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1994 (12) TMI 342

Madras in Writ Petition No. 11 19 of 1977. The said writ petition was moved by Respondent 1 Madura Coats Ltd., for a declaration that Section 25-M of the Industrial Disputes Act, 1947 as it stood under the Industrial Disputes (Amendment) Act, 1976 insofar as it required prior permission to be obtained to effect layoff is ultra vires and void. The writ petitioner Respondent I 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 Disputes (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 the order dated 11 -9-1976 by which the said lay-off application was rejected by the Joint Labour Commissioner. Along with the said Writ Petition No. 11 19 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 2 .....

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sub- section (2), the authority to whom the 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 madedoes 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 sub-section (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 lay-off 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 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 t .....

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ty 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 subsection (3) on the failure of the governmental authority to communicate the permission or the refusal within a period of three months." 5. In Excel Wear' decision this Court analysed the provisions of Section 25-0 and it has been indicated that under Section 25-0, 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 term .....

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been held in the decision in Meenakshi Mills case2 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 2 (1992) 3 SCC 336: 1992 SCC (L&S) 679 the Directive Principles of the Constitution and in general public interest and therefore should be presumed to be reasonable. 8. The learned counsel has also submitted that in Meenakshi Mills case2 this Court has specifically pointed out that the decision in Excel Wear case1 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 case1 that sub-section (2) of Section 25-0 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 M .....

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beyond what is required in the interests 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 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 they go in much excess of the object. 11.Dr Ghosh has als .....

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the requirement of the interest of general public. 13.Dr Ghosh has finally referred to the decision of this Court in Management of Kairbetta Estate v. Rajamanickam6. 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." 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 Mills case2, this Court has also noted the distinctive features of "lay-off'. 14. Dr Ghosh has contended that the decision rendered in Meenakshi Mills case2 has not laid down any absolute proposition that unfettered restriction on the right to hold and acquire property and carry on trade and business activity can be imposed only on the score of social interest. He has also submitted that in Meenakshi Mills case2, the provisions for retrenchment under Section 25-N of the Industrial Disputes Act were taken in .....

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some cases such machinery being imported and highly sophisticated may 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 event of closure,, the job opportunity is bound to be affected and the economic interest of the natio .....

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estriction 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 the Fundamental Rights 12. (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 7 Chintaman Rao v. State of M.P, 1950 SCR 759 : AIR 1951 SC 118; Dwarka Prasad Laxmi Narain v. State of U.P., 1954 SCR 803 : AIR 1954 SC 224; Excel Wear v. Union of India, (1978) 4 SCC 224: 1978 SCC (L&S) 509: (1979) 1 SCR 1009 8 O.K. Ghosh v. E.X. Joseph, AIR 1963 SC 812; Pathumma v. State of Kerala, (1978) 2 SCC 1 AIR 1978 SC 771; Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC 336: 1992 SCC (L&S) 679 9 Kavalappara Kottarathil Kochuni v. State of Madras & Kerala, AIR 1960 SC 1080 : (1960) 3 SCR 887 : Jyoti Pershad v. Administrator.for Union Territory of Delhi, AIR 1961 SC 1602 (1962) 2 SCR 125; Pathumma v. State of Kerala, (1978) 2 SCC 1 : AIR 1978 SC 771 10 Jyoti Pershad v. Administrator.for Union Territory of Delhi, AIR 1961 SC 1602 (1 .....

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contained in the Directive Principles of the Constitution as contained in Articles 38, 39(a), 41 and 43. It has been indicated in Meenakshi Mills case2 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 13 State of Madras v. VG. Row, AIR 1952 SC 196 : 1952 SCR 597; State of U.P. v. Kaushailiya, AIR 1964 SC: 416: (1964) 4 SCR 1002; Bachan Singh v. State a Punjab, (1971) 1 SCC 712 AIR 1971 SC 2164; Pathumma v. State a Kerala, (1978)2 SCC 1 : AIR 1978 SC 771 14 Fatehchand Himmatlal v. State of Maharashtra, (1977) 2 SCC 670: AIR 1977 SC 1825; Excel Wear v. Union of India, (1978) 4 SCC 224: 1978 SCC (L&S) 509 :(1979) 1 SCR 1009 15 Kesavananda Bharati Sripadagalvaru v. State of Kerala, (1973) 4 SCC 225 : AIR 1973 SC 146 1; State of Kerala v. N.M. Thomas, (1976) 2 SCC 310 : 1976, SCC (L&S) 227 : AIR 1976 SC 490; Pathumma v. State of Kerala, (1978) 2 SCC 1 : AIR 1978 SC 771 16 Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC .....

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ployed 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 home in mind by the appropriate Government or authority by exercising its power to grant or refuse permission for retrenchment under sub-section(2). 18.In our view, the aforesaid observations in upholding the validity of Section25-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 effe .....

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onable, 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 apparent causes (like sudden breakdown) justifying lay-off, the authority would act with speed. 20. As already indicated, the distinguishing features between Section 25-M and Section 25-N on one hand and Section 25-0 on the other have been noticed in the decision in Excel Wear case1. 21.In our view, the reasonings indicated in Excel Wear case1 in striking down Section 25-0 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 Mills case1 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 o .....

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