ition No 644 of 1977
Under Article 32 of the Constitution AND Writ Petition No 917 of 1977 Under Article 32 of the Constitution AND Writ Petition Nos 959 and 960 of 1977 F section Nariman M F D Damania G D Dave and Rameshwar Nath for the Petitioners in WP 644 of 977
F D Damania K L Talsania 1
N Shroff H section Parekh and M RP Kapur for the Petitioners in WP 91777
KK Singhvi FD Damania IR Joshi P H Parekh and M Mudgal for the Petitioners in WP Nos 959 96077
U R Lalit for Union of India M C Bhandare for the State of Maharashtra E C Agrawala and M N Shroff for RR
1 2 in WP Nos 644 959 960 and 917 of 1977
1015 SJ Deshmukh Mrs section Bhandare Miss Leela Mehta AN Karkhanis and Miss Malini Podvel for R 3 in WP No 644 of 1977
J Ramamurthi and Miss Vaigai for R 3 in WP 959 96077
M K Ramamurthi A K Ganguli and G section Chatterjee for the Intervener in WP Nos
959 960 State of West Bengal
C G Nadkarni and K L Hathi for the intervener in WP 91777 Mazdoor Congress
F section Nariman and OC Mathur for the Intervener in WP No 64477 Tube Investment
M K Ramamurthi and KMK Nair for the Intervener in WP 64477 State of Kerala
The Judgment of the Court was delivered by UNTWALIA J
By these four Writ Petitions the employers challenge the constitutional validity of Sections 25 o and 25 R of The hereinafter to be referred to as the Act
The facts of the different cases are of a similar nature
It is not necessary to state them in any detail for the purposes of deciding the constitutional question
We may however just refer to a few in order to indicate the nature of the dispute between the parties
WRIT PETITION No 644 OF 1977 The petitioner in this case is Excel Wear a Registered partnership firm the partners of which are citizens of India
The petitioner has a factory at Bombay where it manufactures garments for exports
About 400 workmen were employed in the petitioner s factory
According to its case the relation between the petitioner management and its employees started deteriorating from the year 1974 and had become very much worse from 1976
From August 1976 the workmen became very militant aggressive violent indulged in unjustifiable or illegal strikes and the labour trouble in the factory became of an unprecedented nature
Various incidents have been mentioned in the Writ Petition in support of the above allegations
But since the facts are seriously challenged and disputed on behalf of the Labour Union which was subsequently added as a party respondent in the Writ petition we do not propose to refer to them in any detail and express our views in regard to them one way or the other
The various facts alleged in the petition may be correct may not be correct
We do not think it necessary to adjudicate upon them for the purpose of deciding the constitutional question
Suffice it to say that it is legitimate to 1016 take notice of the fact that various kinds of situation such as labour trouble of an unprecedented nature a factory running in a recurring loss paucity of adequate number of competent and suitable persons in the family of the partners shareholders or the proprietors of a particular factory or even outsiders for the purpose of management non availability of raw materials insurmountable difficulty in the replacement of damaged or worn out machineries and so on and so forth may arise and are said to have arisen in one form or the other in the cases before us
Although the facts pleaded in all the Writ petitions are instances of one or more of such difficulties we shall advert to the consideration of the constitutional question on the justifiable assumption that in a given case they may exist
No body could deny the possibility or probability of the existence of such facts in a particular industry
Excel Wear according to its case finding it difficult almost impossible to carry on the business of the factory any longer served a notice dated May 2 1977 on the State Government of Maharashtra respondent No 2 for previous approval of the intended closure of the undertaking in accordance with Section 25 01 of the Act
The State Government refused to accord the approval and communicated their decision in their letter dated the 1st August 1977
It would be appropriate to quote here the relevant portion of this letter And whereas the Government of Maharashtra after considering the aforesaid notice is satisfied that the reasons for the intended closure are prejudicial to public interest
Now therefore in exercise of the powers conferred by sub section 2 of Section 25 O of the the Government of Maharashtra hereby directs the Excel Wear Bombay 400025 not to close down the said undertaking The petitioner challenges the validity of the order aforesaid
Mr F section Nariman appeared for the petitioner in this case
The Union of India respondent No 1 was represented by Mr U R Lalit and Mr M C Bhandare appeared for respondent No 2
The case of the Labour Union the third respondent was presented by Mr section J Deshmukh
In the petitions under consideration Mr Nadkarni appeared for an intervener Labour Union and Mr M K Ramamurthi for two intervener States of West Bengal and Kerala
WRIT PETITION No 917 OF 1977 In this case the first petitioner is Acme Manufacturing Co Ltd and the second petitioner citizen of India is one of its shareholders
Mr 1017 Damania learned counsel for the petitioners briefly drew our attention to the facts of this cases which were of a nature adverted to above
The Wadala unit of the petitioner company is engaged in the business of manufacturing and selling Diesel oil Engines Mechanical Lubricators Engine Valves and Push Rods etc
The petitioners were obliged to decide to close down the undertaking due to huge losses incurred by them on account of low productivity serious labour unrest and indiscipline resulting in various incidents of assaults or the like
The Company therefore applied to the State Government of Maharashtra on May 2 1977 under section 25 O1 of the Act for approval of the intended closure
The State Government communicated their refusal in their letter dated the 29th July 1977 enclosing therewith a copy of their order couched in identical terms as those in the case of Excel Wear
WRIT PETITIONS 959 AND 960 OF 1977 Mr KK Singhvi appearing for the petitioners in this case apart from supporting the argument of Mr Nariman drew our attention to the facts of this case which were more or less of a similar nature as in the case of Acme Manufacturing Co Ltd Petitioner No 2 is a citizen of India and is a shareholder of Apar Private Ltd petitioner No 1
The Company owns a factory at Vithalwadi Kalyan Bombay which manufactures aluminum rods AAC and ACSR conductors PVC cables and welding electrodes
Feeling compelled to take a decision to close down the factory the Company served a notice on the State Government under section 25 O1 of the Act on September 16 1976
The order of the State Government refusing permission to the petitioner company to close down the undertaking is dated the 23rd December 1976
The reasons for refusal given in this order are slightly different
They are as follows And whereas the Government of Maharashtra after considering the aforesaid notice is satisfied that the reasons for the intended closure of the said undertaking are not adequate and sufficient and the intended closure is prejudicial to the public intervener Broadly speaking the contention on behalf of the employers in all these cases is that a right to close down the business is an integral part of the right to carry on the business guaranteed under Article 191 g of the Constitution of India
The impugned law imposes a restriction the said fundamental right which is highly unreasonable excessive and arbitrary
It is not a restriction but almost amounts to the destruction or negation of that right
The restriction imposed is manifestly beyond the permissible bounds of clause 6 of Article 19 of the 1018 Constitution
The proposition canvassed for our consideration was sometimes too bald and wide
It was submitted that a right to carry on the business includes a right not to carry on the business just like any other right mentioned in clause 1 of Article 19 such as the right to freedom of speech includes a right not to speak and the right not to form an association is inherent in the right to form associations
Similarly a right to acquire and hold property embraces within it a right not to acquire or hold property
The submission was that no body can be compelled to speak or to form an association to acquire or hold property and similarly no body can be compelled to carry on any business
Ms Lalit and Bhandare did not dispute the proposition that the right to close down the business is an integral part of the right to carry on the business
They however strenuously urged That the restrictions imposed by the impugned law are quite reasonable and justified to put a stop to the unfair labour practice and for the welfare of the workmen
It is a progressive legislation for the protection of a weaker section of the society
Mr Deshmukh however did not accept that a right to close down a business is an integral part of the right to carry on any business
He submitted that a right to closure is appurtenant to the ownership of the property namely the undertaking
The total prohibition of closure only affects a part of the right to carry on the business and not a total annihilation of this
The restriction imposed was in public interest and there is a presumption of reasonableness in its favour
Mr Nadkarni endeavored to submit with reference to the high philosophies of Jurisprudence in relation to the social and welfare legislations as expounded by renowned jurists and judges abroad that the action of closing down a business is no right at all in any sense of the term
Mr Ramamurthi while supporting the main arguments put forward on behalf of others led great stress in the point that the law is protected by Article 31 C of the Constitution a point which was merely touched by them but was seriously taken over by Mr Ramamurthi
Before we enter into the focus of the discussion of the main points and their important aspects and facts it would be advantageous to refer to the relevant history of the development of this branch of the law
The Act being Central Act 14 of 1947 was passed in the year 1947
In 1953 an ordinance was promulgated followed by Amending Act 43 of 1953 inserting Chapter VA containing Sections 25A to 25J New definitions of Lay off and Retrenchment were furnished in the Act in clauses kkk and oo of Section 2
The heading of Chapter VA is Lay off and Retrenchment
The relevant provisions of this Chapter were not meant to cover the small industrial 1019 establishment in which less than SO workmen were employed or establishments of a seasonal character
Section 25C made a provision for certain amounts of compensation for workmen in case they are laid off
Section 25F imposes certain conditions on the employers which are conditions precedent to retrenchment of workmen such as the giving of one month s notice or wages in lieu thereof
Provision has also been made for payment of retrenchment compensation
Section 25FF dealt with compensation to workmen in case of transfer of undertakings
In Hariprasad Shivshankar Shukla vs A D Divikar this Court had occasion to consider the meaning of the term retrenchment
It was opined that the word retrenchment means the discharge of surplus labour or staff by the employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action and does not include termination of services of all workmen on a bona fide closure of an industry
The question posed at page 134 by section K Das J who delivered the judgment on behalf of the Constitution Bench of this Court was whether the definition clause of the word retrenchment  covers cases of closure of business when the closure is real and bona fide  The answer given at page 137 was in the negative
Discharge of workmen on bona fide closure of business was held to be not retrenchment
On the view that Section 25F of the Act had no application to a closed or dead industry no pronouncement was made in regard to the constitutional validity of the section if it were to take within its ambit a case of closure also
After the decision of this Court in the case of Hariprasad Shivshanker supra was handed down the law was amended by an ordinance followed by Amending Act 18 of 1957 with retrospective effect from November 28 1956
Section 25FF was amended to make a provision for payment of compensation to workmen in case of transfer of undertakings and a provision was made in Section 25FFF for payment of compensation to workmen in case of closing down of an undertaking
It will be of use to read here sub section 1 of Section 25FFF for the purpose of deciding some of the contentious questions in this case
It reads as follows  Where an undertaking is closed down for any reason whatsoever every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall subject to the provisions of sub section 2 be entitled to notice and compensation in accordance with the provisions of section 25F as if the workman had been retrenched
1020 Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer the compensation to be paid to the workman under clause b of section 25F shall not exceed his average pay for three months
Explanation An undertaking which is closed down by reason merely of i financial difficulties including financial losses or ii accumulation of undisposed of stocks or iiithe expiry of the period of the lease or licence granted to it or iv in a case where the undertaking is engaged in mining operations exhaustion of the minerals in the area in which operations are carried on shall not be deemed to be closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub section
 It would be noticed from the provision extracted above that normally it became necessary for an employer in a case of closure for any reason whatsoever to give notice and compensation to the workmen in accordance with the provisions of section 25F as if the workman had been retrenched
But the proviso clearly postulated that an undertaking may have to be closed down on account of unavoidable circumstances beyond the control of the employer
In that event a ceiling was put in the proviso on the amount of normal compensation payable
The explanation added by Amending Act 45 of 1971 merely indicates that the reasons enumerated in clauses i to iv of the Explanation will not be deemed to be a closure brought about on account of unavoidable reasons beyond the control of the employer within the meaning of the proviso
Factually and really the said reasons may be said to fall within the expression unavoidable circumstances beyond the control of the employer
 But the said reasons will not be deemed to be such that a workman should be made to get only a limited compensation and not the full normal compensation provided in section 25F
The constitutional validity of section 25FFFl came to be considered by this Court in Ms Hatisingh Mfg Co Ltd and another vs Union of India and Ors
The provision was construed in a manner which saved it from the attack on its vires
Since we are on this case
1021 at this very stage we may refer to some very important views expressed therein which are decisive of some of the points raised in this case and cf great help in deciding some others
Shah J as he then was speaking for the Court pointed out at page 535 By Article 191 g of the Constitution freedom to carry on any trade or business is guaranteed to every citizen but this freedom is not absolute In the interest of the general public says the learned Judge the law may impose restrictions on the freedom of the citizens to start carry on or close their undertakings
 This clearly indicates and the whole ratio of the case is based upon this footing that the right to carry on any business includes a right to start carry on or close down any undertaking
It has further been pointed out on the same page that by section 25FFFl termination of employment on closure of the undertaking without payment of compensation and without either serving notice or paying wages in lieu of notice is not prohibited
Payment of compensation and payment of wages for the period of notice are not therefore conditions precedent to closure
 This is one of the main reasons given in the judgment to repel the attack on the constitutional validity of the provision
We however must hasten to add that it does not necessarily follow therefrom that if such payments are made conditions precedent to closure the provision will necessarily be bad
While judging the question as to whether the restrictions imposed by Sections 25 O and 25 R are reasonable or not within the meaning of clause 6 of Article 19 we will have to keep in mind the principles enunciated in Hatising s case at page 535 thus  Whether an impugned provision imposing a fetter on the exercise of the fundamental right guaranteed by article 191 g amounts to a reasonable restriction imposed in the interest of the general public must be adjudged not in the background of any theoretical standards or predeterminate patterns but in the light of the nature and incidents of the right the interest of the general public sought to be secured by imposing the restriction and the reasonableness of the quality and extent of the fetter upon the right
 At pages 536 37 are to be found some important observations in the interest of the labour and we respectfully agree with them
They are as follows Closure of an industrial undertaking involves termination of employment of many employees and throws them into the ranks of the unemployed and it is in the interest of the general public that misery resulting from unemployment 1022 should be redressed
In Indian Hume Pipe Co Ltd vs The Workmen 1960 2 SCR 32 this Court considered the reasons for awarding compensation under section 25F though not its constitutionality
It was observed that retrenchment compensation was intended to give the workmen some relief and to soften the rigour of hardship which retrenchment brings in its wake when the retrenched workman is suddenly and without his fault thrown on the streets to face the grim problem of unemployment
It was also observed that the workmen naturally expects and looks forward to security of service spread over a long period but retrenchment destroys his expectations
The object of retrenchment compensation is therefore to give partial protection to the retrenched employee to enable him to tide over the period of unemployment
Loss of service due to closure stands on the same footing as loss of service due to retrenchment for in both cases the employee is thrown out of employment suddenly and for no fault of his and the hardships which he has to face are whether unemployment is the result of retrenchment or closure of business the same
In case of retrenchment only a specified number of workmen loses their employment while in closure all the workmen become unemployed
By Amending Act 32 of 1972 section 25FFA was inserted in Chapter VA of the Act providing for the giving by the employer of 60 days  prior notice to the appropriate Government of his intention to close down any undertaking
Failure to do so entailed a liability to be punished under section 30A inserted in the Act by the same Amending Act
Chapter VB was inserted in the Act by Amending Act 32 of 1976 with effect from the 5th March 1976
Under section 25K the provisions of this Chapter were made applicable to comparatively bigger industrial establishments in which not less than 300 workmen were employed
Only three kinds of industries were roped in for the purpose of the rigour of the law provided in Chapter VB by defining industrial establishment in clause a section 25L to mean i a factory as defined in clause m of section 2 of the  ii a mine as defined in clause j of sub section 1 of section 2 of the  or 1023 iiia plantation as defined in clause f of section 2 of the 
 Section 25M dealt with the imposition of further restrictions in the matter of lay off
Section 25N provided for conditions precedent to retrenchment of workmen
In these cases the vires of neither of the two sections was attacked
Rather a contrast was made between the said provisions with those of section 25 O to attack the latter
The main difference pointed out was that in sub section 3 of Section 25M the authority while granting or refusing permission to the employer to lay off was required to record reasons in writing and in sub section 4 a provision was made that the permission applied for shall be deemed to have been granted on the expiration of the period of two months
The period provided in sub section 4 enjoins the authority to pass the order one way or the other within the said period
Similarly in sub section
2 of section 25N reasons are required to be recorded in writing for grant or refusal of the permission for retrenchment and the provision for deemed permission was made in sub section
3 on the failure of the governmental authority to communicate the permission or the refusal within a period of three months
We must now read section 25 o impugned provision in full 1 An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall serve for previous approval at least ninety days before the date on which the intended closure is to become effective a notice in the prescribed manner on the appropriate Government stating clearly the reasons for the intended closure of the undertaking Provided that nothing in this section shall apply to an undertaking set up for the construction of buildings bridges roads canals dams or for other construction work
2 On receipt of a notice under sub section 1 the appropriate Government may if it is satisfied that the reasons for the intended closure of the undertaking are not adequate and sufficient or such closure is prejudicial to the public interest by order direct the employer not to close down such undertaking
3 Where a notice has been served on the appropriate Government by an employer under sub section 1 of 1024 section 25FFA and the period of notice has not expired at the commencement of the Industrial Disputes Amendment Act 1976 such employer shall not close down the undertaking but shall within a period of fifteen days from such commencement apply to the n r appropriate Government for permission to close down the undertaking
4 Where an application for permission has been made under sub section 3 and the appropriate Government does not communicate the permission or the refusal to grant the permission to the employer within a period of two months from the date on which the application is made the permission applied for shall be deemed to have been granted on the expiration of the said period of two months
5 Where no application for permission under sub section 1 is made or where no application for permission under sub section  3  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 workman shall be entitled to all the benefits under any law for the time being in force as if no notice had been given to him
6 Notwithstanding anything contained in sub section 1 and sub section 3 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 or sub section 3 shall not apply in relation to such undertaking for such period as may be specified in the order
7 Where an undertaking is approved ar permitted to be closed down under sub section 1 or sub section 4 every workman in the said undertaking who has been in continuous service for not less than one year in that undertaking immediately before the date of application for permission under this section shall be entitled to notice and compensation as specified in section 25N as if the said workman had been retrenched under that section
 1025 Special provision as to the restarting of an undertaking closed down before the commencement of the Amending Act 32 of 1976 was made in section 25P
Whether the said provision is constitutionally valid or invalid does not fall for determination in these cases
What is however of some importance to point out is that only on the existence of the four situations mentioned in clauses a to d of section 25P the undertaking could be directed to be restarted within such time not being less than one month from the date of the order as may be specified in the order
Section 25Q provides for penalty for lay off and retrenchment without previous permission and section 25 R deals with the question of imposition of penalty for closure under certain circumstances
Section 25 R reads as follows  1 Any employer who closes down an undertaking with out complying with the provisions of sub section 1 of Section 25 O shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five thousand rupees or with both
2 Any employer who contravenes a direction given under sub section 2 of section 25 O or section 25P shall be punishable with imprisonment for a term which may extend to one year or with fine which may extend to five thousand rupees or with both and where the contravention is a continuing one with a further fine which may extend to two thousand rupees for every day during which the contravention continues after the conviction
3 Any employes who contravenes the provisions of sub section 3 of section 25 O shall be punishable with imprisonment for a term which may extend to one month or with fine which may extend to one thousand rupees or with both
 Let us now analyse the provisions of section 25 O Sub section 1 requires 90 days notice to the appropriate Government for previous approval of the intended closure
Our attention was drawn to the Bombay Industrial Rules and the form prescribed therein for the filing of an application for permission to close down an undertaking
A very comprehensive history of the undertaking and many facts and figures in relation thereto apart from the reasons to be stated for the intended closure of the undertaking are required to be given in the application form
Under sub section 2 if in the opinion of the 1026 appropriate Government the reasons for the intended closure are not adequate and sufficient or if the closure is prejudicial to the public interest permission to close down may be refused
The reasons given may be correct yet permission can be refused if they are thought to be not adequate and sufficient by the State Government
No reason is to be given in the order granting the permission or refusing it
The appropriate Government is not enjoined to pass the order in terms of sub section 2 within 90 days of the period of notice
Sub section 3 is a special provision in respect of an undertaking where an employer had given a notice under section 25FFA1 before the commencement of Act 32 of 1976
In that event he is required to apply within a certain period for permission to close down an undertaking
Under sub section 4 in a case covered by sub section 3 it is incumbent upon the Government to communicate the permission or the refusal within a period of two months otherwise the permission applied for shall be deemed to have been granted
Sub section 5 brings about the real object of the impugned provisions by stating that the closure of the undertaking shall be deemed to be illegal from the date of the closure if the undertaking has been closed down without applying for permission under sub section 1 or sub section 3 or where the permission for closure has been refused
In that event the workman shall be entitled to all the benefits under ally law for the time being in force as if no notice had been given to him
It is to be noticed that sub section 5 does not say as to whether the closure will be illegal or legal in case a notice under section 1 has been given by the employer but in absence of any communication from the Government within a period of 90 days granting or refusing permission the employer closes down the undertaking on the expiry of the said period
Sub section 6 postulates that there may be a sudden closure of an undertaking due to some exceptional circumstances as accident in the undertaking or death of the employer or the like
In such a situation the appropriate Government is empowered to direct that the provisions of sub section 1 or sub section 3 shall not apply in relation to such undertaking for such period as may be specified in the order
Under sub section 7 where an undertaking is approved or permitted to be closed down then the workman becomes entitled to notice and compensation as specified in section 25N as if the said workman had been retrenched under that section
In other words requirement of section 25N is to be complied with on the grant of the permission to close
Section 25 R while providing for awarding of punishment to an employer who closes down an undertaking without complying with the provisions of sub section 1 of section 25 O or who contravenes a direction given under section 25 O2 is silent on the question of 1027 entailing any penal consequences in case where an employer had applied for permission under sub section 1 of section 25 O but the Government had failed to communicate its order to him within a period of 90 days and the undertaking is closed down on the expiry of the said period
We propose first to briefly dispose of the two extreme contentions put forward on either side as to the nature of the alleged right to close down a business
If one does not start a business at all then perhaps under no circumstances he can be compelled to start one
Such a negative aspect of a right to carry on a business may be equated with the negative aspects of the right embedded in the concept of the right to freedom of speech to form an association or to acquire or hold property
Perhaps under no circumstances a person can be compelled to speak to form an association or to acquire or hold a property
But by imposing reasonable restrictions he can be compelled not to speak not to form an association or not to acquire or hold property
Similarly as held by this Court in Cooverjee Bharucha vs The Excise Commissioner and the Chief Commissioner Ajmer and Ors
Narendra Kumar  Ors
vs The Union of India and Ors total prohibition of business is possible by putting reasonable restrictions within the meaning of Article 196 on the right to carry on the business
But as pointed out at page 387 in the case of Narendra Kumar supra The greater the restriction the more the need for strict scrutiny by the Court and then it is said further In applying the test of reasonableness the Court has to consider the question in the background of the facts and circumstances under which the order was made taking into account the nature of the evil that was sought to be remedied by such law the ratio of the harm causes to individual citizens by the proposed remedy to the beneficial effect reasonably expected to result to the general public
It will also be necessary to consider in that connection whether the restraint caused by the law is more than was necessary in the interests of the general public
 But then as pointed out by this Court in Hatisingh s case supra the right to close down a business is an integral part of the right to carry it on
It is not quite correct to say that a right to close down a business can be equated or placed at par as high as the right not to start and carry on a business at all
The extreme proposition urged on behalf of the employers by equating the two right 1028 and then placing then at par is not quite apposite and sound
Equally so or rather more emphatically we do reject the extreme contention put forward on behalf of the Labour Unions that right to close down a business is not an integral part of the right to carry on a business but it is a right appurtenant to the ownership of the property or that it is not a fundamental right at all
It is wrong to say that an employer has no right close down a business once he starts it
If he has such a right as obviously he has it cannot but be a fundamental right embedded in the right to carry on any business guaranteed under Article 191 g of the Constitution
In one sense that right does appertain to property
But such a faint overlapping of the right to property engrafted in Article 191 f or Article 31 must not be allowed to case any shade or eclipse on the simple nature of the right as noticed above
We now proceed to examine whether the restriction imposed under the impugned law are reasonable within the meaning of Article 196
this is undoubtedly on the footing as held by us above that the right to close a business is an integral part of the fundamental right to carry on a business
But as no right is absolute in its scope so is the nature of this right
It can certainly be restricted regulated or controlled by law in the interest of the general public
On behalf of the petitioners the restrictions imposed by the impugned law are said to be unreasonable because i Section 25 O does not require giving of reasons in the order
ii No time limit is to be fixed while refusing permissions to close down
iiiEven if the reasons are adequate and sufficient approval can be denied in the purported public interest of security of labour
Labour is bound to suffer because of unemployment brought about in almost every case of closure
iv It has been left to the caprice and whims of the authority to decide one way or the other
No guidelines have been given
v Apart from the civil liability which is it be incurred under sub section 5 the closure however compulsive it may be if brought about against the direc 1029 tion given under sub section 2 is visited with penal consequences as provided in section 25 R vi There is no deemed provision as to the according of approval in sub section 2 as in sub section 4
viiRefusal to accord approval would merely mean technically that the business continues but a factory owner cannot be compelled to carry on the business and go on with the production and thus one of the objectives sought to be achieved by this provision cannot be achieved
viiiThere is no provision of appeal revision or review of the order even after sometime
ix The employer is compelled to resort to the provisions of Section 25N only after approval of the closure
x Restriction being much more excessive than is necessary for the achievement of the object is highly unreasonable
xi There may be several other methods to regulate and restrict the right of closure by providing for extra compensation over and above the retrenchment compensation if the closure is found to be mala fide and unreasonable
xiiTo direct the employer not to close down is altogether a negation of the right to close
It is not regulatory
xiiiIf carrying on any business is prohibited in public interest a person can do another business
But to prohibit the closure of a running business is destruction of the right to close
xivThat reasons should be adequate and sufficient from whose points of view is not indicated in the Statute
xv The reasonableness of the impugned restrictions must be examined both from procedural and substantive aspects of the law
Sub section 2 of section 25 O does not make it obligatory for any 1030 higher authority of the Government to take a decision
It may be taken even by a lower officer in the hierarchy
On behalf of the respondents and the interveners all the above arguments were combated and it was asserted that the restriction imposed is reasonable in the interest of the general public
The dominant interest was of labour but the other interests are also protected by the restriction such as interest of ancillary industry and preventing fall in production of a particular commodity which may effect the economic growth
The application form requires the employer applying for permission to close down to give such comprehensive and detailed information that it will enable the appropriate Government to take appropriate decisions in appropriate cases
It was also urged that the word Socialist has been added in the Preamble of the Constitution by the Forty Second amendment and the tests of reasonableness therefore must change and be necessarily different from the dogmatic and stereo type tests laid down in the earlier decisions of this Court
Apart from invoking the bar of Article 31C in terms it was also urged that the spirit behind the said Article for the progress of the law meant for social justice has got to be kept in view while judging the reasonableness of the restriction in the light of its endeavour to advance the directive principles enshrined in Part IV of the Constitution
In order to overcome the various obvious lacunae in the section we were asked by a rule of construction to read down the section and save its constitutionality
It was urged that successive applications can be made on the change of a situation
No amount of compensation can be a substitute for the preventive remedy of the evil of unemployment
We now proceed to deal with the rival contentions
But before we do so we may make some general observations
Concept of socialism or a socialist state has undergone changes from time to time from country to country and from thinkers to thinkers
But some basic concept still holds the field
In the case of Akadasi Padhan vs State of Orissa the question for consideration was whether a law creating a State monopoly is valid under the latter part of Article 196 which was introduced by the first Amendment Act 1951
While considering that question it was pointed out by Gajendragadkar J as he then was at page 704 1031 With the rise of the philosophy of Socialism the doctrine of State ownership has been often discussed by political and economic thinkers
Broadly speaking this discussion discloses a difference in approach
To the socialist nationalisation or State ownership is a matter of principle and its justification is the general notion of social welfare
To the rationalist nationalisation 1 or State ownership is a matter of expediency dominated by considerations of economic efficiency and increased output only production
This latter view supported nationalisation only when it appeared clear that State ownership would be more efficient more economical and more productive
The former approach was not very much influenced by these considerations and treated it a matter of principle that all important and nation building industries should come under State control
The first approach is doctrinaire while the second is pragmatic
The first proceeds on the general ground that all national wealth and means of producing it should come under national control whilst the second supports nationalisation only on grounds of efficiency and increased output
 The difference pointed out between the doctrinaire approach to the problem of socialism and the pragmatic one is very apt and may enable the courts to lean more and more in favour of nationalisation and State ownership of an industry after the addition of the word Socialist in the Preamble of the Constitution
But so long as the private ownership of an industry is recognised and governs an overwhelmingly large proportion of our economic structure is it possible to say that principles of socialism and social justice can be pushed to such an extreme so as to ignore completely or to a very large extent the interests of another section of the public namely the private owners of the undertakings  Most of the industries are owned by limited companies in which a number of shareholders both big and small holds the shares
There are creditors and depositors and various other persons connected with or having dealings with the undertaking
Does socialism go to the extent of not looking to the interests of all such persons In a State owned undertaking the Government of the Government company is the owner
If they are compelled to close down they probably may protect the labour by several other methods at their command even sometimes at the cost of the public exchequer
It may not be always advisable to do so but that is a different question
But 1032 in a private sector obviously the two matters involved in running it are not on the same footing
One part is the management of the business done by the owners or their representatives and the other is running the business for return to the owner not only for the purpose of meeting his livelihood or expenses but to for the purpose of the growth of the national economy by formation of more and more capital
Does it stand to reason that by such rigorous provisions like those contained in the impugned sections all these interests should be completely or substantially ignored  The questions posed are suggestive of the answers
In contrast to the other provisions section 25 o2 does not require the giving of reasons in the order
In two of the impugned orders communicated to the petitioners Excel Wear and Acme Manufacturing Co Ltd it is merely stated that the reasons for the intended closure are prejudicial to public interest suggesting thereby that the reasons given by the employers are correct adequate and sufficient yet they are prejudicial to the public interest
In cases  band fide closures it would be generally so
Yet the interest of labour for the time being is bound to suffer because it makes worker unemployed
Such a situation as far as reasonably possible should be prevented
Public interest and social justice do require the protection of the labour
But is it reasonable to give them protection against all unemployment after affecting the interests of so many persons interested and connected with the management apart from the employers Is it possible to compel the employer to manage the undertaking even when they do not find it safe and practicable to manage the affairs  Can they be asked to go on facing tremendous difficulties of management even at the risk of their person and property  Can they be compelled to go on incurring losses year after year  As we have indicated earlier in section 25FFF retrenchment compensation was allowed in cases of closure and if closure was occasioned on account of unavoidable circumstances beyond the control of the employer a ceiling was put on the amount of compensation under the proviso
The Explanation postulates the financial difficulties including financial losses or accumulation of undisposed stocks etc
as the closing of an undertaking on account of unavoidable circumstances beyond the control of the employer but by a deeming provision only the ceiling in the matter of compensation is not made applicable to the closure of an undertaking for such reasons
In 1972 by insertion of section 25FFA in Chapter VA of the Act an employer was enjoined to give notice to the Government of an intended closure
But gradually the net was cast too wide and the freedom of the employer tightened to such an extent by introduction of the impugned provisions that 1033 it has come to a breaking point from the point of view of the employers
As in the instant cases so in many others a situation may arise both from the point of view of law and order and the financial aspect that the employer finds it impossible to carry on the business any longer
He must not be allowed to be whimsical
Or capricious in the matter ignoring the interest of the labour altogether
But that can probably be remedied by awarding different slabs of compensation in different situations
It is not quite correct to say that because compensation is not a substitute for the remedy of prevention of unemployment the later remedy must be the only one
If it were so then in no case closure call be or should be allowed
In the third case namely that of Apar Private
Ltd the Government has given two reasons both of them being too vague to give any exact idea in support of the refusal of permission to close down
It says that the reasons are not adequate and sufficient although they may be correct and that the intended closure is prejudicial to the public interest
The latter reason will be universal in all cases of closure
The former demonstrates to what extent the order can be unreasonable
If the reason given by the petitioner in great detail are correct as the impugned order suggests they are it is preposterous to say that they are not adequate and sufficient for a closure
Such an unreasonable order was possible to be passed because of the unreasonableness of the law
Whimsically and capriciously the authority can refuse permission to close down
Cases may be there and those in hand seem to be of that nature where if the employer acts according to the direction given in the order he will have no other alternative but to face ruination in the matter of personal safety and on the economic front
if he violates it apart from the civil liability which will be of a recurring nature he incurs the penal liability not only under section 25 R of the Act but under many other Statutes
We were asked to read in section 25 o2 that it will be incumbent for the authority to give reasons in his order and we were also asked to cull out a deeming provision therein
If the Government order is not communicated to the employer within 90 days strictly speaking the criminal liability under section 25 R may not be attracted if on the expiry of that period the employer closes down the undertaking
but it seems the civil liability under section 25 o5 will come into play even after the passing of the order of refusal of permission to close down on the expiry of the period of 90 days
Intrinsically no provision in Chapter VB of the Act suggests that the object of carrying on the production can be achieved by the refusal to grant permission although in the objects and 1034 Reasons of the Amending Act such an object seems to be there although remotely and secondly it is highly unreasonable to achieve the object by compelling the employer not to close down in public interest for maintaining the production
The order passed by the authority is not subject to any scrutiny by any higher authority or tribunal either in appeal or revision
The order cannot be reviewed either
We were again asked to read into the provisions that successive applications can be made either for review of the order or because of the changed circumstances
But what will the employer do even if the continuing same circumstances make it impossible for him to carry on the business any longer  Can he ask for a review  Again by interpretation we were asked to say that steps under section 25N can be taken simultaneously when a notice under section 25 o1 is given
Firstly the language of sub section 7 does not warrant this construction
The action of giving notice and compensation in 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 25N before the employer gets an approval from the Government
It is not always easy to strike a balance between the parallel and conflicting interests
Yet it is not fair to unreasonably tilt the balance in favour of one interest by ignoring the other
Mr Nadkarni relied upon the following passage of Frankfurter J while expressing his view on Balance of Interest I cannot agree in treating what is essentially a problem of striking balance between the competing interest as an exercise in absolutes
 Learned counsel also referred to a note on Government and liberty  from Paradoxes of Legal Science  by Banjamin Cardozo which is to the following effect As the social conscience is awakened the conception of injury is widened and insight into its cause is deepened the area of restraint is therefore increased No body can have a quarrel with these basic principles however high sounding or unreasonable they may appear to be on their face
But 1035 yet no jurisprudence of any country recognizes that the concept of injury is widened and the area of restraint is broadened to an extent that it may result in the annihilation of the person affected by the restraint
In case of fixation of minimum wages the plea of the employer that he has not got the capacity to pay even minimum wages and therefore such a restriction on his right to carry on the business is unreasonable has been repeatedly rejected by this Court to wit U Unichoy and Ors
vs The State of Kerala
But the principle rather in contrast illustrates the unreasonableness of the present impugned law
No body has got a right to carry on the business if he cannot pay even the minimum wages to the labour
He must then retire from business
But to tell him to pay and not to retire even if he cannot pay is pushing the matter to an extreme
In some cases of this Court to wit Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Mazdoor Union it has been opined that where the industry had been closed and the closure was real and bona fide there cannot be an industrial dispute after closure
At page 881 Venkatarama Ayyar J has said Therefore where the business has been closed and it is either admitted or found that the closure is real and bona fide any dispute arising with reference thereto would as held in K N Padmanabha Ayyar vs The State of Madras supra fall outside the purview of the 
And that will a fortiori be so if a dispute arises if one such can be conceived after the closure of the business between the quondam employer and employees
 But the observations at page 882 indicate that if the dispute relates to a period prior to closure it can be referred for adjudication even after closure
The very apt observations are to the following effect If the contention of the appellant is correct what is there to prevent an employer who intends for good and commercial reason to close his business from indulging on a large scale in unfair labour practices in victimisation and in wrongful dismissals and escaping the consequences thereof by closing down the industry  We think that on a true construction of section 3 the power of the State to make a 1036 reference under the section must be determined with reference not to the date on which it is made but to the date on which the right which is the subject matter of the dispute arises and that the machinery provided under the Act would be available for working out the rights which had accrued prior to the dissolution of the business
 It would thus be seen that in the matter of giving appropriate and reasonable relief to the labour even after the closure of the business the facts which were in existence prior to it can form the subject matter of an industrial dispute
Even assuming that strictly speaking all such matters cannot be covered in view of the decisions of this Court we could understand a provision of law for remedying these drawbacks
The law may provide to deter the reckless unfair unjust or mala fide closures
But it is not for us to suggest in this judgment what should be a just and reasonable method to do so
What we are concerned with at the present juncture is to see whether the law as enacted suffers from any vice of excessive and unreasonable restriction
In our opinion it does suffer
The reasonableness has got to be tested both from the procedural and substantive aspects of the law
In the case of State of Bihar vs K K Misra  Ors
it has been said at page 196 As observed in Dr Khare vs State of Delhi  and reiterated in VG Raw s case1952 SCR 597 that in considering reasonableness of laws imposing restrictions on fundamental rights both substantive and procedural aspects of the law should be examined from the point of view of reasonableness and the test of reasonableness wherever prescribed should be applied to each individual statute impugned and no abstract standard or general pattern of reasonableness can be laid down as applicable to all cases
It is not possible to formulate an effective test which would enable the court to pronounce any particular restriction to be reasonable or unreasonable per se
All the attendant circumstances must be taken into consideration and one cannot dissociate the actual contents of the restrictions from the manner of their imposition or the mode of putting them into practice
 It is no doubt true that Chapter VB deals with certain comparatively bigger undertakings and of a few types only
But with all this 1037 difference it has not made the law reasonable
It may be a reasonable classification for saving the law from violation of Article 14 but certainly it does not make the restriction reasonable within the meaning of Article 196
Similarly the interest of ancillary industry cannot be protected by compelling an employer to carry on the industry although he is incapacitated to do so
All the comprehensive and detailed information given in the application forms are of no avail to the employer if the law permits the authority to pass a cryptic capricious whimsical and one sided order
Mr Deshmukh relying upon the decision of this Court in the case of Akadasi Padhan supra urged that there will be presumption of reasonableness in a legislation of this kind
But reliance upon this principle enunciated in the case of State Monopoly of Kendu leaves seems to be misconceived
Gajendragedkar J pointed out at page 704 The amendment made by the Legislature in article 196 shows that according to the Legislature a law relating to the creation of State monopoly should be presumed to be in the interests of the general public
article 196 ii clearly shows that there is no limit placed on the power of the State in respect of the creation of State monopoly
 This proposition cannot be pressed into service in a case of the kind which we are dealing with
Mr Deshmukh s argument that a right to close down a business is a right appurtenant to the ownership of the property and not an integral Art of the right to carry on the business is not correct
We have already said so
The properties are the undertaking and the business assets invested therein
The owner cannot be asked to part with them or destroy them by not permitting him to close down the undertaking
In a given case for his mismanagement of the undertaking resulting in bad relationship with the labour or incurring recurring losses the undertaking may be taken over by the State
That will be affecting the property right with which we are not concerned in this case
It will also be consistent with the object of making India a Socialist State
But not to permit the employer to close down is essentially an interference with his fundamental right to carry on the business
On the basis of the decision of this Court in The State of Gujarat and Anr
vs Shri Ambica Mills Ltd Ahmedabad etc
it was 1038 urged that even if there is a violation by impugned law of the fundamental right guaranteed under Article 191g and not saved by clause 6 thereof the said right has been conferred only on the citizens of India and not upon the corporate bodies like a company
Counsel submitted that the company cannot challenge the law by a writ petition merely by making a shareholder join it
Nothing of the kind was said by Mathew J who spoke for the Court in the above case
The question which was posed at page 773 was whether a law which takes away or abridges the fundamental right of citizens under Article 191f would be void and therefore non est as respects non citizens
On a consideration of a number of authorities of this Court the principle which was culled out and applied in the case of Ambica Mills supra at page 780 is in these words For our purpose it is enough to say that if a law is otherwise
good and does not contravene any of their fundamental rights non citizens cannot take advantage of the voidness of the law for the reason that it contravenes the fundamental right of citizens and claim that there is no law at all
 Contrary to the above submission there are numerous authorities of this Court directly on the point
A reference to the case of Bennet Coloman  Co  ors
vs Union of India  Ors will be sufficient
Following the decision of this Court in Rustom Cavasjee Cooper vs Union of India it was held that if a shareholder s right is impaired the State cannot impair the right of the shareholders as well as of the company and the Court can strike down the law for violation of a fundamental right guaranteed only to the citizens of the challenge is by the company as well as the shareholder
Referring to the bank nationalistion case it is said at page 773 by Ray J as he then was A shareholder is entitled to protection of Article 19
That individual right is not lost by reason of the fact that he is a shareholder of the company
The Bank Nationalisation case supra has established the view that the fundamental rights of shareholders as citizens are not lost when they associate to form a company
When their fundamental rights as shareholders are impaired by State action their rights as shareholders are protected
The reason is that the shareholders  rights are equally and necessarily affected if the rights of the company are affected
 Excel Wear is a partnership concern
The partners in the name of the firm can challenge the validity of the law
In each of the other 1039 two petitions as already stated a shareholder has joined with the company to challenge the law
The contention of Mr Ramamurthi therefore must be rejected
Now we proceed to consider whether the law is saved by Article 31C of the Constitution
This point as indicated earlier was just touched in passing by other counsel
But Mr Ramamurthi endeavoured to advance a full dressed argument on this aspect of the matter
His submission was that Article 31C inserted in the Constitution by the Twenty fifth Amendment Act 1971 as amended by the Forty second Amendment Act 1976 makes the law beyond the pale of challenge on the ground of violation of Article 19
Mr Ramamurthi s argument proceeds thus
A declaration of Emergency on the ground of external danger was made by the President in 1971
While the
imposition of external Emergency was in force internal Emergency was also imposed on June 25 1975
The Emergency both external and internal was lifted on March 21 1977
Article 31C as originally inserted read as follows Notwithstanding anything contained in Article 13 no law giving effect to the policy of the State towards securing the principles specified in Clause b or clause c of article 39 shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by Article 14 Article 19 or Article 31  We have omitted from this quotation that part of Article 31C which was declared void by majority decision in the case of His Holiness Kesavananda Bharati Sripadagalavaru vs State of Kerala 1973 Suppl
SCR 1 The Forty second Amendment made the application of the Article more comprehensive by substituting the words all or any of the principles laid down in place of the words the principles specified in clause b or clause c of Article 39 A feeble attempt in the first instance was made to show that the impugned law was covered by clause b or clause c of Article 39
But this attempt could not be pursued with any force or success
What was however strenuously contended was that surely the law is for giving effect to the policy of the State towards securing the principles laid down in Articles 391 41 and 43 of Part IV and thus within the ambit of the amended Article 31C
No attack on the validity of the law therefore could be made
In the first instance we may point out that we are not impressed with the argument and do not accept it as correct that the impugned law is for giving effect to the policy of the State towards securing any of the principles in Articles 1040 39a or 41
Clause a of Article 39 concerns itself with the policy towards securing that the citizens men and women equally have the right to an adequate means of livelihood
 The impugned law obviously does not fit in with this directive principle
Article 41 deals with right to work to education and to public assistance in certain cases
The impugned law is not concerned with this policy
The directive principle which might be brought nearest to the impugned law is to be found in the following words of Article 43 The State shall endeavour to secure by suitable legislation to all workers  work   without deciding the question whether the impugned law can be said to be a law giving effect to the directive principle enshrined in Article 43 or not we shall assume in favour of the respondents and the interveners that it is so
Yet we shall presently show that the amended Article 31C cannot put this law beyond the pale of challenge
Chapter VB was introduced by Amending Act 32 of 1976 with effect from 5th of March 1976
The amendment aforesaid made in Article 31C was with effect from 3rd January 1977
Section 4 of the Forty second Amendment Act 1976 which brought about the amendment merely uses the expression the words and figures  shall be substituted
 It did not say and probably it could not have said so that they will always be deemed to have been substituted
 It is therefore clear that the amendment was prospective in operation and was not made retrospective
To overcome this difficulty Mr Ramamurthi advanced an ingenious argument
He submitted that Chapter VB was inserted in the Act when the Emergency was in operation
Under Article 358 the State during the period of Emergency was competent to enact the impugned law even though it violated Article 19
By the time the Emergency was lifted amended Article 31C had come into operation
Thus by the continuous process the latter became immune from challenge on the ground of violation of Article 19
Counsel relied upon the following decisions of this Court apart from some others which are not necessary to be referred to viz 1 Keshavan Madhava Menon vs The state of Bombay  2 Dhirubha Devisingh Gohil vs The State of Bombay 3 M P V Sundararamier  Co vs The State of Andhra Pradesh  Anr 4 Jaganath etc
vs Authorised officer Land Reforms  Ors
We shall presently point out 1041 the fallacy in the argument and show that none of the decisions supports the contention
Rather in contrast some of them demolish it
Article 358 says While a Proclamation of Emergency is in operation nothing in article 19 shall restrict the power of the State as defined in Part III to make any law or to take any executive action which the State would but for the provisions contained in that part be competent to make or to take but any law so made shall to the extent of the incompetency cease to have effect as soon as the Proclamation ceases to operate except as respects things done or omitted to be done before the law so ceases to have effect  Sometimes a distinction has been drawn between the lack of legislative competency of a State to make and enact a law on a particular topic covered by any of the Lists in the Seventh Schedule and its incompetency to make a law abridging or abolishing the fundamental rights or in violation of any other provisions of the Constitution
When there is a lack of legislative competence the law made is void ab initio non est and a still born law
But Article 132 also says  The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall to the extent of the contravention be void
 Such a law is void to the extent of the contravention and in case of Article 19 the contravention is of the fundamental rights guaranteed to a citizen
It has been said in some different contexts that for non citizens the law is not void but it is merely unenforceable
Article 358 says that a law made in contravention of Article 19 during the operation of Proclamation of Emergency is not to be treated incompetently made by the State
But as soon as the Proclamation ceases to operate the law so made ceases to have effect to the extent of the incompetency
In other words the Article clearly postulates that the law which was incompetently made and bad for violation of Article 19 will not be taken to be so during the period of Emergency
But as soon as the Emergency is lifted the law becomes bad because it was bad when it was enacted although it could not be taken to be so during the period of Emergency
The amended Article 31C says that if the law gave effect to the policy 1042 of the State towards securing any of the principles laid in Part IV it shall not be deemed to be void on the ground of violation of Article 19
The law which was enacted in March 1976 could by no stretch of imagination be said to be a law giving effect to the policy of the State towards securing any of the principles laid down in Part IV within the meaning of the amended Article 31C which came into force in January 1977
The Legislature could not have thought of enacting a law within the meaning of amended Article 31C at a point of time when the Article stood unamended
It is therefore difficult to accept the argument of the learned counsel that the law was not bad during the operation of the Emergency because of Article 358 and the same position was continued by Article 31C by its amendment by the Forty second Amendment Act
The purport content and the principles underlying the two Articles is so very different that it is difficult to tag the effects of the two together and make it a continuous effect like a relay race in a game
In our view the law was bad for violation of Article 191 g when it was enacted but it was not to be taken to be so during the period of Emergency its invalidity sprouted out with full vigour on the lifting of the Emergency
The amended Article 31C did not save it
In Keshavan s case supra Das J as he then was in the majority judgment of this Court was interpreting clause 1 of Article 13 and while doing so he said at page 234 In other words on and after the commencement of the Constitution no existing law will be permitted to stand in the way of the exercise of any of the fundamental rights
Therefore the voidness of the existing law is limited to the future exercise of the fundamental rights
article 131 cannot be read as obliterating the entire operation of the inconsistent laws or to wipe them out altogether from the statute book for to do so will be to give them retrospective effect which we have said they do not possess
Such laws exist for all past transactions and for enforcing all rights and liabilities accrued before the date of the Constitution
 This case is of no help to the respondents
In Dhirubha s case supra the wordings of Article 31B were being construed
Because of the presence of the words or ever to have become void in the said Article it was said at page 696 97  1043 The intention of the Constitution to protect each and every one of the Acts specified in the Ninth Schedule from any challenge on the ground of violation of any of the fundamental rights secured under Part III of the Constitution irrespective of whether they are pre existing or new rights is placed beyond any doubt or question by the very emphatic language of article 31 B which declares that none of the provisions of the specified Acts shall be deemed to be void or ever to have become void on the ground of the alleged violation of the rights   
In contrast to the language of Article 31C which merely uses the phrase shall be deemed to be void and not the phrase or ever to have become void as used in Article 31B the decision of this Court n Dhirubha s case rather goes against the contention of the learned counsel
In the Sundararamier s case supra Venkatarama Aiyar J summed up the result of the various authorities at page 1474 thus  Where an enactment is unconstitutional in part but valid as to the rest assuming of course that the two portions are severable it cannot be held to have been wiped out of the statute book as it admittedly must remain there for the purpose of enforcement of the valid portion thereof and being on the statute book even that portion which is unenforceable on the ground that it is unconstitutional will operate proprio vigore when the constitutional bar is removed and there is no need for a fresh legislation to give effect thereto These observations were made in connection with the removal of the constitutional bar of imposition of sales tax under Article 286
The distinction so drawn in the above case is not of universal application
In the legislative field there is nothing like void or voidable
The application of the principle has been restricted later to only a limited field namely in connection with the question whether the legislation requires fresh enactment or not when the bar of incompetency is removed
This Court has considered the question whether an enactment subsequently saved by Article 31B by being included in the Ninth Schedule requires a fresh legislation to make it valid
The answer given was in the negative
In the case of Ambica Mills supra Mathew J referred to some of the cases aforesaid and the principles decided therein as also the decision of this Court in 1044 Bhikaji Narain Dhakras  Ors
vs The State of Madhya Pradesh and Anr
wherein Das Acting CJ has said at pages 599 600  All laws existing or future which are inconsistent with the provisions of Part III of our Constitution are by the express provision of Article 13 rendered void to the extent of such inconsistency
Such laws were not dead for all purposes
They existed for the purposes of pre Constitution rights and liabilities and they remained operative even after the Constitution as against non citizens
It is only as against the citizens that they remained in a dormant or moribund condition
 Referring to Sundaramaier s case the learned Judge said at page 775 in Ambica Mills case The proposition laid down by the learned Judge was that if a law is enacted by a legislature on a topic not within its competence the law was a nullity but if the law was on a topic within its competence but if it violated some constitutional prohibition the law was only unenforceable and not a nullity
In other words a law if it lacks legislative competence was absolutely null and void and a subsequent cession of the legislative topic would not revive the law which was still born and the law would have to be reenacted but a law within the legislative competence but violative of constitutional limitation was unenforceable but once the limitation was removed the law became effective
 But later on he hinted at the restricted application of this principle
It may also be pointed out here that in the case of Basheshar Nath vs The Commissioner of Income Tax Delhi  Rajasthan  Another Subba Rao J as he then was held that there was no distinction between lack of legislative competence and violation of constitutional limitations
Subba Rao J reiterated the same view in the case of Deep Chand vs The State of Uttar Pradesh and Others
In the case of Mahendra Lal Jaini vs The State of Uttar Pradesh and others 1045 the Supreme Court again reviewed the authorities and held i that the doctrine of eclipse applied only to pre Constitution and not to post Constitution laws ii that the words to the extent of the inconsistency or to the extent of the contravention were designed to save parts of a law which did not contravene or were not inconsistent with fundamental right iii that the meaning of the word void in article 131 and 2 was the same iv however pre Constitution laws violating fundamental rights were valid when enacted and could therefore be revived under the doctrine of eclipse whereas post Constitution laws violating fundamental rights were still born and non est and could not be revived
In dealing with the argument based on Supreme Court decisions that a law violating article 19 would be void qua citizens but valid qua non citizens Wanchoo J said Theoretically the laws falling under the latter category ie contravening article 19 may be valid qua non citizens but that is a wholly unrealistic consideration and it seems to us that such nationally partial valid existence of the said laws on the strength of hypothetical and pedanic considerations cannot justify the application of the doctrine of eclipse to them Vide Seervai s Constitutional Law of India 2nd edition page 180
Of course in none of the three cases aforesaid the decision of this Court in Sundararamaier s case was considered
For our purpose we have merely pointed out the divergence of opinion on this aspect of the matter although for the decision of the point at issue even Sundararamaier s case does not make good the submission of Mr Ramamurthi
Mr Ramamurthi was not right in pressing this ratio in support of his contention
The content of Article 358 and 31C is entirely different
The former Article rather works in the reverse gear
It does not lift the ban in the way of the State to enact a law in violation of Article 19
It puts the ban under suspension during the period of Emergency and the suspension comes to an end on its lifting
Article 31C has no words to indicate that the ban is removed by it
It merely saves the law enacted after coming into force of the said Article
We therefore must reject the argument of Mr Ramamurthi with reference to Article 31C of the Constitution
1046 In the result all the petitions are allowed and it is declared that Section 25 O of the Act as a whole and Section 25 R in so far as it relates to the awarding of punishment for infraction of the provisions of Section 25 O are constitutionally bad and invalid for violation of Article 191 g of the Constitution
Consequently the impugned orders passed under sub section 2 of Section 25 O in all the cases are held to be void and the respondents are restrained from enforcing them
We must however make it clear that since the orders fall on the ground of the constitutional invalidity of the law under which they have been made we have not thought it fit to express any view in regard to their merits otherwise
We make no order as to costs in any of the petitions


Summary:
The facts of only one petition are set out because they are similar to facts in other petitions
Excel Wear is a partnership firm manufacturing garments for export
About 400 workmen were employed in the petitioners  factory
The case of the petitioners is that the relations between the management and the employees started deteriorating and became very strained from 1976
The workmen became very militant aggressive violent and indulged in unjustifiable or illegal strikes
Various incidents have been mentioned in the Writ Petition in support of the said allegations
However since those facts were seriously challenged and disputed by the workmen the Court did not refer to them in any detail nor expressed any view one way or the other
2 According to the petitioners it became almost impossible to carry on the business
The petitioners therefore served a notice dated 2nd May 1977 on the Government of Maharashtra respondent No 2 for previous approval of the intended closure of the undertaking in accordance with section 25O1
The State Government refused to accord the approval on the ground that the intended closure was prejudicial to public interest
3  The petitioners contended a A right to close down a business is an integral part of the right to carry on a business guaranteed under article 191g of the Constitution
The impugned law imposes a restriction on the said fundamental right which is highly unreasonable
excessive and arbitrary
It is not a restriction but almost amounts to the destruction or negation of that right
The restrictions imposed is manifestly beyond the permissible bounds of article 196 of the Constitution
b A right to carry on a business includes a right not to carry on a business which is like any other right mentioned under Article 191 such as the right to freedom of speech includes a right not to speak and the right not to form an association is inherent under the right to form association
c The restrictions are unreasonable because i Section 25o does not require giving of reasons in the order
ii No time limit is to he fixed while refusing permission to close down
iiiEven if the reasons are adequate and sufficient approval can be denied in the purported public interest of security of labour
Labour is bound to suffer because of unemployment brought about in almost every case of closure
1010 iv It has been left to the caprice and whims of the authority to decide one way or the other
No guidelines have been given
v Apart from the civil liability which is to be incurred under sub section 5 the closure however compulsive it may be if brought about against the direction given under sub section 2 is visited with penal consequences as provided in section 25 R vi There is no deemed provision as to the according of approval in sub section 2 as in sub section 4
viiRefusal to accord approval would merely mean technically that the business continues but a factory owner cannot be compelled to carry on the business and go on with the production and thus one of the objectives sought to be achieved by this provision cannot be achieved
viiiThere is no provision of appeal revision or review of the order even after sometime
ix Restriction being much more excessive than is necessary for the achievement of the object is highly unreasonable
x There may be several other methods to regulate and restrict the right of closure by providing for extra compensation over and above the retrenchment compensation if the closure is found to be mala fide and unreasonable
xi To direct the employer not to close down is a negation of the right to close
It is not regulatory
xiiIf carrying on any business is prohibited in public interest a person can do another business
But to prohibit the closure of a running business is destruction of the right to close
xiii The reasonableness of the impugned restrictions must be examined both from procedural and substantive aspects of the law
Sub section 2 of section 25 D does not make it obligatory for any higher authority of the Government to take a decision
It may be taken even by a lower officer in the hierarchy
4 The respondents  contentions a Some counsel for the respondents did not dispute that the right to close down a business is an integral part of the right to carry on a business
They however contended that the restrictions imposed by the impugned law are quite reasonable and justified to put a stop to the unfair labour practice and for the welfare of the workmen
It is a progressive legislation for the protection of a weaker section of society
b Some other counsel for the respondents however did not accept that a right to close down a business is an integral part of the right to carry on any business
According to them the total prohibition of closure only affects a part of the right to carry on the business and not a total annihilation of this
The restriction imposed was in public interest and there is a presumption of reasonableness in favour of a statute
Reliance was also placed on social and welfare legislation as expounded by renowned jurists and judges abroad
It was also contended that the legislation was protected by Article 31C of the Constitution
1011 5 Allowing the petitions the Court  HELD The right to close down a business cannot be equated with a right not to start or carry on n business at all
The extreme proposition urged on behalf of the employer by equating the two rights and placing them at par is not quite apposite and sound
If one does not start a business at all then perhaps under no circumstances he can be compelled to start one
Such a negative aspect of a right to carry on a business may be equated with the negative aspect of the right embedded in the concept of the right to freedom of speech to form an association or to acquire or hold property
Perhaps under no circumstances a person can be compelled to speak to form an association or to acquire or hold a property
But by imposing reasonable restrictions he can be compelled not to speak not to form an association or not to acquire or not to hold property
A total prohibition of business is possible by putting reasonable restrictions under Article 196 on the right to carry on a business
1027 B D 1028 A Cooverjee B Bharucha vs The Excise Commissioner and the Chief Commissioner Ajmer  Ors   Narendra Kumar  ors
vs The Union of India  ors  relied on
However the greater the restriction the more the need for strict scrutiny by the Court
The contention put forward on behalf of the labour unions that the right to close down a business is not an integral part of the right to carry on a business or that it is not a fundamental right at all is also wrong
In one sense the right does appertain to property
But such a faint overlapping of the night to property engrafted in article 191f or article 31 must not be allowed to cast any shade or eclipse on the simple nature of the right
However the right to close down is not an absolute right
It can certainly be restricted regulated or controlled by law in the interest of the general public
1027 1028 A C Concept of socialism or socialistic state has undergone changes from time to time from country to country and from thinkers to thinkers
But some basic concept still holds the field
In the case of Akadasi Padhan the question for consideration was whether a law creating a state monopoly is valid under the latter part of Article 196
The Court pointed out the difference between the doctrinaire approach to the problem of socialism and the pragmatic one
But so long as the private ownership of an industry is recognised governs an overwhelmingly large proportion of our economic structure it is not possible to say that principles of socialism and social justice can be pushed to such an extreme so as to ignore completely or to a very large extent the interests of another section of the public namely the private owners of the undertakings
1030 G H 1031 E G Akadasi Padhan vs State of Orissa 1963 Suppl
2 SCR 691 referred to
There are creditors and depository and various other persons connected with or having dealings with the undertaking whose rights are also affected by the impugned legislation
1031 G Section 25 O 2 does not require the giving of reasons in the order
In two of the orders in the present cases it is merely stated that the reasons for the intended closure are prejudicial to public interest suggesting thereby that the reasons given by the employers are correct adequate and sufficient yet they are prejudicial to the public interest
In case of bona fide closures it would be 1012 generally so
Yet the interest of labour for the time being is bound to suffer because it makes a worker unemployed
Such a situation as far as reasonably possible should be prevented
Public interest and social justice do require the protection of the labour
But it is not reasonable to give them protection against all unemployment after affecting the interests of so many persons interested including persons who have no connection with the management
It is not possible to compel the employers to manage the undertaking even if they find that it is not safe or practicable to do so
They cannot be asked to go on facing tremendous difficulties of management even at the risk of their person and property
They cannot be compelled to go on incurring losses year after year
1032 C F In the third Writ Petition the Government has given two reasons for refusing to grant permission
Both of them are too vague to give an exact idea in support of the refusal of permission to close down
It says that the reasons are not adequate and sufficient and that the intended closure is prejudicial to the public interest
The latter reason will be universal in all cases of closure
The former demonstrates to what extent the order can be unreasonable
If the reasons given by the petitioner in great detail are correct as the impugned order suggests they are it is preposterous to say that they are not adequate and sufficient for a closure
Such an unreasonable order was possible to be passed because of the unreasonableness of the law
Whimsically and capriciously the authority can refuse permission to close down
1033 B E If the Government order is not communicated to the employer within 90 days strictly speaking criminal liability in section 25R may not be attracted if on the expiry of that period an employer closes down the undertaking
But it seems the civil liability under Section 25O 5 will come into play even after the passing of the order of refusal of permission to close down on the expiry of the period of 90 days
Provision in Chapter VB of the Act suggests that the object of carrying on production can be achieved by the refusal to grant permission although in the objects and reasons of the amending act such an object seems to be there although remotely and secondly it is highly unreasonable to achieve the object by compelling the employee not to close down in public interest for maintaining production
The order passed by the authority is not subject to any scrutiny by any higher authority or tribunal either in appeal or revision
The order cannot be reviewed either
1033 F H 1034 A B It is not always easy to strike the balance between the parallel and conflicting interest and it is not fair to unreasonably tilt the balance in favour of one interest by ignoring the other
In the case of fixation of minimum wages this Court has repeatedly rejected the contention of the employers that he has no capacity to pay minimum wages and therefore his right to carry on the business is affected
1034E 1035 A B U Unichoyi  Ors
vs The State of Kerala  relied on
But this principle rather in contrast illustrates the unreasonableness of the present impugned law
Nobody has got a right to carry on business if he cannot pay even the minimum wages
He must then retire from business But to tell him to pay and not to retire if he cannot pay is pushing the matter to an extreme
It has been observed that where an industry had been closed and the closure was real and bona fide there cannot be an industrial dispute after closure
1035 B D 1013 Pipraich Sugar Mills Ltd vs Pipraich Sugar Mills Mazdoor Union referred to
The law may provide to prevent and regulate unfair unjust or mala fide closure
1036 C The reasonableness has got to be tested both from the procedural and substantive aspects of the law
It is true that Chapter V B deals with certain comparatively bigger undertakings and for a few types only but with all this it has not made the law reasonable
It may be a reasonable law for saving the law from violation of article 14 but certainly it does not make the restriction reasonable within the meaning of article 196
Not to permit the employer to close down is essentially an interference with the fundamental right to carry on the business
1036 D H 1037 A G If a law is otherwise good and does not contravene any of the fundamental rights of the non citizens non citizens cannot take advantage of the voidness of law for the reason that it contravenes the fundamental rights of the citizens and claim that there is no law at all
In the case of Ambica Mills this Court has not said that even if there is violation of the fundamental rights guaranteed by article 191b and not saved by clause 6 of the said right has been conferred only on the citizens of India and not upon the corporate bodies like a company
138 A D State of Gujarat and Anr
vs Shri Ambica Mills Ltd Ahmedabad etc
 explained
Bennet Coleman  Co  ors
vs Union of India  Ors
   Rustom Cavasjee Cooper vs Union of India  relied on
It was laid down in the case of Bennet Coleman  Co  Ors
and Rustom Cavasjee Cooper that if a shareholder s right is impaired the State cannot impair the right of the shareholder as well as of the company and the Court can strike down the law for violation of fundamental right guaranteed only to the citizens if the challenge is by the company as well as by the shareholders
The partners can challenge the validity in the name of firm
In the present case where company is petitioner a shareholder has also been joined with the company to challenge the law 1038 E F H 1039 A The impugned law is not for giving effect to the policy of the State towards securing any of the principles in Articles 391 or 41
The law does not fit in with the said directive principles
The argument that it is protected by article 31C is not sustainable
The amendment was prospective and not retrospective
1039 H 1040 A B E The argument that when the amendment was brought the proclamation of emergency was in operation and thereafter before emergency was lifted the amend article 31C had come into force and thus by the continuous process the latter became immune on the ground of violation of article 19 is not maintainable
1042 C As soon as the emergency is lifted the law becomes bad because it was bad when it was enacted although it could not be taken to be so during the period 1014 of Emergency
Therefore article 31C cannot protect the law
Apart from the fact that article 31C has no application the law was bad for violation of article 191b when it was enacted but it was not taken to be bad during the period of emergency
Its invalidity sprouted out with full vigour on the lifting of emergency
1041 H 1042 C D Keshavan Madhava Menon vs The State of Bombay  Dhirubha Devi Singh Gohil vs The State of Bombay   MPV Sunderaramier  Co vs The State of A P  Anr   Jagannath etc etc
vs Authorised Officer Land Reforms and Ors
   distinguished
Bhikaji Narain Dhakras and Ors vs The State of MP  Anr   Basheshar Nath vs The Commissioner of Income Tax Delhi and Rajasthan and Anr 1959 Suppl
1 SCR 528 Deep Chand vs The State of UP  ors
 1559 Suppl
2 SCR 8 Mahendra Lal Jaini vs The State of UP and ORS
 1963 Suppl
1 SCR 912 referred tb
The Court declared section 25 o as a whole and Section 25R in so for as it relates to the awarding of punishment for infringement of the provisions of Section 25o constitutionally bad and invalid for violation of article 191 of the Constitution
The Court declared the impugned order passed in all the cases to be void and restrained the respondents from enforcing them
The Court however did not express any opinion on the merits of the case since the orders fall on the ground of constitutional invalidity
1046 A C