without going into the merits of the application by his order dated 30th July, 1976.

6. Against the said order, Messrs. Simpson and Company Ltd., filed Writ Petitions Nos. 3686 and 3687 of 1976 before this Court for the issue of a certiorari to quash the said order and for a writ of mandamus directing the Joint Commissioner of Labour dispose of the lay-off application dated 19-5-1976 on merits. The main ground urged by them was that the rules themselves were officially published only on 5-5-1976 and, therefore, any lay-off application could be filed only from that date and the lay-off application having been filed by the management on 19-5-1976 it was well within time and that in view of the lay-off application not having been disposed of within two months the deeming provision in S. 25M(4) will stand attracted.

7. The writ petition was resisted by the Joint Commissioner of Labour as also the Unions of Workmen. Their defence was that the Amending Act had come into force on 5-3-1976, that the authority to whom the application must be made has been notified on 22-3-1976 and, therefore, they should have, in any event, filed an application within 15 days from 22-3-1976 though not from 5-3-1976.

8. After considering the rival contentions Mohan, J., held that the lay-off application filed by the management was in time, that though Amending Act of 1976 came into force on 5-3-1976 the Act should be deemed to have come into force on 5-5-1976 when the rules were published setting out the manner of application and the authority to receive the application under S. 25M and that as the lay-off application had not been disposed of within two months, the management will be entitled to the benefit of the deeming provision in S. 25M(4). Aggrieved by the judgment of Mohan. J. The workmen have filed Writ Appeal Nos. 44 of 1977 and 110 of 1977 wherein they have questioned the view taken by Mohan. J., in the writ petitions.

9. In these two writ appeals the respondents have questioned the constitutional validity of S. 25M. Hence these writ appeals have been posted along with the writ petitions wherein the constitutional validity of S. 25M has been raised apart from other contentions. Thus the main question to be decided in all these cases is whether S. 25M is constitutionally invalid. The learned counsel for the respondents in the writ appeals and the petitioners in the writ petitions rely on the decision of the Supreme Court in Excel Wear v. Union of India, [1978-II L.L.J. 527], holding S. 25-O as constitutionally invalid for violation of Art. 19(1)(g) of the Constitution and the decision of a Division Bench of this Court in K. V. Rajendran v. Deputy Commission of Labour. [1980-II L.L.J. 275], holding S. 25N of the Act as unconstitutional and submit that the reasons given in those decisions for invalidating Ss. 25-O and 25N of the Act will squarely apply here and for the same reasons S. 25M also should be declared unconstitutional. The learned counsel for the contesting respondents in the writ petitions would, however, reply on a decision of a Division Bench of the Andhra Pradesh High Court in General Industrial Society Ltd., v. Commissioner of Labour, (1980) I An. W.R. 92, holding S. 25M to be constitutionally valid.

10. Before considering the question as to whether the reasons given by the Supreme Court in Excel Wear v. Union of India, [1978-II L.L.J. 527], for invalidating S. 25-O and of this Court in K. V. Rajendran v. Deputy Commissioner of Labour, [1980-II L.L.J. 275], for invalidating S. 25N are sufficient to invalidate S. 25M as well, it is necessary to refer to the provisions in S. 25M of the Act and compare the same with Ss. 25-O and 25N. A Division Bench of the Andhra Pradesh High Court in General Industrial Society Ltd., v. Commissioner of Labour, (1980) I An. W.R. 92, after such comparison has pointed out the difference between S. 25M and S. 25-O which was the subject-matter of the decision before the Supreme Court and had held that because of the difference the reasons given by the Supreme Court for invalidating S. 25-O will not apply to invalidate 25M.

11. Section 25M(1) provides that no workman in an industrial establishment to which Chapter V-A applies shall be laid-off by his employer except with the previous permission of such authority as may be specified by the appropriate Government by notification in the Official Gazette, unless such lay-off is due to shortage of power or to natural calamity. Section 25-N(1) provides that no such workman who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until certain conditions are satisfied and until a notice in the prescribed manner is served on the appropriate Government or such authority as may be prescribed by the appropriate Government by notification in the Official Gazette, and the permission of such Government or authority is obtained under sub-s. (2) Section 25-O is to the effect that no employer shall close down such an undertaking of an industrial establishment without prior permission being obtained from an authority specified by the appropriate Government. Section 25-Q provides that any employer who contravenes the provisions of S. 25M or 25N is punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees or with both. Section 25R provides that any employer who closes down an undertaking without complying with the provisions of S. 25-O(1) shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five thousand rupees, or with both. Sub-sections (2) and (3) of S. 25-R provide that an employer who contravenes sub-s. (2) and (3) of S. 25-O shall be punishable with imprisonment for a term extending one year or one month respectively. These sections occur in Chapter V-B of the Act which was introduced by the Amending Act of 1976 and which applies to industrial establishments in which not less than 300 workmen are employed on an average per working day for the preceding 12 months as per S. 25-K. There is no dispute that the industrial establishments before us do come within Chapter V-B. According to S. 25-M an employer must obtain the prior permission of such authority as may be specified by the appropriate Government by notification in the Official Gazette, for laying-off workmen before the workmen is laid-off, and if the permission sought for is not refused within a period of two months, the permission applied for shall be deemed to have been granted on the expiration of the said period of two months According to S. 25-N an employer governed by Chapter V-B has to give three months notice in writing indicating the reasons for retrenchment or payment of three months wages in lieu of such notice before retrenching a workman and also issue a notice in the prescribed manner on the appropriate Government or such authority as may be specified by the appropriate Government by notification in the Official Gazette and obtain the permission of such Government or authority for retrenchment to which the notice relates. As per S. 25-O an employer who intends to close down an undertaking of a industrial establishment to which Chapter V-B applies shall give a notice of the intended closure in the prescribed manner to the appropriate Government stating clearly the reasons for the intended closure of the undertaking and obtain the permission of such Government or authority for closing down the undertaking. The constitutional validity of S. 25-O was challenged before the Supreme Court in Excel Wear v. Union of India, [1978-II L.L.J. 527] and the said section was held to be unconstitutional. The reasons for invalidating S. 25-O given by the Supreme Court as noticed by us in [1980-II L.L.J. 275], are these :

"Intrinsically no provision of Chapter VB suggests that the object of carrying on the production can be achieved by the refusal to grant permission although in the objects and reasons of the Amending Act such an object seems to be there although remotely, it is highly unreasonable to achieve the object by compelling the employer not to close down in public interest for maintaining production. Although Chapter VB deal with certain comparatively bigger undertakings, it does not make the law reasonable, though the classification of undertakings for purposes of the provisions of Chapter VB can be taken to be reasonable classification for saving the law for violation of Art. 14, it certainly does not make the restriction reasonable within the meaning of Art. 19(6). The reasonableness has got to be tested both from the procedural and substantive aspects of the law. In case of bonafide closures though the reasons given by the employers are correct, adequate and sufficient, yet the permission to close down can be refused on the ground of public interest because the interest of labour for the time being is bound to suffer as it makes a worker unemployed, but it is not reasonable to give them protection by compelling the employer to manage the undertaking even when they do not find it safe and practicable to manage the affairs, that they cannot be compelled to go on incurring losses year after year. There is already a built in safeguard in S. 25FFF to prevent a mala fide closure and the requirement as to permission before closure by the appropriate Government even if the grounds set out in S. 25FFF are established will amount to an unreasonable restriction. The law may provide to deter the reckless, unfair, unjust or mala fide closures but cannot prevent the employer from closing down as it is essentially an interference with has fundamental right to carry on the business. Section 25-O does not provide any guidelines for the exercise of the power to grant or refuse permission. The appropriate Government may whimsically and capriciously refuse the permission to close down even if a case has been made out for closure. The section does not compel the appropriate Government to give reasons for the refusal. Any order passed by the authority is not subject to any scrutiny by any higher authority or Tribunal in appeal or in revision."

12. Section 25-N was challenged as constitutionally invalid before this Court in [1980-II L.L.J. 275], for the same reasons as had been given by the Supreme Court in the above case for invalidating S. 25-O. After considering the question as to whether the reasons given by the Supreme Court for striking down S. 25-O will apply for striking down S. 25-N, a Division Bench of this Court to which one of us was a party, took the view that S. 25-N suffers from the same arbitrariness and unreasonableness as pointed out by the Supreme Court with reference to S. 25-O, that S. 25-N or any other provisions does not provide the guidelines as to how the application for permission by an employer for retrenchment has to be disposed of and on what grounds the permission could be refused, that it does not provide for any appeal or revision even against the arbitrary orders of refusal, that the provision is unreasonable in that the employer is forced to continue the employment of personnel who are found to be surplus for his requirements and thus incur unnecessary expenditure in connection with his undertaking, leading ultimately to curtailment of his profits, that there are already sufficient safeguards in the matter of retrenchment of workmen by the employer under Ss. 25-F, 25-G, and 25-H and notwithstanding the said safeguards, to compel an employer to seek permission under S. 25-N will be an unreasonable restriction violating Art. 19(1)(f) and (g) of the Constitution. Similarly, it is now contended before us that the reasons given by the Supreme Court for striking down S. 25-O will also squarely apply here for invalidating S. 25-M, According to the petitioners in the writ petitions S. 25-M also suffers from the same defects as had been pointed out by the Supreme Court in connection with S. 25-O and of this Court in connection with S. 25-N. It is said that S. 25-M also does not provide any guidelines for the grant or refusal of permission and the authority may refuse the permission to lay-off workmen even if a case has been made out for such permission. Any order passed by the authority is also not made subject to scrutiny by any higher authority or Tribunal in appeal or in revision. It is seen that even before the introduction of S. 25-M the Act provides for sufficient safeguards in the matter of laying-off the workmen. Section 2(kkk) defines "lay off" as meaning the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the break-down of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched. Section 25C confers certain rights on the workmen who have been laid-off to get compensation. It provides that whenever a workman whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-off. It also provides that if during the period of twelve months, a workman is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty five days if there is an agreement to that effect between the workman and the employer. Section 25-D compels the employer to maintain a muster roll for the purpose of this Chapter. Section 25-E provides that no compensation shall be paid to a workman who has been laid-off, (1) if he refuses to accept any alternative employment 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 a radius of five miles from the establishment to which he belongs, (2) if he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day, (3) if such laying-off is due a strike or slowing-down of production on the part of workmen in another part of the establishment. Thus the definition of "lay-off" in S. 2(kkk) ensures that lay-off can be resorted to only on account of shortage of coal, power or raw materials or the accumulation of stocks or the break-down of machinery, and if the lay-off is resorted to by the employer he is liable to pay compensation as contemplated by S. 25-C. Section 25-M(1) compels the employer to obtain prior permission of such authority as may be specified by the appropriate Government unless such lay-off is due to shortage of power or to natural calamity. Sub-section (2) of the said section contemplates permission being obtained to continue the lay-off in cases the lay-off was in force when S. 25-M had been introduced, within a period of 15 days from such commencement. Sub-section (3) directs the authority to whom the application has been made to make such enquiry as he thinks fit, and to grant or refuse the permission applied for reasons to be recorded in writing. Under sub-s. (4) if the permission sought for is not granted within the expiry 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 expiry of the said period of two months. Thus the two differences between S. 25M on the one hand S. 25-O and 25-N on the other are (i) the authority to whom the application for permission is made has to record the reasons in writing either for the grant or for refusal of the permission and (ii) if the application is not disposed of within two months the permission should be deemed to have been granted. The question is whether the said two features alone are sufficient for upholding S. 25M to be a reasonable restriction.

13. It has been held in Messrs. Dwaraka Prasad Laxmi Narain v. The State of Uttar Pradesh and 2 others, (1954) S.C.R. 803, that the requirement as to recording reasons in the order is not sufficient safeguard as it is hardly effective, for there is no higher authority prescribed in the order who could examine the propriety of the reasons and revise or review the decision of the authority and that the reasons to be recorded are only for his personal and subjective satisfaction and not for furnishing any remedy for the aggrieved person. It cannot, therefore, be taken that a mere provision requiring reasons to be recorded in writing is a sufficient safeguard against arbitrary refusal, unless there are guidelines from which it is possible to find out whether the reasons given for the refusal are proper and germane, and unless a right of appeal is given to a higher authority against the orders passed by the authority concerned. Similarly the deeming provision in S. 25M(4) is not also a sufficient safeguard against arbitrary exercise of power to grant or refuse permission. That provision is intended to avoid delay in the disposal of the application for permission and to see that such applications are disposed of within a period of two months. Therefore, the decming provision in S. 25M(4) cannot be taken to govern the mode or manner of exercise of the power to grant permission. Thus the two main defect pointed out by Supreme Court in Excel Wear v. Union of India, [1978-II L.L.J. 527], i.e., (1) No guidelines are available from the statue and (2) that there is no provision for scrutiny of the order passed by the authority by any higher authority or Tribunal in appeal or in revision are present even in S. 25M. As a matter of Fact in K. V. Rajendran v. Deputy Commissioner of Labour, [1980-II L.L.J., 275], while distinguishing the Andhra Pradesh case in General Industrial Society Ltd. v. Commissioner of Labour, (1980) I An. W.R. 92 this Court has observed :

"Before that Court, the decision of the Supreme Court above referred to was relied on by the employer but the Court held that S. 25M is not in pari materia with S. 25-O which was the subject-matter before the Supreme Court, that there are two points of difference between the two Ss. 25-O and 25-M, that S. 25M requires reasons to be recorded in writing, that it provides that permission shall be deemed to have been granted on the expiry of the period of two months and that the two points of difference are substantial, and, therefore, the decision of the Supreme Court cannot be invoked to invalidate S. 25M. With respect, we are not inclined to agree with the reasoning given by the Bench of Andhra Pradesh High Court in the said decision. Firstly, a mere provision requiring reasons to be given cannot be taken to be a sufficient safeguard against arbitrary refusal unless guidelines are set out. Unless guidelines are there, it is not possible to find out whether the reasons given for refusal are proper and germane. Even in a case where the employer makes out a good case for retrenchment, it is possible for the appropriate authority to refuse to grant permission by giving some reasons. There is no provision in the Act to question such whimsical orders by filing appeals or revisions ........................ In the Andhra Pradesh case the Court has also taken the view that there is sufficient guidelines in S. 2(kkk) of the Act which says when there can be a valid lay-off. With respect, we are not inclined to agree. As we have already said, even in a case where the employer had made out a case for a valid lay-off as provided in S. 2(kkk) the authority may refuse the permission and there is no way of challenging that refusal under the Act."

Though the decision of the Andhra Pradesh High Court is in favour of the respondents, this Court has specifically disagreed with the said view in the decision in K. V. Rajendran v. Deputy Commissioner of Labour, [1980-II L.L.J. 275]. After holding that S. 25-N is constitutionally invalid for the reasons given by the Supreme Court for invalidating S. 25-O, the Bench has stated that the defects pointed out by the Supreme Court in S. 25-O are present even in Ss. 25-N and 25-M. Having regard to the earlier judgment of a Division Bench of this Court in K. V. Rajendran v. Deputy Commissioner of Labour, [1980-II L.L.J. 275], with which we entirely agree, we hold that S. 25-M is also constitutionally invalid for violation of Art. 19(1)(f) and (g).

14. In view of our finding that S. 25-M is constitutionally invalid for the reasons pointed out by the Supreme Court for invalidating S. 25-O, it is unnecessary to go into the validity or otherwise of the orders passed by the authorities and which have been impugned in some of these cases.

15. In the result, the writ appeals filed by the workmen against the judgment of Mohan, J., are dismissed and the writ petitions filed by the employers are allowed. There will, however, be no order as to costs.

16. It is represented by the learned counsel for the respondent in Writ Appeal No. 44 of 1977 that in pursuance of the orders of this Court, certain amount was paid to the workmen, and now that the writ appeal has been dismissed, the amount should be directed to be adjusted towards the future entitlements of workmen. In view of the said representation, the amount said to have been paid to the workmen by the employer can be adjusted towards future entitlements of the workmen.

17. The contesting respondents seek leave of this Court for filing an appeal to Supreme Court against the judgment just now pronounced. Since we have followed the judgment of Supreme Court in Excel Wear v. Union of India, [1978 II L.L.J. 527], we do not think that the case involves a substantial question of law of general importance which needs to be decided by the Supreme Court.

18. Hence the request for leave is rejected.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //