JUDGMENT
Pradipta Ray, J.
1. The writ petitioners, one of whom was working as Personal Assistant to the Managing Director, Orissa State Leather Corporation Ltd. (hereinafter referred to as the ‘Corporation’) and Ors. as Assistant Managers and Accounts Superintendents in the Corporation have filed this writ application challenging, inter alia, the closure of the Corporation and the consequential termination of employment. They have also challenged various steps and decisions taken for closing down the Corporation including the permission given by the State of Orissa under Section 25O of the Industrial Disputes Act.
2. The Corporation was incorporated under the Indian Companies Act, 1956 as a Government Company on April 19, 1976. It suffered heavy loss and its cumulative loss in the financial year 1994-95 was Rs. 507.43 lakhs which was much more than the paid-up capital of Rs. 425.04 lakhs in the said financial year 1994-95. The State Government constituted a Cabinet Sub-Committee to review the functioning of different public sector undertakings including the Corporation and to devise ways and means for improving their performance. On the basis of the recommendation of the said Cabinet Sub-Committee initially a decision was taken to privatise all the Units of the Corporation and to close down the Corporation in accordance with the provisions of the Industrial Disputes Act (Annexure-4 to the writ application). The proposal to privatise the Units of the Corporation did not materialise. In the meantime the cumulative loss as on March 31, 1996 rose to Rs. 577.27 lakhs; On January 31, 1998 the Industries Department of the State Government intimated the Chairman of the Corporation its approval to the proposal of closure of all activities in the undertakings of the Corporation and directed the Corporation to proceed strictly in accordance with the provisions of the Industrial Disputes Act. On March 17, 1998 Corporation filed application under Section 25O of the Industrial Disputes Act, for necessary permission. Copies of the said application were sent to different workers Union, but no notice was given to the petitioners who were not workmen within the meaning of Section 2(s) of the Industrial Disputes Act. On May 15, 1998 the State Government granted permission as required under Section 25O of the Industrial Disputes Act. Eighteen undertakings of the Corporation were closed with effect from June 18, 1998. On May 18, 1998 petitioners were given notice of termination of their services with effect from June 18, 1998.
3. Main ground of challenge in this writ application is that there could not be a valid closure of the Corporation without following the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as the ‘Act of 1985’). According to the petitioners the Act of 1985 is a special statute having overriding effect over other statutes operating in the filed. It was obligatory on the part of the Corporation to make a reference to the Board for Industrial and Financial Reconstruction (hereinafter referred to as ‘B.I.F.R.’). The Board of Directors of the Corporation not having made any reference to the B.I.F.R. as required under Section 15(1) of the Act of 1985 the purported closure was wholly illegal, ineffective and inoperative. It has been urged that after enactment of the Act of 1985, Section 25O of the Industrial Disputes Act, cannot be made applicable in respect of an Industrial Company which has become a Sick Industrial Company within the meaning of the said Act of 1985.
4. To deal with the submissions made on behalf of the writ petitioners it is necessary to refer to the objects and reasons for enacting the aforesaid Act of 1985 and to some of its relevant provisions. The Act of 1985 was enacted to make special provisions with a view to securing timely detection of sick and potential sick companies owning industrial undertakings and for speedy determination by a Board of Experts of the preventive, ameliorative, remedial and other measures with respect to such companies and for expeditious enforcement of the measures so determined. One of the declared objectives is to prevent loss of employment and to afford maximum protection of employment. Section 15 of the Act of 1985 provides for reference to the B.I.F.R. Section 33 of the said Act provides for penalty if the provisions of the Act or any Scheme or any order of the B.I.F.R. or the appellate authority are violated by anybody. Section 32 is the non-obstante clause giving overriding effect to the provisions of the Act. The provisions of Section 15 and Section 33 are reproduced below:
“15. Reference to Board – (1) Where an industrial company has become a sick industrial company, the Board of Directors of the company, shall, within sixty days from the date of finalisation of the duly audited accounts of the company for the financial year as at the end of which the company has become a sick industrial company, make a reference to the Board for determination of the measures which shall be adopted with respect to the company:
Provided that if Board of Directors had sufficient reasons even before such finalisation to form the opinion that the company had become a sick industrial company, the Board of Directors shall, within sixty days after it has formed such opinion, make a reference to the Board for the determination of the measures, which shall be adopted with respect to the company.
(2) Without prejudice to the provisions of Sub-section (1), the Central Government or the Reserve Bank or a State Government or a Public Financial institution or a State level institution or a scheduled Bank may, if it has sufficient reasons to believe that any industrial company has become, for the purpose of this Act, a sick industrial company, make a reference in respect of such company of the Board for determination of the measures which may be adopted with respect to such company:
Provided that a reference shall not be made under this sub-section in respect of any industrial company by-
(a) the Government of any State unless all or any of the industrial undertakings belonging to such company are situated in such State;
(b) a public financial institution or a State level institution or a scheduled bank unless it has, by reason of any financial assistance or obligation rendered by it, or undertaken by it, with respect to, such company, an interest in such company.
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33. Penalty for certain offences – (1) Whoever violates the provisions of this Act or any Scheme, or any order of the Board or the Appellate Authority and whoever makes a false statement or gives false evidence to the Board or the Appellate Authority, shall be punishable with simple imprisonment for a term which may extend to three years and shall also be liable to fine.
(2) No Court shall take cognizance of any offence under Sub-section (1) except on a complaint in writing of the Secretary or any such other officer of the Board or any such officer of any operating agency as may be authorised in this behalf by the Board.”
5. From the provisions and the scheme of the Act of 1985 it appears that although it has been made obligatory on the part of the Board of Directors of a sick industrial company to make reference to the B.I.F.R., it does not contain any prohibitory provision that such industrial company cannot be wound up or any of its undertakings cannot be closed without complying with the provisions of Section 15. Under Section 33 penal consequences have been provided for violation of any of the provisions of the Act or any scheme or any order of the B.I.F.R. or the appellate authority, but such violation or non-compliance does not render any decision to close an industrial undertaking void or ineffective.
6. It further appears that Section 25 of the Act of 1985 has provided for a machinery to prevent, if possible, ultimate winding up of a company which has become sick. Section 20 of the Act makes the position clear. Under Section 20 B.I.F.R. has been empowered to form opinion whether it is just and equitable that the sick industrial company should be wound up, to record and forward that opinion to the concerned High Court for necessary order for winding up of the sick industrial company.
7. There is a distinction between winding up of a company and closure of any of the undertakings or business within the meaning of the Industrial Disputes Act. Closure has been defined in Section 2(cc) of the I.D. Act as the permanent closing down of a place of employment or part thereof. Closure thus refers to stoppage of business or part of business in an undertaking of an industrial establishment. Closure by itself does not put an end to the legal existence of an industrial establishment while with the winding up of a company in accordance with the provision of the Indian Companies Act the company/ Industrial Establishment ceases to exist.
8. There is nothing in the Act of 1985 to indicate that a sick industrial company cannot close down its business or place of employment without making reference to the B.I.F.R. The closure of an industrial undertaking, however, cannot be declared without complying with the provisions of Section 25O of the Industrial Disputes Act. If an employer seeks permission of the State Government to close down his industrial establishment, the State Government is required to consider such application and take its decision. The purpose of reference to B.I.F.R. is to find out whether the sick industries can be revived or made economically viable. The purpose of seeking permission from the State Government is to satisfy the State Government about the genuineness and adequacy of the reason stated by the employer for closing its business. Thus the field of operation of Section 25O of the Industrial Disputes Act cannot be said to be the same as that of Section 15 of the Act of 1985. As the two provisions of these two Acts do not operate in the same field, there is no question of any conflict or Section 15 of the Act of 1985 having overriding effect on Section 25O of the Industrial Disputes Act.
9. Shri B. Pal, appearing for the petitioners has cited several decisions on the question of overriding effect of the Act of 1985, but none of those decisions has considered the impact of the Act of 1985 on the closure as contemplated by the Industrial Disputes Act. There is no doubt that in case of any conflict in the field of operation of the Act of 1985, provisions of the Act of 1985 have the overriding effect. However, we do not find any operational conflict. We therefore need not discuss the decisions referred to by Shri Pal.
10. On behalf of the opposite parties it has been submitted that the Corporation and its undertakings are all small scale industrial undertakings and as such the Corporation is not governed by the Act of 1985. Section 3(1)(f) of the Act of 1985 has kept a small scale industrial undertaking as defined in Clause (j) of Section 3 of the Industries (Development & Regulation) Act, 1951 outside the purview of the Act. It has been pointed out that on the date of the application for permission for closure, the Corporation had 18 units out of which only five units were industrial undertakings, namely, Government Tannery at Boudh, Government Shoe Factory at Cuttack, Industrial Leather Products, Rourkela, Government Tannery, Titilagarh and Well-Blue Tannery, Rayagada. All those units were registered as small scale industries under the provisions of Industries (Development & Regulation) Act, 1951.
11. To meet the said submission Mr. Pal appearing for the petitioners has referred to Section 11B of the Industries (Development & Regulation) Act, 1951 and has urged that unless the Central Government notifies an industry as a small scale industry it cannot be regarded as a small scale industry. In view of the express language of Section 11B we are unable to accept the said submission of Mr. Pal. The relevant provisions of Section 11B(1) are quoted below:-
“11B. Power of Central Government to specify the requirements which shall be complied with the small scale industrial undertakings. – (1) The Central Government may, with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment under this Act to enable them to maintain their viability and strength so as to be effective in-
(a) promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and
(b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.
specify, having regarding to the factors mentioned in Sub-section (2), by notified order, the requirements which shall be complied with by an industrial undertaking to enable it to be regarded, for the purpose of this Act, as an ancillary, or a small scale, industrial undertaking and different requirements may be so specified for different purposes or with respect to industrial undertakings engaged in the manufacture or production of different articles …….”
It is clear from the aforesaid language that the Central Government is to issue a notified order specifying the requirements to be complied with by an industrial undertaking to earn eligibility to be regarded as a small scale industrial undertaking. The aforesaid provision does not require the Central Government to notify each and every undertaking as small scale industry. At the time of registration of an industrial undertaking as a small scale industry, the registering authority is to satisfy itself about the satisfaction of the criteria for being registered as a small scale industry. In the present case there is no dispute that the concerned industrial units, were all registered as small scale industrial units. In the circumstances, the industrial undertakings of the Corporation were not within the purview of the Act of 1985.
12. Mr. Pal has pointed out that the State Government in the Management of the Corporation did not give any opportunity of hearing to the petitioners before deciding to close down the undertakings and thereby they violated the provision of Section 25O of the Industrial Disputes Act and the principle of natural justice. Section 25O of the Industrial Disputes Act provides that before granting permission, State Government will make necessary enquiry and give reasonable opportunity of being heard to the employer, the workmen and the person interested. Although the petitioners were not workmen within the meaning of the Industrial Disputes Act they being employees likely to be prejudicially affected were definitely ‘persons interested’.
13. In reply to the allegation of absence of opportunity of hearing, opposite parties Nos. 1 and 2 filed a further affidavit disclosing that general notices were issued inviting all ‘persons interested’ to appear on April 23, 1998 before the Minister, Labour and Employment in the Conference Hall of Orissa Secretariat and that in pursuance of such notice Shri S.N. Mohanty, petitioner No. 2 and representative of different Workers’ Union appeared and were heard (Annexure D/3 and E/1). Issuance of individual notice to all the employees and persons interested “is not practicable. When innumerable persons are involved issue of general notice in a reasonable manner is sufficient. Managing Director issued the notice (Annexure D/1) only for the purpose of intimation. It is clear from the notice that State Government held the hearing on April 23, 1998 and the Managing Director merely issued the intimation. The said notice was affixed on the Notice Board and in fact several Unions and one of the petitioners appeared at the hearing. In these circumstances, we are unable to hold that the petitioners were not given opportunity of being heard as contemplated by Section 25O(2) of the Industrial Disputes Act.
14. For the forgoing reasons the decision to close the Corporation and permission granted by the State Government under Section 25O of the Industrial Disputes Act for its closure cannot be invalidated.
15. No other point was urged in support of the writ application.
16. In the result there is no merit in the writ application which is accordingly dismissed. No costs.
R.K. Patra, J.
17. I agree.