ELECTROSTEEL CASTINGS LIMITED Vs. STATE OF WEST BENGAL

JUDGEMENT

(1.) THIS is an application under Art. 226 of the Constitution challenging an order dated the 16th November, 1977, passed by the Special Officer and Ex-officio Deputy Secretary, Labour Department, government of West Bengal.

(2.) IN order to appreciate the challenge it would be necessary to advert to certain facts. The petitioner No. 1 is a company and carries on business, inter alia, in the manufacture and sale of cast iron spun pipes, steel castings and grinding media and for its said business the said petitioner owns and operates two factories which are known as Spun Pipe Works and Steel Foundry works at Barrackpore Trunk Road, 24-Parganas, West Bengal. The Company employs 287 workmen in Spun Pipe Works and 442 workmen in the Steel foundry Works. The Company also employs 39 and 77 non-workmen staff respectively in the said two factories. The cast iron spun pipes manufactured by the petitioner Company are used for water supply and sewerage schemes. All water supply and sewerage shemes are undertaken by various public health engineering authorities of either the State Governments or the Central Government and as such the Government bodies are the only buyers of the cast iron spun pipes manufactured in the country. It is stated that there were originally altogether 8 manufactures of cast iron spun pipes in the country having a total installed capacity of about 5 lakh tons per annum. Out of these eight manufacturing units, Indian Iron and Steel Company at Kulti and Indian Iron and Steel company Stanton, Ujjain which have been taken over by the Central Government since 1976, have an installed capacity of 2,16,000 tons. In addition the iisco- Stantion have been further granted licence for expansion to the tune of another 60,000 tons, which expansion is reported to have been almost completed, according to the petitioner. Since early 1976, according to the petitioner, the spun pipe industry as a whole has been under the grip of acute recession in demand due to severe curtailment of Government expenditure for the purchase of C. I. spun pipes and the availability of cheaper products like asbestos cement pipes, PVC pipes, HDPE pipes, prestressed concrete pipes and ACC pipes. Moreover it appears that the former Minister of Steel and Mines had written a letter to the Chief Minister of all the States requesting them to direct their respective Chief Engineers of all the Engineering Departments to buy C. I. spun pipes manufactured by Ilsco-Stantion, Ujjain and IISCO, Kulti. Similar instructions were also issued by the Union Ministry of Defence and Bureau of public Enterprises, Ministry of Finance, Government of India. The State and the Central Governments being the only purchasers of the said cast iron spun pipes, the inevitable result of the said instructions has been denial of market availability for catering the manufactured goods by non-Central Government undertakings. In the result, four out of six non-Central Government manufacturing units, namely, Sakti Pipes Ltd. , Madras, Andhra Foundry, Hyderabad, gaday Iron and Steel Co. Ltd. , Mysore had been forced to close down their factories. It is the case of the petitioner No. 1, further that as a result of the sharp decline in demand, the work in the said Spun pipe Works of the Company had been adversely affected. In the premises, a large number of employees of the said petitioner have become surplus and the said petitioner accordingly applied to the State Government for permission to retrench 214 workmen in Electrosteel Castings Ltd. The petitioner Company had sought permission to retrench 136 workmen from the Spun Pipe Division and 78 workman from the steel Foundry Division. This application made under Section 25-N of the industrial Dispute Act, 1947. The State Government by the order dated 16th november, 1977 has refused the permission sought for. In the said order the state Government has observed that all the unions functioning in the industry had been consulted and according to them the petitioner Company was a highly profitable concern and whatever difficulties were there these had been created due to the wrong policy of the management who were not interested in securing order and who wanted to make the industry more capital intensive and were trying to reduce the number of workmen. In the premises the order, inter alia, further observed as follows :

(3.) THE said order has been challenged in this application under Art. 226 of the Constitution mainly on the ground that the State Government has no authority to refuse permission on the grounds it has purported to do.