Calcutta High Court
Mamc Sramajibi Union And Anr. vs Union Of India (Uoi) And Ors. on 4 December, 2001
Equivalent citations: (2002)1CALLT233(HC), 2002(1)CHN681, [2002(94)FLR570]
Author: A.K. Mathur
Bench: Ashok Kumar Mathur, Subhro Kamal Mukherjee
JUDGMENT A.K. Mathur, C.J.
1. Both these appeals arise out of order dated 5th October, 2001 passed by the learned single Judge whereby the learned single Judge has dismissed both the writ petitions. Aggrieved against this order both these appeals have been filed. Both the appeals are being disposed of by the common order.
2. The brief facts necessary for disposal of these appeals are that the Central Government on 21st September, 2001 passed an order under Section 25(O) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act) permitting the management to close two units of Mining and allied Machinery Corporation Limited for short (MAMC). An application No. MAM/RO/ND dated 27.7.2001 was filed by the management requesting for closure of MAMC Works at Durgapur and Regional Workshop at Nagpur with effect from 29th October, 2001. On the basis of the materials placed by the management the Government of India by the communication dated 21st September, 2001 permitted the management to close down the above two industrial units. While permitting the management to close down the above two industries the Government of India directed that the workmen of these two units should be given one more chance to exercise their option for Voluntary Retirement Scheme (VRS) within 15 days from the date of issue of the order. Aggrieved against this order two writ petitions were filed by two unions and they were disposed of by the learned single Judge by a common order dated 5th October. 2001 upholding the order of closure dated 21st September, 2001 passed by the Central Government under Section 25(0) of the Act. Aggrieved against this order the unions have preferred both the appeals and they are being disposed of by the common order.
3. It may be relevant to mention here that both the industrial units were established in 1965 and except for the years 1972-76 the company had been continuously making losses. The matter was referred to the BIFR in 1992. The Operating Agency namely IFCI submitted a report suggesting cash infusion of Rs. 142 crores for reviving and reconstructing the company. However, no feasible revival package could be worked out. The management was of the view that it is not possible to infuse additional money for revival of the aforesaid two industrial units. The company introduced VSS at three or four times between 1988 to 2001. Out of the total of 6000 employees only 1490 workers remained and rest of them in phased manner took VSS or VRS and walked out of the above two units. On the basis of the materials placed a notice was given to the workers and it was submitted that there are 1490 workers and the company should not be closed. It was also contended that since the Central Government has delegated the powers under the Act to the State Government the application for closure under Section 25(O) of the Act should not be heard by the Central Government. However, after considering the matter permission was granted for closure by the Central Government by its order dated 21st September, 2001 under Section 25(O) of the Act. The learned single Judge after considering the matter came to the conclusion that the order passed by the Central Government under Section 25(O) of the Act is fully justified and declined to interfere in the matter.
4. Mr. Kalyan Kr. Banerjee, appearing for the appellant in MAT No. 3499/ 2001 strenuously urged before us that the order passed by the Central Government is without jurisdiction as the appropriate Government in case of Section 25(O) of the Act is the State Government and the Central Government cannot exercise the power under Section 25(O) of the Act. He also contended that the State amendment that of West Bengal was not taken into consideration. He also submitted that the reasons given in the order is not a speaking one and there is no reason worth its name mentioned in the order. Supporting the contention of Mr. Banerjee, Mr, Biksh Bhattacharjee appearing for appellant also submitted that as per Section 25(O) of the Act inquiry is required to be made by the Central Government and no inquiry worth its name was made by the Central Government. Similarly, Mr. Jayanta Mitra, appearing for the State submitted that the State Government's stand was not considered. He submitted that the State Government supported the cause of the workers and the State Government was prepared to exempt the payment of Sales Tax and other dues payable to the State. Mr. Mitra also submitted that the Central Government has made the reference and it has been decided by the Central Government, therefore, the Central Government cannot be a Judge in their own cause. Mr. R.N. Majumdar. appearing for the appellant in MAT No. 3560 of 2001 has submitted that the State Government has already made a reference against the so called closure, therefore, the Central Government should not have decided the matter. It is also submitted the mater was pending before the BIFR and after the decision of the BIFR an appeal has been preferred by the workmen before the AAIFR. The proceeding before the AAIFR and the reference made by the State Government before the industrial Tribunal will be rendered infructuous in view of the order passed by the Central Government. The Central Government should have waited for the decision and should not have exercised their power. It was submitted that as per 25-FFA of the Act the appropriate Government is the State Government as held by the apex Court in the case of Steel Authority of India Ltd. v. National Union Waterfront Workers and the non compliance of 25-FFA of the Act is punishable under Section 30A of the Act.
5. As against this the learned counsel for the management submitted that in the present case the appropriate Government is the Central Government as per sub Section (b) of Section 25-L of the Act. It was also submitted that as far as the State amendment is eoncerned the interest of the workers has already been safeguarded in the order itself that in case of a normal closure under Section 25(O) of the Act the incumbent would be entitled to retrenchment compensation as flefined In Section 25N of the Act and the workman will be entitled to three months' notice in writing and the compensation shall be equivalent to 15 days' average pay for every completed year of service or any part thereof in excess of six months which will come to a paltry sum as against the VRS which will be more beneficial to the workers. Therefore, the State amendment has been adequately complied with. In that connection the learned counsel for the management has prepared a chart and submitted to this Court. According to the chart a person with 11 years of service would be entitled to retrenchment benefit of Rs. 49.000/- without Provident Fund and Gratuity whereas if he opts for VRS/VSS he will be entitled to a compensation to the tune of Rs. 3.54.000/- without Provident Fund and Gratuity. If the PF and Gratuity are added with the compensation it will come to Rs. 4,45,611/-compared to Rs. 1,49,6,11/- under the retrenchment benefit. The person with 25 years of service will be entitled to retrenchment benefit of Rs. 1,05,000/- without PF and Gratuity but if he opts for the VRS/VSS he will receive 4,71,000/- as compensation without PF and Gratuity. If the PF and Gratuity are added with the compensation it will come to Rs. 7,19,040/-as against the retrenchment benefit of Rs. 3,53,040/- These benefit is not inclusive of leave salary, notice pay and transport which were to be separately calculated. Therefore, it was submitted that the State amendment was duly followed by giving the workmen better benefits. The comparative chart reads as under:
Stuff Scale No. Comp Years Retirement Benefit PF Gratuity Total Revised vss Benefit PF Gratuity Total (As on 31.3.01) (As on 31.3.01) A669 972-16-1052 11 49000 59611 32000 140611 354000 59611 32000 445661 A679 972-18-1250 11 55200 59311 29200 143711 358700 59311 29200 447211 A335 -do-55
57300 73455 43700 174435 381300 73435 43700 492435 A368 -do-15
99700 79796 40803 220296 306200 79796 40800 426796 0557 1016.1354 20 63100 121190 55900 240190 377600 121190 55900 554690 0551 -do-20
90600 118948 55900 265448 343100 118948 55900 517948 0055 1072-1474 25 86000 151629 74000 313629 428000 151629 74000 653629 9192 -do-25
105000 165040 83000 353040 471000 165040 83000 719040 This figure does not include Leave Salary, Notice Pay and Transport Allowance which would be calculated separately as entitlement is not the same."
6. We have considered the rival submissions of the parties.
7. In order to better appreciate the contentions raised by the parties, we may examine the relevant provisions bearing on the subject. Section 25O under which the present impugned order was passed reads as under:
"25-0 Procedure for closing down an undertaking.--(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.
(2) Where an application for permission has been made under Subsection (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
(3) Where an application has been made under Sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period, of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of Sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workmen, review its order granting or refusing to grant permission under Sub-section (2) or refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(6) Where no application for permission under Sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking has not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this Section, the appropriate Government may, if it is satisfied that owing to such 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 the provisions of Sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under Subsection (2) or where permission for closure is deemed to be granted under Sub-section (3) every workmen who is employed in that undertaking immediately before the date of application for permission under this Section, shall be entitled to receive compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months."
8. West Bengal amendment has been inserted in the first proviso of section 25-O which provides the method, time, mode of payment of compensation in a prescribed manner which reads as under:
"In Section 25O,
(a) in Sub-section (1), after the first proviso, the following proviso be inserted:-
"Provided further that every application for permission to close down an undertaking shall, having regard to the first proviso to Section 25FFF, contain the particulars of the quantum, mode, manner and time of payment of compensation to the workmen, in the manner prescribed, and such employer shall furnish such guarantee as may be required by the appropriate Government to discharge his liability for payment of compensation and other statutory dues to the workmen in the event of such permission being granted under Sub-section (2) or deemed to have been granted under Sub-section (3)"
(b) after Sub-section (1), the following sub-section be inserted:-
"(1A) Where an application for permission has been made under Sub-section (1), the appropriate Government may, having regard to the reasons adduced in such application and the interests of the undertaking and the concerned workmen, issue such directions as may be necessary for maintaining normally and continuity of work during the notice period."
(c) to Sub-section (6). The following explanation be added :-
Explanation : "Benefit under any law" shall include benefits under any contract, agreement, award or settlement under any law;
(d) after Sub-section (7), the following sub-section be inserted-
"(7A) Every order of the appropriate Government under Sub-section (7) shall indicate, for reasons to be recorded, the extent to which compensation computed under Sub-section (8) shall be payable in the case, having regard to the facts and circumstances of the same and for securing such payment, the appropriate Government may obtain such information and guarantee specified in the second proviso to Sub-section (1) as may be considered necessary."
(e) in Sub-section (8) after the words "shall be entitled to receive" the words and brackets, "in addition to all legal dues (including gratuity)", be inserted."
9. As per section 25-O of the Act an employer who intends to close down an undertaking of an industrial establishment to which this chapter applies that is Chapter VB shall apply in the prescribed manner for prior permission at least 90 days before the date on which the intended closure is to become effective to the appropriate Government stating clearly the reasons for the intended closure and the same should be served simultaneously on the representative of the workmen. Sub-section (2) of section 25-O of the Act provides that on receipt of such application the appropriate Government after making such inquiry as it thinks fit and after giving reasonable opportunity of being heard to the applicant and the representative of the workmen may, for reasons to be recorded in writing, grant permisson for closure. In case the reasons are not adequate, in sufficient and urged not in good faith or grossly unfair or unjust or that the closure would be prejudicial to the general public he may record reasons in writing and refuse permission. Therefore, the guiding consideration for closure is' that the reasons for closure should be adequate, sufficient and it is in good faith not unfair or unjust and not prejudicial to the interest of the public at large.
Therefore, the first and foremost thing is that the reason given for closure should be adequate and sufficient that is the guiding factor but if the appropriate Government finds that the closure is not actuated with good faith or it is unfair or unjust or it is against the interest of general public it can certainly refuse such permission, in case the reasons appear to toe Justified, reasonable, sufficient and is not adverse to the public interest then permission can be granted. Permission is to be communicated and in case, under Sub-section (3), Government does not communicate the refusal to grant permission within sixty days from the receipt of the application then there is an implied permission after expiry of sixty days. The Section also provides that the affected party may file an appeal to the Industrial Tribunal as may be notified by the appropriate Government in the appropriate gazette. The Section also provides that refusal to grant permission, or granting permission for closure shall remain in force for a period of one year subject to the decision of the Industrial Tribunal in appeal." if closure is made without permission then such action shall be illegal and Sub-section (7) says that if the appropriate Government is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or like such necessary things they may by order direct-the provisions of Sub-section (1) shall not apply in relation to such undertaking.
Sub-section (8) says that where an undertaking is permitted to close down then every workmen in such undertaking who has been in continuous service in the undertaking for not less than one year before the date of application for permission for closure shall be entitled to thee notice and compensation as specified in Section 25N. Section 25N. which is relevant for our purpose as submission has been made on that count, which reads as under:
25-N Condition precedent to retrenchment of workmen (1) No workmen employed in any industrial establishment to which this Chapter applies, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until,
(a) the, workmen has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workmen has been paid in lieu of such notice, wages for the period of the notice; and
(b) the prior permission of the appropriate Government or such authority as may be specified by that Government by notification in the Official Gazette (hereinafter in this Section referred to as the specified authority) has been obtained on an application made on this behalf.
(2) an Application for permission under Sub-section (1) shall be made by the employer in the prescribed manner stating clearly the reasons for the intended retrenchment and a copy of such application shall also be severed simultaneously on the workmen concerned in the prescribed manner.
(3) Where an application for permission under Sub-section (1) has been made the appropriate Government or the specified authority, after making such, enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen concerned and persons interested in such retrenchment, may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.
(4) Where an application for permission has been made under Sub-
Section (1) and the appropriate Government or the specified authority does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period, of sixty days.
(5) An order of the appropriate Government or the specified authority granting or refusing to grant permission shall, subject to the provisions of Sub-section (6), be final and binding on all the parties concerned and shall remain in force for one year from the Date of such order.
(6) the appropriate Government or the specified authority may, either on Its own motion or on the application made by the employer or any workmen, review its order granting or refusing to grant permission under Sub-section (3) or refer the matter or as the case may be, cause it to be referred to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.
(7) Where no application for permission under Sub-section (1) is made or where the permission for any retrenchment has been refused, such retrenchment shall be deemed to be illegal from the date on which the notice of retrenchment was given to the workmen and the workmen shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him.
(8) Notwithstanding anything contained in the foregoing provisions of this Section, the appropriate Government may, if it is satisfied that owing to such 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 the provisions of Sub-section (1) shall not apply in relation to such establishment for such period as may be specified in the order.
(9) Where permission for retrenchment has been granted under subsection (3) or where permission for retrenchment is deemed to be granted under Sub-section (4), every workmen who is employed in that establishment immediately before the date of application for permission under this Section shall be entitled to receive, at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months."
10. Section 25-L which appears at Chapter VB deals with the definition for this Chapter and we are concerned with Section 25-L(b) which defines appropriate Government, starts with an non obstantive clause; Section 25-L(b) provides :
"25-L. Definitions,--For the purpose of this Chapter,-
(a)xxxxx
(b) notwithstanding anything contained in Sub-clause (ii) of Clause (a) of Section 2,
(i) in relation to any company in which is not less than fifty one percent of the paid up share capital is held by the Central Government, or
(ii) in relation to any corporation not being a corporation referred to in Sub-clause (i) of Clause (a) of Section 2 established by or under any law made by Parliament, the Central Government shall be the appropriate Government."
11. Now coming to the arguments raised by the learned counsel with regard to the appropriate Government and the state amendment it is more than clear that as far as the definition of the appropriate Government in Section 2(a)(ii) of the Act of 1947 will not be applicable in relation to Chapter VB and the definition given of the appropriate Government in this chapter i.e. Section 25-L (b) will govern that is the Central Government, it is not in dispute that the present organisation is a Government of India undertaking and the maximum shares are with the Government of India, i.e. more than 51% of paid up share capital is of Government of India, as such the definition given in Section 25-L (b) will govern. Since it is a Government of India undertaking and more than 51% of the paid up share capital is held by the Central Government, therefore, as far as this company is concerned the appropriate Government is the Central Government. Since the Central Government is the appropriate Government, therefore, as per Section 25O the application has to be made before the Central Government. The application was made before the Central Government under Section 25O and the impugned order was passed by the Central Government. Therefore, as far as the order under Section 25O is concerned, the order has been passed by the Central Government which is the appropriate Government and no exception to that can be taken. The definition given in Section 2(a)(ii) has been specifically excluded under Section 25-L(b). In this connection our attention was invited to a decision of the Constitution Bench of the Supreme Court in the case of Steel Authority of India Ltd. v. National Union Waterfront Workers . In this case the question was with regard to interpretation of Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act. 1970 with that of Section 2(a)(ii) of the Industrial Disputes Act. 1947. But that interpretation has no meaning as far as the present case is concerned. The definition in the present case is governed by Chapter VB of the Act which is a complete code in itself and the definition given in Chapter VB in Section 25-L(b) is relevant for this Chapter. Therefore, the decision of the apex Court given in the aforesaid case has no relevance as far as the controversy involved in the present case. The definition given in Section 2(a)(Ii) of the Act of 1947 and the one under the Contract Labour (Regulation & Abolition) Act, which is a parameteria and the definition given in Section 25-L (b) are not the same and Section 25-L(b) clearly defines that in a Central Government undertaking or a company in which the Central Government has more than 51% share then in that case the appropriate Government shall the be the Central Government. Therefore, the definition given in Section 2(1)(a) of the Contract Act, 1970 and Section 2(a)(ii) under the Industrial Disputes Act, 1947 has no relevance as far as the present controversy is concerned. Therefore, the decision of the apex Court in the case of Steel Authority of India Ltd. v. National Union Waterfront Workers (supra) has no relevance in the present case. Thus, this submission of the learned counsel has no legs to stand.
12. Now coming to the question of State amendment that is West Bengal amendment, as reproduced above, what it safeguards is the compensation of the employees and the manner in which it should be paid. In this connection, learned counsel for the management has pointed out that under Section 25O the workmen would have been entitled to compensation as provided in Section 25N of that Act but in the order of the Central Government dated 21st September, 2001 far better conditions of compensation has been provided. The Central Government has granted benefit more than what could have been received by the incumbent under the State amendment and it has been made very clear in the order itself that the permission is granted subject to the condition that the workmen of the two industrial units would be given one more chance to exercise their option for VRS within a period of 15 days from the date of issue of the order. If this protection was not given to the workmen then the workmen would have only got a paltry sum in terms of Section 25N of the Act but on the contrary the manner and mode has also been provided in the order of granting the benefit of retrenchment compensation to the incumbent and they were given an option to opt for voluntary retirement scheme within 15 days from the date of issue of the order. By virtue of VRS/VSS scheme the amount of compensation is much more than they would have got as explained in the statement filed by the management. The Incumbent have been granted more than what they could have got under Section 25-N(9) of the Act. Therefore, the submission of the learned counsel that the State amendment has not been kept in view and the mode and method of giving compensation has not been detailed in the order does not appear to be correct. On the contrary it appears that the appropriate Government was mindful of the plight of the workers and they have provided that the workmen of the both the units will be entitled to opt for VRS/VSS which is more beneficial to them then the benefit they could have received as per the State amendment. Comparing the two benefits flowing from the order of Central Government dated 21st September. 2001 (as shown above), we find that the argument of the learned counsel with regard to payment of compensation in terms of the State amendment cannot provide better benefit then the one provided by the order of the Central Government. The appropriate Government is mindful of the welfare of the workers and directed the management to give the workmen 15 days time to opt for the VRS/VSS. Mr. Bhattacharya. learned counsel submitted that 15 days time given has long elapsed, therefore, he requested that at least one month's time may be given from the date of passing of this order to opt for VRS/VSS. This request of the learned counsel is justified and the management shall give one month's time from the date of this order to the workmen to opt for VRS/VSS.
13. Now coming to the next question that the order is not a speaking order. The learned counsel for the appellant has pointed out that reasons given by the BIFR has been adopted while passing this order which should not have been done. It was also submitted that as per Section 22(3) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) when the BIFR is in session of the matter, in that case all other proceedings should be suspended. Therefore, it was submitted by the learned counsel that since the matter was pending before the BIFR all the proceeding should normally remain suspended. So far as applicability of Section 22(3) of SICA is concerned, it may be relevant to mention here that all the proceedings before the BIFR has come to an end and the appeal before the AAIFR against the order of the BIFR" was also dismissed. A copy of the order of the AAIFR dated 13th November, 2001 has been placed on record. The BIFR has already passed the order that the company is not revivable and that order has been affirmed by the AAIFR therefore that argument in the present case is purely academic. However, it may be relevant to mention that the BIFR passed an order dated 26th June, 2001 and an appeal was preferred but no stay order was passed by the AAIFR and the appeal has now been dismissed by the AAIFR by the order dated 13th September. 2001. Therefore, the argument of learned counsel that the proceeding was pending before the BIFR is not acceptable as the impugned order was passed on 21st September, 2001 by that time the BIFR has already rejected the petition for revival of the company dated 27th June, 2001 as such Section 22(3) of SICA has no application in the present case. An appeal was also preferred from the order of the BIFR but no stay order has been brought to our notice against the order passed by the BIFR. The said appeal was dismissed on 13th November, 2001. Therefore, suspension of the proceeding for closure of the said two industrial units in view of Section 22(3) of SICA is not applicable in this case. We need not to go further as far as the effect of Section 22(3) of SICA vis a vis Section 25O of the Act is concerned. It seems that the argument has been made without keeping in view the order passed by the BIFR. More so, this fact was clearly stated in the application moved by the management for closure.
14. Coming to the next question with regard to reasons given in the order and that the findings of the BIFR was used for passing the impugned order does not appear to be correct. In the order this was stated as a fact that the matter was, at one point of time, pending before the BIFR but it is not correct to say that the reasons given in the order of BIFR has been utilised for passing the impugned order. The impugned order clearly states that the reasons given by the management for closure of the two industrial units appears to be reasonable and genuine. Instead of repeating all these reasons mentioned in the order, the order says that the reasons shown are reasonable and genuine. Therefore the appropriate Government was satisfied with the reasons given in the application. The reasons given in the application was that Mining & Allied Machinery Corporation Limited operation suffered right from the beginning owing to limitation of underground mining development resulting in lack of capacity utilisation, continued excessive manpower and social overhead due to large social infrastructure. In spite of restructuring in the past and waiver of interest burden and plan and non plan assistance from Government of India, the operations could not become profitable and remained uneconomical. It was also stated that owing to the introduction of VRS from 1989-90 to 1994-95 about 2129 workers left the organisation under this scheme. This scheme was dis-continued in 1995 and the company was referred to the BIFR in 1992 after its erosion of the net worth and cash losses. IFCI submitted a report in November, 1993 suggesting a cash infusion of Rs. 142 crores beside restructuring/waiver of loans and interest. The matter was heard before the BIFR on 6 occasions and the BIFR reached a prima facie conclusion to winding up the company and issued show cause notice and an injunction was passed by this Court on 7th February. 1995 and the proceeding before the BIFR was stayed. The stay was revoked on 13th February, 2001 by this Court and the BIFR was directed to consider a fresh revival scheme. It is also pointed out that the VSS scheme was again introduced in 1998-99 and the scheme was kept open for six months. During this period 1954 persons were rationalised under the scheme and there was an workforce of 2023 as on 30th August, 2000 and decision was taken to close down the factory by the Government. But, however, things continued and again 1503 persons including 67 persons from Nagpur workshop were granted benefit of the VSS scheme. A writ petition [W.P. No-16347(w) of 2000] was filed before the Calcutta High Court and this High Court observed that the respondents shall not close down the company without obtaining permission under Section 25(O) of the Act. Another writ petition (AST No. 3183 of 2000} was filed before this Court wherein this Court passed the same order. Another writ petition was filed before the Mumbai High Court and interim orders were obtained. Then application was filed for vacating the interim order when the Mumbal High Court by its order dated 24th January, 2001 allowed the employees of Nagpur unit to seek benefit of the voluntary separation scheme. Thereafter another application was filed before this Court detailing all these facts including the fact that on 29lh June, 2001 the BIFR after considering the concerned parties came to the conclusion that it is not possible to revive the company as the promoters are not serious in rehabilitating the company nor are -they resourceful enough to mobilize the funds required for this purpose/After the order was passed on 29th June, 2001 the application for permission to closure was moved on 27th July, 2001 under Section 25(O) of the Act.
All these have to be detailed in the order, after reading the order along with application and going through all the facts it is more than apparent that the appropriate Government found that all the facts staled in the application are reasonable and genuine and therefore they granted the permission for closure. Therefore, simply because the order only narrates the facts and finding all the facts given in the application to the reasonable and genuine it cannot be said that there is non-application of mind and the order is not a speaking order. This is a fact that the company went to the BIFR and the BIFR tried to revive the company but failed. This statement of fact has been noticed and order has been passed by the BIFR on 29th June, 2001.
therefore it is not a case that the appropriate Government has passed the order primarily on the basis of the order of the BIFR but it appears that all these statement of facts were taken into consideration and thereafter the order was passed by the appropriate authority. It shows that the order is a speaking order with due application of mind. We may refer here the argument raised by Mr. Bhattacharya that as per section 25-O which says that inquiry is to be made and no such inquiry has been made also does not appear to be correct because all these facts have been brought in the application dated 27th July, 2001 before the authorities along: with all relevant documents and orders passed by different Courts including the order passed by the BIFR. Therefore, inquiry has been made on the detailed facts and a speaking order was passed by the authorities and it is wrong to say that no such inquiry has been made in terms of section 25-O of the Act.
15. Today in this millennium when there is a global economy, India can not lag behind. India has to survive in world market and it cannot carry on with the sinking companies. Therefore, the whole matter should be approached in a pragmatic manner.
Mr. Mitra, learned counsel for the State submitted that the stand of the State was not taken into consideration by the authorities while passing the order that the State Government was uprooting the cause: of the workers for rehabilitation. However, the Government of West. Bengal was not prepared to infuse the required money for the revival of the Company they only showed sympathy with the workers by agreeing to provide exemption of certain loans and dues on account of Sales Tax but that was not sufficient. We posed a question to Mr. Mitra and Mr. Das appearing for the State whether the Slate Government was prepared to take over the company and make sufficient investment to revive the company but they could not give any assurance. Therefore, this argument does not cut any ice.
16. Mr. Mitra also submitted that the Central Government cannot be a judge in their own cause. As the Central Government is the appropriate Government and the application has to be made by the Company before the Central Government which happens to be the major share holder of the company. This argument has also no legs to stand because making an application is an administrative act of the Government and the order passed by the Government under section 25-O is a quasi judicial action. Therefore, these two arc different actions of the Government and the argument that the Central Government cannot be a judge in their own case has no application in the present case. Our attention was invited by the learned counsel for the management to a decision in the case of Dayakar Reddy v. Md Alwyn Auto Ltd. where the apex Court while dealing with a matter under section 25-O observed that where a State undertaking is to be closed then the State has to take administrative (decision first and then a quasi judicial decision under Section 25(O). Their Lordships held that the Government followed the proper procedure and consider all the relevant aspects and on the facts held that the State was justified in granting permission for the closure. In this case out of 1800, 1200 workers had already shown their willingness to accept the voluntary retirement scheme which clearly shows the reasons why the company had become unviable and why it was not able to carry on its aclivilies further. Their Lordships held the reasons to be genuine and adequate and held that the Government was justified in granting permission for closure. It was held :
In a case where the company is a State Government undertaking, the State has to take an administrative decision first and then a quasi judicial decision under Section 25(O). While exercising its power under section 25(O) the State Government did follow the proper procedure and consider all the relevant aspects. It is not possible to find any fault with the decision of the State Government. The facts of this case are very eloquent. Moreover, by the time the Government took the decision, out of 1800 workers, 1200 workers had shown their willingness to accept the Voluntary Retirement Scheme. GO dated 16-6-1997 clearly discloses the reasons why the Company had become unviable and why it was not able to carry on its activities any further. The reasons appear to be genuine and adequate and therefore the Government was justified in granting permission for closure of the Company."
17. Their Lordships further answered the question which has been raised by Mr. Mitra that the Government has decided to close down the company and the Government has passed the order under Section 25(O). In that case their Lordships held that these are two functions performed by the Government one is administrative capacity and the second is a quasi judicial one Therefore, the argument that the Government cannot be a judge of its own cause was specifically negatived. It was observed:
"It was contended by Mr. P.S. Misra, learned senior counsel for the petitioner that in this case the Slate has suggested that the Company should be closed down and it was the same State which then decided under section 25-O to grant permission for closure. In a case where the company is a State Government undertaking, such a situation may arise. It has to take administrative decision first and then a quasi judicial decision under Section 25(O). What we find is that while exercising its power under section 25-O it did follow the proper procedure and consider all the relevant aspects. It is not possible to find any fault with the decision of the State Government."
18. Therefore, this argument of Mr. Mitra is to be rejected.
19. Now coming to the argument of Mr. Majumdar. learned counsel for appellant in MAT No. 3560 of 2001, he submitted that the State Government has already made a reference against this closure and the reference is pending. He also emphasised that the matter is pending before the BIFR therefore the Central Government should not have exercised its power under section 25-O of the Act. In the present case, as already pointed out above, that the Central Government is the appropriate authority and the Central Government has granted permission to effect closure of both the industrial units then in that case the reference made by the State Government before the Industrial Tribunal in exercise of power under Section 10 of the Industrial Disputes Act is meaningless. We have already held above that as per definition of "appropriate Government" in Section 25-L(b) of the Act it is the Central Government which is the appropriate Government then in that case exercise of power under Section 10 of the Act by the Slate was without jurisdiction. Our attention was invited to the case of Bombay Metropolitan Transport Corporation Ltd. And Employees of B.M.T.C. (CIDCO) reported in 1988(1) LLJ 281. In that case the question was whether the winding up by the Company Court shall prevail or permission is to be obtained under section 25-O of the Industrial Disputes Act. The learned single Judge of the Bombay High Court took the view that without obtaining the prior permission for closure under the Industrial Disputes Act the winding up under the Companies Act cannot be maintained. But there is no such question involved in the present case. The management has made an application under section 25-O of the Industrial Disputes Act for permitting them to close their two industrial units. Therefore, there is no controversy in the matter that whether the order passed by the company Court should prevail or the order passed under the Industrial Disputes Act. Admittedly, in the present case permission has been sought under Industrial Disputes Act under Section 25(O). Therefore, this case has also no relevance in the present controversy.
20. The learned counsel has next submitted that under 25-FFA a notice is to be given to the appropriate Government as per the Constitutional Bench judgment in the case of Steel Authority of India Ltd. v. National Union Waterfront Workers (supra) and it is submitted that the appropriate Government in terms of 25-FFA is the State Government. It is alleged that notice was given to the State Government. The submission of the learned counsel with reference to 25-FFA is totally meaningless because the management has moved the appropriate Government under section 25-O of the Act and therefore the provisions under Chapter VB shall apply and in Chapter VB no reference of Section 25FFA appears nor it has any applicability whatsoever. Once and application has been moved under section 25-O under Chapter VB then all the procedure laid down in Chapter VB will be applicable. section 25-O which appears in Chapter VB clearly lays down the complete procedure for closing down the undertaking and for that the appropriate Government is the Central Government. Therefore, the reference of 25-FFA has no application as far as section 25-O is concerned. It clearly lays down whenever and employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective before the appropriate Government. Whereas the period prescribed under 25-FFA is sixty days for application before the appropriate Government. Therefore, 25-FFA has no application in the present case. In the present case we are governed by Chapter VB which is a complete code in itself where special definition has been given of the appropriate Government. Therefore, in the present case Chapter VB is applicable and 25-FFA has no application whatsoever. As such the argument is totally mis-conceived. The cases cited by the learned counsel with reference to 25-FFA has no relevance as far as this submission is concerned.
21. Similarly in the case of Rajasthan Trade Union Kendra, Jaipur And J.K. Synthetics Ltd. Kota reported in 1996(2) LLJ 347. In that case the Court held that 25-FFA is mandatory because it prevents sudden closure. Both the decisions relate to interpretation of Section 25FFA. As we have already taken the view that 25-FFA is not applicable in the present case as we arc governed by Chapter VB which is a complete code in itself. Hence, the submission of the learned counsel with reference to 25-FFA and the above two decisions have no relevance.
22. Mr. Bhattacharya, supporting the case of the appellant, has also invited our attention to Bharat Gold Mines Officers' Association v. Union of India reported in 2001 Lab. 1C 1659. This was a case in which permission of closure was set aside on the ground that the order of closure has been granted by accepting the reasons assigned by the management and submissions made by the unions and other interested parties were not considered and their Lordships upheld the contention that the order docs not show the application of mind. But we have already considered this aspect above while dealing with the reasons given in the order and we are satisfied that the reasons given by the management were duly considered and they are germane to the issue. Therefore, the order passed by the appropriate Government under section 25-O of the Act is a reasonable order and it shows due application of mind. This decision of the Karnataka High Court is distinguishable on facts. In our case due opportunity was given to the labour union but they could not bring any tangible proposal. Not only that we have called upon Mr. Mitra and Mr. Das appearing for the State Government as to whether the State Government was prepared to undertake the revival of these two units by investing Rs. 149 crores but answer was not forth coming. More so, these two industrial units have become so sick that large number of workforce has left the units by taking the benefit of VRS/VSS. Out of a workforce of 6000 only 1500 remained and this itself shows that the establishments is not viable one. In the present economic condition of country if units becomes non-viable then it is not conducive in public interest to continue them, it is in public interest to close down such units and save the drain on public exchequer.
23. As a result of the above discussion we are of the opinion that there is no merit in both the appeals and they are dismissed. Since the workmen were given 15 days time to opt for the VRS in the order dated 21st September, 2001 and the period has since expired in litigation therefore we direct that the appellant workmen may be given one months time to opt for the VRS from the dale of this judgment.
S.K. Mukherjee, J.
24. I agree. Later on The prayer made by Mr. R.N. Majumdar, appearing on behalf of the appellant in M.A.T. 3560/2001 for stay of operation of this judgment is considered and refused.
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