sadalawpublications.com

A DYNAMIC LAW JOURNAL

Menu

Industrial Disputes Act

Supreme Court Affirms Right to Close Business Under Article 19 of Indian Constitution

Leave a Comment / Live cases /

Trending Today Supreme Court Affirms Right to Close Business Under Article 19 of Indian Constitution Bombay High Court Halts Aarey Forest Demolition: Legal Win for Environment and Tribal Rights Delhi High Court Orders Centre to Draft Deepfake Guidelines: Major Step for Digital Privacy and Free Speech in India Supreme Court Clears Uttarakhand’s Uniform Civil Code: A Historic Step Toward Gender Equality and Secular Law in India Supreme Court Reviews CAA Rules 2024: Fresh Petitions Challenge Citizenship Law on Constitutional Grounds Supreme Court Orders CBI Probe into ₹3,200 Crore Bihar Foodgrain Scam: Political Fallout and Fight Against Corruption INTERNSHIP OPPORTUNITY AT INTERVENOR LEGAL SOLUTIONS, NEW DELHI LEGAL JOB OPPORTUNITY AT HEMVATI NANDAN BAHUGUNA GARHWAL UNIVERSITY, UTTARAKHAND LEGAL JOB OPPORTUNITY AT HEAD DIGITAL WORKS, DELHI INTERNSHIP OPPORTUNITY AT VOYAGER CAPITAL Supreme Court Affirms Right to Close Business Under Article 19 of Indian Constitution PRABHAT KUMAR BILTORIA 1 JULY 2025 The Supreme Court of India affirms that the right to shut down a business is protected under Article 19(1)(g) of the Constitution. Learn how this landmark judgment impacts business owners, labor laws, and public interest. Supreme Court Declares Business Closure a Fundamental Right Under Article 19 In a landmark decision, the Supreme Court of India has ruled that the right to close a business is protected under Article 19(1)(g) of the Indian Constitution. The judgment, delivered on June 4, 2025, underscores that the freedom to practice any profession includes the right to shut down operations, subject to reasonable restrictions. This critical verdict was delivered by a bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra. Case Background: Harinagar Sugar Mills and the Closure of Its Mumbai Unit The case stemmed from a petition by Harinagar Sugar Mills Ltd. (Biscuit Division), which sought to shut down its Mumbai facility after losing a vital processing contract with Britannia Industries. The company filed a closure application on August 28, 2019, under Section 25-O of the Industrial Disputes Act, 1947. Despite the statutory requirement for a decision within 60 days, the Maharashtra Labour Department, particularly a Deputy Secretary, delayed the process by either not acting or asking unauthorized questions. Supreme Court’s Interpretation of Presumed Permission The Court ruled that failure by the State to respond within the 60-day period amounts to presumed permission for business closure. It emphasized that the Deputy Secretary’s actions lacked legal backing, as there was no delegation under Section 39 of the Act authorizing such inquiries. This interpretation ensures clarity and accountability in labor law, making it clear that bureaucratic delays cannot hinder legitimate business decisions. Legitimate Grounds and Public Interest Must Be Considered While upholding the right to close a business, the Supreme Court clarified that financial difficulty alone is insufficient. Business owners must demonstrate extraordinary circumstances or inability to continue operations. Moreover, public interest considerations under Section 25-O must be taken into account before final closure is approved. Bombay High Court Overruled: Supreme Court Upholds Lawful Closure In this ruling, the Supreme Court overturned a previous decision by the Bombay High Court, which had ruled against the company citing procedural deficiencies. The apex court concluded that the closure was lawful after the statutory deadline had passed. Additionally, the business compensated 178 employees, with the court ordering ₹15 crore to be disbursed within eight weeks, reflecting its commitment to employee welfare alongside corporate rights. Balancing Constitutional Rights with Accountability This judgment reinforces that Article 19(1)(g) not only safeguards the right to practice a profession but also the right to cease business operations. However, this right must be exercised responsibly, ensuring transparency, legal compliance, and respect for the interests of employees and the public. Leave a Reply Cancel Reply Logged in as Sada Law. Edit your profile. Log out? Required fields are marked * Message* Live Cases Supreme Court Affirms Right to Close Business Under Article 19 of Indian Constitution Sada Law • July 1, 2025 • Live cases • No Comments Bombay High Court Halts Aarey Forest Demolition: Legal Win for Environment and Tribal Rights Sada Law • June 30, 2025 • Live cases • No Comments Delhi High Court Orders Centre to Draft Deepfake Guidelines: Major Step for Digital Privacy and Free Speech in India Sada Law • June 30, 2025 • Live cases • No Comments 1 2 3 … 5 Next »

Supreme Court Affirms Right to Close Business Under Article 19 of Indian Constitution Read More »

Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained

Leave a Comment / Live cases /

Trending Today LEGAL JOB OPPORTUNITY AT ULTRATECH CEMENT LEGAL JOB OPPORTUNITY AT POOJA ENTERTAINMENT LEGAL JOB OPPORTUNITY AT IKIGAI LAW LEGAL JOB OPPORTUNITY AT AMM LAW OFFICES LEGAL JOB OPPORTUNITY AT VIS LEGIS LAW PRACTICE, ADVOCATES JOB OPPORTUNITY AT ADV HUMERA NIYAZI Supreme Court Mandates “Support Persons” for Child Victims Under POCSO Act in Bachpan Bachao Case Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained Supreme Court Rules Section 6A Unconstitutional with Retrospective Effect in CBI v. R.R. Kishore Judgment Supreme Court Judgment on Cancellation of Default Bail After Chargesheet Filing in Serious Offence Cases – State Through CBI v. T. Gangi Reddy (2023) Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained PRABHAT KUMAR BILTORIA 11 June 2025 Discover how the Supreme Court of India affirmed the constitutional right to business closure under Article 19(1)(g), highlighting the landmark case involving Harinagar Sugar Mills Ltd. and the interpretation of the Industrial Disputes Act. Supreme Court Upholds Right to Shut Down Business Under Article 19(1)(g) In a significant ruling, the Supreme Court of India reaffirmed that Article 19(1)(g) of the Indian Constitution grants individuals not only the right to operate a business but also the right to shut it down. This judgment was delivered by a two-judge bench comprising Justice Sanjay Karol and Justice Prashant Kumar Mishra. However, this right remains subject to reasonable restrictions aimed at protecting employees and ensuring compliance with labor laws and statutory procedures. Background of the Case: Harinagar Sugar Mills vs. Bombay High Court Harinagar Sugar Mills Ltd. (HSML), which operated a biscuit division under exclusive Job Work Agreements (JWAs) with Britannia Industries Limited (BIL) for over 30 years, faced a critical change when BIL terminated the agreement in 2019. As a result, HSML applied for closure under the Industrial Disputes Act, 1947 on August 28, 2019, by submitting Form XXIV-C as required under the Maharashtra Rules. However, the application was rejected by the Deputy Secretary of the Maharashtra Government as “incomplete,” leading to delays and further conflict. Government and Union Resistance Despite additional information provided by HSML, the Industrial Tribunal allowed the workers’ union to oppose the closure. HSML argued that the 60-day deemed approval period had lapsed in October 2019 and that the closure should be recognized as valid from the original submission date. They also contended that the Deputy Secretary lacked the authority to reject or alter the application—stating only the Minister had jurisdiction in such cases. Meanwhile, the government cited the incomplete nature of the application and emphasized the need to protect workers’ rights. Supreme Court’s Analysis and Ruling The Supreme Court confirmed that while businesses have a constitutional right to close under Article 19(1)(g), this right is regulated by Section 25-O of the Industrial Disputes Act. The Court ruled: The closure application dated August 28, 2019, was complete and initiated the 60-day statutory window. The Deputy Secretary was not the “appropriate Government” as per Section 25-O. The Minister failed to independently evaluate the application, making the delegation of authority improper. All communications from the Deputy Secretary were legally invalid. The court referenced previous landmark cases like Excel Wear and Orissa Textile and Steel, reaffirming the interplay between business rights and labor regulations. Final Verdict and Compensation Award The Supreme Court set aside the Bombay High Court‘s decision and upheld the deemed closure as valid. It found procedural lapses in how the Maharashtra Government handled the case and concluded that HSML had no viable business options after the JWA termination. In a significant move, the Court directed that compensation awarded to employees during the dispute would not be recoverable. Additionally, it ordered HSML to pay an extra ₹5 crores in compensation to workers—payable within eight weeks. Conclusion: Balancing Business Freedom and Worker Protection This judgment reaffirms the delicate balance between the right to trade or business under Article 19(1)(g) and the legal safeguards designed to protect workers. While entrepreneurs have the liberty to close operations, such decisions must comply with applicable laws and respect due process. The Harinagar Sugar Mills case serves as a precedent on how constitutional freedoms and industrial regulations intersect in a rapidly evolving business environment. Leave a Reply Cancel Reply Logged in as Sada Law. Edit your profile. Log out? Required fields are marked * Message* Live Cases Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained Sada Law • June 11, 2025 • Live cases • No Comments Supreme Court Grants Interim Relief to Journalists in MP FIR Case, Directs Them to Seek High Court Protection Supreme Court Grants Interim Relief to Journalists in MP FIR Case, Directs Them to Seek High Court Protection Sada Law • June 11, 2025 • Live cases • No Comments Supreme Court Stays Madras HC Order Stopping NHAI Toll Collection on Madurai-Tuticorin Highway Supreme Court Stays Madras HC Order Stopping NHAI Toll Collection on Madurai-Tuticorin Highway Sada Law • June 11, 2025 • Live cases • No Comments 1 2 3 … 5 Next »

Supreme Court Upholds Right to Business Closure Under Article 19(1)(g): Harinagar Sugar Mills Case Explained Read More »

Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony

Leave a Comment / Live cases /

Trending Today Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony Punjab and Haryana High Court rejects PIL Seeking ‘Martyr’ Status for Pahalgam Terror Attack Victims Supreme Court on Modification of Arbitral Awards Under Sections 34 and 37: Gayatri Balasamy v. ISG Novasoft Explained Supreme Court Rules Only Vaishnav Sampradaya Members Can Be Receivers of Mathura Temples Rajasthan High Court Flags Lack of Law for Coaching Centers Amid Surge in Student Suicides in Kota Punjab & Haryana High Court Warns Litigant Over Contemptuous Remarks Against Judges in Maya Devi Will Case Allahabad High Court Upholds Survey Order in Sambhal Masjid Case, Says Hindu Plaintiffs’ Suit Is Maintainable Karnataka High Court Declares Power Subsidy Denial to Farmer Societies Unconstitutional, Upholds Cooperative Farming Rights India Imposes Import Restrictions on Bangladeshi Goods Through Northeast Checkpoints Odisha YouTuber Under Probe for Alleged Links to Detained Spy Jyoti Malhotra in Pakistan Espionage Case Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony MAHI SINHA 20 May 2025 The Delhi High Court ruled that once an employee testifies under oath, the burden of proof shifts to the employer. This judgment reaffirms the rights of workers under Indian labor law and highlights key obligations under the Industrial Disputes Act. Delhi High Court Shifts Burden of Proof to Employer After Employee Testimony In a landmark ruling, the Delhi High Court has held that once an employee testifies under oath, the burden of proof shifts to the employer. The case involved Deen Dayal Upadhyay Hospital and a sanitation worker, with Justice Manoj Jain presiding over the matter. Background: Sanitation Worker Denied Minimum Wage The case dates back to 2007 when Sangeeta began working at Deen Dayal Upadhyay Hospital as a sanitation worker, earning Rs. 5,500 per month. She alleged the hospital failed to provide basic employment benefits such as House Rent Allowance, transport allowance, and paid leave. According to her, the salary was also below the Delhi Government’s prescribed minimum wage. After she raised concerns with the hospital management, her employment was terminated in 2015. In response, Sangeeta filed an industrial dispute, claiming she was unjustly dismissed. Hospital Claims Contractual Outsourcing The hospital argued that Sangeeta was not their employee but was engaged by contractor M/s ACME Enterprises. They claimed all sanitation services were outsourced, and her employment ended in April 2015 after a new contractor was appointed. They insisted that Sangeeta’s name was absent from the contractor’s roster and that she had failed to prove continuous employment for over 240 days as required by the Industrial Disputes Act, 1947 under Section 25F. Labor Court Awards Compensation, Hospital Appeals Despite the hospital’s arguments, the labor court ruled in favor of Sangeeta and awarded her Rs. 70,000 as compensation. Unhappy with the decision, the hospital appealed the ruling to the Delhi High Court. Court Analysis: Shifting Burden of Proof Justice Manoj Jain upheld the labor court’s decision. He ruled that while the initial burden to prove continuous employment lies with the employee, once the employee provides substantial evidence—such as salary checks and an unchallenged sworn statement—the burden then shifts to the employer. In this case, Sangeeta’s sworn testimony and payment records sufficed to shift the responsibility to the hospital. However, the hospital failed to provide documentation supporting its outsourcing claims, such as a valid contract with M/s ACME Enterprises or a list of workers employed by the contractor. No Reinstatement, Only Compensation While acknowledging the unlawful termination, the court declined to order Sangeeta’s reinstatement. Citing a long lapse of time and improper hiring practices, the judge ruled that monetary compensation was more appropriate. The court emphasized that appointing government workers without following due procedure would violate Article 16 of the Indian Constitution. The court referred to the precedent set in Union Public Service Commission v. Girish Jayanti Lal Vaghela, reinforcing the need for merit-based and transparent recruitment in public employment. Final Verdict: Compensation Upheld The Delhi High Court dismissed the hospital’s petition and upheld the labor court’s award of Rs. 70,000 in compensation to Sangeeta. The judgment reinforces the principle that employers must maintain proper records and cannot shirk their responsibilities through outsourcing claims. Conclusion: A Win for Workers’ Rights and Legal Accountability The Delhi High Court’s judgment is a significant milestone in upholding the rights of contractual and daily wage workers in India. By shifting the burden of proof to the employer after sworn employee testimony, the court has reinforced accountability under the Industrial Disputes Act. It also sends a clear message that outsourcing arrangements cannot be used as a shield to deny rightful compensation or benefits. This case serves as a precedent for similar labor disputes, especially where continuous service and minimum wage violations are in question. Employers must ensure compliance with employment laws and maintain transparent documentation, while workers can feel more empowered to assert their rights through legal channels. Leave a Reply Cancel Reply Logged in as Sada Law. Edit your profile. Log out? Required fields are marked * Message* Live Cases Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony Sada Law • May 20, 2025 • Live cases • No Comments Punjab and Haryana High Court rejects PIL Seeking ‘Martyr’ Status for Pahalgam Terror Attack Victims Punjab and Haryana High Court rejects PIL Seeking ‘Martyr’ Status for Pahalgam Terror Attack Victims Sada Law • May 20, 2025 • Live cases • No Comments Rajasthan High Court Flags Lack of Law for Coaching Centers Amid Surge in Student Suicides in Kota Rajasthan High Court Flags Lack of Law for Coaching Centers Amid Surge in Student Suicides in Kota Sada Law • May 19, 2025 • Live cases • No Comments 1 2 3 … 5 Next »

Delhi High Court Rules in Favor of Sanitation Worker, Shifts Burden of Proof to Employer After Testimony Read More »

Misuse of Section 17B of the Industrial Disputes Act: Challenges for Employers and Legal Loopholes

Leave a Comment / Case law /

Trending Today Misuse of Section 17B of the Industrial Disputes Act: Challenges for Employers and Legal Loopholes Supreme Court Strikes Down Tamil Nadu Rule Requiring Title Proof for Property Registration Delhi High Court Fines Shazia Ilmi ₹25,000 in Privacy Violation Case Against Rajdeep Sardesai India and Nepal Sign MoU to Strengthen Judicial Cooperation and Legal Exchange Calcutta High Court Allows Anjani Putra Sena’s Ram Navami Rally in Howrah with Strict Conditions Waqf Amendment Bill Sparks Uproar: Opposition Moves Supreme Court Over Alleged Bias Against Muslims “NALSA Files PIL for Humanitarian Release of Aged and Sick Inmates from Indian Jails” Which law states that Aadhaar is required to operate bank accounts? Questions for the Supreme Court the Delhi government’s refusal to grant workers’ allowances Opening the Monument Examining the Long-Term Effects of the 1981 Case Francis Coralie v. Union Territory of Delhi on Individual Liberty and Indian Jurisprudence Rajya Sabha Adopts Bill 2025 for Waqf (Amendment) Misuse of Section 17B of the Industrial Disputes Act: Challenges for Employers and Legal Loopholes MAHI SINHA 08 Apr 2025 The goal of the Industrial Disputes Act, 1947 [the “ID Act”) and its several amendments has always been to guarantee workers social justice and to make sure they are not left defenseless against businesses and industries. Section 17B of the ID Act is one such clause. It was included by the Industrial Disputes (Amendment) Act, 1982, and it became operative on August 21, 1984. Because the employer has challenged the order in the High Court or Supreme Court, workers who have successfully obtained an award from the Labour Court, Industrial Tribunal, or National Tribunal that sets aside an order of termination of their service and directs their reinstatement are not permitted to return to work. This is why Section 17B was enacted. An employer is then responsible for paying the employee’s last salary while the suit is pending. In Dena Bank vs. Kirtikumar T. Patel, the Supreme Court of India explained the purpose of Section 17B, holding that it is to alleviate to some degree the hardship that is caused to the worker due to the delay during the execution of the present during the duration of actions in which the reinstatement award is under objection before the High Court or the Supreme Court. However, some workers are abusing this social welfare legislation as they unfairly enrich themselves while harming the interests of the industries and how the industries have been forced to pay wages even though the workers have found gainful employment elsewhere. The worker must file an affidavit certifying that he is not financially engaged elsewhere in order to be entitled for earnings under Section 17B. The proviso to Section 17B, however, states that the Court will order that no wages be paid if it can be demonstrated to the satisfaction of the High Court or the Supreme Court, as the case may be, that the worker had a job and had been paid enough during the challenge/appeal period, or a portion of it. This clause therefore primarily aims to protect workers who are not engaged in productive employment and who would face financial difficulties in the absence of Section 17B wages. This isn’t always the case, though. The ID Act’s lack of a corollary clause that forbids workers from providing false affidavits of non-employment and no penalties for workers who commit perjury has resulted in the misuse of Section 17B. In order to obtain back pay, some workers who obtained gainful jobs during the trial or after an appeal produce fake affidavits. The ID Act does not provide industries with a haven to protect themselves from such bold human behavior. The only remaining option for the harmed industry would be to file a perjury lawsuit against the dishonest employee. Even if perjury is proven, there will be no financial compensation, therefore this is also of little concern. Furthermore, there have been other instances where the burden of demonstrating whether a worker is gainfully employed has passed from the company to the worker. The Supreme Court recently upheld one of its earlier decisions in the case of National Gandhi Museum vs. Sudhir Sharma, decided on 24.09.2021, which stated that the employee bears the burden of proving that he was not financially secure during the period of challenge or appeal because he is aware of it. The court further held that the facts of each case determine whether or not this burden is discharged. However, the Supreme Court later adopted a different stance in Pradeep S/o Rajkumar Vs. Manganese Ore India, which was determined on 10.12.2021, concluding that the employer had the burden of demonstrating the employee’s gainful employment during the relevant period. It is challenging to determine the current legal position in light of these contradictory Supreme Court rulings. The fact that the employer will not be able to recoup the back wages that were already paid to the worker under orders issued under Section 17B of the ID Act while the appeal is pending, even if the High Court or the Supreme Court ultimately overturns the reinstatement order, further exacerbates the issues facing industries. The case of Dilip Mani Dubey vs. Siel Limited and others reaffirmed this stance. Section 109 of the Bharatiya Sakshya Adhiniyam, 2023 is relevant while evaluating the burden of proof for gainful work because it specifies that the burden of proof rests with the individual when certain facts are particularly within his knowledge. An employee’s employment at another company during the trial or appeal period becomes a fact that he is specifically aware of. Therefore, it must be the employee’s responsibility to demonstrate that they are not engaged in gainful job. In Talwara Cooperative Credit and Service Society Ltd. v. Sushil Kumar, the Supreme Court expressed this opinion. In light of the current legal system and rulings, the legislature must intervene to resolve the confusion and enact strict legislation that forbids the abuse of the ID Act’s welfare provisions. To make sure that the advantage of Section

Misuse of Section 17B of the Industrial Disputes Act: Challenges for Employers and Legal Loopholes Read More »

Get A Quote
Get A Quote