In a significant ruling, a two-judge Supreme Court bench comprising Justices Sanjay Karol and Prashant Kumar Mishra clarified that the fundamental right under Article 19(1)(g) of the Constitution which guarantees the freedom to practice any trade or business also includes the right to shut down that business. However, this right is not absolute and is subject to reasonable restrictions aimed at protecting workers and ensuring compliance with statutory procedures.
Background of the Case
The case arose from appeals filed by Harinagar Sugar Mills Ltd. (HSML) challenging Bombay High Court orders related to the closure of its biscuit manufacturing division. HSML had operated exclusively for Britannia Industries Ltd. (BIL) for over 30 years under Job Work Agreements (JWAs). In 2019, BIL terminated the agreement, prompting HSML to seek closure under the Industrial Disputes Act, 1947.
HSML submitted a closure application on August 28, 2019, under Form XXIV-C as per Maharashtra’s rules. However, the Deputy Secretary of the Maharashtra Government rejected it as “incomplete,” demanding resubmission. Despite HSML’s efforts to provide additional details, the process was delayed. Workers’ unions approached the Industrial Tribunal, seeking restraint on closure, which was granted. HSML’s subsequent petitions were dismissed by the High Court, leading to the Supreme Court appeal.
Key Arguments
HSML argued that:
– Its August 28, 2019, application was complete, and the 60-day statutory period for deemed closure had lapsed by October 2019.
– Only the Minister was the competent authority under Section 25-O of the Industrial Disputes Act, and the Deputy Secretary had no power to demand revisions.
– The termination of the BIL agreement left no alternative business avenues, making closure inevitable.
The government and workers’ unions, however, contended that the application was incomplete and closure should be restrained to safeguard workers’ interests.
Supreme Court’s Findings
The Court held that:
1. HSML’s closure application was valid from August 28, 2019, and the 60-day deemed closure period had expired in October 2019.
2. The Deputy Secretary was not the “appropriate Government” under Section 25-O, and the Minister’s failure to independently assess the application rendered the Deputy Secretary’s communications invalid.
3. HSML had legitimate reasons for closure, given its exclusive reliance on BIL’s business.
The Court referenced its Constitution Bench ruling in Excel Wear, affirming that while Article 19(1)(g) includes the right to close a business, it remains subject to reasonable restrictions under labor laws.
Final Ruling
The Supreme Court:
– Allowed HSML’s appeals, setting aside the High Court orders.
– Declared the closure valid from August 28, 2019, recognizing the lapse of the 60-day period.
– Held that the Deputy Secretary’s interference was unlawful and the Minister’s inaction was a legal defect.
– Enhanced worker compensation by ₹5 crores, in addition to amounts already paid, directing disbursal within eight weeks.
Case Title: Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v. State of Maharashtra & Ors.
© 2025 Powered by Digi Grow Solutions | Design by Hasan Jafer
