Business Standard

Bombay High Court junks pleas challenging closure of Talegaon plant

The High Court upheld the decision of the Industrial Tribunal allowing GMI to close the plant after noting accumulated losses of Rs 9,656.87 crore as of 2021-22

General Motors, GM Talegaon plant

GMI had decided to shut down the Halol plant in Gujarat in 2017 due to accumulated losses of Rs 8500 crore, and it was using the Talegaon plant near Pune to export vehicles from India

Sohini Das Mumbai

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The Bombay High Court on Friday dismissed two writ petitions by the General Motors Employees Union challenging the closure of the General Motors India (GMI) manufacturing facility at Talegaon in Maharashtra.

The High Court upheld the decision of the Industrial Tribunal allowing GMI to close the plant after noting accumulated losses of Rs 9,656.87 crore as of 2021-22.

Justice Milind Jadhav dismissed the two writ petitions by the General Motors Employees Union challenging the Industrial Court's orders in a judgment dated January 9, 2024.

GMI did not comment on the matter.

GMI decided to shut down the Halol plant in Gujarat in 2017 due to accumulated losses of Rs 8,500 crore, and it was using the Talegaon plant near Pune to export vehicles from India.

The Halol plant was sold to China’s SAIC Motor Corp. The company eventually made efforts to sell the plant to China’s Great Wall Motors, but things did not move ahead. GM India applied with the Maharashtra government on November 20, 2020, seeking to close the Talegaon unit which was making the Beat hatchback for export markets. The Maharashtra government referred the matter to the Industrial Tribunal in March 2021.

Meanwhile, GMI offered a voluntary separation scheme (VSS) for the Talegaon plant workers in June 2021. The HC judgment, of which Business Standard has a copy, said that “In June 2021, the Company floated a Voluntary Separation Scheme (VSS) offering 110 days of wages for each completed year of service. Around 484 workers availed the benefits under the Scheme and took the separation benefit of Rs.25 to 35 lakhs each.” 

On July 12, 2021, the company terminated the services of the remaining workmen under Clause 31.08 of the Certified Standing Order (CSO) that permitted the Company to terminate the services of such workmen if they were laid off for more than 45 days, the court document said.

In another development, Hyundai Motor India Ltd said on March 13, 2023, that it has signed a term sheet with GMI for the potential acquisition of the Talegaon plant.

Hyundai Motor India did not wish to comment on the Bombay High Court judgment.

There were several rounds of litigation between the employee union and the company before the Industrial Court, the Bombay High Court, the Apex Court, as well as the state government challenging matters like closure of the plant, layoffs, service conditions, and acquisition deals.

The Industrial Tribunal eventually passed an award on June 30, 2023, permitting the closure of the Talegaon plant with effect from April 30, 2021. The employee union challenged the tribunal's June 30, 2023 order allowing closure as well as the order dated April 28, 2023.

The High Court noted: “Slowdown in the demand for cars manufactured by the company over the last decade coupled with external factors has not only been proved but is also available in the public domain. Rise in the cost of vehicles,  high vehicle finance rates, changes due to various government policies, ever-changing emission norms, wide choices, shorter technology cycles,  drastically changing customer demands, and cost-effectiveness in the competitive rising market have made the Company’s operations in India economically unviable..” 

This has led to the accumulation of losses by the company.

 The court further noted that the closure of the plant was decided after all efforts to recover from financial stress failed. The company is neither a public limited company nor concerned with public utility that it can be forced to continue its operations despite accumulated losses. 

“It needs to be reiterated once again that the company is not a public limited company or a company concerned with public utility to force the company to continue its operations despite accumulated losses. Hence, the submissions of the Union are not acceptable to this court,” the judgment copy said.

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First Published: Jan 12 2024 | 8:06 PM IST

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