Decided on July 18,1988

N. U. Rajguru And Others Respondents


G.T.NANAVATI - (1.)This petition is filed by the Associated Cement Companies Limited (hereafter referred to as the A.C.C.) and one of its Directors and shareholders. The A.C.C. is having one of its Factories at Porbandar and it is known as Porbandar Special Product Works (hereafter referred to as the PSP Works). The principal activity of the PSP Works is to manufacture white cement which is sold under the brand name Silvercrete. The PSP Works started functioning in the year 1914. It started manufacturing white cement in 1959. There was considerable demand for the white cement manufactured by the PSP Works till 1984. M/s. J. K. Cements started manufacturing white cement in Rajasthan in that year. As the white cement manufactured by M/s. J. K. Cements is of greater whiteness and superior quality demand for the white cement manufactured by the PSP Works declined. With the drop in the demand over-all capacity utilisation of the PSP Works dropped from 72 per cent in 1983-84 to 36.4 per-cent in 1984 for the period August to December 1985 it was on 22.3 per cent and during January to June 1986 it was 21.2 per cent. It is the case of the petitioners that it became more difficult for them to sell its product as the Government allowed import of white cement which has higher degree of whiteness. It is also the case of the petitioners that because of the market condition the petitioners were compelled to cut down its selling price from Rs. 2 300 per tonne to Rs. 2 100 per tonne in January 1985 and the same was further reduced to Rs. 1 700 per tonne in March 1985 As there was not enough demand even at that reduced rate the A.C.C. was further compelled to give a rebate of Rs. 300.00 per tonne to the stockists for promoting sales. It is also the case of the petitioners that as a result of under utilisation of the PSP Works cost of production of one tonne of white cement works out at Rs. 4 38 whereas the sales realisation per tonne after giving rebate is only Rs. 1 400 Therefore the PSP Works incurred a loss of Rs. 25.84 lakhs in 1984-85 and a further loss of Rs. 19.80 lakhs between August and October 1985 The total estimated loss for the year 1985-86 is Rs. 73.50 lakhs. It is also the case of the petitioners that demand for white cement in the country is only 1.2 lakh tonnes per annum as against the present rated capacity of 2.11 lakh tonnes of the existing plants. Over and above this the Government has given letters of indent to 7 more concerns for manufacturing white cement with the result that supply would become much more than the total demand in the Country. It is also the case of the petitioners that the plant of the PSP Works is their oldest plant; and if it is required to be replaced it would cost nearly Rs. 15 crores. Even thereafter it will not be able to compete with other manufacturers who are manufacturing white cement of higher degree of whiteness and superior quality. It is also the case of the petitioners that because of the directions given by the Gujarat Pollution Control Board to install Electro-static Precipitators they will be required to incur a further expenditure of Rs. 2 40 crores. Due to all these factors the petitioners find it almost impossible to continue the PSP Works as it has ceased to be an economically viable unit and there is no possibility of making it viable. The petitioners therefore made an application dated 15-11-1985 to the State Government under Sec. 25-O of the Industrial Disputes Act 1947 (hereafter referred to as the Act) for permission to close down their PSP Works with effect from 1/03/1986 The said application was made without prejudice to the contention of the petitioners that Secs. 25-O and 25-R of the Act are invalid and therefore the petitioners have a right to close down the PSP Works without seeking any permission of the Government.
(2.)An inquiry was made by the Labour Commissioner to whom the said application was forwarded by the State Government. The petitioners filed an affidavit of Shri P. A. Jadeja General Manager of the PSP Works in support of their case. Mr. Jadeja was also offered for cross-examination. The Trade Unions which participated in the proceedings are respondents Nos. 4 to 7 in the petition. They did not cross-examine Mr. Jadeja nor did they lead any evidence. It is the case of the petitioners that even though they made out a case that their request is genuine and that there are adequate reasons for closing down the PSP Works the Labour Commissioner by his order dated 16/01/1986 rejected their application. Main reasons given by the Labour Commissioner for rejecting the application are as under :
(1) It is the primary responsibility of the applicant to obtain good raw material and to manufacture good quality cement.

(2) For the period 1975-76 to 1984-85 total profit was Rs. 362.89 profit of Rs. 302.52 lakhs.

(3) It is not correct to say that there is less demand for white cement and there is no market for the product of the PSP Works.

(4) Replacement of the old plant and obtaining finances for that purpose are the matters within the control of the management.

(5) The grounds given by the A.C.C. cannot be regarded as sufficient for permitting the closure of the PSP Works.

(3.)On an application made by the A C.C. under Sec. 25-O(5) the State Government by its order dated 13/03/1986 referred the matter for adjudication to the Industrial Tribunal. Out of four Unions the A.C C. Staff Union (Respondent No. 5) and the Cement Works Mandal (Respondent No. 7) neither fixed their written statements nor made their appearances before the Tribunal. Saurashtra Majdoor Mahajan Sangh (Respondent No. 6) filed its written statement but did not appear before the Tribunal. The matter was contested by the Porbandar Special Product Cement Majdoor Sangh (Respondent No. 4).

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