Bharat Gold Mines Officers' ... vs Union Of India And Ors. on 16 March, 2001

[Cites 38, Cited by 3]

Karnataka High Court

Bharat Gold Mines Officers' ... vs Union Of India And Ors. on 16 March, 2001

Equivalent citations: AIR2001KANT257, 2002(1)KARLJ130, AIR 2001 KARNATAKA 257, 2001 LAB. I. C. 1659, 2001 AIR - KANT. H. C. R. 1346, 2001 CLC 763 (KAR), (2002) ILR (KANT) (1) 408, (2002) 1 KANT LJ 130, (2002) 2 BANKCLR 156

1. These batch of writ petitions are directed against the orders of the Board for Industrial and Financial Reconstruction ("BIFR" for short) and the Appellate Authority for Industrial and Financial Reconstruction ("AAIFR" for short) and also the order of Government of India passed under Section 25-O of the Industrial Disputes Act in Ref. No. L-43024/ 2000-IR (MISC), dated 29-1-2001.

2. The writ petitioners in W.P. Nos. 154 to 166 of 2001 have assailed the Circular issued by the 4th respondent-the Deputy General Manager (Personnel) of Bharat Gold Mines Limited as in Annexure-F, the Circular dated 8-12-2000 giving options to the employees of Bharat Gold Mines Limited, a Heavy Industry Package or the Gujarat Package with the rider that no change in choice once exercised will be permitted and the employees were directed to avail the benefit offered by the Government of India on or before 10-1-2001 under the said scheme.

3. In W.P. Nos. 157 to 159 of 2001, the very writ petitioners have assailed the order passed by the AAIFR dated 15-11-2000 confirming the order passed by the BIFR dated 12-6-2000. In all these petitions, the petitioners have approached for issue of a writ of certiorari and to quash the said orders.

W.P. No. 1343 of 2001 is filed by the writ petitioners praying to issue a writ of certiorari or any other appropriate writ quashing the order dated 12-6-2000 passed by the BIFR and AAIFR and also to direct Government of India to reconsider the matter and to see that the Bharat Gold Mines Limited is not wound up and the mines is revived and to pass such order bearing in mind the provisions of Articles 14 , 21 , 41 , 42 and 43 of the Constitution of India and the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 ("the Act of 1985" for short).

4. In W.P. Nos. 4503 to 4507 and 5118 of 2001, the writ petitioners have prayed this Court to quash the order of Government of India dated 29-1-2001 for closure of Bharat Gold Mines Limited ("BGML" for short) under Section 25-O of the I.D. Act of 1947.

5. In W.P. No. 7987 of 2001, the writ petitioner is aggrieved by the closure of BGML and therefore prays to quash the order passed by the AAIFR confirming the order dated 12-6-2000 passed by the BIFR and to direct to approve the Scheme submitted by the writ petitioner for revival/rehabilitation of the Bharat Gold Mines Limited.

6. The BIFR in its order dated 21-2-2000 recalled the proceedings of the hearing held on 5-5-1999 wherein the Board issued certain directions to the Government of India and the BGML and having regard to the decision taken by the Government of India not to support the revival of the company and not to provide any financial assistance to the company for its revival, has recommended that winding up is the only course of action available and that privatising the company also through a process of global tender has failed, the Board finds that there is no merit in the submissions made by the employees for revival of the company and concluded that the only course of action open in this case is to wind up the company in all round public interest and thereafter directed to issue show-cause notice for winding up. This order of the BIFR was challenged before the AAIFR in Appeal Nos. 277, 290 and 291 of 2000 and that the Appellate Authority has affirmed the order of BIFR in its brief order dated 15-11-2000. The BGML thereafter addressed a letter to the Secretary to the Government of India, Ministry of Labour dated 29-11-2000 to accord permission for the closure of the company under Section 25-O of the ID. Act, 1947 and that the Government passed the impugned order dated 29-1-2001. These orders passed by the BIFR, AAIFR and the Government of India have been assailed by the Labour Unions of the BGML and also one of the private companies who offered to take over the mining operations on its own terms which are not acceptable to Government of India.

7. The Kolar Gold Fields which is now a company under the name of Bharat Gold Mines Limited has a long history which tells a sad saga of its closure in the New Millennium. The KGF is the oldest metalliferous mining company in the country. It is a century old gold mine. John Taylor and Sons from England started the systematic mining in the KGF in the year 1880 agreeing to pay royalty of 5% on the net realisation of gold to the then Government of Mysore. The State Government of Mysore nationalised three gold mines with effect from 29-11-1956 as the then Government felt that the companies would not be making necessary long-term investments as their leases were to expire in 1970 and paid a compensation of Rs. 1.64 crores. In June 1958 the Government of India decided to strengthen the gold reserves and directed the Government of Mysore that the gold produced by the Kolar mines be made over to it and as a Member of the International Monetary Fund, the Government could pay no more than the IMF rates. However, a subsidy representing the difference between the cost of production and the IMF price was given to the State Government under Article 282 of the Constitution of India. Since payment of subsidy became embarrassment to the Government of India, the State Government agreed to transfer the mines to the Central Government for operation under the style of Kolar Gold Mining Undertakings (KGMU), in December 1962 as a subordinate office of the Ministry of Finance. The Board of Management had the Finance Minister as the Chairman, the Deputy Finance Minister as one of the Members. In 1968, a full time Chairman/Managing Director took office. The Administrative control was passed on to the Ministry of Steel and Mines in August 1971. Following the take over in December 1962, the Central Government, set up a high level Committee to suggest measures for reduction in the costs of production. As a result, there was amalgamation of the Mysore and Champion Reef Mines into one unit, centralisation of workshops, town administration, purchase etc., a Technical Committee was asked to review the mining methods and suggest improvements, work-study teams were set up to improve productivity; a scheme of voluntary retirement was brought into effect resulting in 670 persons leaving service. As a result of several reorganisation and economy measures taken in terms of the recommendations, BGML claims to have achieved an annual savings of about Rs. 80 lakhs.

8. The Government of India transferred the management and ownership of KGF to the BGML on 1st April, 1972. As on 1-4-1979, the company had an accumulated loss of over Rs. 10 crores, which has since risen to Rs. 21.82 crores by the close of the financial year 1984-85. The company was registered with an authorised capital of Rs. 15 crores, which was increased to Rs. 33 crores in 1982-83.

9. KS.R. Chary, formerly Secretary, Department of Mines, Government of India was asked by the Central Government in the year 1985 to study the operation of the company and submit a report on the following terms:

(1) To review the present nature, scope and cost of operations and to quantify specific identified items of cost reduction, so that the contribution of loss making areas may be minimised;

(2) To examine whether, with this rationalisation and elimination/minimisation of specific losses, the BGML would be able to work on commercial principles;

(3) 'Inter alia' to examine whether its conversion into a departmental undertaking would improve operations and make them viable;

(4) if as a result of findings on (1), (2) and (3) above, it is found that BGML's operations cannot, in any case, be viable, to recommend whether the operations should be wound up i.e., whether the KGF Mines should be closed down;

(5)    if there is to be closure, to indicate:
   

 a.    the time horizon for the winding up of the KGF mines and the timetable therefor,
 

 b.    optimal level of operations and acceptable level of losses for time slices in the intervening period between total closure and the present period, and 
 

 c.    the scope for diversification of operations and alternative utilisation of the company's infrastructure in the intervening period so as to minimise losses.

10, in his report submitted to the Government of India, Mr. K.S.R. Chari observed that the Kolar Gold Mines history over a century has been one of a series of challenges posed by technical problems of a magnitude rarely encountered elsewhere in the world of hard rock mining. These have seen days when the market prices for gold were as low as Rs, 1.82 per gram for almost six decades. The study team was constituted in September 1984 by the Department of Mines and the study team submitted a report on capacity utilisation, profitability and corporate recovery plan. The Chari's report discloses that the KGF, in their lifetime spanning over hundred years, appear to have brought to the surface 50 million tons of gold-bearing rocks, yielding 800 tons of gold valued at Rs. 17,000 crores at today's price in the market. During the first two decades, the gold values were as high as 40 gms./ton, gradually coming down to the present 3 to 4 gms./ton. The Chari report further noticed that the British Mining Engineers did not think it necessary to bestow any serious attention towards discovering new deposits, all they seem to have done was to confine their attention to the extensive development of the rich Champion lode along its strike and dip within the 10 km. stretch of the Kolar Schist Belt in which the mines are located. It is pointed out by him that the Kolar Schist Belt itself is 80 km. long, out of which a stretch of 40 km. North of the present mine workings is covered by laterites with largely concealed geology, whereas the Southern extension shows evidence of ancient workings, most of which remained undiscovered till recently, when the pace of exploration activities was stepped up. The Schist Belt to the South ends up in the Chittoor District in Andhra Pradesh and partly in the Krishnagiri District of Tamil Nadu, whereas its Northern extension lies within the Karnataka State. After examining the then prevailing gold pricing policy of Government of India, Ore Beneficiation and Metallurgy, the ore available at Nandidurg Mine, Mysore Mine, Champion Mine Chigargunta Mine, Yeppamana Mine, it is observed at certain stage as follows:

"BGML perhaps, missed a golden opportunity to consolidate its position through reorganisation, introduction of modern and innovative technologies pertaining to mining and metallurgy of gold from lean ores etc. At the time when the gold prices in the international market soared to dizzy heights in 1980, the company could have also stepped up its exploration activities in the northern and southern extensions of the Kolar Schist Belt to locate new mining prospects, as it was even then on the cards that the Mysore Mine was rapidly reaching the limits of its working life. Unfortunately, this opportunity was missed; and today, it is facing problems that will take quite some time to get over".

11. Mr. K.S.R. Chari after exhaustive study of the problems of KGF drew some conclusions and made some recommendations as found at paras 15.1 to 15.32. The main recommendations made by him is that the policy adopted by the Government of India in compensating the BGML for the gold made over to it ever since the formation of the company seems to have been directed towards achieving just one objective, to keep the mines going and it is not clear as to why the Government should have been fighting shy of giving the BGML the market price for the gold rights from the start. A positive and more helpful gold pricing policy by the Government could largely have prevented BGML from getting into the present unfortunate position it is in today. It has resulted in the BGML being portrayed as a losing concern which really it has not been so far but is rapidly becoming one. By 31-3-1985, the Government had built up a surplus of Rs. 154.88 crores accruing to it through gold made over by BGML since its inception. The company deserves to be given market price for gold produced by it with immediate effect to enable it to function as a commercial venture. He recommended that Government could treat BGML as the canalising agency and advance necessary FE from its reserves to import 50 to 60 tons of gold annually for sale in the open market at the ruling prices, at a predetermined rate of 10/20 gins, per occasion of wedding etc., and in the process not only will the financial losses incurred by the BGML be wiped out but at the same time, smuggling of gold with all its risks and uncertainties will become a highly uneconomic venture and should get quickly eliminated. Problems would not have become so serious today if only strict control over manpower had been exercised during the past 7 to 8 years. Some 3,500 to 4,000 persons can be considered to be surplus to the present level of the company's operation. A Scheme of voluntary retirement may, however, be drawn up and efforts made to reduce manpower by about 1,000. Having regard to the financial position of the BGML, funds for implementation of this scheme should come from the Government in the form of an outright grant. The vacant posts of wholetime Director for Finance or Personnel may not be filled presently. Some reduction may be necessary in the strength of officers through reorganisation, specially, in the context of shrinkage of mining operations. It should be possible to find outlets for the surplus officers in some of the other public sector companies under the Ministry. Incentive Scheme for reducing the time for sloping operations deserves to be implemented. The future of the Champion mine is greatly dependent on the success of the proposed mechanisation schemes. There are complaints of security lapses. These need be looked into. A senior Police Officer, on deputation from the Karnataka State Government may head the security and vigilance wings. The services of a mining specialist having good knowledge and experience of mines with comparable gco-mining conditions as in South Africa, should have been obtained on priority, as he could have offered expert advice on some of the mechanisation schemes under con-

templation. Further, delay should be avoided. It is observed that it is good management that prepares itself for events that can be clearly foreseen and draws up its long-term plans accordingly, instead of being caught unawares. However, Mr. Chari expressed a sad note at the end when he observed that even the faithful implementation of all the recommendations contained in the Report cannot give this century old enterprise a permanent lease of life. In his note he has stated at the end as under:

"Although the Kolar mines have witnessed, over this long period of history, closure of some units and opening new ones, this is perhaps the first time that the closure of the Mysore Mine cannot be compensated by any other prospect being opened within the area".

12. The Department Related Parliamentary Standing Committee on Industry submitted its seventh report on 30-3-1994 after considering the concrete proposals for development and exploration of mining at Kolar made by one S. Natarajan, former Director (Technical), the documents furnished by the Ministry of Mines, the oral evidence of the representatives of the Ministry, workers' unions management of Bharat Gold Mines. An impression was given to the Parliamentary Committee that faulty process of extraction and pilferage of the finished gold are the two important factors responsible for escalation of cost of production. The machines and other equipments used in extraction of gold ore are either defective or have become outdated in terms of their viability. The mining technology is at present is in dire need of modernisation. BGML Authorities have submitted a rehabilitation proposal worth Rs. 107.83 crores to the Industrial Credit and Investment Corporation of India Limited, the operating agency appointed by BIFR and a copy of the report has been sent to Central Government and suggestion was made to Government of India to consider it sympathetically. Insofar as security and pilferage in the BGML premises, Chari Committee and also the Parliamentary Committee noticed the lapse with much anguish. It was submitted before the Parliamentary Committee that leakage/pilferage of gold has significantly resulted into high cost of production. The poor security arrangements have given sufficient room for pilferage. At present there is no Security Officer to head Security network, Frisking of workers and officers at the site has been quite casual as the security norms are not adhered to strictly. Security personnel have been put to all sorts of problems in performance of their duties. Not to talk of any incentives to them they are even denied the basic working conditions in the company. The Committee also gathered that a large number of goldsmiths and pawnbrokers are at present operating in and around gold field areas. The present erection of six feet wall and the level of fencing around the compound is far from required level of security. There is ample scope for an individual to cross over these fences for their nasty activities. The Security personnel have not been provided proper arms and ammunitions to deal with criminal elements. At present it is estimated that the pilferage of gold is about 30 crores per annum. The Management does not contest the Court cases of pilferages. However, the Management seems to be pretending that it is not aware of these hand in glove malpractices as at no point they have conceded the possibility of pilferage. The tailing deposits also have some gold in it which can be extracted if a CIP is established. No arrangements have been made either to process or dispose of the same. The company has not permitted to sell gold in the open market without any pre-condition, but there are cases of irregularity in terms of commission paid to the agents in the open market. The Parliamentary Committee incidentally considered the social problem prevailing in the KGF Municipal area, the major part of which, is occupied by the workers of BGML. The sub-committee noticed that the workers are living in small houses in in human conditions. They are getting electricity for not more than one hour a day that too at a very low voltage. Similar is the case of potable water. Sanitary conditions are also not satisfactory. Their localities are stinking. The workers have no other options but to live there with their families. The management is charging rentals for these small houses, electricity and water from the low paid workers whereas the officers of the company are perhaps enjoying rent free accommodation. The people living in the area do not know any other profession except mining because they are in this field generation after generation and when these people are not given jobs in KGF they remain unemployed and loiter around in the hope of getting job. The unemployed youth of the area may join hands with these antisocials. The scavenging by scavengers is still in existence in KGF despite its abolition at the national level. The sub-committee made certain recommendations for revival of the company. The company has been referred to BIFR. Now it cannot take any action for the revival without the prior permission of BIFR and therefore, recommended that the reference by BGML, Kolar to BIFR be revoked. The Government may either make available 41 crores of rupees as budgetary support or soft loan to the company or stand as a guarantor to enable the company to get loans from bunks and financial institutions. The Management can raise the requisite funds for its revival by selling its surplus land at the existing market rates. The security network of the company should be streamlined and every effort should be made to prevent pilferage of gold produced by the company. Frisking be made compulsory for everyone coming out of the premises, where gold is produced irrespective of his status. Technology from countries like South Africa, Australia etc., can be explored who can help in modernising the existing techniques of BGML on profit sharing basis. If proper investments are made in this company and new era of hope and dedication is generated the company can run smoothly for the next 50 to 60 years. But there must be a will on the part of the Government to run this company. The State Electricity Board should be apprised of the gravity of the situation and persuaded to reduce the power tariff to reduce the burden of BGML. Similarly, the State Government is charging royalty from BGML without extending any facility. The State can also be persuaded to forgo charging royalty from BGML. The above-mentioned steps recorded by the Committee would create possibility of revival by BGML and certainly it will prove to be a national asset.

13. Let me examine whether this hope of Parliamentary Committee lived long. The BIFR to whom the BGML approached with a request to treat it as a sick industry and to provide mechanism to revive the industry, has failed to do so. The BIFR appears to have considered the various proposals from time to time tor over eight years from 1992 to 2000 without finding any alternative proposal or hope of reviving the sick industry. When the BIFR ultimately failed in its mission to find out any means to revive the industry, recommended to the BGML management to submit a proposal for closure of the company. It is upon that direction, perhaps the management submitted an application under Section 25-O of the I.D. Act which culminated in the order of closure passed by the Joint Secretary, Ministry of Labour, Government of India, in the month of January 2001. Before passing this order, the Government of India issued various circulars of its intention to close the mining industry and directed the workers to opt for a retirement scheme proposed by it by fixing a deadline. The workers represented by the respective unions who had been agitating over the impending closure of the mining industry, approached this Court at the fag end of the life of the company by filing these batch of writ petitions under Articles 226 and 227 of the Constitution of India. Though the parties are different in these writ petitions, that their views and grounds of challenge are the same. All of them have assailed the act of the management of BGML, the final order passed by the BIFR and AAIFR and the Government order for closure of the company. Each workers' union has its own grouse against these orders.

14. The orders of the BIFR, AAIFR and the order passed by the Government under Section 25-O of the I.D. Act are assailed on the following among other grounds in these batch of writ petitions.

That the order of BIFR is wholly erroneous. It has failed to take steps for revival of BGML and relied on the statements made by the representatives of Government of India without even verifying the correctness of the same and rejected the proposal for take over of the company by the private companies. The BIFR has failed to explore the possibility of reviving BGML. The BIFR and AAIFR have failed to consider the various reports submitted for its consideration. The BIFR has failed to consider the reports submitted by the ICICI and that BIFR has failed to find viable alternative within a reasonable time. The order of the Competent Authority granting permission for closure of BGML is totally violative of rules of natural justice, inasmuch as the Competent Authority has not applied its mind to the facts of the case. The order passed by Government on the very face of it which shows that the order was an empty formality. The directions by the Managing Director as per his letter dated 30-1-2001 clearly indicates that the Management of BGML only made it to appear that it has complied with the mandatory provisions of law and the Management as well as the Government has already taken a decision to close the mines. Hence, the permission granted by the Government of India for closure of BGML is not sustainable.

15. The unions have further assailed the order on the ground that the BIFR has failed to consider the various proposals submitted by the unions of BGML. The writ petitioner in W.P. No. 7987 of 2001 a private company incorporated under the Australian Laws, one of the short listed companies, who offered to take over the BGML on certain terms and conditions, assailed these orders on the ground that the BIFR has clearly yielded to the adamant attitude of the Government of India to close the company without discharging its statutory obligations to find out the ways and means to revive the sick company and possibility thereof. It is the contention of the writ petitioners that every possibility of reviving the sick industry and to make it viable depends on the will on the part of the Management. The political will is also lacking in this regard in taking appropriate action at appropriate time, driving the company to sink for want of fund and necessary management.

15-A. In answer to these contentions raised by the writ petitioners, among others, the Government of India in its statement of objections contended that ever since its inception in the year 1972, BGML has been incurring losses and the Government of India has been taking steps to improve the performance of the company. However, the net worth of the company became negative despite efforts by the Government of India to prevent the same through fiscal measures. The Operating Agency appointed by the BIFR failed to suggest rehabilitation scheme which could be acceptable to all the Governments viz., the Central Government, the State Governments of Karnataka and Andhra Pradesh and the employees' union. The employees' union has rejected the recommendation of Operating Agency for any reduction in the manpower. It is contended that effort has been made to reduce the manpower through Voluntary Retirement Scheme (VRS) and decided to explore the possibility of rehabilitation through joint venture route. After decision of the BIFR to wind up the company, the Government of India once again offered VSS (Voluntary Separation Scheme) for one month period which was valid upto 10-1-2000. The Ministry of Labour had already passed an order permitting the closure of the company. That the report submitted by K.S.R. Chari, formerly Secretary, Department of Mines, Government of India, New Delhi, also advised the Central Government to close the company in a phased manner. In view of the accumulated loss there is no chance of the company to revive its mining. Therefore, the only alternative for the Government was to close the mining. The orders of the BIFR and AAIFR in this background is justifiable. The order passed under Section 25-O of the I.D. Act is not arbitrary as the authority has taken into consideration all the factors for passing the said order.

16. In the statement of objections filed by the Government, it is narrated the affairs of the company, the losses accrued and there is no spec of chance to revive the company in view of the huge accumulated loss. According to them, production of gold in KGF goes thrice the value of the gold available in the open market, therefore, it is not economically viable to open the company.

17. The learned Standing Counsel for the Central Government contended that there is no point in exploring the gold investing huge amount when gold is available at cheaper rates at International Market and there is no alternative for the company except to take hard decision to close the BGML and there is no purpose in making attempts to revive virtually a dead industry.

18. The learned Counsels Mr. Rajanna, Mr. Subba Rao, Mr. Udaya Holla did not agree with this explanation offered by the Government of India and the Management of BGML. According to them, the accumulated loss, the interest accrued on the loss and other overhead charges are included while calculating the value of gold produced at KGF. It is their case that various Committees appointed in this regard have highlighted non-exploring of gold at various gold mines. Respondents have also assailed the jurisdiction of this Court in interfering with the orders of the Tribunal in exercise of powers under Articles 226 and 227 of the Constitution of India.

19. These contentions canvassed for consideration can only be appreciated in the light of the statutory provisions of the I.D. Act, the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA" in short). Initially the SICA was enacted to govern the private industries, the provisions of which are extended to Government owned factories. SICA is an Act to make in public interest, special provisions with a view to securing the timely detection of sick and potentially sick companies owning industrial undertakings, the speedy determination by a Board of experts of the preventive, ameliorative, remedial and other measures which need to be taken with respect to such companies and the expeditious enforcement of the measures so determined and for matters connected therewith or incidental thereto. The Tiwari Committee appointed by the Government in 1981 was set up to examine in detail (a) difficulties faced by the banks and financial institutions in the rehabilitation of the sick industrial undertakings; (b) legal problems in the rehabilitation of the units. One of the major problems was the blocking up of the funds. both of the banks and the financial institutions. The Committee besides identifying the causes of sickness gave a model Bill and the Act is passed with modified provisions by taking all the major recommendations.

20. The Supreme Court in the case of Navnit R. Kamani v R.R. Kamani, explicitly explained the object of this legislation in the following words:

"The legislation had been enacted with the end in view to:

1. afford maximum protection of employment;

2. optimise the use of the funds etc.;

3. salvaging the production of assets;

4. realising the amounts due to the banks, etc.; and

5. to replace the existing time consuming and inadequate machinery by efficient machinery for expeditious determination by a body of experts".

Various High Courts while considering the object and purport of the Act made the following observations:

"Sick Industrial Companies (Special Provisions) Act, had been enacted to safeguard the economy of the nation and to protect viable sick units. It is aimed at reviving and rehabilitating sick industries" -- Testeels Limited v. Radhaben Ranchhodlal Charitable Trust.

"The object of the Acts like Sick Industrial Companies (Special Provisions) Act, 1985 is to resuscitate, revive and rehabilitate potentially viable industries and to suggest ameliorative and recuperatory measures" -- State Industrial and Investment Corporation of Maharashtra Limited v. Gangaram Agarwal.

"The main object of the Act is to salvage a viable company by making available funds or other assistance or by making alterations, etc., as contemplated under the Act" -- Industrial Finance Corporation of India v Maharashtra Steels Limited.

The principal difficulty faced by the institutions can be primarily attributed to non-detection of sickness at the incipient stage and the lack of proper co-ordination between the commercial banks and the term-lending institutions.

The legislative intent of the Act is amply stated by the Supreme Court in S.R.F. Limited v. Garware Plastics and Polyesters Limited, as follows:

"The legislative intent, which, therefore, becomes clear is that a sick or potentially sick industry should be detected timely. Proceedings for revival and rehabilitation of the sick or potentially sick company should expeditiously be completed within the time frame and if delay is unavoidable, it should be done within a reasonable time thereafter, say six months. The proceedings are not to be allowed to be used as dilatory tactics to prevent rehabilitation of the sick company or potentially sick company, in particular by rival companies. The Board and the Appellate Authority and the High Court should give effect to the provisions, comply with the procedural format, should finalise the proceedings expeditiously within the time frame so that not only the starving workmen who are kept in agonising wait for revival of the sick company without wages, be rescued, but also needless accumulation of losses by the company and the loss of revenue to the State are avoided".

It is observed that sickness in industry is a universal phenomenon. Sickness is not defined in precise terms in the various Acts. Sickness is a symptom of ailment and not an ailment in itself. It indicates that every-

thing is not well but it does not in itself show what is not well in that everything.

Reserve Bank of India study on causes of sickness long back reveals that 52% of the units have gone sick due to mismanagement; 14% due to initial faulty planning and technical drawback; 2% due to labour trouble; 23% due to market recession and 9% due to other quarrels (Bharat's Sick Industries and BIFR by H.P.S. Pahwa, 5th Edition at page 8).

In the same text, we find at page 11 the economic survey for the year 1996-97 and Table 3 -- Profile of sick industrial undertakings. The total sick industrial units in the country were 2,40,700 out of which 2,38,176 were small-scale industries while 1,867 were non-small scale industries and 657 were Non-SSI weak units, Out of these sick units 16,362 were considered as viable and 2,50,454 were considered as non-viable and 2,390 whose viability not decided. The outstanding bank guarantee at the end of March 1995 was Rs. 13,739 crores, the total sick units involved as on March 1995 was 2,71,206. These statistics only go to show the shocking and alarming industrial scenario of the country.

21. Where a reference is made by the industry under Section 15 of the SICA, the Board, viz., the BIFR can make for determining whether industry has become a sick industry or not. The Board may require by order any Operating Agency to inquire into and make a report on the aspects as may be specified in the order. Section 16(3) further provides for that the Board or the Operating Agency, as the case may be, shall make the inquiry expeditiously and shall try to complete it within a period of 60 days from the commencement of the same. For purpose of Sub-section inquiry shall be deemed to have commenced upon receipt by the Board of the reference or information or upon its own knowledge reduced in writing by the Board. Under Section 17 if after making an inquiry under Section 16, the Board is satisfied that a company has 'become a sick industrial company, the Board shall, after considering all the relevant facts and circumstances of the case, decide, as soon as may be by order in writing, whether it is practicable for the company to (make its net worth exceed the accumulated losses) within a reasonable time and pass appropriate orders. Under Section 14, the Board or the Appellate Authority shall be deemed to be a Civil Court for the purpose of Section 195 of Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974) and every proceeding before the Board or the Appellate Authority shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 and for the purposes of Sectionl 96 of the Indian Penal Code (45 of 1860).

22. From the perusal of the order of the BIFR it is noticed that reference was made to BIFR under Section 15 of the SICA in the year 1992 and the case was registered in Case No. 505 of 1992 in respect of BGML. The Board appointed ICICI vide its order dated 27-7-1993 as the Operating Agency and directed the Operating Agency to submit its re-port/scheme within 3 months. Prior to this order, the BIFR directed the BGML to furnish the following data viz.,

(i) Detailed unit cost structure for producing gold per 10 gms.;

(ii) Details of repairs and maintenance expenditure of Rs. 55 crores;

(iii) Duly updated corporate plan of its future working;

(iv) A detailed comprehensive status note about its activities, future long-term plan, giving comparative position with similar mines in the country and abroad.

In its order dated 18-3-1994 it noticed that even though hearing was held after a considerable lapse of time, Ministry of Mines, Government of India, is still examining the matter and is yet to take a definite view. The Ministry of Mines therefore directed to examine the OA's report immediately and take a view on it including the restructuring within four weeks. The Bench further observed that major parties involved in the rehabilitation exercise are requested for time to facilitate in-depth examination of the rehabilitation scheme. The Ministry submitted that the matter was referred to the group of Ministers who in turn remitted it to the Committee of Secretaries. Government of Karnataka have agreed to give relief in royalty, but have regretted their inability to grant concessions in power tariff. Similarly, Andhra Pradesh Government have not agreed to grant reliefs in royalty as well as power tariffs. The Board noticed during the course of deliberations that company had floated global tenders for (i) recovery of gold from the mine tailing dumps; and (ii) exploration and exploitation for gold in all the lease areas through shallow surface mining. In response to the tenders five offers had so far been received, out of which four were Australian companies and one a Canadian company which have been processed by the Government. The Director, Ministry of Mines stated the issue of global tenders by the company was in line with the current policy of the Government of globalisation and liberalisation. This has added a new di-mension, which too would be considered by the Committee of Secretaries which is at present examining the matter for report to the Group of Ministers which would take a final view. The BIFR took exception to the Government for floating global tenders without bringing it to the notice of the BIFR and its approval and when rehabilitation proposal was already under consideration. Certain directions were also issued to the OA by the BIFR to specifically examine and indicate what measures need to be taken to remove the basic causes of sickness of the company mentioned in the OA's report, viz., decline in production of gold as a result of the reduction in the production of ore and lower grade ore; increase in the cost of production of gold over years; high level of nonproductive workforce; higher power cost in KGF mines; restrictions on sale of gold and the pricing formula adopted by the Government; huge infrastructural facilities and support services resulting in high fixed costs; and inadequate addressal of organisational issues arising out of diversification. By its order dated 27-4-1995 the Board issued further directions that the possibility of dovetailing global tenders with the rehabilitation scheme prepared by the OA should be explored, the company has informed that the global tender could not be integrated into the draft report of the OA since the evaluation report in respect of revised negotiated offers received from short listed bidders is under consideration of the Board of Directors of the company. The evaluation has been done by the Services Division of the ICICI, Bombay and the company sought six weeks' time for the said purpose. Further order was passed on 13-9-1995 wherein it noticed the following at para 3 of the order:

"Sri Satish Chander, Director, Ministry of Mines submitted that the Ministry of Mines have accepted the recommendation of the Board of Directors of BGML and approved M/s. NAAL as partner for joint venture project for exploration and exploitation of gold from shallow mines. As regards the tailing project, the Ministry has desired that BGML shall manage it with the technical assistance of NAAL, who will also assist BGML to increase gold production from the underground operations. BGML have been advised to take necessary steps for signing an MOU with M/s. NAAL. The joint venture will be subject to the approval of the Government. He said that the workers had accepted wage freeze for 5 years, and there is, therefore, no question of any interim relief. Interim relief has not been paid by any sick Central PSU. The GOI is providing cash support of Rs. 14 crores per annum from non-plan assistance to BGML for payment of wages and salaries.

Shri V.A. Gore, DGM, ICICI submitted that the projection would need to be revised in consultation with NAAL and BGML. The OA would need three months' time to submit the revised proposal".

Having regard to these submissions, the Board gave certain directions to reformulate and recast the rehabilitation scheme since M/s. NAAL has been selected as a joint venture partner. New development took place when further sitting was made and the Ministry of Mines desired that the company should renegotiate with the prospective joint venture partner to obtain their equity participation of at least 40%. The meeting was held with M/s. NAAL but they did not agree to enhance BGML's equity beyond 30%. This position was reported to GOI and the matter was under consideration of the Ministry. The Bench also noticed that BGML incurred an operating loss of Rs. 3,873 lakhs during 1993-94 and of Rs. 4,026 lakhs during 1994-95 etc., when the matter was still at the Cabinet level. In the meantime, the NAAL has withdrawn from the MOU and the company are now negotiating with MPI for exploration and exploitation of shallow mines. Thus there were some setback and OA was directed to send a copy of revised rehabilitation scheme to the Central and State Governments. There were about half a dozen subsequent orders passed by the Board and the final order came to be passed on 21-2-2000; when the Board recalled the proceedings of the hearing held on 5-5-1999, when the following directions were given:

(i) GOI would reconsider their stand about charging of interest on plan/non-plan loan provided to the company;

(ii) The company would submit their provisional balance-sheet for 1998-99 within two weeks and audited balance-sheet for 1998-99 within two months to the Board/secured creditors;

(iii) The company would submit a note, inter alia, containing details of plan/non-plan support provided by the GOI to them to the Board/secured creditors;

(iv) GOI would submit the report of the Committee to the Board within 2 weeks;

(v) The company might, if they so desired, submit a separate application seeking permission for sale of discarded equipment and machinery giving all details of descender assets upto 31-3-1998 along with book value. A copy of the said application would also be submitted to GOI/secured creditors/OA who would submit their comments/observations to the Board within 2 weeks after the receipt of the application. Thereafter, the Bench would consider passing appropriate orders without holding any further hearing;

(vi) BIFR would appoint two special Directors on the Board of the company;

(vii) The company would discuss and settle the issue regarding provision of additional collateral security with State Bank of Mysore within 2 weeks.

The impugned order came to be passed on the submission made by the Government of India which has refused to give up interest charges on the accumulated losses as the Department of Expenditure had rejected the proposal for waiver. The Central Government has also refused to bear any more funds viz., Rs. 100 crores for purpose of revival proposal, the employees were helpless in supplying adequate funds by way of promoters' contribution and according to the Board:

"After careful consideration of all the submissions made, observed that the main promoter, Government of India have clearly taken a decision not to support the revival of the company and not to provide any financial assistance to the company for its revival and have clearly recommended that winding up is the only course of action available inasmuch as their effort to privatise the company also through a process of global tender has failed".

The Board further observed that the unions are totally dependent on the Government of India and the State Governments for not only massive reliefs and concessions but also additional financial support of a very large order which is clearly not forthcoming. Therefore, the Board finds that there is no merit in the submissions made by the employees for revival of the company and concludes that the only course of action open in this case is to wind up the company in all round public interest. Therefore, it ordered issue of show-cause notice for winding up to all the parties concerned and their objections/suggestions to this winding up proposal was called for.

23. It is submitted before the Court that the Board has passed the order to wind up and that the Government has passed an order for closure of the company under Section 25-O and that winding up proceedings under Companies Law are now placed before this Court. It is in this background, the learned Standing Counsel for the Central Government submitted that in view of the winding up proceedings submitted to the High Court, it is too late in the day for this Court to quash the orders of the BIFR and AAIFR in exercise of its jurisdiction under Articles 226 and 227 of the Constitution of India. It is needless for me to state that the matter was taken on appeal to AAIFR by all the concerned parties and that AAIFR has also assessed the situation and found that the unions were not in a position to take the responsibility of reviving the company by supplying the requisite funds upon the order of the BIFR. I find that the BIFR is not justifiable in abruptly passing the impugned order for winding up of the company only on the ground that the Central Government refused to pump in the required funds and also to take other measures for revivals of the company, which according to the learned Counsel involves Rs. 100 crores.

24. Sri Udaya Holla, learned Counsel appearing for the petitioner in W.P. No. 7987 of 2001 has assailed the order of the Board on the ground that the Board had not discharged its statutory obligations while recommending for winding up of the company even though any number of alternative proposals were placed before the BIFR and no serious attempt was made by the BIFR to implement the scheme. The BIFR consists of experts which can take measures in respect of sick industrial companies and to expedite the measures so determined. As rightly submitted by him, in the present case, both BIFR and AAIFR have forsaken their duties and obligations and relied upon the representations of the Central Government which is not interested in revival of BGML and the company deserves to be wound up. The Central Government is only a party before the BIFR and AAIFR as the BGML is its baby. The statistics furnished before the Court shows that the company earned profits for two years and thereafter suffered losses. The strength of the labour at one time was 13,000 which was brought down to 4,500. The NAAL which was one of the short listed companies and which had ample experience in gold mining in Australia and other countries offered to take over the sick industry on certain terms and conditions which were not acceptable to Government of India, Respondents 1 and 2 have not placed all the material before the Court to assess the reasons for not agreeing for the joint venture proposal initiated earlier. If the Central Government feels that Rs. 100 crores is a sum which is too high to meet the demand of BGML for its survival, the company could have sought the financial assistance from the other financial institutions and this has not been done in this case. The writ petitioner in W.P. No. 7987 of 2001 painted a very bright picture of exploitation of gold both in the mines and tailing dumps and they gave a rosy picture of making profits after second year. When a private company hopes to revive it with workforce of 1,200 from out of the present workforce of BGML, it is not known what made the Government of India to refuse offering its helping hand to revive a century old gold mine. Various obstacles appear to have been placed in the matter of revival. The BIFR was so optimistic at some stage after considering various proposals for revival, but suddenly turned down and accepted the submission made by the Central Government only on the ground that it will not help BGML to revive the company. It may be noticed that the statutory Board like BIFR and AAIFR were not bound to accept this contention of the Government of India as the Board was specifically meant in law to find out the causes, ways and means to revive the sick industry. The BIFR like an expert medical man before whom a patient with severe malady is brought for diagnosis and treatment. Neither BIFR tried to find out the cause for such malady nor prescribed medicines to cure the disease. It is stated that the BIFR is equipped with experts to deal with such a situation but have failed to do so. It is like accepting the parents' decision not to get its child treated by the doctor and opts for its death without medical treatment. Thus both the statutory Boards failed to discharge their obligations.

25. This is not a case where there is no possibility of revival at all though reserves in Nandidurg mines were depleting. The NAAL and other agencies opined that reserves at Chiraguppa mines and other neighboring mines which could be excavated for profits.

26. It is distressing to note from the reports submitted by various Committees that criminal unlawful activities became rampant in the area. There was rampant pilferage of gold from the premises of the BGML. The Parliamentary Committee and Chari's Committee reports indicate that the management were helpless and often colluded with the workers in not prosecuting the guilty. The century old township of KGF breath lot of problems not only inhuman disease but social as well. Over a lakh of people for over generation are residing in the municipal area of BGML. People are residing there for over generations. It is stated that unemployed youths and others converted themselves into criminal acts and that the workers of the company were partly responsible for pilferage and also for other criminal activities. While the workers blame the management for the present state of affairs, the workers are equally responsible for the same. Mr. Chari noticed in his report that 400 goldsmiths have opened their shops in KGF only with the assistance of the workers and other criminal elements. These goldsmiths could not survive in that area without connivance and assistance of workers. The unions have not diverted their attention to this problem created by their members. In fact Mr. Chari in his report suggested long back that the management should have tightened their security which they have not done, various loopholes were noticed in the security system of BGML. This is only one of the defects pointed out by the committees apart from the extra expenditure incurred by the management as such. No effort has been made by the management to curb unlawful expenditure and also cut down the working force, dismantle old machinery and no serious attempt has ever been made to infuse new life to this century old gold mines.

27. Under Section 20 of the SICA, where the Board, after making inquiry under Section 16 and after consideration of all the relevant facts and circumstances and after giving an opportunity of being heard to all concerned parties, is of opinion that the sick industrial company is not likely to make its net worth exceed the accumulated losses within a reasonable time while meeting all its financial obligations and that the company as a result thereof is not likely to become viable in future and that it is just and equitable that the company should be wound up, it may record and forward its opinion to the concerned High Court.

28. The learned Standing Counsel for the Central Government, Sri Ashok Harnahalli, having regard to the order of the BIFR under Section 20(1) of the SICA submitted that it is for the company Court to take all the circumstances into consideration including the opinion of the Board and it is not for this Court in exercise of powers under Articles 226 and 227 of the Constitution of India to interfere with the orders.

29. The questions which arise for consideration in these writ petitions are extracted and dealt at length supra and I have reached the conclusion that BIFR and AAIFR have failed to advert themselves to the various proposals made by the concerned parties to revive the sick company. The impugned order passed by the BIFR clearly show that abruptly it withdrew the suggestions made previously and proceeded to pass an order holding that it is not viable to revive the sick industry. This is so done only on the ground that the Government of India refused to pump in required funds and virtually took unilateral decision to close it. It is also noticed that the decision taken at the Secretaries level was accepted at the Ministerial level. It is in this background that the observation made by the Parliamentary Committee is recalled by the writ petitioners to emphasise their contentions that there was no political will to revive the century old gold mines. The Hon'ble Chief Minister of Karhataka in his letter dated 23-3-2000 addressed to the Hon'ble Prime Minister of India assured support and co-operation for revival and rehabilitation of the company and requested his immediate intervention in the matter. It is stated that Hon'ble Prime Minister has assured all possible help in the matter. I have extracted the above said letter only to show that the Government of Karnataka is concerned with the plight of the workers after closure of the BGML and the assurance given by the Hon'ble Prime Minister. We have seen the result of the assurance of the Hon'ble Prime Minister and how the Secretary of the concerned department has passed the order for closure.

30. The factors which are partially responsible for escalation of cost in production of gold are admitted by both the parties and the cost of production of electricity is rising. The State Government is selling the electricity at higher price though not at the cost price. But at the same time, the workers are not put in 100% efficiency in production of gold. The age old machineries used, the management inertia to revive and to give a new life to these age old machines coupled with other factors were sufficient for the management for closure of mine. The BIFR which has considered these factors at the first instance, took such a long time to reach the conclusion that running of mine ,is not viable and this was so solely on the plea of the Government of India that it is not prepared to pump in the required money. The BIFR has failed to act within the stipulated time or at least within the reasonable time. The reasons assigned for the final order which is accepted by the AAIFR, in my opinion, are not tenable and acceptable. There is no offer to the workers to run the mine. Where the Central Government found it hard to pump in hundred crores of rupees to revive the factory, it is not worthwhile to ask the workers who had sacrificed their salaries for over five years to find necessary funds unless Government of India was prepared to transfer the management to the workers themselves.

30-A. In this background, the Court has to consider whether it can step in to stop the rot set in in this century old mine and whether the Tribunals in performance of their sacred duty of finding ways and means to revive the sick industry, have erred in their jurisdiction and whether this Court can interfere in exercise of its powers under Articles 226 and 227 of the Constitution of India.

31. The Apex Court in the case of Shama Prashant Raje v. Ganpatrao and Ors., while considering the scope of Articles 226 and 227 of the Constitution of India held as under at page 524:

"In a proceeding under Articles 226 and 227 of the Constitution the High Court cannot sit in appeal over the findings recorded by a competent Tribunal. The jurisdiction of the High Court, therefore is supervisory and not appellate. Consequently Article 226 is not intended to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or order to be made. But notwithstanding the same, on a mere perusal of the order of an inferior Tribunal if the High Court comes to a conclusion that such Tribunal has committed manifest error by misconstruing certain documents, or the High Court comes to a conclusion that on materials it is not possible for a reasonable man to come to a conclusion arrived at by the inferior Tribunal, the inferior Tribunal has ignored to take into consideration certain relevant materials or has taken into consideration materials which are not admissible, then the High Court will be fully justified in interfering with the findings of the inferior Tribunal".

32. The right of the owner to close the losing business is the subject-matter in the judgment of the Apex Court in Excel Wear and Others v. Union of India and Ors. The Supreme Court has explained the concept of socialism and the facts that occurred after this country adopted the socialist pattern which concept is introduced as the basic concept of the Constitution of India. While considering the bona fide closures, the Apex Court laid down at para 25 as follows:

"In contrast to the other provisions, Section 25-O(2) does not require the giving of reasons in the order. In two of the impugned orders communicated to the petitioners, Excel Wear and Acme Manufacturing Company Limited, it is merely stated that the reasons for the intended closure are prejudicial to public interest, suggesting thereby that the reasons given by the employers are correct, adequate and sufficient, yet they are prejudicial to the public interest. In cases of bona fide closures it would be generally so. Yet the interest of labour for the time being is bound to suffer because it makes a worker unemployed. Such a situation as far as reasonably possible, should be prevented. Public interest and social justice do require the protection of the labour. But it is reasonable to give them protection against all unemployment after affecting the interests of so many persons interested and connected with the management apart from the employers. Is it possible to compel the employer to manage the undertaking even when they do not find it safe and practicable to manage the affairs? Can they be asked to go on facing tremendous difficulties of management even at the risk of their person and property? Can they be compelled to go on incurring losses year after year? As we have indicated earlier, in Section 25-FFF retrenchment compensation was allowed in cases of closure and if closure was occasioned on account of unavoidable circumstances beyond the control of the employer a ceiling was put on the amount of compensation under the proviso. The explanation postulates the financial difficulties including financial losses or accumulation of undisposed stocks etc., as the closing of an undertaking on account of unavoidable circumstances beyond the control of the employer but by a deeming provision only the ceiling in the matter of compensation is not made applicable to the closure of an undertaking for such reasons. In 1972 by insertion of Section 25-FFA in Chapter V-A of the Act, an employer was enjoined to give notice to the Government of an intended closure. But gradually the net was cast too wide and the freedom of the employer tightened to such an extent by introduction of the impugned provisions that it has come to a breaking point from the point of view of the employers. As in the instant cases, so in many others, a situation may arise both from the point of view of law and order and the financial aspect that the employer finds it impossible to carry on the business any longer. He must not be allowed to be whimsical or capricious in the matter ignoring the interest of the labour altogether. But that can probably be remedied by awarding different slabs of compensation in different situations. It is not quite correct to say that because compensation is not a substitute for the remedy of prevention of unemployment, the latter remedy must be the only one. If it were so, then in no case closure can be or should be allowed. In the third case namely, that of Apar Private Limited the Government has given two reasons, both of them being too vague to give any exact idea in support of the refusal of permission to close down. It says that the reasons are not adequate ana sufficient (although they may be correct) and that the intended closure is prejudicial to the public interest. The latter reason will be universal in all cases of closure. The former demonstrates to what extent the order can be unreasonable. If the reasons given by the petitioner in great detail are correct, as the impugned order suggests they are, it is preposterous to say that they are not adequate and sufficient for a closure. Such an unreasonable order was possible to be passed because of the unreasonableness of the law. Whimsically and capriciously the authority can refuse permission to close down. Cases may be there, and those in hand seem to be of that nature, where if the employer acts according to the direction given in the order he will have no other alternative but to face ruination in the matter of personal safety and on the economic front. If he violates it, apart from the civil liability which will be of a recurring nature, he incurs the penal liability not only under Section 25-R of the Act but under many other statutes".

These are the questions which are answered by the Apex Court while deciding Excel Wear's case, supra.

33, The case on hand is a Central Government undertaking. The deficiency in the management of the company, the loopholes in the administration, the age old machineries installed by the management for excavating the gold ore, the pilferage of the gold output and other criminal activities, the failure of labour in providing its 100% efficiency in the production of gold -- the combination of all these factors which brought the BGML to the present situation. If that were not so, the Parliamentary Committee would not have suggested certain measures for revival of the company. NAAL, one of the writ petitioners before this Court would not have come forward to take over the company and hopes to earn profits after two years. The Secretaries have taken into consideration only the accumulated losses and the interest accrued thereon amounting to Rs. 500 crores, have not gone further and suggested measures to revive the sick factory. The learned Standing Counsel for the Central Government has no answer to the Court queries - After closure what? The Government of India is not prepared to divulge its mind to the Court whether there was any intention to revive it afterwards, after one year as the life of the order under Section 25-O of the I.D. Act is only for one year or whether the Government will sell this company to a private company for profits as the Central Government has refused to accept the global tender offered to it. These are all questions which cannot be ignored by the Court while ordering for closure of the company like BGML which brings gold, the wealth to the country though at certain cost. It is true that gold can be purchased at a cheaper rate from the foreign countries. But at what cost? The Government would not close all the agricultural farms on the ground that they are economically not viable. The Government has to spend huge foreign reserves for import of gold which is not an essential commodity. There is no purpose in importing gold from the foreign countries when the country itself can produce it. There is no dearth of technical knowledge in this field. In fact, the Parliamentary Committee and others suggested to take the technical opinion of African and Australian countries who are experts in the field. The Government of India has failed to do so. The BIFR which was seized of the same and which throughout the hearing for over six years was hopeful of accepting certain proposals to revive the company, suddenly reverted to the impugned order. Therefore, the BIFR and AAIFR have failed to consider these factors and therefore, there is failure on the part of these authorities which required to be corrected in these writ petitions.

34. So far as the order passed under Section 25-O is concerned, it is submitted that there is no application of mind in passing the order to all the factors placed before the authority and that the authority who passed the order under Section 25-O of the I.D. Act has not considered the public interest, the financial aspect and the workers' agony and the reasons assigned for closure, are not genuine and adequate.

35. This question is a subject of judicial adjudication in a catena of decisions. Reliance is placed by the learned Counsel for the writ petitioners to a few decisions. The Kerala High Court in the case of Laxmi Starch Limited and Anr. v. Kundara Factory Workers' Union, at para 12 has stated as follows:

"No employer has a fundamental right to close down an industry unreasonably or for reasons which are mala fide. Closure has to be for just and inevitable reasons as it affects large number of employees, members of the general public, production of the country etc The Kerala High Court held that there are orders arising under the provisions of Section 25-O of the I.D. Act, are assailable under Article 226 of the Constitution of India, specially where the Government failed to exercise wrongly or mala fide exercised the discretion.

36. A Division Bench of Gujarat High Court in Associated Cement Companies Limited and Anr. v. Union of India and Ors., held that the requirement of Section 25-O(2) is in the nature of a restriction imposed upon the right of the employer to close down the business. Therefore, this phrase must be so construed as to make the restriction which is imposed on the right of the employer reasonable within the meaning of Article 19(6) because the right to close down is not an absolute right and it can certainly be restricted, regulated or controlled by law in the interest of the general public. The question whether the reasons given by employer are genuine and adequate will, no doubt, depend upon facts of each case. A right to close down a business being an integral part of the fundamental right to carry on business, the words "genuine and adequate" must have that meaning which is consistent with the nature of the right. If the closure is bona fide or on account of unavoidable circumstance, beyond the control of the employer, then they will have to be regarded as genuine and adequate.

37. A Division Bench of Karnataka High Court in the case of Union of India v. Stumpp, Scheule and Somappa Limited, concluded as under:

"The present Section 25-O of the Act is denuded of the infirmities found in its predecessor. The provisions of Section 25-O of the Act as it now stands require the Government to give reasons for its order; the factors to be considered by the appropriate Government are stated in Section 25-O(2); an objective approach in arriving at the decision by the Government, is now imperative; the factors stated in Section 25-O(2) which are to be considered, are to be understood in the light of the decision in Excel Wear's case, supra, the appropriate Government has to strive to strike a balance between the various interests involved, in the background of a particular situation; any unreasonable order can be corrected by judicial review; the Government itself may review its order or refer the matter for decision by a Tribunal for adjudication; the application of the employer has to be considered by the appropriate Government and the order to be communicated within sixty days from the date on which the application is made, failing which the permission is deemed to have been granted; there is always an assumption that the Government would exercise its power reasonably. In Excel Wear's case, supra, the Supreme Court recognised that a law may provide to deter reckless, unjust, unfair or mala fide closures; therefore, requirement of a prior permission for closure by itself cannot be an unreasonable restriction on the fundamental right of the employer. In this view of the matter, we hold that, it is not possible to declare Section 25-O of the Act as viola-tive of Article 19(1)(g) of the Constitution".

38. The question now for consideration is the validity of the impugned order passed by the authority. How to judge the validity of the order of the statutory authority? Invoking the jurisdiction of the High Court under Article 226 of the Constitution of India came up before a Bench of five Judges before the Supreme Court in Mohinder Singh Gill and Anr. v. The Chief Election Commissioner, New Delhi and Ors. The Supreme Court while considering the powers of the Election Commissioner under Article 324 of the Constitution of India commenced upon the said question at para 8 held as follows:

"The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order had in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. In Commissioner of Police, Bombay v. Gordhandas Bhanji:

"Public orders publicity made, in exercise of a statutory authority cannot, be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do so. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

39. In Tata Cellular v. Union of India, the Supreme Court while considering the validity of the orders of the statutory authority, the question of principles of judicial review arise for consideration. The Apex Court at para 85 observed as follows:

"The principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State ............ Judicial quest in administrative matters has been to find the right balance between the administrative discretion to decide matters whether contractual or political in nature or issues of social policy; thus they are not essentially justiciable and the need to remedy any unfairness. Such an unfairness is set right by judicial review. The judicial power of review is exercised to rein in any unbridled executive functioning. The restraint has two contemporary manifestations. One is the ambit of judicial intervention; the other covers the scope of the Court's ability to quash an administrative decision on its merits. These restraints bear the hallmarks of judicial control over administrative action. Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision making process itself.

The haste in which the Managing Director of the BGML sitting at Nagpur directed his subordinates at KGF to close the factory forthwith in view of the order passed by the Government of India shows the management's anxiety to wash off their hands as early as possible.

40. The BGML management while submitting its proposal under Section 25-O of the Act to the statutory authority to pass the order to close the company, enclosed the order of BIFR and other particulars. The workers' unions also submitted detailed objections. It was pointed out by the BGML that the Government of India as far back as 1997 made submission before the BIFR to close down the BGML and at any cost it has no mind to continue and revive. The authority who passed the order, incidentally Joint Secretary of the concerned Department who had not taken into consideration any of the submissions made by the workers' unions and other interested parties. Except accepting the reasons assigned by the BGML management, no other reasons assigned by the authority in passing the order of closure. The authority has not taken into consideration the public interest involved, the loss of wealth to the country by forceful closure of the company. Therefore, under the circumstances there is no application of mind to all the factors which were placed before the authority while passing the impugned order.

It is true that the writ petitioners could have applied for review of the order under Section 25(5) of the I,D. Act. Instead, they have chosen to challenge the impugned order in these writ petitions. The impugned order suffers from arbitrariness for want of application of mind to all the factors before the Court and where there is no statutory requirement and where the order is not in the interest of the workers as well, the order is liable to be quashed.

41. In W.P. Nos. 154 to 156 of 2001, the writ petitioners have challenged the circular issued as in Annexure-F, dated 8-12-2000 issued by the Deputy General Manager (Personnel) regarding voluntary separation scheme in BGML under which the workers were given option to VSS under heavy industry package and under the Gujarat package. This was in pursuance of the directions issued by the Government of India dated 31-12-1999. The circular is assailed on the ground that the said circular has not been approved by the Chairman and the Managing Director, but issued by the Deputy General Manager in his personal capacity and no decision is taken by the BGML. It is only in pursuance of the letter of the Government of India. On the basis of recommendations made by Justice S. Mqhan, it is contended that the scheme cannot be effectively implemented in the absence of revised scales of the employees etc. This is clearly a subject which the workers had raised agitation when the question of determining their pensionary benefits under the said scheme arose. The contention that it was not approved by the Management and issued by the Deputy General Manager in his personal capacity is incorrect, The circular is issued in pursuance of the Government of India direction referred to therein. Therefore, I do not find much substance in these writ petitions. Accordingly, they are liable to be dismissed.

42. In the result, W.P. Nos. 154 to 156 of 2001 are dismissed. W.P. Nos. 157 to 159, 1343, 4503 to 4507, 5118 and 7987 of 2001 are allowed. The orders passed by the BIFR dated 12-6-2000 in Case No. 505 of 1992; AAIFR dated 15-11-2000 in Appeal Nos. 277, 290 and 291 of 2000 and the order passed by the Government of India dated 29-1-2001 closing BGML under Section 25-O of the I.D. Act are quashed. The BIFR is directed to reconsider the claim made by the writ petitioners and find ways and means to revive the BGML.

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