# Agra Engineering Industries Employees Union v. State of U.P. and another

- **Citation:** (2003) 2 ILRA 560
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2003-06-11
- **Case number:** Civil Misc. Writ Petition No. 42075 of 2002
- **Bench:** Sunil Ambwani
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/agra-engineering-industries-employees-union-v-state-of-u-p-and-another-40130
- **Pages:** 18

## Headnote

Constitution of India Article 226-Practice
and Procedure- order passed under
Section
25(0)-Review
application
rejected-No reason disclosed-held- not
proper-order
rejecting
the
review
application quashed-recording reason- is
must to assess the validity of order or
even to challenge the validity before
higher authorities.

Held-Para 26

These reasons, however, cannot be the
only reason to be taken into account
while considering the application for
closure. There are other facts and
circumstances including bonafide of the
employers, or such compelling over
riding
circumstances
including
the
interest of general public, on which the
application
for
closure
may
be
considered.
The petitioners
in their
objection had not only assailed the
reasons given in the application namely
financial
difficulties,
but
it
also
challenged the correctness of balancesheet as documents prepared for the
purposes
of
closure
to
avoid
the
consequence in M.C. Mehta's case. The
State
Government
ought
to
have
addressed itself to these questions and
to consider whether the objections, had
substance. It has been held in Orissa
Textile and Steels Ltd. (supra) that the
interest of general public has known
concept. It is a guiding factor which
should
have
been
taken
into
consideration. The record does not show
that the State Government had taken
into account the interest of general
public as one of the factors, specially
when
order
was
to
deprive
238
employees
of
their
right
to
the
retrenchment
compensation
to
be
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
561
determined in accordance with the Act,
as well as compensation of six years
wages to be paid to them under the
orders of the Supreme Court.
Case law discussed:
1978 (4) SCC- 224
1992 (3) SCC- 336
2002 (92) FLR 648
1989 (1) LLJ 599
2001 LIC 3628
1999 LIC-1749
1986 (2) SCC-624
AIR 1960 SC-56
1997 (2) SCC-353

## Text

_Characters 0–39,751 of 61,449. This is a partial read: ask again with offset=39751 for what follows._

INDIAN LAW REPORTS ALLAHABAD SERIES [2003
560
what the workman says, may be true.
Since at this stage it would not be proper
to express any opinion with regard to the
case set up by the workman, suffice to say
that for the reasons stated above, the
award of the labour court deserves to be
quashed and is hereby quashed.

8. In the result, this writ petition
succeeds and is allowed. The award of the
labour Court dated 16.8.1996 is quashed.
The labour court is directed to answer the
reference
made
to
it
expeditiously
considering the long pendency of the
litigation between the parties and since
there is no interim order in this writ
petition, therefore employers are directed
to pay half of the wages that would have
been paid had his services been not
terminated on 12.2.1975 till the date of
this judgement, as it was admitted that the
employers have absolutely no material to
demonstrate that the workman was
gainfully employed during this period.
With the aforesaid direction the labour
court is directed to decide the matter
expeditiously
preferably
within
six
months from the date of presentation of
certified copy of this order before it.
--------
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 11.06.2003

BEFORE
THE HON'BLE SUNIL AMBWANI, J.

Civil Misc. Writ Petition No. 42075 of 2002

Agra Engineering Industries Employees
Union

...Petitioner
Versus
State of U.P. and another ...Respondents

Counsel for the Petitioner:
Sri K.P. Agarwal
Sri S.S. Nigam
Sri Vijay Sinha

Counsel for the Respondents:
Sri S.P. Gupta
Sri Tarun Agarwal
Sri H.N. Shukla
S.C.

Constitution of India Article 226-Practice
and Procedure- order passed under
Section
25(0)-Review
application
rejected-No reason disclosed-held- not
proper-order
rejecting
the
review
application quashed-recording reason- is
must to assess the validity of order or
even to challenge the validity before
higher authorities.

Held-Para 26

These reasons, however, cannot be the
only reason to be taken into account
while considering the application for
closure. There are other facts and
circumstances including bonafide of the
employers, or such compelling over
riding
circumstances
including
the
interest of general public, on which the
application
for
closure
may
be
considered.
The petitioners
in their
objection had not only assailed the
reasons given in the application namely
financial
difficulties,
but
it
also
challenged the correctness of balancesheet as documents prepared for the
purposes
of
closure
to
avoid
the
consequence in M.C. Mehta's case. The
State
Government
ought
to
have
addressed itself to these questions and
to consider whether the objections, had
substance. It has been held in Orissa
Textile and Steels Ltd. (supra) that the
interest of general public has known
concept. It is a guiding factor which
should
have
been
taken
into
consideration. The record does not show
that the State Government had taken
into account the interest of general
public as one of the factors, specially
when
order
was
to
deprive
238
employees
of
their
right
to
the
retrenchment
compensation
to
be
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
561
determined in accordance with the Act,
as well as compensation of six years
wages to be paid to them under the
orders of the Supreme Court.
Case law discussed:
1978 (4) SCC- 224
1992 (3) SCC- 336
2002 (92) FLR 648
1989 (1) LLJ 599
2001 LIC 3628
1999 LIC-1749
1986 (2) SCC-624
AIR 1960 SC-56
1997 (2) SCC-353

(Delivered by Hon'ble Sunil Ambwani, J.)

1. Agra Engineering Industries
Atroni, Agra, respondent no. 2 is a unit of
Jay Engineering works Ltd., a Company
incorporated under the Companies Act.
Petitioner is a union of Agra Engineering
Industries employees. It has prayed for
quashing the order dated 26.4.2002
(Annexure-4 to the writ petition), passed
by the State Government, allowing
application of the company for closure of
respondent no. 2, establishment at Agra
under section 25 'O' of the Industrial
Disputes Act, 1947, and has further
prayed for a direction in the nature of
mandamus to the respondents not to close
down the company i.e. respondent no. 2
and to pay regular salary to its workers.

2. The facts giving rise to this
petition are, that respondent no. 2
suspended its production activities w.e.f.
1.8.2001. Wages were, however, paid to
the workers with a total strength of 238
including 52 members of the staff and 186
workmen, up to 31.5.2001. A recovery
certificate was issued by the Deputy
Labour
Commissioner
under
U.P.
Industrial Peace (Timely Payment of
Wages) Act, 1978 for wages for the
month of November, 2001. In writ
petition No. 5480 of 2002 this Court with
the consent of petitioner company and
employees union, stayed the operation of
the order for a period of two months,
allowing the management to remove
finished goods, semi finished goods and
scrap from factory and pay the amount
under the orders after the removal of the
goods. On 26.2.2002, respondent no. 2
made an application to Secretary Labour
Government of U.P., informing that it
proposes to close down the undertaking
with effect from 30.5.2002, and sought
permission for closure. In para 4 of the
application a declaration was made that in
the event approval for the closure was
granted,
every
workman
in
the
undertaking to whom sub section (8) of
the said section 25 'O' applies, will be
given notice and paid compensation, as
specified in Section 25-N of the Industrial
Disputes Act, 1947 as if the workman had
been retrenched under the said section.
The application enclosed a list of
workmen, details relating to licensed
capacity and utilization capacity of the
manufacture of ceiling fans, annual
production for preceding three years
production in progress itemwise and
valuewise etc. It also included balancesheet and profit and loss account and
audit reports for the last three years,
which reflected losses. Reasons for the
proposed closure were given in appendix
XXII appended to the application dated
26.2.2003. These reasons stated that Agra
Engineering Industries Agra is a unit of
the Jay Engineering Works Ltd. a sick
industrial unit with accumulated losses of
Rs. 107 crores and a negative networth of
Rs. 82 crores. The continued losses had
made the financial position of the
company so bad that it was not possible to
pay suppliers wages and other statutory
dues. The Indian Electric fan industry is
http:\\allahabadhighcourt.nic.in
INDIAN LAW REPORTS ALLAHABAD SERIES [2003
562
facing tremendous pressure both in the
terms of prices and business volume with
rapidly changing economic environment
both
within
the
country
and
internationally.
The
organized
fan
industry in India continuously for 5 years
is loosing its market shares to the
unorganized sector. The Government Tax
policies are continuously making the
organized sector uncompetitive at the
market place, the gradual increase in
excise duty and other government levies
over the past few years have further
widened the gap between the organized
and unorganized sector. The company's
BIFR scheme was approved in November,
1997 and provided major portion of
rehabilitation funds sources from sale of
surplus
land
at
Kolkata,
which
unfortunately
could
not
materialize
despite best efforts by the company in
close coordination with Government of
West Bengal. In view of continued cash
losses the company in June 2002, having
no option submitted a supplementary
proposal to BIFR proposing to close down
manufacturing facility Agra i.e. Agra
Engineering
Industry.
The
financial
position became so worse that the
company was not in a position to continue
procuring raw material as suppliers
declined to supply fresh materials to the
Agra unit before their old dues are settled.
The unit suffered huge losses both in
terms of productivity and financial losses
because of go slow adopted by Agra
Workmen during the year 2000-2001. The
production activities was suspended with
effect from 1.8.2001. The manufacturing
plant of Agra Unit was manufacturing
most of the economy price models and
were the worst hit because of the
domestic/international
price
pressures.
The Company have no funds to invest in
machines overhauling/reconditioning and
that the unit became the weakest link in
terms of quality and reliability and thus it
was
decided
to
close
down
Agra
Engineering Industry. In annexure XXIII
the company disclosed attempts to avoid
closure. It was stated that vide order
dated 21.11.1997 the BIFR sanctioned a
scheme of rehabilitation with cost of Rs.
63.34 crores, including Rs 33 crores from
promoters and Rs. 30.34 crores by sale of
surplus land at Calcutta. The promoters
inducted Rs. 28.77 crores. In financial
year March 1993, the company owed an
amount of Rs 3306 lacs to the bank and
Rs. 166.66 lacs to the term landing
institutions besides deferred creditors of
Rs. 0.52 lacs due to the banks. Due to
non-conclusion of sale of land the
expected fund could not become available
and thus unfortunate step to take decision
to close Agra unit was taken.

3. On receipt of the application the
Assistant Labour Commissioner, Agra
Region, Agra sent notice dated 20.3.2002
to the parties to appear on 23.3.2002. The
petitioner
filed
their
objection
on
23.3.2002 denying the facts stated in the
application for closure. A preliminary
objection was raised that the application
could have been made under section 6
(W) of the Industrial Disputes Act, 1947
which provides the procedure for closing
down an undertaking. It was stated that
the
Agra
Engineering
Unit
was
established in 1969 and is earning profit
for 32 years. The company was
manufacturing 1850 fans per shift per day
and its high quality fans were sold at Rs.
1200 as against cost of production of Rs.
742 per fan.. In para 5 of the objection it
was stated that the unit was notified at sl.
no. 170 by the supreme Court in Public
Interest Litigation No. 13381 of 1984 and
was required to be closed on 31.12.2001.
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
563
In order to avoid the compliance of the
direction of the Supreme Court and to
avoid payment of wages to its workmen,
the company filed under section 25 'O' of
the Act. The B.I.F.R. has passed two
orders for rehabilitation in June 2001 and
11.1.2002, which have not become final
and that rehabilitation proposal has not
been rejected so far. The application
under section 25 (O) was filed in order to
avoid liability of payment. On 26.4.2001
the
management
had
entered
into
settlement with workmen in which
workmen agreed for higher production.
The other two units of Jay Engineering
works at Calcutta and Hyderabad are
showing more losses and that no such
proposal of closure was sent to either
West
Bengal
or
Andhra
Pradesh
Governments. It was further stated in para
13 of the objection that since the U.P. is a
backward Industrial State and that 292
industries of Agra has been closed down,
it was not possible to obtain alternative
employment. It was stated in para 14 that
up-to 1994 the unit was in profits and
bonus was paid at 10.6%, 14%,17% and
up-to 20%. Production of 20 fans per day
in 1969 was increased by workmen upto
1850 fans per day. In the financial year
1999-2000
4,11,140
fans
were
manufactured. The workmen challenged
and objected to the correctness of the
balance-sheet and required that the
balance-sheet should be re-examined. The
workmen raised doubts over the intention
of
the
company
inasmuch
as
the
production never ceased and fell below
the target.

4. The Labour Commissioner,
Kanpur heard both the parties on the date
fixed and directed respondent no. 2 to file
audited balance-sheet for the last 10 years
which were file by the respondent no. 2.
After last hearing dated 23.4.2002, the
Labour
Commissioner
submitted
his
report on the same day, to the Secretary
Labour Department. The impugned order
refers to the application dated 26.2.2002,
the
hearing
given
by
the
Labour
Commissioner, U.P. Kanpur to the
employers and the representative of the
workmen on various dates. It thereafter
concluded that the unit was running in
losses for the last 10 years and had
accumulated losses of Rs. 9.55 crores, and
thus
granted
permission
to
Agra
Engineering a unit of Jay Engineering
Works Ltd. Agra for closure under
Section 25 'O' of the U.P. Industrial
Disputes Act, 1947.

5. Petitioner filed a detailed and
comprehensive review application dated
6.6.2002 under section 25 'O' (5) of the
Industrial Disputes Act, 1947. It was
heard by Labour Commissioner. He
found that no new ground has been taken
and recommended on 2.8.2002 to dismiss
the review petition. By an order dated
2.9.2002, State Government rejected the
review petition.

6. I have heard Sri K.P. Agarwal,
Senior Counsel, assisted by Sri S.S.
Nigam for petitioner and Sri S.P. Gupta,
Senior Counsel, assisted by Shri Tarun
Agarwal for respondent No. 2 and
learned Standing Counsel. By order dated
14.2.2003 the Court had summoned the
original record which was produced on
12.2.2003 and that the records were
retained. The matter was heard on
19.2.2003 and thereafter, after three
adjournments the order was reserved on
27.3.2003. Sri K.P. Agarwal submits that
application for closure has not been
allowed for genuine and adequate reasons.
The industry was running in profit. There
http:\\allahabadhighcourt.nic.in
INDIAN LAW REPORTS ALLAHABAD SERIES [2003
564
was and is huge demand of its products
and the difference between the sale and
profit is not genuine. He submits that the
accounts were manipulated for closing the
unit. The rehabilitation scheme had been
proposed and was not rejected by BIFR.
Retrenchment compensation, as directed
by Apex Court in M.C. Mehta's case was
not paid. He also challenged the adequacy
of the grounds for closure as well as the
fact that the State Government unduly
hurried to close the proceedings as the
statutory period of consideration of
application was coming to an end. He
submits that the Labour Secretary did not
apply his mind and failed to consider the
report of the Labour Commissioner before
granting permission. It will effect the
future of the workmen and will vitiate the
industrial climate. The workmen were
making their best efforts to increase
production.
According
to
Sri
K.P.
Agarwal the application of the company
by which the unit was sought to be closed
and proposed to retrench its workmen was
not bonafide and should not have been
allowed.

7. Sri S.P. Gupta, Senior Advocate ,
appearing for respondent no. 2 defended
the order and submitted that the majority
of the workmen were given detailed
hearing by the Labour Commissioner.
Their objections were duly considered
and after looking into the entire material
on record, the State Government found
that
the
company
is
running
into
accumulated losses of 9.55 crores for the
last 10 years. He submits that the
contention of the petitioner that the
application of the respondent company for
closure has been made to circumvent the
order dated 30.12.1996 passed by the
Supreme Court is patently erroneous. In
its order dated 30.12.1996 Supreme Court
categorically stated, that those who do not
opt for gas connection or re-allocate
themselves on alternate plots will have to
close their factory irrevocably w.e.f.
30.4.1997
and
will
have
to
pay
compensation to its workers by 31.5.1997.
Despite the fact that the unit is not using
coal/coke,
it
applied
for
gas
for
manufacturing activities at that moment
of time. A huge amount was paid to the
gas industry for gas connection. In the
meantime
the
respondent
company
continued to suffer losses. The production
had to be stopped with effect from
1.8.2001
although
the
management
continued to pay its workmen. The
question of circumventing the order dated
30.12.1996 passed by the Supreme Court
did not arise. It was lastly submitted that
the review application filed by petitioner
has been considered and was rejected and
that no ground has been made out to
interfere with the order.

8. Section 25 'O' of the Industrial
Disputes Act, 1947 (in short the Act)
provides for a detailed procedure for
closing an undertaking. Every employer
has a right to close down the undertaking.
He, however, cannot escape the liability
of payment of wages unless he has
applied for permission for closure and has
been granted such permission. Where the
permission has been refused under sub
section (2) of Section 25 'O', the closure
of the undertaking shall be deemed to be
illegal from the date of closure and the
workmen shall be entitled to all the
benefits as if the undertaking has not been
closed down. Sub Section (8) provides
that where, however, the permission has
been granted, under sub section (2), or is
deemed to have been granted under sub
section (3), every workmen employed
immediately before the date of application
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
565
for permission, shall be entitled to receive
compensation which shall be equivalent
to 15 days average pay, for every
completed year of continuous service or
any part thereof in excess of six months.
The object of section 25 'O' is to obtain
permission by satisfying the appropriate
government with the reasons which are in
the interest of general public to close
down the undertaking and to legally
retrenched
its
workmen.
The
Constitutional validity of Section 25 'O'
was challenged in Excel Wears Vs.
Union of India and others (1978) 4 SCC
224. The Constitution Bench of Supreme
Court, hearing the case struck down
section 25 'O', as it then stood before its
amendment, by Amendment Act No. 46
of 1982. The Apex Court held that right
to close down business was an integral
part of fundamental right to carry on
business as guaranteed under Article 19
(1) (g) of the Constitution. There can be a
reasonable restriction on this right under
Article 19 (6) to restrain or deter,
reckless, unfair, unjust and malafide
closure. It held that 25 'O' falling in
Chapter-V B dealt only with bigger
undertaking and of a few type and thus
the classification was reasonable, but the
procedure and requirement of not giving
reasons by the State Government and
absence of provisions for a right of appeal
or revision or even review after some
time, were unreasonable. It also held that
even after the valid closure, section 25 'N'
was attracted, and that the restrictions
imposed were more excessive then were
necessary for achieving object and were
highly unreasonable.

9. In Workmen Vs. Meenakshi
Mills Ltd. (1992) 3 SCC 336), while
considering the constitutional validity of
section 25-N, (as it then stood) Excel
Ware's case was considered. It was held
that the object and reasons underlining
enactment was to prevent unavoidable
hardship of the employees resulting from
retrenchment,
by
protecting
existing
employees and to check growth of
unemployment. One of the object was
also to achieve higher production and
productivity by preserving industrial
peace and hormony. Supreme Court held
that ordinarily a restriction which had
effect on promoting or effectuating a
directive principle can be presumed to be
a
reasonable
restriction,
and
must,
therefore, be regarded to have been
imposed in the interest of general public.
The employers right is not absolute, and
that a restriction imposed on employers
right to terminate services of an employee
is not alien to the constitution of the
scheme.

10. The reasons given in declaring
the restrictions imposed by section 25'O'
in Excel case as unconstitutional were
sought to be cured by Amendment Act
No. 46 of 1982, and that on the legal
position as obtained in Minakshi Mills
case, the opinion in Excel Wears Case
was referred to a constitution bench in
M/S. Orissa Textile & Steels Ltd. Vs.
State of Orissa and others 2002 (92)
FLR 648. The Supreme Court examined
the amended provisions of Section 25 'O'
in the light of law laid down in Meenakshi
Mills Case and held that amending section
25 'O' is not ultra virus the Constitution
and is saved by Article 19 (6) of the
Constitution of India. Some of the
observations, and conditions of valid
exercise of powers by State Government
in M/S. Orissa Textile & Steel Ltd.
relevant for the purposes of this case and
contained in paras 10,11,13,15,17,18,20
http:\\allahabadhighcourt.nic.in
INDIAN LAW REPORTS ALLAHABAD SERIES [2003
566
and 21 of the Judgment are summarized
as below:

(a) The appropriate government before
passing an order is bound to make an
inquiry.
The
order
passed
by
the
appropriate government has to be in
writing and is required to contain reasons.
(b) The requirement of making an
inquiry postulates an inquiry into the
correctness of the facts stated by the
employer in the notice served by him, and
also
all
other
relevant
facts
and
circumstances including the bonafides of
the employer. Opportunity of hearing has
to be afforded to the employer, workmen
and all persons interested.
(c) The detailed information given by
the employer enables the appropriate
government to make up its mind and
collect necessary facts for the purposes of
granting or refusing the permission. The
appropriate government would have to
ascertain
whether
the
information
furnished is correct and whether the
proposed action is necessary, and, if so, to
what extent.
(d) The making of an inquiry, affording
opportunity to the employer, and the
workmen, and all other existing persons,
and the necessity to pass written order
containing reasons, envisages exercise of
functions
which
are
not
purely
administrative in character but are quasi
judicial in nature. Government cannot
dispense with enquiry, however, the
nature of enquiry is at the discretion of
Government.
(e) The right of review under sub section
(5) of amended section 25 'O' is not at the
discretion of the State Government. The
word 'may' in sub section (5) has to be
read as 'shall' and that the review would
necessitate to make an inquiry into all
relevant
facts,
particularly
the
genuineness and adequacy of the reasons
stated by the employer, and giving of an
opportunity of being heard. An order
passed on review would have to be an
order giving reasons. The exercise of
powers of review is also a quasi judicial
functions
performed
by
the
State
Government. The review application has
to be disposed of within reasonable
period. Supreme Court confined this
period to 30 days.
(f) Even if the reasons are genuine and
adequate,
it
does
not
mean
that
permission to close must necessarily be
granted. There can be cases where interest
of general public may require that no
closure takes place. Such reasons must be
all compelling or over-riding in nature
such as manufacturing items require for
defence of the country, manufacturing
vaccine or drugs for an epidemic which is
prevalent for that particular time etc.
However, the Court clarified that it is not
laying down the law that some difficulty
or financial hardship in running the
establishment would be sufficient. The
employer must show that it has become
impossible to continue to run the
establishment.
(g) The phrase "in the interest of general
public" is a phrase of a definite
connotation, and a known concept, in
section 25'O' which had been bodily lifted
from Article 19(6) of the Constitution of
India. It is not vague or undefined term.

11. The facts and circumstances
which may be sufficient to justify the
closure
have
been
the
matter
of
consideration in a number of cases
including Associated Cement Co. Ltd.
and another Vs. Union of India and
others by Full Bench of Gujrat High
Court; In 1989 (1) LLJ. 599; BPMEL
employees Union and others Vs. Union
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
567
of
India,
2001
LIC
3628;
Mrs.
Noorjahan Begum and others Vs.
Orissa State Leather Corporation Ltd.
and others (1999 LIC 1749). In S.G.
Chemicals
Employees
Union
Vs.
Management (1986) 2 SCC 624, the
Supreme court interpreted the expression :
an
undertaking
of
an
industrial
establishment" in section 25 'O' and held
that the terms of 'undertaking', though it
occurs in several sections of the industrial
Disputes Act, has not been defined in the
Act. It means an establishment or
undertaking in which the industry is
carried out unless a specific meaning is
given to that it has to be understood in its
ordinary meaning and sense and thus it
means an undertaking which is a part of
industrial establishment and both taken
together constitute one establishment.
The test laid down to determine whether
the
undertaking
constitute
one
establishment in Associated Cement Co.
Ltd. Vs. Workmen (AIR 1960 SC 56)
were approved. The test which have been
followed in subsequent decision included
that there must be functional integrally
and interdependence of power, unity of
financial control and management of the
sales office and factory of the appellant
company and that too must be considered
part of one and the same unit of industrial
production.

The thrust of submission of Mr. K.P.
Agarwal is that the closure has been
effected with malafide intention to avoid
consequences of the direction given by
Supreme Court in M.C. Mehta (Taj
Trapezium matter) Vs. Union of India
(1997) 2 SCC 353. In order to protect Taj
Mahal which is amongst world wonders,
the Supreme Court took into account the
report of Central Board of Prevention and
Control of Water Pollution, New Delhi
(Control
of Urban
Pollution
Series
CUPS/7/1981-82 page 1981-82) titled as
"inventory and assessment of pollution
emission in and around Agra-Mathura
Region" and the 'Overview Report'
regarding status of air pollution around
the Taj in 1990 by National Environment
Engineering Research Institute (NEERI),
and got a survey conducted through the
U.P. Pollution Control Board, identified
and categorised number of industries
situate in Agra Region. Out of 511 types
of industries 292 Industries, including 46
Engineering Industries were identified
which
included
respondent
industry
namely
Agra
Engineering
Industry
Artoni, Agra at item 170, at page 379 of
the report. The Supreme Court considered
these 292 industries out of the aforesaid
list as responsible for air pollution and
issue orders as against all of them
contained in para 35 of the report. In para
34 it was held that 292 industries detailed
in para 29 of the report included
respondent industry at item no. 170 to
change to natural gas for natural fuel. The
industries which are not in a position to
obtain gas connection for any reason,
were required to stop functioning with the
aid coke & coal in TTZ and made
relaxation as per direction given in para
35. The first direction provided that the
industries
(292
listed
above),
shall
approach/apply to the GAIL before
15.2.1997 for grant of industrial gas
connection. Those which are not in a
position to obtain gas connection and
which do not wish to obtain gas
connection shall apply to UPSIDC before
28.2.1997 for allotment of alternative
plots in the industrial estates outside TTZ.
The GAIL was required to give final
decision by 31.3.1997 and communicate
the allotment letters to the individual
industries. Direction No. 4 provided that
http:\\allahabadhighcourt.nic.in
INDIAN LAW REPORTS ALLAHABAD SERIES [2003
568
those industries which neither apply for
gas
connection
nor
for
alternative
industrial plot shall stop functioning with
the aid of coke/coal in the TTZ with effect
from 30.4.1997. Supply of coke/coal to
these
industries
shall
be
stopped
forthwith. Direction No. 5 provided that
GAIL shall commence supply of gas to
the industries by 30.6.1997. As soon as
the gas supply to an industry commences,
the supply of coke/coal to the said
industry shall be stopped with immediate
effect. Direction no. 13 has been cited as a
reason for apply for closure of the
respondents industry. This direction No.
13 is quoted as below:

"13. The workmen employed in the
above mentioned 292 industries shall be
entitled to the rights and benefits as
indicated hereunder.

(a)
The
workmen
shall
have
continuity of employment at the new town
and place where the industry is shifted.
The terms and conditions of their
employment shall not be altered to their
detriment.

(b) The period between the closure of
the industry in Agra and its restart at the
place of relocation shall be treated as
active employment and the workmen shall
be paid their full wages with continuity of
service.

(c) All those workmen who agree to
shift with the industry shall be given one
year's wages as "shifting bonus" to help
them settle at the new location. The said
bonus shall be paid before 31.1.1998.

(d) The workmen employed in the
industries
who
do
not
intend
to
relocate/obtain Natural Gas and opt for
closure, shall be deemed to have been
retrenched by 31.5.1997, provided they
have been in continuous service (as
defined in Section 25-B of the Industrial
Disputes Act, 1947) for not less than one
year in the industries concerned before the
said
date.
They
shall
be
paid
compensation in terms of section 25-F (b)
of the Industrial Disputes Act. These
workmen shall also be paid, in addition,
six
years'
wages
as
additional
compensation.

(e) The compensation payable to the
workmen in terms of this judgment shall
be paid by the management within two
months of the retrenchment.

(f) The gratuity amount payable to
any workman shall be paid in addition."

12. Sri K.P. Agarwal submits, that
since petitioner industry was directed to
be closed on the aforesaid directions, and
the workers were deemed to have been
retrenched
by
31.5.1997
and
were
required to be paid six years wages as
additional compensation, and that the
guidelines given by Supreme Court were
extended in November 2000 for ten
months and were last extended by its
order
dated
31.12.2001
only
upto
10.1.2001, the respondents tried to avoid
consequences, by applying for permission
for closure. The initial deposit for gas
connection was made to GAIL but no
further steps were taken to obtain gas
connection. The respondent took no steps
whatsoever to switch over to gas or any
alternative technology for running the
industry. Each owner of the industry was
required to file undertaking on or before
10.10.2001 to switchover the gas and if
they failed to contain such undertaking,
the State was directed to disconnect
electricity power as well as water
connection forthwith and such industries
were also not permitted to be run even by
generators. The respondents as such under
the aforesaid threat, which required the
company to pay six years wages as
http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
569
additional compensation and gratuity in
addition, applied for closure. According
to
Sri
K.P.
Agarwal,
the
State
Government was informed by the Labour
Commissioner
with
the
aforesaid
consequence and recommendation was
made to make order conditional upon
such
consequences.
The
Labour
Secretary, however, adopted an arbitrary
approach, and without going into the
judgment and its, consequence formed an
opinion only on the fact that the industrial
establishment had opted and applied for
gas connection and was thus not covered
by the said decision. The Labour
Secretary did not care to go into the
details, and without caring to look
whether the reasons given for closure
were
bonafide
and
whether
the
respondents were trying to avoid the
consequences of M.C. Mehta's case,
proceeded to grant permission for closure
in a wholly casual manner. The State
Government did not take into account any
of the facts and circumstances reported by
the Labour Commissioner who had the
opportunity to hear both the parties. The
entire approach and the assessment was
thus vitiated and is contrary to the ratio of
judgment of M/S. Orissa Textile and
Steels Ltd. in which it was laid down that
before passing an order, the appropriate
government
will
have
to
ascertain
whether the information is correct and the
proposed action is necessary, and that the
fact that there is some financial hardship
in running the establishment could not be
the only ground to grant permission.
There was no finding recorded in the
order which took care of the objection of
the workmen that the financial position
was wrongly projected and that the
accounts were manufactured, and that
there were no compelling reason to close
down industrial establishment and that the
whole attempt was to avoid consequences
of M.C. Mehta's case.

13. The Court has the benefit of
perusing the original records which were
summoned, and retained by the Court.
The record includes the application made
by the Jai Engineering Works Ltd. to
close down its undertaking namely M/S.
Agra Engineering Industries Artoni, Agra
signed by the authorised signatory dated
26.2.2002 which was received by the
Principal Secretary Labour, U.P. on
26.2.2002. The application was forwarded
to Labour Commissioner, U.P., Kanpur.
Notices were issued by the Labour
Commissioner to both, employers and the
workmen. The Labour Commissioner
gave opportunity to both the parties for
hearing. The last hearing took place on
23.4.2002. On the same day, the Labour
Commissioner vide his letter No. 62/IRD2002 (Camp) dated 23.4.2002 submitted a
report to the Joint Secretary Labour
Department,
Government
of
U.P.,
Lucknow. In his report, the Labour
Commissioner Sri Anis Ansari stated that
on
the
record
produced
by
the
establishment,
it
is
clear
that
the
establishment
is
having
financial
difficulties. It is running into losses
continuously for the last ten years totaling
Rs. 9.55 crores. Against this the workmen
have not produced any factual figure. The
employers
presented
a
rehabilitation
scheme before the BIFR in the year 1997.
The scheme was accepted by the BIFR
but for certain reasons it could not be
implemented.
Consequently,
a
new
rehabilitation proposal has been submitted
to BIFR which is pending consideration
and in which the closure of Agra unit is
proposed. The workmen during the
hearing of the matter have drawn the
attention
towards
the
order
dated
http:\\allahabadhighcourt.nic.in
INDIAN LAW REPORTS ALLAHABAD SERIES [2003
570
30.12.1996 made by Supreme Court in
M.C. Mehta Vs. Union of India in writ
petition No. 13381 of 1984 in which Hon.
Supreme Court has provided following
options to the polluting unit in the Taj
Trapezium Area: First the unit (using
coke/coal) causing pollution should be
transferred to other place, away from Taj
Trapezium as a second option, the
concerned unit should use gas as fuel in
its production process. If both these
options are not accepted by the unit by
May, 1997 they should be treated to be
closed and the workmen employed by
them shall be treated to be retrenched.
These workmen, apart from their legal
dues, shall also be paid six years wages as
additional compensation. The subject unit
is listed at no. 117 in the list of the units.
The management have informed that they
have made an application in January,
1997 to Gas Authority of India Ltd. for
gas connection and have deposited rupees
two lacs as prescribed application fees
and have given bank guarantee of rupees
six lacs on 18.2.1997, but GAIL has not
supplied gas to them. In the meantime
because
of
financial
sickness,
the
management has decided to close the
undertaking. On these facts the Labour
Commissioner found, after making a
inquiry, that it appears that the employers
have made an application for closure of
the undertaking, to avoid the payment of
dues determined by Supreme Court. In
these
circumstances,
the
Labour
Commissioner was clearly of the view
that either the closure application should
be rejected on the aforesaid ground or if
the State Government decides to give
permission for closure, he recommended
that the closure should be permitted with
a condition so that the orders passed by
Hon'ble Supreme Court in writ petition
No. 13381 of 1984 may be complied with
and special direction should be given in
that regard.

14. The notices and orders on the
original file, record that on 22.4.2002 the
Principal Secretary Labour Government
of U.P. recorded a note stating that she
had a talk with Labour Commissioner. He
will sent his recommendation tomorrow
after hearing. The record along with
notice should be presented before her in
the morning on 26.4.2002 so that orders
may be obtained and issued on the same
day. The recommendation of the Labour
Commissioner were received by the Joint
Secretary on 24.4.2002 and that on the
same day a note was put before the
Principal Secretary, Labour Department
stating in detail the recommendations
made by the Labour Commissioner. Sri
Sant
Lal,
Joint
Secretary,
also
recommended in his note on the same
day, stating that Labour Commissioner
has
made
recommendations
for
conditional permission of closure. Two
days thereafter on 26.4.2002, the Principal
Secretary
Labour
Department
Government of U.P. passed an order to be
forwarded to the Advisor to the Hon'ble
Governor. The English translation of the
order reads as follows:

"The period for taking decision on
the application for closure filed by Jai
Engineering Works Ltd., Agra is going to
expire today. After several efforts, the
report of Labour Commissioner has been
received yesterday. Keeping in view the
facts it will be proper to give permission
for closure. I have seen the orders passed
in the matter of M.C. Mehta and find that
this establishment is not effected by the
said order regarding retrenchment, as they
have applied for gas within time.

http:\\allahabadhighcourt.nic.in
2 All] Agra Engineering Industries Employees Union V. State of U.P. and another
571

Kindly approve the proposal for
permission of closure.
Manjulika Gautam,
24.4.2002
Principal Secretary,
Labour Department
Government of U.P."

15. The note appears to have
received and approved from the Advisor
to Hon. Governor on 26.4.2002 and on the
same day the order giving permission for
closure was issued under the signatures of
Principal Secretary, Labour Department,
Government of U.P. The order recorded
that the Labour Commissioner has given
opportunities to both the parties for
hearing
and
that
the
notices
and
documents
go
to
show
that
the
establishment is running into losses for
the last 10 years totaling Rs. 9.55 crores,
and that Hon'ble Governor has given
approval for closure of M/S. Agra
Engineering Industries, Agra (a unit of Jai
Engineering Works, Agra) under section
25'O' of the Industrial Disputes Act, 1947.

16. The record includes a letter of
Senior General Manager, Jai Engineering
Works Ltd. dated 13.5.2002 informing
that on 10/11.5.2002, the establishment
has posted cheques by registered post
towards
the
payment
of
closure
compensation and other dues upon it on
closure except gratuity and bonus to all
workmen and staff along with intimating
them to closure of M/S. Agra Engineering
Industries, Agra. It further states that as
per Rule 4, proceedings in the record, the
establishment has not adjusted any wages
payment made earlier of the preceding
month and their full and final closing and
for payment of gratuity, the workmen
have been required to submit their
application under prescribed form for
which the gratuity and bonus will be
payable as per law. The record also
includes proceedings for review of the
order. A letter of Assistant Labour
Commissioner,
Agra
Region
dated
12.6.2002 reported that the establishment
has been closed on 30.5.2002, and that all
the dues payable to the workmen have
been sent by registered post.