1. ' Feeling aggrieved by an order made by the with Labour Court, Hyderabad dated 15th September, 1979 under Standing Order 11-A of the Standing Orders Ordinance, 1968 refusing to give permission to close down the establishment at Hyderabad, the petitioner, namely, the Textile Corporation of Pakistan Limited have moved this petition.
2. ' The short background of the case is that the petitioner a private Limited Company having a total paid up capital of Rs, 36,67,200 which owns a Textile Mill situated in Hyderabad had been allegedly running at losses constantly for the past five years as under ;- {{TABLE}} Accounting year ending 30th September, 1974 Net loss.,Rs, 40, 59, 086.78 Accounting year ending 30th September, 1975 Net loss.--Rs, 39, 93, 168.82 Accounting year ending 30th September, 1976 Net loss,-.12s. 6,07,043.45 Accounting year ending 30th September, 1977 Net loss---Rs, 81, 68, 202.42 Accounting year ending 30th September, 1978 Net loss=.--Rs, 64, 82, 189.78 {{TABLE}} ' The total accumulated losses over the years worked out on 30th September, 1978 comes to Rs, 2,29,25,091.52. There was a change of Management of the Company in November, 1978 and according to the petitioner, a serious attempt was made to remedy the faults. Looking to the rate of absenteeism of workers which was high and further since a number of workers had left the Establishment, the petitioner recruited an additional 65 workers on 19th April, 1979 for operating all the three shifts with full strength. On the very next day, that is, 20th April, 1979 the existing workers, including the Union (respondent 2), according to the petitioner, resisted the induction of new workers by beating them up so brutally that 22 of them were hospitalized. Police cases were registered against concerned offenders, which are pending and complaints were filed by the existing workers also against the new workers. The petitioner-Company also filed two complaints against the previous workers under the Industrial Relations Ordinance, 1969 before the National Industrial Relations Commission against the office bearers of respondent 2, and the Court issued an order restraining the workers from disturbing the working of the Factory. It is further the case of the petitioner that the workers disobeyed the order of the Court and an application for contempt was filed which is pending.
3. ' In the circumstances it was the case of the petitioner that the operational efficiency which was already low became lower, and the financial condition which was critical further deteriorated, and the estimated additional losses for the year were of the order of Rs, 36 iakhs. A definite statement has been made that against the fixed assets of Rs, 27, 23, 297.81 the bank liabilities accounted to Rs, 1,31,20,981 and that in addition the bank overdraft is Rs, 41,14,950.
4. ' It was under the aforesaid alleged circumstance that the application under Standing Order 11-A of the West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance, 1968 was made on 30th April, 1979. It is further stated that from the period from 19th May, 1979 onwards the workers have been laid off from time to time in accordance with law, as it was no longer financially possible to operate the mill. However, liabilities have continued to mount, since even during the lay off period 50 per cent of the wages of workers have to be paid.
5. ' The application for permission to close the Mill came up for hearing and evidence was recorded on various dates. Ultimately the application was dismissed by means of the impugned order and hence this petition.
6. ' The main contentions raised on behalf of the petitioner are as under :
(1) That although respondent 2 accepted the fact that the petitioner had been steadily running losses for the past 5 years, and it was subsequently noted by him that balance-sheets for those years were not challenged on behalf of the workers, there was no basis for the finding that the application for permission to close down was mala fide.
(2) That despite the change in Management, since losses continued to mount so that it had become impossible to obtain additional finances to operate the Mill, the refusal to grant permission to close the Mill amounts to compelling the Company to go into bankruptcy which cannot be done under the law.
7. ' That the payment of bonus should not have been considered as a factor against the petitioner inasmuch as the bonuses were not profit bonuses but were bonuses to provide industrial peace.
8. ' A perusal of the impugned order of respondent No, 1 would show that he has given finding that the petitioner-Company was running at loss constantly for the past 5 years up to 30th September, 1978. This is clear from para. 4 of the impugned order which mentions that the petitioner had produced balance-sheets for 5 years from 1st October, 1974 to 13th September, 1978 duly audited by Dawood All Siraj and Company, Chartered Accountants and the aforesaid balance-sheets are not challenged by respondent 2 in any Court. The learned respondent No, 1 held that the application seeking closure was mala fide firstly because of the fact that the petitioner had made fresh recruitment for running 'C' shift which was considered as an indication by him that the petitioner was in a position to run the factory in spite of losses.
9. ' The explanation given by the petitioner that the recruitment of the 65 additional workers was only a genuine effort on the part of the new Management to operate the Company is plausible as it meant increasing the financial burden which should only have been undertaken with a hope to improve the operational efficiency of the Establishment. The recruitment of 65 additional workers in an effort to improve the working of the Mill should not have been taken to presume that the contention that it was not possible for the applicant to run the factory economically was wrong, especially as the application for permission to close was made after trying out the experiment and also because of the fact that for the period from 8th May, 1979 onwards the workers had been laid off from time to time which was a further indication that it was no longer financially possible to operate the Mill. The presumption of making secret profits in the face of the audited balance- sheets and written account of a Limited Company should not be lightly made unless there is evidence on record to prove the same.
10. ' With regard to the only other reason for rejecting permission to close, namely, that the applicant had paid bonuses in the past five years, in view of the audited balance-sheets authenticity of which was accepted by the learned respondent 1, the question of payment of profit bonuses did not arise and again the explanation that the same were ex gratia payment made with a view to maintaining industrial peace and in order to seek active co-operation of the workers, should have been accepted.
11. ' Mr. Khalid Anwar, the learned counsel for the petitioner, has supported his contention that the case had been disposed of in an arbitrary manner, by referring to para 6 of the impugned order in which the contention of respondent No, 2 that the loss of production was caused by action of the applicants themselves by not supplying bobins and spare parts was accepted after relying on certain letters written to the Management by the Workers Union. It is argued that the Management was under no obligation to reply to such letters ; it had nevertheless sent replies by registered letters A. D. Which were produced in Court together with A. D. Slips. The Management had also produced documentary evidence to establish that, although the previous Management had only supplied bebins and spare parts worth Rs, 1,83,333 the new Management had supplied Rs, 5,30,079.43 worth of bobins and spare parts. Bank statements of Mill records were shown, but the learned Judge had disregarded all such evidence on the ground that registered A.D. Receipts had not been shown to the General Secretary of respondent 2 during cross-examination.
12. The learned respondent No, I have concluded the impugned order by finding that the request for permission to close down the industry appeared to be mala fide for reasons other than the one given by the applicant, without specifying the other reasons. The finding is, therefore obviously based on conjecture and not on material on the record. The refusal to permit closure which, as already stated, is generally the right of the owner of the business or industry should not be based on suspicion or conjecture ; and it is necessary to base such refusal on concern instances indicating mala fides and not on surmises and conjectures. The learned counsel has relied on the decisions in Constitutional Petitions Nos. 77, 85, 60 and 78 of 1977 by the Baluchistan High Court reported in(1) to support his argument that the decision arrived at by respondent 1 being arbitrary was liable to be set aside. It was inter alia observed in the aforesaid decision as under : "29. Arbitrary decisions are never considered wholesome in our system of law. One of the dominant tests of a decision being arbitrary is whether it proceeds on any substantial reason or exhibits lack of application of mind. Such manner of exercise of jurisdiction has very often been equated or called by a synonym of abuse of jurisdiction. Such abuse manifests itself by making it patent that the authority that had the lis before it either overlooked the evidence brought before it or by reason of pre-conceived notions misdirected itself to arrive at such conclusions which are either perverse or could not be substantiated on the basis of available evidence. Such arbitrariness or abuse of jurisdiction may very often become patent by an ad hoc observation indicating a desire to overlook the available evidence coupled with a longing for evidence which in the imagination of the authority should have been produced. Very often a cloak is provided for arbitrary decision by mention of the words that some better evidence or best evidence has not been produced, but the fact of the matter may well be that the available evidence is overlooked. This, in our bumble opinion, is arbitrariness of the worst type {{FOOT NOTE}}
(1) PLD 1978 Quetta, 17 {{FOOT NOTE}} ' when a Tribunal dealing with the rights of the citizen overlooks what is placed before it in the form of evidence and supplements its desire to overlook the evidence by finding a fault with the petitioner that the best evidence has not been produced.'
13. It cannot be gain-said that a Company has a general right in law to close down its business. In interest of better relations between the industry and the workers the Legislature has made laws relating to industrial employment and under the Standing Orders Ordinance, 1968 has put the condition that no employer shall close down the whole of the Establishment without prior permission of the Labour Court. The evidence on record however about continued losses year by year, and despite change in Management, cannot be overlooked as due to the same it was no longer feasible or profitable to continue operating the Mill. Under the circumstances, it is here by declared that the order dated 15th September, 1979 passed by the Presiding Labour Court No, VI is contrary to law and of no legal effect and that the petitioner is entitled to close down its Mill in accordance with law. The petition is allowed accordingly with no order regarding costs.