The judgment emphasizes that the validity of retrenchment and absorption rights are subject to industrial adjudication and allowed consideration for absorption of employees appointed before 1.10.1986 under the Absorption Rules of 1991.

( 1 ) THE U. P. State Sugar Corporation Limited, is owned and controlled by the State Government. The Corporation is running and managing various sugar mills in the State of Uttar Pradesh. It suffered recurring losses. On 31. 3. 1992, its accumulated losses aggregated to Rs. 37,159. 98 lacs, which completely wiped out its net worth. The reasons for losses included, outdated equipment, high prices to cane growers, high power tariff, inadequate modernisation and overstaffing. It had 10448 workers, in its units besides managerial and supervisory staff. With losses mounting to Rs. 58,604 lacs far in excess of its net worth of Rs. 46740 lacs, on 31. 3. 1995, the Corporation filed a petition before the Board of Industrial Finance and Reconstruction. On 21. 8. 1995, the Board declared the Corporation as a sick industries company within the meaning of Section 3 (1) (O) of the Sick Industries (Special Provisions) Act, 1985. The BIFR on its hearing dated 30. 7. 2001 sanctioned a rehabilitation scheme submitted by the Corporation for revival/ rehabilitation of its units. It was proposed that the 11 closed units shall be transferred to newly created subsidiary company of the Corporation, and then the same shall be privatised in phased manner. The employees of these closed units were to be given an invitation to retire voluntarily. The 11 units of the Corporation were finally closed down in two phases (5 mills were closed by Government orders dated 8. 9. 1998 and the remaining 6 mills in the second phase by Government orders dated 12. 11. 1999 ).

( 2 ) THE employees working in the Corporation are known as the Corporation employees, whereas the employees working in the industrial units are in the category of wage board employees. By government order dated 29. 1. 2001, U. P. State Sugar and Cane Development Corporation limited, was constituted as subsidiary company of the Corporation, comprising of 18 units (including all the closed units ). Apart from closing down 11 units of the Corporation, 8 more units were declared unviable in the meeting of Board of Directors of the Corporation held on 11. 6. 2003. It was decided that the 8 unviable units will also be finally closed down from the crushing season 2003-04. At present only 11 units of the Corporation are functioning. The High level Investment Committee of the State of U. P. has issued a notification inviting "expression of interest" for giving the 11 running units of the Corporation on lease. The process is still going on. The Managing Director of the Corporation vide its letter dated 15. 3. 2003 directed all the executive Directors and General Managers of its units to reduce the manpower by 30% and to offer voluntary retirement scheme to these employees. These directions were issued in pursuance of the recommendations of the BIFR. It was also directed that those of the surplus staff determined cadre-wise, who do not accept offer of voluntary retirement may be retrenched and proceeding for retrenchment may be initiated against them.

( 3 ) FOR convenience the subject writ petitions can be classified, mill wise into five categories :

A. (i) Civil Misc. Writ Petition No. 17487 of 2002. Amar Nath and 82 Ors. v. State of V. P. and ors. ; (ii) Civil Misc. Writ Petition No. 15125 of 2002, Qumar Khan and 11 Ors. v. State of U. P. and ors. ; (iii) Civil Misc. Writ Petition No. 19043 of 2002, Karuna Shanker Shukla and 35 Ors. v. State of u, P. and Ors. ; (iv) Civil Misc. Writ Petition No. 21540 of 2003, M. M. Sharma v. State of U. P.

( 4 ) ALL these writ petitions relate to the permanent and seasonal employees of the Rampur Unit of the Corporation which was closed down in the second phase of closure, along with 5 other units by Government order dated 12. 11. 1999 w. e. f, 17. 11. 1999. The 182 employees including 107 permanent and 73 seasonal were served with notices for retrenchment dated 8. 4. 2002. Out of 107 permanent employees, 99 have been received retrenchment compensation t