S. N. VARIAVA, J. -
(1.)IN these Appeals and Writ Petitions the question for consideration, by this Bench, is the constitutional validity of Section 25-O of the INdustrial Disputes Act, 1947. Section 25-O, as it now stands, was incorporated by the Amendment Act 46 of 1982 (for sake of convenience the said Section will hereinafter be referred to as the amended Section 25-O). IN some of these matters the constitutional validity of Section 6-W of the U.P. INdustrial Disputes Act is in question. Section 6-W is identical to amended Section 25-O. Even though in this judgment reference is made only to Section 25-O, what is set out herein will equally apply to Sec. 6-W. For considering the constitutional validity of these Sections it is not necessary to note the facts in each case. Therefore the facts are not being set out.
(2.)IN the case of Excel Wear Etc. v. Union of INdia and others (1979 (1) SCR 1009) a Constitution Bench struck down Section 25-O of the INdustrial Disputes Act (as it then stood). Thereafter the constitutional validity of Section 25-N of the INdustrial Disputes Act (as it then stood) was considered by a Constitution Bench in the case of Workmen v. Meenakshi Mills Ltd. (1992) 3 SCC 336. IN Meenakshi Mills' case this Court after referring to Excel Wear's case, upheld the constitutional validity of Section 25-N. These Appeals and Writ Petitions have been referred to a Constitution Bench with the following observation :
"The common question that arises for consideration relates to the constitutional validity of S. 25(O) of the INdustrial Disputes Act as introduced by Central Act No. 46 of 1982 and Section 25(O) as applicable in the State of M.P. by virtue of M.P. Act No. 32 of 1983 as well as Section 6(W) of the U.P. INdustrial Disputes Act, 1947. The earlier provision contained in Section 25(O) was struck down by this Court in Excel Wear Etc. v. Union of INdia and Ors. 1979 (1) SCR 1009. The learned counsel for the employers in support of their submissions assailing the validity of the said provisions have placed reliance on various observations in the judgment in Excel Wear's Case. On behalf of the workmen reliance has been placed on the decision of the Constitution Bench in Workmen of Meenakshi Mills Ltd. and Ors. v. Meenakshi Mills Ltd. and Anr. 1992 (3) SCC 336. Since the questions raised involve interpretation of the various observations in the judgment in Excel Wear's case as well as in Meenakshi Mills' case, we consider it appropriate that these matters are heard by a Constitution Bench. It is, therefore, directed that all these matters be placed before Hon'ble the Chief Justice of INdia for suitable directions."
It must be mentioned that even amongst the High Courts there is a conflict of opinion. Some of the High Courts have held that the amended Section 25-O of the Industrial Disputes Act and or Section 6-W of the U.P. Industrial Disputes Act still suffers from the substantial vice pointed out in Excel Wear's case and is therefore unconstitutional. Some other High Court have, relying on Meenakshi Mills' case, upheld the validity of amended Section 25-O and/or Section 6-W.
At this stage a submission made by Ms. Jaising needs to be set out Ms. Jaising submitted that in Meenakshi Mills' case a Constitution Bench of this Court has extracted the reasons why in Excel Wears case Section 25-O was struck down. It was submitted that that decision would be binding on this Court. It was submitted that this Court should not itself go into Excel Wear's case to find out the reasons why Section 25-O was struck down. We are unable to accept this submission. As has been held by this Court in the case of P.A. Shah v. State of Gujarat reported in (1985) Supp 3 SCR 1025, it is the duty of the Constitution Court to form its own opinion about a given case and to consider the effect of a precedent by reading it over again, instead of relying upon the gloss placed on that precedent by some other decision. In our view the submissions of all the learned counsel will have to be considered in the light of what is laid down in Excel Wear's case and Meenakshi Mills' case.
(3.)IN Excel Wear's case this Court negatived a submission that a right to close down a business was not a fundamental right and that it was merely a right appurtenant to ownership of property. This Court held that the right to close down a business was an integral part of the fundamental right to carry on business as guaranteed under Article 19(1)(g) of the Constitution. It was held that there could be a reasonable restriction on this right under Article 19(6) of the Constitution. It was held that the law could provide to deter reckless, unfair, unjust and mala fide closure. A challenge under Art. 14 of the Constitution was negatived. It was held that Chapter V-B dealt only with comparatively bigger undertakings and of a few types only and thus the classification was reasonable. It was held that reasonableness of the restrictions must be examined both from procedural and substantive aspects of the law. This Court then considered whether the restrictions imposed by Section 25-O (as it then stood) were reasonable and saved by Article 19(6) of the Constitution. It was held that the restrictions imposed by Section 25-O were unreasonable for the following reasons :
(i) Section 25-O did not require giving of reasons in the order. Even if the reasons were adequate and sufficient, permission to close could be denied in the purported public interest of labour as it had been left to the whims and caprice of the authority to decide one way or the other. Thus the order could be whimsical and capricious.
(ii) No time limit was fixed whilst refusing permission to close down.
(iii) That there was no deemed provision for according approval in the Section. It was held that the result would be that if the Government order was not communicated to the employer within 90 days, strictly speaking, the criminal liability under Section 25-F may not be attracted if on the expiry of that period the undertaking is closed, but the civil liability under S. 25-O(5) would come into play on the expiry of period of 90 days.
(iv) The order passed by the authority was not subject to any scrutiny by any higher authority or tribunal either in appeal or revision and the order could not be reviewed even after some time.
(v) The employer was compelled to resort to the provision of Section 25-N even after approval of closure.
(vi) The restriction imposed was more excessive than was necessary for the achievement of the object and thus highly unreasonable. It was suggested that there could be several other methods to regulate and restrict the right of closure e.g. by providing for extra compensation over and above the retrenchment compensation.
In Meenakshi Mills's case, while considering the constitutional validity of Section 25-N (as it then stood). Excel Wear's case was considered. This Court noted some of the vices pointed out in Excel Wear's case. This Court then pointed out the differences between Sections 25-O and 25-N (as they then stood) and held that considerations which weighed in Excel Wear's case could not be applied for judging the validity of Section 25-N. This Court proceeded on the assumption that the right to retrench workmen was an integral part of the fundamental right of the employer to carry on business under Article 19(1)(g). It was noted that Section 25-N formed part of Chapter V-B which bore the heading "Special Provisions Relating to Layoff, Retrenchment and Closure in Certain Establishments". It was noted that the said Chapter consisted of Sections 25-K to 25-S and that the said Chapter was inserted by Amending Act No. 32 of 1976. This Court held that the objects and reasons underlining the enactment was to prevent avoidable hardship to the employees resulting from retrenchment by protecting existing employees and to check growth of unemployment which would otherwise be the consequence of retrenchment in industrial establishments employing large number of wrokmen. It was noted that one of the objects and reasons was to maintain higher tempo of production and productivity by preserving industrial peace and harmony. It was noted that in mandate contained in the Directive Principles of the Constitution was sought to be given effect to. This Court held that ordinarily, a restriction which had the effect of promoting or effectuating a directive principle can be presumed to be a reasonable restriction in public interest. This Court held that the restrictions imposed must therefore be regarded as having been imposed in the interest of the general public. This Court held that the employer's right was not absolute and a restriction imposed on the employer's right to terminate the service of an employee was not alien to the constitutional scheme. This Court then negatived the following submissions :
(i) Adjudication by a judicial body available in the case of retrenchment under Section 25-F has been substituted by an administrative order passed by an executive authority in the case of retrenchment under Section 25-N and thereby a function which was traditionally performed by Industrial Tribunals Labour Courts has been conferred on an executive authority.
(ii) No guidelines have been prescribed for the exercise of the power by the appropriate Government or authority under sub-section (2) of Section 25-N and it would be permissible for the authority to pass its order on policy considerations which may have nothing to do with an individual employer's legitimate need to reorganise its business. The requirement that reasons must be recorded by the appropriate Government or authority for its order under sub-section (2) of Section 25-N is not a sufficient safeguard against arbitrary action since no yardstick is laid down for judging the validity of those reasons.
(iii) There is no provision for appeal or revision against the order passed by the appropriate Government or authority refusing to grant permission to retrench under sub-section (2) of Section 25-N, Judicial review under Art. 226 of the Constitution is not an adequate remedy.
(iv) The provisions are ex facie arbitrary and discriminatory inasmuch as while the workmen have a right to challenge, on facts, the correctness of an order passed under sub-section (2) granting permission for retrenchment before the Industrial Tribunal by seeking a reference under Section 10 of the Act, the management does not have a similar right to challenge the validity of an order passed under sub-section (2) refusing to grant permission for retrenchment."
It was held that Section 25-N did not suffer from the vice of unconstitutionality, it was held that Section 25-N was not violative of the fundamental rights guaranteed under Art. 19(1)(g). It was held that Section 25-N was saved by Article 19(6) of the Constitution.