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⚖️ SC: Right to Shut Down Business is Part of Article 19(1)(g), But Not Absolute

 


Bench: Justice Sanjay Karol & Justice Prashant Kumar Mishra
Case: Harinagar Sugar Mills Ltd. v. State of Maharashtra & Ors.

🧾 Key Holding:

“The right under Article 19(1)(g) to carry on any trade or business includes the right to shut it down, but this is subject to reasonable restrictions, particularly to protect workers’ rights and ensure compliance with statutory procedures.”

🔍 Facts in Brief:

  • Harinagar Sugar Mills Ltd. (HSML) had operated a biscuit division exclusively for Britannia Industries Ltd. for 30+ years.

  • In 2019, Britannia terminated the Job Work Agreement (JWA), prompting HSML to seek closure under the Industrial Disputes Act, 1947.

  • HSML filed a closure application under Form XXIV-C on 28 August 2019, but the Deputy Secretary of Maharashtra rejected it as "incomplete."

  • The Industrial Tribunal restrained the closure, and the High Court upheld the rejection.

  • HSML appealed to the Supreme Court.

🧑‍⚖️ Supreme Court’s Findings:

✅ Closure Application Valid:

  • The application was complete and thus triggered the 60-day deemed closure rule under Section 25-O, from August 28, 2019.

✅ Deputy Secretary Not Competent Authority:

  • The Deputy Secretary was not the “appropriate Government” under Section 25-O.

  • The Minister failed to apply independent mind, rendering the action legally defective.

✅ Right to Close Business Affirmed:

  • Article 19(1)(g) includes the freedom to close a business, subject to Excel Wear and Orissa Textile precedents on reasonable restrictions.

✅ Workers' Rights Considered:

  • Despite legal closure, the ₹5 crore enhanced compensation was ordered to safeguard the interests of affected workers.

✅ No Recovery of Compensation:

  • Amounts already paid during litigation will not be recovered from workers.

🧠 Why This Judgment Matters:

This ruling strengthens the constitutional freedom of business autonomy, while ensuring that closures are legally sound, procedurally compliant, and socially responsible.

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