Holding

The amended Section 25‑0 of the Industrial Disputes Act, 1947 is constitutionally valid, is saved by Article 19(6) and does not violate the Constitution.

Summary

The Supreme Court examined the constitutional validity of the amended Section 25‑0 of the Industrial Disputes Act, 1947 (and the identical Section 6‑W of the U.P. Industrial Disputes Act) which governs the closure of large industrial undertakings. The Court considered whether the procedural and substantive defects identified in Excel Wear Ltd. v. Union of India had been cured by the 1982 amendment and whether the principles laid down in Meenakshi Mills Ltd. v. Workmen applied. It held that the amendment introduced mandatory enquiry, written reasoned orders, fixed time‑limits and a quasi‑judicial review mechanism, thereby curing the earlier vices and making the restriction a reasonable one under Article 19(6). The phrase “in the interest of the general public” was held to be a definite constitutional concept, not vague. Consequently, the amended Section 25‑0 was found to be constitutionally valid and not ultra‑vires. The appeals and writ petitions were remitted to a Division Bench for disposal in accordance with the law.

Issues considered

The constitutional validity of the amended Section 25‑0 of the Industrial Disputes Act, 1947 (and Section 6‑W of the U.P. Act).
Whether the procedural and substantive defects identified in Excel Wear case have been cured by the amendment.
Whether the principles laid down in Meenakshi Mills case are applicable to the amended provision.
Whether the phrase ‘in the interest of the general public’ is vague or indefinite.
Whether the restriction imposed by the amendment is a reasonable restriction under Article 19(6).
Whether the word ‘may’ in sub‑section (5) of the amended Section 25‑0 must be read as ‘shall’.
Whether the amendment amounts to an impermissible delegation of legislative power.

Legislation cited

Constitution of Indias. Article 141, s. Article 19(1)(g), s. Article 19(5), s. Article 19(6)
Industrial Disputes Act, 1947s. 2‑0 (as amended), s. 25‑0 (amended), s. 25‑N, s. 6‑W
Uttar Pradesh Industrial Disputes Act, 1947s. 6‑W

Subjects

constitutional validityindustrial disputesclosure of undertakingSection 25‑0Article 19(6)reasonable restrictionquasi‑judicial reviewprocedural safeguardsSupreme Court

Judgment

M/S. ORISSA TEXTILE AND STEEL LTD. A
v.
STATE OE ORISSA AND ORS.

JANUARY 17, 2002

[S.P. BHARUCHA, CJ., SYED SHAH MOHAMMED QUADRI, B
N. SANTOSH HEGDE, S.N. VARIAVA AND
SHIVARAJ V. PATIL, JJ.]

Labour Laws :
c
Industrial Disputes Act, 1947-Section 2~-0 (as amended by Amendment
Act 46of1982) and Section 25-N-Constitutional validity of Section 25-0-
Unamended provision contained in the Section struck down by Constitution
Bench in Excel Wear's case-Subsequently in Meenakshi Mills' case
constitutional validity of Section 25-N upheld differentiating the Section with D
unamended Section 25-0-Held, amended Section is not ultra vires the
Constitution and is saved by Article 19(6) of the Constitution-Principles
applicable in Meenakshi Mills' case held relevant in deciding the constitutional
validity of Section 25-0 since it is in substance akin to Section 25-N-
Constitution of India, 1950-Article. 19(/)(g) and 19(6)-U.P. Industrial
Disputes Act, 1947-Section 6-W. E
Constitution of India, 1950-Article 141-Precedent-Consideration of.
by Constitution Court-Held, Constitution Court should form its own opinion
about a case and consider the effect of a precedent by reading it over again
and should not rely upon the gloss placed on that precedent by some other F
decision.

Words and Phrases :

'In the interest ofgeneral pub/ic '-Meaning of-In the context ofSection
25-0 of Industrial Disputes Act, 1947 and Article 19(6) of Constitution of G
India, 1950.
•
The issue before the Court in ·the present appeals was the
constitutional validity of Section 25-0 of Industrial Disputes Act, 1947 as
amended by Amendment Act 46of1982 and Section 6-W ofU.P. Industrial
_ Disputes Act, 1947. Section 6-W is identical to amended Section 25-0. H
309
310 SUPREME COURT REPORTS (2002) I S.C.R.

A Constitution Bench in Excel Wear etc. v. Union of India, (1979) I SCR
1009 had struck down the constitutional validity of Section 25-0 of
Industrial Disputes Act, 1947 as it stood before the Amendment Act 46 of r
1982. Thereafter in Workmen v. Meenakshi Mills Ltd., (1992) 3 SCC 336,
where the constitutional validity of Section 25-N was in question, it was
held by the Constitution Bench that the Section did not suffer from the
B vice of constitutionality and the considerations whi~h weighed in Excel
Wear 's case could not be applied for validity of Section 25-N as there was
difference between Section 25-N and Section 25-0 (unamended).

The questions referred to the present Constitution Bench in the
C present appeals were whether the vices pointed out in Excel Wear's case
had been cured by the amended Section 25-0 and whether the principles
laid down in Meenakshi Mills' case applied to amended Section 25-0.

It was contended that since in Meenakshi Mills' case the Constitution
Bench of this Court had extracted the reasons why in Excel Wear's case
D Section 25-0 was struck down, therefore, the decision of Meenakshi Mills'
case would be binding on this Court and it should not go into Excel Wear's
case to find out the reasons why Section 25-0 was struck down.

Answering the questions referred to it, the Constitution Bench.

E HELD : I.I. It cannot be said that the principles laid down in
Meenakshi Mills' case have no relevance in deciding the constitutional
validity of amended Section 25-0. Amended Section 25-0 is in substance
akin to Section 25-N (as it then stood). It contains many new provisions
and substantially amends/alters the other provisions. Though Meenakshi ,
Mills' case dealt with retrenchment, the same principles would apply, as
F a closure also has the effect of termination of service, though of all the
workmen. Also both Section 25-N and Section 25-0 are in Chapter V. The
objects and reasons for enacting these provisions are the same and must
be kept in mind while considering amended Section 25-0. [326-D)

1.2. Amended Section 25-0 is not ultra-vires the Constitution. It is
G
saved by Article 19(6) of the Constitution.

1.3. The reason why unamended Section 25-0 was struck down was
that it did not require giving of reasons. Under the unamended Section
25-0, the Order was to be passed on a subjective satisfaction of the
H appropriate Government. The amended Section 25-0 provided that the
j

ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA 311
appropriate Government before passing an order is bound to make an A
enquiry. The order passed by the appropriate Government has to be in
writing and contain reasons. [326-F]
1.4. Another reason why Section 25-0 was struck down was that no
time limit had been fixed while refusing permission to close down. This is
now cured by sub-section (4) of the amended Section 25-0 which provides B
that the order of the appropriate Government shall remain in force for
one year from the date of such order. Providing for a period of one year
makes the restriction reasonable. Now sub-section (3) of the amended
Section 25-0 provides that if the appropriate Government does not
r communicate the order within a period of 60 days from the date on which
the application is made, the permission applied for shall be deemed to have C
been granted. Thus this defect has also been cured. [330-C;F] I

1.5. The review and/or reference under amended Section 25-0 would
be in addition to a judicial review under Article 226 or Article 32. Sub-
section (5) of the amended Section 25-0 provides that the appropriate D
Government may, either on its own motion or on an application made by
the employer or any workman, review its order granting or refusing
permission or refer the matter to a Tribunal for adjudication. It has also
been provided that if a reference is made to a Tribunal (under this sub-
section) then the Tribunal should pass its award within a period of 30 days
from the date of such reference. A proper reading of sub-section (5) of E
amended Section 25-0 shows that, in the context in which it is used, the
word "may" necessarily means "shall". Thus the appropriate Government
"shall" review the Order if an application in that behalf is made by the
employer or the workmen. Similarly, if so required by the employer or
the workman, it shall refer the matter to a Tribunal for adjudication. In
exercising powers of review, the appropriate Government would be F
performing quasi judicial functions. Sub-section (5) of amended Section
25-0 provides that the Award should be passed within a period of 30 days
from the date of reference. Even though it does not provide any time frame
within which the review is to be disposed of, it is settled law that the same
~ould have to be disposed of within a reasonable period of time. A period G
of 30 days would be a reasonable period for disposing of a review also.
[331-A-BJ

Chief Controlling Revenue Authority and Anr. v. Maharashtra Sugar
Mills Ltd., (1950) SCR 536 and Western Indian Match Co. v. Workmen, (1974~
3 sec 330, referred to. H
311 SUPREME COURT REPORTS (2002] 1 S.C.R.

A 1.6. Under unamended Section 25-0 (7), even when permission to
close was granted, the employer had still to give notice and compensation
as specified in Section 25-N. Under the amended Section 25-0(8) the
requirement of giving 3 months notice as required by Section 25-N is r
dropped. All that is now required is to pay compensation which is
B equivalent to fifteen days average pay for every completed year of
continuous service. (333-A)

1.7. It is wrong to say that the amended Section merely deals with
the procedural defects pointed out in Excel Wear 's case and does not deal
with the substantive grounds set out in Excel Wear's case. Amended Section
C 25-0 is very different from unamended Section 25-0. It is now more akin
to unamended Section 25-N, the constitutional validity of which was upheld
in Meenakshi Mills ' case. In Excel Wear 's case it has been accepted that
reasonable restrictions could be placed under Article 19(6) of the
Constitution. Excel. Wear 's case recognizes that in the interest of general
public it is possible to restrict, for a limited period of time, the right to
D clo~e down the business. Amended Section 25-0 lays down guidelines
which are to be followed by the appropriate Government in granting or
refusing permission to close down. It has to have regard to the genuineness
and adequacy of the reasons stated by the employer. Amended Section 4
25-0 (7) makes it clear that amended Section 25-0 recognises that if there
E are exceptional circumstances then there could be no compulsion to
continue to run the business. It must, however, be clarified that this Court
is not laying down that some difficulty or financial hardship in running
the establishment would be sufficient. The employer must show that it has
become impossible to continue to run the establishment. Looked at from
this point of view, the restrictions imposed are reasonable and in the ,
F interest of general public. (333-B-G)

1.8. Excel Wear 's case is not to be read to mean that permission to
close must always be granted if the reasons are genuine and adequate. The
observations relied on in Excel Wear 's case are in the context of an order
G under unamended Section 25-0, based on subjective satisfaction and
capable of being arbitrary and whimsical. Now the amended Section 25-
0, provides for an enquiry after affording an opportunity of being heard
and provides that the order has to be a reasoned order in writing. The
order cannot be passed arbitrarily and whimsically. Now the appropriate
Government is exercising quasi judicial functions. Thus the principles laid
H down in Meenakshi Mill's case would apply. (324-B-C)
ORISSA TEXTILE AND STEEL LTD. v. STATE OF ORISSA 313
1.9. The observations in Excel Wear's case, that there should be A
several methods to regulate and/or restrict the right of closure e.g. by
providing for extra compensation over and above the retrenchment
. compensation could be the only method of laying down a reasonable
restriction, are a suggestion as to one method of imposing a reasonable
restriction. Tliere could be exceptional circumstances or overriding reasons B
where, in the interest of general public, there would have to be a restriction
on closure for some time. The observation relied on, cannot be read out
of context. It cannot be said that if reasons are genuine and adequate the
appropriate Government must always grant permission to close, even
though interest of general public and/or other factors require that the
business be continued for some time. (334-E; 335-A) C

I. I 0. It cannot be said that the phrase "in the interest of the general
public" is of a very wide amplitude or that it is vague or uncertain. It is
the phrase of a definite connotation and a known concept. This phrase,
as used in amended Section 25-0, has been bodily lifted from Article 19(6) D
of the Constitution of India. If it is not vague in the Constitution, one fails
to see how it becomes vague when it is incorporated in amended Section
. 25-0. (336-D)

Maneka Gandhi v. Union of India, (1978) I SCC 248 and Premium
Granites v. State a/Tamil Nadu, [1994) 2 SCC 691, referred to. E

1.11. Amended Section 25-0 is the law which lays down the
restriction. There is nothing vague or ambiguous in its provision. It is
Section 25-0 which gives the power to grant or refuse permission. It would
' be impossible to enumerate or set out in Section 25-0 all different F.
contingencies or situations which may arise in actual practice. Each case
would have to be decided on its own facts and <in the basis of circumstances
prevailing at the relevant time. All that can be set out, in the Section; are
guidelines. These have been set out in amended Section 25-0.
[336-H; 337-A)
G
2. It is the duty of the Constitution Court to form its own opinion
a bout a given case and to consider the effect of a precedent by reading it
over again, instead of relying upon the gloss placed on that precedent by
some other section.

P.A. Shah v. State a/Gujarat, [1985] Suppl. 3 SCR 1025, relied on. H
314 SUPREME COURT REPORTS (2002] I S.C.R.

A CIVIL APPELLATE JURISDICTION : Civil Appeal No. 529 of
2002.

From the Judgment and Order dated 12.4.94 of the Orissa High Court
in O.J.C. No. 1808 of 1991.

B WITH

Crl. A. Nos. 76-77/2002, C.A. Nos. 530-531/2002, C.A. No. 532/2002,
533/2002, C.A. No. 3455/90, W.P. (C) No. 672/94, 639195, C.A. No. 3927/
90. C.A. No. 1469/99, W.P. (C) No. 550/98, C.A. Nos. 648, 650 & 652/91,
14136 of 1996.
c
Soli J. Sorabjee, Attorney General, R.N. Trivedi, Additional Solicitor
General, Ms. Indira Jaisingh, J.P. Cama, Rajender Sachhar, Rajbir Bal, B.L.
Yadav, J.P. Goyal, Dr. A.M. Singhvi, G.L. Sanghi, B. Datta, Bharat Sangal,
Ms. Sangeeta Panikar, R.K. Mecodt Singh, Dhruv Mehta, Ms. Shobha,
D Ms. Anu Mehta, S.K. Mehta, Tripurari Ray, Gopal Jain, Vineet Kumar, R.K.
Maheshwari Mahesh Srivastava, Pankaj Srivastava, N.S. Bisht, Rakesh K.
Khanna, Ms. Pallavi Choudhary, Surya Kant, Ms. S. Janani, Y.P. Singh, Ajay
K. Aggarwal, Ms. Alka Aggarwal, C. Siddharth, Jaideep Gupta, Ms. Gauri
Rasgotra, Ms. Shruti Choudhary, Suman Jyoti Khaitan, Ms. Nina Gupta,
Uday Gupta, Ms. Arpita Mahajan, Ms. Praneeta Sharma, Ms. Shiksha Sachdev,
E Krishan Venugopal, Manish Singhvi, C. Radhakrishna, Ms. Kiran Bhardwaj,
Ms. Hema Srinivasan for Arvind Kumar Sharma, S.V. Deshpande, Raj Kumar
Mehta, P.N. Gupta, B.B. Singh, Arvind Verma, Himinder Lal, Anil Mittal
Ms. Sheela Goel and Kailash Chand for the appearing parties.

The Judgment of the Court was delivered by
,
F
S.N. VARIA VA, J. In these Appeals and Writ Petitions the question
for consideration, by this Bench, is the constitutional validity of Section 25-
0 of the Industrial Disputes Act, 1947. Section 25-0, as it now stands, was
incorporated by the Amendment Act 46 of 1982. (for sake of convenience
G the said Section will hereinafter be referred to as the amended Section 25-0.
In some of these matters the constitutional validity of Section 6-W of the
U.P. Industrial Disputes.Act is in question. Section 6-W is identical to amended
Section 25-0. Even though in this Judgment reference is made only to Section
25-0, what is set out herein will equally apply to Section 6-W. For considering
the constitutional validity of these Sections it is not necessary to note the
H facts in each case. Therefore, the facts are not being set out.
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA,J.] J J5

(2) In the case of Excel Wear Etc. v. Union of India and Ors., [ 1979] A
I SCR I 009 a Constitution Bench struck down Section 25-0 of the Industrial
Disputes Act (as it then stood). Thereafter the constitutional validity of Section
25-N of the Industrial Disputes Act (as it then stood) was considered by a
Constitution Bench in the case of Workmen v. Meenakshi Mills Ltd. [ 1992]
3 SCC 336. In Meenakshi Mills' case this Court, after referring to Excel B
Wear's case, upheld the constitutional validity of Section 25-N. These Appeals
and Writ Petitions have been referred to a Constitution Bench with the
following observation:

"The common question that arises for consideration relates to the
, constitutional validity of Section 25(0) of the Industrial Disputes Act C
as introduced by Central Act No. 46 of 1982 and Section 25(0) as
applicable in the State of MP by virtue of M.P. Act No. 32 of 1983
as well as Section 6(W) of the U.P. Industrial Disputes Act, 1947.
The earlier provision contained in Section 25(0) was struck down by
this Court in Excel Wear Etc. v. Union of India and Ors., [ 1979] I
SCR I 009. The learned counsel for the employers in support of their D
submissions assailing the validity of the said provisions have placed
reliance on various observations in the judgment in Excel Wear 's
Case. On behalf of the workmen reliance has been placed on the
decision of the Constitution Bench in. Workmen of Meenakshi Mills
ltd. and Ors. v. Meenakshi Mills Ltd. and Anr., [ 1992] 3 SCC 336. E
Since the questions raised involve interpretation of the various
observations in the judgment in Excel Wear 's case as well as in
Meenakshi Mills· case, we consider it appropriate that these matters
are heard by a Constitution Bench. It is, therefore, directed that all
these matters be placed before Hon'ble the Chief Justice of India for
suitable directions". F

(3) It must be mentioned that even amongst the High Courts there is a
conflict of opinion. Some of the High Courts have held that the amended
Section 25-0 of the Industrial Disputes Act and or Section 6-W of the U.P.
Industrial Disputes Act still suffers from the substantial vice pointed out in G
Excel Wear 's case and is, therefore, unconstitutional. Some other High Court
have, relying on Meenakshi Mills' case upheld he validity of amended Section
25-0 and/or Section 6- W.

(4) At this stage a submission made by Ms. Jaising needs to be set out.
Ms. Jaising submitted that in Meenakshi Mills 's case a Constitution Bench of H
316 SUPREME COURT REPORTS (2002] I S.C.R.

A this Court has extracted the reasons why in Excel Wears case Section 25-0
was struck down. It was submitted that that decision would be binding on this
Court. It was submitted that this Court should not itself go into Excel Wear 's
case to find out the reasons why Section 25-0 was struck down. We are
unable to accept this submission. As has been held by this Court, in the case
B of P.A. Shah v. State of Gujarat reported in [1985] Supp. 3 SCR 1025, it is
the duty of the Constitution Court to form its own opinion about a given case
and to consider the effect of a precedent by reading it over again, instead of
relying upon the gloss placed on that precedent by some other decision. In
our view the submissions of all the learned counsel will have to be considered
in the light of what is laid down in Excel Wear 's case and Meenakshi Mills'
C case.

(5) In Excel Wear's case this Court negatived a submission that a right
to close down a business was not a fundamental right and that it was merely
a right appurtenant to ownership of property. This Court held that the right

D
to close down a business was an integral part of the fundamental right to
carry on business as guaranteed under Article 19( I )(g) of the Constitution. It --
was held that there could be a reasonable restriction on this right under
Article 19(6) of the Constitution. It was held that the law could provide to
deter reckless, unfair, unjust and ma/a fide closure. A challenge under Article
14 of the Constitution was negatived. It was held that Chapter V-B dealt only
E with comparatively bigger undertakings and of a few types only and thus the
classification was reasonable. It was held that reasonableness of the restrictions
must be examined both from procedural and substantive aspects of the law.
This Court then considered whether the restrictions imposed by Section 25-
0 (as it then stood) were reasonable and saved by Article 19(6) of the
Constitution. It was held that the restrictions imposed by Section 25-0 were
F unreasonable for the following reasons:

(i) Section 25-0 did not require giving of reasons in the order. Even
if the reasons were adequate and sufficient, permission to close
could be denied in the purported public interest of labour as it
had been left to the whims and caprice of the authority to decide
G one way or the other. Thus the order could be whimsical and
capricious.

(ii) No time limit was fixed whilst refusing permission to close down.

(iii) That there was no deemed provision for according approval in
H the Section. It was held that the result would be that if the

'
ORISSA TEXTILE AND STEEL LTlt. v. STATEOFORISSA [S.N. VARIAVA, J.] J J7

Government order was not communicated to the employer within A
90 days, strictly speaking, the criminal liability under Section
25-F may not be attracted if on the expiry of that period the
1
undertaking is closed, but the civil liability under Section 25-
0(5) would come into play on the expiry of period of 90 days.

(iv) The order passed by the authority was not subject to any scrutiny B
by any higher authority or tribunal either in appeal or revision
and the order could not be reviewed even after some time.

(v) The employer was compelled to resort to the provision of Section
25-N even after approval of closure.

(vi) The restriction imposed was more excessive than was necessary C
for the achievement of the object and thus highly unreasonable.
It was suggested that there could be several other methods to
regulate and restrict the right of closure e.g. by providing for
extra compensation over and above the retrenchment
compensation. D
(6) In Meenakshi Mill's case, while considering the constitutional
validity of Section 25-N (as it then stood), Excel Wear 's case was considered.
This Court noted some of the vices pointed out in Excel Wear 's case. This
Court than pointed out the differences between Sections 25-0 and 25-N (as
they then stood) and held that considerations which weighed in Excel Wear 's E
case 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 fµndamental right of the employer to carry on business
under Article 19 (l)(g). It was noted that Section 25-N formed part of Chapter
V-8 which bore the heading "Special Provisions Relating to Lay off,
Retrenchment and Closure in Certain Establishments". It was noted that the F
said Chapter consisted of Sections 25-K to 25-S and that the said Chapter
was inserted by Amending Act No. 32 of 1976. This Court held that the
objects and reasons underlining the enactment was to prevent avoidable
hardship to the employees resulting from retrenchment by protecting existing
employees and to check growth pf unemployment which would otherwise be G
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 H
318 SUPREME COURT REPORTS [2002] I S.C.R.

A 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 wa.s not alien
B to the constitutional scheme. This Court then negatived the following
submissions:

(i) Adjudication by a judicial body available in the case of
retrenchment under Section 25-F has been substituted by an
administrative order passed by an executive authority in the case
of retrenchment under Section 25-N and thereby a function which
c was traditionally performed by Industrial Tribunals Labour Courts
has been conferred on an executive authority.

(ii) No guidelines have been prescribed for the exercise of the power
by the appropriate Government or authority under sub-section
(2) of Section 25-N and it would be permissible for the authority
D to pass its order on policy considerations which may have nothing
to do with an individual employer's legitimate need to reorganise
its business. The requirement that reasons must be recorded by . ~

the appropriate Government or authority for its order under sub-
section (2) of Section 25-N is not a sufficient safeguard against
E arbitrary action since no yardstick is laid down for judging the
validity of those reasons.

(iii) There is no provisioa for appeal or revisions against the order
passed by the appropriate Government or authority refusing to
grant permission to retrench under sub-section (2) of Section 25-
,
F N. Judicial review under Article 226 of the Constitution is not an ~
adequate remedy.

(iv) The provisions are exfacie arbitrary and discriminatory inasmuch
as while the workmen have a right to challenge, on facts, the
correctness of an order passed under sub-section (2) granting
G permission for retrenchment before the Industrial Tribunal by
seeking a reference under Section I 0 of the Act, the management
does not have a similar right to challenge the validity of an order
passed under sub-section (2) refusing to grant permission for
retrenchment."

H It was held that Section 25-N did not suffer from the vice of unconstitutionality.
ORISSA TEXTILE AND STEEL LTD. v. STATE OF ORISSA [S.N. VARIA VA, J.] 3 J9
It was held that Section 25-N was not violative of the fundamental rights A
guaranteed under Article 19(1 )(g). It was held that Section 25-N was saved
by Article 19(6) of the Constitution.

(7) On behalf of employees, it is submitted that the amended Section
25-0 has removed all the vices pointed out in Excel Wear 's case. It is submitted
that the amended Section 25-0 is now similar to Section 25-N (as it then B
stood). It is submitted that on the reasoning given in Meenakshi Mil/ 's case
the amended Section 25-0 would have to be held to be constitutionally valid.

(8) On behalf of the employers it has been submitted that:

(a) in Meenakshi Mill's case Section 25-N was being considered. It c
was submitted that in Meenakshi Mill's case it had been held that
considerations which weighed in deciding the constitutional
validity of Section 25-0 would not apply to Section 25-0. It was
submitted that the principles on which Section 25-N was held to
be constitutionally valid would not and should not be applied D
when considering the con.stitutionai validity of Section 25-0.

.. "'"' (b) that the in Excel Wear 's case Section 25-0 (as it then stood) was
struck down not just on procedural grounds, but also on
substantive grounds. It is submitted that the amended Section
25-0 only removes the procedural defects but still suffers from E
the su.bstantive vices pointed out in Excel Wear 's case as in
substance it is the same as Section 25-0 (as it then stood).
(c) that the phrase ''in the interest of the general public" was vague and
of a very wide amplitude. It was submitted that anything and
everything which is in the interest of general public would not
F
have rational or proximate relations with the object of the present
legislation. It was submitted that the restriction permitted by the
use of this phrase goes way beyond what was necessary for the
object to be achieved by the present legislation which was to
prevent avoidable unemployment.
G
(d) that the reasonable restriction permissible under Article 19(6)
has to be imposed by law. It was admitted that there could be a
delegated legislation or subordinate legislation. It was, however
submitted that the restrictions could not be left for determination
by the executive or be imposed by an executive order. It was
submitted that, in the amended Section 25-0, the restrictions H
320 SUPREME COURT REPORTS [2002] I S.C.R.

A were not laid down by law but had been left to the executive to
decide on a case to case basis.

(e) that the restrictions imposed were excessive inasmuch as in the
purported interest of general public closure could be prevented
even if the employer had genuine and adequate reasons. It was
B submitted, relying on Excel Wear's case, that a reasonable
restriction would be one which provides for payment of different
slabs ~f compensation in different situation.

(t) that the amended Section 25-0 left it to the discretion of the
appropriate Government to review the order or to refer the matter
c to the Tribunal.

(g) that the review provided in the amended Section was only a
limited review. It was submitted that effectively the only review
would be a judicial review under Article 226 or 32 of the
Constitution in which factual elements, which went into the
D determination, could not be investigated.

(9) In order to see whether the vices pointed out an Excel Wear 's case
have been cured and to consider whether principles laid down in Meenakshi
.... .
.

Mills' case apply to amended Section 25-0 it would be convenient to set out
herein Section 25-0 (as it then stood), the amended Section 25-0 and Section
E 25-N (as considered in Meenakshi Mills' case). They read as follows:
25-0 (Unamended) 25-0 Amended 25-N

(I) An employer (I) An employer (I) No workman
who intends to close who intends to close employed in any
F down an undertaking down an undertaking of industrial establishment
of an Industrial an Industrial establish- to which this Chapter
establishment to which ment to which this applies, who has been
this Chapter applies Chapter applies shall, m in continuous service
shall, serve, for the prescribed manner, for not less than one
previous approval at apply for prior year under an employer
G least ninety days permission at least shall be retrenched by
before the date on ninety days before the that employer until. "
which the intended date on which the
closure is to become intended closure is to (a) the workman has
effective, a notice in become effective, to the been given three .
H the prescribed appropriate Govern- months' notice in
ORI SSA TEXTILE AND STEEL LTD. v. STA TE OF ORI SSA [S:N. VARI AVA, J.] 32 J
manner, on the ment, stating clearly the writing indicating A
) appropriate Govern-
ment, stating clearly the
reasons for the intended
closure of the
the reasons for
retrenchment and
reasons for the intended undertaking and a copy the period of notice
closure of the of such application shall has expired, or the
undertaking : also be served worknian has been
simultaneously on the paid in lieu of such B
representatives of the notice, wages for
workmen rn the the period of the
prescribed manner: notice:

Provided that nothing Provided that nothing Provided that no such C
in this section shall apply in this sub-section shall notice shall be necessary
to an undertaking set up apply to an undertaking if the retrenchment is
for the construction of set up for the under an agreement,
buildings, bridges, roads, construction of which specifies a date
canals, dams or for other buildings, bridges roads, for termination of
construction work. canals, dams or for other service: D
construction work.
(2) On receipts of a (b) the workman has
notice under sub-s. (I) (2) Where an been paid, at the
the appropriate application for time of retrench-
Government may, if it is permission has been ment, compensa-
satisfied that the reasons made under sub-section tion which shall be E
for the intended closure (I), the appropriate equivalent to fifteen
of the undertaking are not Government, after days' average pay
) adequate and sufficient or making such enquiry as for every completed
such closure is it thinks fit and after year of continuous
prejudicial to the public giving a reasonable service or any part F
interest, by order, direct opportunity of being thereof in excess of
the employer not to close heard to the employer, six months: and
down such undertaking. the workmen and (c) notice in the
persons interested in prescribed manner
(3) Where a notice such closure may,
has been served on the
is served on the G
having regard to the appropriate Govern-
appropriate Govern-ment genuineness and ment by notification
by an employer under adequacy of the reasons rn the Official
sub-s. (I) of S. 25 FFA stated the employer, the Gazette, and the
and the period of notice interest of the general
permission of such
has not expired at he public and all other
Government or H

•
322 · SUPREME COURT REPORTS (2002] I S.C.R.

A commencement of the relevant factors, by authority is obtained
Industrial Disputes order and for reasons to under sub-section
(Amendment) Act, be recorded in writing, (2).
1976, such employer grant or refuse to grant
shall not close down such permission and a (2) On receipt of a
the undertaking but copy of such order shall notice under clause ( c)
B shall within a period of be communicated to the of sub-section (I) the
fifteen days from such employer and the appropriate Government
commencement, apply workmen. or authority may, after
to the appropriate making such enquiry as
Government for (3) \Vhere an such Government or
c permission to close application has been
made under sub-section
authority thinks fit, grant
or refuse, for reasons to
down the undertaking.
(I) and the appropriate be recorded in writing
(4) \Vhere an Government does not the permission for the
application for communicate the order retrenchment to which
permission has been granting or refusing to the notice relates.·
D made under sub-s. (3) grant permission to the
and the appropriate employer within a (3) \Vhere the
Government does not period of sixty days Government or authority
communicate the from the date on which does not communicate
permission or the such application is the permission or the
refusal to grant the made, the permission refusal to grant the
E applied for shall be
permission to the permission to the
employer within a deemed to have been employer within three
period of two months granted on the months of the date of
from the date on the expiration of the said service of the notice
application is made, period of sixty days. under clause ( c) of sub-
F the permission applied section (I) the
for shall be deemed to (4) An order of the Government or authority
have been granted on appropriate Govern- shall be deemed to have
the expiration of the ment granting or granted permission for
said period of two refusing to grant such retrenchment on
months. permission shall, the expiration of the said
G subject to the provisions period of three months.
(5) \Vhere no of sub-section (5), be •
application for final and binding on all ( 4) \Vhere at the
permission under sub- the parties and shall commencement of the
s. (I) is made, or remain in force for one Industrial Disputes
where no application year from the date of (Amendment) Act. 1976
H
•
ORJSSA TEXTILE ANDS.TEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 323

for permi~sion under such order. (32 of 1976), the period A
sub-s. (3) is made of notice given under
within the period (5) The appropriate clause (a) of Section
specified therein or Government may, 25-F for the
where the permission either on its own retrenchment of any
for closure had been motion or on the workman has not B
refused, the closure of application made by the expired, the employer
the undertaking shall employer or any shall not retrench the
be deemed to be illegal workman, review its workman but shall,
from the date of order granting or within a period of
. closure and the refusing to grant fifteen days from such
• workman shall be permission under sub- commencement, apply C
entitled to all the section (2) or refer the to the appropriate
benefits under any law matter to a Tribunal for Government or to the
for the time in force as adjudication: authority specified in
if no notice had been sub-section (2) for
Provided that where
given to him. permission for
a reference has been
retrenchment.
D
(6) Notwithstanding made to a Tribunal
anything contained in under this sub-section, (5) Where an
sub-s. (I) and sub-s. it shall pass an award application for
(3) the appropriate within a period of thirty permission has been
Government may, if it days from the date of made under sub-section E
is satisfied that owing such reference. (4) and the appropriate
to such exceptional Government or the
(6) Where no
circumstances as authority, as the case
application for
accident in the may be, does not
permission under sub-
undertaking or death of communicate the
section (I) is made
the employer or the permission or the F
within the period
like it is necessary so refusal to grant the
specified therein or
to do, by order, direct permission to the
where the permission
that the provisions of employer within a
for closure has been
sub-s. (I) or sub-s. (3) period of two months
refused, the closure of
shall not apply in
the undertaking shall be
from-the da~e on which G
relation to such the application is made,
deemed to be illegal
undertaking for such the permission applied
from the date of closure
period as may be for shall be deemed to
and the workmen shall
specified in the order. have been granted on
be entitled to all the
the expiration of the
benefits under any Jaw
(7) Whereas said period of two H
324 SUPREME COURT REPORTS [2002] I S.C.R.

A undertaking is for the time being in months.
approved or permitted force as if the
to be closed down undertaking had not (6) Where no
under sub-section (I) been closed down. application for
or sub-section (4), permission under clause
every workman in the (7) Notwithstanding (c) of sub-section (I) is
B said undertaking who anything contained in made, or where no
has been in continuous the foregoing application for
service for not less provisions of this permission under sub-
than one year in that section, the appropriate section ( 4) is made
undertaking immedia- Government may, if it within the period
c tely before the date of is satisfied that owing
to such exceptional
specified therein or
where the permission for
application for
permission under this circumstances as the retrenchment has
section shall be entitled accident in the been refused, such
to notice and undertaking or death of retrenchment shall be
compensation as the employer or the like deemed to be illegal
D specified in S.25N as it is necessary so to do, from the date on which
if the said workman by order, direct that the the notice of
had been retrenched provisions of sub- retrenchment was given
under section. section ( 1) shall not to the workman and the
apply in relation to such workman shall the
undertaking for such entitled to all the
E
period as may be benefits under any law
specified in the order. for the time being in
force as if no notice had
(8) \Vhere an been given to him.
undertaking is
F permitted to be closed (7) \Vhere at the
down under sub-section commencement of the
(2) or where permission Industrial Disputes
for closure is deemed to (Amendment) Act, 1976
be granted under sub- (32 of 1976). A dispute
section (3 ), every relating, either solely or
G workman who is in addition to other
employed in that matters, to the
undertaking imme- retrenchment of any
diately before the date workman or workmen of
of application for an industrial
H permission under this establishment to which
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 325
section, shall be entit[ed this Chapter applies is A
.:..i to receive compensation pending before a
f which shall be Conciliation Officer or
equivalent to fifteen the Central Government
days' average pay for or the State
every completed year of Government, as the
continuous service or case may be and
B
any part thereof in
excess of six months. (a) there is an
allegation that
such retren-
• chment is by
ways of
c
victimisation; or
(b) the appropriate
Government is of
the opinion that
such retren-
D
chment is not in
.' the interest of the
maintenance of
industrial peace,
the appropriate E
Government, if
satisfied that it is
necessary so to
do. May, by
" order withdraw
such dispute or, F
as the case may
be, such dispute
in so far as it
relates to such
retrenchment and G
transfer the same
.....• to an authority
(being an autho-
rity specified by
the appropriate
H
326 SUPREME COURT REPORTS [2002] l S.C.R.

A Government by
notification in the
Official Gazette)
for consideration
whether such
retrenchment is
B justified and any
order passed by
such authority
shall be final and
binding on the
c employer and the
workman or
workmen.

(I 0) The comparative table show that the amended Section 25-0 is in
D substance akin to Section 25-N (as it then stood). It contains many new
provisions and substantially amends/alters the other provisions. Though
Meenakshi Mills' case dealt with retrenchment, the same principles would
apply as a closure also has the effect of termination of service, though of all '·
the workmen. Also both Section 25-N and Section 25-0 are in Chapter V.
The objects and reasons for enacting these provisions are the same and must
E be kept in mind whilst considering amended Section 25-0. As set out above
(para 6) they have been extracted in Meenakshi Mill's case. Section 25-0 has
been enacted to give effect to the Directive Principles of the Constitution.
This aspect was not noted in Excel Wear 's case but has been emphasised in
Meenakshi Mill's case. As set out in Meenakshi Mills' case such provisions
p must be regarded as being in the interest of general public. We, therefore, do
not accept the submission that the principles laid down in Meenakshi Mills
case have no relevance in deciding the constitutional validity of (amended)
Section 25-0.

(11) As has been set out herein above, in Excel Wear 's case, one of the
G reasons why Section 25-0 (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, in
para 29, it has been held as follows :

"In sub-section (2) of Section 25-N. Parliament has used terminology
H
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 327
which is different from that used in sub-section (2) of Section 25-0. A
In sub-section (2) of Section 25-0, 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
B
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 c
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 D
must be a speaking order containing reasons. The requirement to
make an enquiry postulates an enquiry into the correctness of the
"t' facts stated by the employer in the notice served under clause (c) of
the sub-section (I) of Section 25-N for retrenchment of the workmen
and other releval\,t facts and circumstances including the employer's E
bonafides 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 ......

,., F

(30) 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 to appropriate Government or authority
to make up its mind whether to grant or refuse permission· for G
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 H
328 SUPREME COURT REPORTS [2002] I S.C.R.

A 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
B 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
c administrative but exercises powers which are quasi-judicial in nature".

We are in agreement with the view that, under the unamended Section 25-
0, the order was to be passed on a subjective satisfaction of the appropriate
Government. Now in amended Section 25-0 the words used are "the
appropriate Government may, after making such enquiry as it thinks fit, and
D 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, interest 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." Thus now
E the appropriate Government before passing an order is bound to make an
enquiry. Now the order passed by the appropriate Government has to be in
writing and contain reasons. As in the case of retrenchment, so also in closure,
the employer has to give notice by filling up a form in which he has to give
precise details and information. As held in Meenakshi Mills' case the
requirement to make an enquiry postulates an enquiry into the correctness of
F the facts stated by the employer in the notice served by him and also all other
relevant facts and circumstances including the bona fide of the employer.
Now an opportunity to be heard would have to be afforded to the employer,
workmen and all persons iQterested. The detailed information which the
employer gives would enable the appropriate Government to make up its
G mind and collect necessary facts for the purposes of granting or refusing
permission. The appropriate Government would have to ascertain whether
the information furnished is correct and whether the propose action is necessary
and, if so, to what extent. The making of an enquiry, the affording of an
opportunity to thr. employer, the workmen and all interested persons and the
necessity to pass a written order containing reasons envisages exercise of
H functions which are not purely administrative in character but quasi-judicial
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 329

in nature. As held in Meenakshi Mills' case the words "the appropriate A
Government, after making such enquiry, as it thinks fit" does not mean that
the Government may dispense with the enquiry at its discretion. These words
only mean that the Government has discretion about the nature of the enquiry
it is to make. We also agree with the following observations in Meenakshi
Mills' case :
B
"42. It has been urged on behalf of the employers that sub-section (2)
of Section 25-N does not prescribe any guidelines or principles to
govern the exercise of the power that has been conferred on the
appropriate Government or the authority in the matter of grant or
. refusal of permission for retrenchment and in the absence of such C
guidelines or principles, it will be open to the appropriate Government
or authority to take into account matters having no bearing or relevance
to the legitimate need of the employer to reorganise his business and
which may even be opposed to such need and it has been pointed that
it would be permissible to pass the order by taking into consideration
the state of unemployment in the industry or the state of unemployment D
in the State. It has also been submitted that the requirement that
reasons should be recorded in the order that is passed by the appropriate
Government or authority would not provide any protection against
arbitrary action because in the absence of principles governing the
exercise of the power, there is no touchstone to assess the validity of E
those reasons. We find no substance in this contention. We have
already dealt with the nature of the power that is exercised by the
appropriate Government or the authority while refusing or granting
permission under sub-section (2) and have found that the said power
is not purely administrative in character but partakes of exercise of
a function which is judicial in nature. The exercise of the said power F
envisages passing of a speaking order on an objective consideration
of relevant facts after affording an opportunity to the concerned parties.
Principles or guidelines are insisted on with a view to control the
exercise of discretion conferred by the statute. There is need for such
principles or guidelines when the discretionary power is purely G
administrative in character to be exercised on the subjective opinion
of the authority. The same is, however, not true when the power is
required to be exercised on objective considerations by a speaking
order after affording the parties an opportunity to put forward their
respective points of view.
H
330 SUPREME COURT REPORTS [2002] I S.C.R.

A (49) We are also unable to agree with the submission that the
requirement of passing a speaking order containing reasons as laid
down in sub-section (2) of Section 25-N does not provide sufficient
safeguard against arbitrary action. In S.N. Mukherjee v. Union of
India, (1990) 4 SCC 594, it has been held that irrespective of the fact
whether the decision is subject to appeal, revision or judicial review,
B the recording of reasons by an administrative authority by itself serves
a salutary purpose, viz., "it excludes chances of arbitrariness and
ensures a degree of fairness in the process of decision-making" (SCC
p. 612 para 36)."

(12) Another reason why Section 25-N was struck down was that no
c time limit had been fixed while refusing permission to close down. This is •
...
now cured by sub-section (4) of the amended Section 25-0. This sub-section
provides that the order of the appropriate Government shall remain in force
for one year from the date of such order. Thus at the end of :he year it is
always open to the employer to apply again for permission to close. We see
D no substance in the submission that the employer would not be able to apply
again (at the end of the year) on the same grounds. In our view if the reasons
were genuine and adequate, the very fact that they have persisted for a year
more is sufficient to necessitate a fresh look. Also ifthe reasons have persisted
for a year, it can hardly be said that they are the same. The difficulties faced "~

during the year, provided they are genuine and adequate, would by themselves
E be additional grounds. Also by the end of the year the interest of the general
public or the other relevant factors, which necessitated refusal of permission
on the earlier occasion may not prevail. The appropriate Government would
necessarily have to make a fresh enquiry, give a reasonable opportunity of
being heard to the employer, workmen and all concerned. In our view,
F providing for a period of one year makes the restriction reasonable.
..,
(13) Now sub-section (3) of the amended Section 25-0 provides that if
the appropriate Government does not communicate the order within a period
of 60 days from the date on which the application is made, the permission
applied for shall be deemed to have been granted. Thus this defect has also
been cured.
G
(14) Further sub-section (5) of the amended Section 25-0 provides that
the appropriate Government may, either on its own motion or on an application
made by the employer or any workman, review its order granting or refusing "'"
permission or refer the matter to a Tribunal for adjudication. It has also been
H provided that if a reference is made to a Tribunal (under this sub-section)
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 33 J
then the Tribunal should pass its award within a period of 30 days from the A
date of such reference. Counsel for the employers submitted that it is left to
the discretion of the appropriate Government to either review or make a
reference. They submitted that there is no right in the employer to compulsorily
seek a review or a reference. The learned Attorney General, fairly submitted
that the work "may", in sub-section (5) of the amended Section 25-0 should
be read as "shall". He further submitted that the "review" would necessitate B
the making of an enquiry into all relevant facts, particularly the genuineness
and adequacy of the reasons stated by the employer, and the giving of an
opportunity of being heard. He submitted that the order passed on review
would have to be an order in writing giving reasons. He submitted that even
.. though sub-section (5) of amended Section 25-0, does not lays down any C
· time limit within which the review was to be disposed off, a proper reading
of the section would necessarily imply that a review would have to be disposed
of within a period of 30 days from the date on which an application for
review was made.

(15) The learned Attorney General relied on the case of Chief Controlling D
Revenue Authority and Anr. v. Maharashtra Sugar Mills Ltd, reported in
(1950] SCR 536, in which this Court observed, in context of the powers
.• conferred on the Chief Revenue Authority by Section 57 of the Indian Stamp
Act, as follows :
E
"In our opinion, the power contained in Section 57 is in the nature
of an obligation or is coupled with an obligation and under the
circumstances can be demanded to be used also by the parties affected
by the assessment of the stamp duty."

' In the case of Western India Match Co. v. Workmen, reported in [1974] 3 F
T
sec 330, it has been held that on a proper construction the word "may", in
Section 6-B of the Uttar Pradesh Industrial Disputes Act, should be read as
"shall".

(16) In our view, the learned Attorney General is right. A proper reading
of sub-section (5) of amended Section 25-0 shows that, in the context in G
which it is used, the word "may" necessarily means "shall". Thus the
appropriate Government "shall" review the Order if an application in that
behalf is made by the employer or the workmen. Similarly, if so required by
the employer or the workman, it shall refer the matter to a Tribunal for
adjudication. As submitted by the learned Attorney General, in a review the H
332 SUPREME COURT REPORTS (2002) I S.C.R.

c
A appropriate Government would have to make an enquiry into all necessary
facts, particularly into the genuineness and adequacy of the reasons stated by
the employer. An opportunity of being heard would have to be given to the
employer, workmen and all interested persons. The order on review would
have to be in writing giving reasons. Thus, in exercising powers of review,
B the appropriate Government would be performing quasi judicial functions.
Sub-section (5) of amended Section 25-0 provides that the Award should be
passed within a period of 30 days from the date of reference. Even though
it does not provide any time frame within which the review is to be disposed
off, it is settled law that the same would have to be disposed of within a
reasonable period of time. In our view, a period of 30 days would be a
C reasonable period for disposing of a review also. This review and/or reference
under amended Section 25-0 would be in addition to a judicial review under
Article 226 or Article 32. In Meenakshi Mills' case it has been held that the
exercise of power being quasi judicial the remedy of judicial review under
Article 226 or Article 32 was an adequate protection against the arbitrary
D action in the matter of exercising of power by the appropriate Government.
We are in full agreement with those observations.

(17) Under Section 25-0 (7) (as it then stood), even when permission
to close was granted, the employer had still to give notice and compensation "· ....
as specified in Section 25-N. Noting this, it was observed in Excel Wear's
E case as follows :

"Again, by interpretation we were asked to say that steps under section
25-N can be taken simultaneously when a notice under section 25-
0( 1) is given. Firstly, the language of sub-section (7) does not warrant
(
this construction. The action of giving notice and compensation in
F
accordance with section 25N is to be taken when an undertaking is
approved or permitted to be closed down and not before that. Secondly,
it is not practicable to give three months notice in writing or wages
for the said period in lieu of notice or to pay the retrenchment
compensation in advance as required by section 25-N before the
G employer gets an approval from the Government."

Now under the amended Section 25-0(8} this requirement of giving 3 months
notices is dropped. All that is now required is to pay compensation which is
equivalent to fifteen days average pay for every completed year of continuous
H service.

,.
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA,J.] 333
(18) We also see no substance in the contention that the amended A

) Section merely deals with the procedural defects pointed out in Excel Wear 's
case and does not deal with the substantive grounds set out in Excel Wear 's
case. In our view amended Section 25-0 is very different from Section 25-
0 (as it then stood). It is now mere akin to Section 25-N (as it then stood)
the Constitutional validity of which was upheld in Meenakshi Mills' case. In B
Excel Wear's case it has been accepted that reasonable restrictions could be
placed under Article 19(6) of the Constitution. Excel Wear's case recognizes
that in the interest of general public it is possible to restrict, for a limited
period of time, the right to close down the business. Amended Section 25-
0 lays down guidelines which are to be followed by the appropriate
.r
.. Government in granting or refusing ;iermission to close down. It has to have C
regard to the genuineness and adequacy of the reasons stated by the employer.
However, merely because the reasons are genuine and adequate cannot mean
that permission to close must necessarily be granted. There could be cases
where the interest of general public may require that no closure takes place.
Undoubtedly where the reasons are genuine and adequate the interest of the
general public must be of a compelling or overriding nature. Thus, by way D

... . of examples, if an industry is engaged in manufacturing of items required for
defence of the country, then even though the reasons may be genuine and
adequate it may become necessary, in the interest of general public, not to
allow closure for some time. Similarly, if the establishment is manufacturing
,

vaccines or drugs for a epidemic which is prevalent at that particular point E
of time, interest of general public may require not to allow closure for a
particular period of time. We must also take a note of sub-section (7) of
amended Section 25-0 which provides that if there are exceptional
circumstances or accident in the undertaking or death of the employer or the
like, the appropriate Government could direct that provision of sub-section F
(I) would not apply to such an undertaking. This, in our view, makes it clear
that amended Section 25-0 recognizes that if there are exceptional
circumstances then there could be no compulsion to continue to run the
business. It must, however, be clarified that this Court is not laying down that
some difficulty or financial hardship in running the establishment would be
sufficient. The employer must show that it has become impossible to continue G
to run the establishment. Looked at from this point of view, in our view, the
....,"'°' restrictions imposed are reasonable and in the interest of general public.

(19) In Excel Wear's case it has been held that under Section 25-0 (as
it then stood), even if the reasons are adequate and sufficient, approval could H
334 SUPREME COURT REPORTS (2002) I S.C.R.

c
A be denied in purported public interest or security of labour. It was submitted
that even now permission to close could be refused even if the reasons were
genuine and adequate. It was submitted that this was a substantive vice which
still prevailed in the amended Section 25-0. We do not read Excel Wear 's
case to mean that permission to close must always be granted if the reasons
B are genuine and adequate. The observations relied on, in Excel Wear 's case,
are in the context of an order under Section 25-0 (as it then stood), based
on subjective satisfaction and capable of being arbitrary and whimsical. Now
the amended Section 25-0 provides for an enquiry after affording an
opportunity of being heard and provides that the order has to be a reasoned
order in writing. The order cannot be passed arbitrarily and whimsically.
c Now the appropriate Government is exercising quasi judicial functions. Thus
the principles laid down in Meenakshi Mills' case would now apply.

(20) Reliance was also placed on the observations, in Excel Wear 's
case, that there could be several methods to regulate and/or restrict the right
D of closure e.g. by providing for extra compensation over and above the
retrenchment compensation. It was submitted that this was also a substantive
ground on which Section 25-0 (as it then stood) was struck down. It was
submitted that the amended Section 25-0 still suffers from the same vice
inasmuch as permission to close could still be refused. It was submitted that
·- .
this amounts to the restriction being excessive and unreasonable. We are
E unable to accept this submission. We do not read the observations in Excel
Wear 's case, which are relied on, as laying down, that that could be the only
method of lying down a reasonable restriction. We read these observations as
being a suggestion as to one method of imposing a reasonable restriction.
This is clear from the following observations in Excel Wear's case (page
F 1036) :- y

"The law may provide to deter the reckless, unfair, unjust or ma/a
fide closures. But it is not for us to suggest in this judgment what
should be a just and reasonable method to do so."

G
As set out hereinabove, the main consideration would be the genuineness and
adequacy of the reasons stated by the employer. But that cannot be the only
consideration. As stated hereinabove, there could be exceptional circumstances
or overriding reasons where, in the interest of general public, there would
have to be a restriction on closure for some time. The observations relied on,
H cannot be read out of context. It is not possible to accept the submission that

'
ORISSA TEXTILE AND STEEL LTD. v. STATEOFORISSA [S.N. VARIAVA, J.] 335

) if reasons are genuine and adequate the appropriate Government must always
grant permission to close, even though interest of general public and/or other
factors require that the business be continued for some time.
A

(21) We also see no substance in the submission that the phrase "in the
interest of the general public" is of a very wide amplitude or that it is vague
or uncertain. In the case of Mrs. Maneka Gandhi v. Union of India, reported B
in (1978] 1 SCC 248, it has been held as follows :

"We are concerned only with the last ground denoted by the words
"in the interest of the general public", for that is the ground which is
attacked as vague and indefinite. We fail to see how this ground can,
by any stretch of argument, be characterised as vague or undefined. C
The words "in the interest of the general public" have a clearly well
defined meaning and the Courts have often been called upon to decide
whether a particular action is "in the interests of the general public"
or in "public interest" and no difficulty has been experienced by the
Courts in carrying out this exercise. These words are in fact borrowed D
ipsissimma verba from Article 19(5) and we think it would be nothing
short of heresy to accuse the Constitution-makers of vague and loose
. .~
thinking. The legislature performed a scissor and paste operation in
lifting these words out of Article 19(5) and introducing them in Section
10(3)(c) and if these words are not vague and indefinite in Article
19(5), it is difficult to see how they can be condemned to be such E
when they occur in Section 10(3)(c). How can Section 10(3)(c) be
said to incur any constitutional infirmity on account of these words
when they are not wider than the constitutional provision in Article
19(5) and adhere loyally to the verbal formula adopted in the
Constitution? We are clearly of the view that sufficient guidelines are F
provided by the words "in the interests of the general public" and the
power conferred on the Passport Authority to impound a passport
cannot be said to be unguided or unfettered. Moreover, it must be
remembered that the exercise of this power is not made dependent on
the subjective opinion of the Passport Authority as regards the necessity G
of exercising it on one or more of the grounds stated in the section,
but the Passport Authority is required to record in writing a brief
statement of reasons for impounding the passport and, save in certain
exceptional circumstances, to apply a copy of such statement to the
person affected, so that the person concerned can challenge the decision
of the Passport Authority in appeal and the appellate authority can H
336 SUPREME COURT REPORTS [2002] I S.C.R.

A examine whether the reasons given by the Passport Authority are
correct, and if so, whether they justify the making of the order
impounding the passport."

(22) Again, in the case of Premium Granites v. State of Tamil Nadu,
reported in [1994] 2 sec 691, it has been held that the phrase "public
c
B interest" finds place in the Constitution and in many enactments and has
since been noted and considered by this Court in various decisions. It has
been held that the said expression is of a definite concept and that there is
nothing vague about it. Undoubtedly, in Maneka Gandhi's case it had been
held that a fundamental right had not been breached. However, that would
C make no difference to the understanding of the term "in the interest of the
general public". In our view, the phrase "in the interest of the general public"
is the phrase of a definite connotation and a known concept. This phrase, as
used in amended Section 25-0, has been bodily lifted from Article 19(6) of
the Constitution of India. As stated in Maneka Gandhi's case if it is not
D vague in the Constitution, one fails to see how it becomes vague when it is
incorporated in amended Section 25-0.

(23) It was submitted that the restriction in order to be valid must be ~,

. imposed by law made by the Government. It is admitted that such law could
include delegate, legislation or subordinate legislation. It is submitted that
mere executive order or mere executive determination was not permissible.
E It was submitted that the law itself must define the content of the restriction.
It was submitted that the Parliament cannot leave it to the executive to
determine the content of the restriction. It was submitted that the object of the
restriction must be differentiated from the restriction itself. It was submitted
that Articles 19(2) to (6) of the Constitution lay down the grounds or objects
;r
F of the restriction. It was submitted that the actual restriction had to be defined
by "law". It was submitted that otherwise it would not be possible to say
whether the restriction laid down by the specific law conforms to the standards
specified in the Constitution and/or whether it was proximate thereto and
reasonable. It was submitted that ifthe content of the restriction was not laid
down by the law but was lef, to be decided by the executive on a case by case
G basis then there would be an impermissible delegation of legislative functions.
• .,.,
(24) We see no substance in these contentions. Amended Section
25-0 is the law which lays down the restriction. As has been set out above,
there is nothing vague or ambiguous in its provision. It is Section 25-0
H which gives the power to grant or refuse permission. It would be impossible
(

).

ORISSA TEXTILE AND STEEL LTD. v. STATEOFOR!SSA [S.N. VAR!AVA, J.] 337

to enumerate or set out in Section 25-0 all different contingencies or situations A
) which may arise in actual practice. Each case would have to be decided on
its own facts and on the basis of circumstances prevailing at the relevant
time. All that can be set out, in the Section, are guidelines. These have been
set out in amended Section 25-0.

(25) Mr. Cama also submitted that amended Section 25-0 was B
discriminatory inasmuch as a firm of lawyers or chartered accountants or
doctors or a hospital employing several hundred workmen could close down
on giving 60 days notice and on payment of closure compensation but in
cases of a factory, mine or plantation permission to close could be refused.
Just such an argument has ben negatived in Excel Wear's case. In Excel C
Wear's case it has been held that the classification is reasonable. We see no
reason to take a different view.

(26) We, therefore, hold that the amended Section 25-0 is not ultra-
vires the Constitution. We hold that it is saved by Article 19(6) of the
Constitution. D
(27) All these Appeals and Writ Petitions are now sent back to a Division
-, Bench for decision in accordance with law.

K.K.T. Appeals and Writ Petitions sent back
to a Division Bench for decision E
in accordance with law.