The Hindu : National : Industries cannot be closed without State's consent: Supreme Court

Online edition of India's National Newspaper
Friday, Feb 18, 2005

National

National

Industries cannot be closed without State's consent: Supreme Court

By Our Legal Correspondent

NEW DELHI, FEB. 17. The Supreme Court has held that prior permission of the appropriate Government is imperative before closure of an industrial undertaking even if there is a settlement between the employer and the employees.

A Bench of Justice N. Santosh Hegde and Justice S.B. Sinha, while giving this ruling said that an agreement for the closure of an undertaking could not prevail over the statutory requirements as contained in Section 25-N and Section 25-O of the Industrial Disputes Act, 1947.

The Bench said that under Sections 25-N and 25-O of the ID Act, if an employer wanted to close down an industrial undertaking, he was bound to apply for prior permission at least 90 days before the date on which the intended closure was to take place.

"While Section 25-N speaks of procedure for conditions precedent to retrenchment, Section 25-O speaks of procedure for closing down an undertaking," the Bench said and held that "obtaining prior permission from the appropriate government, thus, must be held to be imperative in character."

The Bench said that a settlement could be arrived at between the employer and the workmen in case of an industrial dispute.

A settlement, however, on retrenchment or closure could be arrived at provided it was effected in accordance with law. It must be remembered that one of the factors required to be taken into consideration by the Government before the grant or refusal of such permission was the interest of the workmen.

Therefore, the Bench said that the two provisions would prevail over the right of the parties to arrive at a settlement, which must conform to the statutory conditions.

"A contract which may otherwise be valid, however, must satisfy the tests of public policy," it said and added that an agreement which opposed public policy would be void and of no effect.

Acting on a writ petition from Oswal Agro Furane Workers Union challenging the closure of the unit, the Punjab and Haryana High Court held that the closure was illegal.

The management had filed a special leave petition against the judgment.

Printer friendly page
Send this article to Friends by E-Mail

National