Excel Wear Etc vs Union Of India (SC 1978)

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  • Excel Wear is a partnership firm manufacturing garments  for export. About400 workmen  were employed  in the petitioners’ factory. The case of the petitioners  is that  the relations between the management  and     the  employees         started  deteriorating    and became very  strained from  The  workmen   became                very militant, aggressive,  violent and indulged in unjustifiable or illegal strikes. The  petitioners  claim that as a result it  became  almost impossible  to   carry  on  the      business.
  • The petitioners, therefore, served a notice  dated  2nd May,  1977  on  the Government of  Maharashtra for  approval of  closure  of  the  undertaking  The  State  Government refused to  accord the        approval  on  the  ground  that       the intended closure was prejudicial to public interest.
  • The petitioners contended:
    • (a) A right to close down  a business  is an integral part of             the right  to carry  on a business guaranteed under Art. 19 The impugned law imposes a restriction  on the said fundamental right which is highly unreasonable,  excessive   and        It is   not  a restriction  but   almost  amounts  to           the  destruction  or negation  of   that  right.
    • (b) A right to carry on a business includes a right not to carry on a             business  which                is  like  any                other  right mentioned under    Article 19(1)
    • (c) The restrictions are unreasonable because-   (i)  Section 25(o)  does  not        require  giving  of                   reasons in the order.        (ii) No  time limit  is to he fixed while refusing          permission to close down.      (iii)Even  if             the  reasons     are  adequate   and              sufficient, approval  can be  denied  in             the                       purported  public  interest  of              security  of                 Labour  is bound to suffer because of                 unemployment brought  about in  almost  every               case of closure.            (iv) It  has been left to the caprice and whims of           the authority to decide one way or the other.                    No guidelines have been given.
    • The workers contended that the restrictions imposed by the impugned law are quite reasonable and   justified to put a stop to the unfair labour practice and  for the  welfare        of  the   It is a progressive legislation for the protection of a weaker section of society.
    • The workers also did not accept that  a right to close down a business is an integral part  of  the   right  to  carry  on  any  According to  them, the                total prohibition  of closure        only affects a part of the right to carry on the business and nota total annihilation of this. The restriction imposed was in public interest and there is a presumption of reasonableness in favour  of a               statute.
    • The SC agreed with the workers and held that the right to  close down  a business  cannot  be equated with  a right not to start or carry on n business at all. The extreme proposition urged on behalf of the employer by equating  the two  rights and  placing them at par is not sound.  If one does not start a business at all, then perhaps under no circumstances,              he can be compelled to start one. Under no  circumstances, a  person can be compelled to  speak, to form an association or to acquire or hold a property.
    • But by imposing reasonable restrictions, he can be compelled not to speak, not to form an association or not to acquire or not to hold property. A total prohibition of business  is possible  by putting reasonable restrictions under Article  19(6) on           the right  to carry  on a business. However, the greater the restriction, the more the need for strict scrutiny by the Court.
    • The SC agreed with the workers and held that the right to  close down  a business  cannot  be equated with  a right not to start or carry on n business at all. The extreme proposition urged on behalf of the employer by equating  the two  rights and  placing them at par is not sound.  If one does not start a business at all, then perhaps under no circumstances,              he can be compelled to start one. Under no  circumstances, a  person can be compelled to  speak, to form an association or to acquire or hold a property.
    • But by imposing reasonable restrictions, he can be compelled not to speak, not to form an association or not to acquire or not to hold property. A total prohibition of business  is possible  by putting reasonable restrictions under Article  19(6) on           the right  to carry  on a business. However, the greater the restriction, the more the need for strict scrutiny by the Court.

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