When will Government of India come out with the ‘Exit Policy’?
There has been so much talk about it. Who’s ‘Exit’? Obviously the Employers’. The Industrial Disputes Act does not permit a quick exit to employers, that is to say, they cannot close down a business at will. They have to seek permission of the Government; it was not easy to come by during the old days, things have not changed very much even today.
If the employer is not having the unfettered right to close down a business then will he be encouraged to commence a business at all? That is the question many economists and employers’ representatives are asking.
I present to you two cases that are reported in a matter of a week. One is decided by the Supreme Court of Canada while the other is decided by High Court of Allahabad. I will leave the conclusion to you.
Modi Textiles Case
Modi Textiles was running at 40% capacity. Union rivalry saw as many as twenty murders being committed by the employees and thirty incidents of assault. There was illegal strike by employees. The company proposed to close down the mills from 22nd March 1985. They applied for permission to close down but the State Government rejected their application. In the judgement delivered on Nov 13, 2009 the High Court of Allahabad held ‘....it is established that the State Government has not considered the matter in correct perspective and relevant material, evidence and documents have been ignored and further petitioner’s unit, which is lying closed since 1984 requires a fresh look by the State Government as stated in the body of the judgement......The order passed by the State Government is hereby set aside and the matter is remitted to the State Government for fresh consideration.....’ I would like to point out that the judgement comes full twenty five years after the closure!
The Wal-Mart Case [Canada]
The long-anticipated judgment of the Supreme Court of Canada in the Québec Wal-Mart case (Plourde v. Wal-Mart Canada Corp., 2009 SCC 54, along with its sister case, Desbiens v. Wal-Mart Canada Corp., 2009 SCC 55) was released on Friday, November 27, 2009. As expected, the judgment sheds significant light on a Québec employer's rights and obligations with respect to the closure of a business in a unionized context. On the positive side, the Supreme Court confirmed that a Québec employer cannot be forced to continue to operate its business — or to reopen its business — as a result of allegations of unfair labour practices, and held that particular recourses under the Québec Labour Code are unavailable to employees in a workplace closure situation......
......The [Supreme] Court held that, in the case of a permanent closure of a business, terminated employees cannot bring a claim against their employer under ss. 15 to 17 of the Labour Code alleging that they were dismissed because they exercised their rights under the Code, regardless of the motives for the closure. In taking this position, the Court maintained the principle established in I.A.T.S.E. Stage Local 56 v. Société de la Place des Arts de Montréal (2004 SCC 2) that an employer cannot be forced to stay in business, even if the closure is motivated by "socially reprehensible considerations". [Emphasis supplied]
What say you?
Canadian judgement is, in my opinion representing one extreme while Indian law represents another extreme. The solution lies somewhere in the middle. I have a reason to believe that many would readily appreciate this fact.
Will any political leader have the courage to say it and do something about it? Do we still expect foreign investors to feel encouraged to invest in businesses in our country?
Labels: Closure, Exit policy, Modi Textiles, Plourde v. Wal-Mart Canada Corp., Right to Business