The judgment established the importance of providing reasons for granting or refusing permission for closure under the Industrial Dispute Act, and the necessity for a detailed enquiry and a speaking order containing reasons before granting or refusing permission for retrenchment.

1. Vide this writ petition, the petitioner has challenged the order dated 15.12.2000 of Labour Commissioner-Cum-Secretary (Labour) whereby the their application dated 18.10.2000, seeking permission for closing down the industrial establishment, was rejected.

2. The petitioner vide its application dated 18.10.2000 had applied for closing down the undertaking at A-34, G.T.Karnal Road Industrial Area with effect from 18.01.2001 for several reasons. In the application they had disclosed that about 336 workers were in their service and undertook to pay compensation to every workman in the undertaking covered under sub-Section (8) of Section 25-O. The closure was sought on the ground that the establishment was virtually closed due to illegal strike with effect from 13.12.1999 and consequent lock out with effect from 13.01.2000 and the production was down due to the general recession in the market and continuous labour problems for the last three years. The denial of permission to retrench 156 workers under Section 25 (N) of the Industrial Dispute Act (hereinafter referred to as ‘the Act’) vide order dated 30.07.1999 and then subsequent dismissal of review application vide order dated 14.06.2000 is also shown as one of the reasons for inability to run the establishment. Along with the said application the balance sheet of the years ending 1998 and ending 1999 were also submitted. Annexure showing financial position and the losses suffered by the applicant was annexed to show the comparative study of profits and losses of establishment during this period. Vide a separate statement the applicant had also pleaded that the establishment was undergoing irretrievable financial crises which had put the establishment to heavy financial burden and despite taking all possible steps during the year 1997 to 2000 for efficient and good management of the company and despite infusion of more capital and finances, the establishment was not showing any improvement. Other reasons affecting the functioning of establishment are claimed to be the illegal activities by its workers such as illegal strikes since 1997, indiscipline, insubordination, demonstrations, gherao, assault, tool down strike, declaring holidays by the workers. In the application, reference is also made of letters written by petitioner, asking the Labour Commissioner to intervene to sort out the issues of illegal strike etc, which the authorities failed to do in time.

3. This application of the petitioner was contested by the workers before the labour commissioner wherein the workers had blamed the management/petitioner for everything. It is submitted that the workers were forced to sit outside the factory during the period 24.04.1997 to 22.08.1997 and were not paid wages for that period. An industrial dispute with regard to the wages for that period had been raised and pending before the P.O.I.T.No.III, Delhi. It was stated that the management started handing over its work to contractors and started claiming that it had no work for the workers and also manipulated its balance sheets and engineered the loses in the said balance sheets through its expert chartered accountant. That the management had recently installed latest machineries in its work units making it compatible to other facturers of motor parts; that it had invested around 15 crores in the said plant and machinery and so there was no reason for incurring losses and the losses shown were artificial with the object to victimize the workers. The workers in the reply had also given the list of the outsider agencies from whom the management was getting its work done. It was also alleged that the management was selling its goods in the market through its other firms like D.B.Axle, D.B.A. etc.

4. The commissioner however, vide the impugned order dated 15.12.2000 rejected the said application and declined the closing down of the establishment.

5. The said order has been challenged by the management on the grounds that the