LI Network
Published on: January 15, 2024 at 11:00 IST
The Bombay High Court has supported the closure of General Motors’ plant under Section 25-O of the Industrial Disputes Act, 1947, rejecting the claims made by the General Motors Employees Union.
Justice Milind N Jadhav affirmed the order allowing the plant closure, emphasizing that General Motors, not being a public utility company, cannot be compelled to continue operations after incurring substantial losses.
The Court highlighted that the Industrial Tribunal had thoroughly considered the evidence presented, concluding that General Motors had exhausted its resources in attempts to strengthen its financial standing and make the business self-sustainable. The closure decision was made only when all efforts failed.
The Court noted that the company’s efforts to recover from losses were well-documented based on the evidence.
Senior Advocate Sanjay Singhvi represented the petitioner, while Senior Advocate JP Cama appeared for the respondent in the case. General Motors had decided to close its Halol Plant in 2017 due to significant losses and shifted focus to exporting from the Talegaon Plant. The government rejected General Motors’ closure application for the Talegaon Plant on January 18, 2021. The matter was then referred to the Industrial Tribunal on March 19, 2021.
During the legal battles, lay-off notices were issued in 2021, and 484 workers availed separation benefits under the Voluntary Separation Scheme. The Talegaon plant was sold to Hyundai in 2023.
The Industrial Tribunal’s award on June 30, 2023, allowed the closure of the Talegaon plant from April 30, 2021. The employee union challenged this order, arguing that the reference became infructuous after the rejection of the initial closure application.
The High Court, relying on the case of Excel Wear Vs. Union of India, emphasized that a company has the fundamental right to close down its business and cannot be compelled to continue running, especially in the face of continuous losses.
The Court also rejected the union’s argument regarding tampering of the date of closure, stating that the union had fully participated in the proceedings in all forums.
The Court held that the right to close a business is a fundamental right and cannot be restricted, affirming the Tribunal’s decision to allow General Motors to close its plant.
The Court dismissed the application, concluding that the period mentioned in Section 25-O(6) of the Industrial Disputes Act is only ‘directory’ and not ‘mandatory.’