1978 (9) TMI 184 - SC - Indian Laws

Supreme Court Invalidates Sections of Industrial Disputes Act (1)(g)

The Supreme Court declared Sections 25-O and 25-R of The Industrial Disputes Act, 1947, unconstitutional and invalid for violating Article 19(1)(g) of the ... - Issues Involved:1. Constitutional validity of Sections 25-O and 25-R of The Industrial Disputes Act, 1947.2. Right to close down a business as part of the right to carry on a business under Article 19(1)(g) of the Constitution.3. Reasonableness of the restrictions imposed by Sections 25-O and 25-R.4. Applicability of Article 31C of the Constitution to the impugned law.Issue-wise Detailed Analysis:1. Constitutional Validity of Sections 25-O and 25-R of The Industrial Disputes Act, 1947:The employers challenged the constitutional validity of Sections 25-O and 25-R of The Industrial Disputes Act, 1947. Section 25-O requires employers to seek prior approval from the government before closing down an undertaking, and Section 25-R prescribes penalties for non-compliance. The court examined whether these provisions were reasonable restrictions under Article 19(6) of the Constitution.2. Right to Close Down a Business as Part of the Right to Carry on a Business under Article 19(1)(g) of the Constitution:The employers argued that the right to close down a business is an integral part of the right to carry on a business guaranteed under Article 19(1)(g). The court recognized that 'the right to close down a business is an integral part of the right to carry on a business.' However, it noted that this right is not absolute and can be subject to reasonable restrictions.3. Reasonableness of the Restrictions Imposed by Sections 25-O and 25-R:The court considered several arguments regarding the unreasonableness of the restrictions:- Section 25-O does not require the government to provide reasons for its decision.- No time limit is set for the government to refuse permission.- The law leaves the decision to the discretion of the authority without clear guidelines.- There is no provision for appeal, revision, or review of the government's decision.- The employer is compelled to comply with Section 25N only after approval of closure, which is impractical.- The penalties under Section 25-R are excessive.The court found these restrictions to be excessive and unreasonable, stating, 'It is not always easy to strike a balance between the parallel and conflicting interests. Yet it is not fair to unreasonably tilt the balance in favour of one interest by ignoring the other.'4. Applicability of Article 31C of the Constitution to the Impugned Law:The respondents argued that the impugned law was protected by Article 31C, which shields laws giving effect to certain directive principles from being challenged on the grounds of violating fundamental rights. The court examined whether the law fell within the scope of Article 31C, particularly after its amendment by the Forty-second Amendment Act, 1976. The court concluded that the amended Article 31C could not save the law, stating, 'The amended Article 31C did not save it.'Conclusion:The Supreme Court declared Sections 25-O and 25-R of The Industrial Disputes Act, 1947, as unconstitutional and invalid for violating Article 19(1)(g) of the Constitution. The court held that the restrictions imposed by these sections were excessive and unreasonable. Consequently, the impugned orders passed under Section 25-O(2) were void, and the respondents were restrained from enforcing them. The court did not express any views on the merits of the orders otherwise and made no order as to costs in any of the petitions.