The Bombay High Court recently upheld the order of an industrial tribunal permitting the closure of a manufacturing plant of General Motors Company in Talegaon, Maharashtra after the company claimed to have accumulated over ₹9,000 crore of loss. [General Motors Employees Union v. General Motors Company Pvt Ltd]
Justice Milind Jadhav observed that if a company approaches the Court for closure of its establishment on the ground of accumulated losses as per the law, the possibility of unemployment of the workers cannot be a ground to compel the company to run its business and refuse closure.
“The accumulated losses in the present case are substantial. They pan out over almost a decade prior to the closure announced by the Company. What is significant to be noted in the present case is that the Company has suffered significant losses over the past 28 years and at the end of the financial year 2021-2022, the progressing accumulated losses are ₹9656.87 crores,” the Court observed.
The judge also noted that the industrial tribunal had concluded from the evidence that GM seemed to have drained all its resources to make itself financially strong and its business self-sustainable. After these steps did not pay off, the decision of closure had been taken.
A timeline of the factual matrix was as follows:
The General Motors Employees Union had filed a complaint on October 27, 2020 for unfair labour practices (ULP) after a change of service conditions. On December 22, 2020, the industrial court at Pune rejected interim relief.
On November 20, 2020, General Motors filed an application seeking permission for closure of its Talegaon plant on the ground of accumulated losses to the tune of ₹8,500 crore. On December 24, 2020, the company declared end of production at its Talegaon Plant.
Meanwhile, on December 22, 2020, the industrial tribunal rejected the Union's complaint.
January 18, 2021 – The Maharashtra government rejected the closure application because the company could recover from the losses.
January 21, 2021 – The company filed a review application before the State government.
March 18, 2021 – The State government made a reference before the industrial tribunal.
February 21, 2023 – The Union filed an application before the industrial court seeking a restraining order against GM from creating any third-party rights in favour of Hyundai Motors in the company’s Talegaon plant. The Tribunal rejected this on March 8, 2023.
June 30, 2023 – An award was passed in the reference, permitting the closure of the company with effect from April 30, 2021.
This order was challenged in the present writ petition before the High Court.
Senior Advocate Sanjay Singhvi with Advocates Rahul Kamerkar and Brazillia Vaz appeared for the employees' union.
Senior Advocates JP Cama and Zubin Behramkamdin along with advocates Anand S Pathak, Ravish Kumar, Vijay Purohit, Nidhi Raj Bindra, Pratik Jhaveri, Faizan Mithaiwala and Ziauddin Sherkar from P&A Law Offices appeared for General Motors.
[Read order]