general motors: As time runs out on Great Wall deal, General Motors finds exit from Talegaon tougher
The woes for the maker of Chevy cars continue as its term sheet to sell the plant to China’s Great Wall Motors is to expire on June 30, with the proposal stuck for more than two years due to the strict rules governing FDI. To add to its legal challenges, the Maharashtra government’s opposition to the closure of the Talegaon plant was upheld by the Bombay High Court recently.
The High Court dismissed a plea filed by General Motors India that challenged the rejection of its application by Maharashtra for the closure of its unit at Talegaon.
The local unit of General Motors had approached the High Court after the Labour Minister, Maharashtra State and also the authority under the Industrial Dispute Act had rejected its application to allow the company to close its manufacturing plant at Talegaon.
“We are pursuing our legal options. As we have said previously, we are very confident of our legal position,” a General Motors spokesperson told ET.
The division bench of Justice SV Gangapurwala and Justice Vinay Joshi while dismissing the petition filed by the auto major observed that the statute has given a clear option to the authority to either review its own order or to refer the matter to the Tribunal.
“There is no quarrel on the point that the authority has the power to refer the matter to the Tribunal for adjudication, which it had done. Therefore, we do not find any merit in the contentions raised by the petitioner for quashing the impugned order,” said the court in its order that validated Maharashtra’s position.
General Motors had argued that state authorities failed to consider the pressing need for closure while rejecting the application for closure. The company also argued that it can’t be forced to run an industrial unit at a loss.
Senior advocate JP Cama , appearing on behalf of the company, argued that despite huge investments, the company suffered significant loss and hence the management thought that it is not feasible to carry on the business. The company’s accumulated losses as on March 31, 2020, were over ₹ 8,480 crore.
In the case, General Motors Employees Union, opposing the closure of the plant has so far argued that the terms and conditions of the term sheet entered into with the prospective buyer were suppressed.
At the time of filing the case, the company had a total of 1,578 permanent staff and around 2,000 contract staff. General Motors India had entered into a term sheet in January 2020 with China’s Great Wall Motors for the transfer of the manufacturing facility.
