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1988 DIGILAW 402 (BOM)

BAMWARI LOLYA v. STATE OF MAHARASHTRA

1988-12-13

V.A.MOHTA, W.M.SAMBRE

body1988
JUDGMENT : V.A. Mohta, J.—Constitutional validity of Sections 25FFA and 30A of the Industrial Disputes Act, 1947 (I.D. Act), has been questioned in this petition on the ground that they violate Articles 14, 19(1)(g) and Article 21 of the Constitution of India. The short factual background is that the petitioner M/s. R.R. Loiya Sons (Bidi) Private Limited, which was carrying on business of manufacturing Bidis, closed down its factory with effect from 31st August, 1977, after giving notice of closure dated 27th July, 1977 which is not of a minimum 60 days as required by Section 25FFA and, therefore, criminal prosecution u/s 30A has been launched. 2. Section 25FFA which is introduced in the I.D. Act by the Industrial Disputes (Amendment) Act, 1972 (Act No. 32 of 1972) reads thus: "25FFA(1) An employer who intended to close down an undertaking shall serve, at least sixty days before the date on which the intended closure is become effective, a notice, in the prescribed manner, on the appropriate Government stating clearly the reasons for the intended closure of the undertaking: Provided that nothing in this section shall apply to(a) an undertaking in which- (i) less than fifty workman are employed, or (ii) less than fifty workmen were employed on an average per working day in the preceding twelve months: (b) an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work or project. (2) Notwithstanding anything contained in Subsection (1) the appropriate Government in exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that provisions of Sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order". Section 30A, which is also introduced along with Section 25FFA, makes the closure without complying with the provisions of Section 25FFA an offence punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five thousand rupees, or with both. Statement of Objects and Reasons behind introducing the Bill, which was made the Act No. 32 of 1972, reads thus: "The problem of closure of industrial undertakings resulting in loss of production and unemployment of large number of workmen had become very serious. Statement of Objects and Reasons behind introducing the Bill, which was made the Act No. 32 of 1972, reads thus: "The problem of closure of industrial undertakings resulting in loss of production and unemployment of large number of workmen had become very serious. Employers had declared sudden closures of industrial establishments without any notice or advance intimation to the Government. Several factors appeared to have led to these closures, amongst which were accumulated losses over a number of years and mismanagement of the affairs of the establishments. The unsatisfactory state of industrial relations (in the sense of labour unrest making it difficult to sustain regular production) had been pleaded as a precipitating factor. Certain other causes like financial difficulties and non-availability of essential raw material had also been mentioned. Since the problem of closure had been acute in the State of West Bengal, a President's Act. The Industrial Disputes (West Bengal Amendment) Act, 1971 was enacted on the 28th August, 1971. This provided that an employer who intended to close down an undertaking should serve at least sixty days' notice on the State Government stating clearly the reasons for the intended closure of the undertaking. While enacting the legislation for West Bengal, Government considered it desirable to promote Central legislation on the subject since the problem of closure was not limited to West Bengal but was found in varying degrees in other States as well. It was however, felt that before Central legislation was enacted, the matter should be considered by the Indian Labour Conference. The Indian Labour Conference which met on the 22nd an 23rd October, 1971 generally endorsed the proposal for Central legislation. The Act gives effect to the recommendation of the Indian Labour Conference. It provides for the service of a notice, at least sixty days before the intended closure of an undertaking is to become effective, so that within his period prompt remedial measures could be taken, where the circumstances permit, to prevent such closure. No notice will be required to be served in the case of undertaking set up for construction of buildings, roads, canals, dams and other construction works and projects or in the case of small establishments employing less than fifty persons. The Act also provides for closing down any undertaking without serving the requisite notice". No notice will be required to be served in the case of undertaking set up for construction of buildings, roads, canals, dams and other construction works and projects or in the case of small establishments employing less than fifty persons. The Act also provides for closing down any undertaking without serving the requisite notice". 14-12-1988 The above statement gives the legislative history as well as the purpose and hence we need not restate them. As rightly observed by the Calcutta High Court in the case of Walford Transport Limited v. State of West Bengal 1979 L1C 70 object of Section 25FFA is to prevent sudden closure except in certain industries and in certain exceptional circumstances like accident, death of the employer or the like which warrant closure in that notice. 3. The impugned sections have been on the Statute Book for over 7 years before this challenge made in February 1979. Perhaps the inspiration behind the challenge was a decision of the Supreme Court in Excel Wear v. Union of India 1978 I LLJ 527 rendered on 29.9.1978, by which the old Section 25-O of the I.D,. Act was declared to be ultra vires of Articles 14 and 19(3)(g). New Section 25-O with material changes has been inserted by Act No. 46 of 1982, but that is a different part of story. Since strong reliance is placed on the ratio of the above decision, we reproduce a part of the relevant observations. "In 1972 by insertion of Section 25-FFA in Chapter V-A of the Act, an employer was enjoined to give notice to the Government of an intended closure. But gradually the net was case too wide and the freedom of the employer tightened to such an extent by introduction of the impugned provisions that it has come to breaking point from the point of view of the employers". There is no similarity between the rigour of the two provisions. Indeed there is a basic difference between the two. While Section 25-Orequires prior permission of the State Government for closure. Section 25FFA merely requires giving of 60 days' notice of closure. Undoubtedly Section 25-FFA is a restriction on the right to trade. But the restriction appears to be quite reasonable cogsidering the interest of general public. In this connection Shri Darda, the learned counsel for the Attorney-General and Shri Garud, the learned Asstt. Section 25FFA merely requires giving of 60 days' notice of closure. Undoubtedly Section 25-FFA is a restriction on the right to trade. But the restriction appears to be quite reasonable cogsidering the interest of general public. In this connection Shri Darda, the learned counsel for the Attorney-General and Shri Garud, the learned Asstt. Government Pleader, have relied upon the following observations in the case of Hatisingh Mfg. Co. Ltd. and Another Vs. Union of India (UOI) and Others, by which the Constitutional validity of Section 25-FFF has been upheld: "By Article 19(1)(g) of the Constitution free dom to carry on any trade or business is guaranteed to every citizen but this freedom is not absolute...In the interest of general public the law may impose restrictions on the freedom of the citizens to start, carry on or close their undertakings". 4. We are unable to locate any unreasonableness in the provisions so as to attract the vice of violation of Articles 14 or 19(l)(g). No question of protection of life or liberty as contemplated under Article 21 is also involved. Hence on no ground the said provision can be held to be constitutionally void. Section 31A is merely consequential and indeed a necessary concomitant of Section 25-FFF. 5. Theoretically it is possible to say that in certain exceptional cases giving of 60 days' notice is not possible. But the lawmakers do not appear to be obvious to such situations. Sub-section (2) of Section 25FFA empowers the appropriate Government to direct that the provisions of Subsection (1) shall not apply in certain situations and/or for certain period and to exempt an employer from the rigour of Section 25FFA(a). It is also pertinment to notice that Section 25FFA does not apply to all the sundry industries. It applies only to big industries where there are more than 50 workmen. Certain undertakings by the reason of their very nature have received exemption from the operation of the said provision. 6. The learned counsel for the petitioner, Shri Dhabe, relied upon three decisions in support of the submission, (i) State of Bihar Vs. Kamla Kant Misra and Others,. It deals with the question of validity of Section 144(b) of the Code of Criminal Procedure. The Judgment is relied upon to canvass a point that a provision can be declared ultra vires even if it is procedurally unreasonable, (ii) Olga Tellis and Others Vs. Kamla Kant Misra and Others,. It deals with the question of validity of Section 144(b) of the Code of Criminal Procedure. The Judgment is relied upon to canvass a point that a provision can be declared ultra vires even if it is procedurally unreasonable, (ii) Olga Tellis and Others Vs. Bombay Municipal Corporation and Others,. It is a famous case dealing with rights of hutment dwellers in the context of Article 21. (iii) Municipal Corporation of the City of Ahmedabad and Others Vs. Jan Mohammed Usmanbhai and Another,. This is a case in which validity of prohibition of closing slaughter houses on certain dates is upheld. We are unable to locate anything in these decisions which supports the case of the petitioner in any manner. 7. Under the circumstances, the petition is dismissed. Rule discharged. Needless to mention that interim order of stay granted by this Court on 12-3-1979 stands vacated. No order as to cost.