S.K. Dhaon, J.
1. In this and the companion Writ Petition Nos. 8214 of 1986,3294 of 1985,13015 of 1984 and 9948 of 1983 the employers feel aggrieved by the refusal of the State of Uttar Pradesh to accord them permission to close down either undertakings or units.
2. In this petition the material averments of Jay Shree Tea and Industries Ltd., a public limited company, are these. Amongst other businesses, the company has an establishment of Jay Shree Tyres and Rubber Products at Allahabad (hereinafter referred to as the Allahabad Unit). Each business run by the company is a separate establishment having a separate finance, management and control. The Allahabad unit has been suffering huge losses year after year. It has suffered losses from its very inception. In 1976-77 its loss was of Rs. 1.68 lacs, in 1977-78 the loss was of Rs. 49.98 lacs, in 1978-79 the loss was of Rs. 44.37 lacs, in 1979-80 the loss was Rs. 92.08 lacs, in 1980-81 the loss was of Rs 114.5 lacs, in 1981-82 the loss was of Rs. 110.15 lacs, in 1982-83 the loss was of Rs. 109.65 lacs, in 1983-84 the loss was of Rs. 133.55 lacs, in 1984-85 the loss was of Rs. 164.25 lacs and in 1985-86 the loss was of Rs. 195.91 lacs. The total loss suffered is of Rs. 1,022.17 lacs. On September 29,1986, the State Government re jected the application, dated August 4, 1986 seeking permission to close down the unit. Upon an application for review made by the petitioner, the State Government referred the matter for adjudication to a Tribunal and on February 26, 1987, the Tribunal passed an award maintaining the order of the State Government.
3. In Writ Petition No. 8214 of 1986 M/s Amitabh Textile Mills Limited is the petitioner. The material averments are these. The petitioner has been suffering heavy losses for last few years and is one of the sick units in textile in Northern India. There is no possibility of improvement in the foreseeable future. On August 7, 1985, the State Government declined to grant the permission to close down its factory. The prayer made by the petitioner for review of its order was not acceded to by the State Government. However, it made a reference to a Tribunal which on March 6, 1986 passed an award maintaining the order of the State Government.
4. In Writ Petition No.3294 of 1985, Modi Textiles Ltd., is the petitioner. In Writ Petition No. 13015 of 1984, Modi Sintex Ltd. is the petitioner and in Writ Petition No. 9948 of 1983 Modi Spinning and Weaving Mills Company Ltd. is the petitioner. In these petitions the averments are somewhat common. They are that their units have been suffering losses. The workers have been on strike for considerable period and, therefore, the units are no more viable.
5. In the forefront, in these petitions, the constitutional validity of Section 6-W of the U.P. Industrial Disputes Act, 1947 (hereinafter referred to as the U.P. Act), which is in pari materia with the provisions of Section 25O of the Industrial Disputes Act, 1947 (hereinafter referred to as the Central Act) has been questioned.
6. In the U.P. Act, Section 6-W has been Inserted by U.P. Act No.26 of 1983. In the Central Act, Section 25O has been inserted by Section 14 of Act No. 46 of 1982. Section 14-B, a penal provision, which is in pan materia with Section 25R of the Central Act was also inserted in the U.P. Act by Act No.26 of 1983.
7. In the Central Act Chapter IV-B, which contains Sections 25-K to 25-S, was inserted by Act 32 of 1976. The constitutional validity of Section 25O, as it then stood, came up for
consideration before the Supreme Court in Excel Wear and Ors. v. Union of India and Ors. (1978-II-LLJ-527). The Supreme Court declared that Section 25O of the Central Act as a whole and Section 25R, in so far as it provided for punishment for the infraction of Section 25O, were constitutionally bad and invalid for violation of Article 19(1)(g) of the Constitution.
8. The sheet-anchor of the petitioner's case is Excel Wear's case (supra). The submission is
that Section 25O, as at present stands, is constitutionally invalid as Parliament has failed to remove the basis of the law declared by the Supreme Court in that case. Excel Wear's case has, therefore, been read a number of times by the learned Counsel at the bar and also by me. The Supreme Court before reading Sec. 25O considered the legislative history of the Central Act. It referred to the case of Hariprasad Shivshankar Shukla v. A.D. Divikar (AIR) 1957 SC. 121, wherein it was, inter alia, held that the word "retrenchment" did not include the termination of services of all workmen on a bona fide closure of an industry. Discharge of workmen on a 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. The Supreme Court noted that after the decision in the case of Hariprasad Shivashankar (supra) a provision was made in Section 25FFF for payment of compensation to workmen in case of closing down of an undertaking. It read that provision in extenso. It noticed that the constitutional validity of Section 25FFF came to be considered by it in Hatisingh Manufacturing Co. Ltd. v. Union of India (1960-II-LLJ-1). It took note of the decision of Shah, J., as he then was, to the effect:
"By Article 19(1)(g) of the Constitution freedom to carry on any trade or business is guaranteed to every citizen, but this freedom 10 is not absolute. In the interest of the general public, the law may impose restrictions on the freedom of citizens to start, carry on or close their undertakings." (1960-II- LLJ-1 at 7)
Their Lordships in Excel Wear's case (supra) observe:
"This clearly indicates, and the whole ratio of the case is based upon this footing, that the right to carry on or close down any undertak ing."
Thier Lordships note that in Hatisingh's case it is observed that by Section 25-FFF(1) the termination of employment on closure of an undertaking without payment of compensation and without even serving notice or paying wa- 25 ges in lieu of notice is not prohibited. Payment of compensation and payment of wages in lieu of notice are not, therefore, condition precedent to closure. This is one of the main reasons given in judgment to repel the attack on the constitu- 30 tional validity of the provision. However, their Lordships point out that if such payments are made condition precedent to closure, the provision will not necessarily be bad. In Excel Wear's case (supra) their Lordships observe that 35 while judging the question as to whether the restrictions imposed by Section 25O and 25R are reasonable or not within the meaning of Clause (6) of Article 19, the principles enunciated in Hatisingh's case will be kept in mind. 40 Their Lordships from Hastisingh's case(supra):
"Whether an impugned provision imposing a fetter on the exercise of the fundamental rights guaanteed by Article 19(1)(g) amounts to a reasonable restriction imposed in the interest of the general public must be ad- judged not in the background of any theoretical standards of pre-determinate patterns, but in the light of the nature and incidents of the 5 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...."(1960-II-LLJ-1 at 7)
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 should be redressed.
9. In Indian Hume Pipe Co. Ltd. v. The Workmen (1959-II-LU-830), this Court considered the reasons for awarding compensation under Section 25F (though not its constitutionality). It was observed that retrenchment compensation was intended to give the workmen some relief and to soften the rigour of hardship which retrenchment brings in its wake when the retrenched workman is suddenly and without his fault thrown on the streets, to face the grim problem of unemployment. It was also observed that the workman naturally expects and looks forward to security of service spread over 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.
10. Their Lordships note that by Amending Act 32 of 1972 Section 25FFA was inserted in Chapter V-A of the Central Act providing for the giving by the employer of 60 days* prior 5 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 Amendment Act.
Chapter V-B was inserted in the Central Act by Amending Act 32 of 1976. After taking note of the provisions of Sections 25K, L, M and N, their Lordships read Section 25O by quoting the provisions in extenso. They did the same with respect to Section 25R. Their Lordships analyse the provisions of Section 25O in paragraph 18. They observe:
"that in Sub-section (2) of Section 25O, if in the opinion of the appropriate Government, the reasons for the intended closure are not adequate and sufficient or the closure is prejudicial to the public interest, permission to close down may be refused. Reasons given may be correct, yet permission can be refused if they are thought to be not adequate and sufficient by the State Government." (underlining by me).
12. Their Lordships observe that Sub-section (5) brings about the real object of Section 25O by stating that 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) of Sub-section (3) or where the permission for closure has been refused. In that event the workman will be entitled to all the benefits under any law for the time being in force as if no notice had been given. Compensation as specified in Section 25N will be payable to the employees on the grant of the permission to close.
13. In paragraph 21 their Lordships emphasise that the right to close a business is an : integral part of the fundamental right to carry on a business. The right of an employer to close down a business once he starts it is necessarily a right embedded in the right to carry on any business guaranteed under Article 19(l)(g) of t the Constitution. 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.
14. In paragraph 25 their Lordships observe (P.539):
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 V-A 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 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 latter remedy must be the only one. If it were so, then in no case closure can be or should be allowed. In the third case namely that of Apar Private Ltd. the Government has given two reasons, both of them 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 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. Cases may be there, and those in hand seems 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 25R of the Act but under many statutes."
15. Their Lordships point out that intrinsically no provision in Chapter V-B of the Central Act suggests that the object of carrying on the production can be achieved by the refusal to ; grant permission although in the objects and reasons of the Amending Act such an object seems to be there, although remotely, and secondly, it is highly unreasonable to achieve the object by compelling the employer not to close , down in public interest for maintaining the production.
16. Their Lordships react to a note on'*Gov-ernment and liberty' from 'Paradoxes of Legal Science' by Benjamin Cardozo, which is to the following effect:-
"As the social conscience is awakened, the conception injury is widened and insight into its cause is deepened, the area of restraint is, therefore, increased."
"Nobody can have a quarrel with the basic principles, however high sounding or unreasonable they may appear to be on their face. But yet no jurisprudice of any country recognises 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." (underlining by me).
17. Their Lordships observe that nobody has a right to carry on the business if he cannot pay even minimum wages to the labour. He must then retire from business. But to compel him to pay and not to retire even if he cannot pay is pushing the matter to an extreme. Their Lordships reiterate (P.542):
"....But not to permit the employer to close down is essentially an interference with his fundamental right to carry on the business."
18. Their Lordships opine that Section 25O, as it then stood, suffered from the vice of excessive and unreasonable restrictions.
19. The Supreme Court in Excel Wear's case (supra) emphasises that Section 25O(2) does not require the giving of reasons in the order, that the order passed by the authority is not subject to any scrutiny by any higher authority or Tribunal either in appeal or revision, that the order cannot be reviewed either and that the reasonableness of restrictions has got to be decided both from the procedural and substantive aspects of the law. The restrictions will not be reasonable within the meaning of Article 19(6) if the law permits the authority to pass a criptic, capricious, whimsical and one sided order.
20. Sub-sections (1) and (2) of the old Section 25O of the Central Act minus the proviso to Sub-section (1) read:
(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: ..............
(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."
21. In Excel Wear's case (supra) the Supreme Court while considering Section 25O(2) emphasises this: Most of the private owners of the undertakings are limited companies in which there are a number of share holders, small and high. There are also creditors and depositors and various other persons connected with or having dealings with such undertakings. In the private sector activities are twin, one is the management of the business either by owners or representatives of the undertaking and the other is running the business not only for the purpose of growth of the national economy but by formation of more and more capital. Sub-section (2) of Section 25O is capable of producing a result where the interest of a section of the public aforementioned may be completely or substantially ignored at the cost of the principles of socialism and social justice. Though the reasons given by the employers for the intended closure are correct, adequate and sufficient, yet the permission can be refused on the ground that they are prejudicial to the public interest. Generally such a view can be taken even in cases of bona fide closures. Though public interest and social justice do require the protection of the labour, yet it will be unreasonable to give them protection against unemployment after affecting the interest of so many persons connected with the undertaking apart from the employers. Sub-section (2) countenances such a situation. Sub-section (2) also does not frown upon the situations where the employers may be compelled to manage their undertaking even if they do not find it safe and practicable to manage the affairs, they may be asked to go on facing tremendous difficulties of management even at the risk of their person and property and they can be compelled to go on facing losses year after year. By introducing Section 25O the Legislature has cast too wide a net and the freedom of the employer has been curtailed to such an extent that it has come to a breaking point from the point of view of law and order and financial aspect that the employer may find it impossible to carry on business any longer. In such a situation, a via media can be evolved by awarding different slabs of compensation in different contingencies. Therefore, the law is unreasonable.
22. The Supreme Court also emphasises that Section 25O(2) does not require the giving of reasons in the order, that there is a scope for the authority to whimsically and capriciously refuse permissiion to close down and that there is no provision for the review of the order. As already indicated, the Supreme Court finally takes the view that Section 25O suffers from the vice of excessive and unreasonable restrictions.
23. Let us now consider whether Parliament succeeded in knocking off the basis of the decision of the Supreme Court in Excel Wear's case (supra) while substituting the provisions of the old Section 25O by the present provisions. It will be profitable to read the relevant portions of the new provision, which in my opinion are Sub-sections (1) and (2) minus the proviso to Sub-section (1). They said:
"(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner ..................
(2) Where an application for permission has been made under Sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interest of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen."
The provisions as contained in Sub-section (1) of the old Section 25O and the new Section 25O are substantially the same. The new subsection (2) may be analysed thus: (a) the appropriate Government may make such enquiry as it thinks fit; (b) the appropriate Government shall give a reasonable opportunity of a hearing to the employer, the workmen and the persons interested; (c) while considering an application the appropriate Government shall have regard to the genuine- ness and adequacy of the reasons stated by the employer, the interest of the general public and all other relevant factors; (d) the appropriate Government is enjoined to pass an order with reasons recorded in writing while granting or refusing permission. In the old Sub-section (2) of Section 25O the requirement of (a) was implicit, the giving of a reasonable opportunity of hearing to the employer was implicit, the participation of others including the workmen was not excluded, the genuineness and adequacy of reasons stated by the employer for permission to close down an undertaking was also material in the old Section 25O(2), the phrase "prejudicial to the public interest" as used in old Section 25O has been substituted by the words "interest of the general public". A new category of consideration, namely,' and all other relevant factors' has been introduced. Having given a thoughtful consideration to the matter, I feel the Parliament has not been able to remove the basis upon which the Supreme Court in Excel Wear's case (supra) took the view that the old Section 25O imposed excessive and unreasonable restrictions within the meaning of Article 19(6) of the Constitution. Even under the present Section 25O an employer can be compelled not to close down its undertaking in spite of the fact that both from the point of view of security and finance it will be impossible for him to do so. Again he can still be compelled to pay minimum wages to the employees even though he is not capable of doing so. Even now he can be compelled to carry on his business on pain of being completely ruined and eventually annihilated. The Legislature has not given a thought to the via media evolved by the Supreme Court in resloving the conflict between the interest of the employer and the interest of the labour in the event of the closure of an undertaking by providing for a graded compensation or different slabs of compensations to meet different situations.
24. In Chintamanrao and Ors. v. State of Madhya Pradesh (AIR) 1961 SC 118, it is held that if the language employed in a law imposing reasonable restrictions upon the exercise of rights under Article 19(1)(g) of the Constitution is wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting the rights, so long as the possibility of its being applied for the purposes not sanctioned by the Constitution cannot be ruled out, it may be held to be wholly void. Applying this principle in the light of the decision given in Excel Wear's case (supra) there is no escape from the conclusion that, in any view of the matter, the present Sub-section (2) of Section 25O contains a mixture of reasonable and unreasonable restrictions on the exercise of fundamental rights enshrined in Article 19(1)(g).
Sri K.P. Agarwal, the learned Senior Advocate on behalf of workmen, has strenuously urged that the new Section 25O and Sub-section (2) thereof, in particular, should be interpreted not only in the light of the constitutional provisions, including the Directive Principles contained therein and the preamble to the Constitution, but also in the background that ours is a developing country having a system of controlled economy. He has vehemently urged that while granting or refusing permission to close down the appropriate Government in Sub-section (2) of Section 25O is enjoined not to confine its attention to the interest of the employer but to look to a larger interest not only of the worker but also of the community as well. To buttress his submission, he has given an illustration of Lever Brothers closing down their undertaking, which manufactures edible oils. According to the learned Counsel edible oil being an essential commodity, it may not be in the national interest to allow the closure of such an undertaking even though a bonafide and genuine case is made out by the manufacturer for closing down its undertaking. Emphasis is laid by the learned Counsel on the expression "public interest" and "all other relevant factors" as used in Sub-section (2). This aspect of the matter did not escape the attention of the Supreme Court in Excel Wear's case (supra). On the contrary, it was fully conscious of the same. It dealt with the problem in these words (p.538) :-
"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 also 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, hold the shares. There are creditors and depositors and various persons connected with or having dealings with the undertakings. Does socialism go to the extent of not looking to the interest of such persons? In a State-owned undertaking the Government or 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, some times, at the cost of the public exchequer. It may not be always advisable to do so but that is a different question. But 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 also 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."
26. In Stumpp Shuele and Somappa Ltd. and Anr. v. State of Karnataka and Ors. (1985-II-LLJ-543), a learned Single Judge of the Karnataka High Court has held that the new Section 25O is invalid and is void as offending Article 19(1)(g) of the Constitution. I respectfully agree with the conclusion of the learned Judge that the new Section 25O has been enacted in the teeth of the judgment of the Supreme Court in Excel Wear's case (supra) and in the light of the law declared by that judgment the section is liable to be struck down. A similar view has been taken by the Calcutta High Court in Maulins of India Ltd. and Anr. v. State of West Bengal (1989-II-LLJ-400).
27. In Straw Products Ltd. v. State of Madhya Pradesh and Ors. the constitutional validity of Section 25O as amended and Section 25R as inserted in the Industrial Disputes Act, 1947 by the Industrial Disputes Madhya Pradesh Amendment Act of 1983 came up for consideration before two Hon,ble Judges of the High Court of Madhya Pradesh. J.S. Verma, J., as he then was, took the view that the provisions of Sub-section (3) of Section 25O of the Madhya Pradesh Act, which are analogous to the new Section 25O(2) of the Central Act were impliedly contained in the old Section 25O(2) of the Central Act. According to the learned Judge the requirement of recording rasons was not sufficient in the absence of a provision of appeal or revision to a higher authority. His Lordship concluded that the points of difference under Sub-section (3) of the Madhya Pradesh Act and Section 25O(2) of the old Central Act were inconsequential. I respectfully accept the reasoning of the learned Judge that the changes made in Sub-section (3) of the Madhya Pradesh Act do not meet the criticism of the Supreme Court in Excel Wear's case (supra). However, I refrain from express- ing any opinion as to whether in Sub-section (3) a provision of appeal or revision had been made or not or as to whether the provisions of review or reference as made in Sub-section (6) of the Madhya Pradesh Act were effective ana efficacious. I may make it clear that I am of the view that in spite of provisions of review and reference made in the new Sub-section (5) of Section 25O(2) of the Central Act, provisions as contained in Sub-section (2) of the said Act impose unreasonable restrictions. K.N. Shukla, J. disagreed with J.S. Verma, J. as he then was, and, therefore, the matter was referred to a third Hon'ble Judge for opinion, he being the Acting Chief Justice G.L. Oza, as he then was. The : learned Judge agreed with the opinion of K.N. Shukla, J. He interpreted Excel Wear's case thus:
"This reading of the judgment of their Lordships, therefore, clearly indicates that their ; Lordships examined the procedural safeguards first and came to the conclusion that those procedural safeguards are no safeguard and ultimately came to the conclusion that the law was such where an authority could ; pass a cryptic, capricious, whimsical and one-sided order and there is no remedy by way of an appeal or revision and in the absence of any specific provision no review could be made with any fruitful result and, therefore, felt, that the law amounted to negation of the right to close down an establishment which is a fundamental right and such a negation in their Lordship's view was unreasonable as their Lordships felt that something less rigorous could have been done and in this context considered the alternatives. It, therefore, clearly emerges that it is not correct to say that their Lordships declared Section 25O(2) as unconstitutional purely on the basis of substantive examination. It is also not wholly true to come to a conclusion that their Lordships held these provisions to be ultra vires purely on the grounds of procedure, but it appears that . their Lordships after examining the procedural part felt that it was inadequate and no safeguards are provided and, therefore, it amounted to a negation and treating it to be a negation of the right, the law was further examined."
28. The learned Judge examined the provisions of Section 25O(2) of the Madhya Pradesh Act and took the view that the procedural defects, as focussed upon by the Supreme Court, having been removed the basis of the judgment of the Supreme Court disappeared. He, therefore, proceeded to examine file reasonableness of the restrictions imposed, independent of the judgment in Excel Wear's case (supra) and came to the conclusion that on the whole the restrictions were reasonable. With profound respect to the learned Judge, I am unable to subscribe to the view that the Supreme Court in Excel Wear's case declard the old Section 25O(2) of the Central Act constitutionally invalid merely on the ground that there was no procedural safeguard and, therefore, the appropriate Government could pass a cryptic, capricious, whimsical and one sided order. As pointed out above, their Lordships took pains to emphasise that excessiveness and unreasonableness of restrictions on the exercise of the fundamental right not to carry on business was at large in Sub-section (2) of Section 25O(2). In paragraph 21 of his opinion Oza J., as he then was, catalogues the unreasonable restrictions considerd by the Supreme Court in Excel Wear's case (supra). They are fifteen in number. The third is that 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. The learned Judge I deals with it thus:
"but this only talks of a possibility. In fact, even if the reasons are adequate and sufficient, the restriction can be imposed in the interest of general public. It, therefore, does not mean that permission can always be refused on the ground of public interest."
In my humble opinion the Supreme Court emphasises that such restrictions will be excessive and unreasonable and any law containing such restrictions will be constitutionally bad.
29. The seventh is that 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 two objectives sought to be achieved by the provision cannot be achieved. The comment of the learned Judge on this restriction is that the same only indicates a negation of the right to close and, therefore, it deals with the consequence of the refusal to accord sanction. Again, with great respect, I feel that the Supreme Court made its comments on this restriction only to highlight its unreasonableness.
30. The tenth is that restriction being much more excessive than is necessary for the achievement of the object is highly unreasonable. The learned Judge observes that this only suggests that the restriction is more excessive. This aspect too has been dealt with by the Supreme Court in detail.
31. The eleventh is that 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. This is commented upon by the learned Judge that it suggests that the restriction can be more simpler and easier for the undertaking.
32. It is to be remembered that the Supreme Court observes that while considering the question as to whether permission should be granted to an employer to close down the undertaking it will not be correct to apply the principle that compensation is no substitute for the continuity of service. Their Lordships emphasise that if such a doctrine is invoked permission to close an undertaking will never be granted. That is why their Lordships recommended that in striking a balance between the right of an employer and the interest of labour, a via media of awarding compensation on the basis of slab or grade may be introduced. Obviously, such a suggestion was made with a view to make the restrictions reasonable. I have already mentioned in this judgment that Parliament while enacting Section 25O(2) (new) did not advert to this suggestion at all and the same mistake, it appears, has been committed by the Legislature of Madhya Pradesh.
33. The twelfth is that to direct the employer not to close down is altogether a negation of the right to close. It is not regulatory. On this the learned Judge's comment is that it is on the basis of the negation of the right. With profound respect, there can be no quarrel with the proposition that in some cases restrictions may amount to prohibition, but the Supreme Court has emphasised that if the restriction results in the ruination or annihilation of an employer, it will be an unreasonable one.
34. The Thirteenth is that 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. This is commented upon by the learned Judge as a negation of right. Again, I may respectfully point out that the Supreme Court has observed that the negation of the right in the context of Section 25O(2) will be unreasonable restriction on the fundamental right not to carry on a particular business. I, therefore, consider it my misfortune not to agree with the learned Judge that the Legislature of Madhya Pradesh succeeded in removing the defects as highlighted in the judgment of the Supreme Court in Excel Wear's case (supra).
35. The Constitutional validity of the new 5 Section 25O(2) of the Central Act came up for consideration before a Bench of three Hon'ble Judges of the High Court at Delhi in the Delhi Cloth Mills' case, (1989-II-LLJ-250) Speaking for the Court, S.S. Chadha, J. observed that the Supreme Court in Excel Wear's case (supra) examined the procedural safeguard and found f its absence with the result that the action could be arbitrary, whimsical and capricious. Their Lordships did not declare it unconstitutional on the basis of substantive aspects of the law.
With deep respect, I disagree with this reading of the judgment of the Supreme Court. I have already given my reasons in the earlier part of this judgment for taking a different view. I may make it clear that I have proceeded on the assumption that the procedural defects, as pointed : out by the Supreme Court, have been substantially removed by the Parliament in the new Section 25O(2).
36. These petitions succeed and are allowed. It is declared that Section 6-W of the U.P. Industrial Disputes Act, 1947 as a whole is constitutionally bad and invalid for violation of Article 19(1)(g) of the Constitution. Consequently, the impugned orders passed in all the petitions are held to be void and the respondents ; are restrained from enforcing them. The respondents are also restrained from taking any action against the petitioners for the infraction of the provisions of Section 6-W. I, however, make it clear that since the orders fall on the ground of invalidity of the law under which they have been passed, I do not consider it necessary to express any view on the merits of the impugned orders.
37. There shall be no order as to costs in all the writ petitions.