Revival materials and reasoned closure decisions control review of sick industrial unit closure; voluntary separation circular upheld

Closure and rehabilitation decisions for a sick industrial undertaking must reflect consideration of all relevant revival materials and independent application of mind to statutory factors, including public and workers' interests; on the facts discussed, the closure and rehabilitation orders were quashed and revival reconsideration directed. A separate challenge to a voluntary separation circular failed because the circular had been issued pursuant to governmental directions, and its validity was not affected merely because it was signed by a subordinate management officer.

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Issues: (i) Whether the orders of the BIFR and AAIFR, and the Government permission for closure under section 25-O, were liable to be quashed for failure to consider the revival proposals and for want of proper application of mind. (ii) Whether the circular offering the voluntary separation scheme was invalid for want of proper approval.

Issue (i): Whether the orders of the BIFR and AAIFR, and the Government permission for closure under section 25-O, were liable to be quashed for failure to consider the revival proposals and for want of proper application of mind.

Analysis: The statutory scheme under the Sick Industrial Companies (Special Provisions) Act, 1985 required the Board to inquire into sickness, explore revival, and act expeditiously with reference to all relevant materials. The record showed that several revival options, committee reports, and alternative proposals had been placed before the authorities, but the final decision turned substantially on the Central Government's unwillingness to provide further funds. The order granting closure under section 25-O was also tested on the principle that an administrative order must stand or fall on the reasons recorded and must reflect consideration of the relevant factors, including public interest, workers' interests, and the feasibility of revival.

Conclusion: The challenge succeeded. The orders of the BIFR, AAIFR, and the Government of India permitting closure were quashed, and reconsideration of revival was directed.

Issue (ii): Whether the circular offering the voluntary separation scheme was invalid for want of proper approval.

Analysis: The circular was issued pursuant to Government directions and could not be struck down merely on the ground that it was signed by an of the management. The objections raised against its implementation did not establish invalidity in the manner alleged.

Conclusion: The challenge failed. The circular was upheld.

Final Conclusion: The writ petitions were disposed of in different directions, with the closure and rehabilitation orders set aside while the challenge to the voluntary separation circular was rejected.

Ratio Decidendi: In judicial review, a closure decision affecting a sick industrial undertaking can be quashed where the statutory authorities fail to consider relevant revival materials and do not independently apply their mind to the factors required by the governing statute, while a circular issued pursuant to competent governmental direction is not invalid merely because it is signed by a subordinate officer.

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