Holding

The Deputy Secretary’s letter is not an order because he is not the appropriate Government; the Labour Minister alone holds that authority, and his failure to decide within 60 days triggers the deemed‑grant of permission for closure under s.25‑O(3).

Summary

Harinagar Sugar Mills Ltd. (Biscuit Division) (HSML) applied to close its biscuit unit after Britannia Industries terminated a 32‑year job‑work agreement. The State Government, through a Deputy Secretary, sent a letter on 25 September 2019 asking HSML to resubmit its application, claiming the original lacked cogent reasons. HSML argued that the Deputy Secretary lacked authority and that, under s.25‑O(3) of the Industrial Disputes Act, permission to close should be deemed granted after 60 days if the appropriate Government did not decide. The Supreme Court held that the Deputy Secretary was not the "appropriate Government"—that role rests solely with the Labour Minister—and that his letter could not be treated as a valid order. Consequently, no order was communicated within the statutory period, so the deemed‑closure provision applied, and the High Court’s dismissal of the writ petitions was set aside. The appeals were allowed, and compensation to workmen was ordered.

Issues considered

Whether the letter dated 25 September 2019 issued by the Deputy Secretary can be construed as an order under s.25‑O of the Industrial Disputes Act, 1947, and whether the appellant is entitled to relief of deemed closure under s.25‑O(3).
What is the meaning of ‘appropriate Government’ under s.25‑O, and whether the Deputy Secretary acted as the appropriate Government in this case.

Legislation cited

Constitution of Indias. Art.19(1)(g), s. Art.19(6)
Industrial Dispute (Maharashtra) Rules, 1957s. Rule 82-B(1)
Industrial Disputes Act, 1947s. 25-O(1), s. 25-O(2), s. 25-O(3), s. 39

Headnote

Issue for Consideration (i) Whether letter dated 25.09.2019 sent by the Deputy Secretary of State Government can be construed to be an order - Connectedly, whether the appellants would be entitled to the relief of deemed closure, as on 27.10.2019 by virtue of the in s. 25-O(3) of the Industrial Disputes Act, 1947; (ii) What would be the meaning of the phrase ‘appropriate Government’ and whether in the facts of this case, it was the appropriate Government acting in the matter of the closure - if not what is the effect in law, thereof.

Subjects

Closure of businessClosing down an undertakingPermission of closureClosure applicationJob work agreementEfforts to prevent closureNot given cogent reasons for closureFunctus officioWorkers’ unionsForm XXIV-CForm XXIV-BRelief of deemed closureDeeming fiction in s.25-O(3)Freedom of trade, profession, occupation and businessAppropriate governmentRight to shut down a businessMinister of LabourInternal notingNon‑application of mindTop‑down decisionOrder without authorityCommunication without legal sanctionSub‑delegation to officer

Judgment

[2025] 7 S.C.R. 427 : 2025 INSC 801

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr.
v.
State of Maharashtra & Ors.
(Civil Appeal No. 7372 of 2025)
04 June 2025
[Sanjay Karol* and Prashant Kumar Mishra, JJ.]

Issue for Consideration
(i) Whether letter dated 25.09.2019 sent by the Deputy Secretary of
State Government can be construed to be an order - Connectedly,
whether the appellants would be entitled to the relief of deemed
closure, as on 27.10.2019 by virtue of the deeming fiction present
in s. 25-O(3) of the Industrial Disputes Act, 1947; (ii) What would be
the meaning of the phrase ‘appropriate Government’ and whether
in the facts of this case, it was the appropriate Government acting
in the matter of the closure - if not what is the effect in law, thereof.

Headnotes†
Industrial Disputes Act, 1947 – s.25-O(1), 25-O(3) – Industrial
Dispute (Maharashtra) Rules, 1957 – r.82-B(1) – Appellant-HSML
was engaged in biscuit manufacturing exclusively for BIL under
Job Work Agreements (JWA) – JWA was terminated by BIL –
Resultantly, applications for closure of business were made
to the competent authorities on 26.08.2019 – By a letter dated
25.09.2019 sent by Dy. Secretary, State Government informed
HSML that they failed to disclose their efforts to prevent
closure, nor had they given cogent reasons for closure and
were, therefore, asked to resubmit their application – By way
of reply dated 10.10.2019, HSML furnished the particulars as
asked for – It is to be noted that the 60-day period provided for
u/s. 25-O(3) of the Act ran out on 27.10.2019 – On 04.11.2019,
HSML was once again asked to resubmit their application
as authorities found response of HSML lacking – HSML in
their response contended that by virtue of s.25-O(3), the
permission of closure is deemed to have been granted –
The Deputy Commissioner sent to HSML two letters, dated
20.11.2019 and 22.11.2019 asking them to be present for a
meeting on 26.11.2019, and conveying to them that the State
Government was yet to grant permission for closure – Letters

* Author
428 [2025] 7 S.C.R.

Supreme Court Reports

dated 04.11.2019, 20.11.2019 and 22.11.2019 were challenged
before High Court – High Court, by the impugned judgment,
dismissed the writ petitions – Correctness:
Held: There is nothing on record to show that the Dy. Secretary was
duly authorised to conduct communication and/or accept or reject
applications for closure made by industrial units – The concerned
authority in that regard is only the Minister – There is no express
authority resting with the Deputy Secretary – Reliance cannot be
placed on internal noting to establish compliance with procedure –
s.25-O specifically provides “by order and for reasons to be recorded
in writing,” and so, reasons are a statutory necessity – When
the minister is the sole authority, endorsement of a view taken
by an undisclosed officer of the Ministry cannot be said to be an
‘application of mind’ by the competent authority – The decision had
to be top down and not otherwise – The necessary conclusion is
that the letter dated 25.09.2019 addressed by the Deputy Secretary
to HSML cannot be constituted to be an order since such order
to resubmit the application was without any authority since it was
not the appropriate Government acting in that regard and not an
order rejecting or accepting the application – The appropriate
Government failed to make and communicate any order on the
application for closure – The deemed closure would, therefore,
come into effect – In that view of the matter, application dated
28.08.2019 was complete in all respects, and the 60-day period
for the deemed closure to take effect would be calculable from
said date – Also, the Deputy Secretary was not the appropriate
Government who could have asked HSML to revise and resubmit
the application for closure – That authority is only vested with the
Minister concerned. [Paras 15, 16, 17, 18, 22]

Industrial Disputes Act, 1947 – s.25-O – Scope of:
Held: i) The right to close the business is subject to the interest
of the general public; ii) any application seeking permission for
closure must disclose adequate and genuine reasons which the
authority has to have regard for; iii) in certain cases, however, even
if the reasons are genuine and adequate, it does not mean that
permission to close ought to be granted; iv) if it is found that the
reasons are generally adequate, and despite that the appropriate
Government decides for refusal of permission of foreclosure, then
the interest of the general public involved in that particular case
must be “compelling” and “overriding”; v) financial difficulty on its
own cannot constitute the reason for shutting down the business –
[2025] 7 S.C.R. 429

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

An employer must demonstrate exceptional circumstances or an
impossibility of running the business. [Para 13]

Constitution of India – Art.19(1)(g) – Freedom of trade,
profession, occupation and business – Right to shut down
business – Elucidated:
Held: If there exists the freedom to set up and run a trade/business
as one sees fit, necessarily, there has to be a set of rights vesting
with the proprietor/owner to take decisions as may be in his best
interest – At the same time, law does not permit such owner or
proprietor to take any and all decisions without having considered
and accounted for the impact that it shall have on the employees
or workers that are part of this establishment – This is evidenced
by the s. 25-O of the Industrial Disputes Act, 1947 providing for a
detailed procedure to be followed when a person wishes to ‘shut
shop’, but concomitant providing that if the concerned Government
does not take action with reasonable expediency, the business
owner should not be saddled with the costs and responsibilities of
running the business indefinitely, till such time the authority arrives
at a proper and just decision – The sum and substance are that
Art. 19(1)(g) includes the right to shut down a business but is, of
course, subject to reasonable restrictions. [Para 10]

Case Law Cited
Cooverjee B. Bharucha v. Excise Commr. [1954] SCR 873 :
(1954) 1 SCC 18; Hindustan Antibiotics Ltd. v. Workmen [1967]
1 SCR 652 : 1966 SCC OnLine SC 106; Excel Wear v. Union
of India [1979] 1 SCR 1009 : (1978) 4 SCC 224; Orissa Textile
and Steel v. State of Orissa [2002] 1 SCR 309 : (2002) 2 SCC
578 – followed.
Ajaib Singh v. Sirhind Coop. Marketing-cum-Processing Service
Society Ltd. [1999] 2 SCR 505 : (1999) 6 SCC 82; Star Enterprises v.
City and Industrial Development Corpn. of Maharashtra Ltd. [1990]
2 SCR 826 : (1990) 3 SCC 280 – relied on.
Bachhittar Singh v. State of Punjab [1962] Supp. 3 SCR 713 :
AIR 1963 SC 395; Sethi Auto Services Station v. DDA [2008] 14
SCR 598 : (2009) 1 SCC 180; Shanti Sports Club v. Union of India
[2009] 13 SCR 710 : (2009) 15 SCC 705; State of Haryana v.
Hitkari Potteries (2001) 10 SCC 74; Sree Meenakshi Textile Mills
Ltd. v. Madurai Textile Workers Union (CITU) & Ors., 1979 (38) FLR
213; Pimpri Chinchwad New Township Development Authority v.
430 [2025] 7 S.C.R.

Supreme Court Reports

Vishnudev Coop. Housing Society [2018] 11 SCR 310 : (2018) 8
SCC 215; Mahabir Jute Mills Ltd. v. Shibban Lal Saxena [1976]
1 SCR 168 : (1975) 2 SCC 818 – referred to.

List of Acts
Constitution of India; Industrial Dispute (Maharashtra) Rules, 1957;
Industrial Disputes Act, 1947.

List of Keywords
Closure of business; Closing down an undertaking; Permission
of closure; Closure application; Job work agreement; Efforts to
prevent closure; Not given cogent reasons for closure; Functus
officio; Workers’ unions; Form XXIV-C prescribed u/r.82-B(1) of
the Industrial Dispute (Maharashtra) Rules, 1957; Form XXIV-B
prescribed u/r.82-B(1) of the Industrial Dispute (Maharashtra)
Rules, 1957; Relief of deemed closure; Deeming fiction in
s.25-O(3) of Industrial Disputes Act, 1947; Freedom of trade,
profession, occupation and business; Appropriate government;
Right to shut down a business; Minister of Labour; Internal noting;
Non-application of mind; Minister is the sole authority; Top Down
decision; Order without authority; Communication without legal
sanction; Sub-delegation to officer.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7372 of 2025
From the Judgment and Order dated 17.02.2023 of the High Court
of Judicature at Bombay in WP No. 3447 of 2019
With
Civil Appeal No. 7373 of 2025

Appearances for Parties
Advs. for the Appellants:
Mukul Rohatgi, Sr. Adv., Ms. Nina Nariman, Abhay Jadeja, Praveen
Kumar, Arun Unikrishnan, Ms. Pragya Baghel, Ms. Sunaina Kumar.
Advs. for the Respondents:
Shailesh S. Pathak, Nitin S. Tambwekar, Seshatalpa Sai Bandaru,
Aaditya Aniruddha Pande, Siddharth Dharmadhikari, Shrirang B.
Varma, Sourav Singh, Jitendra Kumar Tripathi, Aditya Mishra,
Ratish Kumar Sharma.
[2025] 7 S.C.R. 431

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

Judgment / Order of the Supreme Court

Judgment

Sanjay Karol, J.

This judgment, for clarity and ease of reference, is divided as follows:

TABLE OF CONTENTS*

THE APPEALS ........................................................................... 2
BACKGROUND TO THE WRIT PETITIONS .............................. 3
THE IMPUGNED JUDGMENT ................................................... 13
SUBMISSIONS OF THE PARTIES ............................................. 17
A. Appellants ......................................................................... 17
B. Respondents .................................................................... 21
QUESTIONS TO BE CONSIDERED ......................................... 23
ANALYSIS AND DISCUSSION .................................................. 24
CONCLUSION ............................................................................ 42

Leave Granted.

THE APPEALS
2. These appeals by special leave, question the correctness of a
judgment and order passed by the High Court of Judicature at Bombay,
dated 17th February 20231, in Writ Petition No.3447 of 2019 and Writ
Petition No.3397 of 2019, preferred by the appellants herein in Civil
Appeal arising out of SLP(C)No.4268 of 2019 and by the appellant
in Civil Appeal arising out of SLP(C)No.4565 of 2023, respectively.

1 Hereinafter ‘impugned judgment’
* Ed. Note: Pagination as per the original Judgment.
432 [2025] 7 S.C.R.

Supreme Court Reports

BACKGROUND TO THE WRIT PETITIONS
3. The factual backdrop in which the writ petitions came to be filed is
indisputably identical. As such we refer to the facts of the first appeal,
which are as below :
3.1 Harinagar Sugar Mills Limited (Biscuit Division)2 is a company
incorporated under the Companies Act, 1956 and was engaged
in biscuit manufacturing for Britannia Industries Limited3.
3.2 Such manufacturing by HSML had been exclusively for BIL,
and had been ongoing for more than three decades, under
Job Work Agreements4, granted by the latter to the former and
extended from time to time.
3.3 JWA was terminated by BIL with effect from 20th November
2019, vide letter dated 24th May 2019, stating that the 180-day
notice period, as mandated by clause 20.3.1 of the JWA signed
on 22nd May 2007, would begin from 1st June 2019. The letter
is extracted as under :-

“ANNEXURE P/1
BRITANNIA INDUSTRIES LIMITED
Prestige Shantiniketan, White Field Main Road
Mahadevpura Post, Bengaluru-560048

Without prejudice
By Speed Post/Courier/Email

Date: 24th May 2019
To,
M/s Harinagar Sugar Mills Limited
207, Kalbaddevi Road,
Mumbai-400002, Maharashtra, India
CC: World Trade Centre, Centre-1, 10 th Floor,
Caffe Parade, Mumbai-400 005

2 Abbreviated as ‘HSML’
3 Abbreviated as ‘BIL’
4 Abbreviated as ‘JWA’
[2025] 7 S.C.R. 433

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

Kind Attention : Mr. Ashok Kumar Jasrpuria
Sub : Termination of the job work Agreement

Ref: a. Job work Agreement dated 22nd May, 2007.
b. Job Work Agreement Renewal dated 23rd Oct,
2013 (effective from 18 th Feb 2013 till 17 th
Feb 2023)

Dear Sir,
We refer to job work agreement dated 22nd May, 2007
entered for period of 10 years effective from 21st February,
2003 and renewed on same terms and conditions for
another period of 10 years effective from 18th February,
2013 whereby based on your representations, we have
appointed you as our Contract Manufacturer on the terms
and conditions contained therein.
Pursuant to clause 20.3.1 of the Job Work Agreement, we
hereby serve you One Hundred Eight (180) days written
notice commencing from 1st June 2019 (“Effective date”).
The business relationship between the parties under the
Agreement shall stand terminated on the close of business
hours of 27th November, 2019.
You are requested to discontinue the operations under
the agreement accordingly upon termination and cease to
the know-how-return, all copies of the Know-how without
retaining any part thereof, and deliver entre quantity of
goods manufactured, ingredients, packing material and
Raw Material etc. which are in your possession or custody
as per the terms of the agreement.
Further, you are requested to return all the documents
containing information relating to products and Intellectual
Property Rights of the Company and refrain from sharing,
exchanging or selling or making any copies, summaries
or transcripts of confidential information of the Company.
Sd/-
Britannia Industries Ltd.”
(Emphasis supplied)
434 [2025] 7 S.C.R.

Supreme Court Reports

3.4 Resultantly, applications for closure of business were made to
the competent authorities on 26th August 2019, as per Form
XXIV-C prescribed under Rule 82-B(1) of the Industrial Dispute
(Maharashtra) Rules, 1957 read with Section 25-O(1) of the
Industrial Disputes Act, 19475. The workers of HSML were
informed vide closure notices dated 28th August 2019. The
letter is extracted below:

“HARINAGAR SUGAR MILLS LIMITED
(BISCUIT DIVISION)
Conductors of the Factory & Business of
Shangrilla Food Products Limited
Regd. Office : 207 Katbadevi Road, Mumbai-400002
Pl. Correspondence to:
L.B.S. Marg. Bhandup (W),
Mumbai-400078.
Ref No.
Dated : 28.08.2019
From-XXIV-C
(To be submitted in triplicate)
[See Rule 82-B(1)]
From of application for permission of closure to be made
by an employer under sub-Section (1) of Section 25-O of
the Industrial Disputes Act, 1947 (14 of 1947)
To,
The Secretary to the Government of Maharashtra
Industries, Energy and Labour Department, Mantralaya,
Mumbai-32.
Sir,
Under Section 25-O of the Industrial disputes Act, 1947
(14 of 1947), I hereby inform you that I propose to close
down the undertaking specified below.

5 Hereinafter, ‘the Act’
[2025] 7 S.C.R. 435

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

M/s Harinagar Sugar Mills Ltd. (Biscuit Division), (herein
after referred to as Biscuit Division), L.B.S. Marg, Bhandup
(W), Mumbai-400078 w.e.f. 28/11/2019.
The Biscuit Division had entered into, a job, work
agreement with M/s Britannia Industries Ltd. (BIL) to
manufacture biscuits of Britannia brand. BIL used to
forward to the Biscuit Division its weekly plan as per the
market demand of various varieties of Britannia Brand.
The Biscuit Division then used to manufacture the biscuits
as per the plan forwarded by BIL in the factory premises
A written termination notice was received by the Biscuit
Division on 31-05-2019 from BIL stating that the business
relationship between the parties shall stand terminated
on the close of business hours, of 27/11/2019. Thus BIL
has terminated the job work agreement with the Biscuit
Division and the said Division has no other manufacturing
avenue, since the said Division was manufacturing biscuits
only for BIL. In view of the above, the Biscuit Division has
no other alternative but to close down, the manufacturing
activities.
2. The number of workmen whose service will be terminated
on account of the closure of the undertaking is 178
permanent workmen.
3. Permission is solicited for the proposed closure.
4. I hereby declared that in the event of approval for the
closure being granted every workmen in the undertaking
to whom sub-section (9) of the said section 25-O applies
will be given notice and paid compensation as specified
in section 25N of the Industrial Disputes Act, 1947 (14
of 1947), as if the workman had been retrenched under
that section.
Yours faithfully
For Harinagar Sugar Mills Ltd. (Biscuit Division)
Sd/- Illegible
(Authorised Signatory)
436 [2025] 7 S.C.R.

Supreme Court Reports

CC: 1) The Commissioner of Labour,
Maharashtra, Mumbai
2) The Industries Commissioner,
Maharashtra, Mumbai
3) The Joint Director of Industries, Mumbai”
(Emphasis supplied)

3.5 Letter dated 25 th September 2019 sent by the Deputy
Secretary, Government of Maharashtra, informed HSML that
they failed to disclose their efforts to prevent closure, nor had
they given cogent reasons for closure. They were, therefore,
asked to resubmit their application. This letter forms an
important aspect of the respondents’ case before the High Court
and, therefore, it would be appropriate for it to be extracted.
It reads :

“ANNEXURE P/5
Government of Maharashtra
No. Closure-82019/C.No.3/L-2
Industry, Energy & Labour Dept.
Madam Cama Road
Hutama Rajguru Chowk
Mantralaya, Mumbai-400032

Dated : 25TH September, 2019
To,
Authorised Signatory,
M/s. Hari Nagar Sugar Mills Limited,
L.B.S. Marg, Bhandup (W)
Mumbai-400 078.
Subject:- Application for obtaining permission
U/s. 25(O)(1) for closing down establishment
of M/s Hari Nagar Sugar Mills Ltd. at L.B.S.
Marg, Bhandup (W), Mumbai-78
Reference: Your application dated 28/8.2019.
[2025] 7 S.C.R. 437

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

Sir,
With reference to the above referred application, you
as authorised signatory of M/s. Hari Nagar Sugar Mills
Ltd. have submitted an application to the Government
on 28/8/2019 u/s 25(O)(1) of the Industrial Disputes Act,
1947 for closing down the unit at L.B.S. Marg, Bhandup
(W) Mumbai-78.
2. On reviewing the said application it is observed that
the job contract agreement signed by M/s. Hari Nagar
Sugar Mills Ltd. with M/s. Britania Industries Ltd. for
production of biscuits will be cancelled with effect
from 27.11.2019 and therefore the management of
the Company has given the reason that the said
Biscuit Division will not be able to provide any work
in the said Division, and therefore the application to
obtain permission to close down said Biscuit Division
was submitted to the Government on 28.08.2019.
3. However, no pros and cons about the efforts for
not closing down the said Unit were discussed/
enlisted in the said application. Also, any justifiable
and consummate reasons were also not provided
for closing down the said Division. Therefore, it will
be possible to take action only if you can submit the
application again by providing explanation regarding
other efforts initiated by you for not closing down the
Division, providing justifiable as well as consummate
rationale for this action.
Yours faithfully,
Signed
Dy. Secretary, Govt. of Maharashtra
Copy :
1. Hon. Labour Commission, Kamgar Bhavan, C-20,
E-Block, Bandra-Kurla Complex, Bandra (E),
Mumbai-400 051.
2. Private Secretary to Hon. Minister (Labour)”
(Emphasis supplied)
438 [2025] 7 S.C.R.

Supreme Court Reports

3.6 By way of reply dated 10th October 2019, HSML furnished the
particulars as asked for. It is to be noted here that the 60-day
period provided for under Section 25-O(3) of the Act ran out on
27th October 2019. The said letter reads as under :

“Annexure P/6
HARINAGAR SUAR MILLS LIMITED
(BISCUIT DIVISION)
Conductors of the Factory & Business of
Shangrilla Food Products Limited
Regd. Office : 207 Katbadevi Road, Mumbai-400002

Pl. Correspondence to :
L.B.S. Marg. Bhandup (W),
Mumbai-400 078.

Ref. No.76/19-20 Date: 10.10.2019
To
Shri S.M. Sathe,
The Dy. Secretary,
State of Maharashtra
Mantralaya Mumbai
Sub: Permission sought under Section 25-(O)(I) of Ld.
Act for closure of M/s. Harinagar Sugar Mills Ltd.
(Biscuit Division)
Ref: Your letter dated 25.09.2019.
On 01.10.2019 we have received your letter dated
25.09.2019 with regard to the aforesaid subject.
It is a fact that for last 32 years, the Company used to do job
work of manufacturing biscuits only for Britannia Industries
Ltd. For manufacturing biscuits for Britannia Industries Ltd.,
the raw material as well as necessary plant and machinery
used to be provided and installed by Britannia Industries
Ltd. After receiving termination of Job work agreement from
BIL, the Company Immediately persuaded the management
of BIL to continue agreement and the job work with the
Company. However, said persuasion did not work or yield
[2025] 7 S.C.R. 439

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

any result. The Company had then approached other
biscuit manufacturers such as M/s. Mondelez India Limited
and Us. ITC Ltd. On 15.07.2019, the top management of
the Company had meeting with Mr. T. Arunkumar, CMO,
Manager of M/s. Mondelez India Limited and then as per
his requirement had forwarded e-mail on 24.07.2109.
However, thereafter there was no response. Similarly the top
management of the Company had discussed with Mr. Divi
of M/s. ITC, Foods. However, on 17.07.2019 Mr. Div replied
that there is no requirement of contract manufacturing unit
to them at present. Once again on 24.07.2019 mail was
forwarded to Mr. Divi of M/s. ITC Foods but there was no
response to the said mail. We enclose copies of e-mails
forwarded to M/s. Mondelez India Ltd. and Ms. ITC Foods
The management of the Company had also talked and
discussed with Mr. Ajay Chauhan of Parle Biscuits to
provide job work to the Company. However, there was no
positive response even from Parle Biscuits.
The reason for closing down the manufacturing activities is
there is no job work which can be done in the said factory.
As stated in the closure application the company for last 32
years was doing only the job work for Britannia Industries
Ltd. And the efforts mentioned hereinabove will support
the contention of the company that there is no other way
out but to close its manufacturing operation.
For Harinagar Sugar Mills Ltd.
(Biscuit Division)
Sd/-
Authorised Signatory)”

(Emphasis supplied)

3.7 The authorities once again found the response lacking. Vide
letter dated 4th November 2019 said that their earlier response
did not, once again, cover all aspects, i.e., the possibility of
the employees’ absorption into other manufacturing divisions
and also the possibility of HSML moving to the production of
other goods, apart from biscuits. They were once again asked
to resubmit their application.
440 [2025] 7 S.C.R.

Supreme Court Reports

3.8 On 22nd November 2019 HSML, in their response, contented
that by virtue of Section 25-O(3) of the Act, the permission of
closure is deemed to have been granted, and the authorities
have now become functus officio. The workers’ unions also
opposed the closure, registering the same vide letter dated 4th
November 2019. They cited ‘ulterior motives’ and lack of bona
fide reasons.
3.9 The Deputy Commissioner, Labour, sent to HSML two letters,
dated 20th and 22nd of November 2019 asking them to be present
for a meeting on 26th November 2019, and conveying to them
that the State Government was yet to grant permission for
closure and as such, they should not close down the business
on 27th November 2019, respectively.
3.10 Workers’ unions on the same day as their letter also approached
the Industrial Tribunal seeking to restrain HSML from going
forward with the closure. An ad-interim order came to be
passed by the Tribunal, granting said relief.
3.11 These letters dated 4th November 2019, 20th November 2019
and 22nd November 2019 were the subject matter of challenge
before the High Court.

THE IMPUGNED JUDGMENT
4. The proceedings before the High Court, the culmination of which
was the judgment impugned in these appeals, were as follows: -
4.1 Order dated 28th November 2019 records the statement of
Mr. Ravi Kadam, Senior Counsel appearing for HSML that
the salaries for the month of November shall be paid without
insisting that the employees attend work. It is also recorded
therein that the employees shall maintain peace and harmony.
4.2 On the next date, i.e., 12th December 2019 it was directed that
the salaries for December be paid on or before 6th January 2020.
4.3 Arguments were heard and concluded on 7th February 2023.
4.4 The findings in the impugned judgment can be summarised thus :
Firstly, the Court discussed the scheme of Section 25-O of the Act and
found that an application for closure has to be made to a competent
[2025] 7 S.C.R. 441

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

authority at least 90 days prior to the date from which the closure
is sought to be made effective; the reasons for such closure must
be clearly stated; on receipt of such application, the ‘appropriate
Government’ is to make an enquiry; provide an opportunity for hearing
all concerned - workmen, employer and persons interested in closure,
and then pass a reasoned order, also keeping in view interests of the
general public. Section 25-O(3) provides that if such an appropriate
authority fails to communicate an order made thereby, granting or
denying permission within 90 days of the application being preferred,
it shall be deemed that the permission was granted at the expiry of
60 days. Other parts of Section 25 of the Act were also taken note
of such as the power of review, the remaining in force of the order
of the competent authority for a period of one year etc.
Secondly, it was observed that the case of the petitioners (appellants
before us) was that orders had not been passed by the competent
authority within the statutorily prescribed time frame, and consequently,
the deeming fiction provided for in the Act would come into force and
permission of closure would be deemed granted upon the expiry of
60 days from the application, since more than 90 days had passed
since such making of application. The stand of the State was also
taken into account - which was that the communication dated 25th
September 2019 constituted an order refusing the grant of requisite
permission. It would be appropriate to extract the consideration made
by the High Court, of these contrasting submissions. It is as follows :
“24. The first objection of Mr. Naidu is that even if
communications dated 25 September 2019 were to be
assumed as decisions, the decisions are not taken by
the authority, viz. Hon’ble Minister for Labour but the
same is taken by the Depute Secretary. To counter the
contention, the State Government has placed on record
the file noting on the basis of which the communications
dated 25 September 2019 were issued. The file noting
would indicate that note was prepared by Desk Officer
on 30 August 2019 stating that as per notification dated
25 June 2013, the powers under Section 25-O (2) are
conferred upon the Hon’ble Minister for Labour. It is further
stated that the petitioners’ applications were required to
be forwarded to the Hon’ble Minister for further action.
However, there appears to be an endorsement in hand
442 [2025] 7 S.C.R.

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writing towards the end of the noting to the effect that
petitioners failed to furnish complete and cogent reasons
in their applications. The noting was approved by various
officers in the hierarchy and finally came to be approved
by Hon’ble Minister with a remark accepting hand written
endorsement with further direction that the establishment
should be intimated to file application with cogent reasons.
In accordance with the above decision of the Hon’ble
Minister, the letters dated 25 September 2019 were
addressed to petitioners. We therefore repel the objection
of the petitioners that the decision in communication was
not taken by the Hon’ble Minister.”
Thirdly, the contention of HSML that the application dated 28th August
2019 was complete in all respects and it ought to have been treated
as such was considered. It was submitted that the letter dated 10th
October 2019 (reproduced supra) was in response to the authorities
asking them to resubmit. They supplied thereby, additional reasons
for closure and the steps taken to prevent that eventuality. It was
held that since the undisputed position is that vide letter dated 10th
October 2019 HSML sought to furnish additional reasons, that ipso
facto would amount to an acceptance that the application was not
complete in all respects. That being the case, the deeming fiction
would not come into play. Since the application was deficient, the
State Government need not pass orders thereon. It was thereafter
held as under:
“30.…The fact that authority was not convinced with the
application of the petitioner and had communicated that
cogent reasons are not spelt out in the application would
be sufficient to conclude that the authority did not grant
the application for closure. What was contemplated by
letter dated 25 September 2019 was “re-submission”
of the application. Petitioners however chose to add
reasons to the pending applications on 10 October 2019.
Petitioners failed to submit fresh applications by providing
statement of reasons as directed by State Government
vide letters dated 25 September 2019. This is the reason
why the State Government was once again required to
convey to petitioners that they were required to resubmit
the applications by subsequent communications dated 4
[2025] 7 S.C.R. 443

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

November 2019. It is only after receipt of letters dated
4 November 2019 petitioners took a stand of deemed
permission under Section 25-O(3) of the ID Act in their
letters dated 22 November 2019.
31. We are therefore unable to accept the contention raised
on behalf of the petitioners that the closure applications
filed by them on 28 August 2019 were complete in all
respects so as to trigger deemed permission under
provisions of Section 25 O(3) on expiration of period of
60 days. Petitioners themselves accepted the position
that the closure applications were incomplete by seeking
to adduce reasons for closure by letters dated 10 October
2019. It therefore cannot be held that the establishments
of the petitioners are deemed to have been closed on
expiration of period of 60 days from the date of submission
of closure applications dated 28 August 2019.”
The Writ petitions were dismissed.

SUBMISSIONS OF THE PARTIES
5. We have heard Mr. Mukul Rohatgi, learned Senior Counsel for the
appellant - HSML as also the learned counsel appearing for the
respondents.

A. Appellants
i. The impugned judgment is based on an erroneous reliance
on the ‘wrong form’, which originated out of a submission
of learned Counsel for the State. Reliance was placed by
the learned Division Bench on Form XXIV and instead, it
should have considered Form XXIV-C.
ii. The finding that the applications were incomplete is based
on a misunderstanding/misapplication of the forms.
iii. Noting in the internal office file cannot be used to construe
what constitutes an order. Reference is made to Bachhittar
Singh v. State of Punjab6; Sethi Auto Services Station v.

6 AIR 1963 SC 395
444 [2025] 7 S.C.R.

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DDA7; and Shanti Sports Club v. Union of India8 to submit
that the internal file noting does not constitute an order.
Furthermore, even such a contention that the letter dated
25th September 2019 is based on such noting is belied,
for it does not say so. Instead, it only asks for details of
the efforts made to avoid closure.
iv. An application for closure can only be disposed of by an
order in accordance with Section 25-O(2). If it is not so
done, what has been provided for in Section 25-O(3) will
kick in.
v. The previous iteration of Section 25-O was struck down
by this Court vide its judgment in Excel Wear v. Union
of India9 on the ground that it did not prescribe a time
limit for deciding the applications for closure. It was found
that the restrictions were not in accordance with Article
19(6) of the Constitution of India. The amended iteration
was upheld vide judgment in Orissa Textile and Steel v.
State of Orissa10, wherein it was held that the requirement
to conduct an enquiry, give a hearing, pass a reasoned
order, and also the time limit was the curing of defects
present in the previous version of the section. It has been
so submitted by the appellants to show that the 60-day
requirement is mandatory. If not so observed, it would
violate Article 19(1)(g).
vi. It has not been shown by the respondents, how the
applications made by the appellants are defective/
incomplete. Providing of further information cannot mean
that the original application was defective. The decision in
State of Haryana v. Hitkari Potteries11 was relied upon to
show that even when the application was belatedly rejected
on the ground that it was incomplete in certain respects,
this Court held the deemed permission to be granted.

7 (2009) 1 SCC 180
8 (2009) 15 SCC 705
9 (1978) 4 SCC 224
10 (2002) 2 SCC 578
11 (2001) 10 SCC 74
[2025] 7 S.C.R. 445

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

vii. The 60-day time period provided for in the Act cannot be
extended, including on the pretext of resubmission of the
application for closure. There were two letters issued by
the State authority, one on 25th September 2019 and the
other on 4th November 2019, with the latter one being
beyond the said time period. Thereafter were two further
letters dated 20th and 22nd November 2019 directing
their presence for a meeting, both clearly beyond the
time limit. Further, it is said that there is no provision for
resubmission. Permitting the same would unsettle the
scheme of the law.
viii. The Labour Minister is the “appropriate Government” within
the meaning of the Act, hence all actions contemplated
under Section 25-O could have been undertaken by
him only. No further delegation thereof is provided for or
permissible without notification to such effect under Section
39 of the Act. Be that as it may, it has been held in Orissa
Textile and Steel (supra) that sub-delegation of quasi
judicial function is impermissible. No communication has
been addressed by the ‘appropriate Government’ within
the time frame.
ix. The letter dated 25th September 2019 is by no means an
order. Had it been so, there was no basis for the State’s
further letters. In fact, letter dated 4th November 2019
makes reference to the application for closure dated
28th August 2019. Said letter was also not marked to the
workmen/their representatives which is a requirement
under Section 25-O(2).

B. Respondents
The Workers Union, namely the Maharashtra Rajya Rashtriya Kamgar
Sangh (INTUC) has filed written submissions. Their stand is that the
impugned judgment is justified and takes the correct interpretation
of facts and law. It has been argued therein, inter alia, that :
i. The first response of the State to the closure application,
i.e., letter dated 25th September 2019 is not within the
sphere of challenge.
446 [2025] 7 S.C.R.

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ii. The communication which took place regarding the alleged
closure of HSML and Shangrila12 total approximately 300
workers, and non-inclusion of their recognised union in
such discussions is absolutely detrimental to the interests
of these workers.
iii. The intent of Section 25-O is to protect the fundamental
rights of the employees, i.e., livelihood. The stand of the
State is in consonance therewith, keeping in view important
factors such as genuineness and adequacy of reasons.
iv. No question of law arises in the present matter which
requires or would justify, the interference of this Court
under its jurisdiction under Article 136 of the Constitution
of India.
v. The deeming provision under Section 25-O(3) of the Act
has to be read in continuation with Section 25-O(1) thereof.
Since the employees were never informed of the enquiry
as contemplated under Section 25-O(2) of the Act and
the same never took place, closure cannot be deemed
to have been granted thereunder.
vi. The incompleteness of the applications was accepted by
the appellants themselves since they produced additional
reasons. Also, the argument of respondent No.1 that
internal noting of the file being used to show that the
file had not been delayed, has been adopted by the
Respondent-Union.
vii. Since the learned Industrial Tribunal had granted stay on
26th November 2019, and the writ petition subject matter of
these appeals, was filed before the High Court on the same
day, there has been no effective order of closure thus far.
viii. The question of Respondent-State as to whether the
workers could be accommodated in other ongoing concerns
under the control of the HSML – was justified. None of the
monetary proposals have been accepted by the workers
as placed before the Court and so, they are entitled to full
benefits of Section 25-O(6) of the Act.

12 Appellants in the connected SLP
[2025] 7 S.C.R. 447

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

ix. In furtherance of their submissions, reliance is placed on
a judgment of the High Court of Judicature at Madras in
Sree Meenakshi Textile Mills Ltd. v. Madurai Textile
Workers Union (CITU) & Ors.13

QUESTIONS TO BE CONSIDERED
6. Having heard the learned counsel at length and captured their
submissions as above, the following questions would fall for our
consideration :
A. Whether letter dated 25th September 2019 can be construed
to be an order - Connectedly, whether the appellants would
be entitled to the relief of deemed closure, as on 27th October
2019 by virtue of the deeming fiction present in Section 25-
O(3) of the Act?
B. What would be the meaning of the phrase ‘appropriate
Government’ and whether in the facts of this case, it was the
appropriate Government acting in the matter of the closure - if
not what is the effect in law, thereof?

ANALYSIS AND DISCUSSION
7. At the outset, two aspects must be taken note of. One is that the
Constitution of India under Article 19 provides for the freedom of
trade, profession, occupation and business. Meaning thereby that
all citizens of the country have freedom to choose a location of
their choice and run it as they deem it fit, subject to the reasonable
restrictions that may be made by the legislature. When it comes to
industry which is covered under Article 19, the field of the statute
is occupied by the Industrial Disputes Act, 1947. As such, its scope
must be set out.

First
In Cooverjee B. Bharucha v. Excise Commr.14, a Bench of five
learned Judges, while dismissing an application under article 32
of the Constitution of India arising from the grant of license to sell

13 1979 (38) FLR 213
14 (1954) 1 SCC 18
448 [2025] 7 S.C.R.

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country liquor to a person, allegedly in contravention of the Rules
set out for such purpose, i.e., in a manner, which according to the
petitioner, violated his right under Article 19(1)(g), held :
“7. Article 19(1)(g) of the Constitution guarantees that all
citizens have the right to practise any profession or to carry
on any occupation or trade or business, and sub-section
(6) of the Article authorises legislation which imposes
reasonable restrictions on this right in the interests of the
general public. It was not disputed that in order to determine
the reasonableness of the restriction regard must be had
to the nature of the business and the conditions prevailing
in that trade. It is obvious that these factors must differ
from trade to trade and no hard-and-fast rules concerning
all trades can be laid down. It can also not be denied that
the State has the power to prohibit trades which are illegal
or immoral or injurious to the health and welfare of the
public. Laws prohibiting trades in noxious or dangerous
goods or trafficking in women cannot be held to be illegal
as enacting a prohibition and not a mere regulation. The
nature of the business is, therefore, an important element
in deciding the reasonableness of the restrictions. The right
of every citizen to pursue any lawful trade or business is
obviously subject to such reasonable conditions as may
be deemed by the governing authority of the country
essential to the safety, health, peace, order and morals
of the community…”

Second
A Constitution Bench of this Court in Hindustan Antibiotics Ltd. v.
Workmen15 held as below noting the object of industrial law :
“9. At the outset, it will be convenient to consider the
question of principle. The object of the industrial law is
two-fold, namely, (i) to improve the service conditions of
industrial labour so as to provide for them the ordinary
amenities of life, and (ii) by that process, to bring about
industrial peace which would in its turn accelerate

15 1966 SCC OnLine SC 106
[2025] 7 S.C.R. 449

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

productive activity of the country resulting in its prosperity.
The prosperity of the country, in its turn, helps to improve
the conditions of labour.”
This Court in Ajaib Singh v. Sirhind Coop. Marketing-cum-
Processing Service Society Ltd.16, in the paragraphs extracted
below, discusses the intent of the legislation and its history, in the
following terms :
“5. ...The Act is intended not only to make provision for
investigation and settlement of industrial disputes but
also to serve industrial peace so that it may result in
more production and improve the national economy. In
the present socio-political economic system, it is intended
to achieve cooperation between the capital and labour
which has been deemed to be essential for maintenance
of increased production and industrial peace. The Act
provides to ensure fair terms to workmen and to prevent
disputes between the employer and the employees so
that the large interests of the public may not suffer. The
provisions of the Act have to be interpreted in a manner
which advances the object of the legislature contemplated
in the Statement of Objects and Reasons. While interpreting
different provisions of the Act, attempt should be made
to avoid industrial unrest, secure industrial peace and
to provide machinery to secure the end. Conciliation is
the most important and desirable way to secure that
end. In dealing with industrial disputes, the courts have
always emphasized the doctrine of social justice, which
is founded on the basic ideal of socio-economic equality
as enshrined in the Preamble of our Constitution. While
construing the provisions of the Act, the courts have to
give them a construction which should help in achieving
the object of the Act.
6. The history of the legislation with respect to the industrial
disputes would show that for the first time in the year 1920
the Trade Disputes Act was enacted which provided for
courts of enquiry and Conciliation Boards and forbade

16 (1999) 6 SCC 82
450 [2025] 7 S.C.R.

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strikes in public utility service without a statutory notice in
writing. The Act did not make provision for any machinery for
settling of industrial disputes. The said Act was repealed and
replaced by the Trade Disputes Act, 1929 which started the
State intervention in the settlement of industrial disputes and
armed the Government with the power which could be used
whenever considered fit to intervene in industrial disputes.
This Act was amended in the year 1938 authorising the
Central and Provincial Governments to appoint Conciliation
Officers for mediating in or promoting the settlement of
industrial disputes. Shortly thereafter the Government of
India promulgated the Defence of India Rules to meet the
exigency created by the Second World War. Rule 81-A
gave powers to the Government to intervene in industrial
disputes and was intended to provide speedy remedies
for industrial disputes by referring them compulsorily to
conciliation or adjudication by making the awards legally
binding on the parties and by prohibiting strikes or lockouts
during the pendency of the conciliation or adjudication
proceedings. The Industrial Employment (Standing Orders)
Act, 1946 was enacted which made provision for framing
and certifying of standing orders covering various aspects
of service conditions in the industry. The Industrial Disputes
Bill was introduced in the Central Legislative Assembly
on 8-10-1945 which embodied the essential principles of
Rule 81-A of the Defence of India Rules and also certain
provisions of the Trade Disputes Act, 1929 concerning
industrial disputes. The Bill was passed by the Assembly
in March 1947 and became the law w.e.f. 1-4-1947. The
present Act was enacted with the objects as referred to
hereinabove and provided machinery and forum for the
investigation of industrial disputes, their settlement for
purposes analogous and incidental thereto. The emergence
of the concept of a welfare State implies an end to the
exploitation of workmen and as a corollary to that collective
bargaining came into its own. The legislature had intended
to protect workmen against victimisation and exploitation by
the employer and to ensure termination of industrial disputes
in a peaceful manner. The object of the Act, therefore, is
[2025] 7 S.C.R. 451

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

to give succour to weaker sections of society which is a
prerequisite for a welfare State. To ensure industrial peace
and pre-empt industrial tension, the Act further aims at
enhancing the industrial production which is acknowledged
to be the lifeblood of a developing society. The Act provides
a machinery for investigation and settlement of industrial
disputes ignoring the legal technicalities with a view to
avoid delays, by specially authorised courts which are not
supposed to deny the relief on account of the procedural
wrangles. The Act contemplates realistic and effective
negotiations, conciliation and adjudication as per the need
of society keeping in view the fast-changing social norms
of a developing country like India. It appears to us that the
High Court has adopted a casual approach in deciding the
matter apparently ignoring the purpose, aim and object of
the Act.”
8. Since both the questions that arise for our consideration are
intertwined, they shall be taken up together. The instant dispute
pertains to the closure of HSML and Shangrila, industrial units
engaged in manufacturing for BIL. Section 25-O of the Act deals with
this situation. The extract as it relates to the dispute herein, reads :
“[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 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,
452 [2025] 7 S.C.R.

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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 refused 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.
…”
9. Sub-section 1 states that an employer who wants to close down
his business concern must, write to the concerned ‘appropriate
Government’-
(a) at least 90 days before the date of intended closure;
(b) stating reasons for such closure;
(c) undertaking that the copy of this application has been served
on the representatives of the workmen.
As per sub-section (2), the appropriate is to,
(a) Making a suitable enquiry;
(b) After providing a reasonable opportunity of hearing to the
employer, the workmen and those interested in the closure of
such business;
(c) And considering the genuineness, adequacy of reasons,
interests of the general public & all other relevant factors;
by an order in writing, recording reasons, grant or refuse
such permission. Such an order is to be communicated to the
employer and the workmen.
Sub-section (3) deems the grant of permission for closure as
requested if the appropriate Government does not, within sixty days
of the application, make an order.
[2025] 7 S.C.R. 453

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

10. If there exists the freedom to set up and run a trade/business as one
sees fit, necessarily, there has to be a set of rights vesting with the
proprietor/owner to take decisions as may be in his best interest. At
the same time, it is true that the law does not permit such owner or
proprietor to take any and all decisions without having considered
and accounted for the impact that it shall have on the employees
or workers that are part of this establishment. This is evidenced by
the provision extracted above providing for a detailed procedure to
be followed when a person wishes to ‘shut shop’, but concomitant
providing that if the concerned Government does not take action with
reasonable expediency, the business owner should not be saddled
with the costs and responsibilities of running the business indefinitely,
till such time the authority arrives at a proper and just decision. The
sum and substance are that Article 19(1)(g) includes the right to shut
down a business but is, of course, subject to reasonable restrictions.
This interplay of Article 19(1)(g) and Section 25-O of the Act engaged
in the attention of a Constitution Bench of this Court in Excel Wear
(supra), when it was cast with considering the constitutionality of
Section 25-O as it then stood. It has subsequently been amended,
challenged before this Court and upheld in Orissa Textile and Steel
(supra), which we will discuss further ahead.
11. In Excel Wear (supra), N.L Untwalia, J., writing for the Court made
some pertinent observations which we see fit to reproduce with profit :
“20… But then, as pointed out by this Court in Hatisingh
case the right to close down a business is an integral
part of the right to carry it on. It is not quite correct to say
that a right to close down a business can be equated or
placed at par as high as the right not to start and carry
on a business at all. The extreme proposition urged on
behalf of the employers by equating the two rights and
placing them at par is not quite apposite and sound.
Equally so, or rather, more emphatically we do reject the
extreme contention put forward on behalf of the Labour
Unions that right to close down a business is not an
integral part of the right to carry on a business, but it is a
right appurtenant to the ownership of the property or that
it is not a fundamental right at all. It is wrong to say that
an employer has no right to close down a business once
he starts it. If he has such a right, as obviously he has, it
454 [2025] 7 S.C.R.

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cannot but be a fundamental right embedded in the right
to carry on any business guaranteed under Article 19(1)
(g) of the Constitution.”
12. A Constitution Bench in Orissa Textiles (supra) through Variava J.,
observed as follows about the current iteration of Section 25-O :
“18. We also see no substance in the contention that the
amended section merely deals with the procedural defects
pointed out in Excel Wear case [(1978) 4 SCC 224 :
1978 SCC (L&S) 509 : (1979) 1 SCR 1009] and does not
deal with the substantive grounds set out in Excel Wear
case [(1978) 4 SCC 224 : 1978 SCC (L&S) 509 : (1979)
1 SCR 1009] . In our view the amended Section 25-O
is very different from Section 25-O (as it then stood). It
is now more akin to Section 25-N (as it then stood) the
constitutional validity of which was upheld in Meenakshi
Mills case [(1992) 3 SCC 336 : 1992 SCC (L&S) 679] .
In Excel Wear case [(1978) 4 SCC 224 : 1978 SCC (L&S)
509 : (1979) 1 SCR 1009] it has been accepted that
reasonable restrictions could be placed under Article 19(6)
of the Constitution. Excel Wear case [(1978) 4 SCC 224
: 1978 SCC (L&S) 509 : (1979) 1 SCR 1009] recognizes
that in the interest of general public it is possible to restrict,
for a limited period of time, the right to close down the
business. The amended Section 25-O lays down guidelines
which are to be followed by the appropriate government
in granting or refusing permission to close down. It has
to have regard to the genuineness and adequacy of the
reasons stated by the employer. However, merely because
the reasons are genuine and adequate cannot mean that
permission to close must necessarily be granted. There
could be cases where the interest of general public may
require that no closure takes place. Undoubtedly where
the reasons are genuine and adequate the interest of
the general public must be of a compelling or overriding
nature. Thus, by way of examples, if an industry is engaged
in manufacturing of items required for defence of the
country, then even though the reasons may be genuine
and adequate it may become necessary, in the interest
of the general public, not to allow closure for some time.
[2025] 7 S.C.R. 455

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

Similarly, if the establishment is manufacturing vaccines or
drugs for an epidemic which is prevalent at that particular
point of time, interest of the general public may require
not to allow closure for a particular period of time. We
must also take a note of sub-section (7) of the amended
Section 25-O which provides that if there are exceptional
circumstances or accident in the undertaking or death
of the employer or the like, the appropriate government
could direct that provision of sub-section (1) would not
apply to such an undertaking. This, in our view, makes it
clear that the amended Section 25-O recognizes that if
there are exceptional circumstances then there could be
no compulsion to continue to run the business. It must
however be clarified that this Court is not laying down
that some difficulty or financial hardship in running the
establishment would be sufficient. The employer must
show that it has become impossible to continue to run
the establishment. Looked at from this point of view, in
our view, the restrictions imposed are reasonable and in
the interest of the general public.”
(Emphasis supplied)

13. What can be deduced regarding the scope of section 25-O from the
above extract is –
i. the right to close the business is subject to the interest of the
general public;
ii. any application seeking permission for closure must disclose
adequate and genuine reasons which the authority has to have
regard for;
iii. in certain cases, however, even if the reasons are genuine and
adequate, it does not mean that permission to close ought to
be granted;
iv. if it is found that the reasons are generally adequate, and
despite that the appropriate Government decides for refusal
of permission of foreclosure, then the interest of the general
public involved in that particular case must be “compelling”
and “overriding”;
456 [2025] 7 S.C.R.

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v. financial difficulty on its own cannot constitute the reason for
shutting down the business. An employer must demonstrate
exceptional circumstances or an impossibility of running the
business.
14. In the instant facts, the application for closure was duly addressed to
the authority, which was acknowledged to be on 28 August 2019. The
Deputy Secretary, Ministry of Labour Government of Maharashtra,
responded on 25 September 2019 stating that no sufficient reasons
had been provided for closure. The letter read- “it will be possible to
take action only if you can submit the application again by providing
explanation regarding other efforts initiated by you for not closing
down the Division, providing justifiable as well as consummate
rationale for this action.” Hereby, it was informed that action could
not be taken on the application as it stood and that they would have
to resubmit with better particulars.
15. It is contended by HSML that the Deputy Secretary made such an
order without the requisite authority since he was not the “appropriate
Government” to deal with applications under section 25-O. As such,
the order to revise and resubmit would be non-est in law. It is an
undisputed position, as also noted by the High Court, that the powers
under section 25-O rest with the Minister. There is no difficulty in that
respect. The State Government, being the appropriate Government,
has delegated its power specifically to the Minister for Labour. Section
39 of the Act provides for such a situation. It reads :
“39. Delegation of powers.- The appropriate Government
may, by notification in the Official Gazette, direct that
any power exercisable by it under this Act or rules made
thereunder shall, in relation to such matters and subject
to such conditions, if any, as may be specified in the
direction, be exercisable also,--
(a) where the appropriate Government is Central
Government, by such officer or authority subordinate to
the Central Government or by the State Government,
or by such officer or authority subordinate to the State
Government, as may be specified in the notification; and
(b) where the appropriate Government is a State
Government by such officer or authority subordinate to the
State Government as may be specified in the notification.”
[2025] 7 S.C.R. 457

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

There is nothing on record to show that the Deputy Secretary has
been duly authorised to conduct communication and/or accept or
reject applications for closure made by industrial units. The concerned
authority in that regard is only the Minister. If it is considered that
the Minister for Labour himself represents the State Government or
is merely an agent of the State Government, then for the Deputy
Secretary to act, there ought to have been a notification in that
respect. Otherwise, if the Minister for Labour is a delegate of the
State Government, then there has to be a notification therefor as
well. According to the impugned judgment, a notification to this effect
dated 25 June 2013 is present. However, the same is not on record.
The Respondent-State has contended that the internal noting placed
on record before the High Court shows that the file had travelled
up to the Minister, and, therefore, any action consequent to such
approval by the Minister is in accordance with the law.
16. We find it difficult to accept this contention for two reasons. There is
no express authority resting with the Deputy Secretary. This we have
already observed. Second, reliance cannot be placed on internal
noting to establish compliance with procedure. This Court in Pimpri
Chinchwad New Township Development Authority v. Vishnudev
Coop. Housing Society17, in a case pertaining to proceedings under
the Land Acquisition Act, 1894 concerning the issue of whether the
State is at liberty to withdraw from an acquisition, held “ …a mere
noting in the official files of the Government while dealing with any
matter pertaining to any person is essentially an internal matter of
the Government and carries with it no legal sanctity;…”. [Also see
Bachhittar Singh (supra); Sethi Auto Services Station (supra);
and Shanti Sports Club (supra)].
Hypothetically, assuming that the letter dated 25 September 2019
was sent to HSML with the approval of the Minister, as allegedly
shown by the internal noting in the office file, and was thereby issued
by the competent authority, even in that case, we find the ‘order’
to be lacking. The order accepting or rejecting an application for
closure is undoubtedly an administrative order. It is noted that the file
originated from the desk officer and travelled up through the desks
of various authorities and made its way to the Minister. One of these

17 (2018) 8 SCC 215
458 [2025] 7 S.C.R.

Supreme Court Reports

authorities, it is unclear which one made the noting that the closure
application did not disclose cogent reasons. The Minister endorsed
this finding and noted in the file that they should be asked to submit
the application afresh. This is tried to be shown as a decision of the
Minister. For the competent authority to take a decision, as the law
understands it, there has to be ‘application of mind’. The question
that needs to be addressed is whether endorsement of a noting made
by a subordinate officer can be ‘application of mind’. To show the
same, it is generally prudent that reasons are recorded. In decades
past, there was a belief that the Government would be brought to a
standstill if it had to provide reasons for each administrative action,
keeping in view the fact that it functions through a myriad of agencies
and authorities18. Even here, it was stated that when such a decision
affects the rights of parties, reasons should be accorded. It may
be observed here that Section 25-O specifically provides “by order
and for reasons to be recorded in writing,” and so, reasons are a
statutory necessity. With time, it is now settled that administrative
authorities are also required to give reasons for a decision made. In
Star Enterprises v. City and Industrial Development Corpn. of
Maharashtra Ltd.19, a three-Judge Bench in the context of tenders
invited by a corporation which is ‘State’ within the meaning of Article
12 of the Constitution of India, held as follows in regard to giving
reasons for its decisions:
“10. In recent times, judicial review of administrative action
has become expansive and is becoming wider day by
day. The traditional limitations have been vanishing and
the sphere of judicial scrutiny is being expanded. State
activity too is becoming fast pervasive. As the State has
descended into the commercial field and giant public
sector undertakings have grown up, the stake of the public
exchequer is also large justifying larger social audit, judicial
control and review by opening of the public gaze; these
necessitate recording of reasons for executive actions
including cases of rejection of highest offers. That very
often involves large stakes and availability of reasons
for actions on the record assures credibility to the action;

18 Mahabir Jute Mills Ltd. v. Shibban Lal Saxena, (1975) 2 SCC 818
19 (1990) 3 SCC 280
[2025] 7 S.C.R. 459

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

disciplines public conduct and improves the culture of
accountability. Looking for reasons in support of such
action provides an opportunity for an objective review in
appropriate cases both by the administrative superior and
by the judicial process. The submission of Mr. Dwivedi,
therefore, commends itself to our acceptance, namely, that
when highest offers of the type in question are rejected
reasons sufficient to indicate the stand of the appropriate
authority should be made available and ordinarily the same
should be communicated to the concerned parties unless
there be any specific justification not to do so.”
(Emphasis Supplied)

Reasons, therefore, are important and ought to be recorded. It could
be said that the conclusion reached by the office of the Minister that
HSML had not supplied sufficient reasons for closure would itself
be sufficient to qualify as ‘reasons’. However, can an endorsement
of the view taken by an undisclosed officer of the Ministry be said
to be an ‘application of mind’ by the competent authority when the
Minister is the sole authority? We think not. The decision had to
be Top Down and not otherwise. Had it been that this conclusion
of insufficiency of reasons was the Minister’s conclusion, and then
they would have directed the Deputy Secretary to communicate the
decision to HSML, then our conclusion may have been different.
17. Given the above discussion, the necessary conclusion is that the
letter dated 25 September 2019 addressed by the Deputy Secretary
to HSML cannot be constituted to be an order since such order to
resubmit the application was without any authority since it was not
the appropriate Government acting in that regard and not an order
rejecting or accepting the application. The same conclusion can be
reached on a second count - the ‘order’ suffered from the vice of
non-application of mind by the competent authority.
18. Section 25-O provides that the appropriate Government may, after
making an enquiry and hearing all the concerned parties, pass an
order in writing accepting or rejecting the application for closure. It also
provides that if the appropriate Government does not communicate
and order within 60 days of the date of application, there shall be
deemed closure. We have held that the appropriate Government
had not acted in respect of the application made by HSML since the
460 [2025] 7 S.C.R.

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Minister, who was the competent authority, had not applied his mind
to the administrative ‘order’ nor, did the Deputy Secretary have the
authority to do so. In other words, the appropriate Government failed
to make and communicate any order on the application for closure.
The deemed closure would, therefore, come into effect.
19. Separately, we may observe that the reasoning furnished by the
Deputy Secretary to reject the application for closure made by
HSML is insufficient, and it appears to have been given for the sole
purpose of rejecting the application without due application of mind.
As discussed supra, an employer seeking to close his business must
show compelling and overriding circumstances. The application for
closure clearly states, as already reproduced supra that “Thus BIL
has terminated the job work agreement with the Biscuit Division
and the said provision has no other manufacturing avenue, since
the said Division was manufacturing biscuits only for BIL. In view
of the above, the biscuit division has no alternative but to close
down, the manufacturing activities.”. We may add HSMC to have
clarified that since inception no job work for anyone else was ever
done and that now there is no further scope of executing work for
anyone else. We are quite certain that this spells impossibility. It is
not the case of the Respondent-State that the statement made by
HSML is incorrect and that they had other opportunities ongoing
and available, and despite the same, they had sought permission
for closure. Then, we ask ourselves, when there is no opportunity
or avenue for production, what shall the employees do?
20. Arguendo, if we keep aside the 60-day time period for the deemed
closure to take effect, we find that in the subsequent letter dated 10
October 2019, the position stands further clarified that for the last 32
years, HSML undertook work only from BIL and in doing so, the raw
material and necessary plant and machinery were provided by the
latter itself. Upon receipt of the notice of closure, in an attempt to
save the division, they tried to persuade BIL to reconsider its decision
but were not met with success. They subsequently approached
other companies seeking manufacturing work, but to no avail. In the
attending facts and circumstances, we hold that there did indeed
exist sufficient compelling circumstances for closure.
21. The High Court, in our considered view, erred in placing reliance on
Form XXIV-B, instead of XXIV-C which, resulted into an erroneous
appreciation of statutory provisions.
[2025] 7 S.C.R. 461

Harinagar Sugar Mills Ltd. (Biscuit Division) & Anr. v.
State of Maharashtra & Ors.

CONCLUSION
22. In that view of the matter, we hold that application dated 28th August
2019 was complete in all respects, and the 60-day period for the
deemed closure to take effect would be calculable from said date.
Second, the Deputy Secretary was not the appropriate Government
who could have asked HSML to revise and resubmit the application
for closure. That authority is only vested with the Minister concerned.
The Minister did not, even in the slightest, consider the merits of the
matter independently, much less with or without any application of
mind. Sub-delegation to the officer was not permitted by law, and,
therefore, any communication made by him would be without any
legal sanction.
23. The appeals are allowed. It is, however, clarified that the money paid
to the employees by orders of the High Court in the pendency of the
writ petitions would not be recoverable from them. At this juncture,
we may refer to the order made by this Court preserving the matter
for judgment. It was recorded therein as follows :
“O R D E R
…
5. Shri Rohatgi, learned senior counsel, on instructions,
states that a sum of Rs.4 Crores (approximately) already
stands deposited. In addition, a further sum of Rs.10 crores
can be paid by the petitioner to the respondent workmen.
He clarifies that the said amount would be in addition to
the amount of gratuity (approximately Rs.4 crores) which
the workmen are otherwise entitled to.
6. The entire sum, i.e., the amount of gratuity plus the
enhanced amount can be distributed as compensation
amongst the workmen who may be eligible and entitled
to, for being on the rolls of the company.
7. This, of course, is by way of an endeavour to put an end
to the controversy and without prejudice to the respective
rights and contentions of the parties.”
24. Considering that some of the employees may be, with the closure of
this concern, losing the only job they have known and still others would
be, for no fault of their own, rendered unemployed, we appreciate
462 [2025] 7 S.C.R.

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the gesture made by HSML. Such a statement is taken on record. At
the close of the hearing, Mr. Mukul Rohtagi, learned Senior Counsel
had left the issue of further enhancement of the amount to the Court.
Having given thoughtful consideration, we deem it just and proper
to further enhancing the appellants’ offer by a sum of Rs.5 crores,
thus, making it Rs.15 Crores instead of Rs.10 Crores, as mentioned
in our order extracted supra. Let the amount be released forthwith,
as per their entitlement, in favour of the employees and, in any case,
not later than eight weeks from the date of the judgment.
Pending applications, if any, shall stand disposed of.

Result of the case: Appeals allowed.

†
Headnotes prepared by: Ankit Gyan