Section 25O - Procedure for closing down an undertaking : Industrial Disputes Act 1947

What is the Procedure for closing down an undertaking? Section 25O of Industrial Disputes Act 1947

Section 25O of Industrial Disputes Act 1947 : "Procedure for closing down an undertaking"

25-O. (1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner :

Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or for other construction work.

(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(3) Where an application has been made under sub-section (1) and the appropriate Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(4) An order of the appropriate Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.

(5) The appropriate Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(6) Where no application for permission under sub-section (1) is made within the period specified therein or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.

(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.

(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.

STATE AMENDMENTS

MADHYA PRADESH
For section 25-O, the following section shall be substituted, namely :-

"25-O. Procedure for closing down an undertaking.-(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the State Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen by registered post with acknowledgement due.

(2) Where a notice has been served on the State Government by an employer under sub-section (1) of section 25FFA and the period of notice has not expired at the commencement of the Industrial Disputes (Madhya Pradesh Amendment) Ordinance, 1983, such employer shall not close down the undertaking but shall, within a period of fifteen days from such commencement, apply to the State Government for permission to close down the undertaking.

(3) Where an application for permission has been made under sub-section (1) or sub-section (2) the State Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(4) Where an application has been made under sub-section (1) or sub-section (2), as the case may be, and the State Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(5) An order of the State Government granting or refusing to grant permission shall, subject to the provisions of sub-section (6), be final and binding on all the parties and shall remain in force for one year from the date of such order.

(6) The State Government may, either on its own motion or on the application made by the employer or any workmen, review its order granting or refusing to grant permission under sub-section (3) or refer the matter to the Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(7) Where no application for permission under sub-section (1) or sub-section (2) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.

(8) Notwithstanding anything contained in the foregoing provisions of this section, the State Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.

(9) Where an undertaking is permitted to be closed down under sub-section (3) or where permission for closure is deemed to be granted under sub-section (4), every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months." - Madhya Pradesh Act No. 32 of 1983.

MAHARASHTRA
For section 25-O, the following section shall be substituted, namely:-

"25-O. Application to be made for obtaining permission to close down any undertaking ninety days before closure.-(1) An employer, who intends to close down an undertaking of an industrial establishment to which this Chapter applies, shall submit, for permission, at least ninety days before the date on which the intended closure is to become effective, an application, in the prescribed manner, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking. A copy of such application shall be served by the employer simultaneously on the representatives of the workmen in the prescribed manner:

Provided that nothing in this section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams, or other construction works.

(2) On receipt of an application under sub-section (7), the appropriate Government, after holding such inquiry as it deems fit, and after giving a reasonable opportunity of being heard to the applicant and the representatives of the workmen, may, for the reasons to be recorded in writing, by order grant the permission for closure, or if it is satisfied that the reasons given for the intended closure of the undertaking are not adequate and sufficient, or are not urged in good faith or are grossly unfair or unjust, and in any case such closure would be prejudicial to the interests of the general public, it may, for the reasons to be recorded in writing, by order refuse to grant the permission and direct the employer not to close such undertaking. A copy of any decision given by the appropriate Government under this sub-section shall be sent by it simultaneously to the representatives of the workmen.

(3) Where an application for permission has been made under sub-section (1), and the appropriate Government does not communicate the refusal to grant the permission to the employer, within a period of sixty days from the date of receipt of the application by it, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(4) Any employer or any workman affected by any order made under sub-section (2) or any workman affected by the permission deemed to be granted under sub-section (3), may, within thirty days from the date of the order or from the date from which the permission is deemed to be granted, as the case may be, prefer an appeal to such Industrial Tribunal as may be specified by the appropriate Government by notification in the Official Gazette for such area or areas or for the whole State, as may be specified therein. The Industrial Tribunal shall, after holding such inquiry as it deems fit, as far as possible within thirty days from the date of filing the appeal, pass an order, either affirming or setting aside the order of the appropriate Government or the permission deemed to be granted, as the case may be.

(5) Any order made by the appropriate Government under sub-section (2) or any permission deemed to be granted under sub-section (3), subject to an appeal to the Industrial Tribunal, and any order made by the Industrial Tribunal in such appeal, shall be final and binding on all the parties concerned.

(6) Any order refusing to grant permission for closure made by the appropriate Government under sub-section (2) shall remain in force for a period of one year from the date of such order, unless it is set aside earlier by the Industrial Tribunal in appeal.

(7) When no application for permission under sub-section (7) is made, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure, and the workman shall be entitled to all the benefits under any law for the time being in force, as if no notice had been given to him.

(8) Notwithstanding anything contained in sub-section (1), the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like, it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.

(9) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3), every workman in the said undertaking, who has been in continuous service for not less than one year in that undertaking immediately before the date of application for permission under this section, shall be entitled to notice and compensation as specified in section 25N, as if the said workman has been retrenched under that section." - Maharashtra Act No. 3 of 1982.

RAJASTHAN
For section 25-O the following section shall be substituted, namely:-

"25-0. Procedure for closing down an undertaking. - (1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies including an employer who has served a notice under sub-section (1) of section 25FFA on the State Government of his intention to close down such an undertaking but the period of such a notice has not expired at the commencement of the Industrial Disputes (Rajasthan Amendment) Ordinance, 1983, shall apply for prior permission at least ninety days before the date on which the intended closure is to become effective, to the State Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen by registered post with acknowledgement due.

(2) Where an application for permission has been made under sub-section (1), the State Government, after making such enquiry as it thinks fit and after giving reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by employer, the interests of the general public and all other relevant factors, by order and for reason to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

(3) Where an application has been made under sub-section (1), and the State Government does not communicate the order granting or refusing to grant permission to the employer within a period of sixty days from the date on which such application is made, the permission applied for shall be deemed to have been granted on the expiration of the said period of sixty days.

(4) An order of the State Government granting or refusing to grant permission shall, subject to the provisions of sub-section (5), be final and binding on all the parties and shall remain in force for one year from the date of such order.

(5) The State Government may, either on its own motion or on the application made by the employer or any workman, review its order granting or refusing to grant permission under sub-section (2) or refer the matter to a Tribunal for adjudication:

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(6) Where no application for permission under sub-section (1) is made within the period specified therein, or where the permission for closure has been refused, the closure of the undertaking shall be deemed to be illegal from the date of closure and the workmen shall be entitled to all the benefits under any law for the time being in force as if the undertaking had not been closed down.

(7) Notwithstanding anything contained in the foregoing provisions of this section, the State Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employee or the like it is necessary so to do, by order, direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.

WEST BENGAL
In section 25-O,-
(a) in sub-section (1), after the first proviso, the following proviso shall be inserted:-

"Provided further that every application for permission to close down an undertaking shall, having regard to the first proviso to section 25FFF, contain the particulars of the quantum, mode, manner and time of payment of compensation to the workmen, in the manner prescribed, and such employer shall furnish such guarantee as may be required by the appropriate Government to discharge his liability for payment of compensation and other statutory dues to the workmen in the event of such permission being granted under sub-section (2) or deemed to have been granted under subsection (3).";

(b) after sub-section (1), the following sub-section shall be inserted:-

"(1A) Where an application for permission has been made under sub-section (1), the appropriate Government may, having regard to the reasons adduced in such application and the interests of the undertaking and the concerned workmen, issue such directions as may be necessary for maintaining normalcy and continuity of work during the notice period.";
(c) to sub-section (6), the following Explanation shall be added:-

Explanation : "Benefit under any law" shall include benefits under any contract, agreement, award or settlement under any law;

(d) after sub-section (7), the following sub-section shall be inserted:-
'(7A) Every order of the appropriate Government under sub-section (7) shall indicate, for reasons to be recorded, the extent to which compensation computed under sub-section (8) shall be payable in the case, having regard to the facts and circumstances of the same and for securing such payment, the appropriate Government may obtain such information and guarantee specified in the second proviso to sub-section (1) as may be considered necessary.'

(e) in sub-section (8), after the words "shall be entitled to receive" the words and brackets, "in addition to all legal dues (including gratuity)", shall be inserted. - West Bengal Act 33 of 1989.

ORISSA
For section 25-O of the principal Act, the following section shall be substituted, namely:-

"25-O. Procedure for closing down an undertaking.-(1) An employer who intends to close down an undertaking of an industrial establishment to which this Chapter applies shall, in the prescribed manner, apply, for prior permission at least ninety days before the date on which the intended closure is to become effective, to the appropriate Government, stating clearly the reasons for the intended closure of the undertaking and a copy of such application shall also be served simultaneously on the representatives of the workmen in the prescribed manner:

Provided that nothing in this sub-section shall apply to an undertaking set up for the construction of buildings, bridges, roads, canals, dams or other construction work.

(2) Where an application for permission has been made under sub-section (1), the appropriate Government, after making such enquiry as it thinks fit and after giving a reasonable opportunity of being heard to the employer, the workmen and the persons interested in such closure may, having regard to the genuineness and adequacy of the reasons stated by the employer, the interests of the general public and all other relevant factors, by order and for reasons to be recorded in writing, grant or refuse to grant such permission and a copy of such order shall be communicated to the employer and the workmen.

Provided that where a reference has been made to a Tribunal under this sub-section, it shall pass an award within a period of thirty days from the date of such reference.

(7) Notwithstanding anything contained in the foregoing provisions of this section, the appropriate Government may, if it is satisfied that owing to such exceptional circumstances as accident in the undertaking or death of the employer or the like it is necessary so to do, by order direct that the provisions of sub-section (1) shall not apply in relation to such undertaking for such period as may be specified in the order.

(8) Where an undertaking is permitted to be closed down under sub-section (2) or where permission for closure is deemed to be granted under sub-section (3) every workman who is employed in that undertaking immediately before the date of application for permission under this section, shall be entitled to receive compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous or any part thereof in excess of six months service - Orissa Act No. 6 of 1983.