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

Civil Appeal · 2025 INSC 801Decided 4 Jun 2025
C.A. No.-007372-007372 - 2025 (arising out of SLP(C) No.4268/2023)
Justice Sanjay Karol · Justice Prashant Kumar Mishra

Background

Harinagar Sugar Mills Limited (Biscuit Division) had, for over three decades, exclusively manufactured biscuits for Britannia Industries Limited under a Job Work Agreement. When Britannia terminated that agreement in 2019, the company sought to close its unit and applied to the Maharashtra government for permission to do so under Section 25-O of the Industrial Disputes Act, 1947. A Deputy Secretary in the state government directed the company to revise and resubmit its closure application, rather than the matter being decided by the Minister concerned (the officer actually empowered to act as the "appropriate Government" under the Act). The Bombay High Court had upheld this handling, leading to the present appeal.

Decision Breakdown

The Supreme Court held that the Deputy Secretary was not the "appropriate Government" competent to require the company to revise and resubmit its closure application: that power vested only in the Minister concerned, who never independently applied his mind to the merits of the case. Because there was no valid sub-delegation of authority in law, the Deputy Secretary's communication had no legal sanction, and the company was entitled to treat its closure as deemed to have been permitted through the statutory deeming fiction in Section 25-O(3). The appeals were allowed and the impugned judgment set aside. Recognising the hardship closure would cause to workmen, the Court also approved and enhanced a compensation package (raising the earlier offer from Rs. 10 crores to Rs. 15 crores, in addition to gratuity dues) to be paid to the affected employees within eight weeks.

Lesson Learnt

Statutory powers reserved for a specific authority (like a Minister under labour law) cannot be exercised or effectively delegated to a subordinate officer without legal sanction: procedural lapses of this kind by government functionaries can render their orders void, even while courts remain mindful of protecting workers' livelihoods through compensation.

Official source (sci.gov.in)View Judgment (PDF)

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