Madras High Court
A. Madheswaran vs The State Of Tamilnadu on 26 April, 2006
Author: P.Sathasivam
Bench: P.Sathasivam, J.A.K.Sampathkumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated: 26/04/2006
Coram
The Hon'ble Mr. Justice P.SATHASIVAM
and
The Hon'ble Mr. Justice J.A.K.SAMPATHKUMAR
W.A. No.308 of 2005
and W.P. Nos.6592, 6632, 6840 to 6844, 6851 to 6855, 6940 to 6945,
6997 to 7002, 7026, 7027, 7029, 7030, 7048 to 7052
, 7105, 7106, 7112 to 7117, 7127, 7218, 7219, 7220, 7221, 7382,
7417, 7487, 7513, 7524, 7554, 7656, 7657, 7702, 7858, 8001,
8018, 8086, 8289, 8465, 8629, 8684, 8717, 8738, 8739, 9024, 9423, 9572,
9917, 12578 , 12579/04; 34403, 35574 & 35595 of 2005
and
WAMP No.560/2005 and WPMP Nos.7848, 8288, 8292, 8301 to 8303, 8529, 8
530, 8532, 8534, 8535, 8731, 8732, 8877, 8894, 8950, 8951, 9062, 9063
, 9117, 9319, 11599, 14693, 14695, 9459, 9467, 9528, 9529, 9951, 101
12, 10175, 10213, 10233, 10234, 10532, 10996/04; 37312, 38379 & 38400
of 2005
A. Madheswaran ... Appellants
-Vs-
1. The State of Tamilnadu
Rep. by the Secretary to Govt.,
Handlooms, Handicrafts, Textiles
& Khadi Crafts Dept.,
Secretariat, Chennai 9.
2. The Tamilnadu Khadi & Village
Industries Board, Kuralagam,
Chennai-108, Rep.
by the Chief Executive Officer,
Kuralagam, Chennai-108. ... Respondents
W.A. No.308 of 2005 filed against the order of the learned single
Judge in W.P.M.P. No.8057 of 2004 in W.P. No.6842/2004 dated 19.3.2004.
! Mr.R.Singaravelan, for Appellant in WA.308/05
and for petitioners in WP Nos.6997 to 7002,
7112 to 7117, 7127, 6840 to 6844, 6851 to
6855, 6940 to 6945, 7105, 7106, 7218, 12578
and 12579 of 2004.
Ms.R.Vaigai, for petitioners in WP Nos.6592,
7029, 7030, 7219, 7220, 7487, 7702, 8001, 8299,
8629, 8684, 8738, 8739, 9423/04; 34403, 35574
& 35595 of 2005.
Mrs.Nalini Chidambaram, Senior Counsel for
Mr.L.S.M.Hasan Fizal for petitioners in WP.
Nos.7026, 7027, 7221, 7554, 9917, 8086 &
9024/04.
Mr.P.Rajendiran, for petitioners in W.P.6632,
7524 & 8018 of 2004.
Mr.K.Venkatakrishnan, for petitioner in WPs.7048
to 7052, 7513, 8465 & 8717 of 2004.
Mrs.A.V.Bharathi, for petitioner in WP.7382/04.
Mr.R.Malaichamy, for petitioner in W.P.7417/04.
Mr.A.R.Nixon, for petitioners in WPs.7656 & 7657/04.
Mr.G.R.Swaminathan, for petitioner in WP.7858/2004.
^ Mr.R.Muthukumarasamy, Addl. Advocate General, assisted
by Mr.B.Dinakaran for Khadi Board;
Mr.D.Krishnakumar, Spl. Govt. Pleader for State.
:COMMON JUDGMENT
P.SATHASIVAM, J.
" The art that is in the machine-made article appeals only to the eye the art in Khadi appeals first to the heart and then to the eye."
- GANDHIJI (Courtesy - Swagat, April, 06) Let us see as to whether the ideology of the Father of our Nation is being followed in letter and spirit.
2. Since the grievance expressed is one and the same in all these Writ Petitions, they are being disposed of by this Common Judgment. W.A. No.308 of 2005 is filed against dismissal of the stay petition.
3. A. According to the Petitioners, they are the regular employees of the Tamil Nadu Khadi and Village Industries Board (hereinafter referred to as 'Board'). It is their claim that they all worked continuously in the services of the Board for nearly 10 years and some of them have crossed 10 years of service also. It is not in dispute that their services were regularised and all of them are employees of the Board. They approached this Court by way of present Writ Petitions, challenging the action of the respondents in deciding to retrench 862 employees including the petitioners, who are permanent employees of the Board, which is in violation of Section 25N of the Industrial Disputes Act, 1947, as well as Articles 14 and 16 of the Constitution of India. According to the petitioners, the impugned action of the Government is wholly illegal.
B. It is not in dispute that each of the petitioners was appointed to the services of the Board through the Employment Exchange on proper selection by a Selection Committee constituted as per the Service Regulations of the Board. Some of them were offered appointment on temporary basis on regular pay scales while others were appointed on daily wage basis. However, even in respect of temporary appointments, Provident Fund recovery was initiated by the Board, stating that those persons were likely to be continued with the Board though the post was temporary. Further, the service was also identified as pensionable. Even the temporary appointments were regularised by the Board. After completion of the probation period of two years, all the persons were taken into regular service of the Board. For example, in the case of the petitioner in W.P. No.6592 of 2004, he was placed on probation for a period of two years as per Regulation 19 (1)(a) of the Tamil Nadu Khadi and Village Industries Board Service Regulations, 19 66. Thereafter, on 16.3.1994, he was sanctioned periodical increments, and finally on 25.3.1995, the Board issued an order under Regulation 19(1)(c), declaring him to have satisfactorily completed the probation period. The aforesaid confirmation of probation was also indicated to the Provident Fund Authority in the prescribed form. On 17.07.2 003, a letter was issued, granting him Selection Grade on completion of 10 years of service. It is pointed out that each of the petitioners have similar orders, though issued on different dates. Some of them may not have completed 10 years of service for acquiring the Selection Grade. All of them have been confirmed in service after satisfactory completion of their probation and have a minimum of 8 years of continuous service. Thus, all the petitioners are regular employees of the Board and they have been discharging their functions to the best of their ability without room for any complaint.
C. While so, on 12.3.2004, the Board issued an order, terminating the services of 97 employees, who are similarly placed, and the reason given in the order was that the Government had, in its order dated 12.3.2004, abolished 862 posts in the Board and consequently, it became necessary to terminate the services of the holders of the posts. The order further shows that it was decided to grant some relief, viz., 15 days wages as Service Gratuity and 15 days wages as compensation for every completed year of service. On enquiry, the petitioners came to know that the Government had issued an order in G.O.(Rt) No.19 8, dated 28.11.2003, through the Secretary to the Government, Handlooms, Handicrafts, Textiles and Khadi (F2) Department, regarding the Budget Estimate for 2003-2004 of the Board. The Government approved the Revised Estimate subject to the conditions that the temporary employees of trading wing and non-trading wing, numbering 862, shall be retrenched by making one-time payment of Rs.4 crores and that the permanent employees of trading wing will be considered for absorption in the Office of the District Rural Development Agency-DIC etc. D. Following the Government Order, dated 28.11.2003, the Board, on 12.3.2004, issued proceedings to the effect that, as a measure of reduction of staff cost, 862 posts are abolished and that the employees will be retrenched. 97 posts were identified and they were abolished forthwith. The said 97 employees, being regular employees of the Board and similarly confirmed on satisfactory completion of their probation, cannot be ousted from service in such an arbitrary manner. The respondent/Board is an "industry' as well as an "industrial establishment" since it has several manufacturing units. The Board is covered by the Industrial Disputes Act, 1947, as well as the Tamil Nadu ( Industrial Establishments Confirmation of Permanent Status to Workmen) Act, 1981. The respondent/Board, being an industry, is bound by the prohibitions or mandatory conditions imposed by the Industrial Disputes Act in regard to retrenchment. As per Section 25N of the Industrial Disputes Act, no employer, who employs more than 100 workmen, can retrench his employees without the prior permission of the appropriate Government in the prescribed manner and paying a statutory compensation as well as issuing prior notice therefor. In the present cases, the respondent/Board did not file any application for retrenchment under Section 25N of the Industrial Disputes Act. Hence, the retrenchment of the said 97 employees is wholly illegal and void.
E. The Board has been constituted under the Tamil Nadu Khadi and Village Industries Board Act, 1959, (Tamil Nadu Act 18 of 1959) for the development of Khadi and Village Industries. There are, in all, 220 0 employees of the Board all over the State. The Board has several activities like manufacturing khadi yarn and cloth, soap, paper, honey, leather products, food products, pottery, toys, carpentry and blacksmithy, and several other such activities, which are aimed at encouraging economic activities at the village level. The action of the respondents in abolishing 862 posts, in effect, will cripple the operations of the Board. Khadi and village industries development is mandated in the Directive Principles of State Policy under Articles 41, 46 and 48 of the Constitution of India and the Government cannot withdraw its support to such activities. The impugned action to abolish the posts is thus unconstitutional. In such circumstances, being left with no other alternative remedy, the workers have approached this Court by filing Writ Petitions under Article 226 of the Constitution of India.
4. I. The Chief Executive Officer, Tamil Nadu Khadi and Village Industries Board, Chennai-108, has filed a common counter. In the said counter, it is stated that the Writ Petitions are not maintainable. Though the Board maintains several manufacturing units in the field of hand made papers, soaps, honey, handicrafts, leather, khadi, silk, leather goods, blacksmithy, carpentry etc. , as provided for in the schedule to the Central Khadi and Village Industries Commissions Act, due to poor patronage for these goods, the Government was constrained to implement several tax benefits and rebate benefits for those products. The petitioners working in the Board cannot be classified as workmen and their claims do not fall within the purview of the Industrial Disputes Act. The Government provides grants to the Board to meet out the expenditure for its establishment cost. The Government was providing a grant of Rs.20 to 24 crores every year. The Board was meeting out its non trading expenditures like staff salary, establishment costs etc. from the grants received from the Government. However, on the trading side, the Board has to maintain its activities from its own resources. In spite of adopting economical measures, the Board is unable to maintain the surplus staff strength any longer. The funds from Khadi and Village Industries Commission to the Board has been curtailed for the past four years. The working capital of the Board utilized for manufacturing purposes has been drastically minimised to nil and this has also played a major part in the present financial crisis. Due to a spiraling cost trap, by which the Board was getting weaker day by day, the Government instructed the Khadi Board for reduction of its staff strength by 30% over the period of five years in both trading and non-trading categories. The accumulated loss incurred by the Board exceeded Rs.37.09 crores as on 31.3.2002 and unless some concrete measures are introduced and stringent action is taken, the Board would face difficulties in future and the loss could not be managed.
II. The Government, after considering the request of the Board, was pleased to direct the approval of the budget estimate for the year 2 003-2004. The condition is that the employees of the trading wing and non trading wing, numbering about 862, shall be retrenched. One time payment of Rs.4 crores had been granted towards settlement of retrenchment compensation and service gratuity.
III. The discharge of 97 employees for want of vacancy is perfectly legal and valid and such discharge was made out of necessity. There is no violation of Section 25N of the Industrial Disputes Act since the said Section is not applicable to the Writ Petitioners. The Government passed G.O.No.198 dated 28.11.2003 on the basis of the resolution made by the Board. The writ petitioners are all appointed only in temporary posts, even though they have completed their probation. There are also the junior most among the staff identified for discharge. The decision was taken only after considering various aspects and the impugned order was passed to prevent further loss to the Board.
5. Heard Miss.R.Vaigai, learned counsel, Mrs.Nalini Chidambaram, learned Senior Counsel, and Mr.R.Singaravelan, Mr.P.Rajendran, Mr.K. Venkatakrishnan, Mrs.A.V.Bharathi, Mr.R.Malaichamy, Mr.A.R.Nixon and Mr.G.R.Swaminathan, learned counsel, for the petitioners and Mr.R. Muthukumarasamy, learned Additional Advocate General for the State.
6. The main contentions of the learned counsel for the petitioners are,
(a) The retrenchment effected is in violation of Section 25N of the Industrial Disputes Act, hence, the impugned action is illegal.
(b) The impugned orders reveal a total non-application of mind on the part of the respondents inasmuch as they called the 862 employees as temporary workers, whereas, their appointment was through the Employment Exchange on a proper selection by the Committee constituted as per the Service Regulations of the Board. They were later placed on probation and on successful completion of their probation they were also declared to have been confirmed. In such circumstances, 862 employees, who are not temporary hands, cannot be sent out without complying the provisions of law.
(c) The action of the Government is against the Directive Principles of State Policy enshrined in the Constitution. It is also against the fundamental rights guaranteed to the petitioners to live with dignity and livelihood under Articles 14, 16 and 21 of the Constitution of India.
7. While meeting the above contentions, learned Additional Advocate General submitted that though all the petitioners are permanent employees, considering the financial position, the Government, exercising its budgetary power under Section 18 as well as the general power under Section 13 of Tamil Nadu Act 18 of 1959, after taking a policy decision, decided to terminate 862 employees. He also contended that the respondents are not accepting the stand of the petitioners that they are workmen and that such issue has to be tested before the Labour Court and not in the Writ Petitions. He further contended that since the Government, after taking note of the various aspects including the surplus staff strength, financial position etc., passed an order, retrenching 862 staff and also earmarked Rupees four crores for settlement by way of one time payment, the scope of judicial review is very limited and that all the Writ Petitions are liable to be dismissed.
8. We have carefully considered the relevant materials and the rival contentions.
Khadi and Village Industries Board:
9. The TamilNadu Khadi and Village Industries Board Act, 1959 ( TamilNadu Act 18 of 1959) was enacted by the State of Tamil Nadu. The main objective of the Act is to provide for the establishment of a Board for the development of khadi and village industries. The Preamble of the Act makes it clear that in order to provide for the establishment of a Board for the development of Khadi and village industries, the State of Tamil Nadu enacted the said Act.
10. The following definition in Section 2 is relevant, which is extracted below:-
" 2. Definitions : In this Act, unless the context otherwise requires:-
(a) ..........
(b) ..........
(c) "khadi" means any cloth woven on handlooms in India from cotten, silk or woolen yearn, handspun in India or from a mixture of any two or all of such yarns;
(d) "Khadi and Village Industries Commission" means the Khadi and Village Industries Commission established under Section 4 of the Khadi and Village Industries Commission Act, 1956 (Central Act 61 of 1956).
(e) ...........
(f) ........... (g) ...........
(h) "village industries" means-
(i) all or any of the industries specified in the Schedule to the Khadi and Village Industries Commission Act, 1966 (Central Act 61 of 1956); and
(ii) any industry specified in this behalf by the Government by notification in consultation with the Board;
and includes any other industry deemed to be specified in the said Schedule by reason of a notification under Section 3 of the said Act. "
11. Chapter-II relates to the Khadi and Village Industries Board. Section-3 speaks about establishment and constitution of the Board, and the same is extracted below:-
" 3. Establishment and constitution of the Board :-
(i) With effect from such date as the Government may, by notification, fix in this behalf, there shall be established a Board to be called the Tamilnadu Khadi and Village Industries Board. It shall be a body corporate having perpetual succession and a common seal with power to acquire, hold and dispose of property and to contract and may, by the said name, sue and be sued.
(2) (a) The Board shall consist of not more than fifteen members including the president, the vice president and the secretary (where the secretary is appointed by the Government from amongst the members). The appointment of members, except the president, shall be made by the Government and shall be published in the Tamilnadu Gazette.
(b) The Minister in charge of khadi development in the State shall be the president of the Board.
(c) The Vice-president shall be elected from amongst the nonofficial members of the Board.
(d) The Government may, in consultation with the Board, appoint a person who may or may not be a member of the Board to be the secretary of the Board :
Provided that where a person other than a member is appointed as Secretary, he shall not be entitled to vote at meetings of the Board.
(e) the majority of the members shall be non-officials
(f) The Government shall appoint as members:-
(i) only such non-officials as have shown an active interest in the production and development of khadi or in the development of village industries, and
(ii) officials."
12. Chapter-III refers to various functions of the Board. Amongst other functions, the main object of the Board is to plan, organize and implement programmes for the development of khadi and village industries. (emphasis supplied)
13. Chapter-IV relates to Finance, Accounts, Audit and Reports. As per Section-15, the Board has to maintain two funds, viz., Khadi Fund and the Village Industries Fund. Section-16 enables the Government from time to time to make subventions and grants to the Board for implementation of the purposes specified in the Act. Government may also advance loans to the Board. Section-18 speaks about Budget. The Board has to prepare and submit the Budget to the Government for approval, showing the estimated receipts and expenditure in respect of khadi and village industries respectively during the financial year.
14. Section 29 enables the Government to make Rules and by virtue of Section 30, the Government can make the Regulations.
15. The various provisions referred to above would make it clear that it is mandatory on the part of the State Government to develop and encourage Khadi and Village Industries by sanctioning more grants and advancing loans. The Board is also empowered to receive money from various sources by way of grants, subventions, donations & gifts and to receive loans from the Central Government or State Government or the Khadi and Village industries Commission or any local authority or any body or organisation or any individual for all or any of the purposes of the Act.
What Constitution says?
16. Apart from the above provisions, it is useful to refer to Article 43 of the Constitution of India, which reads as under:-
" 43. Living wage, etc., for workers.-- The State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas."
The above provision in the Directive Principles of the Constitution of India makes it obligatory on the part of the State Government among other things to provide decent wages to all workers. It also mandates the States to endeavour to promote cottage industries on an individual or co-operative basis in rural areas.
17. In this background, let us consider as to whether the impugned action of the Government in retrenching 862 persons, employed in the Trading Wing and the Non-Trading Wing of the Board, is justifiable or not?
Khadi Board Industry or not?
18. Section 2(j) of the Industrial Disputes Act, 1947, defines ' industry' as follows:-
" 'Industry' means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen."
19. Miss.Vaigai, learned counsel appearing for some of the petitioners, by adverting to the activities of the Board and the number of persons involved, contended that Khadi Board is an 'industry' as well as an 'industrial establishment'. It is not in dispute that the Board has several manufacturing units. According to her, the Board is covered by the Industrial Disputes Act, 1947.
20. On the other hand, learned Additional Advocate General, reiterating the specific stand taken in the counter, contended that the Board is not an 'industry' and that, even otherwise, the said issue cannot be decided by this Court as the proper course for the petitioners is to approach the Labour Court.
21. On going through the various activities of the Board and the number of persons employed, we are unable to accept the objection raised by the learned Additional Advocate General. As a matter of fact, in paragraph No.29 of the counter affidavit filed by the Khadi and Village Industries Board, the Chief Executive Officer has admitted that the Board is maintaining manufacturing units in some of the places. We have already referred to the fact that the Board has several activities like manufacturing khadi yarn and cloth, soap, paper, honey, leather products, food products, pottery, toys, carpentry, blacksmithy and several other such activities, which are aimed at encouraging the economic activities at the village level.
22. In (1983) 2 SCC 4 (Northern Carriers Pvt. Ltd. vs. Jullundur Improvement Trust), the Honourable Supreme Court has held that Bihar Khadi Gramodyog Sangh is an 'industry' within the meaning of the expression of Section 2(j) of the Industrial Disputes Act. The Supreme Court, after pointing out the Constitution Bench decision in Bangalore Water Supply & Sewerage Board vs. A.Rajappa ((1978) 3 SCR 207), concluded thus, " The wide sweep of expression 'industry' as interpreted therein will comprehend Bihar Khadi Gramodyog Sangh and, therefore, following the decision it must be held that Bihar Khadi Gramodyog Sangh is an industry within the meaning of the expression of Section 2(j) of the Industrial Disputes Act. 1947."
23. As discussed earlier, in view of several activities carried on by the Board including manufacture of khadi yarn and other products and of the fact that 2200 permanent employees are being engaged in the activities of the Board and that the Tamil Nadu Khadi and Village Industries Board is similar to Bihar Khadi Gramodyog Sangh; and in the light of the above referred decision of the Supreme Court; we are satisfied that the Board is covered by the Industrial Disputes Act, 19 47 as well. In view of our conclusion, viz., the respondent/Board is an 'industry', it is bound by the mandatory prohibitions imposed by the Industrial Disputes Act, 1947, in regard to retrenchment.
Section-25N of the I.D. Act, complied with or not?
24. Now let us consider as to whether the impugned order of the Government to retrench 862 employees is in violation of Section 25N of the Industrial Disputes Act as claimed by the petitioners.
25. Section 25N of the Industrial Disputes Act, 1947, refers to ' conditions precedent to retrenchment of workmen'. The relevant provisions are as follows:-
" 25N. Conditions precedent to retrenchment of workmen.-- (1) No workman 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 workman has been given three months' notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman 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 (hereafter in this section referred to as the specified authority) has been obtained on an application made in this behalf."
It is clear from sub-Section(1) that no workman, who has been in continuous service for not less than one year, shall be retrenched without following the procedure contemplated in Section 25N of the I.D. Act.
26. As per sub-section(2), an application for permission under subSection (1) shall be made by the employer in the prescribed manner, giving reasons for the intended retrenchment, and a copy of the said application shall also be served on the workmen concerned in the prescribed manner.
As per sub-Section(3), where an application for permission under sub-section (1) has been made, the Government, after making enquiry and after affording reasonable opportunity of being heard to the employer, the workmen concerned and the persons interested in such retrenchment, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, after recording the reasons in writing, may either grant or refuse permission and a copy of such order shall also be communicated to the employer and the workmen.
Sub-section (5) makes it clear that the order of the Government, either granting or refusing to grant permission, subject to the provisions of sub-section(6), shall be final and binding on all the parties concerned and shall remain in force for one year from the date of such order. Sub-section(6) enables the Government to refer the issue to the Industrial Tribunal for adjudication. Further, prior permission of the Government is mandatory before retrenching any workman.
27. As per the Tamil Nadu Industrial Disputes Rules, 1958, an employer, who intends to retrench his workmen, has to make an application in Form "R-1", giving details of the workmen proposed to be retrenched as well as details regarding total number of workmen employed in the Industrial Establishment and the total number of those who will be affected by the proposed retrenchment. The application also must contain declaration declaring that the workmen permitted to be retrenched will be paid compensation due to them under sub-section(9) of Section 25-N of the Act.
28. In the impugned order, viz., G.O. (Rt) No.198, Handlooms Handicrafts Textiles and Khadi Department, dated 28.11.2003, though a reference has been made to the letter from the Chief Executive Officer, Tamil Nadu Khadi & Village Industries Board, the same is not an application in terms of Section 25N of the Industrial Disputes Act. We have already referred to various procedures to be followed, if any workman is to be retrenched. There must be an application in terms of Form R-1. The employer has to furnish various details required to be shown therein. When such an application is made for permission under sub-section (1) of Section 25N, it is incumbent on the part of the Government to make an enquiry by affording reasonable opportunity of being heard to the employer as well as the workmen concerned and also the persons interested in such retrenchment. It is also mandatory on the part of the Government to conduct the enquiry having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the workmen and all other relevant factors, and after recording the reasons in writing, either grant or refuse such permission. It is also incumbent on the part of the Government to communicate such decision to the employer as well as to the workmen.
29. A perusal of the impugned order shows that the Chief Executive Officer of the Tamil Nadu Khadi and Village Industries Board submitted a proposal viz., Revised Estimate for 2002-2003 and Budget Estimate 2003-2004 for approval of the Government. While approving the Revised Estimate for 2002-2003 and Budget Estimate for 2003-2004, the Government imposed a condition that the temporary employees of trading wing and non-trading wing, numbering 862, shall be retrenched by making one-time payment of Rs.4 Crores. The letter of the Board, dated 27.2.2003, and the ultimate decision of the Government cannot be a formal application, as provided in sub-section (1) of Section-25N of the I. D. Act, and an order of the Government in terms of sub-section (5) of Section-25N. Nowhere in the impugned order, it has been stated that the Government has conducted an enquiry in compliance with the provisions of the Act. In paragraph No.2 (iv) of the Government Order, it is stated that out of 171 khadi Krafts, 149 are functioning in rental premises; that most of the khadi krafts have turn over, which will not cover the costs; and that all such loss making Khadi Krafts shall be closed at once ensuring that at least 1 khadi kraft is available in each district. Except the financial position, the Government has not considered other relevant materials/aspects. We have already recorded the admitted stand of the respondents that all the workmen are permanent, though, in the impugned order, it is stated temporary employees (para No.2(i)). In fact, learned Additional Advocate General has fairly admitted that it is a mistake and that the services of the petitioners have been regularised in the Khadi Board.
30. In the earlier part of our order, we have concluded that the Khadi Board has sufficient manufacturing units and there are 2200 employees engaged in the services of the Board, in such circumstances, retrenchment of those workers, without complying with the procedure contemplated in Section 25N of the I.D. Act, is void.
31. We accept the contention of the learned counsel for the petitioners that the impugned action is in violation of Section 25N of the Industrial Disputes Act, accordingly, the same is illegal. As rightly pointed out, though the Government provides funds to the Board, it cannot direct the Board to act in violation of the statutory provisions. Inasmuch the provisions of the Industrial Disputes Act, governing retrenchment, are mandatory, any retrenchment effected in contravention of the said provisions is void and inoperative.
32. Coming to the second contention, as rightly pointed out by the counsel appearing for the petitioners, the petitioners were appointed to the services of the Board through the Employment Exchange on proper selection by a Selection Committee constituted as per the Service Regulations of the Board. Though they were appointed on temporary basis, it is not in dispute that, after successful completion of the probation, they were regularised and being paid regular pay wages. In fact, learned Additional Advocate General fairly conceded that the reference made in paragraph No.2(i) of the impugned order of the Government, dated 28.11.2003, is a mistake. In such circumstances, 862 employees, who are not temporary hands, cannot be sent out without complying the provisions of law as discussed above.
33. The next contention is that the action of the Government is against the Directive Principles of State Policy enshrined in the Constitution of India, in particular Article 43, which expects the State to take initiatives to promote cottage industries on an individual or co-operative basis in rural areas.
34. Section 2 (h) of the Tamil Nadu Khadi and Village Industries Board Act, 1959, defines 'village industries'. As per Section 2(h)(i), the industries specified in the Schedule to the Khadi and Village Industries Commission Act, 1956 (Central Act 61 of 1956), and as per Section 2(h)(ii), any industry specified by the Government by notification in consultation with the Board, come within the ambit of ' village industries'. We have already mentioned the preamble of the Act and as per the same, it is the duty of the State Government to establish a Board for the development of Khadi and village industries. Inasmuch as Khadi and Village Industries development is mandated as per the Directive Principles of State Policy, the State cannot withdraw its support to such activities. On the other hand, we are of the view that the State must take all initiatives for the survival of the village industries, which are backbone for development of economy at village level. It is true that budgetary proposal of the Board shows loss for several years and now, the Board is unable to withstand without support or grant of the Government.
35. Mr.R.Singaravelan, learned counsel appearing for some of the petitioners, by drawing our attention to various provisions of the Act, pointed out that the Board is entitled to funds from various sources including the Central Government and the Khadi and Village Industries Commission established under Section-4 of the Khadi and Village Industries Commission Act, 1956 (Central Act). In fact Section 15 of the State Act enables the Board to receive grants not only from the Central/State Governments but also by way of other grants, subventions, donations, funds, etc.
36. Mrs.Nalini Chidambaram, learned Senior counsel for some of the petitioners, has brought to our notice that similar Boards functioning in Delhi and Allahabad are getting profits by their products and good administration. In fact, she placed certain products of other similarly placed Boards and submitted that those products are in need among the public due to the wise measures adopted in popularising those products and that by adopting such innovative methodology, the Tamil Nadu Khadi Board can also reach the pinnacle in the public market.
37. We agree that nobody can underestimate the products of Khadi and Village Industries Board, in fact, they are good for heath, cheaper in price and superior in quality. It is the grievance of the State that patronage for those products is not up to the mark, which necessitated them to close down several Khadi Krafts within the State. As suggested by the learned Senior Counsel, by adopting business techniques and tactics, the Khadi products can be made as more consumable items by the public. It is for the State Government to find out the novel methods for popularising the Khadi products and making their availability at cheaper price.
38. Learned Additional Advocate General, by drawing our attention to the decision of the Apex Court reported in ((2003) 11 SCC 784) Notified Area Council v. Gahar Mohd.), submitted that since the Government had taken a policy decision for abolition of 862 posts due to paucity of funds, such decision cannot be interfered with by this Court.
39. It is true that in the said decision, in paragraph No.4, the Hon'ble Supreme Court, has held thus:-
" ... The position is fairly well settled that continuance or abolition of posts is within the power of the employer and any decision in that regard is not available to be interfered with by the court unless it is held to be vitiated by mala fides or is arbitrary"
He also heavily relied on a Division Bench decision of this Court reported in 2005 (1) CTC 396 (Chairman and M.D., rep. by Liquidator, T. N. Co-op. Oilseeds Growers' Federation v. T.N. Co-op. Oilseeds Growers' Federation Employees Union), in support of his claim that the correctness of the administrative decision cannot be questioned in a writ petition. In the said decision, the Division Bench, after referring to an earlier Division Bench decision reported in 2004 (5) CTC 554 ( Rama Muthuramaingam vs. The Deputy Superinentendent of Police), has concluded, 'ordinarily the Courts should not interfere with administrative decisions, and should exercise judicial self restraint'.
40. It is clear from the said decisions, first of all, there is no bar or complete prohibition from considering the administrative decisions taken by the Government and secondly, it depends upon facts and circumstances of each case. In the first referred Supreme Court decision ((2003) 11 SCC 784), aggrieved by the resolution passed by Notified Area Council, Orissa, to abolish the system of engaging workers on daily-wage basis, two aggrieved employees approached the Orissa High Court by way of Writ Petition, which was disposed of by the High Court on 25.08.1998, against which, the Notified Area Council filed appeal before the Supreme Court. The Hon'ble Supreme Court pointed out the legal position that continuance or abolition of posts is within the power of an employer and decision in that regard cannot be interfered with by the Courts unless it is mala fide or arbitrary.
41. In the case before the Division Bench of this Court (2005 (1) CTC 396), considering various aspects, viz., the Tamil Nadu Cooperative Oilseeds Gorwers' Federation limited has been continuously running at a loss; there are no prospects for future profitable operations; no scope for earning income through oil extraction from copra and its continuance is not serving the farmers' interest in any significant manner; various posts have been ordered to be abolished.
42. In the cases on hand, we have already referred to the ambition of the Father of our Nation in spreading the use of Khadi products and developing village industries; and the Directive Principles of State Policy enshrined in the Constitution of India, which mandates the State to bring forward legislation and take all initiatives for implementing the same. Further, the products of the Board are beneficial to millions of people. Taking note of the above aspects, we are of the view that it is but proper for the Government to take effective steps for survival of the Board and for its development. We are of the humble view that the decisions relied on by the learned Additional Advocate General are not applicable to the cases on hand in view of the peculiar factual position.
43. As rightly pointed out by Mrs.Nalini Chidambaram, as per Sections-11 and 12 of the Tamil Nadu Khadi and Village Industries Board Act, it is the duty of the Board to organise and implement various programmes for the development of Khadi and Village Industries. It is useful to mention the steps to be taken by the Board as provided in sub-Section(2) of Section-11:-
" (a) to start, encourage, assist and run khadi and village industries;
(b) to provide deserving persons with gainful employment in their homes through the organization of khadi and village industries;
(c) to grant loans and give other assistance for the development of khadi and village industries;
(d) to organize co-operative societies for khadi and village industries;
(e) to conduct training centres and train persons at such centres or at other centres outside State of Tamilnadu in khadi and village industries;
(f) to arrange for the supply of raw materials, tools and implements to such Industries and for the sale of their finished products;
(g) to arrange for the publicity and popularization of the finished products of such industries by opening stores, shops, emporia, exhibitions and the like;
(h) to educate public opinion and cultivate in the public a preference for such industries and for utilization of their producers;
(i) to seek and obtain advice and guidance of experts;
(j) to encourage and promote research in the technique of production of khadi or in the development of village industries; and
(k) to provide facilities for a study of the problems relating to khadi or village industries."
Section-12 provides necessary guidelines to the Board for the purpose of carrying out its functioning. The powers enumerated therein are:-
(i) to acquire and hold such movable and immovable property as it deems necessary and to lease, sell or otherwise transfer any such property.
Provided that any lease, sale or other transfer to any person or authority other than the khadi and Village Industries Commission of any immovable property belonging to the Board shall be null and void unless t is sanctioned by the Government;
(ii) to appoint a committee or committees for securing the efficient performance of its functions and, in particular, for ensuring that such functions are performed with due regard to the requirement of the local area concerned;
(iii) to incur expenditure and undertake any work in any area in the State for the framing and execution of such schemes as it may consider necessary for the purpose of carrying out the provisions of this Act, or as may be entrusted to it by the Government; and
(iv) to enter into any contract and to do all things necessary for the purpose of this act."
44. In the light of the above functions and powers of the Board, it is the duty of the State Government to secure and allot more funds for the survival and development of khadi and village industries. As pointed out earlier, the Central Government also owes more responsibility and it is but proper on its part to provide financial assistance to the State Board then and there, depending on the claim of the State Government. The Board can also seek assistance from the Central Khadi Commission. Section-12 also enables the Board to appoint a Committee or committees for the efficient performance of its functions considering due regard to the requirement of the local area concerned.
45. Though Mr.R.Singaravelan made an elaborate argument, pointing out various items from list-1 and list-3 in Schedule-7 of the Constitution, we are of the view that there is no need to go into the said aspect for disposal of the above Writ Petitions.
46. In the case on hand, first of all, the procedure contemplated under Section-25N of the I.D. Act has not been adhered to and bypassing all the procedural aspects and mandatory prohibitions, which are required to be complied with before retrenchment, the Government directed the Khadi Board to retrench its employees. It has to be borne in mind that our Constitution has broadened the horizons of the right of the employees and thus, they have been assured security of tenures against sudden termination of employment at the hands of the administrative agency without adhering to the procedure/prohibitions mandated in law. It is not as if that the Board has sunk forever into deep waters. By extending benevolent aid and introducing innovative measures, the Board can be made to stand even as a competitor in the business hub as in the case of the Boards at Delhi and Allahabad, and thereby, the State can also get the credit of fulfilling the ambition of the Father of our Nation. Apart from sending the Officials of the Board to Delhi and Allahabad to study the expertise in augmenting the standard of the Board, we also suggest for appointment of an Expert Committee to consider various aspects which include locating the Khadi Crafts at the Government Offices such as Collector and other Revenue Offices instead of continuing in rental premises as it gulps away probably a part of the income of the Board.
47. On considering the entire materials and various aspects, particularly the ideology/ambition of the father of the Nation, provisions in the Directive Principles of the Constitution, powers and functions of the Board and enabling provisions to secure funds from various sources including the Central Government and the Central Khadi Commission and also taking note of the legal aspect viz., non-compliance of Section 25N of the Industrial Disputes Act, we hold that the impugned Government Order in G.O.Rt.No.198, Handlooms Handicrafts and Khadi Department, dated 28.11.2003, is illegal. Accordingly, we declare that the employees, who have approached this Court by way of Writ Petitions as well as others covered under the said G.O., are entitled to be continued in service. It is made clear that the employees, who are ousted by the impugned G.O. and not in employment till this date, are not entitled to wages for the said period, however, the entire period shall be counted for all other service benefits. Insofar as the persons, who are actually retrenched by the impugned order, they are to be taken into service within a period of FOUR weeks from today.
48. All the Writ Petitions are allowed as mentioned above. No costs. The Common Order passed above also covers W.P. No.6842 of 2004, hence, no order is required in W.A. No.308 of 2005. Accordingly, the same is closed. Connected Miscellaneous Petitions are closed.
To
1. Secretary to Govt., Handlooms, Handicrafts, Textiles & Khadi Crafts Dept., Secretariat, Chennai 9.
2. the Chief Executive Officer, The Tamilnadu Khadi & Village Industries Board, Kuralagam, Chennai-108.