S.25-O ID Act| Can't Permit Authority To Sit On Closure Application & Operate Deeming Provision: Madras HC Sets Aside Closure Of 2 Textile Mills

The Madras High Court has set aside notices for the closure of two Mills in Puducherry, whose history dates back to the French Colonial period, on the ground that provisions of the Industrial Disputes Act, 1947 were not complied with in its true spirit.Justice S. Vaidyanathan noted that the Mills were closed without issuing any notice of enquiry under Section 25-O of the 1947 Act for making objection before the Authority concerned and without taking up the matter for hearing.The Bench observed,"Though the Government and the 6th Respondent have filed counter affidavits, narrating several details, including financial loss, etc, all these particulars should have been referred to in detail in an order after conducting an enquiry by the authority concerned and not after effecting the closure, which would amount to putting a cart before a horse."It added, "the Government cannot keep the application for closure in a cold storage and wake up from slumber and say that deeming provision has come into play. The purpose of deeming provision provided under the Act is for a different aspect."It allowed the writ petitions filed by two separate registered trade unions and passed a common order for both Swadeshi Cotton Mill and Bharathi Mills considering them as a single entity.What is Section 25-OSub-section 1 provides that an employer who intends to close down an industrial establishment shall apply to the appropriate Government for prior permission, 90 days in advance, stating clearly the reasons for the intended closure. The same shall also be served on the representatives of the workmen.Sub-section 2 thereof provides that the appropriate Government, after making requisite enquiry, give a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure and shall thereafter, by a reasoned order grant or refuse such closure.Section 25-O(3) is a deeming provision which stipulates that the closure application is not decided within 60 days, permission shall be deemed to have been granted.FindingsEven if the closure happens due to the Government's non-communication of the order granting/ refusing the permission for shutting down the industry, the enquiry mentioned under Section 25(O)(2) after affording the concerned parties including the workmen and the employer cannot be dispensed with, observed the court. If the Authority is allowed to operate the deeming provision without conducting any enquiry, the very purpose of the provisions of the Act itself will be defeated, as there is not even an attempt to conduct an enquiry, which is mandatory on the part of the concerned Authority under Section 25(O)(2) of the I.D.Act, 1947, observed the court."...The core issue involved is whether the deeming provision can be read in isolation, when the Authorities have not discharged their statutory obligation mentioned therein. After receipt of the application for closure under Section 25(O) of the I.D.Act, 1947, especially when more than 100 workmen were employed on an average per working day for the preceding twelve months, the issuance of notice to the Workmen or their representative and hearing all the parties, who are interested and likely to be affected, is obligatory before closing down an Undertaking within a period of 60 days", the court noted in the common order.The single-judge bench also mentioned that even if the Government passes an adverse order, any employees can seek a reference to the Tribunal under Section 25 (O)(3) of I.D Act. The bench also noted that the Government cannot keep the application in 'cold storage' and then take the stand that the deeming provision has come into play on the expiry of 60 days. In the current case as well, none of the workmen was afforded a reasonable opportunity of being heard, the court noted.About the suo motu impleaded IAS Officer who is the Secretary to Government, the court observed that he was at the receiving end of the court's wrath several times for discrepancies in many orders passed by him. The court was also of the opinion that some of the IAS Officers are still not familiar with various provisions of the Industrial Disputes Act."....This Court is of the view that Corporation is a part of the Government of Puducherry and in case any closure application is filed, it can be scrutinized by the concerned Authority and the matter can be straight away referred to a Tribunal, so that, instead of two adjudications, namely, one before the Authority and the other one before the Tribunal, a comprehensive decision can be taken. The I.D.Act, 1947 need to be amended to enable a Labour Court or Tribunal to decide the issue, as the IAS Officers, who are entrusted with such quasi judicial work, lacks familiarity with the strict provisions of the Act on account of their other administrative / official duties."Background and Court's ObservationsOn account of financial unsustainability in continuing with the functioning of both Mills, the...

S.25-O ID Act| Can't Permit Authority To Sit On Closure Application & Operate Deeming Provision: Madras HC Sets Aside Closure Of 2 Textile Mills

Sebin James

There is not even an attempt to conduct enquiry, which is mandatory under the provision, Court noted.

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