Companies

Maharashtra rejects GM’s application for closure of Talegaon plant

Forum Gandhi Mumbai | Updated on January 18, 2021

General Motors’ manufacturing plant in Talegaon   -  Bloomberg

Employees’ union files writ petition in Mumbai HC challenging the company’s move

The Maharashtra Government has rejected General Motors’ application for closure of its plant in Talegaon. This comes after the Employees Union of General Motors India filed an urgent writ petition in the Mumbai High Court challenging the company’s decision to close the plant ahead of selling the assets to China’s Great Wall Motors.

General Motors had filed an application on November 20, 2020 before the State seeking permission to close the unit.

Dilip Walse-Patil, Maharashtra’s Labour Minister, in his order on Monday, said, “I have no hesitation to reject the said application...the company could have taken some other alternative path to sustain its operation in India.”

‘Capacity to recover losses’

While the company had cited accumulated losses for the proposed closure, Patil dismissed it saying that losses alone cannot be a reason for the closure of an MNC unit. “The company has capability to recover from this situation and absorb the losses,” he stated.

In his observations, Patil said General Motors is a renowned name in the automotive industry, and has employed nearly 1,578 employees, 2,000 contract employees, various vendors and ancillary units, with approximately 25,000 dependants on it.

Patil said the company has had at least 5 per cent of the market share in the four-wheeler market, and has been well funded since.

He noted that since it is a multinational company, the resources at its disposal can be fruitfully utilised.

Though the company has offered a voluntary separation scheme (VSS), the Labour Minister said it is necessary to give enough time for either party to consider or restructure the scheme as per workers’ response.

On January 15, the employee union had moved an urgent application in the Bombay High Court challenging GM’s closure application.

In its writ petition, the union has said that GM has signed an MoU to sell its business to Great Wall Motors China; thus, it is not a case of closure, but rather a transfer of undertaking as per the Industrial Disputes Act.

Job risk

In this case, “the employees will also continue working under the new buyer,” Rahul Kamerkar, the lawyer appearing on behalf of the employees, told BusinessLine.

However, if GM is allowed to close the unit first and then sell all the land, plant, and machinery to Great Wall, the Chinese company can hire its own workers, putting at risk the jobs of existing employees, he explained.

However, if the factory is transferred to the Chinese company, the existing employees will retain their jobs.

The petition was filed under Section 25 O (3) of the Industrial Disputes Act. According to the Act, if no order is passed on the closure application within 60 days of the application being made, the application is deemed to be approved.

“Since GM’s application was filed on November 20, 2020, January 19, 2021 would have been the last day on which the government could pass an order rejecting the application,” Kamerkar said.

Published on January 18, 2021

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