EXCEL WEAR ETC. versus UNION OF INDIA AND .ORS.

Citation: [1979] 1 S.C.R. 1009 · Decided: 29-09-1978 · Supreme Court of India · Bench: Y.V. CHANDRACHUD · Disposal: Case Allowed

Cited by 8 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

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1009 
EXCEL WEAR ETC. 
v • 
UNION OF INDIA AND .ORS. 
September 29, 1978 
[Y. V. CHANDRACHUD, C.J., R. S. SARKARIA, N. L. UNTWALIA, 
A. 0. KOSHAL AND A. P. SEN, JJ.J 
llldustrial Dispures Act. 1947-Sections 25(0) and Section 25(R)-Constitu· 
lional Validity of-Whether right to close down an undertaking a fundamental 
. <ight. 
A 
B 
'fhe facts of only one petition are set out because they are similar to f~ts 
in other petitions. Excel Wear is a partnership firm manufacturing garments for 
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uport. About 400 workmen were employed in the petitioners' factory. 
The 
case ot the petitioners is that the relations. between the .aiana.gement and the 
employe .. started deteriorating and became very straioed from 1976. The work· 
men became very militant, aggressive, violent and indulged in unjustifiable or 
illegal strikes. 
Various incidents have been mentioned in the Writ P!tition in 
'tUpport of the said allegations. 
However, since those facts were s.eriouslY 
challe.aged and· disputed by the workmen, the Court did not refer to them in 
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.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. T.he petitioners, therefore, served a notice dated 2nd 1'-fay, 1977 on 
the Government of ~faharashtra, respondent No. 2 for previous approval of the 
intended closure of the undertaking in accordance with section 25(0)(1). The 
S'tate Government refused to accord the approval on the ground 
that 
the 
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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 
<Jn a business guaranteed under Art. 19 (I )(g) of the Constitution. 
The im· 
pugned law imposes a restriction on the said fundamental right which is highly 
unreasonable, excessive and arbitrary. It i! not a restriction but almost amounts 
1o the deatructien or negation of that ri:ht. The restrictions imposed is mani~ 
festly beyond the permissible bounds of Art. 19(6) of the Constitution. 
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(b) A right to carry on a business includes a right not to carry on a busi-
ness whic:h is like any other right mentioned under Article 19(1) such as the 
Tight to freedom of speech includes a ri&ht not to speak and the right not to 
form an association is inherent under the right to form association. 
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(c) The restrictions are unreasonable because-
(i) Section 25(0) does not require ,ti\'ing of reasons in the order. 
(ii) No time Ii1nit is to be 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. L&bour 
is bound to su!fer because of unemployment brought about in almost 
every case of closure. 
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1010 
SUPREME COURT REPORTS 
(1979] 1 s.c.R. 
A 
(iv) It has been left to the caprice and whims of the authority to decide 
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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) RefusaJ. to accord approval would merely mean technically that the 
business continues but a factory owner cannot be compelled to l.!arry 
on the business anJ go on v;1ith 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 
(x) 
(xi) 
(xii) 
(xiii) 
achievement of the object is highly unreasona.ble. 
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. 
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To direct the employer not to close down is ai negation of the right 
to !=lose. 
It is not regulatory. 
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. 
The reasonableness of the impugned restri

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