The main legal point established in the judgment is the distinction between closure and retrenchment, and the conditions precedent for termination of service or retrenchment.

( 1 ) HEARD Counsel for the parties.

( 2 ) THE respondent company is engaged in business of Export of Carpets does not have any manufacturing unite of its own.

( 3 ) THE Carpet manufacturing industry is a cottage industry. Most of the carpets are woven by the weavers at home. The respondent company had set up about 10 looms on experimental basis in the year 1968 at Guria factory, which at the relevant time was a production centre. Services of 48 bunkers/weavers engaged on the experimental looms were terminated by notice dated 12. 4. 1982, which is appended as Annexure 1 to the writ petition. The reason behind the closure of weaving section at Guria factory, was because of extremely bad economic recession in North America and Western Europe in the beginning of the 1982, which adversely affected the business of the respondents. According to the Employers there was drastic reduction of orders from these countries primarily because of high cost of production of Carpets in India, which resulted in severe financial crises. The loss suffered by the Company in the year 1981-82 was to the tune of rs. 30. 84 lakhs and as such it became necessary for the company to adopt such measures as to effect economy and cut down of cost of production.

( 4 ) THE cost of weaving on Company experimental looms set up by the Company at Guria was very high and running of weaving activity was not economically viable. The Company, therefore, decided to close down the Weaving Department of Guria factory and issued letter dated 12th April, 1982 terminating the services of 48 bunkers working on the looms for aforesaid trade reasons. The notice dated 12th April, 1982 is as under:" as a measure of economy mixed with other reasons the management has decided to close down the Guria Factory Pvt. Looms and as such your services have become surplus to the requirements of the Management and the same arc hereby retrenched with immediate effect. You are hereby advised and directed to collect your dues, if any, alongwith one months pay in lieu of one months notice and retrenchment compensation as required under law today at 10. 00 a. M. from the factory office. You are further advised to leave your permanent address with our office so that in event your services are required, you may be called. "

( 5 ) THE stoppage of manufacturing activity on the experimental Looms resulting in termination of services of the weavers having become surplus, gave rise to an industrial dispute. On conciliation proceeding having failed, the dispute regarding termination was referred by the State government in exercise of its power contained under Section 4-K of the Industrial Disputes Act, 1947. The reference contained the names of 48 employees who had been retrenched and whose termination of services had been challenged by the petitioner Union.

( 6 ) ON receipt of the reference the case was registered as adjudication case No. 9 of 1982 before the Labour Court, Varanasi. It was thereafter transferred to the Labour Court, Allahabad where it was re-registered as adjudication case No. 19 of 1998.

( 7 ) THE Labour Court, Allahabad decided the reference case against the workmen. Aggrieved by the award, the present petition has been filed by the Sanyukta Kalin Mazdoor Sabha, which had espoused the case of workmen challenging the validity and correctness of the award.

( 8 ) THE case of the workmen in this petition is that provisions of Section 6-N, Sub-clauses (a) and (b) of the U. P. Industrial Disputes Act, 1947 lay down the conditions precedents for termination of service or retrenchment, which are mandatory, these have not been complied with by the employer and as such the termination of their service is illegal and they are entitled to continuity of service with full back wages. The contention of the petitioners is that the weaving activity of the respondent company had been stopped due to weavers having become surplus and this stoppage of manufacturing activity does not amoun