LAXMI STARCH LTD Vs. KUNDARA FACTORY WORKERS UNION

JUDGEMENT

(1.) Petitioner is a Public Limited Company which is an industrial establishment satisfying the requirements of S.25-K of the Industrial Disputes Act. Permission sought for by the Company under S.25 O (1) of the Industrial Disputes Act for closure was refused by the Government under sub-section (2). Ext. P-6 is copy of the order dated 17th January 1990. Ext. P-7 review petition was filed under sub-section (5) of S.25 O on 3rd February 1990. Complaining that the petition was not disposed of the petitioners moved O.P. No. 3721 of 1990 for compelling the Government to pass orders on Ext. P-7. The O.P. was allowed by the original of Ext. P-8 judgment. Subsequently, at the instance of the Company itself, the Government passed Ext. P-9 order referring the matter to the Industrial Tribunal. By Ext. P-10 award the Industrial Tribunal rejected the application holding that there are no grounds for reviewing the decision. Thus, permission to close down the establishment stands rejected. Prayers in the O-P. are (1) to strike down S.25 O as unconstitutional, (2) to quash Ext. P-10 award of the Industrial Tribunal, and (3) to direct the State to grant permission for closure.

(2.) On reference under S.15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, the Board for Industrial and Financial Reconstruction under Ext. P-1 proceedings declared the Company as a sick unit. Huge recurring loss consequent on non availability of raw materials, increase in wages etc. coupled with the alleged refusal of the Government in giving a helping hand are the reasons in support of the prayer. These reasons were denied and it was alleged that the attempt to close the company is mala fide with ulterior motive. By Ext. P-6 order and Ext. P-10 award the grounds alleged were found unreal, insufficient and mala fide. Petitioners would say that the reasons alleged in Ext. P-6 and P-10 for refusal are not proper. Ext. P-10 is also said to be in excess of the powers of the Industrial Tribunal. S.25O of the Industrial Disputes Act is alleged to be violative of Art.14 and 19(1)(g) of the Constitution. These grounds are also denied.

(3.) The first question for consideration is whether S.25O is unconstitutional on the ground that it violates Art.14 and 19(1)(g). If that contention is found in favour of the petitioners the other questions may not arise. In order to consider that question certain other factors also may be relevant. In the year 1957, S.25 FF was amended in order to make a provision for payment of compensation to workmen in case of transfer of the undertaking and a further provision was made in S.25-FFF for payment of compensation in cases of closing down of undertakings. When an undertaking is closed down, every workman in continuous service for not less than one year shall be entitled to get notice and compensation in accordance with S.25-F as if the workman has been retrenched. Compensation under S.25-F shall be equivalent to fifteen days average pay for every completed year of continuous service or any part thereof in excess of six months. But the proviso to S.25-FFF (1) says that when the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer the compensation to be paid to the workman under S.25-F shall not exceed his average pay for three months. Explanation to S.25-FFF (1) provides that an undertaking which is closed down by reason merely of (1) financial difficulties including financial loss, or (2) accumulation of undisposed off stocks, or (3) expiry of the period of lease or licence, or (4) exhaustion of the materials when the undertaking is engaged in mining operations, shall not be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso. The Explanation has application only in respect of the quantum of compensation. If the undertaking is closed down without permission, the closure shall be deemed to be illegal under S.25 O(6) and the workmen shall be entitled to all the benefits as if the undertaking had not been closed. Thus, there are three different provisions in three different contingencies having bearing on the question of benefits due to the workmen on closure.