NDLI: Excel Wear Etc. Vs. Union of India and .ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Inustrial Disputes Act. 1947
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Industrial Disputes Act, 1947 (14 of 1947)
Case Type	Writ Petition
Court	Supreme Court of India
Disposal Nature	Petition Allowed
Headnote	Industrial Disputes Act, 1947 - Sections 25(O) and Section 25(R) - Constitutional Validity of - Whether right to close down an undertaking a fundamental right.The facts of only one petition are set out because they are similar to facts in other petitions. Excel Wear is a partnership firm manufacturing garments for export. About 400 workmen were employed in the petitioners' factory. The case of the petitioners is that the relations between the management and the employees started deteriorating and became very strained from 1976. The workmen became very militant, aggressive, violent and indulged in unjustifiable or illegal strikes. Various incidents have been mentioned in the Writ Petition in support of the said allegations. However, since those facts were seriously challenged and disputed by the workmen, the Court did not refer to them in any detail nor expressed any view one way or the other. According to the petitioners it became almost impossible to carry on the business. The petitioners, therefore, served a notice dated 2nd May, 1977 on the Government of Maharashtra, respondent No. 2 for previous approval of the intended closure of the undertaking in accordance with section 25(O)(1). The State Government refused to accord the approval on the ground that the intended closure was prejudicial to public interest.The petitioners contended :(a) A right to close down a business is an integral part of the right to carry on a business guaranteed under Art. 19 (I )(g) of the Constitution. The impugned law imposes a restriction on the said fundamental right which is highly unreasonable, excessive and arbitrary. It is not a restriction but almost amounts to the destruction or negation of that right. The restrictions imposed is manifestly beyond the permissible bounds of Art. 19(6) of the Constitution.(b) A right to carry on a business includes a right not to carry on a business which is like any other right mentioned under Article 19(1) such as the right to freedom of speech includes a right not to speak and the right not to form an association is inherent under the right to form association.(c) The restrictions are unreasonable because- (i) Section 25(O) does not require giving of reasons in the order. (ii) No time limit is to be fixed while refusing permission to close down. {iii) Even if the reasons are adequate and sufficient, approval can be denied in the purported public interest of security of labour. Labour is bound to suffer because of unemployment brought about in almost every case of closure.(iv) It has been left to the caprice and whims of the authority to decide one way or the other. No guidelines have been given. (v) Apart from the civil liability which is to be incurred under sub-section (5), the closure, however, compulsive it may be, if brought about against the direction given under sub-section (2) is visited with penal consequences as provided in section 25-R. (vi) There is no deemed provision as to the according of approval in sub-section (2) as in sub-section ( 4). (vii) Refusal to accord approval would merely mean technically that the business continues but a factory owner cannot be compelled to carry on the business and go on with the production and thus one of the objectives sought to be achieved by this provision cannot be achieved. (viii) There is no provision of appeal, revision or review of the order even after sometime.(ix) Restriction being much more excessive than is necessary for the achievement of the object is highly unreasonable. (x) There may be several other methods to regulate and restrict the right of closure by providing for extra compensation over and above the retrenchment compensation if the closure is found to be mala fide and unreasonable.(xi) To direct the employer not to close down is a negation of the right to close. It is not regulatory. (xii) If carrying on any business is prohibited in public interest, a person can do another business. But to prohibit the closure of a running business is destruction of the right to close. (xiii) The reasonableness of the impugned restrictions must be examined both from procedural and substantive aspects of the law. Subsection (2) of s. 25-D does not make it obligatory for any higher authority of the Government to take a decision. It may be taken even by a lower officer in the hierarchy. ( 4) The respondents• contentions :- (a) Some counsel for the respondents did not dispute that the right to close down a business is an integral part of the right to carry on a business. they however, contended that the restrictions imposed by the impugned law are quite reasonable and justified to put a stop to the unfair labour practice and for the welfare of the workmen. It is a progressive legislation for the protection of a weaker section of society. (b) Some other counsel for the respondents, however, did not accept that a right to close down a business is an integral part of the right to carry on any business. According to them, the total prohibition of closure only affects a part of the right to carry on the business and not a total annihilation of this. The restriction imposed was in public interest and there ·is a presumption of reasonableness in favour of a statute. Reliance was also placed on social and welfare legislation as expounded by renowned jurists and judges abroad. It was also contended that the legislation was protected by Article 31C of the Constitution.
Judge	Hon'ble Mr. Justice N.L. Untwalia
Neutral Citation	1978 INSC 192
Petitioner	Excel Wear Etc.
Respondent	Union Of India And .ors.
SCR	[1979] 1 S.C.R. 1009
Judgement Date	1978-09-29
Case Number	644

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