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PETITIONER: THE PAPNASAM LABOUR UNION

       Vs.

RESPONDENT: MADURA COATS LTD. AND ANR.

DATE OF JUDGMENT08/12/1994

BENCH: RAY, G.N. (J) BENCH: RAY, G.N. (J) HANSARIA B.L. (J)

CITATION:  1995 AIR 2200            1995 SCC  (1) 501  JT 1995 (1)    71        1994 SCALE  (5)153

ACT:

HEADNOTE:

JUDGMENT: G.N. RAY, J.: 1.     This appeal is directed against the order  dated  9th April,  1981 passed by the Division Bench of the High  Court of  Madras in Writ Petition No. 1119 of 1977. The said  writ petition  was  moved by the respondent No.  1  Madura  Coats Ltd., for a declaration that Section 25-M of the  Industrial Disputes Act, 1947 as it stood un-               75 der  the Industrial Dispute (Amendment) Act, 1976 in so  far as it required prior permission to be obtained to effect lay off is ultra vires and void. The writ petitioner  respondent No.  1 also prayed that the State of Tamil Nadu  represented by  the  Secretary  to  Government,  Labour  and  Employment Department,  Madras should be restrained from enforcing  the provisions of the said Industrial Dispute (Amendment) Act in respect  of the lay off application being application No.  4 of  1976 made by the petitioner. The petitioner also  prayed for  a  writ  in the nature of certiorari  calling  for  the records  of  the Joint Commissioner of Labour,  Madras,  for quashing  order dated 11th September 1976 by which the  said lay  off  application  was rejected’  by  the  Joint  Labour Commissioner. Along with the said Writ Petition No. 1119  of 1977,  a  number of similar writ petitions  challenging  the vires  of  Section 25-M of the Industrial Disputes  Act  and consequential  prosecutional  penalty  for the  lay  off  in contravention  of  Section 25-M were heard by  the  Division Bench  of the Madras High Court and by one common  judgment, all the said writ petitions were disposed of. 2.      The Division Bench of the Madras High   Court  inter alia  held  that  Section 25-M as it stood  under  the  said amendment  Act,  1976 was constitutionally invalid  for  the reasons given by this Court in invalidating Section 25-O  of the  Industrial  Disputes Act in the  decision  rendered  in Excel  Wear Etc versus Union of India and Others  (1979  (1) SCR 1009).  The Madras High Court. further held that in view

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of  its  finding  that  Section  25-M  was  constitutionally invalid,  it  was unnecessary for the Court to go  into  the validity   or  otherwise  of  the  orders  passed   by   the authorities  which  had been impugned in some of  the  cases before  the  High Court. The High Court also   rejected  the prayer  for  granting  leave  to appeal  to  this  Court  by indicating that as the High Court had followed the  judgment of  the  Apex  Court  in Excel Wear’s  case,  there  was  no occasion  t6  hold  that the impugned  decision  involved  a substantial question of law of general importance which  was required to be decided by the Apex Court. 3.     For  the  purpose  of  appreciating  the   respective contentions of the parties in this appeal, the provisions of Section  25-M of the Industrial Disputes Act as  amended  by the  Industrial Dispute(Amendment) Act, 1976 is set  out  as hereunder:-               "25-M.  Prohibition of lay-off-(1) No  workman               (other  than  a  badli  workman  or  a  casual               workman)  whose  name is borne on  the  muster               rolls of an industrial establishment to  which               this Chapter applies shall be laid off by  his               employer  except with the previous  permission               of  such authority as may be specified by  the               appropriate Government by notification in  the               official Gazette,unless such lay off is due to               shortage of power or to natural calamity.               (2)  Where  the  workman  (other  than   badli               workman  or casual workman) of  an  industrial               establishment  referred to in subsection (1  )               have been laid off before the commencement  of               the Industrial Disputes (Amendment) Act,  1976               and    such   layoff   continues    at    such               commencement, the employer in relation to such               establishment   shall,  within  a  period   of               fifteen days from such  commencement, apply to               the authority specified under sub-section  (1)               for permission to continue the lay-off.               (3)  In  the  case of  every  application  for               permission under sub-section (1) or subsection               (2), the authority to whom the               76               application  has been made may,  after  making               such  inquiry  as  he  thinks  fit,  grant  or               refuse, for reasons to be recorded in writing,               the permission applied for.               (4)  Where an application for  permission  has               been made under sub-section (1) or sub-section               (2) and the authority to whom the  application               is made does not communicate the permission or               the  refusal  to grant the permission  to  the               employer  within a period of two  months  from               the date on which the application is made, the               permission applied for shall be deemed to have               been  granted  on the expiration of  the  said               period of two months.               (5) Where no application for permission  under               sub-section   (1)   is  made,  or   where   no               application  for permission  under  subsection               (2) has been made within the period  specified               therein, or where the permission for the  lay-               off or the continuance of the lay off has been               refused,  such  layoff shall be deemed  to  be               illegal  from  the date on which  the  workmen               have  been laid off and the workmen  shall  be               entitled to all the benefits under any law for

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             the  time  being in force as if they  had  not               been laid off               (6) The provisions of Section 25 C (other than               the  second  proviso thereto) shall  apply  to               cases of lay-off referred to in this Section.               Explanation   -  For  the  purposes  of   this               section,  a workman shall not be deemed to  be               laid-off  by  an  employer  if  such  employer               offers  any alternative employment  (which  in               the opinion of the employer does not call  for               any  special skill or previous experience  and               can  be  done  by the  workman)  in  the  same               establishment from which he has been laid  off               or in any other establishment belonging to the               same  employer,  situate in the same  town  or               village, or situate within such distance  from               the establishment to which he belongs that the               transfer  will not involve undue  hardship  to               the  workman  having regard to the  facts  and               circumstances  of his case, provided that  the               wages  which would normally have been paid  to               the  workman are offered for  the  alternative               appointment also." 4.    Mr. Kumar learned counsel appearing for the  appellant has  contended  that the decision rendered in  Excel  Wear’s case is clearly distinguishable and the High Court has  gone wrong  in  relying on the said decision  and  accepting  the reasons  which weighed with this Court in striking down  the constitutional  validity of Section 25-O of  the  Industrial Disputes  Act by holding that the said reasons  are  equally applicable  in considering the validity of the Section  25-M and  on such premises declared Section 25-M as  ultra  vires the  Constitution.   Mr.  Kumar has submitted  that  in  the decision  in  Excel  Wear’s case,  this  Court  noticed  the distinguishing  features in Section 25-M and  Section  25-N, when  compared with Section 25-O of the Industrial  Disputes Act.  This Court noticed that:               "Section  25(M) dealt with the  imposition  of               further restrictions in the matter of  layoff.               Section   25(N)   provided   for    conditions               precedent  to  retrenchment  of  workmen.   In               these  cases the vires of neither of  the  two               sections were attacked. Rather, a contrast was               made between, the said provisions with that of               Section 25(0) to attack the latter.  The  main               difference pointed out was that in sub-section               (3)  of  Section 25(M),  the  authority  while               granting   or  refusing  permission   to   the               employer  to  lay off was required  to  record               reasons  in writing and in sub-section  (4)  a               provision was made that the permission applied               for shall be deemed to have been               77               granted on the expiration of the period of two               months. The period provided in subsection  (4)               enjoins  the authority to pass the  order  one               way  or  the  other within  the  said  period.               Similarly, in sub-section (2) of Section 25(N)               reasons are required to be recorded in writing               for  grant  or refusal of the  permission  for               retrenchment    and    the    provision    for               retrenchment  and  the  provision  for  deemed               permission was made in sub-section (3) on  the               failure  of  the  governmental  authority   to               communicate  the  permission  or  the  refusal

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             within a period of three months." 5.      In  Excel Wear’s decision this  Court  analysed  the provisions  of Section 25-0 and it has been  indicated  that under  Section  25-O, if in the opinion of  the  appropriate Government,  the  reasons for the intended closure  are  not adequate and sufficient or if the closure was prejudicial to the  public  interest,  permission to close  down  could  be refused.   It  was pointed out by this  Court  that  reasons given  for the closure by the employer might be correct  yet permission  could be refused if they were thought to be  not adequate  and  sufficient  by the State  Government  and  no reason  was required to be given in the order  granting  the permission or refusing it. It was also pointed out that  the appropriate Government was not enjoined to pass the order in terms  of sub-section (2) and Section 25-O within  90  days’ period of the notice. It was indicated in .Excel Wears  case that  even  though a situation  might arise  both  from  the point  of  view of law and order and financial  aspect  that employer  would find it impossible to carry on business  any longer,  permission could be refused even when  the  reasons for   intended  closure  was  bonafide  but  the   concerned authority felt that the closure was against public interest, which  reason  would be universal in all cases  of  closure. Such provision with potentiality to pass unreasonable  order was  held  to be beyond the pale of  reasonable  restriction permitted by Article 19 (6) of the Constitution. 6.     The learned counsel has submitted that  Section  25-M and  Section 25-N have common distinguishing features  which make  the  said two provisions different from  Section  25-O the validity of which was considered by this Court in  Excel Wear’s  case. In the aforesaid circumstances,  the  decision rendered in Excel Wear’s case is not applicable for deciding the constitutional validity of Section 25-M. 7.      The learned counsel for the appellant  has  strongly relied on the decision of this Court in the case of  Workmen of  Meenakshi Mills Ltd. and others versus  Meenakshi  Mills Ltd. and another ( 1992 (3) SCC 336).  In the said decision, the  constitutional  validity of Section 25-N  as  it  stood prior to the substitution by Industrial Disputes (Amendment) Act, 1984 was taken into consideration and it has been  held by  this  Court  that conferment  of  power  on  appropriate Government  authority  to  grant or  refuse  permission  for retrenchment  is  not vitiated on the ground of  absence  of provision  for appeal or revision against or review  of  the order passed by the Government or authority as the order  is required  to be a speaking order to be passed  on  objective considerations.  It has also been held that sub-section  (2) of  Section  25-N  is  not vitiated on  the  ground  of  non prescription of guidelines for exercise of the power because exercise of the power under Section 25-N being quasijudicial in  nature and not purely administrative and  discretionary, guidelines  are not required. Moreover, the power has to  be exercised  not  only  by  indicating  reasons  but  also  in accordance with the objective 78 indicated  in the Statement of Objects and Reasons given  in the  said  amending  Act, 1976 as also  the  basic  idea  of settlement   of   industrial  disputes  and   promotion   of industrial  peace. It has also been held in the decision  in Meenakshi Mill’s case that Section 25-N as it stood prior to the  Amending  Act  1984,  though  imposed  restriction   on employer’s right to retrench workmen, but such  retrenchment were imposed in consonance with the directive principles  of the   Constitution  and  in  general  public  interest   and therefore should be presumed to be reasonable.

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8.      The  learned  counsel has  also  submitted  that  in Meenakshi  Mill’s case this Court has  specifically  pointed out that the decision in Excel Wear’s case is not applicable for  considering the constitutional validity of the  Section 25-N.   It  has  been  pointed  out  in  distinguishing  the decision  made in Excel Wear’s case that sub-section (2)  of Section 25-O provided for an order being passed by the State Government  refusing  to  grant  permission  to  close   the undertaking on its subjective satisfaction and there was  no requirement  for recording of reasons in the said order  and in these circumstances, this Court held that the absence  of a  right  of  appeal or review  or  revision  rendered  .the restriction   as  unreasonable.  The  learned  counsel   has therefore  submitted  that  in  view  of  the  decision   in Meenakshi  Mill’s  case,  the  constitutional  validity   of Section  25-M  cannot  be challenged and  section  25-M  and Section  25N   having  common  features  and  being  clearly distinguishable from Section 25-O of the Industrial Disputes Act,  the  reasons indicated in Meenakshi  Mill’s  case  for upholding the constitutional validity of Section 25-N  fully applies for upholding the constitutional validity of Section 25-M. The learned counsel has therefore submitted that the  appeal should  be allowed by holding that Section 25-M as it  stood prior to Amending Act 1984 was valid and orders passed under Section 25-M cannot be held illegal and void. 9.     Dr. Shankar Ghosh, learned senior advocate  appearing for  the  respondent No. 1, Madura Coats Ltd.,  has  however submitted that for appreciating the question of unreasonable restriction  imposed on the fundamental  right to  carry  on trade  or  business  under the guise  of  protecting  public interest,  it  is necessary to consider whether or  not  the restriction’  imposed under the statute is  consistent  with and limited to the extent of control required for  achieving the  purpose  for  which the restriction was  sought  to  be imposed.   In this connection, Dr. Ghosh has referred to  an earlier decision of this Court in Chintaman Rao v. State  of Madhya  Pradesh  (1979  SCR  759).  In  the  said  decision, Sections  3  and  4  of  the  Central  Province  and   Berar Regulation  of Manufacture of Bidi  (Agricultural  Purposes) Act 1948 wr taken into consideration. Under Section 3 of the said  Act,  the Deputy Commissioner was empowered  to  issue notification  thereby fixing a period to be an  agricultural season  with  respect to such villages as may  be  specified therein. Under sub-section (1) of Section 4 of the said Act, the  Deputy Commissioner was empowered to issue an order  in respect   of  such  villages  as  he  may  specify   thereby prohibiting the manufacture of Bidi during the  agricultural season.   Sub-section  (2)  of Section 4  provided  that  no person residing in a village specified in such order,  shall during  the  agricultural  season,  engage  himself  in  the manufacture  of Bidis and no manufacturer shall  during  the said 79 season  employ any person for the manufacture of  Bidis.  In Chintaman Rao’s case this Court has held:               "The phrase ’reasonable restriction’  connotes               that  the  limitation imposed on a  person  in               enjoyment of the right should not be arbitrary               or  of  an  excessive nature  beyond  what  is               required  in the interest of the public.   The               word ’reasonable’ implies intelligent care and               deliberation, that is, the choice of a  course               which   reason  dictates.  Legislation   which               arbitrarily  or excessively invades the  right

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             cannot  be  said  to contain  the  quality  of               reasonableness and unless it strikes a  proper               balance  between  the  freedom  guaranteed  in               article  19(  1 )(g) and  the  social  control               permitted by clause (6) of Article 19, it must               be held to be wanting in that quality." 10.     It has been held by this Court in the said  decision that  the object of the statute is to provide  measures  for the  supply of adequate labour for agricultural purposes  in Bidi  manufacturing  areas of the Province and it  could  be achieved  by  legislation  restraining  the  employment   of agricultural  labour in the manufacture of Bidis during  the agricultural  season.  Even in point of time, a  restriction may  have been reasonable if it amounted to a regulation  of the  hours  of  work  in the  business.  But  the  aforesaid provisions  of  the Act have no reasonable relation  to  the object in view but the said provisions are drastic in  scope that it go in much excess of the object. 11.    Dr.  Ghosh has also referred to another  decision  of this Court in M/s Dwarka Prasad Laxmi Naram versus Slate  of Uttar  Pradesh  and two others (1954 SCR 803). In  the  said case,  constitutional  validity of Clause 43  of  U.P.  Coal Control Order. 1953 was taken into consideration and it  has been held in the said decision that the licensing  authority may  grant,  refuse  to grant, renew or refuse  to  renew  a licence  and  may  suspend, cancel,  revoke  or  modify  any licence  or any term thereof granted by him under the  order for reasons to be recorded for the action he takes. Not only so,  the power could be exercised by any to whom  the  State Coal Controller’ may choose to delegate the same.  Such wide power  including the power to delegate to any person of  the choice  of the Controller without any guiding principle  was held to be unreasonable and far in excess of the  reasonable restriction required to achieve the purpose. 12.   Dr. Ghosh has further referred to the decision of this Court  in  Pathumma and others versus State  of  Kerala  and others  (AIR  1978  SC  771).  In  the  said  decision,  the constitutional   validity  of  Section  20  of  the   Kerala Agriculturists Debt Relief Act was taken into  consideration by  a larger Bench of seven Judges. It has been held in  the said decision by upholding the validity of Section 20 of the Kerala   Act   that  in  interpreting   the   constitutional provision, the court should keep in mind the social  setting of  the country so as to show a complete  consciousness  and deep  awareness of the growing requirements of the  society, the increasing needs of the nation, the burning problems  of the  day and the complex issues facing the people which  the legislature  in its wisdom through  beneficial  legislation. seeks  to  solve  The judicial approach  should  be  dynamic rather  than static. pragmatic and not pedantic and  elastic rather  than rigid. It has also been indicated that  Article 19 guarantees all the seven freedoms to the citizens of  the country including the right to hold, acquire and dispose  of property.   But   article  19   also   provides   reasonable restrictions  to be placed by Parliament or the  Legislature in 80 public  interest.   It has been further  indicated  that  in judging  the reasonableness of the restrictions  imposed  by Clause (6) of Article 19, the Court has to bear in mind  the Directive  Principles.  It  has  also  been  indicated  that restriction  to  be reasonable must not be arbitrary  or  in excessive  nature so as to go beyond the requirement of  the interest of general public. 13.   Dr. Ghosh has finally referred to the decision of this

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Court  in  Management of Kairbette  Estate  v.  Rajamanickan (1960 (3) SCR 371). In this decision, this Court  considered the  import  of  the expression "any other  reason"  in  the definition  of ’lay off under Section 2 (kkk) of  Industrial Disputes’Act. It has been held that:               "Any  other  reason to  which  the  definition               refers,  must, we think, be a reason which  is               allied   or  analogous  to   reasons   already               specified." 14.    Dr.  Ghosh contends that the definition  of  lay  off clearly  indicates  a  number  of  contingencies  which  may justify ’lay off.  He has submitted that in Meenakshi Mill’s case, this Court has also noted the distinctive features  of ’lay off 15.   Dr. Ghosh has contended that the decision rendered  in Meenakshi  Mill’s  case  has  not  laid  down  any  absolute proposition that unfettered restriction on the right to hold and  acquire  property  and ca.fly  on  trade  and  business activity  can  be  imposed  only  on  the  score  of  social interest.   He has also submitted that in  Meenakshi  Mill’s case, the provisions for retrenchment under Section 25-N  of the Industrial Disputes Act was taken into consideration but retrenchment  is  a crystalised or frozen occasion  and  the same  should not be held at par with the provisions for  lay off  under Section 25-M. It has been contended by  Dr  Ghosh that if the distinction between lay off and retrenchment and different  types  of  problem associated with  lay  off  and retrenchment are considered in their proper perspective  the reasonings for upholding the validity of Section 25-N should not  be made applicable in deciding their vires  of  Section 25-M.  Dr  Ghosh  has  submitted that  for  the  purpose  of upholding  the constitutional validity of a statute, upon  a challenge on account of unreasonable restriction, the  Court is required to look into the facts and circumstances and the ground realities under which the offending provision of  the statute  is  to  be  applied.   No  strait-jacket   formula, therefore,  can  be laid down for deciding the  question  of reasonable  restriction  in each and every statute.  He  has submitted that in the matter of lay off under Section  25-M, excepting in the case of power failure and natural calamity, in all other cases, even if there are genuine urgent grounds for  immediate  action  of lay off, a  prior  permission  is requiredto be obtained. It is permissible under Section 25-M to defer disposal of an application for such permission  for approval  upto  a  period of two months  from  the  date  of application even if ultimately such permission is  accorded. Such  outer  limit  of two months in a given  case,  may  be wholly unreasonable thereby frustrating the very purpose for which  an  immediate action for lay off was  warranted.  Dr. Ghosh  has submitted in support of his contention that  even if  in  a  given  case  there  is  breakdown  of   essential components  of  a  machinery without  which  the  productive activity  in a particular factory cannot be carried  on  and even  if it so happens that any attempt to run  the  factory involves  substantial risk even in respect of  other  plants and also the labour force involved in operational  activity, the management though 81 has  a bona fide and urgent need to immediately lay off  the labourers  whose service cannot be gainfully utilised  until the  productive activities  can be effectively  restored  on some  future date, cannot resort to lay off lawfully  unless permission is accorded by the concerned authority.  Dr Ghosh has submitted that it may not be unlikely that in some cases such  machinery being imported and highly sophisticated  may

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not  be repaired and commissioned in near future and a  case of  immediate  lay off was essentially  necessary,  but  the rigid  provisions of Section 25-M do not provide for  taking immediate  action  in  such  and  similar  contingency.  The provisions of Section 25-M requiring formal approval in  all circumstances except in the case of power failure or natural calamity  must  be  held to be  absolutely  undesirable  and harsh.  The  restriction imposed in Section 25-M is  far  in excess  of reasonable restriction necessary to  achieve  the object  of  preventing improper action of  the  employer  in resorting   to  lay  off  The  unreasonable  compulsion   in retaining  a  large labour force without any  service  being rendered by them may lead to closure of the unit being  sick and economically not a viable unit. Such undesirable  result brought on the employer on compulsion cannot be held to be a normal   incidence  of  a  reasonable  restriction  on   the employer’s  right  to lay off Such provision  may  not  even serve  the interest of labour force because in the  vent  of closure, the job opportunity is bound to be affected and the economic interest of the nation is bound to be in  jeopardy. Dr.  Ghosh has submitted that the problems  associated  with ’lay  off have their special features and incidence and  the principle underlying the restriction imposed on retrenchment under Section 25-N as considered in Meenakshi Mill’s case is not   applicable   in   all   fours   in   considering   the reasonableness of the restrictions imposed in Section  25-M. Dr.  Ghosh  has  submitted that  the  broad  features  which weighed   with  this  Court  in  holding  Section  25-O   as unconstitutional  in  Excel Wear’s case  are  applicable  in deciding the constitutional validity of Section 25-M. In the aforesaid facts, the impugned decision holding Section  25-M before amendment in 1984’ as unconstitutional should not  be interfered with and the appeal should be dismissed. 16.    After considering the respective submissions  of  the learned  counsel  for the parties  and  considering  various decisions  of  this  Court  in  deciding  the  question   of reasonableness  of the restriction imposed by a  statute  on the  fundamental  rights  guaranteed by Article  19  of  the Constitution  of  India  (reference to which  would  be  mad hereinafter),it appears to us that the following  principles and  guidelines should be kept in mind for  considering  the constitutionality of a statutory provision upon a  challenge on  the alleged vie of unreasonableness of  the  restriction imposed by it: (a)     The  restriction  sought  to  be  imposed  ’on   the fundamental   rights  guaranteed  by  Article  19   of   the Constitution must not be arbitrary or of an excessive nature so  as  to  go beyond the requirement of  fIt  need  of  the society  and  object sought to be achieved. (1950  SCR  759. 1954 SCR 803, 1979(1) SCR 1003). (b)    There  must  be a direct and  proximate  nexus  or  a reasonable  connection between the restriction  imposed  and the object sought to be achieved. (AIR 1963 SC 812, AIR 1978 SC 777, 1992 (3) SCC 336). (c)  No abstract or fixed principle can 82 be  laid  down which may have universal application  in  all cases.   Such consideration on ’the question of  quality  of reasonableness,therefore,  is expected to vary from case  to case. (AIR 1960 SC 1080, AIR 1961 SC 1602, AIR 1978 SC 771). (d)     In  interpreting  constitutional  provisions,  court should be alive to the felt need of the society and  complex issues  facing the people which the legislature  intends  to solve through effective legislation. (AIR 1961 SC 1602,  AIR 1978 SC 771).

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(e)     In appreciating such problems and felt need  of  the society the judicial  approach must necessarily be  dynamic, pragmatic and elastic. (AIR 1961 SC 1602, AIR 1977 SC  1825, AIR 1978 SC 771). (f’)      It  is  imperative  that  for   consideration   of reasonableness  of  restriction imposed by  a  statute,  the Court should examine whether the social control as envisaged in  Article  19  is being  effectuated  by  the  restriction imposed on fundamental right.  (AIR 1952 SC 196, AIR 1964 SC 416, AIR 1978 SC 771). (g)    Although Article 19 guarantees all the seven freedoms to the citizen. such guarantee does not confer any  absolute or   unconditional  right  but  is  subject  to   reasonable restriction  which  the  legislature may  impose  in  public interest. It is therefore necessary to examine whether  such restriction  is meant to protect social  welfare  satisfying the need of prevailing social values. (AIR 1952 SC 196,  AIR 1964 SC 416, AIR 1971 SC 2164, AiR i978 SC 771 ) (h)  The reasonableness has got to be tested both  from  the procedural and substantive aspects.  It should not be  bound by  processual perniciousness or jurisprudence of  remedies. (AIR 1977 SC 1825, 1979 (1) SCR 1009) (j)      Restriction  imposed  on  the   fundamental   right guaranteed under Article 19 of the Constitution must not  be arbitrary, unbridled, uncanalised and excessive and also not unreasonably  discriminatory.  Exhypothesis,  therefore,   a restriction  to be reasonable must also be  consistent  with Article 14 of the Constitution. (k)     In  judging the reasonableness  of  the  restriction imposed  by Clause (6) of Article 19, the Court has to  bear in mind directive principles of state policy.  (AIR 1973  SC 1461, AIR 1976 SC 490, AIR 1978 SC 771) (1)    Ordinarily, any restriction so imposed which has  the effect  of promoting or effectuating a  directive  principle can  be  presumed to be a reasonable restriction  in  public interest. (1992 (3) SCC 336). 17.     In  Meenakshi Mill’s case, the contention  that  the Section  25-N  has imposed unreasonable restriction  on  the fundamental right to hold property and to carry on  business activities  has been rejected by indicating that the  object underlying  the  enactment of Section  25-N  by  introducing prior scrutiny of the reasons for retrenchment is to prevent avoidable   hardship   to  the  employees   resulting   from retrenchment by protecting existing employment and to  check the  growth  of unemployment which would  otherwise  be  the consequences  of  retrenchment in  industrial  establishment employing  a  large  number of workmen.  It  has  also  been indicated in the said 83 decision  that the restriction imposed in Section  25-N   on the  right  of retrenchment of the employer is  intended  to maintain  higher  tempo of production  and  productivity  by preserving  industrial peace and harmony, and in that sense, Section  25-N seeks to give effect to the mandate  contained in the directive principles of the Constitution as contained in Articles 38, 39(a), 41 and 43.  It has been indicated  in Meenakshi.  Mi11’s case that ordinarily any  restriction  so imposed which has the effect of promoting or effectuating  a directive  principle  can  be  presumed  to  be   reasonable restriction in public interest and a restriction imposed  on the employer’s right to terminate the service of an employee is  not alien to the constitutional scheme  which  indicates that the employer’s right is not absolute.   We may indicate here that even in Excel Wear’s case it has been held that:               "the right to close a business is an  integral

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             part  of the fundamental right to carry  on  a               business.  But as no right is absolute in  its               scope  so is the nature of this right. It  can               certainly   be   restricted,   regulated    or               controlled by law in   the interest of general               public."                                      (Emphasis supplied) 18.    In Meenakshi Mill’s case, it has been held  that  the power  to  grant or refuse permission  for  retrenchment  of workmen conferred under sub-section (2) of Section 25-N  has to  be  exercised  on an  objective.  consideration  of  the relevant facts after affording an opportunity to the parties having  an  interest in the matter and reasons  have  to  be recorded in the order that is passed. The enquiry which  has to be made under sub-section (2) before an order granting or refusing  permission for retrenchment of workmen is  passed, would  require an examination of the particulars which  .are required to be supplied by the employer. Such decision being quasi-judicial, is justiceable before High Court. In view of the time limit of three months prescribed in sub-section (3) of Section 25N, there is need for expeditious disposal which may not be feasible if the proceedings are conducted  before a  judicial  officer  accustomed to  the  judicial  process. Moreover,  during the course of such consideration,  it  may become  necessary to explore the steps that may have  to  be taken  to  remove  the  causes  necessitating  the  proposed retrenchment  which  may  involve  interaction  between  the various  departments of the Government.  This can be  better appreciated and achieved by an Executive Officer rather than a Judicial Officer.  It has also been indicated in Meenakshi Mill’s  case  that in the matter of exercise  of  the  power conferred by sub-section (2) of Section 25-N, the power  has to  be exercised keeping in view the provisions of  the  Act and  the object underlying the Amending Act of 1976  whereby Section 25-N was inserted in the Act. The object  underlying the  requirement  of prior permission  for  retrenchment  of workmen  introduced  by  Section 25-N as  indicated  in  the Statement  of  Object and Reasons for the  Amending  Act  of 1976,  is   to prevent avoidable hardship to  the  employees resulting  from  retrenchment by  protecting  employment  to those   already  employed  and  maintain  higher  tempo   of production  and productivity by preserving industrial  peace and  harmony. The said consideration coupled with the  basic idea   underlying  the  provisions  of  the   Act,   namely, settlement   of   industrial  disputes  and   promotion   of industrial  peace,  gives  a sufficient  indication  of  the factors  which have to be borne in mind by  the  appropriate government or author- 84 its    by exercising its power to grant or refuse permission for retrenchment under sub-section(2). 19.    In our view, the aforesaid observations in  upholding the validity of Section 25-N squarely apply in upholding the validity   of  Section  25-M.   It  is  evident   that   the legislature  has taken care in exempting the need for  prior permission  for lay off in Section 25-M  if such lay off  is necessitated   on  account  of  power  failure  or   natural calamities  because such  reasons  being  grave, sudden  and explicit,  no further scrutiny is called for. There  may  be various  other contingencies justifying an immediate  action of  lay  off  but then the legislature  in  its  wisdom  has thought  it  desirable in the greater public  interest  that decision  to lay off should not be taken by the employer  on its  own assessment with immediate effect but  the  employer must  seek  approval from the concerned authority  which  is

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reasonably  expected to be alive to the problems  associated with  the concerned industry and other relevant factors,  so that  on scrutiny of the reasons pleaded for permitting  lay off, such authority may arrive at a just and proper decision in  the matter of according or refusing  permission  to  lay off.   Such authority is under an obligation to  dispose  of the   application  to  accord  permission  for  a  lay   off expeditiously  and,  in  any  event,  within  a  period  not exceeding  two months from the date of  seeking  permission. It  may not be unlikely that in some cases an  employer  may suffer unmerited hardship upto a period of two months within which his application for lay off is required to be disposed of  by  the  authority concerned  but  having  undertaken  a productive  venture  by  establishing  an  industrial   unit employing a large number of labour force, such employer  has to  face such consequence on some occasions and may have  to suffer  some  hardship for some time but not  exceeding  two months within which his case for a lay off is required to be considered  by the concerned authority otherwise it will  be deemed  that  permission has been accorded. In  the  greater public interest for maintaining industrial peace and harmony and   to  prevent  unemployment  without  just  cause,   the restriction  imposed  under subsection(2)  of  Section  25-M cannot  be  held  to be arbitrary, unreasonable  or  far  in excess  of  the  need for which such  restriction  has  been sought to be imposed. 20.     It may be pointed out that sub-section (3)  requires recording  of reasons for the decision taken, and a copy  of the  order is required to be communicated to all  concerned. Further, by force of sub-section (4), permission sought  for shall be deemed to have been granted, if the decision is not communicated   within  the  mentioned   period.   Procedural reasonableness  has been taken care of by these  provisions. As regards substantive reasonableness, we feel satisfied, as the  power  in question would be exercised  by  a  specified authority  and as it can well be presumed   that the one  is to  be  specified  would be a high authority  who  would  be conscious of his duties and obligation. If such an authority would be informed that lay .off is required because of,  any sudden break down of machinery, which illustration was given by  Dr.  Ghosh to persuade us to regard the  restriction  as unreasonable, we have no doubt that the authority would  act promptly  and see that the establishment in question is  not put to loss for no fault on its part. As every power has  to be  exercised  reasonably,  and as such  an  exercise  takes within  its fold, exercise of power within reasonable  time, we  can  take  for  granted  that  the  statutory  provision requires that in 85 apparent causes (take sudden break down) justifying lay off, the authority would act with speed. 21.     As  already indicated, the  distinguishing  features between  Section  25-M  and Section 25-N  on  one  hand  and Section 25-O on the other have been noticed in the  decision in Excel Wear’s case. 22.    In our view, the reasonings indicated in Excel Wear’s case   in  striking  down  25-O  are  not   applicable   for considering the constitutional validity of Section  25-M(2). On  the  contrary,  it appears to  us  that  the  reasonings indicated in Meenakshi Mill’s case in upholding the validity of  Section  25-N squarely apply in upholding the  vires  of Section  25-M.  It  also appears to  us  that  the  impugned provision  of  Section  25-M satisfies  various  aspects  of scrutiny   for  upholding  reasonable  restriction  on   the fundamental  right when tested in the context of  guidelines

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and  principles  indicated  hereinbefore.  The   restriction appears  necessary  to us in larger public interest  and  to protect   the  interest  of  workmen,  who,  but   for   the restriction  may be subjected to uncalled for lay  off.  The application of this restriction to industrial establishments specified  in Section 25-K duly takes care of  the  hardship which  could  otherwise be caused to  small  establishments. Directive  Principles do require placing of the  restriction on large industrial establishments employing large number of workmen.   The impugned decision of the Madras  High  Court, therefore, must be held to be erroneous and the same is, set aside  by  upholding  the  vires  of  Section  25-M  of  the Industrial Disputes Act. 1947 which was introduced under the Amending  Act of 1976.  This appeal is,  therefore,  allowed without, however, any order as to costs. 86