WP/5360/2021 of Swadeshi Panchalai Thozilalar Vs The Secretary on 31 December 2021

1. The Secretary,Industries and Commerce,Government of Puducherry,Puducherry.Industries and Commerce,Government of Puducherry,Puducherry.

2. The Secretary (Labour),Government of Puducherry,Puducherry.Government of Puducherry,Puducherry.

3. M/s.Pondicherry Textile Corporation Limited,A Government of Puducherry UndertakingAFT Mill Premises, Cuddalore Road,Pondicherry-605 004.Rep. by its DirectorA Government of Puducherry UndertakingAFT Mill Premises, Cuddalore Road,Pondicherry-605 004.Rep. by its Director

4. M/s.Swadeshee-Bharathee Textile Mills Ltd.,A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004Rep. by its Managing DirectorA unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004Rep. by its Managing Director

5. The Managing DirectorM/s.Swadeshi Cotton MillA unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 0046. Thiru. E.Vallavan, I.A.S.,The Secretary to Government (Industries and Commerce),Chief Secretariat, Puducherry-605 001....Respondents (R6 suo motu impleaded by an order dated 27.04.2021 inW.P.No.5360/2021)

Prayer: Writ Petition filed under Article 226 of theConstitution of India, praying for the issuance of a Writ ofCertiorarified Mandamus, calling for records relating to theimpugned notice dated 29.09.2020 issued by the 5[th] Respondent andquash the same and consequently, direct the Respondents to takeappropriate steps to make the 5[th] Respondent Mill operative.

W.P.No.5365 of 2021

Sri Bharathi Mills Thozilalar Urimai Padukapppu SangamNo.23, 1[st] Floor, Middle Street,Veeman Nagar, Thilaspet,Puducherry-605 009.Rep. by its President Mr.K.Mohandass ...Petitioner -vs-

1. The Secretary,Industries and Commerce,Government of Puducherry,Puducherry.

2. The Secretary (Labour),Government of Puducherry,Puducherry.Government of Puducherry,Puducherry.

3. M/s.Pondicherry Textile Corporation Limited,A Government of Puducherry UndertakingAFT Mill Premises, Cuddalore Road,Pondicherry-605 004.Rep. by its Director

4. M/s.Swadeshee-Bharathee Textile Mills Ltd.,A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004Rep. by its Managing Director

5. The Managing DirectorM/s.Sri Bharathi Mills,A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004

6. Thiru. E.Vallavan, I.A.S.,The Secretary to Government (Industries and Commerce),Chief Secretariat, Puducherry-605 001....Respondents (R6 suo motu impleaded by an order dated 27.04.2021 inW.P.5365/2021)

Prayer: Writ Petition filed under Article 226 of theConstitution of India, praying for the issuance of a Writ ofCertiorarified Mandamus, calling for records relating to theimpugned notice dated 29.09.2020 issued by the 5[th] Respondent andquash the same and consequently, direct the Respondents to takeappropriate steps to make the 5[th] Respondent Mill operative.

These Writ Petitions have been filed, seeking to quash theimpugned notice dated 29.09.2020, by which a notice was issuedby the 5[th] Respondent with regard to closure of two Mills,namely, M/s.Swadeshi Cotton Mill and M/s.Sri Bharathi Mills. ThePetitioner / Union also sought a direction to the Respondents totake appropriate steps to make the 5[th] Respondent Mill operative.

Relief

2. The Petitioners / Sangam are the registered Unions underthe Trade Unions Act, 1926. According to Sangam, the Mills arein existence for more than 90 years and on account of loss, it has been decided to wind up the Mills by means of filing aclosure application under Section 25-O of the IndustrialDisputes Act,1947 (in short 'the I.D.Act, 1947'). The Managementhas issued a closure notice dated 29.09.2020, indicating thatthe Mills would be closed with effect from 30.09.2020.

3. According to the Sangam, the notice under Section 25(O)of the I.D.Act, 1947 was issued in the prescribed format only on02.06.2020 and as there was a defect in the application, thesaid application was returned, which was re-submitted on01.07.2020. In the closure application dated 02.06.2020, it wasdecided to close Mills with effect from 01.09.2020. The Millswere closed on 30.09.2020 and according to the Sangam, no noticeof enquiry was issued for making objection before the Authorityconcerned and without taking up the matter for hearing, theGovernment has replied stating that there is a deemed closureafter 60 days in terms of Section 25(O) of the I.D.Act, 1947.The stand of the Government was that if no orders were passedwithin 60 days from the date of receipt of application, theclosure will come into effect and that Mills have been closedwith effect from 30.09.2020.

4. The grievance of the Sangam was that when a specificprovision is stipulated under the Act, it is the duty cast uponthe Authority concerned to hear necessary and proper parties,including the aggrieved parties, and pass orders on theapplication in respect of closure of Mills. Keeping theapplication under lock and seal, and thereafter informing thatthe period had already expired is not the real intention of thefairness of the I.D.Act, 1947, and therefore, the closure is badin law. According to them, the closure was to be given effectwith effect from 01.09.2020 and strangely, without assigning anyreason, the date was fixed as 30.09.2020.

5. The Management contended that the Workers have been paidcompensation in part and stages, which have been acceptedwithout any protest and that when there was a genuine reason toclose down the Mills, the Workers have no right to question it,more so, in the light of the deemed provision. According to theGovernment, the Mill is a part of Government of Puducherry andthat there was a huge loss and therefore, the question to revivethe Mill at this stage is not possible. The reasons given by theMill in the closure application are perfectly valid and that thedocuments produced before the Authorities would reveal thatthere was a loss and that they are unable to cope up with thesituation. Since private Sector Entities cater the demands moreefficiently than the Management Mill, they were unable to regainthe financial wealth even under the Chairmanship of an IAS

Officer and therefore, it has been decided to close down theMill by giving compensation under Section 25(FF) of the I.D.Act,1947. The stand of the Management was that they have nofinancial resources for procurement of raw materials to operatethe Mills and the machineries have become faulty due to frequentbreakdown and it cannot be repaired any further.

6. Thiru.E.Vallavan, I.A.S., who has been suo motu impleadedas R6, has filed a counter affidavit dated 08.06.2021, wherein,it has been inter alia stated as follows:

i)Swadeshee and Bharathee Textile Mills Limited, Puducherrywere two separate Mills and they started functioning during theFrench Colonial Period. In 1985, Swadeshee Cotton Mill was takenover by the National Textile Corporation (NTC), whereas theBharathee Mill, which was started in the year 1897, was takenover by NTC during 1974. The Management of NTC decided to closedown these two Mills in 2005 and the Government of Puducherryhad taken over these two Mills from NTC;

ii) It was stated that SITRA, Coimbatore was requested tostudy the techno-economic viability of Swadeshee-BharatheeTextile Mills Limited in the year 2007, which, in turn concludedthat these two Mills were operating below the standard industrynorms on account of outdated technology and therefore,recommended for closure of Mills. Subsequently, Government ofPuducherry has constituted an Expert Committee to study forrestoration of financial health of the Mills under theChairmanship of one Thiru.B.Vijayan, I.A.S. (retired) and thesaid Committee also recommended for closure of the Mills underSection 25(FF) of the I.D.Act, 1947, which was placed before theCabinet;

iii) It was further stated that Cabinet, vide Resolutiondated 13.01.2019, approved the implementation of VoluntaryRetirement Scheme (VRS), which was issued to Anglo FrenchTextiles by an order dated 02.01.2013 to Swadeshi BharatheeTextile Mills. There was a difference of opinion between theLieutenant Governor and Chief Minister/Council of Ministers inimplementation of the recommendations of the Committee andtherefore, the subject was referred to the Home Ministry, NewDelhi and the Board of Directors concluded that the continuanceof operation of the Mill is not feasible;

iv) It was also stated that the Managing Director,Swadeshee-Bharathee Textile Mills Ltd., filed Form O-3 dated 13.09.2019 and thereafter, filed a letter dated 11.10.2019 alongwith lay-off notice in Form O-3 and sought permission to lay off135 Workmen employed in M/s.Sri Bharathi Mill, Puducherry. Asper G.O.Ms.No.177/80-Lab dated 01.09.1980, the Secretary toGovernment, Labour Department, Puducherry is the 'SpecifiedAuthority' to exercise the powers and perform the functions inconnection with grant of permission for lay-off. The Sangamsfiled a joint representation dated 30.12.2019 and raised theirobjections to give permission for lay-off and requested to runthe Mill effectively. The Managing Director, Swadeshee-BharatheeTextile Mills Ltd., filed Form O-3 dated 11.10.2019 along withlay-off notice in Form O-3 and sought permission to lay off 70Workmen employed in M/s.Swadeshi Cotton Mill, Puducherry. As perSection 25-A & 25-C of the I.D.Act, 1947, an industrialestablishment employing 50 to 100 workmen shall pay 50% of thetotal of the basic wages and dearness allowance for all daysduring which he is so laid off. Further, as per Rule 75-A of theIndustrial Disputes (Central) Rules, 1957, if any workmanemployed in an industrial establishment as defined in Section25-A of the Act, is laid off, the employer shall given notice ofcommencement and termination of such lay-off i Form O-1 and O-2respectively within seven days of such commencement ortermination. Hence, Form O-3 dated 11.10.2019 was returned tofile the same in Form O-1 in accordance with the relevantprovisions of the Act and Rules;

v) In the counter affidavit, it was stated that accordingly,two separate Closure notices in Form QA dated 02.06.2020 werefiled for permission in respect of the proposed closure ofM/s.Sri Bharathi Mill and M/s.Swadeshee Cotton Mill, Puducherryand the number of workmen, whose services will be terminated onaccount of closure of undertaking is 119 and 68 respectively.Since there were certain discrepancies, it was returned forrectification. It was stated that Section 25(O) of the I.D.Act,1947 is not applicable to M/s.Swadeshi Cotton Mill and Section25FFA (Chapter V-A) of the I.D.Act, 1947, alone will beapplicable to them. However, it was further stated that thoughtwo separate Factory License under the Factories Act, 1948 wereobtained, they were registered as a Single entity asM/s.Swadeshee-Bharathee Textile Mills Ltd., Puducherry under theCompanies Act and therefore, the provisions of Chapter V-B willbe applicable only if single Form QA in respect of Mills isfiled together and only then, a reasonable opportunity of beingheard may be provided to the Workmen. As per Sub-Section (1) ofSection 25-O of the Act, the employer, who intends to close downan undertaking shall apply for prior permission at least ninetydays before the date of intended closure;

vi) It was also stated that the appropriate Government forgranting or refusing to grant permission of closure underSection 25(O) of the Act is the Administrator and on 01.07.2021,the file was submitted for orders of the Lieutenant Governor,Puducherry and subsequently, the Labour Minister had returnedthe file on 08.07.2020 for want of a copy of Board Resolutionand the Chief Secretary minuted to bring on record quickly,thereby the Management of Mills was requested to furnishnecessary reply immediately, in response to which, theManagement had enclosed the following documents:

a) Copy of the Board Resolution for closure of SBTML Mills,viz., M/s. Sri Bharathi Mill, Puducherry and M/s. SwadeshiCotton Mill, Puducherry.

b) Copy of the I.D. Note of the Lieutenant-Governor'sSecretariat, Puducherry, vide No.1141/LGS/2019 pertaining to theinterim direction for filing notice of closure of SBTML, Millsunder Section 25(O) of the Industrial Disputes Act, 1947.

c) Copy of the I.D. Note of the Directorate of Industries &Commerce, Puducherry vide No.01/GEN/SNTML/2019-20/498 pertainingto the action taken upon the above mentioned interim directionof the Lieutenant Governor of Puducherry.

vii) It was further stated in the counter affidavit thatthough the file was re-submitted on 14.07.2020 for orders of theLieutenant Governor, Puducherry for making an enquiry underSection 25(O)(2) of the I.D.Act, 1947, it was help up with theOffice of the Welfare Minister, Puducherry till 19.11.2020 andsubsequently, it was decided to implement VRS, which was issuedto Anglo French Textiles dated 02.01.2013. Though the BharathiyaLabour Union, Puducherry wanted to close down the Mill andsought for a fair settlement, the Lieutenant Governor statedthat the elected Government chose not to submit the file ofLabour Department to the competent authority, viz., LieutenantGovernment in respect of closure notice dated 02.06.2020 ofSBTML and therefore, directed to close Mill with effect from30.09.2020 as per statute and the Department of Industriessanctioned an amount of Rs.1.71 Crore as grant-in-aid toM/s.SBTML towards part payment of closure compensation toworkers;

viii) It was also stated that since the decision ofappropriate Government was not received from Labour Department,Puducherry, the Management presumed the grant of permission and

closed the Mills officially on 30.09.2020 and returned the fileto the Labour Department on 27.11.2020, with a direction toensure timely payment of closure compensation to the workers. Itwas finally stated that there was no delay on his part and hewas not aware of the closure notice dated 29.09.2020 issued bythe 4[th] Respondent, as he was not allocated with the subject atthe time of closure of the Mills.

7. According to Mrs.N.Mala, learned Government Pleader(Puducherry), in terms of Section 25(O)(6), in case noapplication is filed for permission as contemplated under sub-section (1) within the period specified therein or where thepermission for closure has been refused, then only the closurebecomes illegal and the employees would be entitled to all thebenefits. In this case, the application has been made and thedefects were rectified and thereafter, the closure has takeneffect in the subsequent date and therefore, the submission putforth by the Writ Petitioners that there is a violation ofSection 25(O) of the I.D.Act, 1947 cannot be accepted. It wasfurther contended that since there was no order passed, thedeeming provision has come into effect.

8. Heard the learned counsel for the Petitioners, learnedGovernment Pleader (Puducherry) for R3 to R5 and the learnedGovernment Advocate for R1 & R2, Thiru.E.Vallavan, I.A.S. (R6)and perused the material documents available on record.

9. It is seen that the closure application has been made on02.06.2020 to close down the Mills with effect from 01.09.2020.Pursuant to the return of the application, it was re-submittedon 01.07.2020 after complying with the defects mentioned thereinand subsequently, it was decided to close down the Mills witheffect from 30.09.2020.

10. De hors the change in the date of closure, the issue tobe decided is as to whether the provisions of Section 25(O) ofthe I.D.Act, 1947 has been complied with in its strict sense.For the sake of convenience, Section 25(O) of the I.D.Act, 1947is extracted hereunder:

“25-O. Procedure for closing down an undertaking.-

(1) An employer who intends to close down anundertaking of an industrial establishment to which thisChapter applies shall, in the prescribed manner, apply,for prior permission at least ninety days before thedate on which the intended closure is to becomeeffective, to the appropriate Government, stating clearly the reasons for the intended closure of theundertaking and a copy of such application shall also beserved simultaneously on the representatives of theworkmen in the prescribed manner:

Provided that nothing in this sub-section shallapply to an undertaking set up for the construction ofbuildings, bridges, roads, canals, dams or for otherconstruction work.

(2) Where an application for permission has beenmade under sub-section (1), the appropriate Government,after making SUCH ENQUIRY as it thinks fit and aftergiving a reasonable opportunity of being heard to theemployer, the workmen and the persons interested in suchclosure may, having regard to the genuineness andadequacy of the reasons stated by the employer, theinterests of the general public and all other relevantfactors, by order and for reasons to be recorded inwriting, grant or refused to grant such permission and acopy of such order shall be communicated to the employerand the workmen.

(3) Where an application has been made under sub-section (1) and the appropriate Government does notcommunicate the order granting or refusing to grantpermission to the employer within a period of sixty daysfrom the date on which such application is made, thepermission applied for shall be deemed to have beengranted on the expiration of the said period of sixtydays.

(4) An order of the appropriate Government grantingor refusing to grant permission shall, subject to theprovisions of sub-section (5), be final and binding onall the parties and shall remain in force for one yearfrom the date of such order.

(5) The appropriate Government may, either on itsown motion or on the application made by the employer orany workman, review its order granting or refusing togrant permission under sub-section (2) or refer thematter to a Tribunal for adjudication:

Provided that where a reference has been made to aTribunal under this sub-section, it shall pass an awardwithin a period of thirty days from the date of suchreference.

(6) Where no application for permission under sub-section (1) is made within the period specified therein,or where the permission for closure has been refused, the closure of the undertaking shall be deemed to beillegal from the date of closure and the workmen shallbe entitled to all the benefits under any law for thetime being in force as if the undertaking had not beenclosed down.

(7) Notwithstanding anything contained in theforegoing provisions of this section, the appropriateGovernment may, if it is satisfied that owing to suchexceptional circumstances as accident in the undertakingor death of the employer or the like it is necessary soto do, by order, direct that the provisions of sub-section (1) shall not apply in relation to suchundertaking for such period as may be specified in theorder.

(8) Where an undertaking is permitted to be closeddown under sub-section (2) or where permission forclosure is deemed to be granted under sub-section (3),every workman who is employed in that undertakingimmediately before the date of application forpermission under this section, shall be entitled toreceive compensation which shall be equivalent tofifteen days' average pay for every completed year ofcontinuous service or any part thereof in excess of sixmonths.]]”

11. In terms of the aforesaid Section, it is mandatory onthe part of Employer to issue notice to close down theUndertaking by giving three months' notice and specify the dateof closure by simultaneously making an application before theAuthorities concerned for closing down the Undertaking. Theconcerned Authority, after scrutinizing the records and afterrectification of defects will have to decide the applicationwithin 60 days from the date of original application for closureor within 60 days from the date of re-presentation.

12. In this case, admittedly, the Authority concerned didnot conduct any enquiry / hearing and allow the period toautomatically get lapsed, thereby, deeming provision has comeinto operation. The core issue involved is whether the deemingprovision can be read in isolation, when the Authorities havenot discharged their statutory obligation mentioned therein.After receipt of the application for closure under Section 25(O)of the I.D.Act, 1947, especially when more than 100 workmen wereemployed on an average per working day for the preceding twelvemonths, the issuance of notice to the Workmen or theirrepresentative and hearing all the parties, who are interestedand likely to be affected, is obligatory before closing down an Undertaking within a period of 60 days as mentioned supra. Incase of any adverse order, the employees are entitled to seekfor reference under Section 25(O)(3) of the I.D.Act, 1947 andthe Tribunal shall pass an Award within 30 days from the date ofreceipt of Reference and that the Government cannot refuse torefer the matter for adjudication.

13. In this case, not even a hearing has been conducted andno reference has been made. When the Authorities fail todischarge their duties, it is obligatory on the part of theGovernment to refer the matter for adjudication beforeappropriate Tribunal. As stated supra, the Government cannotkeep the application for closure in a cold storage and wake upfrom slumber and say that deeming provision has come into play.The purpose of deeming provision provided under the Act is for adifferent aspect and not for sending a communication about thereceipt of application by the Government and hearing thereafter.

14. If the contention of Mrs.N.Mala, learned GovernmentPleader (Puducherry) is accepted, it will make mockery of theentire provisions of Section 25(O) of the I.D.Act, 1947.Admittedly, in this case, an application has been filed, seekingpermission for closure and the same was re-presented aftercuring the defects. If the Authority is allowed to operate thedeeming provision without conducting any enquiry, the verypurpose of the provisions of the Act itself will be defeated, asthere is not even an attempt to conduct enquiry, which ismandatory on the part of the concerned Authority under Section25(O)(2) of the I.D.Act, 1947. Though the Government and the 6[th]Respondent have filed counter affidavits, narrating severaldetails, including financial loss, etc, all these particularsshould have been referred to in detail in an order afterconducting an enquiry by the authority concerned and not aftereffecting the closure, which would amount to putting a cartbefore a horse.

15. The Supreme Court in the case of Orissa Textile & SteelLtd. vs. State of Orissa and Others, reported in AIR 2002 SC 708held that the appropriate Government exercising quasi-judicialfunction cannot pass orders arbitrarily or whimsically. For thesake convenience, the relevant paragraphs of the said judgmentare extracted hereunder:

“5. In Excel Wear's case, this Court negatived asubmission that a right to close down a business wasnot a fundamental right and that it was merely a rightappurtenant to ownership of property. This Court held that the right to close down a business was an integralpart of the fundamental right to carry on business asguaranteed under Article 19(1)(g) of the Constitution.It was held that there could be a reasonablerestriction on this right under Article 19(6) of theConstitution. It was held that the law could provide todeter reckless, unfair, unjust and mala fide closure. Achallenge under Article 14 of the Constitution wasnegatived. It was held that Chapter V-V dealt only withcomparatively bigger undertakings and of a few typesonly and thus the classification was reasonable. It washeld that reasonableness of the restrictions must beexamined both from procedural and substantive aspectsof the law. This Court then considered whether therestrictions imposed by Section 25-O (as it then stood)were reasonable and saved by Article 19(6) of theConstitution. It was held that the restrictions imposedby Section 25-O were unreasonable for the followingreasons:

“(i) Section 25-O did not require giving ofreasons in the order. Even if the reasons were adequateand sufficient, permission to close could be denied inthe purported public interest of labour as it had beenleft to the whims and caprice of the authority todecide one way or the other. Thus the order could bewhimsical and capricious.

(ii) No time limit was fixed whilst refusingpermission to close down.

(iii) That there was no deemed provision foraccording approval in the Section. It was held that theresult would be that if the Government order was notcommunicated to the employer within 90 days, strictlyspeaking, the criminal liability under Section 25-F maynot be attracted if on the expiry of that period theundertaking is closed, but the civil liability underSection 25-O(5) would come into play on the expiry ofperiod of 90 days.

(iv) The order passed by the authority was notsubject to any scrutiny by any higher authority ortribunal either in appeal or revision and the ordercould not be reviewed even after some time.

(v) The employer was compelled to resort to theprovision of Section 25-N even after approval ofclosure.

(vi) The restriction imposed was more excessive than was necessary for the achievement of the objectand thus highly unreasonable. It was suggested thatthere could be several other methods to regulate andrestrict the right of closure e.g. by providing forextra compensation over and above the retrenchmentcompensation.

“11....Under the unamended Section 25-O, the orderas to be passed on a subjective satisfaction of theappropriate Government. Now, in amended Section 25-Othe words used are “the appropriate Government may,after making such enquiry as it thinks fit, and aftergiving a reasonable opportunity of being heard to theemployer, the Workmen and persons interested in suchclosure may, having regard to the genuineness andadequacy of the reasons stated by the employer,interest of the general public and all other relevantfactors by order and for reasons to be recorded inwriting, grant or refuse to grant such permission.”Thus now the appropriate Government before passing anorder is bound to make an enquiry. Now, the orderpassed by the appropriate Government has to be inwriting and contain reasons. As in the case ofretrenchment so also in closure, the employer has togive notice by filing up a form in which he has to giveprecise details and information. The requirement tomake an enquiry postulates an enquiry into thecorrectness of the facts stated by the employer in thenotice served by him and also all other relevant factsand circumstances including the bona fide of theemployer. Now an opportunity to be heard would have tobe afforded to the employer, workmen and all personsinterested. The detailed information which the employergives would enable the appropriate Government to makeup its mind and collect necessary facts for thepurposes of granting or refusing permission. Theappropriate Government would have to ascertain whetherthe information furnished is correct and whether theproposed action is necessary and, if so, to whatextent. The making of an enquiry, the affording of anopportunity to the employer, the workmen and allinterested persons and the necessity to pass a writtenorder containing reasons envisages exercise offunctions which are not purely administrative incharacter but quasi-judicial in nature. The words "theappropriate Government, after making such enquiry, asit thinks fit" does not mean that the Government maydispense with the enquiry at its discretion. Thesewords only mean that the Government has discretion about the nature of the enquiry it is to make.”

about the nature of the enquiry it is to make.”

22. Again, in the case of Premium Granites v.State of Tamil Nadu MANU/SC/0466/1994 : [1994]1SCR579 ,it has been held that the phrase "public interest"finds place in the Constitutional and in manyenactments and has since been noted and considered bythis Court in various decisions. It has been held thatthe said expression is of a definite concept and thatthere is nothing vague about it. Undoubtedly, in ManekaGandhi's case it had been held that a fundamental righthad not been breached. However, that would make nodifference to the understanding of the term "in theinterest of the general public". In our view, thephrase "in the interest of the general public" is thephrase of a definite connotation and a known concept.This phrase, as used in amended Section 25-O, has beenbodily lifted from Article 19(6) of the Constitution ofIndia. As stated in Maneka Gandhi's case if it is notvague in the Constitution, one fails to see how itbecomes vague when it is incorporated in amendedSection 25-O.

23. It was submitted that the restriction in orderto be valid must be imposed by law made by theGovernment. It is admitted that such law could includedelegated legislation or subordinate legislation. It issubmitted that mere executive order or mere executivedetermination was not permissible. It was submittedthat the law itself must define the content of therestriction. It was submitted that the Parliamentcannot leave it to the executive to determine thecontent of the restriction. It was submitted that theobject of the restriction must be differentiated fromthe restriction itself. It was submitted that Articles19(2) to (6) of the Constitution lay down the groundsor objects of the restriction. It was submitted thatthe actual restriction had to be defined by "law". Itwas submitted that otherwise it would not be possibleto say whether the restriction laid down by thespecific law conforms to the standards specified in theConstitution and/or whether it was proximate theretoand reasonable. It was submitted that if the content ofthe restriction was not laid down by the law but wasleft to be decided by the executive on a case by casebasis then there would be an impermissible delegationof legislative functions.24. We see no substance in these contentions. AmendedSection 25-O is the law which lays down the restriction. As has been set out above, there isnothing vague or ambiguous in its provision. It isSection 25-O which gives the power to grant or refusepermission. It would be impossible to enumerate or setout in Section 25-O all different contingencies orsituations which may arise in actual practice. Eachcase would have to be decided on its own facts and onthe basis of circumstances prevailing at the relevanttime. All that can be set out, in the Section, areguidelines. These have been set out in amended Section25-O.”

From the above observation of the Supreme Court, it is clearthat enquiry is mandatory. Though the nature of enquiry vestswith the Government, it does not mean that enquiry can bedispensed with in view of the judgment of the Apex Court,especially Paragraph No.11. If the present employer is allowedto stick on the deeming provision alone, it will set a badprecedent to other employers to follow the same and ensure thatthe Authority concerned does not pass any order within 60 daysand thereafter, would extend the benefit of compensation on theground that no order has been passed within 60 days and to saythat in the light of deeming provision the closure has come intoeffect. At this moment, it is useful to refer to the preamble ofthe I.D.Act, 1947, which states as follows:

“An Act to make provision for the investigationand the settlement of industrial disputes, and forcertain other purposes.”

16. The purpose of the I.D.Act, 1947 is for a speedy remedyand that is why, an outer time limit has been prescribed forpassing an award for the appropriate Forum to decide the issuewithin a time frame. Even though the I.D.Act, 1947 prescribes anouter time limit, such provision is only directory in nature andnot mandatory. Merely because an award has not been passedwithin time, it will not make the reference made by theGovernment is bad or the powers of the Court are extinguished /functus officio, whereas the time limit prescribed under Section25(O)(3) is mandatory and it has got to be complied with in itsentirety. The Authority must render a finding about thegenuineness and adequacy of the reasons stated by the Employer.The interest of the Public will have to be taken intoconsideration before arriving at any conclusion with regard toclosure. By closing down a Government Establishment, there is adeprivation of livelihood, which is in violation of Article 21and 39 of the Constitution of India.

17. This Court cannot go into the factual aspects regardingthe genuineness of the closure and the veracity of the loss(whether true or created one) can be decided only by theAuthority / Tribunal. This Court cannot adjudicate the disputedquestion of facts and hold (or put a rubber stamp) that theAuthority's decision in not performing the duties cast upon himis correct. There was an interim order passed by this Court,directing the Government to pay 50% of the balance amountwithout prejudice to the rights of the parties on 29.04.2021.

18. The Government has produced a copy of the Report of theExpert Committee, wherein in Page No.2 under the head'Methodology', it has been mentioned as follows:

“......Further,adetailedstakeholderconsultation with the trade unions, associations,individual labourers and the mill management were alsocarried out and in the process eliciting opinionsregarding the health of the company.”

In the report, though it has been described that trade unionswere heard, it cannot be construed that it is an hearing underSection 25(O) of the I.D.Act, 1947, firstly for the reason thatExpert Committee is not an Authority and secondly, when there isa notice issued under Section 25(O) of the I.D.Act, 1947, theparties ought to have been heard. Therefore, it is crystal clearthat there is a procedural irregularity in the light of thejudgment of the Apex Court (referred to supra), which entitlesthe employees to get all the benefits as if there is no closurein the eye of law. If the closure of an establishment is illegaland not justified, even an individual workman can raise anIndustrial Dispute, stating that there is non employment onaccount of the illegal closure and the concerned Labour Forum isempowered to adjudicate the same and render an award. The periodof limitation under Section 2-A will commence only after theissue in these Writ Petitions is resolved and not earlier.

19. In the present case on hand, Thiru.E.Vallavan, I.A.S.,Secretary, who has been suo motu impleaded as R6 by this Courtin this case has come forward for the first time, saying that hewas not the Authority. Till he was impleaded, the issue wasproceeded on the assumption that he was the concerned Authority.When this Court insisted that he should file a counter, he hasnarrated several details, but however, stated that he was notthe Authority to decide the issue and the Administrator was theAuthority, who is dealing with the matter. When the IndustrialDisputes Act was enacted in 1947, the powers have been conferred

on the Government Officials to decide the quasi judicial mattersand almost all the Establishments have obeyed the orders of theAuthority under the various Labour Enactments. Now, they areunder various pressure. The Appropriate Government must think ofamending the provisions of the Act to ensure that the powers arevested with the Industrial Tribunal, thereby the Reviewprovisions can be deleted. The above suggestion for amendmenthas been made based on the decision of the Supreme Court in thecase of Krishna District Co-operative Marketing Society Limitedvs. N.V.Purnachandra Rao, (1987) 4 SCC 99, wherein suggestionfor amending the provisions of the Industrial Disputes Act wasmade and the relevant paragraph is extracted hereunder:

"11. We may incidentally observe that the CentralAct itself should be suitably amended making itpossible to an individual workman to seek redress inan appropriate forum regarding illegal termination ofservice which may take the form of dismissal,discharge, retrenchment etc. or modification ofpunishment imposed in a domestic enquiry. An amendmentof the Central Act introducing such provisions willmake the law simpler and also will reduce the delay inthe adjudication of industrial disputes. Many learnedauthors of books on industrial law have also beenurging for such an amendment. The State Act in theinstant case has to some extent met the above demandby enacting section 41 providing for a machinery forsettling disputes arising out of termination ofservice which can be resorted to by an individualwork- man. In this connection we have one moresuggestion to make. The nation remembers withgratitude the services rendered by the former LabourAppellate Tribunal which was manned by some of oureminent Judges by evolving great legal principles inthe field of labour law, in particular with regard todomestic enquiry, bonus, gratuity, fair wages,industrial adjudication etc. The Industrial Disputes(Appellate Tribunal) Act, 1950 which provided for anall-India appellate body with powers to hear appealsagainst the orders and awards of Industrial Tribunalsand Labour Courts in India was repealed in haste. Ifit had continued by now the labour jurisprudence wouldhave developed perhaps on much more satisfactory linesthan what it is today. There is a great need today torevive and to bring into existence an all- IndiaLabour Appellate Tribunal with powers to hear appealsagainst the decisions of all Labour Courts, IndustrialTribunals and even of authorities constituted underseveral labour laws enacted by the States so that a body of uniform and sound principles of Labour law maybe evolved for the benefit of both industry and labourthroughout India. Such an appellate authority canbecome a very efficient body on account ofspecialisation. There is a demand for the revival ofsuch an appellate body even from some workers'organisations. This suggestion is worth considering.All this we are saying because we sincerely feel thatthe Central Act passed forty years ago needs a secondlook and requires a comprehensive amendment."

20. Thiru.E.Vallavan, I.A.S. had already invited the wrathof this Court. In an Industrial Dispute, pertaining tosuspension, he, as a Conciliation Officer, revoked thesuspension and ordered for reinstatement, when he has no powersto do so in the capacity as a Conciliation Officer. In yetanother case, this Court warned him and thereafter, granted timeto withdraw the wrong order passed by him and to refer thematter for conciliation. Since some of the IAS Officers are notfamiliar with the provisions of certain enactments, I have madethe above suggestion for amendment.

21. In the typeset of papers at Page No.36, a reply dated21.12.2020 to the query raised under RTI Act has been annexed,wherein it was stated that the Labour Department of Puducherryhad not issued any order granting permission for closure inrespect of the Mills. Thus, it is obvious that there is no orderof closure as such and hence, the Government is harping upon thedeeming provision.

22. It is seen that even though two separate Writ Petitionshave been filed by the Sangam, as per the Status Report onSwadeshee-Bharathee Textile Mills Ltd., Puducherry dated27.11.2018 (annexed at Page No.15), both Swadeshi Cotton Millsand Sri Bharathi Mills were taken over by Pondicherry TextileCorporation (A Government of Puducherry Undertaking) with effectfrom 01.04.2005, thereby both Mills were brought under oneumbrella and therefore, fresh application to comply with theprovisions of Section 25(O) of the I.D.Act, 1947 will have to befiled in respect of all the employees, namely, 119 and 68. Thereappears functional integrity between the two Mills of NTC, whichwas jointly vested with the Government of Puducherry.

23. Once the closure is held to be illegal in terms ofSection 25(O)(6) of the I.D.Act, 1947, Workmen are deemed to bein service and therefore, they are entitled to wages. It is madeclear that this order is applicable only to those, who questioned the closure and will not apply to those, who receivedbenefits and left. That apart, in the interim order dated29.04.2021, this Court has already made it clear that a Five ManCommittee can raise a dispute or Seven Workmen can jointogether, form a Trade Union, questioning the closure. Since theWorkmen have been deprived of their employment, they areentitled to question the non-employment, on account of illegalclosure individually by raising a dispute under Section 2-A ofthe I.D.Act, 1947, which is maintainable. The other provisionsof the I.D.Act, 1947, namely, Section 25(F), 25(FF) and the likehave also not complied with and therefore, the Workmen beforethis Court should be construed to be in employment.

24. The Hon'ble Supreme Court in the case of Jaipur ZilaSahakari Boomi Vikas Bank Ltd vs. Ram Gopal Sharma and others,reported in (2002) 2 SCC 244 held “13...It is well-settled rule of interpretationthat no part of statute shall be construed asunnecessary or superfluous. The proviso cannot bediluted or disobeyed....”

The Apex Court in the aforesaid decision clearly held that theinterpretation of statute must be such that it should advancethe legislative intent and serve the purpose for which it ismade rather than to frustrate it. The decision has been renderedin the context of interpretation to Section 33(2)(b) of theI.D.Act, 1947, to decide as to whether it was mandatory on thepart of the employer to comply with the said provision or toallow the employee to take recourse to a complaint under Section33-A of the I.D.Act. The Apex Court in Paragraph No.15 of thesaid case made it very clear that when no application is made orthe one made is withdrawn, the contention of the Management,that there is no order of refusal of such application on meritand as such the order of dismissal or discharge does not becomevoid or inoperative unless such an order is set aside underSection 33A, was rejected therein. It was further made clear bythe Apex Court that the conditions stipulated under Section 33(2)(b) has got to be complied with in letter and spirit, whichis mandatory.

25. Similarly, insofar as the provisions of Section 25(O)are concerned, a duty is cast upon the Government / Authority /Tribunal to decide the application, when it is filed under thesaid provision. The contra contention of the respondents, thatthere is a deeming provision, which will enable the employer toclose down an Undertaking, will not hold good. Admittedly, the Mills belong to the Government and the Authority and Managementshould be a model employer to comply with the mandatoryprovisions prescribed under the I.D.Act, 1947. That being thecase, if the contention of the respondents is accepted, then theprovisions of Section 25(O) will get diluted and the employercannot be allowed to gain any advantage over the defaultcommitted on account of non-consideration of the applicationwithin the time prescribed.

26. Normally, this Court would direct the Authorities toconsider the application afresh, but, in terms of Section 25(O)(4) of the I.D.Act, 1947, the order will be in force for aperiod of one year. Of course, in this case, there is no orderin the eye of law, as, on account of inaction of the Government,the closure can be given effect to from the prospective date,after an order is passed in terms of Section 25(O) of theI.D.Act, 1947. Hence, the employer need to file afreshapplication, seeking for closure of the Establishment based onthe existing number of employees as on date, including those,who have accepted the compensation under protest and not otheremployees, who have already received the compensation withoutprotest. In case the total number of employees is less than 100as on date after excluding those employees, who have acceptedthe compensation without protest, then there is no requirementto file an application under Chapter V-B, but of course, othermandatory provisions of Chapter V-A will have to be compliedwith, if applicable. A Division Bench of this Court in TheManagement of Chandra Textiles Private Limited Coimbatore vs.N.Palaniswami and Others, reported in (1987) I LLJ 458 Madobserved as follows:

“26. Mr.Venkataraman, learned counsel for the firstRespondent, referred to the definition of the words,"under protest" in the Law Lexicon of Venkataramiah,Vol. II. Besides that, he referred to Supdt. (Tech, I)Central Excise, I. D. D., Jabalpur v. Pratap Rai (1978)II S.C.J. 490 which has considered the meaning of thewords, "without prejudice". In the view which we havetaken on the facts of the case, it is not necessary forus to consider those decisions. We rest content bypointing out that the conduct of the first respondent isnot one from which it can be inferred in any matter thathe had accepted the award of the Labour Court to becorrect. On the other hand, he was been unequivocallypointing out the other way.

27. In the view which we have taken on the facts ofthis case, the authorities relied upon by the learned counsel for the appellant will not apply to this case.Each case will have to depend on its own facts. In thepresent case, the conduct of the appellant was not suchthat he became disentitled to the discretionary reliefunder Article 226 of the Constitution of India by thedoctrine of approbation and reprobation or any otherprinciple of law. The decisions cited by learned counselfor appellant will not help him in the present case.

28 & 29 ........

30. In view of the fact that the first respondenthad been kept out of employment for nearly fifteen yearsby the fault of the Management and the fact that theManagement has failed to place before the Labour Courtor his Court any material for refusal of back-wages, wethink it just and proper to grant the consequentialrelief of back-wages.”

From the above judgement, it is clear that the Authorityconcerned / Labour Court / Tribunal will have to look into thethe doctrine of approbation and reprobation and in case anemployee accepted any amount under protest, then he is entitledto agitate his grievance before the appropriate Forum. In allfairness, the demand raised by the Sangam in these WritPetitions is valid and hence, the impugned notice is liable tobe interfered with.

27. In fine, these Writ Petitions are allowed and both theimpugned notice dated 29.09.2020 is hereby set aside. The amountalready received under protest shall be adjusted and theremaining amount shall be paid within a period of six monthsfrom the date of receipt of a copy of this order. In themeanwhile, it is open to the employer to make afresh applicationfor closure of the Undertaking in terms of the provisions of theAct, if so advised, after complying with the mandatory statutoryprovisions and after the waiting period, if any provided underthe Act, the matter may be taken up by the Authority concerned.This Court is of the view that Corporation is a part of theGovernment of Puducherry and in case any closure application isfiled, it can be scrutinized by the concerned Authority and thematter can be straight away referred to a Tribunal, so that,instead of two adjudications, namely, one before the Authorityand the other one before the Tribunal, a comprehensive decisioncan be taken. The I.D.Act, 1947 need to be amended to enable aLabour Court or Tribunal to decide the issue, as the IASOfficers, who are entrusted with such quasi judicial work, lacks familiarity with the strict provisions of the Act on account oftheir other administrative / official duties. It is made clearthat if any of the Workmen have already settled the dispute andaccepted the monetary benefits, they will not be entitled to anyrelief. The employees, whose claims have already been settled,cannot be allowed to have the best of both the benefits. Nocosts. Consequently, connected miscellaneous petitions areclosed.

Sd/- Assistant Registrar(CS-IX)

//True Copy//

Sub Assistant Registrar

ar

To:

1. The Secretary,Industries and Commerce,Government of Puducherry,Puducherry.Industries and Commerce,Government of Puducherry,Puducherry.2. The Secretary (Labour),Government of Puducherry,Puducherry.Government of Puducherry,Puducherry.

3. The Director

M/s.Pondicherry Textile Corporation Limited,A Government of Puducherry UndertakingAFT Mill Premises, Cuddalore Road,Pondicherry-605 004.A Government of Puducherry UndertakingAFT Mill Premises, Cuddalore Road,Pondicherry-605 004.

4. The Managing Director,

M/s.Swadeshee-Bharathee Textile Mills Ltd.,A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004A unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004

5. The Managing DirectorM/s.Swadeshi Cotton MillA unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004M/s.Swadeshi Cotton MillA unit of M/s.Swadeshee Bharathee Textile Mills Ltd.,A Government of Puducherry UndertakingMaraimalai Adigal Salai,Pudduchery-605 004

6. Thiru. E.Vallavan, I.A.S.,The Secretary to Government (Industries and Commerce),Chief Secretariat, Puducherry-605 001.

+2cc to Mrs.Anil Relwani, Advocate, S.R.No.224

+1cc to Mrs.N.Mala, Government Pleader Puducherry, High Court, Madras, S.R.No.112

+1cc to the Government Pleader for Puducherry, High Court, Madras, S.R.No.130

W.P.Nos.5360 and 5365 of 2021

EV(CO)RGA(19/01/2022)