A five-judge Constitution bench of the Supreme Court has rejected the challenge to the provision in the Industrial Disputes Act dealing with the right of the management to close down an industry, thus resolving the conflict of views on this question existing in different high courts.
In 1979, the Supreme Court had struck down Section 25-0 of the Act stating that the right to close down a business was an integral part of the fundamental right to carry on business guaranteed in Article 19(1)(g) of the Constitution. Following this ruling, Parliament amended the Section in 1982 to make it constitutional, curing the defects pointed out by the Supreme Court.
However, the amended provision was also caught in different interpretations by the high courts. The state laws, modelled on the provisions of the Industrial Disputes Act, were upheld or quashed according to the interpretations of the respective high courts. Therefore, the employers or employees in those cases appealed to the Supreme Court. The constitution bench headed by Chief Justice S P Bharucha upheld the provision on Thursday.
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The court considered appeals from Orissa, Bihar, UP and Maharashtra where state legislations have similar provisions regarding closure of units. Some of the companies which appealed are Orissa Textile & Steel Ltd, Bombay Gas Public Ltd, Oswal Agro Furane Ltd, and Hindalco Industries.
The employers had argued that the restrictions imposed by law on closure were excessive in asmuch as in the purported interest of the general public, closure could be prevented even if the employer had genuine and adequate reasons. They contended that the words