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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
S.V. Gangapurwala, Sandeep V. Marne, JJ.
Harinagar Sugar Mills Ltd – Appellant
Versus
State of Maharashtra – Respondent
Writ Petition No. 3447 of 2019
Decided On : 17-02-2023
ID Act - Closure of Establishments - Sec. 25-O(3) - The court dismissed the petitions seeking a declaration that the establishments are deemed to have been closed under provisions of Sec. 25-O(3) of the ID Act. The court held that the deeming fiction under Sec. 25-O(3) would not be triggered as the applications for closure were incomplete and the State Government promptly communicated the deficiencies within 60 days. The court also emphasized that the petitioners could file fresh applications for closure, which would be decided on merits as per the scheme of Sec. 25-O of the ID Act.
Fact of the Case:
The petitioners sought a declaration that their establishments are deemed to have been closed under provisions of Sec. 25-O(3) of the ID Act. The State Government communicated deficiencies in the closure applications within 60 days, and the petitioners responded by adding reasons for closure. The court held that the deeming fiction under Sec. 25-O(3) would not be triggered as the applications for closure were incomplete.
Finding of the Court:
The court found that the petitioners' establishments cannot be deemed to have been closed under the provision of Sec. 25-O(3) of the ID Act. The court dismissed the petitions without any orders as to costs.
Issues: The main issue was whether the establishments are deemed to have been closed under the provision of Sec. 25-O(3) of the ID Act due to the State Government's failure to communicate an order granting or refusing permission for closure within 60 days.
Ratio Decidendi: The court held that the deeming fiction under Sec. 25-O(3) would not be triggered as the applications for closure were incomplete and the State Government promptly communicated the deficiencies within 60 days. The court emphasized that the petitioners could file fresh applications for closure, which would be decided on merits as per the scheme of Sec. 25-O of the ID Act.
Final Decision: The court dismissed the petitions seeking a declaration that the establishments are deemed to have been closed under provisions of Sec. 25-O(3) of the ID Act. The court also dismissed the interim applications.
JUDGMENT
SANDEEP V.MARNE,J. - The Challenge : Petitioners are aggrieved by the action of the State Government in not treating their establishments as deemed to have been closed under provisions of Sec. 25-O(3) of the Industrial Disputes Act, 1947 ("ID Act"). The deeming fiction is invoked alleging non decision of applications seeking permission for closure of establishments within 60 days. The petitioners assail communications dtd. 4/11/2019 calling upon the petitioner to resubmit application for closure as well as letters dtd. 20/11/2019 and 22/11/2019 directing them not to close their establishments. Petitioners also seek a declaration that their establishments are deemed to have been granted permission for closure on expiration of period of 60 days from the date of applications of closure dtd. 28/8/2019 under Sec. 25-O(3) of the ID Act.
Facts
2. Facts in both the Writ Petitions are identical. The petitioners are companies incorporated under the provisions of Companies Act, 1956 and were engaged in manufacturing of biscuits for Britannia Industries Limited ("BIL") under Job Work Agreements. It is averred that BIL terminated the Job Work Agreements with effect from 20/11/2019. Petitioners accordingly intimated to all its workmen as well as Unions about termination notice by BIL. Petitioners decided to apply for closure of their manufacturing activities at Bhandup and submitted applications for permission for closure on 28/8/2019 in Form XXIV-C prescribed under Rule 82-B(1) of the Industrial Disputes (Maharashtra) Rules read with Sec. 25-O(1) of the ID Act. Petitioners simultaneously informed its workmen and the recognised trade unions about applications for closure by giving them closure notices dtd. 28/8/2019.
3. Petitioners received letters dtd. 25/9/2019 from the office of the Deputy Secretary Labour, Government of Maharashtra intimating that they failed to disclose the efforts made by them for closure of the manufacturing business nor cited complete and cogent reasons for closure. Petitioners were therefore called upon to resubmit applications by disclosing efforts to prevent closure and by furnishing valid and complete reasons for closure.
4. Petitioners responded to letters dtd. 25/9/2019 vide their letters dtd. 10/10/2019 disclosing the reasons for closure as well as efforts made to prevent closure. Period of 60 days provided for under Sec. 25-O(3) of the ID Act expired on 27/10/2019. However, it is the case of the petitioners, that no order granting or refusing permission for closure was passed/communicated by the State Government and therefore upon expiration of period of 60 days, closure permission was deemed to have been granted in view of provision of Sec. 25-O(3) of the ID Act.
5. On 4/11/2019, petitioners received letters from Deputy Secretary, Government of Maharashtra in response to their letters dtd. 10/10/2019 stating that their response did not cover the aspect of possibility of petitioners absorbing the employees in other manufacturing divisions as well as possibility of petitioners indulging in manufacturing of other items instead of biscuits. Petitioners were directed to submit fresh applications after considering such options with valid and cogent reasons. It was communicated that it was not possible to take any action on the request of petitioners in the prevailing circumstances. The letters dtd. 4/11/2019 are subject matter of challenge in the present petitions.
6. Petitioners responded vide letters dtd. 22/11/2019 relying on provisions of Sec. 25-O(3) of the ID Act taking a position that the permission to have closure is deemed to have been granted and that the authority had become functus officio to deal with applications dtd. 28/8/2019. In the meantime, Petitioners also received letters dtd. 4/11/2019 from Unions alleging ulterior motive and lack of bonafide reasons for closure of the undertakings. Petitioners responded on 22/11/2019 clarifying their position. The Deputy Commissioner, Labour sent letter
The deeming fiction under Sec. 25-O(3) of the ID Act is not triggered if the closure applications are incomplete and deficiencies are communicated by the State Government within 60 days. The petition....
The court established that a closure permitted under the Industrial Disputes Act remains valid unless successfully challenged within a reasonable timeframe.
The provisions of Section 25-O of the Industrial Disputes Act are directory, allowing closure based on accumulated losses, and potential unemployment cannot prevent a company from closing a loss-maki....
The provisions of Section 25-O of the Industrial Disputes Act are directory, allowing for closure applications to be valid even if adjudicated after one year from the refusal of closure permission.
The court upheld the legality of the closure of the industrial establishment, affirming that the majority acceptance of a severance package by workers binds all, including dissenting individuals.
The management's factory closure without requisite permission violated Sections 25(O) and 25(R) of the Industrial Disputes Act, establishing grounds for criminal charges.
The refusal to permit closure of a business under Section 25(o) of the Industrial Disputes Act, 1947 was arbitrary and not sustainable, as the employer is not required to submit restructuring plans.
Closure of business does not constitute retrenchment under the Industrial Disputes Act, 1947, reaffirming that termination due to closure is outside statutory definitions of retrenchment.
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