# M/S. ORISSA TEXTILE AND STEEL LTD v. ST A TE OE ORISSA AND ORS

- **Citation:** [2002] 1 S.C.R. 309
- **Court:** Supreme Court of India
- **Decided:** 2002-01-17
- **Bench:** S.P. Bharucha, Syed Shah Mohammed Quadri, N. Santosh Hegde, S.N. Variava, Shivaraj V. Patil
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-orissa-textile-and-steel-ltd-v-st-a-te-oe-orissa-and-ors-18348
- **Pages:** 29

## Headnote

Labour Laws :
Industrial Disputes Act, 1947-Section 2~-0 (as amended by Amendment
A
B
c
Act 46of1982) and Section 25-N-Constitutional validity of Section 25-0Unamended provision contained in the Section struck down by Constitution
Bench in Excel Wear's case-Subsequently in Meenakshi Mills' case
constitutional validity of Section 25-N upheld differentiating the Section with D
unamended Section 25-0-Held, amended Section is not ultra vires the
Constitution and is saved by Article 19(6) of the Constitution-Principles
applicable in Meenakshi Mills' case held relevant in deciding the constitutional
validity of Section 25-0 since it is in substance akin to Section 25-NConstitution of India, 1950-Article. 19(/)(g) and 19(6)-U.P. Industrial
Disputes Act, 1947-Section 6-W.
E
Constitution of India, 1950-Article 141-Precedent-Consideration of.
by Constitution Court-Held, Constitution Court should form its own opinion
about a case and consider the effect of a precedent by reading it over again
and should not rely upon the gloss placed on that precedent by some other F
decision.
Words and Phrases :
'In the interest of general pub/ ic '-Meaning of-In the context of Section
25-0 of Industrial Disputes Act, 1947 and Article 19(6) of Constitution of G
India, 1950.
•
The issue before the Court in ·the present appeals was the
constitutional validity of Section 25-0 of Industrial Disputes Act, 1947 as
amended by Amendment Act 46of1982 and Section 6-W ofU.P. Industrial
_ Disputes Act, 1947. Section 6-W is identical to amended Section 25-0.
H
309
310
SUPREME COURT REPORTS
(2002) I S.C.R.
A
Constitution Bench in Excel Wear etc. v. Union of India, (1979) I SCR
1009 had struck down the constitutional validity of Section 25-0 of
Industrial Disputes Act, 1947 as it stood before the Amendment Act 46 of
r
1982. Thereafter in Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC 336,
where the constitutional validity of Section 25-N was in question, it was
held by the Constitution Bench that the Section did not suffer from the
B vice of constitutionality and the considerations whi~h weighed in Excel
Wear 's case could not be applied for validity of Section 25-N as there was
difference between Section 25-N and Section 25-0 (unamended).
The questions referred to the present Constitution Bench in the
C present appeals were whether the vices pointed out in Excel Wear's case
had been cured by the amended Section 25-0 and whether the principles
laid down in Meenakshi Mills' case applied to amended Section 25-0.
It was contended that since in Meenakshi Mills' case the Constitution
Bench of this Court had extracted the reasons why in Excel Wear's case
D Section 25-0 was struck down, therefore, the decision of Meenakshi Mills'
case would be binding on this Court and it should not go into Excel Wear's
case to find out the reasons why Section 25-0 was struck down.
Answering the questions referred to it, the Constitution Bench.
E
HELD : I.I. It cannot be said that the principles laid down in
Meenakshi Mills' case have no relevance in deciding the constitutional
validity of amended Section 25-0. Amended Section 25-0 is in substance
akin to Section 25-N (as it then stood). It contains many new provisions
and substantially amends/alters the other provisions. Though Meenakshi
,
Mills' case dealt with retrenchment, the same principles would apply, as
F a closure also has the effect of termination of service, though of all the
workmen. Also both Section 25-N and Section 25-0 are in Chapter V. The
objects and reasons for enacting these provisions are the same and must
be kept in mind while considering amended Section 25-0. [326-D)
G
1.2. Amended Section 25-0 is not ultra-vires the Constitution. It is
saved by Article 19(6) of the Constitution.
1.3. The reason why unamended Section 25-0 was struck down was
that it did not require giving of reasons. Under the unamended Section
25-0, the Order was to be passed on a subjective satisfaction of the
H appropriate Government. The amended S

## Text

_Characters 0–39,842 of 69,505. This is a partial read: ask again with offset=39842 for what follows._

M/S. ORISSA TEXTILE AND STEEL LTD.
v.
ST A TE OE ORISSA AND ORS.
JANUARY 17, 2002
[S.P. BHARUCHA, CJ., SYED SHAH MOHAMMED QUADRI,
N. SANTOSH HEGDE, S.N. VARIAVA AND
SHIVARAJ V. PATIL, JJ.]
Labour Laws :
Industrial Disputes Act, 1947-Section 2~-0 (as amended by Amendment
A
B
c
Act 46of1982) and Section 25-N-Constitutional validity of Section 25-0Unamended provision contained in the Section struck down by Constitution
Bench in Excel Wear's case-Subsequently in Meenakshi Mills' case
constitutional validity of Section 25-N upheld differentiating the Section with D
unamended Section 25-0-Held, amended Section is not ultra vires the
Constitution and is saved by Article 19(6) of the Constitution-Principles
applicable in Meenakshi Mills' case held relevant in deciding the constitutional
validity of Section 25-0 since it is in substance akin to Section 25-NConstitution of India, 1950-Article. 19(/)(g) and 19(6)-U.P. Industrial
Disputes Act, 1947-Section 6-W.
E
Constitution of India, 1950-Article 141-Precedent-Consideration of.
by Constitution Court-Held, Constitution Court should form its own opinion
about a case and consider the effect of a precedent by reading it over again
and should not rely upon the gloss placed on that precedent by some other F
decision.
Words and Phrases :
'In the interest of general pub/ ic '-Meaning of-In the context of Section
25-0 of Industrial Disputes Act, 1947 and Article 19(6) of Constitution of G
India, 1950.
•
The issue before the Court in ·the present appeals was the
constitutional validity of Section 25-0 of Industrial Disputes Act, 1947 as
amended by Amendment Act 46of1982 and Section 6-W ofU.P. Industrial
_ Disputes Act, 1947. Section 6-W is identical to amended Section 25-0.
H
309
310
SUPREME COURT REPORTS
(2002) I S.C.R.
A
Constitution Bench in Excel Wear etc. v. Union of India, (1979) I SCR
1009 had struck down the constitutional validity of Section 25-0 of
Industrial Disputes Act, 1947 as it stood before the Amendment Act 46 of
r
1982. Thereafter in Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC 336,
where the constitutional validity of Section 25-N was in question, it was
held by the Constitution Bench that the Section did not suffer from the
B vice of constitutionality and the considerations whi~h weighed in Excel
Wear 's case could not be applied for validity of Section 25-N as there was
difference between Section 25-N and Section 25-0 (unamended).
The questions referred to the present Constitution Bench in the
C present appeals were whether the vices pointed out in Excel Wear's case
had been cured by the amended Section 25-0 and whether the principles
laid down in Meenakshi Mills' case applied to amended Section 25-0.
It was contended that since in Meenakshi Mills' case the Constitution
Bench of this Court had extracted the reasons why in Excel Wear's case
D Section 25-0 was struck down, therefore, the decision of Meenakshi Mills'
case would be binding on this Court and it should not go into Excel Wear's
case to find out the reasons why Section 25-0 was struck down.
Answering the questions referred to it, the Constitution Bench.
E
HELD : I.I. It cannot be said that the principles laid down in
Meenakshi Mills' case have no relevance in deciding the constitutional
validity of amended Section 25-0. Amended Section 25-0 is in substance
akin to Section 25-N (as it then stood). It contains many new provisions
and substantially amends/alters the other provisions. Though Meenakshi
,
Mills' case dealt with retrenchment, the same principles would apply, as
F a closure also has the effect of termination of service, though of all the
workmen. Also both Section 25-N and Section 25-0 are in Chapter V. The
objects and reasons for enacting these provisions are the same and must
be kept in mind while considering amended Section 25-0. [326-D)
G
1.2. Amended Section 25-0 is not ultra-vires the Constitution. It is
saved by Article 19(6) of the Constitution.
1.3. The reason why unamended Section 25-0 was struck down was
that it did not require giving of reasons. Under the unamended Section
25-0, the Order was to be passed on a subjective satisfaction of the
H appropriate Government. The amended Section 25-0 provided that the
j
r
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA
311
appropriate Government before passing an order is bound to make an A
enquiry. The order passed by the appropriate Government has to be in
writing and contain reasons. [326-F]
1.4. Another reason why Section 25-0 was struck down was that no
time limit had been fixed while refusing permission to close down. This is
now cured by sub-section (4) of the amended Section 25-0 which provides B
that the order of the appropriate Government shall remain in force for
one year from the date of such order. Providing for a period of one year
makes the restriction reasonable. Now sub-section (3) of the amended
Section 25-0 provides that if the appropriate Government does not
communicate the order within a period of 60 days from the date on which
the application is made, the permission applied for shall be deemed to have C
been granted. Thus this defect has also been cured. [330-C;F] I
1.5. The review and/or reference under amended Section 25-0 would
be in addition to a judicial review under Article 226 or Article 32. Subsection (5) of the amended Section 25-0 provides that the appropriate D
Government may, either on its own motion or on an application made by
the employer or any workman, review its order granting or refusing
permission or refer the matter to a Tribunal for adjudication. It has also
been provided that if a reference is made to a Tribunal (under this subsection) then the Tribunal should pass its award within a period of 30 days
from the date of such reference. A proper reading of sub-section (5) of E
amended Section 25-0 shows that, in the context in which it is used, the
word "may" necessarily means "shall". Thus the appropriate Government
"shall" review the Order if an application in that behalf is made by the
employer or the workmen. Similarly, if so required by the employer or
F
the workman, it shall refer the matter to a Tribunal for adjudication. In
exercising powers of review, the appropriate Government would be
performing quasi judicial functions. Sub-section (5) of amended Section
25-0 provides that the Award should be passed within a period of 30 days
from the date of reference. Even though it does not provide any time frame
within which the review is to be disposed of, it is settled law that the same
~ould have to be disposed of within a reasonable period of time. A period G
of 30 days would be a reasonable period for disposing of a review also.
[331-A-BJ
Chief Controlling Revenue Authority and Anr. v. Maharashtra Sugar
Mills Ltd., (1950) SCR 536 and Western Indian Match Co. v. Workmen, (1974~
3 sec 330, referred to.
H
311
SUPREME COURT REPORTS
(2002] 1 S.C.R.
A
1.6. Under unamended Section 25-0 (7), even when permission to
close was granted, the employer had still to give notice and compensation
as specified in Section 25-N. Under the amended Section 25-0(8) the
requirement of giving 3 months notice as required by Section 25-N is
r
dropped. All that is now required is to pay compensation which is
B equivalent to fifteen days average pay for every completed year of
continuous service. (333-A)
1.7. It is wrong to say that the amended Section merely deals with
the procedural defects pointed out in Excel Wear 's case and does not deal
with the substantive grounds set out in Excel Wear's case. Amended Section
C 25-0 is very different from unamended Section 25-0. It is now more akin
to unamended Section 25-N, the constitutional validity of which was upheld
in Meenakshi Mills ' case. In Excel Wear 's case it has been accepted that
reasonable restrictions could be placed under Article 19(6) of the
Constitution. Excel. Wear 's case recognizes that in the interest of general
public it is possible to restrict, for a limited period of time, the right to
D clo~e down the business. Amended Section 25-0 lays down guidelines
which are to be followed by the appropriate Government in granting or
refusing permission to close down. It has to have regard to the genuineness
and adequacy of the reasons stated by the employer. Amended Section
4
25-0 (7) makes it clear that amended Section 25-0 recognises that if there
E are exceptional circumstances then there could be no compulsion to
continue to run the business. It must, however, be clarified that this Court
is not laying down 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. Looked at from
this point of view, the restrictions imposed are reasonable and in the
F
interest of general public. (333-B-G)
1.8. Excel Wear 's case is not to be read to mean that permission to
close must always be granted if the reasons are genuine and adequate. The
observations relied on in Excel Wear 's case are in the context of an order
G under unamended Section 25-0, based on subjective satisfaction and
capable of being arbitrary and whimsical. Now the amended Section 250, provides for an enquiry after affording an opportunity of being heard
and provides that the order has to be a reasoned order in writing. The
order cannot be passed arbitrarily and whimsically. Now the appropriate
Government is exercising quasi judicial functions. Thus the principles laid
H down in Meenakshi Mill's case would apply. (324-B-C)
,
..
'
ORISSA TEXTILE AND STEEL LTD. v. STA TE OF ORISSA
313
1.9. The observations in Excel Wear's case, that there should be A
several methods to regulate and/or restrict the right of closure e.g. by
providing for extra compensation over and above the retrenchment
compensation could be the only method of laying down a reasonable
restriction, are a suggestion as to one method of imposing a reasonable
restriction. Tliere could be exceptional circumstances or overriding reasons B
where, in the interest of general public, there would have to be a restriction
on closure for some time. The observation relied on, cannot be read out
of context. It cannot be said that if reasons are genuine and adequate the
appropriate Government must always grant permission to close, even
though interest of general public and/or other factors require that the
business be continued for some time. (334-E; 335-A)
C
I. I 0. It cannot be said that the phrase "in the interest of the general
public" is of a very wide amplitude or that it is vague or uncertain. It is
the phrase of a definite connotation and a known concept. This phrase,
as used in amended Section 25-0, has been bodily lifted from Article 19(6) D
of the Constitution of India. If it is not vague in the Constitution, one fails
to see how it becomes vague when it is incorporated in amended Section
. 25-0. (336-D)
Maneka Gandhi v. Union of India, (1978) I SCC 248 and Premium
Granites v. State a/Tamil Nadu, [1994) 2 SCC 691, referred to.
E
1.11. Amended Section 25-0 is the law which lays down the
restriction. There is nothing vague or ambiguous in its provision. It is
Section 25-0 which gives the power to grant or refuse permission. It would
be impossible to enumerate or set out in Section 25-0 all different F.
contingencies or situations which may arise in actual practice. Each case
would have to be decided on its own facts and <in the basis of circumstances
prevailing at the relevant time. All that can be set out, in the Section; are
guidelines. These have been set out in amended Section 25-0.
[336-H; 337-A)
2. It is the duty of the Constitution Court to form its own opinion
a bout a given case and to consider the effect of a precedent by reading it
over again, instead of relying upon the gloss placed on that precedent by
some other section.
G
P.A. Shah v. State a/Gujarat, [1985] Suppl. 3 SCR 1025, relied on.
H
314
SUPREME COURT REPORTS
(2002] I S.C.R.
A
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 529 of
B
c
2002.
From the Judgment and Order dated 12.4.94 of the Orissa High Court
in O.J.C. No. 1808 of 1991.
WITH
Crl. A. Nos. 76-77 /2002, C.A. Nos. 530-531/2002, C.A. No. 532/2002,
533/2002, C.A. No. 3455/90, W.P. (C) No. 672/94, 639195, C.A. No. 3927/
90. C.A. No. 1469/99, W.P. (C) No. 550/98, C.A. Nos. 648, 650 & 652/91,
14136 of 1996.
Soli J. Sorabjee, Attorney General, R.N. Trivedi, Additional Solicitor
General, Ms. Indira Jaisingh, J.P. Cama, Rajender Sachhar, Rajbir Bal, B.L.
Yadav, J.P. Goyal, Dr. A.M. Singhvi, G.L. Sanghi, B. Datta, Bharat Sangal,
Ms. Sangeeta Panikar, R.K. Mecodt Singh, Dhruv Mehta, Ms. Shobha,
D Ms. Anu Mehta, S.K. Mehta, Tripurari Ray, Gopal Jain, Vineet Kumar, R.K.
Maheshwari Mahesh Srivastava, Pankaj Srivastava, N.S. Bisht, Rakesh K.
Khanna, Ms. Pallavi Choudhary, Surya Kant, Ms. S. Janani, Y.P. Singh, Ajay
K. Aggarwal, Ms. Alka Aggarwal, C. Siddharth, Jaideep Gupta, Ms. Gauri
Rasgotra, Ms. Shruti Choudhary, Suman Jyoti Khaitan, Ms. Nina Gupta,
Uday Gupta, Ms. Arpita Mahajan, Ms. Praneeta Sharma, Ms. Shiksha Sachdev,
E Krishan Venugopal, Manish Singhvi, C. Radhakrishna, Ms. Kiran Bhardwaj,
Ms. Hema Srinivasan for Arvind Kumar Sharma, S.V. Deshpande, Raj Kumar
Mehta, P.N. Gupta, B.B. Singh, Arvind Verma, Himinder Lal, Anil Mittal
Ms. Sheela Goel and Kailash Chand for the appearing parties.
F
The Judgment of the Court was delivered by
S.N. V ARIA VA, J. In these Appeals and Writ Petitions the question
for consideration, by this Bench, is the constitutional validity of Section 250 of the Industrial Disputes Act, 1947. Section 25-0, as it now stands, was
incorporated by the Amendment Act 46 of 1982. (for sake of convenience
G the said Section will hereinafter be referred to as the amended Section 25-0.
In some of these matters the constitutional validity of Section 6-W of the
U.P. Industrial Disputes.Act is in question. Section 6-W is identical to amended
Section 25-0. Even though in this Judgment reference is made only to Section
25-0, what is set out herein will equally apply to Section 6-W. For considering
the constitutional validity of these Sections it is not necessary to note the
H facts in each case. Therefore, the facts are not being set out.
,
,
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA,J.] J J5
(2) In the case of Excel Wear Etc. v. Union of India and Ors., [ 1979] A
I SCR I 009 a Constitution Bench struck down Section 25-0 of the Industrial
Disputes Act (as it then stood). Thereafter the constitutional validity of Section
25-N of the Industrial Disputes Act (as it then stood) was considered by a
Constitution Bench in the case of Workmen v. Meenakshi Mills Ltd. [ 1992]
3 SCC 336. In Meenakshi Mills' case this Court, after referring to Excel B
Wear's case, upheld the constitutional validity of Section 25-N. These Appeals
and Writ Petitions have been referred to a Constitution Bench with the
following observation:
"The common question that arises for consideration relates to the
constitutional validity of Section 25(0) of the Industrial Disputes Act C
as introduced by Central Act No. 46 of 1982 and Section 25(0) as
applicable in the State of MP by virtue of M.P. Act No. 32 of 1983
as well as Section 6(W) of the U.P. Industrial Disputes Act, 1947.
The earlier provision contained in Section 25(0) was struck down by
this Court in Excel Wear Etc. v. Union of India and Ors., [ 1979] I
SCR I 009. The learned counsel for the employers in support of their D
submissions assailing the validity of the said provisions have placed
reliance on various observations in the judgment in Excel Wear 's
Case. On behalf of the workmen reliance has been placed on the
decision of the Constitution Bench in. Workmen of Meenakshi Mills
ltd. and Ors. v. Meenakshi Mills Ltd. and Anr., [ 1992] 3 SCC 336. E
Since the questions raised involve interpretation of the various
observations in the judgment in Excel Wear 's case as well as in
Meenakshi Mills· case, we consider it appropriate that these matters
are heard by a Constitution Bench. It is, therefore, directed that all
these matters be placed before Hon'ble the Chief Justice of India for
suitable directions".
F
(3) It must be mentioned that even amongst the High Courts there is a
conflict of opinion. Some of the High Courts have held that the amended
Section 25-0 of the Industrial Disputes Act and or Section 6-W of the U.P.
Industrial Disputes Act still suffers from the substantial vice pointed out in G
Excel Wear 's case and is, therefore, unconstitutional. Some other High Court
have, relying on Meenakshi Mills' case upheld he validity of amended Section
25-0 and/or Section 6-W.
(4) At this stage a submission made by Ms. Jaising needs to be set out.
Ms. Jaising submitted that in Meenakshi Mills 's case a Constitution Bench of H
316
SUPREME COURT REPORTS
(2002] I S.C.R.
A this Court has extracted the reasons why in Excel Wears case Section 25-0
was struck down. It was submitted that that decision would be binding on this
Court. It was submitted that this Court should not itself go into Excel Wear 's
case to find out the reasons why Section 25-0 was struck down. We are
unable to accept this submission. As has been held by this Court, in the case
B of P.A. Shah v. State of Gujarat reported in [1985] Supp. 3 SCR 1025, it is
the duty of the Constitution Court to form its own opinion about a given case
and to consider the effect of a precedent by reading it over again, instead of
relying upon the gloss placed on that precedent by some other decision. In
our view the submissions of all the learned counsel will have to be considered
in the light of what is laid down in Excel Wear 's case and Meenakshi Mills'
C case.
(5) In Excel Wear's case this Court negatived a submission that a right
to close down a business was not a fundamental right and that it was merely
a right appurtenant to ownership of property. This Court held that the right
to close down a business was an integral part of the fundamental right to
D carry on business as guaranteed under Article 19( I )(g) of the Constitution. It
was held that there could be a reasonable restriction on this right under
Article 19(6) of the Constitution. It was held that the law could provide to
deter reckless, unfair, unjust and ma/a fide closure. A challenge under Article
14 of the Constitution was negatived. It was held that Chapter V-B dealt only
E with comparatively bigger undertakings and of a few types only and thus the
classification was reasonable. It was held that reasonableness of the restrictions
must be examined both from procedural and substantive aspects of the law.
This Court then considered whether the restrictions imposed by Section 250 (as it then stood) were reasonable and saved by Article 19(6) of the
Constitution. It was held that the restrictions imposed by Section 25-0 were
F unreasonable for the following reasons:
G
(i)
Section 25-0 did not require giving of reasons in the order. Even
if the reasons were adequate and sufficient, permission to close
could be denied in the purported public interest of labour as it
had been left to the whims and caprice of the authority to decide
one way or the other. Thus the order could be whimsical and
capricious.
(ii) No time limit was fixed whilst refusing permission to close down.
(iii) That there was no deemed provision for according approval in
H
the Section. It was held that the result would be that if the
--
'
1
ORISSA TEXTILE AND STEEL LTlt. v. STATEOFORISSA [S.N. VARIAVA, J.] J J 7
Government order was not communicated to the employer within A
90 days, strictly speaking, the criminal liability under Section
25-F may not be attracted if on the expiry of that period the
undertaking is closed, but the civil liability under Section 250(5) would come into play on the expiry of period of 90 days.
(iv) The order passed by the authority was not subject to any scrutiny B
by any higher authority or tribunal either in appeal or revision
and the order could not be reviewed even after some time.
(v) The employer was compelled to resort to the provision of Section
25-N even after approval of closure.
(vi) The restriction imposed was more excessive than was necessary C
for the achievement of the object and thus highly unreasonable.
It was suggested that there could be several other methods to
regulate and restrict the right of closure e.g. by providing for
extra compensation over and above the retrenchment
compensation.
D
(6) In Meenakshi Mill's case, while considering the constitutional
validity of Section 25-N (as it then stood), Excel Wear 's case was considered.
This Court noted some of the vices pointed out in Excel Wear 's case. This
Court than pointed out the differences between Sections 25-0 and 25-N (as
they then stood) and held that considerations which weighed in Excel Wear 's E
case could not be applied for judging the validity of Section 25-N. This Court
proceeded on the assumption that the right to retrench workmen was an
integral part of the fμndamental right of the employer to carry on business
under Article 19 (l)(g). It was noted that Section 25-N formed part of Chapter
V-8 which bore the heading "Special Provisions Relating to Lay off,
Retrenchment and Closure in Certain Establishments". It was noted that the F
said Chapter consisted of Sections 25-K to 25-S and that the said Chapter
was inserted by Amending Act No. 32 of 1976. This Court held that the
objects and reasons underlining the enactment was to prevent avoidable
hardship to the employees resulting from retrenchment by protecting existing
employees and to check growth pf unemployment which would otherwise be G
the consequence of retrenchment in industrial establishments employing large
number of workmen. It was noted that one of the objects and reasons was to
maintain higher tempo of production and productivity by preserving industrial
peace and harmony. It was noted that the mandate contained in the Directive
Principles of the Constitution was sought to be given effect to. This Court
held that, ordinarily, a restriction which had the effect of promoting or H
318
SUPREME COURT REPORTS
[2002] I S.C.R.
A effectuating a directive principle can be presumed to be a reasonable restriction
in public interest. This Court held that the restrictions imposed must, therefore
be regarded as having been imposed in the interest of the general public. This
Court held that the employer's right was not absolute and a restriction imposed
on the employer's right to terminate the service of an employee wa.s not alien
B to the constitutional scheme. This Court then negatived the following
submissions:
(i)
Adjudication by a judicial body available in the case of
retrenchment under Section 25-F has been substituted by an
administrative order passed by an executive authority in the case
c
of retrenchment under Section 25-N and thereby a function which
was traditionally performed by Industrial Tribunals Labour Courts
has been conferred on an executive authority.
(ii) No guidelines have been prescribed for the exercise of the power
by the appropriate Government or authority under sub-section
D
(2) of Section 25-N and it would be permissible for the authority
to pass its order on policy considerations which may have nothing
to do with an individual employer's legitimate need to reorganise
its business. The requirement that reasons must be recorded by
the appropriate Government or authority for its order under subsection (2) of Section 25-N is not a sufficient safeguard against
E
arbitrary action since no yardstick is laid down for judging the
validity of those reasons.
(iii) There is no provisioa for appeal or revisions against the order
passed by the appropriate Government or authority refusing to
grant permission to retrench under sub-section (2) of Section 25F
N. Judicial review under Article 226 of the Constitution is not an
adequate remedy.
(iv) The provisions are exfacie arbitrary and discriminatory inasmuch
as while the workmen have a right to challenge, on facts, the
correctness of an order passed under sub-section (2) granting
G
permission for retrenchment before the Industrial Tribunal by
seeking a reference under Section I 0 of the Act, the management
does not have a similar right to challenge the validity of an order
passed under sub-section (2) refusing to grant permission for
retrenchment."
H It was held that Section 25-N did not suffer from the vice of unconstitutionality.
.
~
,
~
.. "'"'
ORISSA TEXTILE AND STEEL LTD. v. STATE OF ORISSA [S.N. VARIA VA, J.] 3 J 9
It was held that Section 25-N was not violative of the fundamental rights A
guaranteed under Article 19(1 )(g). It was held that Section 25-N was saved
by Article 19( 6) of the Constitution.
(7) On behalf of employees, it is submitted that the amended Section
25-0 has removed all the vices pointed out in Excel Wear 's case. It is submitted
that the amended Section 25-0 is now similar to Section 25-N (as it then B
stood). It is submitted that on the reasoning given in Meenakshi Mil/ 's case
the amended Section 25-0 would have to be held to be constitutionally valid.
(8) On behalf of the employers it has been submitted that:
(a) in Meenakshi Mill's case Section 25-N was being considered. It c
was submitted that in Meenakshi Mill's case it had been held that
considerations which weighed in deciding the constitutional
validity of Section 25-0 would not apply to Section 25-0. It was
submitted that the principles on which Section 25-N was held to
be constitutionally valid would not and should not be applied D
when considering the con.stitutionai validity of Section 25-0.
(b) that the in Excel Wear 's case Section 25-0 (as it then stood) was
struck down not just on procedural grounds, but also on
substantive grounds. It is submitted that the amended Section
25-0 only removes the procedural defects but still suffers from E
the su.bstantive vices pointed out in Excel Wear 's case as in
substance it is the same as Section 25-0 (as it then stood).
(c) that the phrase ''in the interest of the general public" was vague and
of a very wide amplitude. It was submitted that anything and
everything which is in the interest of general public would not
have rational or proximate relations with the object of the present F
legislation. It was submitted that the restriction permitted by the
use of this phrase goes way beyond what was necessary for the
object to be achieved by the present legislation which was to
prevent avoidable unemployment.
(d) that the reasonable restriction permissible under Article
G
19(6)
has to be imposed by law. It was admitted that there could be a
delegated legislation or subordinate legislation. It was, however
submitted that the restrictions could not be left for determination
by the executive or be imposed by an executive order. It was
submitted that, in the amended Section 25-0, the restrictions H
320
A
B
c
D
SUPREME COURT REPORTS
[2002] I S.C.R.
were not laid down by law but had been left to the executive to
decide on a case to case basis.
(e) that the restrictions imposed were excessive inasmuch as in the
purported interest of general public closure could be prevented
even if the employer had genuine and adequate reasons. It was
submitted, relying on Excel Wear's case, that a reasonable
restriction would be one which provides for payment of different
slabs ~f compensation in different situation.
(t)
that the amended Section 25-0 left it to the discretion of the
appropriate Government to review the order or to refer the matter
to the Tribunal.
(g) that the review provided in the amended Section was only a
limited review. It was submitted that effectively the only review
would be a judicial review under Article 226 or 32 of the
Constitution in which factual elements, which went into the
determination, could not be investigated.
(9) In order to see whether the vices pointed out an Excel Wear 's case
have been cured and to consider whether principles laid down in Meenakshi
Mills' case apply to amended Section 25-0 it would be convenient to set out
herein Section 25-0 (as it then stood), the amended Section 25-0 and Section
E 25-N (as considered in Meenakshi Mills' case). They read as follows:
F
G
25-0 (Unamended)
(I) An employer
who intends to close
down an undertaking
of
an
Industrial
establishment to which
this Chapter applies
shall,
serve, for
previous approval at
least
ninety
days
before the date on
which the intended
25-0 Amended
(I) An employer
who intends to close
down an undertaking of
an Industrial establishment to which this
Chapter applies shall, m
the prescribed manner,
apply
for
prior
permission at least
ninety days before the
date on which the
25-N
(I) No workman
employed
in
any
industrial establishment
to which this Chapter
applies, who has been
in continuous service
for not less than one
year under an employer
shall be retrenched by
that employer until.
closure is to become
intended closure is to
(a) the workman has
effective, a notice in
become effective, to the
H
the
prescribed
appropriate Governbeen given three .
months' notice in
.... .
.
"
)
)
ORI SSA TEXTILE AND STEEL LTD. v. STA TE OF ORI SSA [S:N. VARI A VA, J.] 32 J
manner,
on
the ment, stating clearly the
appropriate
Governreasons for the intended
ment, stating clearly the closure
of
the
reasons for the intended undertaking and a copy
closure
of
the of such application shall
undertaking :
also
be
served
simultaneously on the
representatives of the
workmen
rn
the
prescribed manner:
writing indicating A
the reasons for
retrenchment and
the period of notice
has expired, or the
worknian has been
paid in lieu of such B
notice, wages for
the period of the
notice:
Provided that nothing
Provided that nothing
Provided that no such C
in this section shall apply in this sub-section shall notice shall be necessary
to an undertaking set up apply to an undertaking if the retrenchment is
for the construction of set
up
for
the under an agreement,
buildings, bridges, roads, construction
of which specifies a date
canals, dams or for other buildings, bridges roads, for
termination
of
construction work.
canals, dams or for other service:
D
construction work.
(2) On receipts of a
(b) the workman has
notice under sub-s. (I)
(2)
Where
an
been paid, at the
the
appropriate application
for
time of retrenchGovernment may, if it is
satisfied that the reasons
for the intended closure
of the undertaking are not
adequate and sufficient or
such
closure
is
prejudicial to the public
interest, by order, direct
the employer not to close
down such undertaking.
(3) Where a
notice
has been served on the
appropriate Govern-ment
by an employer under
sub-s. (I) of S. 25 FFA
permission has been
made under sub-section
(I), the appropriate
Government,
after
making such enquiry as
it thinks fit and after
giving a reasonable
opportunity of being
heard to the employer,
the
workmen
and (c)
persons interested in
such
closure
may,
having regard to the
genuineness
and
adequacy of the reasons
stated the employer, the
and the period of notice interest of the general
has not expired at he public and all other
ment, compensation which shall be E
equivalent to fifteen
days' average pay
for every completed
year of continuous
service or any part F
thereof in excess of
six months: and
notice
in
the
prescribed manner
is served on the G
appropriate Government by notification
rn
the
Official
Gazette, and the
permission of such
Government
or H
•
322
· SUPREME COURT REPORTS
(2002] I S.C.R.
A
commencement of the
Industrial Disputes
(Amendment) Act,
1976, such employer
shall not close down
B
c
D
E
F
G
H
the undertaking but
shall within a period of
fifteen days from such
commencement, apply
to the appropriate
Government
for
permission to close
down the undertaking.
(4)
\Vhere
an
application
for
permission has been
made under sub-s. (3)
and the appropriate
Government 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 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)
\Vhere
no
application
for
permission under subs. (I) is made, or
where no application
•
relevant factors, by
order and for reasons to
be recorded in writing,
grant or refuse to grant
such permission and a
copy of such order shall
be communicated to the
employer
and
the
workmen.
authority is obtained
under sub-section
(2).
(2) On receipt of a
notice under clause ( c)
of sub-section (I) the
appropriate Government
or authority may, after
making such enquiry as
(3)
\Vhere
an such Government or
application has been authority thinks fit, grant
made under sub-section or refuse, for reasons to
(I) and the appropriate be recorded in writing
Government does not the permission for the
communicate the order retrenchment to which
granting or refusing to
grant permission to the
employer within a
period of sixty days
from the date on which
such application is
made, the permission
applied for shall be
deemed to have been
granted
on
the
expiration of the said
period of sixty days.
( 4) An order of the
appropriate Government
granting
or
refusing
to
grant
permission
shall,
subject to the provisions
of sub-section (5), be
final and binding on all
the parties and shall
remain in force for one
year from the date of
the notice relates.·
(3)
\Vhere
the
Government or authority
does not communicate
the permission or the
refusal to grant the
permission
to
the
employer within three
months of the date of
service of the notice
under clause ( c) of subsection
(I)
the
Government or authority
shall be deemed to have
granted permission for
such retrenchment on
the expiration of the said
period of three months.
( 4) \Vhere at the
commencement of the
Industrial
Disputes
(Amendment) Act. 1976
•
..
•
ORJSSA TEXTILE ANDS.TEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 323
for permi~sion under
sub-s. (3) is made
within
the
period
specified therein or
where the permission
for closure had been
refused, the closure of
the undertaking shall
be deemed to be illegal
from the date of
closure
and
the
workman shall be
entitled to all the
benefits under any law
for the time in force as
if no notice had been
given to him.
(6) Notwithstanding
anything contained in
sub-s. (I) and sub-s.
(3) the appropriate
Government may, if it
is satisfied that owing
to such exceptional
circumstances
as
accident
in
the
undertaking or death of
the employer or the
like it is necessary so
to do, by order, direct
that the provisions of
sub-s. (I) or sub-s. (3)
shall not apply in
relation
to
such
undertaking for such
period as may be
specified in the order.
(7)
Whereas
such order.
(5) The appropriate
Government
may,
either on
its own
motion or on the
application made by the
employer
or
any
workman, review its
order
granting
or
refusing
to
grant
permission under subsection (2) or refer the
matter to a Tribunal for
adjudication:
Provided that where
a reference has been
made to a Tribunal
under this sub-section,
it shall pass an award
within a period of thirty
days from the date of
such reference.
(6)
Where
no
application
for
permission under subsection (I) is made
within
the
period
specified therein or
where the permission
for closure has been
refused, the closure of
the undertaking shall be
deemed to be illegal
from the date of closure
and the workmen shall
be entitled to all the
benefits under any Jaw
(32 of 1976), the period A
of notice given under
clause (a) of Section
25-F
for
the
retrenchment of any
workman
has
not B
expired, the employer
shall not retrench the
workman but shall,
within a period of
fifteen days from such
commencement, apply C
to
the
appropriate
Government or to the
authority specified in
sub-section (2) for
permission
retrenchment.
(5)
Where
application
for
an
for
D
permission has been
made under sub-section E
( 4) and the appropriate
Government or the
authority, as the case
may be, does not
communicate
the
permission
or
the F
refusal to grant the
permission
to
the
employer within a
period of two months
from-the da~e on which G
the application is made,
the permission applied
for shall be deemed to
have been granted on
the expiration of the
said period of two H
A
B
c
D
E
F
G
H
324
SUPREME COURT REPORTS
[2002] I S.C.R.
undertaking
is
approved or permitted
to be closed down
under sub-section (I)
or sub-section (4),
every workman in the
said undertaking who
has been in continuous
service for not less
than one year in that
undertaking immediately before the date of
application
for
permission under this
section shall be entitled
to
notice
and
compensation
as
specified in S.25N as
if the said workman
had been retrenched
under section.
for the time being in
force
as
if
the
undertaking had not
been closed down.
(7) Notwithstanding
anything contained in
the
foregoing
provisions
of this
section, the appropriate
Government may, if it
is satisfied that owing
to such exceptional
circumstances
as
accident
in
the
undertaking or death of
the employer or the like
it is necessary so to do,
by order, direct that the
provisions of subsection ( 1) shall not
apply in relation to such
undertaking for such
period as may be
specified in the order.
(8)
\Vhere
an
undertaking
is
permitted to be closed
months.
(6)
Where
application
no
for
permission under clause
(c) of sub-section (I) is
made, or where no
application
for
permission under subsection ( 4) is made
within
the
period
specified therein or
where the permission for
the retrenchment has
been refused,
such
retrenchment shall be
deemed
to be illegal
from the date on which
the
notice
of
retrenchment was given
to the workman and the
workman
shall
the
entitled to all the
benefits under any law
for the time being in
force as if no notice had
been given to him.
(7) \Vhere at the
down under sub-section
commencement of the
(2) or where permission
for closure is deemed to
be granted under subsection
(3 ),
every
workman
who
is
employed
in
that
undertaking
immediately before the date
Industrial
Disputes
(Amendment) Act, 1976
(32 of 1976). A dispute
relating, either solely or
in addition to other
matters,
to
the
retrenchment of any
workman or workmen of
of application
for
an
industrial
permission under this
establishment to which
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 325
section, shall be entit[ed
this Chapter applies is A
.:..i
to receive compensation
pending
before
a
f
which
shall
be
Conciliation Officer or
equivalent to fifteen
the Central Government
days' average pay for
or
the
State
every completed year of Government, as the B
continuous service or
case may be and
any part thereof in
there
is
excess of six months.
(a)
an
allegation that
such
retren-
•
chment is by c
ways
of
victimisation; or
(b) the appropriate
Government is of
the opinion that D
such
retrenchment is not in
. '
the interest of the
maintenance of
industrial peace,
the appropriate E
Government, if
satisfied that it is
necessary so to
do.
May,
by
"
order withdraw
such dispute or, F
as the case may
be, such dispute
in so far as it
relates to such
retrenchment and G
•
transfer the same
.....
to an authority
(being an authority specified by
the appropriate
H
326
A
B
c
SUPREME COURT REPORTS
[2002] l S.C.R.
Government by
notification in the
Official Gazette)
for consideration
whether
such
retrenchment is
justified and any
order passed by
such authority
shall be final and
binding on the
employer and the
workman
or
workmen.
(I 0) The comparative table show that the amended Section 25-0 is in
D substance akin to Section 25-N (as it then stood). It contains many new
provisions and substantially amends/alters the other provisions. Though
Meenakshi Mills' case dealt with retrenchment, the same principles would
apply as a closure also has the effect of termination of service, though of all
the workmen.