Full Judgment Text
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PETITIONER:
THE PAPNASAM LABOUR UNION
Vs.
RESPONDENT:
MADURA COATS LTD. AND ANR.
DATE OF JUDGMENT08/12/1994
BENCH:
RAY, G.N. (J)
BENCH:
RAY, G.N. (J)
HANSARIA B.L. (J)
CITATION:
1995 AIR 2200 1995 SCC (1) 501
JT 1995 (1) 71 1994 SCALE (5)153
ACT:
HEADNOTE:
JUDGMENT:
G.N. RAY, J.:
1. This appeal is directed against the order dated 9th
April, 1981 passed by the Division Bench of the High Court
of Madras in Writ Petition No. 1119 of 1977. The said writ
petition was moved by the respondent No. 1 Madura Coats
Ltd., for a declaration that Section 25-M of the Industrial
Disputes Act, 1947 as it stood un-
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der the Industrial Dispute (Amendment) Act, 1976 in so far
as it required prior permission to be obtained to effect lay
off is ultra vires and void. The writ petitioner respondent
No. 1 also prayed that the State of Tamil Nadu represented
by the Secretary to Government, Labour and Employment
Department, Madras should be restrained from enforcing the
provisions of the said Industrial Dispute (Amendment) Act in
respect of the lay off application being application No. 4
of 1976 made by the petitioner. The petitioner also prayed
for a writ in the nature of certiorari calling for the
records of the Joint Commissioner of Labour, Madras, for
quashing order dated 11th September 1976 by which the said
lay off application was rejected’ by the Joint Labour
Commissioner. Along with the said Writ Petition No. 1119 of
1977, a number of similar writ petitions challenging the
vires of Section 25-M of the Industrial Disputes Act and
consequential prosecutional penalty for the lay off in
contravention of Section 25-M were heard by the Division
Bench of the Madras High Court and by one common judgment,
all the said writ petitions were disposed of.
2. The Division Bench of the Madras High Court inter
alia held that Section 25-M as it stood under the said
amendment Act, 1976 was constitutionally invalid for the
reasons given by this Court in invalidating Section 25-O of
the Industrial Disputes Act in the decision rendered in
Excel Wear Etc versus Union of India and Others (1979 (1)
SCR 1009). The Madras High Court. further held that in view
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of its finding that Section 25-M was constitutionally
invalid, it was unnecessary for the Court to go into the
validity or otherwise of the orders passed by the
authorities which had been impugned in some of the cases
before the High Court. The High Court also rejected the
prayer for granting leave to appeal to this Court by
indicating that as the High Court had followed the judgment
of the Apex Court in Excel Wear’s case, there was no
occasion t6 hold that the impugned decision involved a
substantial question of law of general importance which was
required to be decided by the Apex Court.
3. For the purpose of appreciating the respective
contentions of the parties in this appeal, the provisions of
Section 25-M of the Industrial Disputes Act as amended by
the Industrial Dispute(Amendment) Act, 1976 is set out as
hereunder:-
"25-M. Prohibition of lay-off-(1) No workman
(other than a badli workman or a casual
workman) whose name is borne on the muster
rolls of an industrial establishment to which
this Chapter 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.
(2) Where the workman (other than badli
workman or casual workman) of an industrial
establishment referred to in subsection (1 )
have been laid off before the commencement of
the Industrial Disputes (Amendment) Act, 1976
and such layoff continues at such
commencement, the employer in relation to such
establishment shall, within a period of
fifteen days from such commencement, apply to
the authority specified under sub-section (1)
for permission to continue the lay-off.
(3) In the case of every application for
permission under sub-section (1) or subsection
(2), the authority to whom the
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application has been made may, after making
such inquiry as he thinks fit, grant or
refuse, for reasons to be recorded in writing,
the permission applied for.
(4) Where an application for permission has
been made under sub-section (1) or sub-section
(2) and the authority to whom the application
is made does not communicate the permission or
the refusal to grant the permission to the
employer within a period 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 expiration of the said
period of two months.
(5) Where no application for permission under
sub-section (1) is made, or where no
application for permission under subsection
(2) has been made within the period specified
therein, or where the permission for the lay-
off or the continuance of the lay off has been
refused, such layoff shall be deemed to be
illegal from the date on which the workmen
have been laid off and the workmen shall be
entitled to all the benefits under any law for
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the time being in force as if they had not
been laid off
(6) The provisions of Section 25 C (other than
the second proviso thereto) shall apply to
cases of lay-off referred to in this Section.
Explanation - For the purposes of this
section, a workman shall not be deemed to be
laid-off by an employer if such employer
offers any alternative employment (which in
the opinion of the employer does not call for
any special skill or previous experience and
can be done by the workman) 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 such distance from
the establishment to which he belongs that the
transfer will not involve undue hardship to
the workman having regard to the facts and
circumstances of his case, provided that the
wages which would normally have been paid to
the workman are offered for the alternative
appointment also."
4. Mr. Kumar learned counsel appearing for the appellant
has contended that the decision rendered in Excel Wear’s
case is clearly distinguishable and the High Court has gone
wrong in relying on the said decision and accepting the
reasons which weighed with this Court in striking down the
constitutional validity of Section 25-O of the Industrial
Disputes Act by holding that the said reasons are equally
applicable in considering the validity of the Section 25-M
and on such premises declared Section 25-M as ultra vires
the Constitution. Mr. Kumar has submitted that in the
decision in Excel Wear’s case, this Court noticed the
distinguishing features in Section 25-M and Section 25-N,
when compared with Section 25-O of the Industrial Disputes
Act. This Court noticed that:
"Section 25(M) dealt with the imposition of
further restrictions in the matter of layoff.
Section 25(N) provided for conditions
precedent to retrenchment of workmen. In
these cases the vires of neither of the two
sections were attacked. Rather, a contrast was
made between, the said provisions with that of
Section 25(0) to attack the latter. The main
difference pointed out was that in sub-section
(3) of Section 25(M), the authority while
granting or refusing permission to the
employer to lay off was required to record
reasons in writing and in sub-section (4) a
provision was made that the permission applied
for shall be deemed to have been
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granted on the expiration of the period of two
months. The period provided in subsection (4)
enjoins the authority to pass the order one
way or the other within the said period.
Similarly, in sub-section (2) of Section 25(N)
reasons are required to be recorded in writing
for grant or refusal of the permission for
retrenchment and the provision for
retrenchment and the provision for deemed
permission was made in sub-section (3) on the
failure of the governmental authority to
communicate the permission or the refusal
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within a period of three months."
5. In Excel Wear’s decision this Court analysed the
provisions of Section 25-0 and it has been indicated that
under Section 25-O, if in the opinion of the appropriate
Government, the reasons for the intended closure are not
adequate and sufficient or if the closure was prejudicial to
the public interest, permission to close down could be
refused. It was pointed out by this Court that reasons
given for the closure by the employer might be correct yet
permission could be refused if they were thought to be not
adequate and sufficient by the State Government and no
reason was required to be given in the order granting the
permission or refusing it. It was also pointed out that the
appropriate Government was not enjoined to pass the order in
terms of sub-section (2) and Section 25-O within 90 days’
period of the notice. It was indicated in .Excel Wears case
that even though a situation might arise both from the
point of view of law and order and financial aspect that
employer would find it impossible to carry on business any
longer, permission could be refused even when the reasons
for intended closure was bonafide but the concerned
authority felt that the closure was against public interest,
which reason would be universal in all cases of closure.
Such provision with potentiality to pass unreasonable order
was held to be beyond the pale of reasonable restriction
permitted by Article 19 (6) of the Constitution.
6. The learned counsel has submitted that Section 25-M
and Section 25-N have common distinguishing features which
make the said two provisions different from Section 25-O
the validity of which was considered by this Court in Excel
Wear’s case. In the aforesaid circumstances, the decision
rendered in Excel Wear’s case is not applicable for deciding
the constitutional validity of Section 25-M.
7. The learned counsel for the appellant has strongly
relied on the decision of this Court in the case of Workmen
of Meenakshi Mills Ltd. and others versus Meenakshi Mills
Ltd. and another ( 1992 (3) SCC 336). In the said decision,
the constitutional validity of Section 25-N as it stood
prior to the substitution by Industrial Disputes (Amendment)
Act, 1984 was taken into consideration and it has been held
by this Court that conferment of power on appropriate
Government authority to grant or refuse permission for
retrenchment is not vitiated on the ground of absence of
provision for appeal or revision against or review of the
order passed by the Government or authority as the order is
required to be a speaking order to be passed on objective
considerations. It has also been held that sub-section (2)
of Section 25-N is not vitiated on the ground of non
prescription of guidelines for exercise of the power because
exercise of the power under Section 25-N being quasijudicial
in nature and not purely administrative and discretionary,
guidelines are not required. Moreover, the power has to be
exercised not only by indicating reasons but also in
accordance with the objective
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indicated in the Statement of Objects and Reasons given in
the said amending Act, 1976 as also the basic idea of
settlement of industrial disputes and promotion of
industrial peace. It has also been held in the decision in
Meenakshi Mill’s case that Section 25-N as it stood prior to
the Amending Act 1984, though imposed restriction on
employer’s right to retrench workmen, but such retrenchment
were imposed in consonance with the directive principles of
the Constitution and in general public interest and
therefore should be presumed to be reasonable.
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8. The learned counsel has also submitted that in
Meenakshi Mill’s case this Court has specifically pointed
out that the decision in Excel Wear’s case is not applicable
for considering the constitutional validity of the Section
25-N. It has been pointed out in distinguishing the
decision made in Excel Wear’s case that sub-section (2) of
Section 25-O provided for an order being passed by the State
Government refusing to grant permission to close the
undertaking on its subjective satisfaction and there was no
requirement for recording of reasons in the said order and
in these circumstances, this Court held that the absence of
a right of appeal or review or revision rendered .the
restriction as unreasonable. The learned counsel has
therefore submitted that in view of the decision in
Meenakshi Mill’s case, the constitutional validity of
Section 25-M cannot be challenged and section 25-M and
Section 25N having common features and being clearly
distinguishable from Section 25-O of the Industrial Disputes
Act, the reasons indicated in Meenakshi Mill’s case for
upholding the constitutional validity of Section 25-N fully
applies for upholding the constitutional validity of Section
25-M.
The learned counsel has therefore submitted that the appeal
should be allowed by holding that Section 25-M as it stood
prior to Amending Act 1984 was valid and orders passed under
Section 25-M cannot be held illegal and void.
9. Dr. Shankar Ghosh, learned senior advocate appearing
for the respondent No. 1, Madura Coats Ltd., has however
submitted that for appreciating the question of unreasonable
restriction imposed on the fundamental right to carry on
trade or business under the guise of protecting public
interest, it is necessary to consider whether or not the
restriction’ imposed under the statute is consistent with
and limited to the extent of control required for achieving
the purpose for which the restriction was sought to be
imposed. In this connection, Dr. Ghosh has referred to an
earlier decision of this Court in Chintaman Rao v. State of
Madhya Pradesh (1979 SCR 759). In the said decision,
Sections 3 and 4 of the Central Province and Berar
Regulation of Manufacture of Bidi (Agricultural Purposes)
Act 1948 wr taken into consideration. Under Section 3 of the
said Act, the Deputy Commissioner was empowered to issue
notification thereby fixing a period to be an agricultural
season with respect to such villages as may be specified
therein. Under sub-section (1) of Section 4 of the said Act,
the Deputy Commissioner was empowered to issue an order in
respect of such villages as he may specify thereby
prohibiting the manufacture of Bidi during the agricultural
season. Sub-section (2) of Section 4 provided that no
person residing in a village specified in such order, shall
during the agricultural season, engage himself in the
manufacture of Bidis and no manufacturer shall during the
said
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season employ any person for the manufacture of Bidis. In
Chintaman Rao’s case this Court has held:
"The phrase ’reasonable restriction’ connotes
that the limitation imposed on a person in
enjoyment of the right should not be arbitrary
or of an excessive nature beyond what is
required in the interest of the public. The
word ’reasonable’ implies intelligent care and
deliberation, that is, the choice of a course
which reason dictates. Legislation which
arbitrarily or excessively invades the right
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cannot be said to contain the quality of
reasonableness and unless it strikes a proper
balance between the freedom guaranteed in
article 19( 1 )(g) and the social control
permitted by clause (6) of Article 19, it must
be held to be wanting in that quality."
10. It has been held by this Court in the said decision
that the object of the statute is to provide measures for
the supply of adequate labour for agricultural purposes in
Bidi manufacturing areas of the Province and it could be
achieved by legislation restraining the employment of
agricultural labour in the manufacture of Bidis during the
agricultural season. Even in point of time, a restriction
may have been reasonable if it amounted to a regulation of
the hours of work in the business. But the aforesaid
provisions of the Act have no reasonable relation to the
object in view but the said provisions are drastic in scope
that it go in much excess of the object.
11. Dr. Ghosh has also referred to another decision of
this Court in M/s Dwarka Prasad Laxmi Naram versus Slate of
Uttar Pradesh and two others (1954 SCR 803). In the said
case, constitutional validity of Clause 43 of U.P. Coal
Control Order. 1953 was taken into consideration and it has
been held in the said decision that the licensing authority
may grant, refuse to grant, renew or refuse to renew a
licence and may suspend, cancel, revoke or modify any
licence or any term thereof granted by him under the order
for reasons to be recorded for the action he takes. Not only
so, the power could be exercised by any to whom the State
Coal Controller’ may choose to delegate the same. Such wide
power including the power to delegate to any person of the
choice of the Controller without any guiding principle was
held to be unreasonable and far in excess of the reasonable
restriction required to achieve the purpose.
12. Dr. Ghosh has further referred to the decision of this
Court in Pathumma and others versus State of Kerala and
others (AIR 1978 SC 771). In the said decision, the
constitutional validity of Section 20 of the Kerala
Agriculturists Debt Relief Act was taken into consideration
by a larger Bench of seven Judges. It has been held in the
said decision by upholding the validity of Section 20 of the
Kerala Act that in interpreting the constitutional
provision, the court should keep in mind the social setting
of the country so as to show a complete consciousness and
deep awareness of the growing requirements of the society,
the increasing needs of the nation, the burning problems of
the day and the complex issues facing the people which the
legislature in its wisdom through beneficial legislation.
seeks to solve The judicial approach should be dynamic
rather than static. pragmatic and not pedantic and elastic
rather than rigid. It has also been indicated that Article
19 guarantees all the seven freedoms to the citizens of the
country including the right to hold, acquire and dispose of
property. But article 19 also provides reasonable
restrictions to be placed by Parliament or the Legislature
in
80
public interest. It has been further indicated that in
judging the reasonableness of the restrictions imposed by
Clause (6) of Article 19, the Court has to bear in mind the
Directive Principles. It has also been indicated that
restriction to be reasonable must not be arbitrary or in
excessive nature so as to go beyond the requirement of the
interest of general public.
13. Dr. Ghosh has finally referred to the decision of this
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Court in Management of Kairbette Estate v. Rajamanickan
(1960 (3) SCR 371). In this decision, this Court considered
the import of the expression "any other reason" in the
definition of ’lay off under Section 2 (kkk) of Industrial
Disputes’Act. It has been held that:
"Any other reason to which the definition
refers, must, we think, be a reason which is
allied or analogous to reasons already
specified."
14. Dr. Ghosh contends that the definition of lay off
clearly indicates a number of contingencies which may
justify ’lay off. He has submitted that in Meenakshi Mill’s
case, this Court has also noted the distinctive features of
’lay off
15. Dr. Ghosh has contended that the decision rendered in
Meenakshi Mill’s case has not laid down any absolute
proposition that unfettered restriction on the right to hold
and acquire property and ca.fly on trade and business
activity can be imposed only on the score of social
interest. He has also submitted that in Meenakshi Mill’s
case, the provisions for retrenchment under Section 25-N of
the Industrial Disputes Act was taken into consideration but
retrenchment is a crystalised or frozen occasion and the
same should not be held at par with the provisions for lay
off under Section 25-M. It has been contended by Dr Ghosh
that if the distinction between lay off and retrenchment and
different types of problem associated with lay off and
retrenchment are considered in their proper perspective the
reasonings for upholding the validity of Section 25-N should
not be made applicable in deciding their vires of Section
25-M. Dr Ghosh has submitted that for the purpose of
upholding the constitutional validity of a statute, upon a
challenge on account of unreasonable restriction, the Court
is required to look into the facts and circumstances and the
ground realities under which the offending provision of the
statute is to be applied. No strait-jacket formula,
therefore, can be laid down for deciding the question of
reasonable restriction in each and every statute. He has
submitted that in the matter of lay off under Section 25-M,
excepting in the case of power failure and natural calamity,
in all other cases, even if there are genuine urgent grounds
for immediate action of lay off, a prior permission is
requiredto be obtained. It is permissible under Section 25-M
to defer disposal of an application for such permission for
approval upto a period of two months from the date of
application even if ultimately such permission is accorded.
Such outer limit of two months in a given case, may be
wholly unreasonable thereby frustrating the very purpose for
which an immediate action for lay off was warranted. Dr.
Ghosh has submitted in support of his contention that even
if in a given case there is breakdown of essential
components of a machinery without which the productive
activity in a particular factory cannot be carried on and
even if it so happens that any attempt to run the factory
involves substantial risk even in respect of other plants
and also the labour force involved in operational activity,
the management though
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has a bona fide and urgent need to immediately lay off the
labourers whose service cannot be gainfully utilised until
the productive activities can be effectively restored on
some future date, cannot resort to lay off lawfully unless
permission is accorded by the concerned authority. Dr Ghosh
has submitted that it may not be unlikely that in some cases
such machinery being imported and highly sophisticated may
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not be repaired and commissioned in near future and a case
of immediate lay off was essentially necessary, but the
rigid provisions of Section 25-M do not provide for taking
immediate action in such and similar contingency. The
provisions of Section 25-M requiring formal approval in all
circumstances except in the case of power failure or natural
calamity must be held to be absolutely undesirable and
harsh. The restriction imposed in Section 25-M is far in
excess of reasonable restriction necessary to achieve the
object of preventing improper action of the employer in
resorting to lay off The unreasonable compulsion in
retaining a large labour force without any service being
rendered by them may lead to closure of the unit being sick
and economically not a viable unit. Such undesirable result
brought on the employer on compulsion cannot be held to be a
normal incidence of a reasonable restriction on the
employer’s right to lay off Such provision may not even
serve the interest of labour force because in the vent of
closure, the job opportunity is bound to be affected and the
economic interest of the nation is bound to be in jeopardy.
Dr. Ghosh has submitted that the problems associated with
’lay off have their special features and incidence and the
principle underlying the restriction imposed on retrenchment
under Section 25-N as considered in Meenakshi Mill’s case is
not applicable in all fours in considering the
reasonableness of the restrictions imposed in Section 25-M.
Dr. Ghosh has submitted that the broad features which
weighed with this Court in holding Section 25-O as
unconstitutional in Excel Wear’s case are applicable in
deciding the constitutional validity of Section 25-M. In the
aforesaid facts, the impugned decision holding Section 25-M
before amendment in 1984’ as unconstitutional should not be
interfered with and the appeal should be dismissed.
16. After considering the respective submissions of the
learned counsel for the parties and considering various
decisions of this Court in deciding the question of
reasonableness of the restriction imposed by a statute on
the fundamental rights guaranteed by Article 19 of the
Constitution of India (reference to which would be mad
hereinafter),it appears to us that the following principles
and guidelines should be kept in mind for considering the
constitutionality of a statutory provision upon a challenge
on the alleged vie of unreasonableness of the restriction
imposed by it:
(a) The restriction sought to be imposed ’on the
fundamental rights guaranteed by Article 19 of the
Constitution must not be arbitrary or of an excessive nature
so as to go beyond the requirement of fIt need of the
society and object sought to be achieved. (1950 SCR 759.
1954 SCR 803, 1979(1) SCR 1003).
(b) There must be a direct and proximate nexus or a
reasonable connection between the restriction imposed and
the object sought to be achieved. (AIR 1963 SC 812, AIR 1978
SC 777, 1992 (3) SCC 336).
(c) No abstract or fixed principle can
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be laid down which may have universal application in all
cases. Such consideration on ’the question of quality of
reasonableness,therefore, is expected to vary from case to
case. (AIR 1960 SC 1080, AIR 1961 SC 1602, AIR 1978 SC 771).
(d) In interpreting constitutional provisions, court
should be alive to the felt need of the society and complex
issues facing the people which the legislature intends to
solve through effective legislation. (AIR 1961 SC 1602, AIR
1978 SC 771).
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(e) In appreciating such problems and felt need of the
society the judicial approach must necessarily be dynamic,
pragmatic and elastic. (AIR 1961 SC 1602, AIR 1977 SC 1825,
AIR 1978 SC 771).
(f’) It is imperative that for consideration of
reasonableness of restriction imposed by a statute, the
Court should examine whether the social control as envisaged
in Article 19 is being effectuated by the restriction
imposed on fundamental right. (AIR 1952 SC 196, AIR 1964 SC
416, AIR 1978 SC 771).
(g) Although Article 19 guarantees all the seven freedoms
to the citizen. such guarantee does not confer any absolute
or unconditional right but is subject to reasonable
restriction which the legislature may impose in public
interest. It is therefore necessary to examine whether such
restriction is meant to protect social welfare satisfying
the need of prevailing social values. (AIR 1952 SC 196, AIR
1964 SC 416, AIR 1971 SC 2164, AiR i978 SC 771 )
(h) The reasonableness has got to be tested both from the
procedural and substantive aspects. It should not be bound
by processual perniciousness or jurisprudence of remedies.
(AIR 1977 SC 1825, 1979 (1) SCR 1009)
(j) Restriction imposed on the fundamental right
guaranteed under Article 19 of the Constitution must not be
arbitrary, unbridled, uncanalised and excessive and also not
unreasonably discriminatory. Exhypothesis, therefore, a
restriction to be reasonable must also be consistent with
Article 14 of the Constitution.
(k) In judging the reasonableness of the restriction
imposed by Clause (6) of Article 19, the Court has to bear
in mind directive principles of state policy. (AIR 1973 SC
1461, AIR 1976 SC 490, AIR 1978 SC 771)
(1) Ordinarily, any restriction so imposed which has the
effect of promoting or effectuating a directive principle
can be presumed to be a reasonable restriction in public
interest. (1992 (3) SCC 336).
17. In Meenakshi Mill’s case, the contention that the
Section 25-N has imposed unreasonable restriction on the
fundamental right to hold property and to carry on business
activities has been rejected by indicating that the object
underlying the enactment of Section 25-N by introducing
prior scrutiny of the reasons for retrenchment is to prevent
avoidable hardship to the employees resulting from
retrenchment by protecting existing employment and to check
the growth of unemployment which would otherwise be the
consequences of retrenchment in industrial establishment
employing a large number of workmen. It has also been
indicated in the said
83
decision that the restriction imposed in Section 25-N on
the right of retrenchment of the employer is intended to
maintain higher tempo of production and productivity by
preserving industrial peace and harmony, and in that sense,
Section 25-N seeks to give effect to the mandate contained
in the directive principles of the Constitution as contained
in Articles 38, 39(a), 41 and 43. It has been indicated in
Meenakshi. Mi11’s case that ordinarily any restriction so
imposed which has the effect of promoting or effectuating a
directive principle can be presumed to be reasonable
restriction in public interest and a restriction imposed on
the employer’s right to terminate the service of an employee
is not alien to the constitutional scheme which indicates
that the employer’s right is not absolute. We may indicate
here that even in Excel Wear’s case it has been held that:
"the right to close a business is an integral
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part of the fundamental right to carry on a
business. But as no right is absolute in its
scope so is the nature of this right. It can
certainly be restricted, regulated or
controlled by law in the interest of general
public."
(Emphasis supplied)
18. In Meenakshi Mill’s case, it has been held that the
power to grant or refuse permission for retrenchment of
workmen conferred under sub-section (2) of Section 25-N has
to be exercised on an objective. consideration of the
relevant facts after affording an opportunity to the parties
having an interest in the matter and reasons have to be
recorded in the order that is passed. The enquiry which has
to be made under sub-section (2) before an order granting or
refusing permission for retrenchment of workmen is passed,
would require an examination of the particulars which .are
required to be supplied by the employer. Such decision being
quasi-judicial, is justiceable before High Court. In view of
the time limit of three months prescribed in sub-section (3)
of Section 25N, there is need for expeditious disposal which
may not be feasible if the proceedings are conducted before
a judicial officer accustomed to the judicial process.
Moreover, during the course of such consideration, it may
become necessary to explore the steps that may have to be
taken to remove the causes necessitating the proposed
retrenchment which may involve interaction between the
various departments of the Government. This can be better
appreciated and achieved by an Executive Officer rather than
a Judicial Officer. It has also been indicated in Meenakshi
Mill’s case that in the matter of exercise of the power
conferred by sub-section (2) of Section 25-N, the power has
to be exercised keeping in view the provisions of the Act
and the object underlying the Amending Act of 1976 whereby
Section 25-N was inserted in the Act. The object underlying
the requirement of prior permission for retrenchment of
workmen introduced by Section 25-N as indicated in the
Statement of Object and Reasons for the Amending Act of
1976, is to prevent avoidable hardship to the employees
resulting from retrenchment by protecting employment to
those already employed and maintain higher tempo of
production and productivity by preserving industrial peace
and harmony. The said consideration coupled with the basic
idea underlying the provisions of the Act, namely,
settlement of industrial disputes and promotion of
industrial peace, gives a sufficient indication of the
factors which have to be borne in mind by the appropriate
government or author-
84
its by exercising its power to grant or refuse permission
for retrenchment under sub-section(2).
19. In our view, the aforesaid observations in upholding
the validity of Section 25-N squarely apply in upholding the
validity of Section 25-M. It is evident that the
legislature has taken care in exempting the need for prior
permission for lay off in Section 25-M if such lay off is
necessitated on account of power failure or natural
calamities because such reasons being grave, sudden and
explicit, no further scrutiny is called for. There may be
various other contingencies justifying an immediate action
of lay off but then the legislature in its wisdom has
thought it desirable in the greater public interest that
decision to lay off should not be taken by the employer on
its own assessment with immediate effect but the employer
must seek approval from the concerned authority which is
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reasonably expected to be alive to the problems associated
with the concerned industry and other relevant factors, so
that on scrutiny of the reasons pleaded for permitting lay
off, such authority may arrive at a just and proper decision
in the matter of according or refusing permission to lay
off. Such authority is under an obligation to dispose of
the application to accord permission for a lay off
expeditiously and, in any event, within a period not
exceeding two months from the date of seeking permission.
It may not be unlikely that in some cases an employer may
suffer unmerited hardship upto a period of two months within
which his application for lay off is required to be disposed
of by the authority concerned but having undertaken a
productive venture by establishing an industrial unit
employing a large number of labour force, such employer has
to face such consequence on some occasions and may have to
suffer some hardship for some time but not exceeding two
months within which his case for a lay off is required to be
considered by the concerned authority otherwise it will be
deemed that permission has been accorded. In the greater
public interest for maintaining industrial peace and harmony
and to prevent unemployment without just cause, the
restriction imposed under subsection(2) of Section 25-M
cannot be held to be arbitrary, unreasonable or far in
excess of the need for which such restriction has been
sought to be imposed.
20. It may be pointed out that sub-section (3) requires
recording of reasons for the decision taken, and a copy of
the order is required to be communicated to all concerned.
Further, by force of sub-section (4), permission sought for
shall be deemed to have been granted, if the decision is not
communicated within the mentioned period. Procedural
reasonableness has been taken care of by these provisions.
As regards substantive reasonableness, we feel satisfied, as
the power in question would be exercised by a specified
authority and as it can well be presumed that the one is
to be specified would be a high authority who would be
conscious of his duties and obligation. If such an authority
would be informed that lay .off is required because of, any
sudden break down of machinery, which illustration was given
by Dr. Ghosh to persuade us to regard the restriction as
unreasonable, we have no doubt that the authority would act
promptly and see that the establishment in question is not
put to loss for no fault on its part. As every power has to
be exercised reasonably, and as such an exercise takes
within its fold, exercise of power within reasonable time,
we can take for granted that the statutory provision
requires that in
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apparent causes (take sudden break down) justifying lay off,
the authority would act with speed.
21. As already indicated, the distinguishing features
between Section 25-M and Section 25-N on one hand and
Section 25-O on the other have been noticed in the decision
in Excel Wear’s case.
22. In our view, the reasonings indicated in Excel Wear’s
case in striking down 25-O are not applicable for
considering the constitutional validity of Section 25-M(2).
On the contrary, it appears to us that the reasonings
indicated in Meenakshi Mill’s case in upholding the validity
of Section 25-N squarely apply in upholding the vires of
Section 25-M. It also appears to us that the impugned
provision of Section 25-M satisfies various aspects of
scrutiny for upholding reasonable restriction on the
fundamental right when tested in the context of guidelines
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and principles indicated hereinbefore. The restriction
appears necessary to us in larger public interest and to
protect the interest of workmen, who, but for the
restriction may be subjected to uncalled for lay off. The
application of this restriction to industrial establishments
specified in Section 25-K duly takes care of the hardship
which could otherwise be caused to small establishments.
Directive Principles do require placing of the restriction
on large industrial establishments employing large number of
workmen. The impugned decision of the Madras High Court,
therefore, must be held to be erroneous and the same is, set
aside by upholding the vires of Section 25-M of the
Industrial Disputes Act. 1947 which was introduced under the
Amending Act of 1976. This appeal is, therefore, allowed
without, however, any order as to costs.
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