{"id":213815,"date":"2005-02-14T00:00:00","date_gmt":"2005-02-13T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-oswal-agro-furane-ltd-anr-vs-oswal-agro-furance-workers-union-on-14-february-2005"},"modified":"2018-07-12T01:03:31","modified_gmt":"2018-07-11T19:33:31","slug":"ms-oswal-agro-furane-ltd-anr-vs-oswal-agro-furance-workers-union-on-14-february-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-oswal-agro-furane-ltd-anr-vs-oswal-agro-furance-workers-union-on-14-february-2005","title":{"rendered":"M\/S Oswal Agro Furane Ltd. & Anr vs Oswal Agro Furance Workers Union & … on 14 February, 2005"},"content":{"rendered":"
Supreme Court of India<\/div>\n
M\/S Oswal Agro Furane Ltd. & Anr vs Oswal Agro Furance Workers Union & … on 14 February, 2005<\/div>\n
Author: S.B. Sinha<\/div>\n
Bench: N.S. Hegde, S.B. Sinha<\/div>\n
           CASE NO.:\nAppeal (civil)  1469 of 1999\n\nPETITIONER:\nM\/s Oswal Agro Furane Ltd. & Anr.\t\t\t\t\n\nRESPONDENT:\nOswal Agro Furance Workers Union & Ors.\t\t\t\n\nDATE OF JUDGMENT: 14\/02\/2005\n\nBENCH:\nN.S. Hegde & S.B. Sinha\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T<\/p>\n
S.B. SINHA, J :\n<\/p>\n
INTRODUCTION :\n<\/p>\n
\tWhether in a case of closure of an industrial undertaking, prior
\npermission of the appropriate Government is imperative and whether a
\nsettlement arrived at by and between the employer and the workmen would
\nprevail over the statutory requirements as contained in Section 25-N and
\nSection 25-O of the Industrial Disputes Act, 1947 (‘the Act’, for short) are
\nthe primal questions involved in this appeal which arises from a judgment
\nand order passed by a Division Bench of the Punjab & Haryana High Court
\ndated 10.7.1998 in CWP No.8214 of 1997 allowing the writ petition filed by
\nthe Respondents herein.\n<\/p>\n
BACKGROUND FACTS :\n<\/p>\n
\tThe Appellant’s industrial undertaking  was set up as a 100% Export
\nOriented Unit for Paddy Processing, Furfural and Rice Bran Extraction.
\nAllegedly, in view of lack of demand in the international market of its
\nproduct, Rice Bran Oil was sold by it in the local market, wherefor no
\nRegistration-cum-Allocation Certificate below the minimum price was
\nobtained.   The said purported statutory violation  was the subject-matter of a
\nwrit petition filed  by the Appellant herein before the Delhi High Court
\nwhich was allowed.\n<\/p>\n
The matter came up  for consideration  before this Court and in its
\njudgment rendered in Agricultural and Processed Food Products etc. vs.
\nOswal Agro Furane and Others etc. [(1996) 4 SCC 297]  this Court held that
\nthe Appellant is liable to pay a sum of Rs. fifty crores under different heads
\nto the State.  Allegedly, on the ground such a huge liability had been
\nincurred, a notice dated 29.5.1996 was issued to the State Government in
\nterms of Section 25-O of the Act.  Notices were also issued to the workmen
\non 12.6.1996 whereupon a purported settlement was arrived at on or about
\n14.6.1996 in terms of Section 12(3) of the Act.  The Respondents herein
\nquestioned the said settlement by filing a writ petition which, as noticed
\nhereinbefore, was allowed.\n<\/p>\n
HIGH COURT :\n<\/p>\n
  The High Court in its impugned judgment arrived at the following
\nfindings :\n<\/p>\n
\t1.\tAs the Management had not applied for prior permission to
\nclose down the industrial undertaking as is mandatorily required under
\nSection 25-O of the Act, the purported notice dated 29.5.1996  was illegal.\n<\/p>\n
2.\tThe closure of the industrial undertaking of the Appellant being
\nillegal, the workmen were entitled to all the benefits in terms of sub-section
\n(6) of Section 25-O of the Act. Although the settlement dated 14.6.1996 took
\nplace as a result of the purported closing down of  the industry, a valid
\nclosure itself being a foundation of such settlement and it being illegal and
\nvoid and, thus, cannot  be sustained in law.\n<\/p>\n
3.\tClosure of the industrial undertaking resulting in retrenchment as
\ncontained in Section 25-N of the Act envisages fulfillment of two conditions
\nprecedent therefor, namely, (1) three months’ notice\/ notice pay in lieu
\nthereof; and (2) prior permission of the appropriate Government and both
\nbeing mandatory in nature; the retrenchment of the workmen was  illegal as
\nprior permission therefor had not been sought from the State.\n<\/p>\n
4.\tThe provisions of Sections 25-J, 25-N and 25-F should be read
\nconjointly with Section 25-N of the Act.\n<\/p>\n
5.\tAlthough Section 18 of the Act makes a settlement binding on all
\nworkmen but such settlement cannot be entered into in contravention of the
\nprovisions of Chapters VA and VB of the Act.\n<\/p>\n
SUBMISSIONS :\n<\/p>\n
\tMr. P.N. Puri, the learned counsel appearing on behalf of the
\nAppellant would submit that having regard to the purport and object of the
\nIndustrial Disputes Act , a settlement arrived at in course of conciliation
\nproceedings within the meaning of sub-section (3) of Section 12 of the Act
\nbeing binding on all workmen in terms of Section 18 thereof; the High Court
\ncommitted an error in passing the impugned judgment.  The learned counsel
\nwould contend that in view of such a settlement, the writ petition filed by the
\nRespondents was not maintainable.  Strong reliance in this behalf has been
\nplaced on P. Virudhachalam and Others vs. Management of Lotus Mills and
\nAnother<\/a> [(1998) 1 SCC 650].  The learned counsel would further urge that
\nthe non-obstante clause contained in Section 25-J occurring in Chapter V-A
\nwill have no application in relation to a  proceedings contained in Chapter
\nV-B thereof.  Reliance in this behalf was placed on Engineering Kamgar
\nUnion vs. Electro Steels Castings Ltd. and Another.<\/a>[(2004) 6 SCC 36].        .\n<\/p>\n
\tMr. Himinder Lal, the learned counsel appearing on behalf of the
\nRespondents, on the other hand, would submit that the provisions of
\nSections 25-N and 25-O are imperative in character.\n<\/p>\n
THE RELEVANT PROVISIONS OF THE ACT :\n<\/p>\n
Section 2(p) defines a settlement as one  arrived at in the course of
\nconciliation proceedings and includes a written agreement by and between
\nthe employer and workmen entered into otherwise than in the course of
\nconciliation proceeding where such agreement has been signed by the parties
\nthereto in such manner as may be prescribed and a copy thereof has been
\nsent to an officer authorized in this behalf by the appropriate Government
\nand the conciliation officer.  Section 12 of the Act provides for duties of
\nconciliation officers.  Sub-section (3) thereof  provides that if a settlement of
\nthe dispute or of any of the matters in dispute is arrived at in the course of
\nthe conciliation proceedings the conciliation officer shall send a report
\nthereof to the appropriate Government together with a memorandum of the
\nsettlement signed by the parties to the dispute.   Section 18 of the Act
\nprovides for the binding nature of such settlement,  sub-section (3) whereof
\nreads as under :\n<\/p>\n
\t“(3) A settlement arrived at in the course of
\nconciliation proceedings under this Act or an arbitration
\naward in a case where a notification has been issued
\nunder sub-section (3A) of section 10A or an award of a
\nLabour Court, Tribunal or National Tribunal which has
\nbecome enforceable shall be binding on <\/p>\n
\t(a)\tall parties to the industrial dispute;\n<\/p>\n
(b) \tall other parties summoned to appear in the
\nproceedings as parties to the dispute, unless
\nthe Board, arbitrator, Labour Court, Tribunal
\nor National Tribunal, as the case may be,
\nrecords the opinion that they were so
\nsummoned without proper cause;\n<\/p>\n
(c) \twhere a party referred to in clause (a) or
\nclause (b) is an employer, his heirs,
\nsuccessors or assigns in respect of the
\nestablishment to which the dispute relates;\n<\/p>\n
(d) \twhere a party referred to in clause (a) or
\nclause (b) is composed of workmen, all
\npersons who were employed in the
\nestablishment or part of the establishment,
\nas the case may be, to which the dispute
\nrelates on the date of the dispute and all
\npersons who subsequently become
\nemployed in that establishment or part.”\n<\/p>\n
Section 25-N of the Act lays down conditions precedent to
\nretrenchment of workmen whereas Section 25-O provides for the procedure
\nfor closing down an undertaking of an industrial establishment.  Section 25-
\nN of the Act lays down two conditions before a retrenchment of workman
\ncan be effected which are : (a) the workman has been given three months’
\nnotice in writing indicating the reasons for  retrenchment or paid in lieu such
\nnotice wages for the said period; and (b) the prior permission of the
\nappropriate Government has been obtained by the employer on an
\napplication made in this behalf.  Sub-section (2) of Section 25-N provides
\nfor the manner in which the application for permission under sub-section (1)
\nis required to be made.  Sub-section (3) of Section 25-N postulates grant or
\nrefusal of such permission by the appropriate Government upon making
\nsuch enquiry as it may think fit after giving a reasonable opportunity of
\nbeing heard to the employer, the workmen concerned and the persons
\ninterested in such retrenchment, and also  having regard to the genuineness
\nand adequacy of the reasons stated by the employer, the interests of the
\nworkmen and all other relevant factors.  Sub-section (4) of Section 25-N
\nprovides that when an order passed  by the appropriate Government is not
\ncommunicated within a period of sixty days from the date on which such
\napplication is made, the permission applied for shall be deemed to have been
\ngranted on the expiration of the said period.  Sub-section (7) of Section 25-N
\nprovides for the consequences emanating from non-making of application
\nfor permission under sub-section (1) or where such permission has been
\nrefused,  stating  the retrenchment of the workman shall be deemed to be
\nillegal from the date on which the notice of retrenchment was given to the
\nworkman and the workman shall be entitled to all the benefits under any law
\nfor the time being in force as if no notice had been given to him..  The only
\nexception provided for as regard grant of exemption from the operation
\nthereof is contained in sub-section (8) thereof i.e. in a case where the
\nappropriate Government is satisfied that owing to such exceptional
\ncircumstances  as accident in the establishment or death of the employer or
\nthe like, it may by order direct that the provisions of sub-section (1) shall not
\napply in relation to such establishment.\n<\/p>\n
\tSection 25-O of the Act contains similar provisions  as regard
\nissuance of such notice and passing of an order by the appropriate
\nGovernment.\n<\/p>\n
DETERMINATION :\n<\/p>\n
It is not in dispute that the Appellant herein did not ask for grant of
\nsuch prior permission before the appropriate Government disclosing its
\nintention to effect closure of the said unit and such question of grant of  prior
\npermission by the State did not arise.\n<\/p>\n
\tConstitutionality of Section 25-N of the Act came up for consideration
\nbefore a Constitution Bench of this Court in Workmen of Meenakshi Mills
\nLtd. and Others etc. vs. Meenakshi Mills Ltd. and Another etc. [(1992) 3
\nSCC 336], wherein  inter alia, a contention was raised that Section 25-O as it
\noriginally stood having been declared unconstitutional by this Court in Excel
\nWear etc. vs. Union of India and Others etc. [(1978) 4 SCC 224] holding
\nthat an employer has a fundamental right not to carry on any business,
\nSection 25-N on the same analogy should be held to be ultra vires. In
\nMeenakshi Mills (supra) this Court noticed the distinguishing features
\nbetween Sections 25-N and 25-O as originally enacted and the amendments
\neffected therein in terms of the Industrial Disputes (Amendment) Act, 1984.\n<\/p>\n
The following contentions raised therein by the learned counsel
\nappearing on behalf of the  employer  were noticed by this Court  :\n<\/p>\n
\t“(1) Adjudication by a judicial body available in
\nthe case of retrenchment under Section 25-F has been
\nsubstituted by an administrative order passed by an
\nexecutive authority in the case of retrenchment under
\nSection 25-N and thereby a function which was
\ntraditionally performed by Industrial Tribunals\/Labour
\nCourts has been conferred on an executive authority.\n<\/p>\n
\t(II)\tNo guidelines have been prescribed for the
\nexercise of the power by the appropriate Government or
\nauthority under sub-section (2) of Section 25-N and it
\nwould be permissible for the authority to pass its order on
\npolicy considerations which may have nothing to do with
\nan individual employer’s legitimate need to reorganize its
\nbusiness.  The requirement that reasons must be recorded
\nby the appropriate Government or authority for its order
\nunder sub-section (2) of Section 25-N is not a sufficient
\nsafeguard against arbitrary action since no yardstick is
\nlaid down for judging the validity of those reasons.\n<\/p>\n
\t(III)\tThere is no provision for appeal or revision
\nagainst the order passed by the appropriate Government
\nor authority refusing to grant permission to retrench
\nunder sub-section (2) of Section 25-N  Judicial review
\nunder Article 226 of the Constitution is not an adequate
\nremedy.\n<\/p>\n
\t(IV)\tThe provisions are ex facie arbitrary and
\ndiscriminatory inasmuch as while the workmen have a
\nright to challenge, on facts, the correctness of an order
\npassed under sub-section (2) granting permission for
\nretrenchment before the Industrial Tribunal by seeking a
\nreference under Section 10 of the Act, the management
\ndoes not have a similar right to challenge the validity of
\nan order passed under sub-section (2) refusing to grant
\npermission for retrenchment.”\n<\/p>\n
\tThis Court rejected all the aforementioned contentions and upheld the
\nconstitutionality of the said Act.\n<\/p>\n
\tA bare perusal of the provisions contained in Sections 25-N and 25-O
\nof the Act leaves no manner of doubt that the employer who intends to close
\ndown the undertaking and\/or effect retrenchment of workmen working in
\nsuch industrial establishment, is bound to apply for prior permission at least
\nninety days before the date on which the intended closure is to take place.
\nThey constitute conditions precedent for effecting a valid closure, whereas
\nthe provisions of Section 25-N of the Act provides for conditions precedent
\nto retrenchment; Section 25-O speaks of procedure for closing down an
\nundertaking.  Obtaining a prior permission from the appropriate
\nGovernment, thus, must be  held to be imperative in character.\n<\/p>\n
\tA settlement within the meaning of Section 2(p) read with sub-section
\n(3) of Section 18 of the Act undoubtedly binds the workmen but the question
\nwhich would arise is, would it mean that thereby the provisions contained in
\nSections 25-N and  25-O are not required to be complied with?  The answer
\nto the said question must be rendered in the negative.  A settlement can be
\narrived at between the employer and workmen in case of an industrial
\ndispute.  An industrial dispute may arise as regard the validity of a
\nretrenchment or a closure or otherwise.  Such a settlement, however, as
\nregard retrenchment or closure can be arrived at provided such retrenchment
\nor closure has been effected in accordance with law.  Requirements of
\nissuance of a notice in terms of Sections 25-N and 25-O, as the case may,
\nand\/or a decision thereupon by the appropriate Government are clearly
\nsuggestive of the fact that thereby a public policy has been laid down.  The
\nState Government before granting or refusing such permission is not only
\nrequired to comply with the principles of natural justice by giving an
\nopportunity of hearing both to the employer and the workmen but also is
\nrequired to assign reasons in support thereof and is also required to pass an
\norder having regard to the several factors laid down therein.  One of the
\nfactors besides others  which is required to be taken into consideration by the
\nappropriate Government before grant or refusal of such permission is the
\ninterest of the workmen.  The aforementioned provisions being imperative in
\ncharacter would prevail over the right of the parties to arrive at a settlement.
\nSuch a settlement must conform to the statutory conditions laying down a
\npublic policy.  A contract which may otherwise be valid, however,  must
\nsatisfy the tests of public policy not only in terms of the aforementioned
\nprovisions but also in terms of Section 23 of the Indian Contract Act.\n<\/p>\n
\tIt is trite that  having regard to the maxim “ex turpi causa non oritur
\nactio”, an agreement which  opposes  public policy as laid down in terms of
\nSections 25-N and 25-O of the Act would be void and of no effect.  The
\nParliament has acknowledged the governing factors of such public policy.
\nFurthermore, the imperative character of the statutory requirements would
\nalso be borne out from the fact that in terms of sub-section (7) of Section 25-
\nN and sub-section (6) of Section 25-O, a legal fiction has been created.  The
\neffect of such a legal fiction is now well-known.  [See East End Dwellings
\nCo. Ltd. V. Finsbury Borough Council [(1951) 2 All ER 587, Om Hemrajani
\nvs. State of U.P. and Another<\/a>  (2005) 1 SCC 617 and  M\/s Maruti Udyog
\nLtd. vs. Ram Lal & Ors.<\/a>  2005 (1) SCALE  585].\n<\/p>\n
\tThe consequences flowing from such a mandatory requirements as
\ncontained in Sections 25-N and 25-O must, therefore, be given full effect.
\nThe decision of this Court in P. Virudhachalam (supra) relied upon by Mr.
\nPuri does not advance the case of the Appellant herein.  In that case, this
\nCourt was concerned with a settlement arrived at in terms of Section 25-C of
\nthe Act.  The validity of such a settlement was upheld in view of the first
\nproviso to Section 25-C of the Act.  Having regard to the provisions
\ncontained in the first proviso appended to Section 25-C of the Act, this Court
\nobserved that Section 25-J thereof would not come in the way of giving
\neffect to such settlement.  However, the provisions contained in Sections 25-
\nN and 25-O do not contain any such provision in terms whereof the
\nemployer and employees can arrive at a settlement.\n<\/p>\n
In  Engineering Kamgar Union (supra), the question which fell for
\nconsideration of this Court was as to whether in relation to an industry which
\nwas governed by the State Act, the provisions of Section 25-O would be
\nattracted.  This Court held that having regard to the provisions contained in
\nArticle 254 of the Constitution of India, the provisions of the State Act shall
\nprevail over the Parliamentary Act as the former received the assent of the
\nPresident of India stating :\n<\/p>\n
\t“The contention of Mr. Banerjee to the effect that
\nSection 25J of the Central Act has been incorporated by
\nreference in Section 25S cannot be accepted.  Section
\n25S does not introduce a non-obstante clause as regard
\nChapter V-A.  Furthermore, Section 25J is not a part of
\nChapter V-B.  By reason of Section 25S, the provisions
\nof Chapter V-A were made applicable only in relation to
\ncertain establishments referred to in Chapter V-B.  The
\nParliament has deliberately used the words “so far as may
\nbe” which would also indicate that provisions of Chapter
\nV-A were to apply to the industrial establishments
\nmentioned in Chapter V-B.  The non-obstante clause
\ncontained in Section 25J does not apply to the entire
\nChapter V-B.  Applicability of Chapter V-A in relation to
\nthe industrial establishments covered by Chapter V-B in
\nterms of Section 25J vis-`-vis Section 25S is permissible
\nbut the contention cannot be taken any further so as to
\nmake Section 25O of the Central Act prevail over the
\nState Act by taking recourse to the non-obstante clause.
\nNon-obstante clause contained in Section 25J is, thus,
\nrequired to be kept confined to Chapter V-A only and in
\nthat view of the matter we have no hesitation in holding
\nthat Chapter V-B does not have an overriding effect over
\nthe State Act.”\n<\/p>\n
\tIndisputably, in this case, the industrial undertaking belonging to the
\nAppellant herein  attracts the provisions of Chapter VB of the Act and
\nconsequently the provisions referred to in Section 2(s) including Section 25J
\nshall apply in relation thereto.\n<\/p>\n
\tThe decision of this Court in  Engineering Kamgar Union (supra)
\nthus, must be understood to have been rendered in the fact situation
\nobtaining therein.\n<\/p>\n
CONCLUSION :\n<\/p>\n
\tFor the reasons aforementioned, we do not find any merit in this
\nappeal which is accordingly dismissed.  However, in the facts and
\ncircumstances of the case, there shall be no order as to costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India M\/S Oswal Agro Furane Ltd. & Anr vs Oswal Agro Furance Workers Union & … on 14 February, 2005 Author: S.B. Sinha Bench: N.S. Hegde, S.B. Sinha CASE NO.: Appeal (civil) 1469 of 1999 PETITIONER: M\/s Oswal Agro Furane Ltd. & Anr. RESPONDENT: Oswal Agro Furance Workers Union & Ors. DATE […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-213815","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nM\/S Oswal Agro Furane Ltd. & Anr vs Oswal Agro Furance Workers Union & ... on 14 February, 2005 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-oswal-agro-furane-ltd-anr-vs-oswal-agro-furance-workers-union-on-14-february-2005\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S Oswal Agro Furane Ltd. & Anr vs Oswal Agro Furance Workers Union & ... on 14 February, 2005 - 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