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PETITIONER: EXCEL WEAR ETC.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT29/09/1978

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. CHANDRACHUD, Y.V. ((CJ) SARKARIA, RANJIT SINGH KOSHAL, A.D. SEN, A.P. (J)

CITATION:  1979 AIR   25            1979 SCR  (1)1009  1978 SCC  (4) 224  CITATOR INFO :  RF         1981 SC 234  (103)  RF         1985 SC 613  (5)  E          1991 SC 101  (27)

ACT:      Industrial Disputes Act 1947-Sections 25(O) and Section 25(R)-Constitutional Validity of-Whether right to close down an undertaking a fundamental right.

HEADNOTE:      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  25(O)(1).  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 Art. 19(1)(g)  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

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manifestly beyond  the permissible  bounds of  Art. 19(6) 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 19(1)  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 25(o)  does  not  require  giving  of                reasons in the order.           (ii) No  time limit  is to he fixed while refusing                permission to close down.           (iii)Even  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).           (vii)Refusal 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.           (viii)There 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.           (xii)If 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 s. 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

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              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  19(6) on  the right  to carry  on a business. [1027 B-D, 1028 A]      Cooverjee B.  Bharucha v.  The Excise  Commissioner and the Chief  Commissioner,  Ajmer  &  Ors.;  [1954]  SCR  873; Narendra Kumar  & ors. v. The Union of India & ors. [1960] 2 SCR 375 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 Art.  19(1)(f) or Art. 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 19(6).  The  Court

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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  v. 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 25(R)  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 25(O) (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 V(B) 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

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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. v. The State of Kerala. [1962]      1 SCR 946 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. v. Pipraich Sugar Mills      Mazdoor Union, [1966] SCR 872 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 Art. 14 but certainly it does  not make  the  restriction  reasonable  within  the meaning of  Art. 19(6).  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  Art. 19(1)(b) 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. [1()38 A-D]           State of  Gujarat and  Anr. v.  Shri Ambica  Mills Ltd., Ahmedabad, etc. [1974] 3 SCR 760 explained.           Bennet Coleman  & Co.  & ors.  v. Union of India &      Ors., [1973] 2 SCR 757, Rustom Cavasjee Cooper v. Union      of India, [1970] 3 SCR 530 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,

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1039 A]      The impugned law is not for giving effect to the policy of the  State towards  securing any  of  the  principles  in Articles 39(1)  or 41. The law does not fit in with the said directive principles.  The argument  that it is protected by Art. 31(C) 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 Art. 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, Art.  31C cannot  protect the law. Apart from the fact that Art. 31C has no application the law was bad  for violation  of Art. 19(1)(b) 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 v.  The State  of  Bombay,      [1951] 2  SCR 228;  Dhirubha Devi  Singh Gohil  v.  The      State of  Bombay [1955] 1 SCR 691; M.P.V. Sunderaramier      & Co.  v. The  State of  A. P. & Anr., [1958] SCR 1422,      Jagannath  etc.,   etc.  v.  Authorised  Officer,  Land      Reforms   and   Ors.   etc.,   [1972]   1   SCR   1055;      distinguished.           Bhikaji Narain  Dhakras and  Ors v.  The State  of      M.P. &  Anr., [1955]  2 SCR  589; Basheshar Nath v. The      Commissioner of  Income Tax,  Delhi and  Rajasthan  and      Anr., [1959]  Suppl. 1 SCR 528; Deep Chand v. The State      of U.P.  & ors.,  [1559] Suppl.  2 SCR  8; Mahendra Lal      Jaini v.  The State  of U.P.  and ORS., [1963] Suppl. 1      SCR 912 referred t(b.      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 25(o) constitutionally bad and invalid for violation of Art. 19(1) 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]

JUDGMENT:      ORIGINAL JURISDICTION: Writ Petition 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. S.  Nariman, M.  F.  D.  Damania,  G.  D.  Dave  and Rameshwar Nath for the Petitioners in W.P. 644 of ]977.      F. D.  Damania, K.  L. Talsania,  1. N.  Shroff, H.  S. Parekh and  M. R.P.  Kapur,  for  the  Petitioners  in  W.P. 917/77.      K.K. Singhvi,  F.D. Damania,  I.R. Joshi,  P. H. Parekh and M. Mudgal for the Petitioners in W.P. Nos. 959-960/77.

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    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 W.P. Nos. 644, 959, 960 and 917 of 1977. 1015      S.J. Deshmukh, Mrs. S. Bhandare, Miss Leela Mehta, A.N. Karkhanis and Miss Malini Podvel for R. 3 in W.P. No. 644 of 1977.      J. Ramamurthi  and Miss  Vaigai for  R. 3  in W.P. 959- 960/77.      M. K.  Ramamurthi, A.  K. Ganguli  and G. S. Chatterjee for the  Intervener in  W.P. Nos.  959-960  (State  of  West Bengal).      C. G.  Nadkarni and  K. L.  Hathi for the intervener in W.P. 917/77 (Mazdoor Congress).      F. S.  Nariman and  O.C. Mathur  for the  Intervener in W.P. No. 644/77 (Tube Investment).      M. K.  Ramamurthi and K.M.K. Nair for the Intervener in W.P. 644/77 (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 Industrial Disputes Act, 1947 (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

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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  25-0(1) 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      Industrial  Disputes   Act,  1947   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.  S. 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. S.  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-O(1)  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. K.K. 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, P.V.C.  cables and  welding electrodes.  Feeling compelled to  take a decision to close down the factory, the

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Company served  a  notice  on  the  State  Government  under section 25-O(1)  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  19(1)  (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.      M/s. 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

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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 v. 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 S.  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

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    reason merely of-           (i)  financial difficulties  (including  financial                losses); or           (ii) accumulation of undisposed of stocks; or,           (iii)the 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 25FFF(l) came to be considered  by this  Court in M/s Hatisingh Mfg. Co. Ltd. and another  v. 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  19(1)  (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  s.  25FFF(l),  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

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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      Art. 19(1)  (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. v.      The Workmen-[1960]  2 SCR  32 this Court considered the      reasons for  awarding compensation under s. 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

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              2 of the Factories Act, 1948;           (ii) a  mine as  defined in  clause  (j)  of  sub-                section (1)  of section  2 of  the Mines Act,                1952; or 1023           (iii)a plantation as defined in clause (f) of                section 2  of  the  Plantations  Labour  Act,                1951."      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-s.  (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-s. (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

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              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

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              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 25FFA(1) 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

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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- O(2) 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  v.   The  Excise   Commissioner  and   the   Chief Commissioner, Ajmer,  and Ors.  Narendra Kumar & Ors. v. The Union of  India and  Ors total  prohibition of  business  is possible  by  putting  reasonable  restrictions  within  the meaning of  Article 19(6)  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

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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 19(1) (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  19(1) (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 19(6). 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.           (iii)Even  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).      (vii)Refusal  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.      (viii)There 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.      (xii)To direct  the  employer  not  to  close  down  is           altogether a negation of the right to close. It is

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         not regulatory.      (xiii)If 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.      (xiv)That 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 v. State of Orissa the question for  consideration was  whether a  law  creating  a State monopoly  is valid  under the  latter part  of Article 19(6) 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

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    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-o(2) 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

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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-o(2) 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

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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-o(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.  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-o(1) 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.

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v. 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.  v.  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 v. The      State of  Madras (supra),  fall outside  the purview of      the Industrial  Disputes Act.  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 s.      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 v. K. K. Misra & Ors. it has been said at page 196:-           "As observed  in Dr.  Khare  v.  State  of  Delhi,      (1950) SCR  519 and reiterated in V.G. Raw’s case(1952)      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

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    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  19(6). 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  Art.      19(6) 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.      Art. 19(6)  (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.  v. 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 19(1)(g) 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

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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 19(1)(f) 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. v. Union of India & Ors. will be sufficient. Following  the decision  of this Court in Rustom Cavasjee Cooper  v. 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

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    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  v. State      of Kerala-(1973) Suppl. S.C.R. 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 39(1), 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 39(a) 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 v. The state of Bombay ;  (2) Dhirubha  Devisingh  Gohil  v.  The  State  of Bombay; (3)  M. P.  V. Sundararamier   & Co. v. The State of

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Andhra Pradesh  & Anr;  (4) Jaganath etc. etc. v. Authorised officer, Land  Reforms &  Ors. etc. 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 Art. 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 13(2) 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

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and make it a continuous effect like a relay-race in a game. In our  view the  law was bad for violation of Article 19(1) (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.  Art.  13(1)  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 Art. 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

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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. v. The State of Madhya Pradesh and Anr. wherein Das, Acting C.J., 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 v. 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 v.  The State of Uttar Pradesh and Others. In the case of Mahendra  Lal Jaini  v. 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      Art. 13(1)  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 Art.  19 would be void qua citizens but valid      qua non-citizens, Wanchoo J. said:      Theoretically  the   laws  falling   under  the  latter

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    category (i.e.  contravening Art.  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 19(1) (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. P.H.P.                                     Petitions allowed 1047