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PETITIONER:

THE PAPNASAM LABOUR UNION

Vs.

RESPONDENT:

MADURA COATS LTD. AND ANR.

DATE OF JUDGMENT08/12/1994

BENCH:

RAY, G.N. (J)

BENCH:

RAY, G.N. (J)

HANSARIA B.L. (J)

CITATION:

1995 AIR 2200 1995 SCC (1) 501

JT 1995 (1) 71 1994 SCALE (5)153

ACT:

HEADNOTE:

JUDGMENT:

G.N. RAY, J.:

1. This appeal is directed against the order dated 9th

April, 1981 passed by the Division Bench of the High Court

of Madras in Writ Petition No. 1119 of 1977. The said writ

petition was moved by the respondent No. 1 Madura Coats

Ltd., for a declaration that Section 25-M of the Industrial

Disputes Act, 1947 as it stood un-

75

der the Industrial Dispute (Amendment) Act, 1976 in so far

as it required prior permission to be obtained to effect lay

off is ultra vires and void. The writ petitioner respondent

No. 1 also prayed that the State of Tamil Nadu represented

by the Secretary to Government, Labour and Employment

Department, Madras should be restrained from enforcing the

provisions of the said Industrial Dispute (Amendment) Act in

respect of the lay off application being application No. 4

of 1976 made by the petitioner. The petitioner also prayed

for a writ in the nature of certiorari calling for the

records of the Joint Commissioner of Labour, Madras, for

quashing order dated 11th September 1976 by which the said

lay off application was rejected' by the Joint Labour

Commissioner. Along with the said Writ Petition No. 1119 of

1977, a number of similar writ petitions challenging the

vires of Section 25-M of the Industrial Disputes Act and

consequential prosecutional penalty for the lay off in

contravention of Section 25-M were heard by the Division

Bench of the Madras High Court and by one common judgment,

all the said writ petitions were disposed of.

2. The Division Bench of the Madras High Court inter

alia held that Section 25-M as it stood under the said

amendment Act, 1976 was constitutionally invalid for the

reasons given by this Court in invalidating Section 25-O of

the Industrial Disputes Act in the decision rendered in

Excel Wear Etc versus Union of India and Others (1979 (1)

SCR 1009). The Madras High Court. further held that in view

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of its finding that Section 25-M was constitutionally

invalid, it was unnecessary for the Court to go into the

validity or otherwise of the orders passed by the

authorities which had been impugned in some of the cases

before the High Court. The High Court also rejected the

prayer for granting leave to appeal to this Court by

indicating that as the High Court had followed the judgment

of the Apex Court in Excel Wear's case, there was no

occasion t6 hold that the impugned decision involved a

substantial question of law of general importance which was

required to be decided by the Apex Court.

3. For the purpose of appreciating the respective

contentions of the parties in this appeal, the provisions of

Section 25-M of the Industrial Disputes Act as amended by

the Industrial Dispute(Amendment) Act, 1976 is set out as

hereunder:-

"25-M. Prohibition of lay-off-(1) No workman

(other than a badli workman or a casual

workman) whose name is borne on the muster

rolls of an industrial establishment to which

this Chapter applies shall be laid off by his

employer except with the previous permission

of such authority as may be specified by the

appropriate Government by notification in the

official Gazette,unless such lay off is due to

shortage of power or to natural calamity.

(2) Where the workman (other than badli

workman or casual workman) of an industrial

establishment referred to in subsection (1 )

have been laid off before the commencement of

the Industrial Disputes (Amendment) Act, 1976

and such layoff continues at such

commencement, the employer in relation to such

establishment shall, within a period of

fifteen days from such commencement, apply to

the authority specified under sub-section (1)

for permission to continue the lay-off.

(3) In the case of every application for

permission under sub-section (1) or subsection

(2), the authority to whom the

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application has been made may, after making

such inquiry as he thinks fit, grant or

refuse, for reasons to be recorded in writing,

the permission applied for.

(4) Where an application for permission has

been made under sub-section (1) or sub-section

(2) and the authority to whom the application

is made 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 subsection

(2) has been made within the period specified

therein, or where the permission for the lay-

off or the continuance of the lay off has been

refused, such layoff shall be deemed to be

illegal from the date on which the workmen

have been laid off and the workmen shall be

entitled to all the benefits under any law for

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the time being in force as if they had not

been laid off

(6) The provisions of Section 25 C (other than

the second proviso thereto) shall apply to

cases of lay-off referred to in this Section.

Explanation - For the purposes of this

section, a workman shall not be deemed to be

laid-off by an employer if such employer

offers any alternative employment (which in

the opinion of the employer does not call for

any special skill or previous experience and

can be done by the workman) in the same

establishment from which he has been laid off

or in any other establishment belonging to the

same employer, situate in the same town or

village, or situate within such distance from

the establishment to which he belongs that the

transfer will not involve undue hardship to

the workman having regard to the facts and

circumstances of his case, provided that the

wages which would normally have been paid to

the workman are offered for the alternative

appointment also."

4. Mr. Kumar learned counsel appearing for the appellant

has contended that the decision rendered in Excel Wear's

case is clearly distinguishable and the High Court has gone

wrong in relying on the said decision and accepting the

reasons which weighed with this Court in striking down the

constitutional validity of Section 25-O of the Industrial

Disputes Act by holding that the said reasons are equally

applicable in considering the validity of the Section 25-M

and on such premises declared Section 25-M as ultra vires

the Constitution. Mr. Kumar has submitted that in the

decision in Excel Wear's case, this Court noticed the

distinguishing features in Section 25-M and Section 25-N,

when compared with Section 25-O of the Industrial Disputes

Act. This Court noticed that:

"Section 25(M) dealt with the imposition of

further restrictions in the matter of layoff.

Section 25(N) provided for conditions

precedent to retrenchment of workmen. In

these cases the vires of neither of the two

sections were attacked. Rather, a contrast was

made between, the said provisions with that of

Section 25(0) to attack the latter. The main

difference pointed out was that in sub-section

(3) of Section 25(M), 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

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granted on the expiration of the period of two

months. The period provided in subsection (4)

enjoins the authority to pass the order one

way or the other within the said period.

Similarly, in sub-section (2) of Section 25(N)

reasons are required to be recorded in writing

for grant or refusal of the permission for

retrenchment and the provision 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

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within a period of three months."

5. In Excel Wear's decision this Court analysed the

provisions of Section 25-0 and it has been indicated that

under Section 25-O, if in the opinion of the appropriate

Government, the reasons for the intended closure are not

adequate and sufficient or if the closure was prejudicial to

the public interest, permission to close down could be

refused. It was pointed out by this Court that reasons

given for the closure by the employer might be correct yet

permission could be refused if they were thought to be not

adequate and sufficient by the State Government and no

reason was required to be given in the order granting the

permission or refusing it. It was also pointed out that the

appropriate Government was not enjoined to pass the order in

terms of sub-section (2) and Section 25-O within 90 days'

period of the notice. It was indicated in .Excel Wears case

that even though a situation might arise both from the

point of view of law and order and financial aspect that

employer would find it impossible to carry on business any

longer, permission could be refused even when the reasons

for intended closure was bonafide but the concerned

authority felt that the closure was against public interest,

which reason would be universal in all cases of closure.

Such provision with potentiality to pass unreasonable order

was held to be beyond the pale of reasonable restriction

permitted by Article 19 (6) of the Constitution.

6. The learned counsel has submitted that Section 25-M

and Section 25-N have common distinguishing features which

make the said two provisions different from Section 25-O

the validity of which was considered by this Court in Excel

Wear's case. In the aforesaid circumstances, the decision

rendered in Excel Wear's case is not applicable for deciding

the constitutional validity of Section 25-M.

7. The learned counsel for the appellant has strongly

relied on the decision of this Court in the case of Workmen

of Meenakshi Mills Ltd. and others versus Meenakshi Mills

Ltd. and another ( 1992 (3) SCC 336). In the said decision,

the constitutional validity of Section 25-N as it stood

prior to the substitution by Industrial Disputes (Amendment)

Act, 1984 was taken into consideration and it has been held

by this Court that conferment of power on appropriate

Government authority to grant or refuse permission for

retrenchment is not vitiated on the ground of absence of

provision for appeal or revision against or review of the

order passed by the Government or authority as the order is

required to be a speaking order to be passed on objective

considerations. It has also been held that sub-section (2)

of Section 25-N is not vitiated on the ground of non

prescription of guidelines for exercise of the power because

exercise of the power under Section 25-N being quasijudicial

in nature and not purely administrative and discretionary,

guidelines are not required. Moreover, the power has to be

exercised not only by indicating reasons but also in

accordance with the objective

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indicated in the Statement of Objects and Reasons given in

the said amending Act, 1976 as also the basic idea of

settlement of industrial disputes and promotion of

industrial peace. It has also been held in the decision in

Meenakshi Mill's case that Section 25-N as it stood prior to

the Amending Act 1984, though imposed restriction on

employer's right to retrench workmen, but such retrenchment

were imposed in consonance with the directive principles of

the Constitution and in general public interest and

therefore should be presumed to be reasonable.

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8. The learned counsel has also submitted that in

Meenakshi Mill's case this Court has specifically pointed

out that the decision in Excel Wear's case is not applicable

for considering the constitutional validity of the Section

25-N. It has been pointed out in distinguishing the

decision made in Excel Wear's case that sub-section (2) of

Section 25-O provided for an order being passed by the State

Government refusing to grant permission to close the

undertaking on its subjective satisfaction and there was no

requirement for recording of reasons in the said order and

in these circumstances, this Court held that the absence of

a right of appeal or review or revision rendered .the

restriction as unreasonable. The learned counsel has

therefore submitted that in view of the decision in

Meenakshi Mill's case, the constitutional validity of

Section 25-M cannot be challenged and section 25-M and

Section 25N having common features and being clearly

distinguishable from Section 25-O of the Industrial Disputes

Act, the reasons indicated in Meenakshi Mill's case for

upholding the constitutional validity of Section 25-N fully

applies for upholding the constitutional validity of Section

25-M.

The learned counsel has therefore submitted that the appeal

should be allowed by holding that Section 25-M as it stood

prior to Amending Act 1984 was valid and orders passed under

Section 25-M cannot be held illegal and void.

9. Dr. Shankar Ghosh, learned senior advocate appearing

for the respondent No. 1, Madura Coats Ltd., has however

submitted that for appreciating the question of unreasonable

restriction imposed on the fundamental right to carry on

trade or business under the guise of protecting public

interest, it is necessary to consider whether or not the

restriction' imposed under the statute is consistent with

and limited to the extent of control required for achieving

the purpose for which the restriction was sought to be

imposed. In this connection, Dr. Ghosh has referred to an

earlier decision of this Court in Chintaman Rao v. State of

Madhya Pradesh (1979 SCR 759). In the said decision,

Sections 3 and 4 of the Central Province and Berar

Regulation of Manufacture of Bidi (Agricultural Purposes)

Act 1948 wr taken into consideration. Under Section 3 of the

said Act, the Deputy Commissioner was empowered to issue

notification thereby fixing a period to be an agricultural

season with respect to such villages as may be specified

therein. Under sub-section (1) of Section 4 of the said Act,

the Deputy Commissioner was empowered to issue an order in

respect of such villages as he may specify thereby

prohibiting the manufacture of Bidi during the agricultural

season. Sub-section (2) of Section 4 provided that no

person residing in a village specified in such order, shall

during the agricultural season, engage himself in the

manufacture of Bidis and no manufacturer shall during the

said

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season employ any person for the manufacture of Bidis. In

Chintaman Rao's case this Court has held:

"The phrase 'reasonable restriction' connotes

that the limitation imposed on a person in

enjoyment of the right should not be arbitrary

or of an excessive nature beyond what is

required in the interest of the public. The

word 'reasonable' implies intelligent care and

deliberation, that is, the choice of a course

which reason dictates. Legislation which

arbitrarily or excessively invades the right

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cannot be said to contain the quality of

reasonableness and unless it strikes a proper

balance between the freedom guaranteed in

article 19( 1 )(g) and the social control

permitted by clause (6) of Article 19, it must

be held to be wanting in that quality."

10. It has been held by this Court in the said decision

that the object of the statute is to provide measures for

the supply of adequate labour for agricultural purposes in

Bidi manufacturing areas of the Province and it could be

achieved by legislation restraining the employment of

agricultural labour in the manufacture of Bidis during the

agricultural season. Even in point of time, a restriction

may have been reasonable if it amounted to a regulation of

the hours of work in the business. But the aforesaid

provisions of the Act have no reasonable relation to the

object in view but the said provisions are drastic in scope

that it go in much excess of the object.

11. Dr. Ghosh has also referred to another decision of

this Court in M/s Dwarka Prasad Laxmi Naram versus Slate of

Uttar Pradesh and two others (1954 SCR 803). In the said

case, constitutional validity of Clause 43 of U.P. Coal

Control Order. 1953 was taken into consideration and it has

been held in the said decision that the licensing authority

may grant, refuse to grant, renew or refuse to renew a

licence and may suspend, cancel, revoke or modify any

licence or any term thereof granted by him under the order

for reasons to be recorded for the action he takes. Not only

so, the power could be exercised by any to whom the State

Coal Controller' may choose to delegate the same. Such wide

power including the power to delegate to any person of the

choice of the Controller without any guiding principle was

held to be unreasonable and far in excess of the reasonable

restriction required to achieve the purpose.

12. Dr. Ghosh has further referred to the decision of this

Court in Pathumma and others versus State of Kerala and

others (AIR 1978 SC 771). In the said decision, the

constitutional validity of Section 20 of the Kerala

Agriculturists Debt Relief Act was taken into consideration

by a larger Bench of seven Judges. It has been held in the

said decision by upholding the validity of Section 20 of the

Kerala Act that in interpreting the constitutional

provision, the court should keep in mind the social setting

of the country so as to show a complete consciousness and

deep awareness of the growing requirements of the society,

the increasing needs of the nation, the burning problems of

the day and the complex issues facing the people which the

legislature in its wisdom through beneficial legislation.

seeks to solve The judicial approach should be dynamic

rather than static. pragmatic and not pedantic and elastic

rather than rigid. It has also been indicated that Article

19 guarantees all the seven freedoms to the citizens of the

country including the right to hold, acquire and dispose of

property. But article 19 also provides reasonable

restrictions to be placed by Parliament or the Legislature

in

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public interest. It has been further indicated that in

judging the reasonableness of the restrictions imposed by

Clause (6) of Article 19, the Court has to bear in mind the

Directive Principles. It has also been indicated that

restriction to be reasonable must not be arbitrary or in

excessive nature so as to go beyond the requirement of the

interest of general public.

13. Dr. Ghosh has finally referred to the decision of this

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Court in Management of Kairbette Estate v. Rajamanickan

(1960 (3) SCR 371). In this decision, this Court considered

the import of the expression "any other reason" in the

definition of 'lay off under Section 2 (kkk) of Industrial

Disputes'Act. It has been held that:

"Any other reason to which the definition

refers, must, we think, be a reason which is

allied or analogous to reasons already

specified."

14. Dr. Ghosh contends that the definition of lay off

clearly indicates a number of contingencies which may

justify 'lay off. He has submitted that in Meenakshi Mill's

case, this Court has also noted the distinctive features of

'lay off

15. Dr. Ghosh has contended that the decision rendered in

Meenakshi Mill's case has not laid down any absolute

proposition that unfettered restriction on the right to hold

and acquire property and ca.fly on trade and business

activity can be imposed only on the score of social

interest. He has also submitted that in Meenakshi Mill's

case, the provisions for retrenchment under Section 25-N of

the Industrial Disputes Act was taken into consideration but

retrenchment is a crystalised or frozen occasion and the

same should not be held at par with the provisions for lay

off under Section 25-M. It has been contended by Dr Ghosh

that if the distinction between lay off and retrenchment and

different types of problem associated with lay off and

retrenchment are considered in their proper perspective the

reasonings for upholding the validity of Section 25-N should

not be made applicable in deciding their vires of Section

25-M. Dr Ghosh has submitted that for the purpose of

upholding the constitutional validity of a statute, upon a

challenge on account of unreasonable restriction, the Court

is required to look into the facts and circumstances and the

ground realities under which the offending provision of the

statute is to be applied. No strait-jacket formula,

therefore, can be laid down for deciding the question of

reasonable restriction in each and every statute. He has

submitted that in the matter of lay off under Section 25-M,

excepting in the case of power failure and natural calamity,

in all other cases, even if there are genuine urgent grounds

for immediate action of lay off, a prior permission is

requiredto be obtained. It is permissible under Section 25-M

to defer disposal of an application for such permission for

approval upto a period of two months from the date of

application even if ultimately such permission is accorded.

Such outer limit of two months in a given case, may be

wholly unreasonable thereby frustrating the very purpose for

which an immediate action for lay off was warranted. Dr.

Ghosh has submitted in support of his contention that even

if in a given case there is breakdown of essential

components of a machinery without which the productive

activity in a particular factory cannot be carried on and

even if it so happens that any attempt to run the factory

involves substantial risk even in respect of other plants

and also the labour force involved in operational activity,

the management though

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has a bona fide and urgent need to immediately lay off the

labourers whose service cannot be gainfully utilised until

the productive activities can be effectively restored on

some future date, cannot resort to lay off lawfully unless

permission is accorded by the concerned authority. Dr Ghosh

has submitted that it may not be unlikely that in some cases

such machinery being imported and highly sophisticated may

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not be repaired and commissioned in near future and a case

of immediate lay off was essentially necessary, but the

rigid provisions of Section 25-M do not provide for taking

immediate action in such and similar contingency. The

provisions of Section 25-M requiring formal approval in all

circumstances except in the case of power failure or natural

calamity must be held to be absolutely undesirable and

harsh. The restriction imposed in Section 25-M is far in

excess of reasonable restriction necessary to achieve the

object of preventing improper action of the employer in

resorting to lay off The unreasonable compulsion in

retaining a large labour force without any service being

rendered by them may lead to closure of the unit being sick

and economically not a viable unit. Such undesirable result

brought on the employer on compulsion cannot be held to be a

normal incidence of a reasonable restriction on the

employer's right to lay off Such provision may not even

serve the interest of labour force because in the vent of

closure, the job opportunity is bound to be affected and the

economic interest of the nation is bound to be in jeopardy.

Dr. Ghosh has submitted that the problems associated with

'lay off have their special features and incidence and the

principle underlying the restriction imposed on retrenchment

under Section 25-N as considered in Meenakshi Mill's case is

not applicable in all fours in considering the

reasonableness of the restrictions imposed in Section 25-M.

Dr. Ghosh has submitted that the broad features which

weighed with this Court in holding Section 25-O as

unconstitutional in Excel Wear's case are applicable in

deciding the constitutional validity of Section 25-M. In the

aforesaid facts, the impugned decision holding Section 25-M

before amendment in 1984' as unconstitutional should not be

interfered with and the appeal should be dismissed.

16. After considering the respective submissions of the

learned counsel for the parties and considering various

decisions of this Court in deciding the question of

reasonableness of the restriction imposed by a statute on

the fundamental rights guaranteed by Article 19 of the

Constitution of India (reference to which would be mad

hereinafter),it appears to us that the following principles

and guidelines should be kept in mind for considering the

constitutionality of a statutory provision upon a challenge

on the alleged vie of unreasonableness of the restriction

imposed by it:

(a) The restriction sought to be imposed 'on the

fundamental rights guaranteed by Article 19 of the

Constitution must not be arbitrary or of an excessive nature

so as to go beyond the requirement of fIt need of the

society and object sought to be achieved. (1950 SCR 759.

1954 SCR 803, 1979(1) SCR 1003).

(b) There must be a direct and proximate nexus or a

reasonable connection between the restriction imposed and

the object sought to be achieved. (AIR 1963 SC 812, AIR 1978

SC 777, 1992 (3) SCC 336).

(c) No abstract or fixed principle can

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be laid down which may have universal application in all

cases. Such consideration on 'the question of quality of

reasonableness,therefore, is expected to vary from case to

case. (AIR 1960 SC 1080, AIR 1961 SC 1602, AIR 1978 SC 771).

(d) In interpreting constitutional provisions, court

should be alive to the felt need of the society and complex

issues facing the people which the legislature intends to

solve through effective legislation. (AIR 1961 SC 1602, AIR

1978 SC 771).

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(e) In appreciating such problems and felt need of the

society the judicial approach must necessarily be dynamic,

pragmatic and elastic. (AIR 1961 SC 1602, AIR 1977 SC 1825,

AIR 1978 SC 771).

(f') It is imperative that for consideration of

reasonableness of restriction imposed by a statute, the

Court should examine whether the social control as envisaged

in Article 19 is being effectuated by the restriction

imposed on fundamental right. (AIR 1952 SC 196, AIR 1964 SC

416, AIR 1978 SC 771).

(g) Although Article 19 guarantees all the seven freedoms

to the citizen. such guarantee does not confer any absolute

or unconditional right but is subject to reasonable

restriction which the legislature may impose in public

interest. It is therefore necessary to examine whether such

restriction is meant to protect social welfare satisfying

the need of prevailing social values. (AIR 1952 SC 196, AIR

1964 SC 416, AIR 1971 SC 2164, AiR i978 SC 771 )

(h) The reasonableness has got to be tested both from the

procedural and substantive aspects. It should not be bound

by processual perniciousness or jurisprudence of remedies.

(AIR 1977 SC 1825, 1979 (1) SCR 1009)

(j) Restriction imposed on the fundamental right

guaranteed under Article 19 of the Constitution must not be

arbitrary, unbridled, uncanalised and excessive and also not

unreasonably discriminatory. Exhypothesis, therefore, a

restriction to be reasonable must also be consistent with

Article 14 of the Constitution.

(k) In judging the reasonableness of the restriction

imposed by Clause (6) of Article 19, the Court has to bear

in mind directive principles of state policy. (AIR 1973 SC

1461, AIR 1976 SC 490, AIR 1978 SC 771)

(1) Ordinarily, any restriction so imposed which has the

effect of promoting or effectuating a directive principle

can be presumed to be a reasonable restriction in public

interest. (1992 (3) SCC 336).

17. In Meenakshi Mill's case, the contention that the

Section 25-N has imposed unreasonable restriction on the

fundamental right to hold property and to carry on business

activities has been rejected by indicating that the object

underlying the enactment of Section 25-N by introducing

prior scrutiny of the reasons for retrenchment is to prevent

avoidable hardship to the employees resulting from

retrenchment by protecting existing employment and to check

the growth of unemployment which would otherwise be the

consequences of retrenchment in industrial establishment

employing a large number of workmen. It has also been

indicated in the said

83

decision that the restriction imposed in Section 25-N on

the right of retrenchment of the employer is intended to

maintain higher tempo of production and productivity by

preserving industrial peace and harmony, and in that sense,

Section 25-N seeks to give effect to the mandate contained

in the directive principles of the Constitution as contained

in Articles 38, 39(a), 41 and 43. It has been indicated in

Meenakshi. Mi11's case that ordinarily any restriction so

imposed which has the effect of promoting or effectuating a

directive principle can be presumed to be reasonable

restriction in public interest and a restriction imposed on

the employer's right to terminate the service of an employee

is not alien to the constitutional scheme which indicates

that the employer's right is not absolute. We may indicate

here that even in Excel Wear's case it has been held that:

"the right to close a business is an integral

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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 general

public."

(Emphasis supplied)

18. In Meenakshi Mill's case, it has been held that the

power to grant or refuse permission for retrenchment of

workmen conferred under sub-section (2) of Section 25-N has

to be exercised on an objective. consideration of the

relevant facts after affording an opportunity to the parties

having an interest in the matter and reasons have to be

recorded in the order that is passed. The enquiry which has

to be made under sub-section (2) before an order granting or

refusing permission for retrenchment of workmen is passed,

would require an examination of the particulars which .are

required to be supplied by the employer. Such decision being

quasi-judicial, is justiceable before High Court. In view of

the time limit of three months prescribed in sub-section (3)

of Section 25N, there is need for expeditious disposal which

may not be feasible if the proceedings are conducted before

a judicial officer accustomed to the judicial process.

Moreover, during the course of such consideration, it may

become necessary to explore the steps that may have to be

taken to remove the causes necessitating the proposed

retrenchment which may involve interaction between the

various departments of the Government. This can be better

appreciated and achieved by an Executive Officer rather than

a Judicial Officer. It has also been indicated in Meenakshi

Mill's case that in the matter of exercise of the power

conferred by sub-section (2) of Section 25-N, the power has

to be exercised keeping in view the provisions of the Act

and the object underlying the Amending Act of 1976 whereby

Section 25-N was inserted in the Act. The object underlying

the requirement of prior permission for retrenchment of

workmen introduced by Section 25-N as indicated in the

Statement of Object and Reasons for the Amending Act of

1976, is to prevent avoidable hardship to the employees

resulting from retrenchment by protecting employment to

those already employed and maintain higher tempo of

production and productivity by preserving industrial peace

and harmony. The said consideration coupled with the basic

idea underlying the provisions of the Act, namely,

settlement of industrial disputes and promotion of

industrial peace, gives a sufficient indication of the

factors which have to be borne in mind by the appropriate

government or author-

84

its by exercising its power to grant or refuse permission

for retrenchment under sub-section(2).

19. In our view, the aforesaid observations in upholding

the validity of Section 25-N squarely apply in upholding the

validity of Section 25-M. It is evident that the

legislature has taken care in exempting the need for prior

permission for lay off in Section 25-M if such lay off is

necessitated on account of power failure or natural

calamities because such reasons being grave, sudden and

explicit, no further scrutiny is called for. There may be

various other contingencies justifying an immediate action

of lay off but then the legislature in its wisdom has

thought it desirable in the greater public interest that

decision to lay off should not be taken by the employer on

its own assessment with immediate effect but the employer

must seek approval from the concerned authority which is

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reasonably expected to be alive to the problems associated

with the concerned industry and other relevant factors, so

that on scrutiny of the reasons pleaded for permitting lay

off, such authority may arrive at a just and proper decision

in the matter of according or refusing permission to lay

off. Such authority is under an obligation to dispose of

the application to accord permission for a lay off

expeditiously and, in any event, within a period not

exceeding two months from the date of seeking permission.

It may not be unlikely that in some cases an employer may

suffer unmerited hardship upto a period of two months within

which his application for lay off is required to be disposed

of by the authority concerned but having undertaken a

productive venture by establishing an industrial unit

employing a large number of labour force, such employer has

to face such consequence on some occasions and may have to

suffer some hardship for some time but not exceeding two

months within which his case for a lay off is required to be

considered by the concerned authority otherwise it will be

deemed that permission has been accorded. In the greater

public interest for maintaining industrial peace and harmony

and to prevent unemployment without just cause, the

restriction imposed under subsection(2) of Section 25-M

cannot be held to be arbitrary, unreasonable or far in

excess of the need for which such restriction has been

sought to be imposed.

20. It may be pointed out that sub-section (3) requires

recording of reasons for the decision taken, and a copy of

the order is required to be communicated to all concerned.

Further, by force of sub-section (4), permission sought for

shall be deemed to have been granted, if the decision is not

communicated within the mentioned period. Procedural

reasonableness has been taken care of by these provisions.

As regards substantive reasonableness, we feel satisfied, as

the power in question would be exercised by a specified

authority and as it can well be presumed that the one is

to be specified would be a high authority who would be

conscious of his duties and obligation. If such an authority

would be informed that lay .off is required because of, any

sudden break down of machinery, which illustration was given

by Dr. Ghosh to persuade us to regard the restriction as

unreasonable, we have no doubt that the authority would act

promptly and see that the establishment in question is not

put to loss for no fault on its part. As every power has to

be exercised reasonably, and as such an exercise takes

within its fold, exercise of power within reasonable time,

we can take for granted that the statutory provision

requires that in

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apparent causes (take sudden break down) justifying lay off,

the authority would act with speed.

21. As already indicated, the distinguishing features

between Section 25-M and Section 25-N on one hand and

Section 25-O on the other have been noticed in the decision

in Excel Wear's case.

22. In our view, the reasonings indicated in Excel Wear's

case in striking down 25-O are not applicable for

considering the constitutional validity of Section 25-M(2).

On the contrary, it appears to us that the reasonings

indicated in Meenakshi Mill's case in upholding the validity

of Section 25-N squarely apply in upholding the vires of

Section 25-M. It also appears to us that the impugned

provision of Section 25-M satisfies various aspects of

scrutiny for upholding reasonable restriction on the

fundamental right when tested in the context of guidelines

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and principles indicated hereinbefore. The restriction

appears necessary to us in larger public interest and to

protect the interest of workmen, who, but for the

restriction may be subjected to uncalled for lay off. The

application of this restriction to industrial establishments

specified in Section 25-K duly takes care of the hardship

which could otherwise be caused to small establishments.

Directive Principles do require placing of the restriction

on large industrial establishments employing large number of

workmen. The impugned decision of the Madras High Court,

therefore, must be held to be erroneous and the same is, set

aside by upholding the vires of Section 25-M of the

Industrial Disputes Act. 1947 which was introduced under the

Amending Act of 1976. This appeal is, therefore, allowed

without, however, any order as to costs.

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