Special provisions relating to lay-off, retrenchment and closure in certain establishments

Chapter VB
Special provisions relating to lay-off, retrenchment and closure

in certain establishments
Sec. 25K Application of Chapter VB

Sec. 25K, 25L and 25N
Construction of houses Falls within the definition of manufacturing process making compliance of
chapter V-B mandatory before retrenching workmen if employed 100 and above
Chapter V-B Is attracted for construction of houses if employed more than 100
Manufacturing process Includes Construction of houses for purposes of compliance of chapter V-B
Factory Sec.25 L attracts to construction of houses
5B.1 The service of a female daily wager typist was dispensed with without a departmental
enquiry. The employers business was constructing houses, laying down several pipelines
and constructing roads. He employed more than 100 employees. She was however paid
retrenchment compensation with salary for the period of 1 month. Labour Court reinstated
her with 50% back wages. Upon challenge High Court held that construction of houses for
the purpose of selling comes within the definition of manufacturing process. Since more than
100 workmen were in employment provisions of chapter V-B of the Act is attracted. As the
employer did not comply with Sec.25 N as a condition precedent to retrenchment, the High
Court upheld the reinstatement but reduced the back wages from 50% to 25% considering
her appointment as a daily wager.
M.P. Housing Board v. Smt. Jyoti Chitnis & Ors., 2008 III LLJ 959 : 2008 (118) FLR 509 : 2008 IV LLN
894 : 2008 LLR 1036 (MP.HC) WP 2087 of 2006 dt. 22-4-2008
From the above.are as under. (Page: 963, Para: 11)
It is clear.as per law. (Page: 963, Para: 12)
With regard to.as to costs. (Page: 963, Para: 13)
Sec. 25K(1)
Hundred or more Workman for computation for applicability of Chapter V-B kept undecided so far as
contractor and mathadi workers are concerned
Indian Gum The question which Mathadi / contract employee to be counted for making strength 100 is
kept undecided
Mathadi To be counted with contract labour to make the strength 100 kept open
5B.2 Whether for the purpose of computing the number of workmen while applying the Sec. 25-
K(1) of the Act contractors workmen, mathadi workers and workmen of other industrial
establishments are liable to be included or not is kept open.
Maharashtra General Kamgar Union v. Indian Gum Industries Ltd., 2008 II LLJ 827 : 2008 (118) FLR
399 : 2008 II LLN 795 : 2008 LIC 1345 : 2008 LLR 575 : 2008 (3) SCC 127 : 2008 (1) SCC (L&S) 574 :
2008 (5) BCR 426 (S.C.2J) CA 3936 of 2001 dt. 30-1-2008
We are of the opinion that in the light of the compromise arrived at between the parties, the present matter
does not survive but we do find that the matter is of general importance, which will ultimately have to be
1
resolved in some other case. We accordingly dispose of the appeal and leave the question open to be
decided in an appropriate matter. (Page: 828, Para: 4)
Note: In view of the above, the decision of Bombay High Court no rules the field.
Sec. 25L - Definitions

Sec.: 25L
Industrial Establishment Includes An establishment engaged in production of quality seeds

Manufacturing Activity Includes Production of quality seeds
Production of Quality Seeds Is a manufacturing activity and hence an industry
Sec. 25L Attracts to production of quality seeds
Retrenchment Is void if not the provisions of the act are not observed no matter the activity is a
production of manufacturing activity of quality seeds
5B.3 Activities involving production of quality seeds will bring the employer within the definition
of industrial establishment within the meaning of Sec. 25L of the Act. The court held that
the production of seeds involves human intervention and therefore it is a manufacturing
process and rejected the contention of the employer that it is not a manufacturing process
and upheld the contention of workman that he relies on the admission of the employer to
justify his claim that management was engaged in activities of production of quality seeds
which could not arrive without a manufacturing process hence the employer falls within Sec.
25L of the Act. This gives rise to observance of all the provisions of the Act before
undertaking retrenchment/termination without which the retrenchment was held void.
Lal Bahadur v. State of Haryana & Ors., 2010 IV LLJ 261 : 2010 (124) FLR 949 : 2010 II LLN 351 : 2010
LIC 2675 : 2010 I CLR 825 : 2010 LLR 484: 2010 LLR 980 (P&H.HC) CWP 13596 of 2001 dt. 15-10-
2009
In this case.the industrial establishment. (Page: 266, Para: 9)
Sec. 25M Prohibition of Lay-off

Sec. 25M
Lay off Provision 25M if violated Sec. 25Q attracts which cannot be cured by a settlement
Settlement Is not a substitute for curing the violation of Sec. 25M attracting penal provision of Sec. 25Q
granting permission to prosecute u/s. 34
Statutory provisions Are not amenable to be watered down by means of a settlement especially violation
attracts penal provisions
Penal provisions Are to be strictly construed with no scope for moderation by means of settlement
5B.4 Where the Appropriate Government has held that the employer is not a seasonal
establishment, challenge to the order of Government granting permission u/s. 34 of the Act
to prosecute for committing breach of Sec. 25M by inflicting lay off without prior permission
of the Appropriate Government amounting to an offence u/s. 25Q does not suffer any
illegality. And the employers contention that this controversy was already settled for
payment of 85% of lay of wages is only to be rejected because settlement by itself will not
take away the statutory effect of the provision such as Sec. 25Q which is penal in nature and
settlement is not a substitute to the compliance of the statutory requirements. The contention
that it is a seasonal industry was already negated by the State Government with no scope
but to pay the layoff compensation.
2
M/s. Siruguppa Sugars & Chemicals Ltd. v. State of Karnataka & Anr., 2010 II LLJ 390 : 2009 (122) FLR
364 : 2010 LIC 383 : 2009 III CLR 875 (Karn.HC) WP 47139 of 2004 dt. 10-2-2009
If an employer.permission to prosecute. (Page: 393, Para: 9)
As far as.same is dismissed. (Page: 393, Para: 10)
Sec. 25-M(7)
Lay-off The specified authority can make a reference u/s. 25M(7) to the tribunal once it gives permission
without giving any notice to the parties
Reference U/s. 25M(7) does not partake a requirement to give any notice to the parties
Sec. 25M(7) Does not require any notice to be given to the parties while making a reference as settled by
Apex court in the judgment of Cable Corporation of India
Notice U/s. 25M(7) to the parties is not required to be given while making a reference
5B.5 Sub-Sec. 7 of Sec. 25M, sub-sec. 6 of Sec. 25N and sub-sec. 5 of Sec. 25-O of the Act are
identical. While making a reference, in this case at the instance of the union, the specified
authority under sub-Sec. 7 of Sec. 25M had made a reference to the tribunal without giving
any notice to the employer. In this case the dispute was regarding laying off 98 workmen for
a period of one year, for which the Appropriate Government had given permission earlier
and the same was sought to be referred in terms of Sec. 25M(7). The High Court upheld the
reference without notice to the employer being a settled principle of law as laid down by the
Apex court in Cable Corporation of India v. Additional Commissioner of Labour & Ors.,
2005 II LLJ 1057 inasmuch as employer has full opportunity to place materials as deemed fit
before the tribunal and hence it cannot be said that any principle of natural justice was
violated.
L.M. Glasfiber India (Private), Ltd. v. State of Karnataka & Anr., 2011 II LLJ 178 : 2010 (127) FLR 914 :
2010 III LLN 854 : 2011 I CLR 161 (Karn.HC) WP 37059 of 2009 dt. 9-3-2010
In view of the law laid.and Others (supra) case. (Page: 181, Para: 13)
Sec. 25-M (7)
Additional Commissioner of Labour Though not the specified authority u/s. 25M (7) can hear the parties
provided files for passing orders are circulated to Commissioner of Labour
Specified authority For laying off workmen though not heard them but received the files from Additional
Commissioner of Labour after being heard the order so passed is valid and legal
Lay off orders Passed by Commissioner of Labour after receiving the files from Additional
Commissioner of Labour who heard the workmen is valid and legal
5B.6 The question is regarding the legality of permission granted by the Commissioner of Labour
who is the specified authority, for laying off 24 workmen though that specified authority
himself has not heard the workmen but on his direction Additional Commissioner of Labour
issued notice and heard them. In this regard the High Court held that though it is heard by
Additional Commissioner of Labour he circulated the file to Commissioner of Labour who
then passed the lay off orders. Further at the instance of Division Bench of High Court
which had directed the Commissioner of Labour to review his orders if need be, he had
issued notice to the parties and after hearing confirmed his earlier orders. Hence the High
Court held that there is no illegality in the layoff orders issued by the Commissioner of
Labour though under the circumstances originally the parties were not heard by him but by
Additional Commissioner of Labour.
Karan Woosin Ltd. Employees Union Rep. by its President & Ors. v. State of Andhra Pradesh, L.E.T. & R.
Department & Ors., 2009 (120) FLR 629 (AP.HC) WP 5657 of 2006 dt. 2-1-2007
3
Heard the learned.avail to them. (Page: 631, Para: 5)
Admittedly, the notice.confirmed the same. (Page: 631, Para: 6)
The contention of.without hearing them. (Page: 632, Para: 7)
Sec. 25-M (8) & Sec. 33C(2)
Lay off Compensation Being falling under money due is susceptible to execution u/s. 33C(2) if not paid
Sec. 25M(8) Once attracted for violation of Sec. 25M(1) remedy u/s. 33C(2) for summary execution can
be invoked
Sec. 33C(2) Proceedings can be invoked for unpaid lay off compensation in terms of Sec. 25M(8)
Chapter VA or VB For lay off compensation comes within the purview of any award or settlement
covering the proceeding u/s. 33C(2)
5B.7 The question is whether the unpaid lay off compensation can be claimed by the workman
u/s. 33C(2) of the Act. In this case the employer failed to obtain permission u/s. 25M(1) and
as a result became liable to pay the dues in terms of Sec. 25M(8) since such lay off was
deemed to be illegal from the date of such lay off and workmen are entitled to all the benefits
as if they had not been laid down. The layoff compensation is in the nature of recovery of
money due from the employer and capable of recovery u/s. 33C(2) which is in the nature of
execution proceeding. Such money is not only susceptible to recovery not only as per the
settlement or an award but also under the ingredients of the provisions of Chapter VA or
VB of the Act by summary procedure and the workman need not be forced to take the
recourse to the general mode of execution in a civil court. To bring this under the ambit of
Sec. 33C(2) it is not necessary that the amount claimed should always be for a
predetermined amount and hence the claim for lay off compensation also falls within the
term money due.
Management of Cambodia Mills, Coimbatore & Anr. v. Presiding Officer, Labour Court, Coimbatore &
Ors., 2011 III LLJ 157 (Mad.HC) WP 957 & 14393 of 2003 dt. 12-1-2011
As far as the present case.opined by this Court. (Page: 164, Para: 33)
Be that as it may, since.the writ petitions fail. (Page: 164, Para: 35)
Sec. 25N Conditions Precedent to retrenchment of workmen

Sec. 25N
Burden of Proof On the workmen to prove that there are not less than 100 workmen in the industrial
establishment
5B.8 The burden to establish that there were not less than 100 workmen in the industrial
establishment is on the workman who so allege.
Pune Labour Union v. State of Maharashtra & Ors., 2010 II LLJ 376 : 2010 (124) FLR 630 : 2010 II LLN
503 : 2010 I CLR 72 : 2010 (1) Mah.LJ 806 (Bom.DB) WP 473 of 2006 dt. 13-11-2009
In the instant case.that burden. (Page: 379, Para: 12)
Sec. 25N
4
Outside Agency Work can be entrusted to cut the costs leading to lawful retrenchment provided all
parameters of Sec. 25N was complied with
Sec. 25N If all parameters are complied with retrenchment leading to closure of unit with a view to cut a
cost cannot be held unjustified
Closure of unit Justified and proper as all requisite parameters of Sec. 25N had been complied with
5B.9 Closure of a unit and entrusting the work in one department to outside agency on
consideration of cost cutting and due consideration of these circumstances leading to the
government granting permission to retrench 82 workmen was held proper as all the
requisite parameters of Sec. 25N had been complied with. The decision of the government
was upheld. Petition by the Union dismissed.
Bharat Seats Employees Union v. Specified Authority u/s. 25-N of the Industrial Disputes Act, 1947 & Anr.,
2010 IV LLJ 87 : 2010 (125) FLR 767 : 2010 II CLR 376 (P&H.HC) CWP 2240 of 2003 dt. 8-1-2010
The decision of Government.down the unit. (Page: 91, Para: 13)
Sec. 25N
Head Office In case of production of quality seeds acts in aid of carrying on the predominant activity of
production of quality seeds
Quality Seeds Being a manufacturing activity the head office which aids the same is to be clubbed with
the field unit to reckon within the meaning of Sec. 25N
Retrenchment Without complying with Sec. 25N will be nonest as head office and unit are engaged in
manufacturing quality seeds one cannot exists without the other
Sec. 25N Attracts to manufacturing quality seeds since the workman employed by the head office cannot
be severed from the field unit
5B.10 The head office of the industrial organization manufacturing quality seeds cannot be
divorced from the activity of its field unit because there is proximate nexus between the two.
Hence the head office is not severable from its field unit because the purpose of head office is
carrying on or aiding the carrying on of such predominant activity of manufacturing quality
seeds and hence the entire establishment or undertaking is deemed to be one industrial
establishment. The head office is really in the nature of the brain to propel its activities. It
pilots its activity. One cannot exist without the other. In this case the employer employed
more than 500 men and women and the workmen of head office must also be taken as part
of the establishment for production of quality seeds. Hence any retrenchment without
complying with Sec. 25N and only complying Sec. 25F was held in violation of the provisions
of 25N. The employer did not serve notice u/s. 25N which provides 3 months notice with
reasons. Hence the High Court set aside the order of labour court to the contrary.
Lal Bahadur v. State of Haryana & Ors., 2010 IV LLJ 261 : 2010 (124) FLR 949 : 2010 II LLN 351 : 2010
LIC 2675 : 2010 I CLR 825 : 2010 LLR 484: 2010 LLR 980 (P&H.HC) CWP 13596 of 2001 dt. 15-10-
2009
The workman had.is invalid. (Page: 267: Para: 10)
If the activities.not discharged. (Page: 268: Para: 11)
Sec.25 N
Regularization Of juniors in preference to their seniors is invidious discrimination
Junior workman If regularized to the exclusion of seniors it amounts to invidious discrimination
State Within the meaning of Art.12 is expected to follow statutory provision of Sec. 25N before
retrenchment without any discrimination in regularization
Retrenchment Illegal ab initio for want of compliance with Sec. 25N
5
5B.11 Petitioner workers appointed for a project work under a scheme of the Department of
Telecommunication had completed 240 days of continuous service and claimed for their
regularization. On the other hand junior workers who had not completed 240 days were
regularized by the respondents. Hence the present petition in which it was held that non
consideration of petitioners for the regularization amounted to invidious discrimination in
relation to their juniors especially when the employer being a State within the meaning of
Art. 12. Since Sec. 25N was attracted their subsequent retrenchment without the permission
of the state government was void ab initio and hence they deemed to be in continuous service
with all consequential benefits. Directions were issued to consider cases of petitioners for
regularization.
Vinod Kumar & Ors. v. Union of India & Ors., 2008 LIC 3130 (HP.HC) CWP 1524 of 2002 dt. 16-5-2008
Now the Courtthe respondent-corporation. (Page: 3136, Para: 21)
If the persons.similarly situated persons. (Page: 3138, Para: 25)
The fact that.held as under. (Page: 3138, Para: 27)
In view of.as to costs. (Page: 3139, Para: 28)
Sec. 2(s) and 25N

Supervisor Is the one with power to sanction leave, granting overtime, recommending leave, issuing
instructions for overtime and functioning as in charge of multiple units
Workman Excludes Store Supervisor
Sec. 25N Does not attract for termination of a Store Supervisor drawing pay of Rs. 9576 with
Supervisory functions
5B.12 A person working as a Store Supervisor exercising power to sanction leave of the workman
and putting in signatures for extracting extra work and over-time, supervising work of his
subordinates, recommending the leave application and issuing instructions with regard to
overtime etc, controlling as in charge of 3 units comprising Ayurvedic, Engineering,
Packing, Stores and Dispatch was held to be a supervisor and not a workman by the Labour
Court. Therefore he has no cause to take recourse to I.D. Act against his so called illegal
termination. The High Court upheld the award holding him not a workman within the
meaning of Sec. 2(s) of the Act. Hence invocation of Sec. 25N does not arise.
Sunil Dutt Bakshi v. M/s. Dabur India Ltd. & Anr., 2009 LIC 1750 : 2009 LLR 727 (HP.HC) CWP 385 of
2008 dt. 4-12-2008
Sh. Som Raj.work at Badli. (Page: 1751, Para: 8)
In view of.I. D. Act, 1947. (Page: 1752, Para: 9)
The Petitioner was.his appointment letter. (Page: 1754, Para: 11)
The submission of.in the affidavit. (Page: 1754, Para: 12)
Sec. 10(3) & 25-N
Lock-out Prohibition u/s. 10(3) is valid even when no reference of dispute of need to retrench workman
was made
Reference U/s. 10(1) is not necessary to prohibit a lock out
Retrenchment A dispute raised by employer need not be referred by Government yet prohibit the lock out
Sec. 25-N Compliance is precondition for any reference of said dispute u/s. 10(1)
6
5B.13 The dispute raised by the employer inter alia is the viability to continue the industry unless
the workforce is reduced. The union disregarded the managements proposal. The
Appropriate Government refused to refer this dispute u/s. 10(1) of the Act though it referred
another dispute putting a ceiling on Dearness Allowance. The Appropriate Government even
when it did not make a reference u/s. 10(1) of the Act it still issued prohibition u/s. 10(3) of
the Act against lock out declared by the management. The High Court both Single Judge
and Division Bench had upheld the Governments stand. The question before Supreme
Court was whether the Appropriate Government is competent to issue prohibition u/s. 10(3)
when the said dispute was not referred by it for adjudication. The Supreme Court held that
a dispute can be raised by employer, if his application for permission is denied by the
Appropriate Government. But before complying with the provisions of Sec. 25-N the
employer is precluded from raising a dispute for reference u/s. 10(1) of the Act. Hence the
Appropriate Government was fully competent and empowered to issue the order of
prohibition.
M/s. Empire Industries Ltd. v. State of Maharashtra & Ors., 2010 II LLJ 593 : 2010 (125) FLR 337 : 2010
II LLN 566 : 2010 LIC 2163 : 2010 I CLR 1070 : 2010 LLR 777 : 2010 (1) SCC (L&S) 987 : 2010 AIR
(SC) 1389 : 2010 (4) BCR 227 (S.C.2J) CA 3003 of 2005 dt. 17-3-2010
It may be stated here that during the course of this protracted litigation the factory was closed down on
April 26, 1999 and since then it remains closed. The validity of the factory's closure is not in issue. This
means that the relevance of the present appeal is only for the period September 23, 1992 (the date on which
the prohibition order was issued) to April 26, 1999 (when the factory was finally closed down). In case, the
impugned prohibition order is held legal and valid and the appeal is dismissed the lock-out in the factory
after September 26, 1992 would be illegal in terms of Section 24(O) of the Act and the appellant would be
liable to face the legal consequences. If, on the other hand the appeal succeeds and the prohibition order is
struck down as illegal and invalid, that would be the end of the matter. (Page: 594, Para: 3)
In face of such detailed regulatory mechanism provided for in the Act and the Rules, we find the
submission of Mr. Shanti Bhushan completely unacceptable. To say, that even without following the
provisions of Section 25N of the Act, it is open to the employer to raise a demand for retrenchment of
workmen and to ask the government to refer the ensuing dispute to the Industrial Tribunal for adjudication,
would tantamount to substituting a completely different mechanism in place of the one provided for in the
Act to determine the validity and justification of the employer's request for retrenchment of workers. It is
true that under Section 25N the authority to grant or refuse permission for retrenchment is vested in the
appropriate government which in this case would be the state government or the authority specified by it.
Under Section 10(1) too it is the state government that would make a reference of the industrial dispute.
But the two provisions are not comparable. The nature of the power of the state government and its
functions under the two provisions are completely different. In making the reference (or declining to make
the reference) under Section 10(1) of the Act the state government acts in an administrative capacity
whereas under Section 25N(3) its power and authority are evidently quasi judicial in nature see the
Constitution Bench decision of this Court in Workmen of Meenakshi Mills Ltd. and Ors. v. Meenakshi
Mills Ltd. and Anr. MANU/SC/0512/1992 : (1992) 3 SCC 336 paragraphs 28 to 30. Further, though
Section 25N(6) has the provision to refer the matter to the tribunal for adjudication, that provision is
completely different from Section 10(1). A reference under Section 10(1) of the Act cannot be used to
circumvent or bypass the statutory scheme provided under Section 25N of the Act. This is, however, not to
say that there cannot be any dispute on the subject of retrenchment that can be referred to the tribunal for
adjudication. A dispute may always be raised by or on behalf of the retrenched workmen questioning the
validity of their retrenchment. Similarly, the employer too can raise the dispute in case denied permission
for retrenchment by the government. [It is another matter that the chances of the disputes being referred for
adjudication are quite remote: see Workmen of Meenakshi Mills Ltd. (supra) paragraphs 56 & 57]. But the
point to note is that the occasion to raise the demand/dispute comes after going through the statutory
provisions of Section 25N on the Act. (Page: 602, Para: 27)
In light of the discussions made above, we arrive at the conclusion that on the material date there was no
dispute on the basis of any demand raised by the appellant in regard to retrenchment of any workers in the
7
factory, Garlick Engineering. Secondly, and more importantly, any retrenchment of worker(s) can only be
effected by following the provisions laid down under the Act and the Rules. It follows that it is not open to
the management to make a demand/proposal for retrenchment of workmen and disregarding the provisions
of the Act ask the government to refer the demand/dispute under Section 10(1) to the tribunal for
adjudication. The only demand raised by the management regarding imposition of ceiling on dearness
allowance was already referred to the Industrial Tribunal. Hence, the appropriate government was fully
competent and empowered to issue the impugned order prohibiting closure of the factory. There was no
illegality or infirmity in the closure notice. (Page: 604, Para: 29)
Sec. 25N
Review The workmen have to seek u/s. 25N(6) if they want to contest the permission for retrenchment
granted alleging breach of Sec. 25F
Retrenchment U/s. 25N does not entitle the workman to any relief due to his failure to avail the remedy of
review provided u/s. 25N(6)
Sec. 25N(6) Review is efficacious remedy instead of writ petition for allegations of breach of Sec. 25F
5B.14 Employer retrenched the workmen after following due process of law. The workmen did not
avail the opportunity to contest the same by way of review as provided u/s. 25N(6). The
Labour Court held that the employer did not violate the provisions of retrenchment.
Whereas in a writ petition challenging the same the High Court held that the proper course
open to the workmen would be to seek review u/s. 25N(6). Having not invoked this course the
permission to retrench has reached finality. Therefore the writ petition is not maintainable.
Even otherwise the workmen have no cause of action alleging breach of Sec. 25F in cases of
valid retrenchment. The workmen are not entitled to any relief.
Mrs. Malti Devi v. Management of M/s. I.E.S. India Ltd. & Anr., 2010 II LLJ 547 : 2009 (123) FLR 926
(Jhar.HC) WP(L) 1297 of 2009 dt. 24-7-2009
Learned Tribunal after.to any relief. (Page: 548, Para: 4)
The grounds raised.I. D. act. (Page: 548, Para: 5)
Sec. 25 N
Retrenchment The employer should not only comply with Sec.25-N but also cannot rely on a clause of
S.O held ultra vires
Industrial Dispute If raised belatedly the workman will forfeit the back wages for the period from the date
of retrenchment to the date of award
Back Wages Payable against illegal retrenchment only from the date of award and not from the date of
retrenchment if the workman raised a dispute after 4 years
5B.15 Where the retrenchment was held illegal for want of compliance with Sec. 25-N of the Act
and also when the employer relied on clause 13 of the Standing Orders which was held in the
earlier judgment of the same Court as ultra vires of I.D Act upheld by the Supreme Court,
such retrenchment cannot be validated by the High Court in a writ petition. The High Court
upheld the award for reinstatement made by the Labour Court but modified the back wages
to be payable only from the date of award minus the amount already received instead of
from the date of retrenchment for the reason that the workman raised the dispute after a
period of 4 years.
Rajasthan State Road Transport Corporation, Kota v. Surendra Kumar Bagri & Anr., 2009 (120) FLR 506
: 2008 III CLR 934 : 2009 LLR 410 (Raj.HC) SBCWP 6436 of 1994 dt. 14-10-2008
A perusal of.the respondent- workman. (Page: 507, Para: 2)
8
In the result. of the Act of 1947. (Page: 508, Para: 3)
Sec. 25N & 25L(a)
Retrenchment In Forest Development Corporation of Maharashtra will be void if Sec. 25N was not
complied with
Forest Development Corporation of Maharashtra Is a factory within the meaning Sec. 2(m) and industrial
establishment within the meaning Sec. 25L(a)
Sec. 25N If not complied with retrenchment made by Forest Development Corporation of Maharashtra
will be illegal
Industrial Establishment Includes Forest Development Corporation of Maharashtra
5B.16 The Forest Development Corporation of Maharashtra was held involved in activities of
manufacturing such as developing land to raise plantation of important trees and to carry
out the business of felling, converting, dragging, hauling, marketing, processing,
standardizing, grading, sorting, distributing and selling the forest products. It also carry on
the business of timber and lumber sawmill to manufacture and deal in articles wherein
forest produce is used for like manufacturing plywood, pulpwood, matchwood, hardwood,
woodblocks for flooring, boxes, windows, doors, wood pulp, wood wool, masts, spars,
derricks, sleepers, tool handles, paneling, wood work, furniture and dealing in waste
byproducts. Therefore the activities were held a manufacturing process within the meaning
of Sec. 2(k) and therefore it is a factory within the meaning of Sec. 2(m) of the Factories Act
and an industrial establishment within the meaning of Sec. 25L(a). Hence before retrenching
any workmen the employer was obliged to seek permission of the Appropriate Government
u/s. 25N(2). In this case no such permission was obtained. The High Court quashed and set
aside the order of industrial court to the contrary and the judgement of the labour court was
restored.
Kisan Atmaram Kasti v. Forest Development Corp. of Maharashtra Ltd., Ballarasha & Ors., 2011 (3)
Mah.LJ 774 : 2012 I LLJ 426 : 2011 (130) FLR 296 : 2011 I CLR 971 : 2011 (6) BCR 109 (Bom.HC) WP
3301, 3315, 3318 & 3319 of 2006 dt. 24/25-2-2011
Keeping in view the.Industrial Dispute Act, 1948. (Page: 780, Para: 12)
Shri Giripunje, the.cannot be sustained. (Page: 781, Para: 14)
Sec. 10(1) & 25-N(3)
Quasi Judicial Is the power of State Government u/s. 25-N(3) of the Act
Administrative Is the power of state govt. u/s. 10(1) of the Act
Sec. 25-N(3) Power of Appropriate Government is quasi judicial
Sec. 10(1) Power of Appropriate Government is administrative
5B.17 The Appropriate Government though the same, yet it exercises different powers u/s. 10(1)
and 25-N (3) of the Act while referring the matter for adjudication. In making the reference
or declining to make the reference u/s. 10(1) of the Act, the State Government Acts in an
administrative capacity. Whereas u/s. 25-N (3) its power and authority are quasi judicial in
nature.
M/s. Empire Industries Ltd. v. State of Maharashtra & Ors., 2010 II LLJ 593 : 2010 (125) FLR 337 : 2010
II LLN 566 : 2010 LIC 2163 : 2010 I CLR 1070 : 2010 LLR 777 : 2010 (1) SCC (L&S) 987 : 2010 AIR
(SC) 1389 : 2010 (4) BCR 227 (S.C.2J) CA 3003 of 2005 dt. 17-3-2010
In face of such detailed regulatory mechanism provided for in the Act and the Rules, we find the
submission of Mr. Shanti Bhushan completely unacceptable. To say, that even without following the
provisions of Section 25N of the Act, it is open to the employer to raise a demand for retrenchment of
9
workmen and to ask the government to refer the ensuing dispute to the Industrial Tribunal for adjudication,
would tantamount to substituting a completely different mechanism in place of the one provided for in the
Act to determine the validity and justification of the employer's request for retrenchment of workers. It is
true that under Section 25N the authority to grant or refuse permission for retrenchment is vested in the
appropriate government which in this case would be the state government or the authority specified by it.
Under Section 10(1) too it is the state government that would make a reference of the industrial dispute.
But the two provisions are not comparable. The nature of the power of the state government and its
functions under the two provisions are completely different. In making the reference (or declining to make
the reference) under Section 10(1) of the Act the state government acts in an administrative capacity
whereas under Section 25N(3) its power and authority are evidently quasi judicial in nature see the
Constitution Bench decision of this Court in Workmen of Meenakshi Mills Ltd. and Ors. v. Meenakshi
Mills Ltd. and Anr. MANU/SC/0512/1992 : (1992) 3 SCC 336 paragraphs 28 to 30. Further, though
Section 25N(6) has the provision to refer the matter to the tribunal for adjudication, that provision is
completely different from Section 10(1). A reference under Section 10(1) of the Act cannot be used to
circumvent or bypass the statutory scheme provided under Section 25N of the Act. This is, however, not to
say that there cannot be any dispute on the subject of retrenchment that can be referred to the tribunal for
adjudication. A dispute may always be raised by or on behalf of the retrenched workmen questioning the
validity of their retrenchment. Similarly, the employer too can raise the dispute in case denied permission
for retrenchment by the government. [It is another matter that the chances of the disputes being referred for
adjudication are quite remote: see Workmen of Meenakshi Mills Ltd. (supra) paragraphs 56 & 57]. But the
point to note is that the occasion to raise the demand/dispute comes after going through the statutory
provisions of Section 25N on the Act. (Page: 602, Para: 27)
Sec. 25N(4)
Deemed permission For retrenchment u/s. 25N if 60 days from the date of application was erroneously
computed the retrenched workmen are entitled to all benefits
Contempt petition Is not maintainable if the breach of court order was not deliberate
Sec. 25N If deemed permission u/s. 25N(4) was wrongly computed to be 60 days from the date of
application the employer is liable to all monetary payments to the retrenched workmen
5B.18 By the order dated 23.8.2002, High Court held the retrenchment of the workmen was illegal
as the deemed permission for retrenchment u/s. 25N of the I. D. Act was wrong as it was on
mistaken calculation of 60 days. The High Court thereupon directed the employer to pay all
the monetary benefits to all the 101 workmen. Consequently the employer settled the dispute
with 71 workmen. The remaining 30 workmen with whom no settlement were arrived at
filed contempt petitions. The High Court rejecting the contempt petition held that there was
no deliberate breach of the order passed by the High Court inasmuch as these 30 workmen
have already entered into full and final settlement with employer receiving sizable amount
and hence there was no willful disobedience of the court orders.
Md. Alamdar & Ors. v. State of Jharkhand & Ors., 2009 II LLJ 658 : 2009 LLR 878 (Jhar.HC) CC(C) 638
of 2007 dt. 17-2-2009
It appears that.is directed accordingly. (Page: 660, Para: 5)
As a cumulative effect.by this Court. (Page: 660, Para: 10)
Sec. 25-N (6)
Reference Is not permissible u/s. 25-N (6) of the Act once the specified authority exercised the option to
review
Review Once made u/s. 25-N (6) there is no scope for reference
Sec. 25-N (6) Gives choice of review or reference and not both
5B.19 The language of Sec. 25-N(6) is plain precise and unambiguous and admits of only one
meaning. The word or appearing in the section between review or reference is disjunctive
10
and alternative. The word or cannot be read as and to make it conjunctive and
cumulative. Hence, once the Appropriate Government or the specified authority exercised its
choice and review application is disposed of there is no choice of further making reference in
view of the clear language of Sec. 25-N(6) of the Act. The judgment of Single Judge and
Division Bench directing to make a reference, despite review and rejection of the application
of employees union, was set aside.
Cable Corp. of India Ltd. v. Additional Commissioner of Labour & Ors., 2008 II LLJ 1057 : 2008 (118)
FLR 748 : 2008 III LLN 468 : 2008 LIC 2644 : 2008 II CLR 545 : 2008 (2) SCC (L&S) 581 : 2008 (7)
SCC 680 : 2008 AIR (SC) 2386 : 2008 (4) AIR (Bom.HC) 679 (S.C.2J) CAJCA 7211 of 2005 dt. 16-5-
2008
In Fakir Mohd. (dead) by Lrs. v. Sita Ram 2002 (1) SCC 741 it was held that the word 'or' is normally
disjunctive The use of the word 'or' in a statute manifests the legislative intent of the alternatives prescribed
under law. (Page: 1060, Para: 13)
Had the Legislature intended that the reference could be made after the Government or the Specified
Authority deals with the review power, it would have said so specifically by specific words. It could have
provided for a direct reference. The parameters of review are different from a reference. (Page: 1060,
Para: 15)
When a language is plain and unambiguous and admits of only one meaning no question of construction
of a statute arises, for the Act speaks for itself. (Page: 1061, Para: 19)
Sec. 25F & 25N
Industrial Establishment For contending violation of Sec. 25N in the matter of retrenchment the workman
has to plead his establishment falls within the meaning of Sec. 25L
Sec. 25F Does not attract if the workman refuses to accept bankers cheque towards one months notice
pay and retrenchment compensation
Bankers Cheque If the workman refuses towards one months notice pay and retrenchment compensation
he has no case for violation of Sec. 25F
Sec. 25N To attract a pleading is necessary that the establishment in which workman was employed falls
within the meaning of Sec. 25L
5B.20 When the workman refused to accept bankers cheque towards one month pay and
retrenchment compensation there cannot be a case for violation of provision of clause (a)
and (b) of Sec. 25F. Similarly where there was no pleadings that where the workman was
employed in an industrial establishment within the meaning of Sec. 25L the workman cannot
contend that the employer had violated Sec. 25N of the Act inasmuch as there could be no
case for attraction of Chapter VB of the Act. In this case admittedly the workman was
employed in a dam project.
Sudarshan Rout v. Commissioner-cum-Secretary to Govt. of Orissa & Ors., 2011 III LLJ 515 : 2011 IV
LLN 384 : 2011 LIC 730 : 2011 LLR 477 (Ori.DB) WP 4238 of 2003 dt. 27-10-2010
The petitioner has asserted.Act have been violated. (Page: 517, Para: 5)
Sec. 25G of the Act.retrenchment of the petitioner. (Page: 517, Para: 6)
Besides the plea that.have been complied with. (Page: 518, Para: 7)
11
Sec. 25-O Procedure for closing down an undertaking
Sec. 25-O(4)
Closure Once permitted by the Government, the only right of the workman is to get compensation
Final and Binding Is the order of closure u/s. 25-O on the parties
Compensation U/s. 25FFF is the only right for workmen once the closure is permitted
5B.21 An order of Appropriate Government granting an application for closure u/s. 25-O being
final and binding, thereafter the only right which accrues in favour of the workmen is to
obtain compensation as provided there under. Once it is proved that the master servant
relationship exists at the time of closure the entitlement for compensation stems from that
relation. Once the closure is effected, that relationship is snapped.
Managing Director, Karnataka Forest Development Corporation Ltd. v. Workmen of Karnataka Pulpwood
Ltd. & Ors., 2008 I LLJ 880 : 2007 (115) FLR 811 : 2008 I LLN 450 : 2008 I CLR 63 : 2009 (1) SCC
(L&S) 464 (S.C.2J) CA 4800 of 2007 with CA 4802 of 2007 dt. 11-10-2007
It is unfortunate that the State of Karnataka as also Appellant- Corporation did not specifically take one
stand or the other. It has been prevaricating its stand from stage to stage. The relationship between the
company and the respondents being employer and workmen is governed by the provisions of the Industrial
Disputes Act, 1947. The Management of an industrial undertaking is entitled to take recourse to closure of
its undertaking in terms of the provisions of the said Act itself. Section 25-O of the said Act lays down the
procedure for closing down an undertaking. Once the permission had been given by the State Government,
all consequences would ensue. In terms of Sub-section (8) of Section 25-O, all the workmen would be
entitled to receive compensation which shall be equivalent to 15 days average pay for every completed year
of continuous service or any part thereof in excess of six months. Section 25S provides that in relation to a
closure of an undertaking governed by Chapter V-B, the provisions of Sections 25B, 25D, 25E, 25F, 25G,
25H and 25 would also apply. Section 25J provides that the provisions of Chapter VA shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
Indisputably in the event an undertaking is closed down, the only right which accrues in favour of the
workmen is to obtain compensation as provided for. We may notice that Sub-section (4) of Section 25O
provides that an order of the appropriate Government is final and binding on the parties. (Page: 885/886,
Para: 16)
Sec. 25-O
Disputed question of fact Cannot be agitated in writ

Workmen 100 or more or less Is a disputed question of fact requires adjudication writ not maintainable
Workman A definition under Industrial Disputes Act is different than the worker under Factories Act
5B.22 Where there is disputed question of facts as to the number of workmen employed, the notice
of closure of establishment cannot be challenged in a writ petition. The definition of worker
u/s. 2(l) of Factories Act is substantially different from the definition of workmen u/s. 2(s) of
the Act. Hence whether Chapter VB is applicable or not is a disputed question requiring
adjudication in appropriate forum.
Larsen & Toubro Employees Association v. State of Haaryana & Ors., 2009 II LLJ 457 (P&H.DB) CWP
3197 of 2008 dt. 20-10-2008
On behalf of.created under the Act. (Page: 458, Para: 4)
Sec. 25-O(2)
Sec. 101 of Evidence Act Burden of Proof of assertion made is on the union
12
Written Statement Assertion made by the union there in the burden to prove on the union
Burden of Proof Is on the union if it asserts in written statement that mills closure is due to
mismanagement
5B.23 The union contended in its written statement that the mill suffered heavy losses due to
financial mismanagement, non replacement of machineries or spare parts, huge borrowings
and debt trap. Under Sec. 101 of evidence Act the burden to prove these facts is on the
union. But the union failed to prove its assertions against the mill in its written statement.
Hence it virtually admits the case of the mill leading to the adverse circumstances affecting
the viability of the mill to continue to work. If the union fails to prove either by way of direct
evidence or by cross-examination its assertion made in written statement, the admission
made by it goes in favour of the mill for closure u/s. 25- O (2) of the Act.
Hindoostan Spinning & Weaving Mills, Mumbai v. Hindustan Crown Mills Siddhivinayak Kamgar
Karcmachari Sangharsha Sanghatana & Ors., 2008 I LLJ 243 : 2008 II LLN 361 : 2007 (4) BCR 568 :
2007 (5) Mah.LJ 801 (Bom.DB) OOCJA 364, 441 & 458 of 2005 dt. 11-6-2007
Now let us.adversarys case. (Page: 256, Para: 68)
With.appellant mill. (Page: 256/257, Para: 69)
Sec. 25-O
Closure Of an undertaking with 83 workmen does not attract Sec. 25-O

Approval For closure of an undertaking employing 83 workmen is not required u/s. 25-O
5B.24 There were at the most 83 workmen working in the establishment at the time of closure
notice was issued. Hence the provision of Sec. 25-O of the I. D. Act are not applicable. Even
then the union challenged the notice of closure. The Industrial Court held that the employer
previously also laid down its workmen on the ground of financial stringency. The closure of
the undertaking on this ground being untenable, it was held illegal for non compliance of
Sec. 25-O of the Act. The employer challenged the order before High Court. It held that the
Sec. 25-O does not attract to the case in hand because at the most the number of workmen in
the establishment were only 83. Moreover it is now well settled and permitted to close down
even a part of the undertaking. Therefore the order of Industrial Court was set aside.
K. Mohan & Co. International, Nashik v. Nashik Workers Union, Nashik & Anr., 2009 I CLR 34 (Bom.HC)
CAJWP 4154 of 1997 dt. 29-7-2008
Mr. Rele criticized.be set aside. (Page: 36, Para: 4)
Apart from this.not be closed. (Page: 36, Para: 5)
Sec. 25-O
Judicial Review Of the permission granted for closure of 7 units to be rejected if the matter was already
examined by experts and BIFR and AAIFR and other High Courts
Writ petition Not maintainable if the permission for closure under challenge was already subjected to
scrutiny by the experts and in proceedings before BIFR and AAIFR and High Courts
Closure Permission granted for closure of 7 units cannot be called into question in a writ petition if the
same are already examined by the experts and in proceedings under BIFR and AAIFR and High Courts
5B.25 The appropriate government accorded permission for closure of 7 units of the company due
to irreversible losses suffered and with a view to rehabilitate the remaining units. The entire
gamut of the issue was gone into with BIFR, AAIFR and in proceedings before Delhi and
P&H. High Courts. A judicial review of the permission granted u/s. 25-O at this stage, the
High Court held, does not arise because the decisions were arrived at by the experts after
13
taking into consideration all relevant factors. Allowing the petition will cause incalculable
harm to the interest of rehabilitation of the remaining units and interest of workmen hence
petition dismissed.
Cement Corporation Employees Union v. Union of India & Ors., 2009 II LLJ 347 (MP.HC) WP 6582 of
2008 dt. 1-12-2008
The detailed facts.dated November 17, 2006. (Page: 351, Para: 20)
Not only this.had attained finality. (Page: 352, Para: 21)
Coming to the.without any basis. (Page: 352, Para: 22)
Sec. 25-O
Closure Compensation Admissible to the mill workman from the date of closure till the date of order in
the writ petition for the reason that workmans services were never lawfully terminated by the mill
Legal termination If the mill upon closure did not do workman is entitled to closure compensation even
after closure of the mill till the date of order in the writ petition
Unfair labour practice Has been committed by the employer for want of legal termination if no work and
no wages provided no matter mill is closed
5B.26 In a ULP Complaint, the Industrial Court directed the employer only to pay the wages from
16-3-1996 till the date of closure of the Mills for not providing work and not paying wages to
the workman. As the closure compensation was not awarded by the Court, the present
petition by the workman in which it was held that where there is no legal termination of the
workman by the employer mills, the contract of employment still subsists. Hence, the
employer is bound to pay closure compensation as per law with interest at the rate of 6% per
annum till the date of the order in writ petition.
Arvind Mahadev Gharat v. National Textile Corporation Ltd. & Ors., 2008 III CLR 627 (Bom.HC)
OOCJWP 2507 of 2005 with WP 288 of 2006 dt. 2-9-2008
In the circumstances . of the Mills. (Page: 628, Para: 4)
In the circumstances .rule is discharged. (Page: 629, Para: 5)
Sec. 25-O & Art. 226
Writ jurisdiction Is not maintainable when there is alternative remedy under Industrial Disputes Act
unless there are special circumstance
Representative Union Duly authorized can challenge the closure of an unit without permission u/s. 25-O
Closure of unit Without permission but obtaining resignation allegedly under threat is a question of fact
writ not maintainable
5B.27 The employer sought closure of unit but the Appropriate Government rejected the same.
Later in another application for retrenchment, Government permitted the same only for 32
out of 146 workmen. But the employer allegedly under threat and coercion obtained
resignation of workmen and closed the unit. The two workmen challenged the same as if
representing the union of workmen. The Single Judge allowed the writ petition directing to
grant benefits u/s. 25-O and any amount they received should be adjusted and they be paid
the difference. The same is assailed in writ appeal. The Division Bench quashed and set aside
the same for twin reasons: Firstly these two workmen did not represent the workmen as a
union and no valid resolution authorising them to file writ was obtained and hence they
lacked locus standi to represent them. Secondly when there is an efficacious alternative
remedy under Industrial Disputes Act, they should have approached to Labour Court and
14
Tribunal and there is no special circumstance to invoke writ jurisdiction especially when
there are disputed questions of facts to be answered.
M/s. Suraj Industries Ltd. v. Ravi Dutt & Ors., 2010 I LLJ 674 : 2010 III LLN 301 : 2009 LLR 1246
(HP.DB) LPA 83 of 2008 dt. 15-9-2009
It is clear.to file the petitioner. (Page: 677, Para: 7)
From the above.of the case. (Page: 678, Para: 11)
It follows.of the Act. (Page: 680, Para: 17)
Thus, prima facie.writ jurisdiction. (Page: 682, Para: 24)
Sec. 10 & 25-O
Reference Even if only two workmen remains to raise a dispute after VRS, the Appropriate Government
cannot refuse to refer
Appropriate Government Cannot refuse to refer even if the dispute is raised by two workmen against
closure
Closure On which though dispute raised by only two workmen, Appropriate Government cannot refuse
reference
5B.28 Out of 160 employees, about 150 employees opted for VRS floated by the employer and
obtained benefits in full and final settlement of all their dues. The employer thereafter closed
down the factory. Two workmen who did not opt raised an industrial dispute against
closure, being illegal for want of compliance with Sec. 25-O but the appropriate Government
refused to refer the matter u/s. 10 of the Act since, the dispute pertains to only two workmen.
The Single Judge upheld the same. The Division Bench held that the number of workmen
who raises the dispute is immaterial. When there is a dispute even two workmen can raise
the same because door is even otherwise open to them directly to approach the Labour
Court u/s. 2A(2) of the Act. The Division Bench directed the Government to refer the matter
for adjudication.
Shaw Wallace & Co. Ltd. rep. by its General Secretary P.R. Viswambaram, Madras v. State of Tamil Nadu,
rep. by Secretary to Government, Labour & Employment Department, Chennai & Anr., 2008 II LLJ 250 :
2008 (118) FLR 197 : 2008 II CLR 329 : 2008 LLR 495 (Mad.DB) WA 1271 of 2001 dt. 11-1-2008
As per guideline.the appellant. (Page: 252, Para: 11)
But in this case.of this case. (Page: 253, Para: 12)
On the other hand.thus order. (Page: 253, Para: 13)
Sec. 18 and 25-O
Principles of Sec. 18 Can be applied to a matter of closure so as to bind a non party if the case was
examined by various authorities before granting permission for closure
5B.29 The question is whether the orders of Punjab and Haryana High Courts regarding the issue
of closure was binding on the union when they were not party to the proceedings. The High
Court held that the closure of 7 units being the subject matter in the litigation examined by
various courts including BIFR and AAIFR the principles applicable to a settlement as
enunciated u/s. 18 can be made applicable to this case as well. So viewed, the court held that
the union cannot now argue that the orders were not binding on them.
15
Cement Corporation Employees Union v. Union of India & Ors., 2009 II LLJ 347 (MP.HC) WP 6582 of
2008 dt. 1-12-2008
Before parting with.and had failed. (Page: 355, Para: 31)
Sec. 25-O
Closure Illegal if no prior permission taken, entitling workmen to all benefits u/s. 25-O of the Act except
bonus
Prior Permission If not taken while closing the Mill, closure will be illegal and the workmen are entitled
to all benefits u/s. 25-O of the Act except bonus
Settlement u/s. 18(1) Notwithstanding workmen eligible only for minimum bonus due to closure of the
mill and lack of surplus
Workmen Can even apply directly to the State Government for appropriate revenue recovery certificate
without any judicial adjudication on the issue relating to closure benefits statutory bonus
Closure If illegal benefits can be claimed directly from the State Government for appropriate revenue
recovery certificate without any judicial adjudication
Judicial adjudication Not necessary rather an application to the State Government for appropriate revenue
recovery certificate on the issue relating to closure sufficient
Revenue Recovery certificate The State Government can issue for illegal closure without resorting to
judicial intervention
5B.30 Closure is held to be illegal since no permission was sought for the same. Hence the workmen
are entitled to all benefits u/s. 25-O of the Act. But the workmen are not entitled to the
benefits of bonus and ex gratia payment as per the settlement between the South India Mill
Association and the four Trade Unions u/s. 18(1) of the Act because the mill was not
functioning and was under closure and therefore there could not be any surplus income
which could result in payment of bonus. Therefore by virtue of Sec. 10 of Payment of Bonus
Act the workers are eligible only for minimum bonus. The High Court upheld the order of
the Tribunal and also stated that the workmen can even apply directly to the State
Government for appropriate revenue recovery certificate without any judicial adjudication
on the issue relating to closure.
Sri. Arunachaleswarar Mills v. Joint Secretary, Department of Industries & Labour, Secretariat, Chennai
& Ors., 2010 (125) FLR 436 : 2010 II LLJ 783 : 2010 I LLN 331 : 2010 LIC 1521 : 2010 I CLR 503 : 2010
II CLR 352 : 2010 LLR 641 (Mad.HC) WP 24564 of 2009 dt. 18-1-2010
Therefore, in respect.Industrial Dispute Act. (Page: 438, Para: 6)
In respect of issue.for minimum bonus. (Page: 438, Para: 7)
Further, when section.not stand to reason. (Page: 441, Para: 15)
Sec. 25 F and 25-O
Closure If illegal for want of compliance with Sec. 25- O with no proof of actual closure the workman is
entitled for reinstatement for violation of Sec. 25 F
Burden of proof Regarding the fact of closure is on employer
Written statement A pleading there in alone without further evidence regarding the fact of closure is
unsustainable
5B.31 Where no permission was taken by the employer before the closure of the Centre at Dabra
under the mandatory procedure of Sec. 25-O and no clear evidence was provided except the
pleading in the written statement that the Dabra Centre was closed, the employer failed to
discharge the burden of proof and hence it is to be held that there was no closure of the
16
Centre at Dabra and the workman was held entitled for reinstatement as his services were
terminated in violation of Sec. 25 F of the Industrial Disputes Act.
M.P. Rajya Beej Evam Farm Vikas Nigam & Ors. v. Ashok Kumar, 2008 III LLJ 47 : 2008 (117) FLR 506 :
2008 III LLN 524 : 2008 II CLR 402 : 2008 LLR 596 (MP.HC) WP (S) 6285 of 2006 with WP (S) 5167 of
2005 dt. 22-1-2008
Hence when there .Industrial Disputes Act. (Page: 50, Para: 10)
Sec. 25 FFA and 25-O
Motive Of employer in closing down the establishment cannot be questioned if the number of employees
is less than 50
Closure Of the concern cannot be called into question if the number of workmen is less than 50
Compensation For closure cannot be avoided even if the number of workmen in the establishment is less
than 50
5B.32 When the number of workmen employed is less than 50, the provisions of Sec. 25 FFA and
25-O would not be attracted. The employer is at liberty to close down the establishment.
Whether the closure is sham or bogus cannot be considered by the Industrial Court. In this
case only 7 workmen were employed. Merely because the employer had entered into a
settlement to pay minimum wages and subsequently closed down the establishment without
complying with the settlement, the workmen cannot question the motive of the employer to
close down the concern. The only liability of the employer is to pay the compensation against
retrenchment. The High Court upheld the order of Industrial Court and directed the
employer to pay compensation from the date of closure with 6% interest.
Leelabhai Sakharam Bhagwat & Ors. v. Shobha Industries, 2009 LLR 141 (Bom.HC) CAJWP 2375 of
1997 dt. 21-9-2008
.The Industrial Court. has been dismissed. (Page: 142, Para: 1)
.Admittedly, in the present case.petition stands dismissed. (Page: 142, Para: 2)
Sec. 25-O & 25FFF
Functional Integrality Absent Between the two units having different manufacturing patterns with no
interchangeability of labour different service conditions training and recruitment rules
Common Management With interchangeability of managerial personnel with common accounts and
balance sheet and nothing more is not suggestive of functional integrality between the two
Sec. 25-O Is not violated upon closure of cycle chain unit even when the industrial chains and automotive
chains unit continues production pattern being different commonality of management notwithstanding
Cycle Chain Unit Which has different production pattern than the industrial chains and automotive chains
can be closed without resort to Sec. 25-O due to absence of functional integrality
5B.33 The management of the TI Diamond Chain Ltd. was running two units one Cycle Chain
Division and the other Industrial Chains and Automotive Chains. The cycle chain division
was closed down due to stiff competition. The workmen were paid closure compensation in
terms of Sec. 25FFF. However they raised an industrial dispute claiming there was common
management of two units and managerial staffs were interchangeable, accounts and balance
sheet were common. The tribunal gave an award holding that the employer did not comply
with Sec. 25-O inasmuch as there was functional integrality between the two units. Upon
challenge the High Court set aside the award and held that on facts the findings of the
tribunal were perverse for the reasons that though both units were under a common
management but the workmen engaged in one unit were not transferred to the other, both
units have different manufacturing pattern, different labourers were employed, the training
17
imparted was not one and the same including recruitment and service conditions. The court
held that in the face of these overwhelming evidence there was no functional integrality
between the two units, closure of one in no way affecting the other and hence Sec. 25-O was
not violated.
Management, TI Diamond Chain Ltd., Chennai v. Presiding Officer, Principal Labour Court, Chennai &
Ors., 2011 II LLJ 102 (Mad.HC) WP 23614 of 2006 dt. 27-9-2010
It is an admitted.needs immediate reference. (Page: 107, Para: 12)
Applying the.the other unit. (Page: 109/110, Para: 23)
Though normally as.the Management herein. (Page: 110, Para: 25)
Sec. 25-O & 25N
Functional Integrality If closure of one cannot exist the other is only one fact but not superior to others
like finance, management, geographic, unity, trademark, workforce
Closure One will not survive the other is only one facet for functional integrality and cannot be true in all
cases
5B.34 The question is whether the two companies viz. shekoba Auto Private Ltd and Neotronics (P)
Ltd, one Manufacturing plastic film capacitors and the other wire wound resistors with
plastic film capacitors are integral whole. The Industrial Court after going elaborately held
that termination of services of workmen without complying with S.25 O and 25N was illegal.
The Single Judge reversed the same holding that is a matter of termination and the
industrial court has no jurisdiction under item 9 Sch. IV. Instead Labour Court has under
item 1 Sch. IV. Setting aside the judgement of Single Judge the Division Bench upheld the
order of Industrial Court for the reason that as there is closure of one unit without
complying with the provision of Sec. 25-O and 25N amounting to failure to implement
settlement it is correctly brought under the sweep of item 9 and Sch. IV of MRTU & PULP
Act and secondly to hold the two units into one it is not necessary to adhere to the principle
that one unit cannot exist without the other in all cases. It is only one fact of functional
integrality which may not be a superior test. In this case though both were manufacturing
independently but similar products and the management finance, geographical proximity,
unity of ownership, trade mark, work force being common the closure without complying
with Sec. 25-O or retrenchment without complying with Sec. 25N is illegal, since Chapter VB
is attracted.
R.K. Shinde & Ors. v. Shekoba Auto Pvt. Ltd. & Anr., 2008 II LLJ 1037 : 2008 I CLR 996 : 2008 (1) BCR
602 (Bom.DB) CAJLPA 66 of 2006 in WP 5845 of 1999 dt. 26-11-2007
.the employers witness.book adjustments. (Page: 1053, Para: 19)
The question is.commercial sense. (Page: 1053, Para: 20)
Mr. Deshmukh.functionally integrated. (Page: 1053/1054, Para: 21)
Sec. 25-O and 25-N

Separate establishments A factum if exists there could be no functional integrality between Head Office
in Bombay and factories at Aurangabad and Delhi to attract S.25-O and 25-N
Functional integrality Between Head Office at Bombay and factories at Aurangabad and Delhi does not
exist being separate establishments
5B.35 Where the head office at Bombay and factories at Aurangabad and Delhi were separate
establishments, it cannot be said that there was functional integrality between them. Hence,
18
in the absence of functional integrality, the provisions of Sec. 25-O and 25N of the I. D. Act
cannot be attracted. Therefore the findings of functional integrality rendered by the
Industrial Tribunal are not sustainable.
Devidayal Rolling Mills & Anr. v. Engineering Workers Union & Anr., 2008 (2) BCR 9: 2008 (4) Mah.LJ
607 (Bom.HC) WP 5387 of 1996 with WP 190 of 1998 with WP 2037 of 1997 dt. 15-1-2008
The union in.1999 must fail. (Page: 16, Para: 13)
In the premises.accrued if any. (Page: 16, Para: 14)
Sec. 2(p), 18(1), 25-O
Settlement To obviate compliance of Sec. 25- O and 25-N even though validly made if against the public
policy an interest of workmen will not sustain
Sec. 25-O Provisions of which can override individual settlements made by the employer to come out of
the grip of chapter -V-B
Sec. 25-N Provisions of which can override individual settlements made by the employer to come out of
the grip of chapter -V-B
Closure U/s. 25-O and retrenchment u/s. 25N cannot be invalided by individual settlements being in the
nature of a public policy and opposed to the interest of workmen
5B.36 The employer sought permission for closure u/s. 25 O which was rejected. Thereafter the
employer sought permission to retrench 50 workmen out of 141. The Government permitted
retrenchment of only 32 workmen. The employer thereafter made individual settlements
with individual workman to get out of the purview of chapter -V-B. The question before the
High Court was whether the settlements so made are in compromise with the provisions of
Sec. 25N and 25-O of the Act or not. The High Court answered the same in negative because
such settlement which may otherwise be valid must conform to the statutory conditions
laying down a public policy including in terms of Sec. 23 of Indian Contract Act. This
includes the interest of the workman. These being imperative in character would prevail
over the right of the parties to arrive at a settlement.
Ravi Dutt & Ors. v. State of H.P. & Ors., 2008 III LLJ 795 : 2008 LIC 3220 : 2008 LLR 853 (HP.HC)
CWP 215 of 2005 dt. 16-5-2008
It is settled .should be registered. (Page: 797, Para: 5)
A settlement within .Indian Contract Act. (Page: 800, Para: 12)
The settlement arrived .as noticed above. (Page: 801, Para: 14)
Though the management .to alternate remedy. (Page: 802, Para: 18)
Sec. 33 C (2), 25 O and 25 FFA

Closure Chapter V B does not attract
Sec. 25 FFA once complied with for closure of mill compliance of chapter V B does not arise
Sec. 33C(2) Disputed questions of fact not adjudicated like entitlement of wages on closure of mill for
which chapter V A applies cannot be decided
5B.37 Where the workmen could not establish by evidence that employer had employed more than
100 workmen in the previous year, chapter V B of the Act is inapplicable for purposes of
Sec. 25 O etc. So also there is little scope for getting the disputed facts adjudicated, claiming
a sum of Rs.9.2 lakhs towards wages of 52 workmen and a sum of Rs.7.80 lakhs for 45
workmen for the period prior to closure of the mill, in Labour Court having jurisdiction u/s.
19
33C(2) of the Act having power merely to interpret the award or settlement, workmens
rights having not been determined by a prior adjudication.
Karnataka State Co-operative Marketing Federation Ltd. Bangalore v. Dharwad District Employees
Association, Hubli & Anr., 2008 II LLJ 193 : 2008 I CLR 597 (Karn.HC) WP 5485 of 2004 with WP
15304 of 2005 dt. 19-7-2007
In answering these.by the employer. (Page: 200, Para: 9)
Nothing the above.of money claimed. (Page: 200, Para: 10)
In any event.is kept open. (Page: 200, Para: 11)
Sec. 25-O(1), 25L
Registration or Incorporation Under Companies Act is the basis to reckon separate industrial
establishment to fall within the expression industrial establishment u/s. 25L
Divisions Of a company registered under Companies Act are not independent to exclude each division
from taking permission for closure u/s. 25-O(1) or from chapter VB
Sec. 25-O(1) Applies even to a division of a registered company provided the company in all its divisions
employees more than 100 workmen
Closure Of one division without taking permission u/s. 25-O(1) becomes illegal no matter the number of
workmen are less than 100 if the work force in the incorporated company as a whole is more than 100
Back Wages For illegal closure if 12 years have elapsed full wages before granting assessment for
adjustment of the wages earned during gainful employment elsewhere after closure is to be considered
Permission Even to close one division of an incorporated company is necessary u/s. 25-O(1) no matter
the number of workmen in the division is less than 100 since if other divisions added it will be more than
100
5B.38 The employer, a company which had several divisions such as Manufacturing Supply
Division (MSD), National Software Division (NSD), Engineering Support Division (ESD) etc.
employed more than 100 workmen in all these divisions. The company offered VRS to all
employees of MSD division but 24 of them did not accept. They apprehended closure of their
division and filed a complaint under MRTU and PULP Act. The industrial court dismissed
the complaint holding there were less than 100 workmen in the MSD division at the time of
closure and hence Sec. 25K is not attracted. Upon challenge the High Court set aside the
order of industrial court and held that for counting whether the workmen in the
undertaking comprised 100 or more the entire company is to be taken into consideration and
not the individual section, department or division which was to be closed. In this case the
employer only considered the division MSD for counting the number of workmen and not
the ESD into account. But the MSD was not a separate legal entity because there was no
registration or incorporation of that division under the Companies Act. Hence closure of
MSD alone without taking permission u/s. 25-O(1) was deemed illegal from the date of
closure and the workmen are entitled to all benefits as if the undertaking had not been
closed down. Though they are entitled for full back wages 12 years have since elapsed and
hence the court remanded the matter to industrial court only to consider whether they are
entitled to full wages or wages earned in gainful employment elsewhere to be adjusted after
closure.
S.B. Patole & Ors. v. Fujitsu ICIM Ltd., Pune & Ors., 2011 (128) FLR 303 : 2011 II LLJ 219 : 2011 I LLN
199 : 2010 III CLR 978 : 2011 (2) Mah.LJ 72 (Bom.HC) CAJWP 2988 of 1998 dt. 29-10-2010
In the present.closed down. (Page: 311, Para: 21)
In the present.as a whole. (Page: 313/314, Para: 24)
20
The period which.till today. (Page: 314/315, Para: 27)
Sec. 25-O (2)
Public Interest And heavy debt suffered by the mill require equitable consideration in which later
overrides the former
Closure of Mill Being a fait accompli beyond revival the scheme of BIFR will prevail over public interest
5B.39 The Industrial Tribunal after hearing the parties gave permission to close the mill which was
challenged by the union but the award was set aside by the Single Judge. The Division Bench
upheld the award of the Tribunal and set aside the judgment of Single Judge and held that
scheme of BIFR is already in most part implemented. The machineries are sold. The landed
properties of the mill are also transferred. There is no possibility of revival. The case of
public interest cannot survive in the face of heavy debts incurred by the mill because an
equitable balance is to be taken between competing interests. The Court awarded to the
remaining employees who did not take VRS, closure compensation. However management
was persuaded to give them same benefit as those to whom VRS benefit was given provided
the union communicates the acceptance of the offer unconditionally within 45 days. Failure
to do so will entitle them only closure compensation.
It is thus.Industrial Disputes Act. (Page: 266/267, Para: 115)
The implementation.cannot succeed. (Page: 269, Para: 122)
The impugned.appellant mill. (Page: 270, Para: 124)
Sec. 25-O (2)
Cross Examination Of management witness if not made on the pleadings contended with the union
deemed to have accepted the opponents case
Management Witness If not cross examined on the contention made in pleadings the union deemed to
have accepted the opponents case
5B.40 The Trade Union in its pleadings in the written statement while squarely admitting the
grounds for closure of the mill, blamed the mill management for creating the adverse
situation by way of mismanagement. But the union failed to cross examine the management
witnesses on these essential and material facts. If he asks no question with regard to his
pleadings then he must be taken to have accepted the opponents case in entirety.
Mr. Tidke.See 240. (Page: 260, Para: 84)
Sec. 25-O(2)
Genuine and Adequate Reason for closure includes circumstances beyond the control of employer
Closure If due to circumstances beyond the control of employer it becomes genuine and adequate
5B.41 If the closure is bonafide or on account of unavoidable circumstances, beyond the control of
the employer, then they will have to be regarded as genuine and adequate.
21
Before.adequate. (Page: 253, Para: 50)
Sec. 25-O (2)
AmalgamationIf taken place in another mill for obviating unemployment, subsequent request to closure as
if no amalgamation happened is illegal
ClosureOf mill is to be set aside if prior to that mill is amalgamated with another to obviate
unemployment
Textile MillIf sought closure, the antecedent factor of amalgamation in another mill to obviate
unemployment will not permit to do so
5B.42 The permission for closure of textile mill made u/s. 25-O(2) was refused by State
Government on the ground that the said mill was already amalgamated with another textile
mill with the aim of revival and rehabilitation and to avoid unemployment of workmen. But
this aspect was ignored by Tribunal and Single Judge who have allowed closure setting aside
the Governments decision. Since amalgamation, the textile mill had earned profit. These
forums also have ignored the concept of public intent. The reasons advanced by these
forums are not genuine and adequate. Therefore the order of closure was set aside as illegal
and workmen were to be treated as on employment.
Gopal Mill Mazdoor Union & Ors. v. State of Rajasthan & Ors., 2008 II LLN 508 (Raj.DB) DBCSA 150
of 1991 dt. 13-11-2007
Upshot..of STM. (Page: 520/521, Para: 23)
For these..reviving STM. (Page: 521, Para: 24)
Sec. 25-O (2)
Closure The Appropriate Government cannot refuse to grant by a cryptic order without the discussion on
the material on record
Appropriate Government Cannot refuse to grant permission for closure without a discussion on the
material by a cryptic order
Cryptic Order Issued by Appropriate Government u/s. 25-O (2) is untenable unless there is discussion on
the materials on record
5B.43 The employer sought closer of the textile mill for the reason that there were 30 criminal
cases of assault including murders which created panic and terror on the supervisory and
managerial staff including co-workers and the normal functioning of the mill could not be
carried out on account of rivalry between the two unions. There were strike and heavy
losses. The efforts of the management to revive the mill by inducting fresh blood did not
help. However the Appropriate Government refused to accord permission to close down the
mill ignoring the material evidence. The High Court found that there was substance in the
writ petition and the chaotic atmosphere including violence in and around the mill did not
permit the employer to function the mill. The terror and threat extended by the Labour
Unions and their criminal activities kept away the workmen from work. The State
Government without entering into a discussion on these materials refused to grant
permission for closure by a cryptic order hence the matter was remitted to the State
Government for a fresh consideration.
22
Modi Textiles Limited v. State of Uttar Pradesh & Ors., 2010 (124) FLR 360 : 2009 III CLR 947 (All.HC)
CWP 3294 of 1985 dt. 13-11-2009
The chaotic atmosphere,.reconsideration by the State Government. (Page: 364, Para: 8)
Sec.: 25-O (2) & 25-O(5)
Review Application of the order of closure once received the authority in its option may refer the matter
to the tribunal giving no reasons therefore since it reviewed nothing
Refer U/s. 25-O(5) while making no reasons need be given since it has reviewed nothing
Reasons Not needed to be furnished by the concerned authority while making a reference to the Tribunal
u/s. 25-O(5)
5B.44 On receiving an application to review the order of closure made u/s. 25-O(2) the concerned
authority can either review its own order or make a reference to the Tribunal. While making
a reference to the Tribunal no reason s are required to be given by the concerned authority
as no rights of parties were altered by making such a reference against its earlier decision
with power and liberty to the tribunal to take a decision independently.
N.S.P. Straw & Paper Products (P) Ltd. v. Commissioner of Labour, Gujarat State, Ahmedabad, 2010 IV
LLJ 356 : 2010 (127) FLR 797 : 2010 LIC 2507 : 2010 III CLR 426 (Guj.HC) SCA 5323 of 1997 dt. 10-3-
2010
The reference may.record the reasons. (Page: 358, Para: 10)
Under these.be accepted. (Page: 359, Para: 11)
In view of the.of either side. (Page: 359, Para: 14)
Sec. 25-O(5)
Closure Even if permission granted u/s. 25 O(2) employer cannot implement until a period of 30 days
elapsed for review/reference u/s. 25-O(5)
Review And Reference u/s. 25-O(5) limits the power of employer to instantaneously implement the order
of closure u/s. 25-O(2) until a period of 30 days elapsed
Reference And Review u/s. 25-O(5) limits the power of employer to instantaneously implement the order
of closure u/s. 25-O(2) until a period of 30 days elapsed
Unfair Labour Practice Includes Implementing the order of closure u/s. 25-O(2) without waiting the
outcome of been application made u/s. 25-O(5)
5B.45 The issue involved was whether the employer can implement the order of the Appropriate
Government granting permission for closure u/s. 25-O (2) of the Act immediately without
waiting for a period of 30 days in order to enable the workman to file application seeking
review or reference of the order of closure inasmuch as when the order made u/s. 25-O (2) is
final and binding u/s. 25-O (4) of the Act. The High Court held that the mechanism of a
review/reference available u/s. 25-O (5) will become nugatory if the employer was allowed to
close down the factory without waiting atleast for a period of 30 days till final disposal of the
matter by the tribunal. In this case permission to close down was granted on April 2, 2008
and application for review was made on April 17, 2008. But without waiting for 30 days
services of workmen were discontinued on April 2, 2008 itself and some of the machineries
were dismantled from August 11, 2008 onwards. Hence the action of the employer was hit by
item 9 of Schedule IV of MRTU and Pulp Act being prima facie an Unfair Labour Practice.
Hence the Union was held entitled for Interim Relief against dismantling of machinery.
23
Navnath Kanha Naik & Ors. v. United Breweries Ltd. & Anr., 2009 II LLJ 558 : 2008 (119) FLR 890 :
2008 III CLR 567 (Bom.HC) CAJWP 6187 of 2008 dt. 16-9-2008
.In my view, this submission.provisions of Sec. 25-O. (Page: 565, Para: 17)
Apart from this.in the present case. (Page: 567, Para: 21)
.As I have already held..........before the Industrial Court. (Page: 569, Para: 24)
Sec. 25- O (3)
Intended date of closure Specified by the employer remains unchanged though the Appropriate
Government defaulted to grant or refuse approval for closure within specified period
Appropriate Government Once failed to grant or refuse approval for closure its default is not amenable to
be corrected by changing the specified date of closure indicated by the employer
Closure On the specified date indicated by the employer in his closure application deemed to have been
granted if the appropriate Government takes no decision to grant or refuse approval
5B.46 Whenever a decision is taken by the State Government or by the Tribunal in case of a
reference, the intended date of the closure specified by the employer in the application filed
under subsection (1) of Sec. 25-O of the Industrial Disputes Act, 1947 cannot be changed.
Hence, after the expiry of 60 days in case of default by the Government, the permission shall
be deemed to have been granted.
Hind Syntex Ltd. v. Dewas Mazdoor Sangh & Ors., 2008 III LLJ 372 : 2009 (120) FLR 659 : 2008 IV LLN
465 : 2009 LIC 17 : 2008 III CLR 862 (MP.HC) WP(S) 1892 of 2005 dt. 31-3-2008
Under sub-section (5) . fault of his (Page: 379, Para: 21)
Sec. 25-O(4)
Functus Officio The tribunal does not become even if the reference made under Sec. 25-O(4) read with
Sec. 25-O(5) was not disposed of within a period of one year
Directory Is the period of one year specified for disposing of the reference made under Sec. 25-O(4) read
with Sec.25-O(5)
Mandatory Excludes The period of one year specified u/s. 25-O(4) read with Sec. 25-O(5)
Period of one year For disposal of reference specified u/s. 25-O(4) read with proviso to Sec. 25-O(5) is
directory and not mandatory
5B.47 Section 25-O(5) mandates that when a reference has been made to a Tribunal to adjudicate
on the permission granted to close down an Industrial undertaking, the said reference is to
be disposed of by an award within a period of 30 days. Sec 25-O(4) mandates that the order
of the Appropriate Government made u/s. 25-O(2) will remain in force for a period of 1
year. Hence the question is whether the tribunal not disposing of the matter within a period
of one year becomes functus officio or not. Upholding the order of the Tribunal rejecting the
contention of the employer, the High Court held that the time frame fixed u/s. 25-O(4) and
proviso to Section 25-O(5) is only directory and not mandatory. The delay in disposing of the
matter within the time frame was explained in this case for lack of appointment of sufficient
number of judges by the State Government. Hence it cannot be held that the Tribunal ceases
to have jurisdiction and becomes functus officio as soon as period of one year is over from
the date of order passed by the Labour Commissioner permitting closure.
Universal Ferro & Allied Chemicals Ltd. Mumbai v. Maharashtra Ferro Alloys Mazdoor Sangh, through
its General Secretary & Anr., 2009 IV LLJ 445 : 2009 II CLR 311 (Bom.HC) WP 2973 of 2008 dt. 24-3-
2009
24
.Therefore, in my considered opinion.injustice to the worker class. (Page: 455, Para: 16)
Sec. 25-O(5)
Review Once made reference u/s. 25-O(5) is incompetent

Reference And review u/s. 25-O(5) is alternative remedy
Sec. 25-O(5) Remedy of review and reference is alternative
5B.48 Once the specified authority has held that there is no case for review of the permission
already granted to close down the industrial unit reference to tribunal by the same authority
is incompetent. The law in this regard is already settled in the cable corporation case by the
Apex Court.
Paint Employees Union, Mumbai v. Kansai Nerolac Paints Ltd. Mumbai, 2009 III LLJ 543 : 2009 (121)
FLR 294 : 2009 II LLN 396 : 2009 I CLR 580 : 2009 (2) BCR 599 : 2009 (2) Mah.LJ 722 (Bom.DB)
OOCJA 446 of 2008 in WP 1332 of 2007 dt. 15-1-2009
It is not possible.cable corporation case (supra). (Page: 552/553, Para: 34)
Sec. 25-O(5)
Sec. 25-O(5) In which the period of 30 days mentioned for award is directory
Directory Is the stipulation of 30 days mentioned in Sec. 25-O(5) for completion of adjudication
Mandatory Excludes The provision in Sec. 25-O(5) of 30 days for decision by tribunal
Industrial Tribunal Even if decides the reference after 30 days of reference u/s. 25-O(5), it is a valid
award
Award Made u/s. 25-O(5) even after 30 days of reference is valid and legal
Reference U/s. 25-O(5) if answered after a period of 30 days, still it is valid being directory
5B.49 In a review application made by the employer against the permission granted by the
Appropriate Government, the said Government in exercise of its power u/s. 25-O(5) has
referred the matter to Tribunal for adjudications with stipulations that it should give its
decision within 30 days of reference. The reference was answered against the workman after
nearly 96 days. The question is whether the award of the Tribunal because of this technical
reason becomes null and void or whether such a stipulation of 30 days in Sec. 25-O(5) is
mandatory or directory. The Division Bench held that it is now settled law that it is not
mandatory but only directory because the procedure prescribed in Sub-Sec. 25-O(5) is
designed to advance and facilitate justice.
Gopal Mill Mazdoor Union & Ors. v. State of Rajasthan & Ors., 2008 II LLN 508 (Raj.DB) DBCSA 150
of 1991 dt. 13-11-2007
In construing.ends of justice. (Page: 518, Para: 14)
Sec. 25-O (5)
Review Need not be exhausted u/s. 25-O (5) before the employer seeking a remedy of writ petition
Writ petition There is no absolute bar merely because there is an alternative remedy of review u/s. 25-O
(5)
5B.50 The issue is whether the employer can challenge the order of the Appropriate Government
refusing to grant closure of the factory u/s. 25-O (2) without first exhausting the alternative
remedy of review u/s. 25-O(5) of the Act. The High Court held that if the State Government
has neglected to appreciate the materials on record, there is no absolute bar for the
employer in approaching the High Court in a writ petition, no matter there is an alternative
remedy before him. Hence where the State Government has not considered the matter in
25
proper perspective and the relevant material, evidence and documents, the High Court can
consider the writ petition and direct the Appropriate Government to have a fresh look into
the matter.
Modi Textiles Limited v. State of Uttar Pradesh & Ors., 2010 (124) FLR 360 : 2009 III CLR 947 (All.HC)
CWP 3294 of 1985 dt. 13-11-2009
The petitioner has.is not an absolute bar. (Page: 364, Para: 9)
In the case of.to a grinding halt. (Page: 365, Para: 10)
In the case of.to grant permission. (Page: 365, Para: 11)
Sec. 25 O (5)
Functional Integration If the union alleges the Appropriate Government must refer the matter for
adjudication though it has given permission for closure
Review If the Appropriate Government is asked for by the union of its decision to close the unit it has to
make a reference
Closure Though the Appropriate Government has accorded if the union asks for review because of
functional integrality the Appropriate Government has to refer the matter to tribunal
Reference The Appropriate Government has to make if the union asks for review its decision for closure
on the basis of functional integrality of closed and other unit
5B.51 The management sought permission from the Government to close their unit manufacturing
refrigerators which had in its employment 267 workers, which they claimed was not a part
of the unit manufacturing plastic components. The Appropriate Government accorded
permission to close the refrigeration unit. Whereas the workmen claimed that the units were
integrated and there were 352 workers in all and closing of one unit employing maximum
number of employees and retaining the other would jeopardize the interest of the workmen.
Hence the Union sought for review of Governments decision but the same was rejected. The
Single Judge held that in such cases the matter should have been referred to the tribunal for
adjudication especially where the union alleges functional integration. Hence quashing the
order for not to review, directed the State Government to make a reference to the tribunal.
Workmen of B.S. Refrigerators, Ltd. Bangalore v. Principal Labour Secretary, Bangalore & Anr., 2008
(117) FLR 334 : 2008 I LLN 678 : 2008 I CLR 1050 : 2008 LLR (Sum) 669 (Karn.HC) WP 35099 of 2004
(L-RES) dt. 8-10-2007
In the circumstances.matter to the tribunal. (Page: 339, Para: 20)
Of course.fact finding body. (Page: 339, Para: 21)
Sec. 25-O(5) & 10
Closure Being an industrial dispute reference u/s. 10 is valid

Industrial dispute For closure can be raised and referred u/s. 10 read with Sec. 25-O(5)
Reference Of a closure dispute u/s. 10 read with u/s. 25-O(5) is valid
u/s. 25-O(5) If in favour of employer on lapse of one year without decision employees cannot remain
remedy less, hence reference u/s. 10 read with Sec. 25-O(5) is tenable
5B.52 An anomalous and untenable situation will arise in which the employer on one hand is at
liberty to approach the Appropriate Government with fresh application for closure after
expiry of one year from the date of refusal by the Appropriate Government to close down
the undertaking or from the date of expiry of one year from the date of application for
26
review or reference but the same remedy on the other hand is not available to workmen
whose application for review or reference u/s. 25-O(5) if remained undecided even upto a
period of one year. If that is the case, a reference made at the instance of employees u/s. 10
read with Sec. 25-O(5) is held legal and valid being an industrial dispute arising out of
closure raised by the employees. A harmony between the special provision of Sec. 25-O(5)
and general provision of Sec. 10 can thus be established instead of leaving the workmen
without any remedy.
Bon Ltd. v. Hindustan Lever Employees Union, 2008 (116) FLR 191 : 2007 III CLR 989 : 2008 LLR (Sum)
336 : 2008 (1) Mah.LJ 683 (Bom.HC) OOCJWP 1832 of 2007 dt. 18-9-2007
Upon plain.I.D. Act (Page: 202, Para: 16)
Section 25-O creates.would turn into reality. (Page: 202, Para: 18)
Sec. 25-O (5)

Functus Officio Excludes Tribunal after 30 days of reference made u/s. 25-O(5)
Nullity Excludes The award made even after 30 days of a reference u/s. 25-O(5)
Mandatory Excludes The word shall appearing in Sec. 25-O(4) and 25-O(5)
Directory Includes The word shall appearing in Sec. 25-O(4) and 25-O(5)
Sec. 25-O(5) A reference made to the tribunal continues to be valid even after the period of 30 days
mentioned in the proviso thereto
5B.53 The issue is whether the tribunal becomes functus officio by not deciding the reference u/s.
25-O(5) within a period of 30 days from making especially in view of the meaning required
to be given to the word shall in Sec. 25-O(4) and 25-O(5). The court held that the word
shall though ordinarily to be considered as imperative in nature but it should always to be
construed in accordance with the nature, scope and purpose of the statute. Therefore if the
provisions of the 30 days appearing in Sec. 25-O(5) or one year in Sec. 25-O(4) if held
mandatory it will defeat the nature, scope and purpose of the statute and render the
proceedings of the tribunal infructuous after lapse of 30 days or and 1 year. Hence it is
unconceivable to say that the tribunal ceases its jurisdiction after a period of 30 days or and
1 year as the case may be and or the award passed becomes nullity and void. In other words
the provisions are directory in nature and not mandatory.
Britannia Industries Ltd. v. Maharashtra General Kamgar Union & Anr., 2008 (4) Mah.LJ 324 : 2008 (2)
BCR 277 (Bom.HC) WP 2659 of 2005 dt. 30-10-2007
Therefore, the meaning.fact of each case. (Page: 334, Para: 42)
There is no such.and even otherwise also. (Page: 340, Para: 64)
There is some force.become functus officio. (Page: 340, Para: 69)
Sec. 17-B and 25-O (6)
Minutes of the Order For 50% last drawn wages will be superseded by the provision of the sec. 17B read
with Sec. 25 O of the Act
Last Drawn Wages Will be payable notwithstanding the minutes of the order should the employer contest
the order refusing to grant permission to closure
Agreement- To pay 50% last drawn wages upon refusal of permission to close down the unit cannot survive
in the face of application of S.25 O(6)
5B.54 There was a minutes of order between the employer and the workmen to pay 50% of the last
drawn wages in the challenge by the employer by a writ petition against refusal of the
Industrial court to grant permission to close down the Industrial unit u/s. 25-O of the Act.
27
Meanwhile some of the law points in the petition were referred to the larger bench. The
workmen thereupon moved a Notice of Motion for full last drawn wages due to the perceived
delay in the conclusion of the matter. The High Court held that the minutes of the order are
not same as consent terms. The workmen who did not accept VRS though party to the
Minutes now claiming last drawn wages u/s 17B of the Act have filed the requisite affidavits
and hence they are entitled to the last drawn wages in as much as Sec. 17-B read with Sec.
25-O (6) of the Act comes calling notwithstanding the minutes of the order.
Britannia Industries Ltd. v. Maharashtra General Kamgar Union & Anr., 2008 III CLR 621 : 2009 II LLJ
555 : 2008 (119) FLR 915 : 2009 II LLN 381 (Bom.HC) OOCJNM 79 of 2008 dt. WP 2659 of 2005 dt. 16-
9-2008
Mr. Singh, learned.of the industrial Disputes Act. (Page: 622, Para: 6)
There is no merit.25-O (6)applies with full effect. (Page: 622, Para: 8)
Sec. 25-O(8)
VRS Only is to be payable even if the workman continued after closure

Closure Of a mill with permission notwithstanding, if the employee is continued he is entitled only for
VRS
Employment In other unit of NTC is not permissible once the permission for closure of unit in which
workman is working is granted even if he was continued beyond closure
Swadeshi mill Workmen is not permitted to continue his employment in NTC once closure is granted
though he continued beyond closure
5B.55 The Swadeshi Cotton Mills is a unit of National Textile Corporation. It became sick and was
granted permission to be closed down. Instead of granting compensation u/s. 25-O(8), the
company floated a better modified VRS scheme which was accepted except one employee
who withdrew the VRS application under confusion. His case is that he was continued even
after closure of the mill. He therefore wanted continuity of service in N.T.C. The Single
Judge allowed the application. The Division Bench set aside the same and held that in fact
upon permission to close, Sec. 25-O(8) attracts. However a better VRS was floated for which
the workman was entitled. Since he was not an employee of NTC, the Single Judge could not
have ordered his employment in any of its units in M.P. He was allowed to take the benefit of
VRS with interest. Even if he has been continued after closure he had received wages for
that period and only his relief was postponed hence he is not entitled to get continuity of
service in NTC but allowed VRS instead of benefit u/s. 25-O(8).
National Textile Corporation (M.P.) Ltd., Indore & Anr. v. Priya Kumar Sharma, 2008 III LLJ 753 : 2008
(118) FLR 514 : 2008 III CLR 266 (MP.DB) WP 352 of 2006 dt. 14-3-2008
Learned.section (8) thereof. (Page: 758, Para: 14)
Though.@12%. (Page: 758, Para: 15)
In the result.employee. (Page: 758, Para: 16)
Sec. 25 O(8)
Closure If valid and justified liability to pay only compensation in terms of Sec.25 O(8) arises Direction
to pay full back wages by the tribunal is illegal
Sec.25 O(8) Attracts for legal closure Direction to pay full back wages cannot sustain
Tribunal Has no authority to direct the payment of any additional amount by way of ex- gratia payment
otherwise than provided in the Act as closure compensation
28
5B.56 The Tribunal has no authority to direct the payment of any additional amount by way of full
back wages otherwise than what is provided under the statute in Sec. 25-O(8) when the
closure is justified and valid in view of the financial constraints when all legal payments
being made in time. Hence the order of the Tribunal granting full back wages, additionally,
is not legally sustainable and company was directed to pay compensation only in terms of
Sec. 25-O(8).
Hind Syntex Ltd. v. Dewas Mazdoor Sangh & Ors., 2008 III LLJ 372 : 2009 (120) FLR 659 : 2008 IV LLN
465 : 2009 LIC 17 : 2008 III CLR 862 (MP.HC) WP(S) 1892 of 2005 dt. 31-3-2008
Needless to say .are hereby quashed. (Page: 381, Para: 25)
Sec. 25-O(1), 25-O(4)
Closure Application u/s. 25-O(1) though withdrawn second application soon thereafter is allowed
Application u/s. 25-O(1) Is not akin to suit
Suit Excludes Application u/s. 25-O(1)
5B.57 An application made u/s. 25-O(1) is not a suit so as to apply the Order 23 Rule 1(4) of Civil
Procedure Code in as much as a fresh application u/s. 25-O(1) is not barred once the
application for permission for closure made earlier is withdrawn bonafide. The contention
that once having withdrawn the application u/s. 25-O(1), the employer cannot prefer a fresh
application until and unless a year is elapsed u/s. 25-O(4) is rejected for the reason that Sec.
25-O(4) applies when an order is passed on merits either granting or refusing to grant
permission for closure.
Sarva Shramik Sanghatana (KU), Mumbai v. State of Maharashtra & Ors., 2008 II LLJ 501 : 2008 II LLN
776 : 2008 LIC 760 : 2008 LLR (Sum) 893 : 2008 (1) SCC 494 : 2008 (1) SCC (L&S) 215 : 2008 AIR
(SC) 946 : 2008 (2) AIR (Bom.HC) 82 : 2008 (3) BCR 758 (S.C.2J) CA 5458 of 2007 dt. 28-11-2007
No doubt, Order XXIII Rule 1(4) CPC states that where the plaintiff withdraws a suit without permission
of the court, he is precluded from instituting any fresh suit in respect of the same subject matter. However,
in our opinion, this provision will apply only to suits. An application under Section 25O(1) is not a suit, and
hence, the said provision will not apply to such an application. (Page: 506, Para: 22)
Leaned counsel submitted that the order of the Labour Commissioner dated 12.4.2007 allowing the
respondent-company to withdraw its closure application dated 1.2.2007 should be deemed to be an order
refusing to grant permission, and hence a fresh application under Section 25-O(1) could not be filed before
the expiry of one year from the date of the said order. We do not agree. In our opinion, Section 25-O(5)
only applies when an order is passed on merits either granting or refusing to grant permission for closure.
Since in the present case no order on merits was passed, but only an order permitting withdrawal of the
closure application was passed, Section 25-O(5) has no application. (Page: 506, Para: 24)
Note: Also refer Sarva Shramik Sanghatana v. State of Maharashtra & Ors., 2008 I LLJ 1067 : 2007 (5)
BCR 498 (Bom.DB)
Sec. 25-O (5), 17- B and 2(b)
Sec. 25-O (5) Determination refusing permission to close if stayed by High Court, attracts last drawn
wages u/s 17- B of the Act
Last drawn wages Attracts for stay of operation of an award u/s 25-O(5) refusing permission for closure
Closure If refused u/s 25 O(5) and (6),challenge there to attracts benefits of Sec. 17 B of the Act
Award includes orders made u/s 25 O(5) of the Act
5B.58 The question is whether a decision of Tribunal made in a reference u/s 25-O(5) refusing
permission for closure and direction to reinstate workmen with all benefits if challenged
29
before High Court, attracts the benefits of Sec. 17 B upon staying the decision of the
Tribunal is as much as in a case of closure unlike in cases of termination the refusal to grant
permission cannot be considered as an order for reinstatement. The division bench held that
one cannot give a restricted meaning to the term award. The words of any question
relating thereto occurring in Sec. 2(b) indicates a wide meaning. Hence the order passed by
an Industrial court u/s. 25-O(5) is capable of being construed as an award within the scope of
sec 17 B of the Act. This interpretation gets sustenance from the mandate and command
contained in Sec. 25-O(6)
IVP Limited v. IVP Limited Workers Union & Anr., 2010 III LLJ 219 : 2010 (126) FLR 572 : 2010 I CLR
303 : 2010 (1) BCR 201 : 2010 (3) BCR 203 (Bom.DB) RP 28 of 2009 NM 168 of 2009 A 11 of 2009 WP
1934 of 2007 dt. 11/16-12-2009
The industrial court.expeditiously. (Page: 222, Para: 8)
In the light.nothing more. (Page: 223, Para: 12)
Sec. 25-O
Closure Restriction imposed u/s. 25-O is held not unreasonable even in its amended form
Art. 19(1)(g) of the Constitution Is not hit by the present Sec. 25-O being in the interest of the General
Public same as appearing in Art. 19(6)
Section 25-O Even in the present form is not ultra virus to Art. 19(1)(g) of the Constitution
5B.59 The short point is that whether the present Sec. 25-O is violative of Art.19(1)(g) of the
Constitution being unreasonably restrictive even in its amended form. Rejecting this
contention the Division Bench held that the phrase in the interest of the general public
appearing in Sec. 25-O has been bodily lifted from Art.19(6) of the Constitution. If this
phrase is not vague in the Constitution, one fails to see how it becomes vague when
incorporated in amended Sec. 25-O. Hence the refusal to close down an undertaking is not
violative of Art.19(1)(g) of the Constitution. Each contingency for closure is independent on
its own facts and circumstances prevailing at relevant time for a decision.
The Commercial Ahmedabad Mills Co. Ltd. & Anr. v. State of Gujarat, 2011 V LLN 672 (Guj.DB) SCA
3991 of 1986 dt. 7-7-2011
However this issue.19(6) of the Constitution. (Page: 674, Para: 2)
Sec. 25-O
Functional Integrality Exists if there is transferability of workmen one Balance sheet ownership control
and supervision
Closure If there is functional integrality between three units constituting one Industrial Establishment
permission to close anyone is required u/s. 25-O
Compensation U/s. 25FFF is not sufficient for closure of one unit without permission u/s. 25-O if there is
functional integrality between all the units employing more than 100 workmen
5B.60 The issue is whether the factories Manesar and Malanpur with its Head Office are one
Industrial Establishment. The employer closed the factory at Malanpur without prior
permission u/s. 25-O by merely complying with Sec. 25FFA on the ground that there were
less than 100 workmen in the factory. On the other hand, there were a total of 306 workmen
working in all the three units. The Tribunal held that there was functional integrality on the
ground that there was unity of ownership, workmen were transferable from one unit to
another, production quality control and marketing and sales of the end product were
controlled by the Head Office. There was one balance sheet. Hence ownership, supervision,
control, transferability of workmen, dependence of one factory with the other for finishing
30
and testing before supply to customer, payment of bill, provision of funds and finances by
the owner bring all the three units into one Industrial establishment. Hence the closure of
one unit without complying with Sec. 25-O was held illegal and workmen were held entitled
for all benefits under the law.
M/s. NHK Spring India Ltd., Malanpur, Bhind v. NHK Shramik Sangh, Gwalior (M.P.), 2011 (130) FLR
768 : 2012 I LLJ 709 (MP.DB) WP 6535 OF 2009 dt. 20-5-2011
Industrial Tribunal.with the petitioner. (Page: 772, Para: 9)
In view of the.port commission. (Page: 772, Para: 10)
Sec. 25R Penalty for closure

Sec. 25-R
Maharashtra Co-operative Societies Act Permission u/s.107 to prosecute the complaint of closure and
impleading the liquidator for wages cannot be denied
Closure Of a mill run by co-operative society though requires permission u/s.107 of the said Act to
invoke Sec. 25-O for closure the joint director cannot but grant such permission
MRTU Act A complaint for illegal closure of the mill run by co-operative society is maintainable only
when permission u/s.107 is granted and such permission cannot be rejected
5B.61 The workman of the mill raised dispute that the closure of the mill was not according to the
Sec. 25-O. Their complaint was rejected by industrial court for the reason that no
permission u/s. 107 of the Maharashtra Co-operative Societies Act was obtained for
impleading liquidator of the mill and to prosecute the complaint before industrial court. The
permission sought was rejected by the joint director. The high court held that in any case the
permission could not have been with held by the joint director/registrar u/s. 107 for
prosecuting complaint under MRTU Act. Hence the order passed by the joint director was
quashed and set aside and permission to prosecute the complaint and impleading the
liquidator was granted.
Narayan S/o. Arjunji Vighne & Ors., Amravati v. State of Maharashtra & Ors., 2010 III CLR 337 : 2010
IV LLN 535 (Bom.HC) WP 4823 of 2009 dt. 9-8-2010
Having considered.of society. (Page: 339, Para: 8)
It is contended.permissible. (Page: 340, Par: 9)
For the reasons.been allowed. (Page: 341, Para: 12)
31

Special provisions relating to lay-off, retrenchment and closure in certain establishments

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Chapter VB

Special provisions relating to lay-off, retrenchment and closure

Sec. 25K Application of Chapter VB

From the above.are as under. (Page: 963, Para: 11)

It is clear.as per law. (Page: 963, Para: 12)

With regard to.as to costs. (Page: 963, Para: 13)

Sec. 25L - Definitions

Industrial Establishment Includes An establishment engaged in production of quality seeds

In this case.the industrial establishment. (Page: 266, Para: 9)

Sec. 25M Prohibition of Lay-off

If an employer.permission to prosecute. (Page: 393, Para: 9)

As far as.same is dismissed. (Page: 393, Para: 10)

Sec. 25-M (7)

Admittedly, the notice.confirmed the same. (Page: 631, Para: 6)

The contention of.without hearing them. (Page: 632, Para: 7)

Sec. 25-M (8) & Sec. 33C(2)

Sec. 25N Conditions Precedent to retrenchment of workmen

In the instant case.that burden. (Page: 379, Para: 12)

The decision of Government.down the unit. (Page: 91, Para: 13)

The workman had.is invalid. (Page: 267: Para: 10)

If the activities.not discharged. (Page: 268: Para: 11)

Now the Courtthe respondent-corporation. (Page: 3136, Para: 21)

If the persons.similarly situated persons. (Page: 3138, Para: 25)

The fact that.held as under. (Page: 3138, Para: 27)

In view of.as to costs. (Page: 3139, Para: 28)

Sec. 2(s) and 25N

Sh. Som Raj.work at Badli. (Page: 1751, Para: 8)

In view of.I. D. Act, 1947. (Page: 1752, Para: 9)

The Petitioner was.his appointment letter. (Page: 1754, Para: 11)

The submission of.in the affidavit. (Page: 1754, Para: 12)

Sec. 10(3) & 25-N

Learned Tribunal after.to any relief. (Page: 548, Para: 4)

The grounds raised.I. D. act. (Page: 548, Para: 5)

A perusal of.the respondent- workman. (Page: 507, Para: 2)

Sec. 25N & 25L(a)

Shri Giripunje, the.cannot be sustained. (Page: 781, Para: 14)

Sec. 10(1) & 25-N(3)

It appears that.is directed accordingly. (Page: 660, Para: 5)

As a cumulative effect.by this Court. (Page: 660, Para: 10)

Sec. 25-N (6)

Sec. 25F & 25N

Sec. 25G of the Act.retrenchment of the petitioner. (Page: 517, Para: 6)

Disputed question of fact Cannot be agitated in writ

On behalf of.created under the Act. (Page: 458, Para: 4)

Now let us.adversarys case. (Page: 256, Para: 68)

With.appellant mill. (Page: 256/257, Para: 69)

Closure Of an undertaking with 83 workmen does not attract Sec. 25-O

Mr. Rele criticized.be set aside. (Page: 36, Para: 4)

Apart from this.not be closed. (Page: 36, Para: 5)

Not only this.had attained finality. (Page: 352, Para: 21)

Coming to the.without any basis. (Page: 352, Para: 22)

In the circumstances . of the Mills. (Page: 628, Para: 4)

In the circumstances .rule is discharged. (Page: 629, Para: 5)

Sec. 25-O & Art. 226

It is clear.to file the petitioner. (Page: 677, Para: 7)

From the above.of the case. (Page: 678, Para: 11)

It follows.of the Act. (Page: 680, Para: 17)

Thus, prima facie.writ jurisdiction. (Page: 682, Para: 24)

Sec. 10 & 25-O

As per guideline.the appellant. (Page: 252, Para: 11)

But in this case.of this case. (Page: 253, Para: 12)

On the other hand.thus order. (Page: 253, Para: 13)