- (1.) THIS is an application under Art. 226 of the Constitution challenging an order dated the 16th November, 1977, passed by the Special Officer and Ex-officio Deputy Secretary, Labour Department, government of West Bengal.
(2.) IN order to appreciate the challenge it would be necessary to advert to certain facts. The petitioner No. 1 is a company and carries on business, inter alia, in the manufacture and sale of cast iron spun pipes, steel castings and grinding media and for its said business the said petitioner owns and operates two factories which are known as Spun Pipe Works and Steel Foundry works at Barrackpore Trunk Road, 24-Parganas, West Bengal. The Company employs 287 workmen in Spun Pipe Works and 442 workmen in the Steel foundry Works. The Company also employs 39 and 77 non-workmen staff respectively in the said two factories. The cast iron spun pipes manufactured by the petitioner Company are used for water supply and sewerage schemes. All water supply and sewerage shemes are undertaken by various public health engineering authorities of either the State Governments or the Central Government and as such the Government bodies are the only buyers of the cast iron spun pipes manufactured in the country. It is stated that there were originally altogether 8 manufactures of cast iron spun pipes in the country having a total installed capacity of about 5 lakh tons per annum. Out of these eight manufacturing units, Indian Iron and Steel Company at Kulti and Indian Iron and Steel company Stanton, Ujjain which have been taken over by the Central Government since 1976, have an installed capacity of 2,16,000 tons. In addition the iisco- Stantion have been further granted licence for expansion to the tune of another 60,000 tons, which expansion is reported to have been almost completed, according to the petitioner. Since early 1976, according to the petitioner, the spun pipe industry as a whole has been under the grip of acute recession in demand due to severe curtailment of Government expenditure for the purchase of C. I. spun pipes and the availability of cheaper products like asbestos cement pipes, PVC pipes, HDPE pipes, prestressed concrete pipes and ACC pipes. Moreover it appears that the former Minister of Steel and Mines had written a letter to the Chief Minister of all the States requesting them to direct their respective Chief Engineers of all the Engineering Departments to buy C. I. spun pipes manufactured by Ilsco-Stantion, Ujjain and IISCO, Kulti. Similar instructions were also issued by the Union Ministry of Defence and Bureau of public Enterprises, Ministry of Finance, Government of India. The State and the Central Governments being the only purchasers of the said cast iron spun pipes, the inevitable result of the said instructions has been denial of market availability for catering the manufactured goods by non-Central Government undertakings. In the result, four out of six non-Central Government manufacturing units, namely, Sakti Pipes Ltd. , Madras, Andhra Foundry, Hyderabad, gaday Iron and Steel Co. Ltd. , Mysore had been forced to close down their factories. It is the case of the petitioner No. 1, further that as a result of the sharp decline in demand, the work in the said Spun pipe Works of the Company had been adversely affected. In the premises, a large number of employees of the said petitioner have become surplus and the said petitioner accordingly applied to the State Government for permission to retrench 214 workmen in Electrosteel Castings Ltd. The petitioner Company had sought permission to retrench 136 workmen from the Spun Pipe Division and 78 workman from the steel Foundry Division. This application made under Section 25-N of the industrial Dispute Act, 1947. The State Government by the order dated 16th november, 1977 has refused the permission sought for. In the said order the state Government has observed that all the unions functioning in the industry had been consulted and according to them the petitioner Company was a highly profitable concern and whatever difficulties were there these had been created due to the wrong policy of the management who were not interested in securing order and who wanted to make the industry more capital intensive and were trying to reduce the number of workmen. In the premises the order, inter alia, further observed as follows : "after going through the papers placed before me and the submissions of all concerned, I feel that there is some force in the statement of the management that requirement of Spun Pipes from this concern has considerably reduced due to the directive of the Union Ministry of Steel and mines urging the State Governments to make their purchase from Public sector Undertakings. It is also found that this matter has been taken up by the concern and the association to which it belongs, with the Government of India and the State Government. They have written to the Prime minister. Union Minister of Steel and Mines. Chief Minister, Commerce and industries Minister of this State and other Ministers. It is also noticed that the Commerce and Industries Minister of this State has taken up the issue with the Union Ministry of Steel and Mines. The Chief Minister has also assured them that he would look into the problem. Therefore, at this stage, there is no reason to be completely pessimistic about the outcome of the discussion. The attention of the State Government is being invited again to the need for taking up the matter with the Government of india. Assuming that the State Government will pay adequate attention to the problem, it is felt that it is not immediately necessary to retrench the large number of workmen in the manner suggested. This is because it is found this concern is a highly profitable organisation which has paid heavy dividends in the preceding years and has built up huge reserves. Its current assets are more than three times its current liabilities and, therefore the concern can certainly wait for some time to watch further developments. Moreover, it has also reduced a large number of casual and badli workers and, therefore, considerably lessened expenditure on wages. It is also possible for the Company to make diversification in certain directions and new production lines. The concern is in a position to do so due to its financial stability. It is well-known that this has some constraints and is a time-consuming process but in the case of this particular concern, it may be possible to overcome the constraints and carry on for some time till it is in a position to make the required diversification. Regarding the Steel Foundry division, the concern should be able to meet the challenge of the new units that are coming up because it is in a position to reduce prices and still remain viable. Accordingly, while I am drawing the attention of the State Government to the requirements for taking up the issue regarding orders for Spun Pipes with the Government of India, I feel that there is no reason for permitting the retrenchment of the large number of workmen, as prayed for by the management. The permission prayed is accordingly refused under provisions of Section 25-N (2), Industrial Disputes Act, 1947. "
(3.) THE said order has been challenged in this application under Art. 226 of the Constitution mainly on the ground that the State Government has no authority to refuse permission on the grounds it has purported to do.;