PETITIONER: PAPNASAM LABOUR UNION Vs. RESPONDENT: MADURA COATS LTD. DATE OF JUDGMENT08/12/1994 BENCH: RAY, G.N. (J) BENCH: RAY, G.N. (J) HANSARIA B.L. (J) CITATION: 1995 AIR 2200 1995 SCC (1) 501 JT 1995 (1) 71 1994 SCALE (5)153 ACT: HEADNOTE: JUDGMENT:
The Judgment of the Court was delivered by
G.N. RAY, J.- This appeal is directed against the order
dated 9-4-1981 passed by the Division Bench of the High
Court of Madras in Writ Petition No. 11 19 of 1977. The
said writ petition was moved by Respondent 1 Madura Coats
Ltd., for a declaration that Section 25-M of the Industrial
Disputes Act, 1947 as it stood under the Industrial Disputes
(Amendment) Act, 1976 insofar as it required prior
permission to be obtained to effect layoff is ultra vires
and void. The writ petitioner Respondent I also prayed that
the State of Tamil Nadu represented by the Secretary to
Government, Labour and Employment Department, Madras should
be restrained from enforcing the provisions of the said
Industrial Disputes (Amendment) Act in respect of the lay-
off application being Application No. 4 of 1976 made by the
petitioner. The petitioner also prayed for a writ in the
nature of certiorari calling for the records of the Joint
Commissioner of Labour, Madras, for quashing the order dated
11 -9-1976 by which the said lay-off application was
rejected by the Joint Labour Commissioner. Along with the
said Writ Petition No. 11 19 of 1977, a number of similar
writ petitions challenging the vires of Section 25-M of the
Industrial Disputes Act and consequential prosecutional
penalty for the lay-off in contravention of Section 25-M
were heard by the Division Bench of the Madras High Court
and by one common judgment, all the said writ petitions were
disposed of.
2.The Division Bench of the Madras High Court inter alia
held that Section 25-M as it stood under the said Amendment
Act, 1976 was constitutionally invalid for the reasons given
by this Court in invalidating Section 25-0 of the Industrial
Disputes Act in the decision rendered in Excel Wear v. Union
of India 1. The Madras High Court further held that in view
of its finding that Section 25-M was constitutionally
invalid, it was unnecessary for the court to go into the
validity or otherwise of the orders passed by the
authorities which had been impugned in some of the cases
before the High
1 (1978) 4 SCC 224: 1978 SCC (L&S) 509 :(1979) 1 SCR 1009
505
Court. The High Court also rejected the prayer for granting
leave to appeal to this Court by indicating that as the High
Court had followed the judgment of the Apex Court in Excel
Wear case1, there was no occasion to hold that the impugned
decision involved a substantial question of law of general
importance which was required to be decided by the Apex
Court.
3.For the purpose of appreciating the respective contentions
of the parties in this appeal, the provisions of Section 25-
M of the Industrial Disputes Act as amended by the
Industrial Disputes (Amendment) Act, 1976 is set out as
hereunder:
“25-M. Prohibition of lay-off.- (1) No
workman (other than a badli workman or a
casual workman) whose name is borne on the
muster-rolls of an industrial establishment to
which this Chapter applies shall be laid off
by his employer except with the previous
permission of such authority as may be
specified by that appropriate Government by
notification in the Official Gazette, unless
such lay-off is due to shortage of power or to
natural calamity.
(2)Where the workman (other than badli
workman or casual workman) of an industrial
establishment referred to in sub-section (1)
have been laid off before the commencement of
the Industrial Disputes (Amendment) Act, 1976
and such lay-off continues at such
commencement, the employer in relation to such
establishment shall, within a period of
fifteen days from such commencement, apply to
the authority specified under sub-section (1)
for permission to continue the lay-off.
(3) In the case of every application for
permission under sub-section (1)or sub-
section (2), the authority to whom the
application has been made may, after making
such inquiry as he thinks fit, grant or
refuse, for reasons to be recorded in writing,
the permission applied for.
(4)Where an application for permission has
been made under sub-section(1) or sub-
section (2) and the authority to whom the
application is madedoes not communicate the
permission or the refusal to grant the
permission to the employer within a period of
two months from the date on which the
application is made, the permission applied
for shall be deemed to have been granted on
the expiration of the said period of two
months.
(5)Where no application for permission
under sub-section (1) is made, or where no
application for permission under sub-section
(2) has been made within the period specified
therein, or where the permission for the lay-
off or the continuance of the lay-off has been
refused, such lay-off shall be deemed to be
illegal from the date on which the workmen
have been laid off and the workmen shall be
entitled to all the benefits under any law for
the time being in force as if they had not
been laid off.
506
(6) The provisions of Section 25-C (other than
the second proviso thereto) shall apply to
cases of lay-off referred to in this section.
Explanation.- For the purposes of this
section, a workman shall not be deemed to be
laid off by an employer if such employer
offers any alternative employment (which in
the opinion of the employer does not call for
any special skill or previous experience and
can be done by the workman) in the same
establishment from which he has been laid off
or in any other establishment belonging to the
same employer, situate in the same town or
village, or situate within such distance from
the establishment to which he belongs that the
transfer will not involve undue hardship to
the workman having regard to the facts and
circumstances of his case, provided that the
wages which would normally have been paid to
the workman are offered for the alternative
appointment also.”
4. Mr Kumar, learned counsel appearing for
the appellant has contended that the decision
rendered in Excel Wear case1 is clearly
distinguishable and the High Court has gone
wrong in relying on the said decision and
accepting the reasons which weighed with this
Court in striking down the constitutional
validity of Section 25-0 of the Industrial
Disputes Act by holding that the said reasons
are equally applicable in considering the
validity of the Section 25-M and on such
premises declared Section 25-M as ultra vires
the Constitution. Mr Kumar has submitted that
in the decision in Excel Wear case1, this
Court noticed the distinguishing features in
Section 25-M and Section 25-N, when compared
with Section 25-0 of the Industrial Disputes
Act. This Court noticed that: (SCC p. 238,
para 16)
“Section 25-M dealt with the imposition of
further restrictions in the matter of lay-off.
Section 25-N provided for conditions precedent
to retrenchment of workmen. In these cases
the vires of neither of the two sections were
attacked. Rather, a contrast was made between
the said provisions with those of Section 25-0
to attack the latter. The main difference
pointed out was that in sub-section (3) of
Section 25-M, the authority while granting or
refusing permission to the employer to layoff
was required to record reasons in writing and
in sub-section (4) a provision was made that
the permission applied for shall be deemed to
have been granted on the expiration of the
period of two months. The period provided in
sub-section (4) enjoins the authority to pass
the order one way or the other within the said
period. Similarly, in sub-section (2) of
Section 25-N reasons are required to be
recorded in writing for grant or refusal of
the permission for retrenchment and the
provision for retrenchment and the provision
for deemed permission was made in subsection
(3) on the failure of the governmental
authority to communicate the permission or the
refusal within a period of three months.”
5. In Excel Wear’ decision this Court analysed the
provisions of Section 25-0 and it has been indicated that
under Section 25-0, if in the opinion of the appropriate
Government, the reasons for the intended closure are not
507
adequate and sufficient or if the closure was prejudicial to
the public interest, permission to close down could be
refused. It was pointed out by this Court that reasons
given for the closure by the employer might be correct yet
permission could be refused if they were thought to be not
adequate and sufficient by the State Government and no
reason was required to be given in the order granting the
permission or refusing it. It was also pointed out that the
appropriate Government was not enjoined to pass the order in
terms of sub-section (2) and Section 25-0 within 90 days’
period of the notice. It was indicated in Excel Wear case’
that even though a situation might arise both from the point
of view of law and order and financial aspect that employer
would find it impossible to carry on business any longer,
permission could be refused even when the reasons for
intended closure were bona fide but the authority concerned
felt that the closure was against public interest, which
reason would be universal in all cases of closure. Such
provision with potentiality to pass unreasonable order was
held to be beyond the pale of reasonable restriction
permitted by Article 19(6) of the Constitution.
6. The learned counsel has submitted that Section 25-M and
Section 25-N have common distinguishing features which make
the said two provisions different from Section 25-0 the
validity of which was considered by this Court in Excel Wear
case’. In the aforesaid circumstances, the decision
rendered in Excel Wear case1 is not applicable for deciding
the constitutional validity of Section 25-M.
7. The learned counsel for the appellant has strongly
relied on the decision of this Court in the case of Workmen
v. Meenakshi Mills Ltd.2 In the said decision, the
constitutional validity of Section 25-N as it stood prior to
the substitution by Industrial Disputes (Amendment) Act,
1984 was taken into consideration and it has been held by
this Court that conferment of power on appropriate
Government authority to grant or refuse permission for
retrenchment is not vitiated on the ground of absence of
provision for appeal or revision against or review of the
order passed by the Government or authority as the order is
required to be a speaking order to be passed on objective
considerations. It has also been held that sub-section (2)
of Section 25-N is not vitiated on the ground of non-
prescription of guidelines for exercise of the power because
exercise of the power under Section 25-N being quasi-
judicial in nature and not purely administrative and
discretionary, guidelines are not required. Moreover, the
power has to be exercised not only by indicating reasons but
also in accordance with the objective indicated in the
Statement of Objects and Reasons given in the said Amending
Act, 19’/6 as also the basic idea of settlement of
industrial disputes and promotion of industrial peace. It
has also been held in the decision in Meenakshi Mills case2
that Section 25-N as it stood prior to the Amending Act,
1984, though imposed restriction on employer’s right to
retrench workmen, but such retrenchment were imposed in
consonance with
2 (1992) 3 SCC 336: 1992 SCC (L&S) 679
508
the Directive Principles of the Constitution and in general
public interest and therefore should be presumed to be
reasonable.
8. The learned counsel has also submitted that in
Meenakshi Mills case2 this Court has specifically pointed
out that the decision in Excel Wear case1 is not applicable
for considering the constitutional validity of the Section
25-N. It has been pointed out in distinguishing the
decision made in Excel Wear case1 that sub-section (2) of
Section 25-0 provided for an order being passed by the State
Government refusing to grant permission to close the
undertaking on its subjective satisfaction and there was no
requirement for recording of reasons in the said order and
in these circumstances, this Court held that the absence of
a right of appeal or review or revision rendered the
restriction as unreasonable. The learned counsel has
therefore submitted that in view of the decision in
Meenakshi Mills case2, the constitutional validity of
Section 25-M cannot be challenged and Section 25-M and
Section 25-N having common features and being clearly
distinguishable from Section 25-0 of the Industrial Disputes
Act, the reasons indicated in Meenakshi Mills case2 for
upholding the constitutional validity of Section 25-N fully
applies for upholding the constitutional validity of Section
25-M. The learned counsel has therefore submitted that the
appeal should be allowed by holding that Section 25-M as it
stood prior to Amending Act, 1984 was valid and orders
passed under Section 25-M cannot be held illegal and void.
9. Dr Shankar Ghosh, learned Senior Advocate appearing for
Respondent 1, Madura Coats Ltd., has however submitted that
for appreciating the question of unreasonable restriction
imposed on the fundamental right to carry on trade or
business under the guise of protecting public interest, it
is necessary to consider whether or not the restriction
imposed under the statute is consistent with and limited to
the extent of control required for achieving the purpose for
which the restriction was sought to be imposed. In this
connection, Dr Ghosh has referred to an earlier decision of
this Court in Chintaman Rao v. State of M.p3. In the said
decision, Sections 3 and 4 of the Central Province and Berar
Regulation of Manufacture of Bidi (Agricultural Purposes)
Act, 1948 were taken into consideration. Under Section 3 of
the said Act, the Deputy Commissioner was empowered to issue
notification thereby fixing a period to be an agricultural
season with respect to such villages as may be specified
therein. Under sub-section (1) of Section 4 of the said
Act, the Deputy Commissioner was empowered to issue an order
in respect of such villages as he may specify thereby
prohibiting the manufacture of Bidi during the agricultural
season. Sub-section (2) of Section 4 provided that no
person residing in a village specified in such order, shall
during the agricultural season, engage himself in the
manufacture of Bidis and no manufacturer shall during the
said season employ any person for the manufacture of Bidis.
In Chintaman Rao case3 this Court has held:
3 1950 SCR 759 : AIR 1951 SC 11 8
509
“The phrase ‘reasonable restriction’ connotes that the
limitation imposed on a person in enjoyment of the right
should not be arbitrary or of an excessive nature, beyond
what is required in the interests of the public. The word
‘reasonable’ implies intelligent care and deliberation, that
is, the choice of a course which reason dictates.
Legislation which arbitrarily or excessively invades the
right cannot be said to contain the quality of
reasonableness and unless it strikes a proper balance
between the freedom guaranteed in Article 19(1)(g) and the
social control permitted by clause (6) of Article 19, it
must be held to be wanting in that quality.”
10.It has been held by this Court in the said decision
that the object of the statute is to provide measures for
the supply of adequate labour for agricultural purposes in
Bidi manufacturing areas of the Province and it could be
achieved by legislation restraining the employment of
agricultural labour in the manufacture of Bidis during the
agricultural season. Even in point of time, a restriction
may have been reasonable if it amounted to a regulation of
the hours of work in the business. But the aforesaid
provisions of the Act have no reasonable relation to the
object in view but the said provisions are drastic in scope
that they go in much excess of the object.
11.Dr Ghosh has also referred to another decision of this
Court in Dwarka Prasad Laxmi Narain v. State of Up4 In the
said case, constitutional validity of clause 43 of U.P Coal
Control Order, 1953 was taken into consideration and it has
been held in the said decision that the licensing authority
may grant, refuse to grant, renew or refuse to renew a
licence and may suspend, cancel, revoke or modify any
licence or any term thereof granted by him under the order
for reasons to be recorded for the action he takes. Not
only so, the power could be exercised by any to whom the
State Coal Controller may choose to delegate the same. Such
wide power including the power to delegate to any person of
the choice of the Controller without any guiding principle
was held to be unreasonable and far in excess of the
reasonable restriction required to achieve the purpose.
12.Dr Ghosh has further referred to the decision of this
Court in Pathumma v. State of Kerala5. In the said
decision, the constitutional validity of Section 20 of the
Kerala Agriculturists Debt Relief Act was taken into
consideration by a larger Bench of seven Judges. It has
been held in the said decision by upholding the validity of
Section 20 of the Kerala Act that in interpreting the
constitutional provision, the court should keep in mind the
social setting of the country so as to show a complete
consciousness and deep awareness of the growing requirements
of the society, the increasing needs of the nation, the
burning problems of the day and the complex issues facing
the people which the Legislature in its wisdom through
beneficial legislation, seeks to solve. The judicial
approach should be dynamic rather than static, pragmatic and
not pedantic and elastic rather than rigid. It has
4 1954 SCR 803 : AIR 1954 SC 224
5 (1978) 2 SCC 1 : AIR 1978 SC 771
510
also been indicated that Article 19 guarantees all the seven
freedoms to the citizens of the country including the right
to hold, acquire and dispose of property. But Article 19
also provides reasonable restrictions to be placed by
Parliament or the Legislature in public interest. It has
been further indicated that in judging the reasonableness of
the restrictions imposed by clause (6) of Article 19, the
Court has to bear in mind the directive principles. It has
also been indicated that restriction to be reasonable must
not be arbitrary or in excessive nature so as to go beyond
the requirement of the interest of general public.
13.Dr Ghosh has finally referred to the decision of this
Court in Management of Kairbetta Estate v. Rajamanickam6.
In this decision, this Court considered the import of the
expression “any other reason” in the definition of “lay-off’
under Section 2(kkk) of Industrial Disputes Act. It has
been held that:
“Any other reason to which the definition refers, must, we
think, be a reason which is allied or analogous to reasons
already specified.” Dr Ghosh contends that the definition of
lay-off clearly indicates a number of contingencies which
may justify lay-off. He has submitted that in Meenakshi
Mills case2, this Court has also noted the distinctive
features of “lay-off’.
14.Dr Ghosh has contended that the decision rendered in
Meenakshi Mills case2 has not laid down any absolute
proposition that unfettered restriction on the right to hold
and acquire property and carry on trade and business
activity can be imposed only on the score of social
interest. He has also submitted that in Meenakshi Mills
case2, the provisions for retrenchment under Section 25-N of
the Industrial Disputes Act were taken into consideration
but retrenchment is a crystallised or frozen occasion and
the same should not be held on a par with the provisions for
lay-off under Section 25-M. It has been contended by Dr
Ghosh that if the distinction between lay-off and
retrenchment and different types of problems associated with
lay-off and retrenchment are considered in their proper
perspective the reasonings for upholding the validity of
Section 25-N should not be made applicable in deciding the
vires of Section 25-M. Dr Ghosh has submitted that for the
purpose of upholding the constitutional validity of a
statute, upon a challenge on account of unreasonable
restriction, the Court is required to look into the facts
and circumstances and the ground realities under which the
offending provision of the statute is to be applied. No
strait-jacket formula, therefore, can be laid down for
deciding the question of reasonable restriction in each and
every statute. He has submitted that in the matter of lay-
off under Section 25-M, excepting in the case of power
failure and natural calamity, in all other cases, even if
there are genuine urgent grounds for immediate action of
lay-off, a prior permission is required to be obtained. It
is permissible under Section 25-M to defer disposal of an
application for such permission for approval up to a period
of two months from the date of application even if
ultimately such permission is accorded. Such outer limit
6 (1960) 3 SCR 371 : AIR 1960 SC 893
511
of two months in a given case, may be wholly unreasonable
thereby frustrating the very purpose for which an immediate
action for lay-off was warranted. Dr Ghosh has submitted in
support of his contention that even if in a given case there
is breakdown of essential components of a machinery without
which the productive activity in a particular factory cannot
be carried on and even if it so happens that any attempt to
run the factory involves substantial risk even in respect of
other plants and also the labour force involved in
operational activity, the management though has a bona fide
and urgent need to immediately lay-off the labourers whose
service cannot be gainfully utilised until the productive
activities can be effectively restored on some future date,
cannot resort to lay-off lawfully unless permission is
accorded by the authority concerned. Dr Ghosh has submitted
that it may not be unlikely that in some cases such
machinery being imported and highly sophisticated may not be
repaired and commissioned in near future and a case of
immediate lay-off was essentially necessary, but the rigid
provisions of Section 25-M do not provide for taking
immediate action in such and similar contingency. The
provisions of Section 25-M requiring formal approval in all
circumstances except in the case of power failure or natural
calamity must be held to be absolutely undesirable and
harsh. The restriction imposed in Section 25-M is far in
excess of reasonable restriction necessary to achieve the
object of preventing improper action of the employer in
resorting to lay-off. The unreasonable compulsion in
retaining a large labour force without any service being
rendered by them may lead to closure of the unit being sick
and economically not a viable unit. Such undesirable result
brought on the employer on compulsion cannot be held to be a
normal incidence of a reasonable restriction on the
employer’s right to lay-off. Such provision may not even
serve the interest of labour force because in the event of
closure,, the job opportunity is bound to be affected and
the economic interest of the nation is bound to be in
jeopardy. Dr Ghosh has submitted that the problems
associated with “lay-off’ have their special features and
incidence and the principle underlying the restriction
imposed on retrenchment under Section 25-N as considered in
Meenakshi Mills case2 is not applicable on all fours in
considering the reasonableness of the restrictions imposed
in Section 25-M. Dr Ghosh has submitted that the broad
features which weighed with this Court in holding Section
25-0 as unconstitutional in Excel Wear case1 are applicable
in deciding the constitutional validity of Section 25-M. In
the aforesaid facts, the impugned decision holding Section
25-M before amendment in 1984 as unconstitutional should not
be interfered with and the appeal should be dismissed.
15.After considering the respective submissions of the
learned counsel for the parties and considering various
decisions of this Court in deciding the question of
reasonableness of the restriction imposed by a statute on
the Fundamental Rights guaranteed by Article 19 of the
Constitution of India (reference to which would be made
hereinafter), it appears to us that the following principles
and guidelines should be kept in mind for considering
512
the constitutionality of a statutory provision upon a
challenge on the alleged vice of unreasonableness of the
restriction imposed by it:
(a) The restriction sought to be imposed on
the Fundamental Rights guaranteed by Article
19 of the Constitution must not be arbitrary
or of an excessive nature so as to go beyond
the requirement of felt need of the society
and object sought to be achieved7.
(b) There must be a direct and proximate
nexus or a reasonable connection between the
restriction imposed and the object sought to
be achieved8.
(c) No abstract or fixed principle can be
laid down which may have universal application
in all cases. Such consideration on the
question of quality of reasonableness,
therefore, is expected to vary from case to
case9.
(d) In interpreting constitutional
provisions, courts should be alive to the felt
need of the society and complex issues facing
the people which the Legislature intends to
solve through effective legislation10.
(e) In appreciating such problems and felt
need of the society the judicial approach must
necessarily be dynamic, pragmatic and elastic
11.
(f)It is imperative that for consideration of
reasonableness of restriction imposed by a
statute, the Court should examine whether the
social control as envisaged in Article 19 is
being effectuated by the restriction imposed
on the Fundamental Rights 12.
(g) Although Article 19 guarantees all the
seven freedoms to the citizen, such guarantee
does not confer any absolute or unconditional
right but is subject to reasonable restriction
which the Legislature may impose in public
interest. It is therefore
7 Chintaman Rao v. State of M.P, 1950 SCR 759 : AIR 1951
SC 118; Dwarka Prasad Laxmi Narain v. State of U.P., 1954
SCR 803 : AIR 1954 SC 224; Excel Wear v. Union of India,
(1978) 4 SCC 224: 1978 SCC (L&S) 509: (1979) 1 SCR 1009
8 O.K. Ghosh v. E.X. Joseph, AIR 1963 SC 812; Pathumma v.
State of Kerala, (1978) 2 SCC 1 AIR 1978 SC 771; Workmen v.
Meenakshi Mills Ltd., (1992) 3 SCC 336: 1992 SCC (L&S) 679
9 Kavalappara Kottarathil Kochuni v. State of Madras &
Kerala, AIR 1960 SC 1080 : (1960) 3 SCR 887 : Jyoti Pershad
v. Administrator.for Union Territory of Delhi, AIR 1961 SC
1602 (1962) 2 SCR 125; Pathumma v. State of Kerala, (1978) 2
SCC 1 : AIR 1978 SC 771
10 Jyoti Pershad v. Administrator.for Union Territory of
Delhi, AIR 1961 SC 1602 (1962) 2 SCR 125; Pathumma v. State
of Kerala, (1978) 2 SCC 1 : AIR 1978 SC 771
11 Jyoti Pershad v. Administrator.for Union Territory of
Delhi, AIR 1961 SC 1602 (1962) 2 SCR 125; Fatehchand
Himmatlal v. State of Maharashtra, (1977) 2 SCC 670 : AIR
1977 SC 1825; Pathumma v. State of Kerala, (1978) 2 SCC 1 :
AIR 1978 SC 771
12 State of Madras v. VG. Row, AIR 1952 SC 196 : 1952 SCR
597; State of U.P v. Kaushailiya, AIR 1964 SC 416 : (1964) 4
SCR 1002; Pathumma v. State of Kerala, (1978) 2 SCC 1 : AIR
1978 SC 771
513
necessary to examine whether such restriction
is meant to protect social welfare satisfying
the need of prevailing social values13.
(h) The reasonableness has got to be tested
both from the procedural and substantive
aspects. It should not be bound by processual
perniciousness or jurisprudence of remedies
14.
(j) Restriction imposed on the Fundamental
Rights guaranteed under Article 19 of the
Constitution must not be arbitrary, unbridled,
uncanalised and excessive and also not
unreasonably discriminatory. Ex hypothesis
therefore, a restriction to be reasonable must
also be consistent with Article 14 of the
Constitution.
(k) In judging the reasonableness of the
restriction imposed by clause (6)of Article
19, the Court has to bear in mind Directive
Principles of State Policy15.
(l)Ordinarily, any restriction so imposed
which has the effect of promoting or
effectuating a directive principle can be
presumed to be a reasonable restriction in
public interest16.
16. In Meenakshi Mills case2, the contention that Section
25-N has imposed unreasonable restriction on the fundamental
right to hold property and to carry on business activities
has been rejected by indicating that the object underlying
the enactment of Section 25-N by introducing prior scrutiny
of the reasons for retrenchment is to prevent avoidable
hardship to the employees resulting from retrenchment by
protecting existing employment and to check the growth of
unemployment which would otherwise be the consequences of
retrenchment in industrial establishment employing a large
number of workmen. It has also been indicated in the said
decision that the restriction imposed in Section 25-N on the
, right of retrenchment of the employer is intended to
maintain higher tempo of production and productivity by
preserving industrial peace and harmony, and in that sense,
Section 25-N seeks to give effect to the mandate contained
in the Directive Principles of the Constitution as contained
in Articles 38, 39(a), 41 and 43. It has been indicated in
Meenakshi Mills case2 that ordinarily any restriction so
imposed which has the effect of promoting or effectuating a
directive principle can be presumed to be reasonable
restriction in public interest and a restriction imposed on
the employer’s right to terminate the service of an employee
is not alien to the constitutional scheme
13 State of Madras v. VG. Row, AIR 1952 SC 196 : 1952 SCR
597; State of U.P. v. Kaushailiya, AIR 1964 SC: 416: (1964)
4 SCR 1002; Bachan Singh v. State a Punjab, (1971) 1 SCC 712
AIR 1971 SC 2164; Pathumma v. State a Kerala, (1978)2 SCC 1
: AIR 1978 SC 771
14 Fatehchand Himmatlal v. State of Maharashtra, (1977) 2
SCC 670: AIR 1977 SC 1825; Excel Wear v. Union of India,
(1978) 4 SCC 224: 1978 SCC (L&S) 509 :(1979) 1 SCR 1009
15 Kesavananda Bharati Sripadagalvaru v. State of Kerala,
(1973) 4 SCC 225 : AIR 1973 SC 146 1; State of Kerala v.
N.M. Thomas, (1976) 2 SCC 310 : 1976, SCC (L&S) 227 : AIR
1976 SC 490; Pathumma v. State of Kerala, (1978) 2 SCC 1 :
AIR 1978 SC 771
16 Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC 336: 1992
SCC (L&S) 679
514
which indicates that the employer’s right is not absolute.
We may indicate here that even in Excel Wear case1 it has
been held that:
“the right to close a business is an integral part of the
fundamental right to carry on a business. But as no right
is absolute in its scope so is the nature of this right. It
can certainly be restricted, regulated or controlled by law
in the interest of general public.” (emphasis supplied)
17.In Meenakshi Mills case2, it has been held that the
power to grant or refuse permission for retrenchment of
workmen conferred under sub-section (2) of Section 25-N has
to be exercised on an objective consideration of the
relevant facts after affording an opportunity to the parties
having an interest in the matter and reasons have to be
recorded in the order that is passed. The enquiry which has
to be made under sub-section (2) before an order granting or
refusing permission for retrenchment of workmen is passed,
would require an examination of the particulars which are
required to be supplied by the employer. Such decision
being quasi-judicial, is justiciable before High Court. In
view of the time-limit of three months prescribed in sub-
section (3) of Section 25-N, there is need for expeditious
disposal which may not be feasible if the proceedings are
conducted before a judicial officer accustomed to the
judicial process. Moreover, during the course of such
consideration, it may become necessary to explore the steps
that may have to be taken to remove the causes necessitating
the proposed retrenchment which may involve interaction
between the various departments of the Government. This can
be better appreciated and achieved by an Executive Officer
rather than a Judicial Officer. It has also been indicated
in Meenakshi Mills case2 that in the matter of exercise of
the power conferred by sub-section (2) of Section 25-N, the
power has to be exercised keeping in view the provisions of
the Act and the object underlying the Amending Act of 1976
whereby Section 25-N was inserted in the Act. The object
underlying the requirement of prior permission for
retrenchment of workmen introduced by Section 25N as
indicated in the Statement of Objects and Reasons for the
Amending Act of 1976, is to prevent avoidable hardship to
the employees resulting from retrenchment by protecting
employment to those already employed and maintain higher
tempo of production and productivity by preserving
industrial peace and harmony. The said consideration
coupled with the basic idea underlying the provisions of the
Act, namely, settlement of industrial disputes and promotion
of industrial peace, gives a sufficient indication of the
factors which have to be home in mind by the appropriate
Government or authority by exercising its power to grant or
refuse permission for retrenchment under sub-section(2).
18.In our view, the aforesaid observations in upholding
the validity of Section25-N squarely apply in upholding
the validity of Section 25-M. It is evidentthat the
Legislature has taken care in exempting the need for prior
permission for lay-off in Section 25-M if such lay-off is
necessitated on account of power failure or natural
calamities because such reasons being grave, sudden and
explicit, no further scrutiny is called for. There may be
various other contingencies justifying an immediate action
of lay-off but
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then the Legislature in its wisdom has thought it desirable
in the greater public interest that decision to lay-off
should not be taken by the employer on its own assessment
with immediate effect but the employer must seek approval
from the authority concerned which is reasonably expected to
be alive to the problems associated with the industry
concerned and other relevant factors, so that on scrutiny of
the reasons pleaded for permitting layoff, such authority
may arrive at a just and proper decision in the matter of
according or refusing permission to lay-off. Such authority
is under an obligation to dispose of the application to
accord permission for a lay-off expeditiously and, in any
event, within a period not exceeding two months from the
date of seeking permission. It may not be unlikely that in
some cases an employer may suffer unmerited hardship up to a
period of two months within which his application for lay-
off is required to be disposed of by the authority concerned
but having undertaken a productive venture by establishing
an industrial unit employing a large labour force, such
employer has to face such consequence on some occasions and
may have to suffer some hardship for sometime but not
exceeding two months within which his case for a lay-off is
required to be considered by the authority concerned
otherwise it will be deemed that permission has been
accorded. In the greater public interest for maintaining
industrial peace and harmony and to prevent unemployment
without just cause, the restriction imposed under sub-
section (2) of Section 25-M cannot be held to be arbitrary,
unreasonable or far in excess of the need for which such
restriction has been sought to be imposed.
19.It may be pointed out that sub-section (3) requires
recording of reasons for the decision taken, and a copy of
the order is required to be communicated to all concerned.
Further, by force of sub-section (4), permission sought for
shall be deemed to have been granted, if the decision is not
communicated within the mentioned period. Procedural
reasonableness has been taken care of by these provisions.
As regards substantive reasonableness, we feel satisfied, as
the power in question would be exercised by a specified
authority and as it can well be presumed that the one to be
specified would be a high authority who would be conscious
of his duties and obligation. If such an authority would be
informed that lay-off is reuired because of, any sudden
breakdown of machinery, which illustration was given by Dr
Ghosh to persuade us to regard the restriction as
unreasonable, we have no doubt that the authority would act
promptly and see that the establishment in question is not
put to loss for no fault on its part. As every power has to
be exercised reasonably, and as such an exercise takes
within its fold, exercise of power within reasonable time we
can take for granted that the statutory provision requires
that in apparent causes (like sudden breakdown) justifying
lay-off, the authority would act with speed.
20.As already indicated, the distinguishing features
between Section 25-M and Section 25-N on one hand and
Section 25-0 on the other have been noticed in the decision
in Excel Wear case1.
21.In our view, the reasonings indicated in Excel Wear
case1 in striking down Section 25-0 are not applicable for
considering the constitutional
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validity of’ Section 25-M(2). On the contrary, it appears
to us that the reasonings indicated in Meenakshi Mills case1
in upholding the validity of Section 25-N squarely apply in
upholding the vires of Section 25-M. It also appears to us
that the impugned provision of Section 25-M satisfies
various aspects of scrutiny for upholding reasonable
restriction on the fundamental right when tested in the
context of guidelines and principles indicated hereinbefore.
The restriction appears necessary to us in larger public
interest and to protect the interest of workmen, who, but
for the restriction may be subjected to uncalled for lay-
off. The application of this restriction to industrial
establishments specified in Section 25-K duly takes care of
the hardship which could otherwise be caused to small
establishments. Directive Principles do require placing of
the restriction on large industrial establishments employing
large number of workmen. The impugned decision of the
Madras High Court, therefore, must be held to be erroneous
and the same is, set aside by upholding the vires of Section
25-M of the Industrial Disputes Act, 1947 which was
introduced under the Amending Act of 1976. This appeal is,
therefore, allowed without, however, any order as to costs.
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