Sunil Ambwani, J. - (1.) Agra Engineering Industries, Artoni, Agra, Respondent No. 2 is a unit of Jay Engineering Works Ltd., a Company incorporated under the Companies Act. Petitioner is a Union of Agra Engineering Industries employees. It has prayed for quashing the order dated 26.4.2002 (Annexure-4 to the writ petition), passed by the State Government, allowing application of the Company for closure of Respondent No. 2, establishment at Agra under Section 25-0 of the Industrial Disputes Act, 1947 and has further prayed for a direction in the nature of mandamus to the respondents not to close down the company i.e., Respondent No. 2 and to pay regular salary to its workers.
(2.) The facts giving rise to this petition arc, that Respondent No. 2 suspended its production activities w.e.f, 1.8.2001. Wages were, however, paid to the workers with a total strength of 238 including 52 members of the staff and 186 workmen, up to 31.5.2001. A recovery certificate was issued by the Deputy Labour Commissioner under U.P. Industrial Peace (Timely Payment of Wages) Act, 1978 for wages for the month of November, 2001. In Writ Petition No. 5480 of 2002 this Court with the consent of petitioner Company and employees Union, stayed the operation of the order for a period of two months, allowing the Management to remove finished goods, semi-finished gods and scrap from factory and pay the amount under the orders, after the removal of the goods. On 26.2.2002, Respondent No. 2 made an application to Secretary, Labour Government of U.P., informing that it proposes to close down the undertaking with effect from 30.5,2002, and sought permission for closure. In Para 4 of the application a declaration was made that in the event approval for the closure was granted, every workman in the undertaking to whom Sub-section (8) of the said Section 25-0 applies, will be given notice and paid compensation, as specified in Section 25-N of the Industrial Disputes Act, 1947 as if the workman had been retrenched under the said section. The application enclosed a list of workmen, details relating to licensed capacity and utilization capacity of the manufacture of ceiling fans, annual production for preceding three years production in progress itemwise and valuewise etc. It also included balance-sheet and profit and loss account and audit reports for the last three year, which reflected losses. Reasons for the proposed closure were given in Appendix XXII appended to the application dated 26.2.2003. These reasons stated that Agra Engineering Industries, Agra is a unit of the Jay Engineering Works Ltd. a sick industrial unit with accumulated loses of Rs. 107 crores and a negative networth of Rs. 82 crores. The continued losses had made the financial position of the Company so bad that it was not possible to pay suppliers, wages and other statutory dues. The Indian Electric Fan Industry is facing tremendous pressure both in the terms of prices and business volume with rapidly changing economic environment both within the country and internationally. The organized fan industry in India continuously for 5 years is loosing its market shares to the unorganized sector. The Government Tax policies arc continuously making the organized sector uncompetitive at the market place, the gradual increase in excise duty and other Government levies, over the past few years have further widened the gap between the organized and unorganized sector. The company's BIFR scheme was approved in November, 1997 and provided major portion of rehabilitation funds sources from sale of surplus land at Kolkata, which unfortunately could not materialize despite best efforts by the company in close coordination with Government of West Bengal. In view of continued cash losses the company in June, 2002, having no option submitted a supplementary proposal to BIFR proposing to close down manufacturing facility Agra i.e., Agra Engineering Industry. The financial position became so worse that the company was not in a position to continue procuring raw materials as suppliers declined to supply fresh materials to the Agra Unit before their old dues arc settled. The unit suffered huge losses both in terms of productivity and financial losses because of go slow adopted by Agra workmen during the year 2000-2001. The production activities was suspended with effect from 1.8.2001. The manufacturing plant of Agra Unit was manufacturing most of the economy price models and were the worst hit because of the domestic/international price pressures. The Company have no funds to invest in machines overhauling/reconditioning and that the unit became the weakest link in terms of quality and reliability and thus, it was decided to close down Agra Engineering Industry. In Annexure XXIII the company disclosed attempts to avoid closure. It was stated that vide order dated 21.11.1997 the BIFR sanctioned a scheme of rehabilitation with cost of Rs. 63.34 crores, including Rs. 33 crores from promoters and Rs. 30.34 crores by sale of surplus land at Calcutta. The promoters inducted Rs. 28.77 crores. In financial year March, 1993, the company owed an amount of Rs. 3306 lacs to the Bank and Rs. 166.66 lacs to the term landing institutions besides deferred creditors of Rs. 0.52 lacs due to the Banks. Due to non-conclusion of sale of land the expected fund could not become available and thus, unfortunate step to take decision to close Agra Unit was taken.
(3.) On receipt of the application the Assistant Labour Commissioner, Agra Region, Agra sent notice dated 20.3,2002 to the parties to appear on 23.3.2002. The petitioner filed their objection on 23.2.2002 denying the facts stated in the application for closure. A preliminary objection was raised that the application could have been made under Section 6 (W) of the Industrial Disputes Act, 1947 which provides the procedure for closing down an undertaking. It was stated that the Agra Engineering Unit was established in 1969 and is earning profit for 32 years. The company was manufacturing 1850 fans per shift per day and its high quality fans were sold at Rs. 1200 as against cost of production of Rs. 742 per fan. In Para 5 of the objection it was stated that the unit was notified at SI. No. 170 by the Supreme Court in Public Interest Litigation No. 13381 of 1984 and was required to be closed on 31.12.2001. In order to avoid the compliance of the direction of the Supreme Court and to avoid payment of wages to its workmen, the company filed under Section 25-0 of the Act. 'He BIFR has passed two orders for rehabilitation in June, 2001 and 11.1.2002, which have not become final and that rehabilitation proposal has not been rejected so far. The application under Section 25-0 was filed in order to avoid liability of payment. On 26.4.2001 the Management had entered into settlement with workmen in which workmen agreed for higher production. The other two units of Jay Engineering Works at Calcutta and Hyderabad are showing more losses and that no such proposal of closure was sent to cither West Bengal or Andhra Pradesh Governments. It was further stated in Para 13 of the objection that since the U.P. is backward Industrial State and that 292 industries of Agra has been closed down, it was not possible to obtain alternative employment. It was stated in Para 14 that up-to 1994 the unit was in profits and bonus was paid at 10.6%, 14%, 17% and up-to 20%. Production of 20 fans per day in 1969 was increased by workmen upto 1850 fans per day. In the financial year 1999-2000, 4,11,140 fans were manufacture. The workmen challenged and objected to the correctness of the balance-sheet and required that the balance-sheet should be re-examincd. The workmen raised doubts over the intention of the company inasmuch as the production never ceased and fell below the target.;