Antibiotic Stores Private Limited v. K. D. Prasad — 1976 DIGILAW 48 (PAT)

Judgment Nagendra prasad Singh, J. 1. This writ application under Articles 226 and 227 of the Constitution of India has been filed by the petitioner for quashing a notification, dated the 12th December, 1976, issued by the State Government in exercise of powers conferred on it by rule 70 (3) of the Defence of India Rules, 1971 (hereinafter referred to as the 'Rules'), directing the petitioner-Company "to take immediate necessary measures to open its Patna Branch within ten days from the date of the issue of "the order" and to keep it open for the unimpeded employment of persons employed therein." A copy of the said notification is annexure "4" to the writ application. 2. According to the petitioner, it carries on trade and business in medicines and thing connected there with. The petitioner had sole selling and distribution agency in the State of Bihar of the goods manufactured by M/S Borroughs Welcome Ltd., M/S. Neo Pharma Private Ltd., and others. Sometime between January and April, 1975, the sole selling agency in the States of Bihar and Uttar Pradesh in respect of such Companies came to an end and the petitioner was left with no option but to close its business both at Patna and at Luckaow. It is alleged that, on the 27th May, 1975, the petitioner notified the closure of its business and notice with respect to the same were given to all authorities concerned saying that the said closure of the business would be effect the from the 1st August, 1975. A copy of the said notice given to the Secretary to the Government of Bihar in the Department of Labour and Employment, Patna, is annexure "i" to the writ application. According to the petitioner, the workmen were also informed by a notice, dated the 25th June, 1975. A copy of the said notice is annexure "2" to the writ application. It is the further case of the petitioner that, on receipt of the said notice of closure of its business, the workmen instituted Title Suit No. 95 of 1975 in the Third Court of the Munsif at Patna, who initially granted an ad-interim injunction, but, later, on hearing the parties, vacated the same. It is the further case of the petitioner that, on receipt of the said notice of closure of its business, the workmen instituted Title Suit No. 95 of 1975 in the Third Court of the Munsif at Patna, who initially granted an ad-interim injunction, but, later, on hearing the parties, vacated the same. An appeal against the said order was filed before the District Judge, which was heard by an Additional District Judge, who by his order, dated the 11th August, 1975, dismissed the said appeal filed on behalf of the workmen. A copy of the said order is annexure "3" to the writ application. The petitioner alleges that the closure of the business was complete after the dismissal of the aforesaid appeal on the 11th August, 1975. It is said that, out of 33 employees, 20 have already accepted retrenchment compensation. The remaining, however, are challenging the legality of the closure. The petitioner has stated in the writ application that the Labour Department wanted the petitioner to reopen its Patna office, but the petitioner expressed its inability in view of the termination of the agencies. Thereafter, the petitioner received the impugned notification directing the petitioner to take immediate measures to reopen its Patna Branch and keep it open for the unimpeded employment of the persons employed therein. The petitioner sent a reply to the said notice on the 18th December, 1975, setting out the circumstances in which the business at Patna had been closed. Petitioner's counsel, who went to hand over the said letter, was told that the notification issued was final and operative and that, if the Branch was not opened, action under sub-rule (4) of rule 70 of the Rules shall be taken against the petitioner. According to the petitioner the impugned notification is illegal, ultra vires and the purported exercise of the power under the Rules amounts to an invasion over the right of the petitioner to carry on trade and business. 3. A Counter affidavit has been filed on behalf of the respondents saying that the statement made in the writ application that the petitioner had lost all agencies and has no business at Patna is incorrect; that only agency of M/s. Burrough Welcome & Co. (India) - Private Ltd. had been terminated; that the-petitioner continues to have the agency of Mis. A Counter affidavit has been filed on behalf of the respondents saying that the statement made in the writ application that the petitioner had lost all agencies and has no business at Patna is incorrect; that only agency of M/s. Burrough Welcome & Co. (India) - Private Ltd. had been terminated; that the-petitioner continues to have the agency of Mis. Dolphin Laboratories Private Ltd.; Calcutta and M/s. Lyka Laboratories, Bombay; and, as such, the petitioner has adequate business to keep its Patna Branch going on. It is further stated that the notice of closure given by the petitioner was opposed by the Antibiotic Stores Employees' Union which raised an industrial dispute. The State Conciliation machinery intervened in the matter and tried to persuade the management not to close the establishment. The matter was discussed between the management and the union before the Assistant Labour Commissioner, Patna and also before the Deputy Labour Commissioner, Bihar, with no positive results, and the establishment was finally closed with effect from the 11th August, 1975. It has been further stated that, in course of discussion, it had come to the notice of Government that the petitioner• Company had lost just a fraction of its business, that is, its agency of M/s. Burroughs Welcome & Co. Private Ltd: but it had still agencies of the other manufacturers and that business was enough at least to keep and maintain 13 employment, and as such, the State had to issue the impugned notification in exercise of the powers under rule 70(3) of the Rules, after being satisfied that a place of employment• had been closed for reasons other than the furtherance of an industrial dispute. It has also been asserted on behalf of the State in the said counter affidavit that the representation of the petitioner, dated the 18th December, 1975 (annexure "3") was considered by the State Government and rejected and the decision was communicated by a letter, dated the 23rd December, 1975, a copy whereof is annexure "X" to the counter-affidavit. According to the respondent-State, the closure of the Patna Branch is not a "closure of business", but is the "closure of a place of employment", inasmuch as the business of the petitioner is still flourishing and thriving and only its establishment at Patna has been closed. 4. According to the respondent-State, the closure of the Patna Branch is not a "closure of business", but is the "closure of a place of employment", inasmuch as the business of the petitioner is still flourishing and thriving and only its establishment at Patna has been closed. 4. After the writ application was admitted and rule was issued to the respondents to show cause, an application under rule 5 of Chapter XXXT (C) of the Patna High Court Rules was filed on behalf of three persons, who are 3 of the 13 employees of the petitioner referred to above on the 16th January, 1976, praying that the order of admission passed by this Court on the 22nd December, 1975 be recalled. Another application was filed on the 19th January, 1976 on behalf of these persons seeking permission to add an additional prayer to the application filed on the 16th January, 1976. The said additional prayer was that the aforesaid three persons may be heard in opposition to the writ application under rule 5 of Chapter XXI (C) of rules of this Court. During the course of the hearing of the writ application, on the 6th February, 1976, an order was passed saying that, as the aforesaid three persons were persons to be directly affected by the result of the writ application, they should be heard in accordance with the rules of this Court. 5. Learned counsel appearing for the petitioner has not challenged the impugned notification, dated the 12th December, 1975, on the ground that in any manner it violates the right guaranteed to the petitioner under Article 19 of the Constitution of India, obviously because, during the Presidential Order under Article 359 (i) of the Constitution, the petitioner is not entitled to enforce any such right, even if it may have any learned counsel has, however, urged that the said notification is not permissible even under the powers conferred on the respondent-State under sub-rule (3) of rule 70 of the Rules. 6. Rule 70 is headed as "Prevention of hurtles in place of employment". 6. Rule 70 is headed as "Prevention of hurtles in place of employment". Sub-rule (3) of rule 70, the interpretation ".,.hereof is in question in this writ application, reads as follows :- "(3) If in the opinion of the State Government a place of employment has been closed for reasons other than the furtherance of an industrial dispute, the State Government may by order in writing require the owner or persons having the management of such place of employment to take, within such time as may be specified in the order, such, measure as may be so specified to secure that the place of employment shall be opened and shall remain open, for the unimpeded employment of persons employed therein." Sub-rule (4) prescribes the punishment for contravening the provisions of any order made under sub-rule (3) and other sub-rules of the said rule. Before the power under sub-rule (3) of rule 70 can be exercised by the State Government, two conditions must be fulfilled, namely, 0) that a place of employment has been closed, (ii) that, in the opinion of the state Government, it has been closed for reasons other than the furtherance of an industrial dispute". If the two conditions are fulfilled, the State Government can require the owner or the persons having the management of such place of employment to take measures to open the same. In the present case, the fact that a place of employment has been closed is not in controversy. According to the petitioner, the closure of the place of employment is merely the result of the closure of the business of the petitioner. 7. Learned counsel for the petitioner has submitted that sub-rule (3) 0f rule 70 would be attracted only in cases where there is a closure of the place of business; it is not applicable in cases where there has been a closure of the business itself; and as, in the present case, there has been a closure of the business itself, the order under sub-rule (3) of rule 70 would amount to an order without authority of law. In support of his contention that there is a distinction between closure of business and closure of a place business learned counsel for the petitioner placed reliance on the cases of Management of Express Newspapers (Private) Ltd. V. The workers M/S Tatanagar Foundry Co. Ltd. V. Their workmen. M/s Party and Co. In support of his contention that there is a distinction between closure of business and closure of a place business learned counsel for the petitioner placed reliance on the cases of Management of Express Newspapers (Private) Ltd. V. The workers M/S Tatanagar Foundry Co. Ltd. V. Their workmen. M/s Party and Co. Ltd. v. P.C. Pal and Work men of the Indian Leaf Tobacco Development Co. Ltd., Guntur v. The Management of Indian Leaf Tobacco Development Co. Ltd. Guntur. 8. In the case of Management of Express Newspapers (Private) Ltd., it was observed at page 573, paragraph 10, as follows: and genuine, the dispute which the respondents may raise in respect of such a closure is not an industrial dispute at all. On the other hand, if, in fact, and in substance, it is a lockout, but the said action has adopted the disguise of a closure, and a dispute is raised in respect of such an action, it would be an industrial dispute which industrial adjudication is competent to deal with" . Similarly, in the case of M/s Tatanagar Foundary Co. Ltd., it was again pointed out that, in the case of a closure, the employer merely does not close down the place of business, but he closes the business itself finally and irrevocably. A lockout, on the other hand, indicates the closure of a place of business, and not the closure of the business itself. In that case, the Company had two manufacturing establishment, one located at Bellur in the State of West Bengal and the other at Jamshedpur in Bihar. On the facts of that case, it Was found that the undertaking at Jamshedpur had been finally closed and it amounted to closure of the business. In the case of the Management of Indian Leaf Tobacco Development Co. Ltd., it was observed that, if the Company closed down a branch or a depot, a question could always arise as to the relief to which the workmen of that branch or depot were entitled. In such cases where the closure of some depots by the Company is genuine and real, and not only a device adopted for carrying on the same business in a different manner, than the workmen, who are retrenched due to such closure, are entitled to retrenchment compensation only, and cannot claim any re-employment or reinstatement. In the case of M/s Parry and Co. In the case of M/s Parry and Co. Ltd., it was observed that it was within the managerial discretion of an employer to organise and arrange his business in the manner he considered best and so long as that was done bona-fide it was not competent of a tribunal to question its propriety and in such cases even retrenchment was permissible. 9. There can not be any doubt that the closure of a business stands on a different footing than the closure of a place of business. But the question which remains to be answered is as to whether those destination are applicable so far as the provisions of sub-rule (3) of rule 70 of the Rules are concerned. Rule 70 (J) does not speak of closure of place of business it refers to a closure of a place of employment. This will happen in either case, whether the business itself is closed, or the place of business is closed. In my opinion, therefore, the petitioner cannot derive much benefit by merely asserting that it did not close the place of business but the business itself. I shall, however, indicate later that even this assertion that it had closed the business itself does not appear to be correct; but, even assuming the same to be correct, in my opinion, it is difficult to hold that the power under sub-rule (3) of rule 70 cannot be exercised in cases of closure of business. Construing sub-rule (3) of rule 70 in its proper context, it appears to me that it vests power in the State Government to issue a direction to reopen any place of employment which had been closed for any reason whatsoever, except in furtherance of an industrial dispute. The only condition precedent to the exercise of this power is that the State Government must be of opinion that it had been so closed and deeded to be reopened for unimpeded employment of the persons employed therein. The sub-rule refers to a place of employment, and there is no reason to think that it means only places of business. The power under the said sub-rule can be exercised even in respect of a place of employment where no business was being carried. The sub-rule refers to a place of employment, and there is no reason to think that it means only places of business. The power under the said sub-rule can be exercised even in respect of a place of employment where no business was being carried. No doubt, if it is held that such power can be exercised even in cases of bonafide closure within the meaning of the Industrial Disputes Act, on the face of it, it looks startling. But these are matters not to be considered by the Courts. If Parliament bas vested such power in the State Government, during the period when Proclamation of Emergency is in force, and, for adopting special measures "to ensure the public safety and interest, the defence of India and Civil defense, it is for the State Government to decide as to whether the circumstances demand exercise of such power. The matter would be different if the exercise of such power is tainted with mala fides or for oblique motive. 10. There is no allegation of mala fides against the respondent-State or against any of its authorities, or that the notification has been issued with some ulterior motive. Learned counsel for the petitioner, however, submitted that there was no material on the basis of which the aforesaid opinion could have been formed by the State Government. In this connection he has referred to the judgment of the Supreme Court in Berium Chemicals Ltd. V. Company Law Board and M.A. Rasheed V. The State of Kerala in support of his contention that it is open to this Court to find out as to whether there was reasonable basis for forming any such opinion by the State Government. In the case of Barium Chemicals Ltd. it was pointed out that even if a statute prescribes for formation of an opinion by the authority any order passed in exercise of the said power can be quashed where the order in question had been passed on grounds extraneous to the legislation or in absence of relevant grounds. In my opinion, a decision in respect of exercise of power under the Companies Act, can not be of much help while construing the scope of the rules in question which are emergency provisions. In my opinion, a decision in respect of exercise of power under the Companies Act, can not be of much help while construing the scope of the rules in question which are emergency provisions. In the case of M. A. Rasheed no doubt, it was observed that administrative decisions in exercise of powers, even if conferred in subjective terms, are to be made in good faith on relevant considerations and Courts may enquire whether a reasonable man could have come to the decision in question without misdirecting himself on law or the facts in material respect. But in that very decision it was observed as follows at page 2254, paragraph-18 :- "It is a matter of policy for the State Government to decide to what extent there should be interference in relation to the enjoyment of property. The public interest is of paramount consideration. In the present case the steps taken are in the larger interests of labour engaged in the coir industry. The pre-eminent question is that it is an emergency legislation. Similar view was expressed by the Supreme Court in the case of State of Assam V. Bharat Kala Bhandar Ltd. which was also a case of exercise of power under the Defence of India Rules, 1962, in these words :- "(16) It is clear that a notification under sub-r. (i) is conditioned on the subjective satisfaction of the Central Government Or the State Government as to the various purposes mentioned in sub-r (i). The High Court was also conscious of the fact that this subjective opinion was generally speaking not justiciable and it was not open to a Court to see if the opinion of the authority was justified by objective tests. The High Court was also conscious of the fact that it was not open to the Court to examine the adequacy of the material on which the opinion rested. Further, the High Court also held that the reasonableness of the opinion could not be examined by the Court. This statement of the law by the High Court is well settled and was accepted by the High Court. The High Court further held that the validity of an order might be challenged on the ground of mala fides and this again is well settled. " 11. This statement of the law by the High Court is well settled and was accepted by the High Court. The High Court further held that the validity of an order might be challenged on the ground of mala fides and this again is well settled. " 11. However, coming to the facts of the present case, it appears that, before issuing the impugned notification under sub-rule (3) of rule 70, the State Government heard the petitioner on the question of closing the place of employment. In paragraph 12 of the writ petition itself the petitioner has stated that "the Labour Department wanted the petitioner to reopen its Patna office but the petitioner submitted that since it is a closure of business and that too for the reasons of there being no distributorship and agency, it was not possible for the petitioner to re-start its business in the State of Bihar." The matter was also considered, as has been mentioned in the counter affidavit of the State, by the Assistant Labour Commissioner and the Deputy Labour Commissioner in presence of the petitioner and the union. It has also been asserted on behalf of the respondents that the claim of closure of the business made on behalf of the petitioner is a myth; the petitioner sti1l holds the agency of M/s Dolphin Laboratories, Calcutta and M/s. Lyka Laboratories, Bombay. 12. The intervenors have produced two letters, dated the 30th September, 1975 and the 17th October, 1975, addressed by the petitioner to the Purchase Officer, Bokaro Steel Ltd. within the State of Bihar, offering to supply certain drugs, including life-saving drugs. Some of them are manufactured by MIs. Borroughs Welcome Ltd. Copies of these letters are annexures "B/1" and "B", respectively, to the counter-affidavit on behalf of the applicants under rule 5 of Chapter XXI (C) of the High Court Rules filed on the 4th February, 1976. In the letter, dated the 30th September, 1975 (Annexure "B/l") it is mentioned as follows:- "We request you to kindly favour us with your order in and arrange to send us Excise permit to our Calcutta office in favour of our Patna office, so that arrangement may be made by us to dispatch the stock to you per Carryco, your carriers, Ex-Patna to Bokaro Steel. Awaiting your valued order." On the basis of this statement, it has been submitted on behalf of the respondents that the petitioner had stocked sufficient drugs at its Patna, Office even on the 30th September, 1975 and was carrying on business in respect of the same, even though it asserts that there had been a closure of the business at patna with effect from the 11th August, 1975, the day the injunction order was vacated. Learned counsel for the petitioner could not give any satisfactory explanation to the statements made in this letter and the statement made on affidavit. He has simply submitted that Some unsold drugs had been kept at Patna office and the petitioner was trying to dispose of the same even after the closure. In connection with the assertion made by the respondents that the petitioner has not ceased to be agent of M/s. Dolphin Laboratories, and M/s. Lyka Laboratories, letters purported to have been issued recently by these companies were produced in Court. It is difficult for this Court to accept the said statement on production of any such letter during the course of the hearing of the writ application. It was primarily the concern of the State Government and the petitioner should have satisfied the State Government on those questions. In my opinion, on the facts and in the circumstances, it is difficult to hold that the petitioner has been able to prove that there has been a complete closure of its business. Apart from that, if the State Government, after having applied its mind to the question at issue, was of the opinion that the power under sub-rule (3) of rule 70 should be exercised, keeping in view the larger interests of the society, and there is no allegation, much less proof, on behalf of the petitioner regarding mala fide exercise of the said power, in my opinion, it is difficult for this Court to interfere with the exercise of the said power, holding that there was no material on the basis of which the State Government could have formed the said opinion. 13. Learned counsel for the petitioner, during the course of argument, also tried to show that there was an industrial dispute before the closure in question; that is, prior to the 11th August, 1975 and, as such, the power under the said sub-rule could not have been exercised. 13. Learned counsel for the petitioner, during the course of argument, also tried to show that there was an industrial dispute before the closure in question; that is, prior to the 11th August, 1975 and, as such, the power under the said sub-rule could not have been exercised. In my opinion, when sub-rule (3) of rule 70 of the Rules speaks of closure for reasons other than furtherance of an industrial dispute, it refers to the decision regarding closure and not since which date it is actually closed. There is no allegation that there was any industrial dispute prior to the 27th May, 1975, when the decision to close the place of employment at Patna was taken on behalf of the petitioner. Any dispute which followed was in furtherance of the closure; the closure itself was not in furtherance of an industrial dispute so as to oust the jurisdiction of the State Government to exercise the power under sub-rule (3) of rule 70. 14. In the result, the application fails and is dismissed. SHAMBHU PRASAD SINGH, J.- I agree in view of the finding that it was not a case of closure of the business, most of the other points urged do not, really, arise for decision. Application dismissed.