Case: Rashtriya Sut Girni Mazdoor Sangh Through Its General Secretary Vs. S Government of Maharashtra,Ministry of Law and Judiciary

( 2 ) RASHTRIYA Sut Girni Mazdoor Sangh, a Union registered under the Trade Unions Act, 1926 and also recognised as a representative Union under the provisions of the Bombay Industrial Relations Act, 1946 for the local area of Amravati Taluka in which respondent No. 6 is located ( for short, "the Union", is the petitioner in writ petition No. 1335 of 1997. In the other writ petition, namely Writ Petition No. 1402 of 1997, the Maharashtra State Textile Corporation Limited, a Government Company, (for short, "the Corporation"), in whom M/s. Vijay Mills has been vested, is the petitioner. The union in Writ Petition No. 1335 of 1997 filed by it, has prayed for appropriate writ, order or direction for quashing and setting aside the notice of closure datedthe decision of the State Government datedand the entire proceedings initiated in pursuance of notice of closure datedbefore the Commissioner of Labour, Mumbai. The Corporation is aggrieved by the order datedpassed by the Commissioner of Labour, Mumbai, to the extent the application of closure made by it has been rejected. The subject matter in both these writ petitions being similar, they are heard together and disposed of by this common3 ) THE controversy raised in these two writ petitions arises from the facts and circumstances, which we summarize hereunder: vijay Mills, Badnera, ceased production and went in liquidation in the month of February, 1969. This Court passed winding up order in respect of the said Vijay Mills in the month of September, 1973 (for the sake of brevity, we shall refer to Vijay Mills hereinafter as "the Mill" ). The said Mill was taken over by the Government of India in the month of November, 1974 under section(2) of the Industries (Development and Regulation) Act, 1951 at the instance of the Government of Maharashtra. The Government of Maharashtra, in exercise of the powers conferred on it under section 3, Clause (iv) of(1) of section 4 of the Bombay Relief Undertakings (Special Provisions) Act, 1958, declared by its Notification datedthe Mill as "relief Undertaking" for a period of one year with effect fromAfter expiry of one year fromevery year thereafter, similar notification was issued and the Mill continued to be conducted as "relief Undertaking" tillThe Government of Maharashtra onpromulgated the Maharashtra Textile Companies (Acquisition and Transfer of Undertakings) Ordinance, 1982 nationalising the said Mill. Thereafter the Maharashtra Textile Companies (Acquisition and Transfer of Undertakings) Ordinance, 1982 was promulgated, which provided for acquisition and transfer of rights of the said Mill. An intervening fact may be noticed here that ona notice was published by the Mill about basic salary payable as per Mangalmurthy Award, but it was declared that the dearness allowance would be only87, the Union filed Writ Petition No. 2453 of 1987 before this Court praying (i) quashing of Notification issued under the Bombay Relief Undertakings (Special Provisions) Act, 1958; (ii) stay of Notification datedand direction to pay the dearness allowance as per Mangalmurthy Award and (iii) direction to respondents to run the Mill so as to subserve the objects and purposes of the Nationalisation Act of 1982. The said writ petition is pending before this Court. Onthe Corporation made an application under sectionof the Industrial Disputes Act, 1947 seeking permission toworkmen, but the said application was later on withdrawn. It is the case of the Union that since 1974 till January 1990, the workers sacrificed wages to the extent of 45 percent because of illegal application of the Bombay Relief Undertakings (Special Provisions) Act, 1958 in the expectation that the State Government would rehabilitate the Mill. In the month of February, 1993, the Corporation sold the old machinery to Japanese firm for Rs. 67 lakhs. Apprehending trouble from the Union in that regard, the Management filed complaint under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 before the Industrial Court seeking direction that the workers/recognised Union should not oppose removal of old machinery from the Mill premises. The Industrial Court onpassed an order allowing the Corporation to remove the said machinery after recording its undertaking that the amount of Rs. 67 lakhs realised from the sale of old machinery would be utilised for rehabilitation of the Mill. Onthe Cabinet of the State Government took decision to close the Mill and that the employees/workers in the said Mill should be given voluntary retirement. In the communication datedsent by the State Government to the Managing Director of the Corporation, the decision taken in the Cabinet meeting held onwas conveyed. Thereafter onthe Corporation made on application under(1) of sectionof the Act of 1947 to the Commissioner of Labour, Mumbai, seeking permission to close the Mill for the reasons assigned in the Annexure annexed to the application. It appears that the Commissioner of Labour issued notice on997 as the next date. The Union filed its objections before the Commissioner of Labour onThe Corporation filed its reply to the objections made by the Union onThe Corporation also made an application to the Commissioner of Labour onfor issuance of notice to the Government of Maharashtra and also for sending the detailed copy of the reply filed by the Union to the Government. The Commissioner of Labour onsought further information from the Corporation and onrejected the application made by the Corporation under sectionof the Act of 1947 on the ground that Writ Petition No. 2453 of 1987 is pending before the High Court, though the Commissioner of Labour held that the application made by the Corporation for closing down the Mill appears to be genuine and4 ) AS indicated above, the Union is aggrieved by the proceedings initiated by the Corporation under sectionof the Act of 1947, while the Corporation is challenging the legality and correctness of the order datedrejecting the application made by it.

Reasoning:
( 8 ) THERE is no dispute that the Mill ceased production and went in liquidation in the month of February, 1969 and this Court passed winding up order in the month of September, 1973 in respect of the said Mill. There is also no dispute that in the month of February, 1974, the Mill was taken over by the Government of India at the instance of the Government of Maharashtra under section(2) of the Industries (Development and Regulation) Act, 1951, and that the Government of Maharashtra exercised the powers conferred on it under the Bombay Relief Undertakings (Special Provisions) Act, 1958 and declared by its Notification datedthe Mill as "relief Undertaking" and similar Notifications were issued from time to time tillwhen the Government of Maharashtra promulgated the Ordinance, which later on became the Act vide Maharashtra Act No. XXXIII ofis true that the Act of 1982 was enacted to provide for the acquisition of the Mill for the purpose of ensuring continued and increased production of goods manufactured by the Mill. The Mill was being wound up under the supervision of the High Court and the management of the Mill was taken over by the Corporation on behalf of the Government of India under section 18fa of the Industries (Development and Regulation) Act, 1951. In order to ensure continued and increased production of goods, the Mill was acquired initially by promulgation of ordinance, which later on was repealed and enacted in the Act of 1982. The Act came into force onSection 3 of the Act of 1982 provides that on the "appointed day", that isthe right, title and interest of the Mill shall stand transferred to and shall vest absolutely in the State Government. It further provides that after the Mill is vested in the State Government, it shall stand transferred to and vested in the Corporation. Section 7 provides for issuance of shares by the Corporation for the value of assets transferred to it by the State Government. The management and administration of the Mill is provided under section 9 of the Act of 1982, which provides that the Mill shall be managed on behalf of the Corporation by such person or body of persons as may be nominated by the Corporation in this behalf and such person or body of persons shall carry on management in accordance with such regulations as may be made by the Corporation in this behalf with the previous approval of the State Government. It is thus provided under section 9 that the Mill shall be managed by the Corporation. Section 10 makes a provision that the employees, who were in employment immediately before the "appointed day", shall become the employees of the Corporation with the same rights and privileges as if the Mill has not been transferred and vested in the Corporation and their employment shall continue unless and until their employment in the Corporation is duly terminated or until their remuneration and other conditions of service are duly altered by the Corporation. Thus section 10 provides that the erstwhile employees, who had become employees of the Corporation on transfer of the Mill, shall continue in employment so long as their services are not duly terminated. In other words, the employment of esrtwhile employees, who became employees of the Corporation, could be brought to an end in accordance with law. An employment of an employee can come to an end by various modes and closure of the Mill is one of the modes by which the employment of the employee can be duly terminated. There is absolutely no provision in the Act of 1982 prohibiting the Corporation from closing the Mill while acting in accordance with law and under various enactments about which the Act of 1982 is silent. The Act of 1982 cannot be read to mean that once the Mill has been acquired under the said Act, it should be necessarily continued to run in perpetuity, even if it has become financiallyand there are genuine, valid and adequate grounds for its closure. Merely because the Mill came to be acquired under the Act of 1982 and vested in the State Government thereunder and then transferred to the Corporation, can it be said that the Corporation is compelled to run the said Mill irrespective of numerous valid reasons, which do not justify its continuance. After acquisition of the Mill under the Act of 1982 by the State Government and thereafter transfer to the Corporation, the various enactments, which govern the relationship of the employer and employee between the Mill and its employees cannot be excluded. We find ourselves unable to agree with the submission of the learned Counsel for the Union that since the Act of 1982 is holding the field and is occupied, it was not open to the State Government to decide closure of the16 ) THERE cannot be any quarrel on the proposition that the executive or the State power cannot be exercised in derogation of law made by the competent legislature. The question, in the facts and circumstances and in the light of the Act of 1982, is whether the State Government, by taking decision to close the Mill, has exercised power in derogation of the Act of 1982 For the reasons already indicated by us above, it cannot be held that the decision to close down the Mill by the State Government, or for that matter, by making an application under sectionof the Act of 1947 by the Corporation, is inconsistent or contrary to or in derogation of the Act of 1982. By referring to the various provisions of the Act of 1982, we have already indicated that the said Act of 1982 does not prohibit the State Government or, for that matter, the Corporation, to take a decision for the closure of the Mill. Rather the provisions contained in sections 9 and 10 of the Act of 1982 do lead to the conclusion that the Corporation is empowered to terminate the employment of the employees in accordance with law, and that would not exclude the termination of employment of the employees as a result of closure. We, therefore, are unable to agree with the submission of the learned Counsel for the Union that the action of the Corporation in making the application under sectionof the Act of 1947 is contrary to the Act of17 ) IN so far as the contention of the learned Counsel for the Union that the Cabinet has not taken a decision to close the Mill is concerned, we are of the view that such submission has been made by misconstruing the communication datedsent by the State Government to the Corporation. Since there was a dispute about the exact English translation of the documentwe got the English translation of the said document done from the Official Translator of this Court, marked "x" for identification18 ) IT would be thus seen from the aforesaid document that in the meeting held onthe Cabinet decided to close down the Mill, as the machinery of the Mill was old and worn out. The Cabinet further decided that the employees/workers in the said Mill should be given voluntary retirement. As the Cabinet was competent to take such decision and such decision having been taken, no fault can be found in the said decision. In Dayakar Reddys case (supra), the Apex Court observed that in a case where the company is a State Government undertaking, the State has to take an administrative decision first and then adecision under section19 ) IN the present case also, the facts are eloquent. In the application, the facts are: (i) old and outdated building and machinery and very low productivity, (ii) continuous heavy losses; (iii) the Mill is(iv) the liabilities as onamounting to Rs. 813. 91 lakhs exceed the assets which are at Rs. 139. 05 lakhs; (v) the Corporation is a sick company as per the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 and a reference has already been by the Corporation to the Board of Industrial Finance and Reconstruction and as per the report of the operating Agency (IDBI) appointed by B. I. F. R. , the Mill is unviable and has been recommended for closure, etc. Besides that, during the course of arguments, Shri Deshpande, the learned Senior Counsel, after seeking instructions from the Manager of the Corporation, who was in Court, submitted that at the time of acquisition, there were 900 employees. Out of which, 600 employees have already retired and on the date of the application made under sectionof the Act of 1947, only 300 employees were in employment. Even the Commissioner of Labour has found the reasons assigned by the Corporation for closure genuine and adequate. For all these reasons, it cannot be said that the Cabinet decision for closure was not in accordance with law or was inconsistent with the provisions of the Act of 1982 or that the application made by the Corporation under sectionof the Act of 1947 seeking closure of the Millwas beyond its authority or20 ) SINCE the running of the Mill had becomeand in the light of its liabilities, which are more than six times its assets, the submissions of the learned Counsel for the Union that the application made by the Corporation under sectionof the Act of 1947 seeking closure of Mill is violative of Articles 14 and 21 of the Constitution of India, cannot be accepted. It is true that by acquisition of the Mill by the State Government and its transfer and further vesting in the Corporation was for the purpose of protecting the employment of its employees, but by passage of time if the objects of acquisition could not be achieved and the Mill continued to run in heavy losses and it became absolutelyit was open to the Corporation to apply for its closure. There is no merit in the submission of the learned Counsel for the Union that by the Act of 1982, the livelihood of the employees is protected for all times to come. We have already referred to section 10 of the the Act of 1982, which provides for termination of the employees in accordance with law and, therefore, it cannot be said that the employment of the employees was perpetually protected. Reliance placed by the learned Counsel for the Union on paragraphs 32 and 33 of the case of Olga Tellis (supra), paragraphs 230 to 240, 269, 274, 296 and 298 of the Delhi Transport Corporations case (supra) and paragraphs 40 to 47 and 49 of the Air India Statutory Corporations case (supra) do not help the Union in the facts and circumstances of the present case and, therefore, we are not burdening this judgment by quoting the aforesaid judgments1 ) NOW, we may turn to the submission of the learned Counsel for the Union that the delegation of power by the State Government to the Commissioner of Labour Under section 39 of the Act of 1947 is bad in law and is actuated with malice. The learned Counsel for the Union submitted that the delegation is mala fide, because the power is entrusted for one purpose and is deliberately used with the design of achieving another, which is unauthorised or forbidden. On facts, the learned Counsel for the Union submitted that onthe Commissioner of Labour refused to accept the copy of Unions reply to the application made by the Corporation under sectionof the Act of 1947 and, therefore, a letter was sent by the Union to the Government of India by registered A/d, which was not replied by the State23 ) THOUGH the said observations were made by the Apex Court in the light of the provisions contained in sectionof the Act of 1947, we are of the considered view that the said observations are equally applicable to the provisions of sectionof the Act of 1947 and that the State Government is competent to delegate its power to the officer or authority subordinate to it. The delegation of the power by the State Government to the Commissioner of Labour under section 39 of the Industrial Disputes Act, 1947, therefore, cannot be faulted. We do not find any merit in the submission of the learned Counsel for the Union that the said delegation was mala fide. As a matter of fact, by Notification datedthe powers exercisable by the State Government under sectionsof the Act of 1947 have been delegated to the Commissioner ofit noted that the Commissioner of Labour in the impugned order datedconcluded that the structure of the factory building was very old and in dilapidated condition and hence it was unsafe. He further held that the ratio of the installed capacity to capacity utilisation was very poor and it was one of the important reasons for heavy losses and subsequent illness of the Mill. The Commissioner of Labour thus held that the reasons for the closure were genuine and reasonable. Despite the aforesaid findings, the Commissioner of Labour rejected the application on the ground that Writ Petition No. 2453 of 1987 was pending. We called for the record and proceedings of Writ Petition No. 2453 of 1987 and perused the papers made therein. In the said writ petition filed by the Union, the Union has challenged the vires of sections 3 and 4 of the Bombay Relief Undertakings (Special Provisions) Act, 1958 and the Notifications issued thereunder and sought direction to the Corporation to run the Mill so as to subserve the purposes of Nationalisation Act of 1982. From the proceedings, we find that no interim order is operating in favour of the Union. In these circumstances, by mere pendency of Writ Petition No. 2453 of 1987, the application made by the Union for closure could not have been rejected, when the Commissioner of Labour found that the reasons for closure were genuine and adequate. The impugned order passed by the Commissioner of Labour onwas, therefore, unsustainable and has to be set aside to the extent the application for closure has been rejected. In the light of these findings, we do not intend to examine the merits of the contention advanced by the learned Senior Counsel appearing for the Corporation that on expiry of sixty days from the date of making of application under sectionof the Act of 1947, since no order was passed by the Commissioner of Labour, the application was deemed to be granted and vehement opposition to this contention by the learned Counsel for the Union that, in the facts and circumstances, there could not have been deemed grant of permission, since before expiry of ninety days, the Commissioner of Labour rejected the application.