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V. Dhanapalan, J.—W.P. No. 5099 of 2010 has been filed praying for issuance of a writ of certiorari to call for the records and quash
G.O.Ms. 15/2009-Ind B Department of Industrial Development (Industries and Commerce, Puducherry) dated 25.02.2010 granting approval to
discontinue all operations in the ''A'' Unit of Aglo French Textile of Puducherry Textile Corporation Ltd. announcing a Voluntary Retirement
Scheme and re-deployment of all the workers of ''A'' Unit to other Units as being contrary to Anglo French Textile Ltd. (Acquisition and Transfer
of Textile Undertaking) Act, 1986, and Section 25-O and Section 9-A of the Industrial Disputes Act, 1947. W.P. No. 23040 of 2010 has been
filed praying for issuance of a writ of certiorari to call for the records relating to the impugned order of the third respondent bearing Ref.: G.O.Ms.
No. 15/2009-Ind B, dated 25.02.2010, and the order of the fourth respondent bearing Ref. PD/782/2010, dated 17.09.2010, and quash the
same.
Since both the Writ Petitions involve a common question of law, they are being dealt with in common. For the sake of disposal, let me take the
facts in W.P. No. 5099 of 2010.
Anglo French Textiles, popularly known as AFT, was started in the year 1898 as Rodier Mill. It was taken over by AFT Societe Anonyme in
1951. It obtained its present name Anglo French Textile Ltd. in 1956 when the Companies Act was extended to Pondicherry. The original Rodier
Mill is known as ''A'' Unit in the AFT. The second Unit was added to AFT in 1960s, which came to be known as the ''B'' Unit. The third Unit,
namely, ''C'' was added to AFT in the year 1975-1976. It was taken over by the Government of Pondicherry Anglo Textile Ltd. (Acquisition and
Transfer of Textile Undertaking) Act, 1986. This was done in consultation with the approval of the Government of India.
''A'' Unit of the Mill is a Composite Mill having 17488 Ring Spindles, 144 Plain Looms and a process house with the capacity to process up to
75000 mts. cloth per day. Being a composite mill, it has the complete range of machinery to convert fibre to garments. The ''A'' Unit has blow
rooms to clean the raw cotton, card room, draw frame, speed frame roving, ring frame yarn, cone winding, pirm winding, warping, weaving, grey
ware house, singeing, desiring, scouring, mercerizing, bleaching, dyeing, printing, finishing, colour warehouse and packed cloth. Thus, the ''A'' Unit
starts with raw cotton and finishes with the end product of printed cloth. The ''A'' Unit supplies the required yarn to the B and C Units. The total
yarn production of A and C Units is about 17100 kg/day which is captively consumed by the other units of the Mill. The average processed cloth
production is about 43000 m/day, out of which 1900 mts. cloth production is being processed for job work. About 25% of the processed fabric is
being exported to Europe. The entire fabric for school uniform is provided by Anglo French Textiles Ltd.
In the year 2007, the process house in ''A'' Unit was modernized with the addition of machineries like Jumbo Jiggers, Jet Dyeing, Wider Width
Stenter, Wider Width Calendering Machine etc. at a cost of more than rupees ten crores. In the C Unit, Spinning Section is equipped with some of
the modern high tech machineries such LMW LC 300 A Cards, LMW RSB 851 draw frames etc.
The total strength of the Mill at present is 2402 workers and 386 staff members. Out of this, 1387 workers are employed in ''A'' Unit alone.
The issue of modernising the Anglo French Textile Mills has been under contemplation for several decades. In 1994, the Administrator of
Pondicherry constituted a Committee of experts of all India reputation and experience to examine its working and submit a report to the
Government for implementation of the necessary changes so that the Anglo French Textile Mills with its export potential cover further new
horizons. The Expert Committee submitted its report dated 12.12.1994 and gave several recommendations for modernisation of the mill.
The proposal of Comprehensive Modernization Programme of Anglo French Textiles at a cost of Rs. 104 crores was approved by the second
respondent by their office memo dated 13.11.2001. As per the said memo, an amount of Rs. 14.05 crores was already sanctioned by the
government for modernization and an amount of Rs. 1.15 crores was available in the budget of the year 2001-2002. The office memo also
requested the Directors of Industries and Commerce to make necessary arrangements to provide remaining funds in the budget for the
Comprehensive Modernization Programme in Anglo French Textiles, Pondicherry.
In the year 2007, the South India Textile Research Association (SITRA) carried out Techno Economic Viability study of Anglo French Textiles,
Puducherry. Also, the Government of Puducherry appointed a two member Committee with regard to revision of wages and other demands. The
two member Committee, by its report, dated 26.11.2008, recommended the closing of the Spinning and Weaving Operation and shifting of
processing Section of A Unit to B Unit.
The respondents in the impugned notification, dated 25.10.2008, decided to grant approval to the proposal of Director of Industries and
Commerce to discontinue all operations in A Unit of AFT adopting the due process of law. The impugned notification also approved the new
Voluntary Retirement Scheme for all the workers and the staff in A Unit and other units. The notification also approves the re-deployment of the
workers of A Unit to other units as per operational requirements even by giving as an incentive one month pay or Rs. 10,000/- whichever is higher.
The Government of Puducherry, in exercise of its executive powers, cannot pass the impugned G.O. to close part of the undertaking. Such a
closure would be contrary to the object of the Acquisition Act. Further, the closure also results in large reduction of workers in the company which
is also against the object of the Acquisition Act. The impugned G.O. ought not to have been issued without the mandate of State Assembly and
without amendments to the Anglo French Textile Ltd. (Acquisition and Transfer of Textile Undertaking) Act. 1986. The VRS Scheme announced
in the impugned G.O. will lead to reduction in the number of workers employed or to be employed in the ''A'' Unit. The order of redeployment of
workers from ''A'' Unit to other units will increase the number of workers employed in ''B'' and ''C'' Units.
It is the ''A'' Unit, in which the maximum or majority of the workers are employed. Out of the total strength of 2402 workers, about 1387
workers are employed in ''A'' Unit. If the workers are redeployed, there is every likelihood that it will result in the retrenchment of workers in ''S''
and ''C'' Units. Such a reduction or increase cannot be effected without following the mandatory procedure prescribed u/s 9-A of the Industrial
Disputes Act, 1947. Hence, the impugned G.O.Ms. No. 15, dated 25.02.2010, is illegal, arbitrary and contrary to law.
First respondent/PTC has filed a counter affidavit, stating as under :
12.1. Anglo French Textiles became sick in the early 1980''s due to factors like surplus labour, old machinery with low productivity, labour unrest
etc. From the date of acquisition, the Government is funding the Mills in order to protect the labour force and their families. The Corporation is
reeling under heavy financial crunch due to various reasons. The Government of Puducherry appointed South India Textile Research Association
(SITRA), Coimbatore, in the year 2007 to undertake a techno-economic viability study of Anglo French Textiles, Puducherry, with particular
reference to identify the causes for the poor performance and suggest measures for improvement. SITRA made various recommendations in its
report which was submitted to Government in August 2007 and one of the recommendations was to discontinue the uneconomical activities,
namely, ''A'' Unit Spinning and Weaving.
12.2. Subsequently, a two member committee was constituted by the Government of Puducherry to examine the demands of workers regarding
payment of central DA and wage hike and other related issues, vide G.O.Ms. No. 4/2008-Ind B, dated 20.06.2008. The said committee
recommended vide its report, dated 27.11.2008, to discontinue Spinning and Weaving operations in ''A'' Unit and shifting of Processing section
from ''A'' Unit to ''B'' Unit. The committee has further recommended that the ceiling of Voluntary Retirement Scheme package may be increased to
Rs. 4 lakhs.
12.3. ''A'' Unit buildings are more than 110 years old and the major portion of Spinning Department collapsed twice and other old buildings in ''A''
Unit are also not in a fit condition to continue the operation endangering the lives of many workers and causing damages to the machineries.
SITRA, in its report, also stated that since the condition of the buildings in A Unit Spinning is poor, the Mills should ensure that nothing happens
untowardly for the workers before closing of the A Unit. The Executive Engineer, Buildings and Roads (Central) Division, PWD, Pondicherry,
vide their letter, dated 06.12.1999, also informed that after verification of RSJ Girders and Terrace of ''A'' Unit of Spinning Section which is in
collapsed condition and also the remaining standing portion adjoining the damaged portion to a length of 80 meters x 14.5 meters, the building,
which is 100 years old, is structurally unsafe for occupation. Chief Inspector of Factories and Boilers, by their letter, dated 21.10.2004, stated that
the building where the incident occurred is 80 years old and a similar incident had occurred earlier in the year 1999. To avoid any casualties due to
recurrence of such incidents in future and to ensure a safe working environment for the workers, it is considered absolutely necessary that the
manufacturing activities in this section be discontinued till it is completely strengthened, restructured and renovated. Pondicherry Engineering
College was also requested to submit a report on the condition of the building, which suggested that for a total safety and good working condition,
an alternate roofing system had to be made.
12.4. Under the circumstances, the Government has decided to discontinue the operations in A Unit adopting the due process of law in order to
ensure the safety of the workmen and also to discontinue the uneconomical activities and reduce the loss so as to ensure that the Corporation may
be made viable again in the interest of the labour force.
Respondents 2 and 4/Government of Pondicherry also have filed a counter affidavit on similar lines with that of the first respondent.
Third respondent/Commissioner of Labour has filed a counter stating that the subject matter was taken place between the management of
Anglo French Textiles of Pondicherry Textile Corporation Ltd. and the Pondicherry Textile Mills Labour Union; he was not involved in the matter
and hence he may be exempted from the writ proceedings.
Learned counsel for the petitioners would contend that the first respondent Mill has been taken over by the Act of the State Government and
hence the same cannot be partially closed down, leading to reduction of workforce without appropriate amendments to the Act. They would
further contend that the closure of ''A'' Unit has been done without following the due process of law as contemplated under Sections 9-A and 25-
O of the Industrial Disputes Act, 1947. In support of their contentions, the learned counsel would rely upon the following decisions :
(i) Orissa Textile and Steel Ltd. Vs. State of Orissa and Others, :
In Meenakshi Mills case 2 while considering the constitutional validity of Section 25-N (as it then stood), Excel Wear case 1 was considered.
This Court noted some of the vices pointed out in Excel Wear case 1. 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 case 1 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 Lay-off, 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 the amending Act 32 of 1976. This Court held that the objects and reasons underlining the enactment
were 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 workmen. 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 the 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.
As has been set out hereinabove, in Excel Wear case 1 one of the reasons why Section 25-O (as it then stood) was struck down was that it
did not require giving of reasons. Now the order granting or refusing permission has to be in writing and be a reasoned order. In Meenakshi Mills
case 2 in paras 29-30, it has been held as follows: (SCC pp. 363-66) In sub-section (2) of Section 25-N, Parliament has used terminology which
is different from that used in sub-section (2) of Section 25-O. In sub-section (2) of Section 25-O, Parliament had used the expression the
appropriate government may, if it is satisfied that the reasons for intended closure of the undertaking are not adequate or sufficient or such closure
is prejudicial to the public interest which implied that the order refusing to grant permission to close down the undertaking was to be passed on a
subjective satisfaction of the appropriate government about the adequacy or the sufficiency of the reasons for the intended closure or the closure
being prejudicial to the public interest. In sub-section (2) of Section 25-N, the words used were the appropriate government or authority may,
after making such enquiry as such government or authority thinks fit, grant or refuse, for reasons to be recorded in writing which indicates that the
appropriate government or authority, before passing an order granting or refusing permission for retrenchment, is required to make an enquiry
though the precise nature of the enquiry that is to be made is left in the discretion of the appropriate government or authority and further that the
order that is passed by the appropriate government or authority must be a speaking order containing reasons. The requirement to make an enquiry
postulates an enquiry into the correctness of the facts stated by the employer in the notice served under clause (c) of sub-section (1) of Section 25-
N for retrenchment of the workmen and other relevant facts and circumstances including the employer''s bona fides in making such retrenchment
and such an enquiry involving ascertainment of relevant facts will necessarily require affording an opportunity to the parties viz. the employer and
the workmen, who have an interest in the matter, to make their submissions.
***
It would thus appear that the employer is required to furnish detailed information in respect of the working of the industrial undertaking so as to
enable the appropriate government or authority to make up its mind whether to grant or refuse permission for retrenchment. Before passing such
order, the appropriate government or authority will have to ascertain whether the said information furnished by the employer is correct and the
proposed action involving retrenchment of workmen is necessary and if so, to what extent and for that purpose it would be necessary for the
appropriate government or authority to make an enquiry after affording an opportunity to the employer as well as the workmen to represent their
case and make a speaking order containing reasons. This necessarily envisages exercise of functions which are not purely administrative in
character and are quasi-judicial in nature. The words as such government or authority thinks fit do not mean that the government or authority may
dispense with the enquiry at its discretion. These words only mean that the government or authority has the discretion about the nature of enquiry
which it may make. In our opinion, therefore, while exercising its powers under sub-section (2) of Section 25-N in the matter of granting or
refusing permission for retrenchment, the appropriate government or the authority does not exercise powers which are purely administrative but
exercises powers which are quasi-judicial in nature.
We, therefore, hold that the amended Section 25-O is not ultra Vires the Constitution. We hold that it is saved by Article 19(6) of the
Constitution.
(ii) Oswal Agro Furane Ltd. and Another Vs. Oswal Agro Furane Workers Union and Others, :
Whether in a case of closure of an industrial undertaking, prior permission of the appropriate Government is imperative and whether a settlement
arrived at by and between the employer and the workmen would prevail over the statutory requirements as contained in Section 25-N and Section
25-O of the Industrial Disputes Act, 1947 (the Act for short) are the primal questions involved in this appeal which arises from a judgment and
order passed by a Division Bench of the Punjab and Haryana High Court dated 10-7-1998 in CWP No. 8214 of 1997 allowing the writ petition
filed by the respondents herein.
It is not in dispute that the appellant herein did not ask for grant of such prior permission before the appropriate Government disclosing its
intention to effect closure of the said unit and such question of grant of prior permission by the State did not arise.
A bare perusal of the provisions contained in Sections 25-N and Section 25-O of the Act leaves no manner of doubt that the employer who
intends to close down the undertaking and/or effect retrenchment of workmen working in such industrial establishment, is bound to apply for prior
permission at least ninety days before the date on which the intended closure is to take place. They constitute conditions precedent for effecting a
valid closure, whereas the provisions of Section 25-N of the Act provide for conditions precedent to retrenchment; Section 25-O speaks of
procedure for closing down an undertaking. Obtaining a prior permission from the appropriate Government, thus, must be held to be imperative in
character.
It is trite that having regard to the maxim ''ex turpi causa non oritur action'', an agreement which opposes public policy as laid down in terms of
Sections 25-N and 25-O of the Act would be void and of no effect. Parliament has acknowledged the governing factors of such public policy.
Furthermore, the imperative character of the statutory requirements would also be borne out from the fact that in terms of sub-section (7) of
Section 25-N and sub-section (6) of Section 25-O, a legal fiction has been created.
Indisputably, in this case, the industrial undertaking belonging to the appellant herein attracts the provisions of Chapter V-B of the Act and
consequently the provisions referred to in Section 2(s) including Section 25-J shall apply in relation thereto.
(iii) Centre for Public Interest Litigation Vs. Union of India (UOI) and Another, :
There is no challenge before this Court as to the policy of disinvestment. The only question raised before us is whether the method adopted by
the Government in exercising its executive powers to disinvest HPCL and BPCL without repealing or amending the law is permissible or not. We
find that on the language of the Act such a course is not permissible at all.
(iv) Somasundaram Corporation (Pvt.) Ltd. Vs. The Government of Tamil Nadu and others, :
30.... It is true that the Government as well as Tamil Nadu Textile Corporation furnished a number of reasons for their inability to continue the Mill.
However, as rightly said, after acquiring the Mill by a valid legislation, for valid reasons, merely because there is a financial crisis, it is not open to
the State Government to restore it to the erstwhile owner by imposing certain conditions. Having said that to safeguard the public interest and in
particular the employee of the said Mill and after making categorical declaration in securing the principles laid down in Arts. 39(b) and Art.(c) of
the Constitution, the action of the State Government cannot be appreciated. As a matter of fact, if the contention of the Government is accepted,
undoubtedly, it goes against the object of the Tamil Nadu Act 81 of 86 which I have already upheld in W.P. No. 1979 of 1988. In the light of
what is stated above, the impugned order in G.O. No. 287 (Handlooms, Handicrafts, Textiles and Khadi) Department, dated October 14,1993, is
liable to be quashed.
33 Before parting with these cases, I want to emphasize one aspect. After realising the difficulties due to financial crisis at the hands of the erstwhile
owner of the Mill, the said undertaking initially was under the management of the Tamil Nadu Textile Corporation as directed by the Government
of India by virtue of powers conferred under I.D.R. Act. Thereafter, on the basis of the representations, the said mill was taken over initially by
way of an Ordinance and thereafter by way of legislation, namely Tamil Nadu Act 81 of 1986. Having taken a decision by way of Legislation after
making a declaration, declaring that the Tamil Nadu Act 81 of 1986 is for giving effect to the policy of the State towards securing principles laid
down in Cls. 2(b) and 2(c) of Art. 39 of the Constitution of India and also in the interest of all concerned and in particular to safeguard the
employees of the said Mill, I am of the view that the Government of Tamil Nadu with the assistance of financial institutions should take all
endeavour to keep the Mill running. It is true that at one stage, the application filed by the Tamil Nadu Textile Corporation before the B.I.F.R. has
been dismissed stating that the erstwhile owner has challenged the acquisition by way of a writ petition before this Court. This Court has now
upheld the enactment made by the State Legislature, hence it is open to the State Government/Tamil Nadu Textile Corporation to move B.I.F.R.
for appropriate relief and also approach financial institution in order to revive and run the mill in the interest of workers concerned. When both the
Union of India and the State Government encourage more industries by bringing forward many schemes to help them, it is equally important to see
that the existing Mills, particularly the mill acquired by the State Government by way of valid legislation is developed and kept running on right
direction. This Court also hopes that in the march of industrial development, a duty is also cast on the State Government to protect its own
industries/undertakings by making all efforts in running these industries including the present Mills. It is needless to mention that if such action is
being taken, undoubtedly the workers have to co-operate with the State Government in order to achieve the object in enacting the Legislation.
(v) A. Madheswaran Vs. The State of Tamilnadu and The Tamilnadu Khadi and Village Industries Board, :
In the light of the above functions and powers of the Board, it is the duty of the State Government to secure and allot more funds for the
survival and development of khadi and village industries. As pointed out earlier, the Central Government also owes more responsibility and it is but
proper on its part to provide financial assistance to the State Board then and there, depending on the claim of the State Government. The Board
can also seek assistance from the Central Khadi Commission. Section- 12 also enables the Board to appoint a Committee or committees for the
efficient performance of its functions considering due regard to the requirement of the local area concerned.
(vi) Voltas Limited (Motor Plant) Vs. Voltas Motor Plant Employees Union and Another, :
In my opinion, prima facie it was obligatory on the part of the petitioner company to place necessary details before the Industrial Court to
demonstrate as to how many employees/workers were surplus. As per the notice published by the company, every employee completing age of 40
years or completing permanent service of 10 years as on April 1,1999 was eligible to opt for VRS. It is, therefore, clear that no material was
placed on record by the petitioner so as to demonstrate how many workers were surplus. The VRS as framed had given clear indication that the
petitioner-company was prepared to accept the request of all the employees, if they were to opt for VRS. If that be so, prima facie it appears that
in the garb of VRS, an attempt was to retrench all the workmen, if possible. If the benefit of VRS was intended to be extended to all the workers
then, in that event, prima facie it was an attempt to close down the factory without following provisions of Section 25-N of the Industrial Disputes
Act. The instances are not uncommon giving rise to unpredictable situation with the entire managerial staff opting for VRS. Some could not run
their factories for want of managers and supervisors, with the result, the factories are lying closed. It would thus be the matter of evidence as to
what extent the business of the company has dwindled down and to what extent the manpower would be needed by the company in its existing set
up, so as to keep the factory running. Whether the industrial unit of the petitioner is viable or not would be a question, which can only be tried and
decided on the basis of necessary evidence which may be placed before the Court. Under these circumstances, I am of the firm opinion that the
respondent/complainant union has certainly made out a prima facie case i.e., a case for enquiry... The balance of convenience also lies in favour of
the complainant so as to prevent the parties to reach the stage of no-return. Once the VRS is allowed to operate and the parties are allowed to
travel till the point of no-return and factory is allowed to put their shutters down then it will be impossible to lift the shutters. Under the
circumstances, the possible injury which may cause, would be irreparable.
(vii) Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, :
The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by
the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the
beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out. We may here draw
attention to the observations of Bose, J. in Gordhandas Bhanji
2: Public orders, publicly made, in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer
making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to
have public effect and are intended to affect the acting''s and conduct of those to whom they are addressed and must be construed objectively with
reference to the language used in the order itself.
Orders are not like old wine becoming better as they grow older.
On the other hand, learned counsel for the respondents would contend that the workmen employed in the first respondent Mill are liable for
transfer from one job to another, from one department to another and from one shift to another according to exigencies of the Mill''s working; they
have followed due process of law before passing the orders impugned and hence the same cannot be interfered with. To substantiate their case,
they have relied upon a decision of the Supreme Court in Dayakar Reddy Vs. M.D. Allwyn Auto Ltd. and Others, wherein it is held as under :
It was contended by Mr. P.S. Mishra, learned Senior Counsel for the petitioner that in this case the State had suggested that the Company
should be closed down and it was the same State which then decided u/s 25-O to grant permission for closure. In a case where the company is a
State Government undertaking, such a situation may arise. It has to take an administrative decision first and then a quasi-judicial decision u/s 25-O.
What we find is that while exercising its power u/s 25-O it did follow the proper procedure and consider all the relevant aspects. It is not possible
to find any fault with the decision of the State Government. The facts of this case are very eloquent. Moreover, by the time the Government took
the decision, out of 1800 workers, 1200 workers had shown their willingness to accept the Voluntary Retirement Scheme. GO dated 16-6-1997
clearly discloses the reasons why the Company had become unviable and why it was not able to carry on its activities any further. The reasons
appear to be genuine and adequate and therefore the Government was justified in granting permission for closure of the Company. This SLP is
therefore dismissed.
I have heard the learned counsel for the parties and also gone through the records, in addition to giving thoughtful consideration to the
submissions.
First respondent/Anglo French Textiles, also known as Pondicherry Textile Corporation, was started in the year 1898 as Rodier Mill. It was
taken over by AFT Societe Anonyme in 1951. It obtained its present name Anglo French Textile Ltd. in 1956 when the Companies Act was
extended to Pondicherry. The original Rodier Mill is known as ''A'' Unit in the AFT. The second Unit was added to AFT in 1960s, which came to
be known as the ''B'' Unit. The third Unit, namely, ''C'' was added to AFT in the year 1975-1976. It was taken over by the Government of
Pondicherry Anglo Textile Ltd. (Acquisition and Transfer of Textile Undertaking) Act, 1986, and the same was done in consultation with the
approval of the Government of India. The issue of modernising the Anglo French Textile Mills had been under contemplation for several decades.
In 1994, the Administrator of Pondicherry constituted a Committee of experts of all India reputation and experience to examine its working and
submit a report to the Government for implementation of the necessary changes so that the Anglo French Textile Mills with its export potential
cover further new horizons. The Expert Committee submitted its report dated 12.12.1994 and gave several recommendations for modernisation of
the mill.
In the year 2007, the South India Textile Research Association (SITRA) carried out Techno Economic Viability study of Anglo French
Textiles, Puducherry. Also, the Government of Puducherry appointed a two member Committee with regard to revision of wages and other
demands. The two member Committee, by its report, dated 26.11.2008, recommended the closing of the Spinning and Weaving Operation and
shifting of processing Section of A Unit to B Unit. The respondents, by the impugned notification, dated 25.10.2008, decided to grant approval to
the proposal of Director of Industries and Commerce to discontinue all operations in A Unit of AFT adopting the due process of law. The
impugned notification also approved the new Voluntary Retirement Scheme for all the workers and the staff in A Unit and other units. The
notification further approved the re-deployment of the workers of A Unit to other units as per operational requirements even by giving as an
incentive one month pay or Rs. 10,000/- whichever is higher.
In the given situation, what is to be examined is, whether the impugned orders are bad in law ?
For the above examination, the relevant provisions for consideration are, Sections 9-A and 25-O of the Industrial Disputes Act coupled with
Clause 6-A of the Standing Orders, which are as under :
21.1. Section 9-A :
9-A. Notice of change. No employer, who proposes to effect any change in the conditions of service applicable to any workman in respect of any
matter specified in the Fourth Schedule, shall effect such change,
(a) without giving to the workman likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to
be effected; or
(b) within twenty-one days of giving such notice:
Provided that no notice shall be required for effecting any such change
(a) where the change is effected in pursuance of any 2[settlement or award]; or
(b) where the workmen likely to be affected by the change are persons to whom the Fundamental and Supplementary Rules, Civil Services
(Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in
Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may
be notified in this behalf by the appropriate Government in the Official Gazette, apply.
21.2. Section 25-O :
25-O. Procedure for closing down an undertaking. (1) An employer who intends to close down an undertaking of an industrial establishment to
which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended
closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of
such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:
Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for
other construction work.
(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks
fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such closure may, having
regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by
order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the
employer and the workmen.
(3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or
refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied
for shall, be deemed to have been granted on the expiration of the said period of sixty days.
(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and
binding on all the parties and shall remain in force for one year from the date of such order.
(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order
granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:
Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the
date of such reference.
(6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has
been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the
benefits under any law for the time being in force as if the undertaking had not been closed down.
(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to
such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the
provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.
(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under
sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this section,
shall be entitled to receive compensation which shall be equivalent to fifteen days average pay for every completed year of continuous service or
any part thereof in excess of six months.
Section 9-A deals with notice of change. As per the said section, no employer, who proposes to effect any change in the conditions of service
applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change without giving to the workman likely
to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected or (b) within twenty-one days
of giving such notice. However, the proviso clause makes it clear that no notice shall be required for effecting any such change where the change is
effected in pursuance of any settlement or award or where the workmen likely to be affected by the change are persons to whom the Fundamental
and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave
Rules, Civil Service Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment
Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.
Applying the above proviso to the instant case, it is to be stated that notice of change, as contemplated u/s 9-A, is not required for the reason
that the workmen likely to be affected are covered by the Standing Orders of the Corporation, dated 30.09.1967. Moreover, Clause 6-A of
Standing Orders of first respondent PTC provides for transfers. In this connection, it is apt to refer to the said Clause as under :
6-A. Transfers : All employees are liable to be transferred from one job to another, from one department to another and from one shift to another
according to the exigencies of the Mill''s working :
Provided,
(i) When an employees is transferred from a job of one description to a job of another description, the transfer shall not involve any pecuniary
prejudice to him.
(ii) When an employee is transferred from a job of one description to a job of another description, no proceeding shall be taken by the
Management against him for slowing down of work or delaying production before the expiry of six months after the transfer.
In this case, it is not the case of the petitioners that because of their transfer from A unit to other units or from a job of one description to a job
of another description, there is a pecuniary prejudice to them so also, by such transfer, any proceeding has been taken by the management against
them for slowing down of work or delaying production. Therefore, the contention of the learned counsel for the petitioners that Section 9-A is not
complied with by the management before passing the impugned order has to be dispelled. This is also in view of the fact that the said Standing
Orders have been published in the Official Gazette as per Section 9-A and the same are binding on the workers.
Coming to Section 25-O, it contemplates the procedure for closing down an undertaking. As per Sub-section (1), an employer who intends to
close down an undertaking of an industrial establishment, shall, in the prescribed manner, apply, for prior permission at least ninety days before the
date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of
the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner
and as per Sub-section (2), where an application for permission has been made under sub-section (1), the appropriate Government, after making
such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such
closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other
relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be
communicated to the employer and the workmen.
Sub-section (6) contemplates that where no application for permission under sub-section (1) is made within the period specified therein, or
where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the
workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.
Sub-section (8) states that where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is
deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for
permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days average pay for every completed
year of continuous service or any part thereof in excess of six months.
To attract Section 25-O(1), termination of employment and payment of compensation should be necessary concomitants as per sub-section 8.
In this case, there is no termination but only transfer. The management has also offered an incentive of a pay of one month salary or Rs. 10,000/-
whichever was higher while effecting transfer. It is also stated in the counter of the Corporation that the building of A unit was in dilapidated
condition and the welfare of workers was of much importance. The impugned G.O., while referring to discontinuance of operations in ''A'' Unit,
also offered VRS for the employees. No closure is contemplated and further all the employees, who did not opt for VRS, would be redeployed in
B & C Units.
The impugned G.O. has been passed in pursuance of the recommendations of SITRA report and the report of the Two Member Committee.
The petitioners have not challenged either the G.O. constituting the two member committee and the reference made thereunder or the findings of
two member committee. In other words, the petitioners have accepted and acted upon the said reports by receiving the wage revision
recommended by the two member committee and, as such, they are estopped from challenging the impugned G.O., dated 25.02.2010. It is also
seen that pursuant to the said G.O., 109 workers have submitted VRS applications and they are issued relieving orders on 06.03.2010 by paying
the VRS amount. The impugned G.O. only speaks of discontinuance but not closing down of the unit. It has already been implemented in part in so
far as it relates to VRS Scheme. It is passed in order to ensure the safety of the workmen and to discontinue the Unit till it is completely
strengthened, restructured and renovated and also to ensure that the Corporation is made viable again in the interest of labour force.
Significant it is to mention that pursuant to filing of the Writ Petitions, the first respondent management and all 21 existing Trade Unions have
entered into a Settlement, dated 03.09.2012, u/s 12(3), as per which, one of the conditions was to implement the orders of the Government on the
buildings which are identified by the competent authority as unsafe in ''A'' Unit, which is binding on the parties to the settlement as well as other
workers and also the petitioners in W.P. No. 23040 of 2010. In view of the said settlement, the petitioners cannot have any grievance and the writ
petitions become infructuous.
It is true, as per Section 25-O(1), prior permission from the appropriate Government is mandatory for closing down of an undertaking. But, in
this case, closing down of the A unit is not resorted to, as it is only a discontinuance.
Discontinuance'' would not amount to ''closure''. The term ''closure'', as per Section 2 (cc) of the Industrial Disputes Act means, permanent
closing down of a place of employment or part thereof. While in closure there is a permanent closing down of the unit, in discontinuance, there is
every possibility of revival of the unit. The language which the legislature intended to mean is the permanent closing down of a place of
employment. In case of discontinuance or shifting of a place, it does not mean that there is a permanent closure. Therefore, the closure, as defined
u/s 2(cc) would be construed in literal terms that it must be a permanent closure of the unit. In the instant case, a perusal of the entire records
would reveal that there is no such closure, but it is only discontinuance.
It is a cardinal principal and settled proposition that only in the case of closure, the mandatory requirement of Section 25-O(1) as to approval
from the appropriate Government is necessary and no one can escape from such requirement and only on such approval closure can be resorted
to. Therefore, this Court is of the opinion that for closure of the unit, it is mandatory that there must be approval from the appropriate Government.
In the above legal position, it is to be examined that whether discontinuance will be construed as closure. The legislative intent of the meaning
as defined under the Act would clearly give an unambiguous reason that a permanent closing down is to be defined as closure. If that is so,
discontinuance cannot be construed as closure, in which case if the respondent unit is inclined to restore it may also happen and there is a
likelihood of change. In such a circumstance, it is to be held that permanent closure of the unit, as defined under 2 (cc), is not available in this case
and, therefore, as far as this case is concerned, no approval is mandated for discontinuance of the unit in question and the impugned order in that
regard, which also contemplates the shifting of employees from one unit to another unit, has to be upheld. Further, in this case, discontinuance of
''A'' Unit has taken place due to the unsafe buildings. Hence, discontinuance of ''A'' Unit, in this case, cannot be construed as closure for the sake
of Section 25-O(1). Therefore, in the absence of any permanent closing down of the unit, the mandatory requirement as contemplated u/s 25-O
will not arise in this case.
Safeguarding the lives of workers is more important than protecting the interests of the workmen. The reasons assigned for discontinuance are
that the buildings in Spinning and Weaving Sections of ''A'' unit are in a dilapidated condition and that the machineries therein are very old and in
poor condition. In the given situation, it has become indispensable for the Government to discontinue the activities so as to ensure the safety of
workers.
In this case, as already two major incidents have taken place in view of the poor condition of the buildings and reports to that effect have also
been given by the appropriate authorities stating that it is not advisable to continue operations in the said building due to its old age, I am of the
considered opinion that any continuance of operations in the said building would endanger the very lives of the workmen of the ''A'' Unit. As such,
the Government has taken a right decision to discontinue the operations in ''A'' Unit of the Corporation, without even affecting the interests of the
workmen i.e., by not retrenching any workman from service but by transferring them to other Unit and, at the same time, offering VRS for the
workmen who opt for the same. That apart, as per section 2(oo), ''retrenchment'' means the termination by the employer of the service of a
workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include voluntary
retirement of a workman. Hence, the question of retrenchment, as pointed out by the learned counsel for the petitioners, does not arise at all in this
case.
Under the circumstances, while upholding the rule of law that prior permission from the appropriate Government is a sine qua non for closing
down of an undertaking, in view of my holding that discontinuance does not amount to closure coupled with the fact that retrenchment and payment
of compensation are not involved, the provision of Section 25-O(1) cannot be attracted to this case. Besides, in view of the Settlement u/s 12(3),
dated 03.09.2012, entered into between the first respondent management and all the existing Trade Unions, including the petitioners herein, these
Writ Petitions have become infructuous.
True also it is, as contended by the learned counsel for the petitioners that the first respondent Corporation was acquired by the Government
of Pondicherry vide Act No. 7 of 1986 i.e., The Anglo French Textiles Limited (Acquisition and Transfer of Textiles Undertaking) Act, 1986, and
the said Act was enacted to provide for acquisition and transfer of the right, title and interest of the Anglo French Textiles Limited for the purpose
of ensuring continued and increased production of goods essential to the needs of the community and the matters connected therewith or incidental
thereto. As per the statement of objects and reasons, the acquisition was undertaken inter alia to facilitate further investment of very large sums of
money necessary for re-organising and rehabilitating the said undertaking and thereby to protect the interest of workmen employed therein and
augment the production of cloth and yarn so as to subserve the interest of the general public. It is also stated that the acquisition by the Government
of the said undertaking is necessary in the interest of the labour force, maintenance of production, ensuring credit line and in the larger interest of
the people of Pondicherry.
Though the Corporation was acquired by the Government of Pondicherry under Act 7 of 1986 with the above objects and reasons, in view of
my findings as above, holding that discontinuance does not amount to closure and the question of retrenchment did not arise, the impugned G.O.,
dated 25.02.2010, passed by the second respondent is not ultra vires the provisions of the said Act.
Adverting to the decisions relied upon by the learned counsel for the petitioners, it is to be stated that they are the cases wherein either lay-off
or retrenchment was involved, which elements are not present in this case. Hence, the said decisions cannot be cashed in on by the petitioners.
In view of my discussion at length in the foregoing paragraphs, these Writ Petitions are dismissed. No costs. Consequently, the connected
M.P. Nos. 2 to 5 of 2010 in W.P. No. 5099 of 2010 and M.P. Nos. 2 and 3 of 2010 in W.P. No. 23040 of 2010 are closed. While parting
with, this Court would observe that the transfers effected by the impugned order shall not cause any pecuniary prejudice to the employees and the
same shall be in the manner as contemplated in the Standing Orders and also as per the Settlement arrived at between the parties.