Punjab and Haryana High Court upholds closure of HMT tractor unit at Pinjore

Tribune News Service

Saurabh Malik
Chandigarh, September 1

The Punjab and Haryana High Court has upheld the closure of the HMT tractor division at Pinjore after holding that the “appropriate” or the Union Government accorded its approval after following the due process prescribed under the Industrial Disputes Act.

The ruling by Justice Rajbir Sehrawat came on a bunch of petitions challenging the order dated February 14, 2017, for the tractor division’s closure.

The Bench during the course of hearing was told 850 employees had opted for the VRS offered by the company even before the formal closure order could be passed. The rest were paid the retrenchment compensation at the time of closure.

One of the arguments was the closure order stood vitiated on account of the fact that the Centre, which was also the appropriate government in the case of the unit, had already taken a decision to close it. The subsequent procedure of compliance of Section 25(O) of the Act was a sham and mere formality.

Justice Sehrawat asserted it was not even in dispute that the Centre was the majority stake and shareholder in HMT Ltd. Under the Companies Act as well, all decisions of HMT Ltd were to be taken by the resolutions of the company through majority decisions. Therefore, any proposal of the management to go in for closure was required to be put up to the Centre as majority stakeholder.

Justice Sehrawat added the VRS scheme was totally optional. Any employee could have opted for the same at any time after it was issued by the company, even before the company’s final closure if it was perceived by him as more beneficial than the “statutory compensation payable on statutory closure”.

“Those who opted for the VRS scheme before the final statutory closure were rightly paid VRS benefits before the final order of closure of the unit. Hence, the argument qua the decision already having been taken by the Central government qua closure and the subsequent proceeding being only formality is liable to be noted only to be rejected,” the Bench added.

What the court observed

Justice Rajbir Sehrawat of the Punjab and Haryana High Court asserted that the approval by the “appropriate government” as required under the statutory provisions came only after following the due process as prescribed under the Act, including hearing the workmen.

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