Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 14
PETITIONER:
STATE OF BOMBAY
Vs.
RESPONDENT:
K. P. KRISHNAN AND OTHERS. (AND CONNECTED APPEAL)
DATE OF JUDGMENT:
18/04/1960
BENCH:
GAJENDRAGADKAR, P.B.
BENCH:
GAJENDRAGADKAR, P.B.
SINHA, BHUVNESHWAR P.(CJ)
KAPUR, J.L.
SUBBARAO, K.
WANCHOO, K.N.
CITATION:
1960 AIR 1223
CITATOR INFO :
R 1964 SC1617 (6)
RF 1967 SC 295 (60)
RF 1969 SC 707 (50)
R 1975 SC2226 (9)
RF 1975 SC2238 (14)
D 1976 SC1474 (8,10)
E&R 1985 SC 915 (5)
RF 1990 SC 255 (5)
ACT:
Industrial Dispute-Failure of conciliation--Appropriate
Government’s Power of reference-Order of refusal-Reasons, if
must be germane to the issue-Classification-Bonus-Industrial
Disputes Act, 1947 (14 of 1947), ss. 12(5), 10(1).
HEADNOTE:
Section 2(5) of the Industrial Disputes Act, 1947, properly
construed, does not by itself confer the power on the
appropriate Government to make a reference. That power is
really contained in s. 10(i) of the Act. In deciding
whether it should or should not make a reference under s.
12(5) of the Act the appropriate Government need not base
its decision solely on the report of the conciliation
officer, but is free to take into consideration all other
relevant facts and circumstances under s. 10(1), and where
it refused to make a reference it must record and com-
municate its reasons therefore to the parties concerned.
Such reasons, however, must be germane, and not extraneous
or irrelevant, to the dispute.
But in exercising such wide powers as are conferred by S.
10(1), the appropriate Government must act fairly and
reasonably and not in a punitive spirit, and although
considerations of expediency may not be wholly excluded, it
must not be swayed by any extraneous considerations.
Consequently, in a case where the issues in dispute related
to a claim of classification for specified employees and
additional bonus and the sole ground on which the Government
refused to refer the dispute for adjudication under s. 12(5)
was that the employees had adopted go-slow tactics during
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 14
the relevant year, although the company had nevertheless
voluntarily paid three months’ bonus for that year and the
report of the conciliation officer was in favour of the
employees,
Held, that the Government acted on irrelevant considerations
and its decision being wholly punitive in character a clear
case for the issue of a writ of mandamus was made out.
Held, further, that since the work done by the employees
prima facie justified the claim for classification and it
was in consonance with the practice prevailing in other
comparable concerns, the misconduct of the respondents could
be no ground for refusing reference as the claim was in
regard to the future benefit to the employees.
228
The claim of bonus being also prima facie justified by the
profits earned during the relevant year in accordance with
well settled principles of industrial adjudication, the
order of refusal was in the nature of a punitive action that
was wholly inconsistent with the object of the Act.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 37 & 38 of
1957.
Appeals from the judgment and order dated August 30, 1955,
of the former Bombay High Court in Appeals Nos. 55 and 56 of
1955, arising out of the judgment and order dated June 23,
1955, of the said High Court in Misc. Application No. 80 of
1955.
C. K. Daphtary, Solicitor-General of India, B. Ganapathy
Iyer and R. H. Dhebar, for the appellant (in C. A. No. 37 of
57) and respondent No. 6 (in C. A. No. 38/57).
S. D. Vimadalal and I. N. Shroff, for the appellant (in C.
A. No. 38/57) and respondent No. 6 (in C. A. No. 37/57.)
Rajni Patel, S. N. Andley, J. B. Dadachanji, Rameshwar Nath
and P. L. Vohra, for respondents Nos.1 and 3 to 5 (in both
the appeals).
S. B. Naik and K. R. Chaudhuri, for respondent No. 2 (in
both the appeals).
1960. August 18. The Judgment of the Court was delivered
by
GAJENDRAGADKAR J.-These two appeals arise from an industrial
dispute between the Firestone Tyre and Rubber Co. of India
Ltd., (hereafter called the company) and its workmen
(hereafter called the respondents), and they raise a short
and interesting question about the construction of s. 12(5)
of the Industrial Disputes Act 14 of 1947 (hereafter called
the Act). It appears that the respondents addressed four
demands to the company; they were in respect of gratuity,
holidays, classification of certain employees and for the
payment of an unconditional bonus for the financial year
ended October 31, 1953. The respondents’ union also
addressed the Assistant Commissioner of Labour, Bombay,
forwarding to him a
229
copy of the said demands, and intimating to him that since
the company had not recognised the respondents’ union there
was no hope of any direct negotiations between the union and
the company. The Assistant Commissioner of Labour, who is
also the conciliation officer, was therefore requested to
commence the conciliation proceedings at an early date.
Soon thereafter the company declared a bonus equivalent to
1/4 of the basic earnings for the year 195253. The
respondents then informed the company that they were
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 14
entitled to a much higher bonus having regard to the profits
made by the company during the relevant year and that they
had decided to accept the bonus offered by the company
without prejudice to the demand already submitted by them in
that behalf. After holding a preliminary discussion with
the parties the conciliation officer examined the four
demands made by the respondents and admitted into
conciliation only two of them ; they were in respect of the
classification of certain employees and the bonus for the
year 1952-53; the two remaining demands were not admitted in
conciliation. The conciliation proceedings initiated by the
conciliator, however, proved infructuous with the result
that on July 5, 1954, the conciliator made his failure
report under s. 12(4) of the Act. In his report the
conciliator has set out the arguments urged by both the
parties before him in respect of both the items of dispute.
In regard to the respondents’ claim for bonus the conci-
liator made certain suggestions to the company but the
company did not accept them, and so it became clear that
there was no possibility of reaching a settlement on that
issue. Incidentally the conciliator observed that it
appeared to him that there was considerable substance in the
case made out by the respondents for payment of additional
bonus. The conciliator also dealt with the respondents’
demand for classification and expressed his opinion that
having regard to the type and nature of the work which was
done by the workmen in question it seemed clear that the
said work was mainly of a clerical nature and the demand
that the said workmen should be
230
taken on the monthly-paid roll appeared to be in consonance
with the practice prevailing in other comparable concerns.
The management, however, told the conciliator that the said
employees had received very liberal increments and had
reached the maximum of their scales and so the management
saw no reason to accede to the demand for classification.
On receipt of this report the Government of Bombay (now the
Government of Maharashtra) considered the matter and came to
the conclusion that the dispute in question should not be
referred to an industrial tribunal for its adjudication.
Accordingly, as required by s. 12(5) on December 11, 1954,
the Government communicated to the respondents the said
decision and stated that it does not propose to refer the
said dispute to the tribunal under s. 12(5) " for the reason
that the workmen resorted to go slow during the year 195253
". It is this decision of the Government refusing to refer
the dispute for industrial adjudication that has given rise
to the present proceedings.
On February 18, 1955, the respondents filed in the Bombay
High Court a petition under Art. 226 of the Constitution
praying for the issue of a writ of mandamus or a writ in the
nature of mandamus or other writ, direction or order against
the State of Maharashtra (hereafter called the appellant)
calling upon it to refer the said dispute for industrial
adjudication under s. 10(1) and s. 12(5) of the Act. To
this application the company was also impleaded as an oppon-
ent. This petition was heard by Tendolkar J. He held that
s. 12(5) in substance imposed an obligation on the appellant
to refer the dispute provided it was satisfied that a case
for reference had been made, and he came to the conclusion
that the reason given by the appellant for refusing to make
a reference was so extraneous that the respondents were
entitled to a writ of mandamus against the appellant.
Accordingly he directed that a mandamus shall issue against
the appellant to reconsider the question of making or
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 14
refusing to make a reference under s. 12(5) ignoring the
fact that there was a slow-down and taking into account only
such reasons as are germane to the
231
question of determining whether a reference should or should
not be made.
Against this decision the appellant as well as the company
preferred appeals. Chagla, C. J., and Desai, J., who
constituted the Court of Appeal, allowed the two appeals to
be consolidated, heard them together and came to the
conclusion that the view( taken by Tendolkar J. was right
and that the writ of mandamus had been properly issued
against the appellant. The appellant and the company then
applied for and obtained a certificate from the High Court
and with that certificate they have come to this Court by
their two appeals Nos. 37 and 38 of 1957. These appeals
have been ordered to be consolidated and have been heard
together, and both of them raise the question about the
construction of s. 12(5) of the Act.
Before dealing with the said question it would be convenient
to state one more relevant fact. It is common ground that
during a part of the relevant year the respondents had
adopted go-slow tactics. According to the company the
period of go-slow attitude was seven months whereas
according to the respondents it was about five months. It
is admitted that under cl. 23(c) of the standing orders of
the company willful slowing down in performance of work, or
abatement, or instigation thereof, amounts to misconduct,
and it is not denied that as a result of the go-slow tactics
adopted by the respondents disciplinary action was taken
against 58 workmen employed by the company. The respon-
dents’ case is that despite the go-slow strategy adopted by
them for some months during the relevant year the total
production for the said period compares very favorably with
the production for previous years and that the profit made
by the company during the relevant year fully justifies
their claim for additional bonus. The appellant has taken
the view that because the respondents adopted go-slow
strategy during the relevant year the industrial dispute
raised by them in regard to bonus as well as classification
was not to be referred for adjudication under s. 12(5). It
is in the light of these facts that we have to consider
whether
232
the validity of the order passed by the appellant refusing
to refer the dispute for adjudication under s. 12(5) can be
sustained.
Let us first examine the scheme of the relevant provisions
of the Act. Chapter III which consists of ss. 10 and 10A
deals with reference of dispute to Boards, Courts or
Tribunals. Section 10(1) provides that where the
appropriate Government is of opinion that any industrial
dispute exists or is apprehended, it may at any time by
order in writing refer the dispute to one or the other
authority specified in cls. (a) to (d). This section is of
basic importance in the scheme of the Act. It shows that
the main object of the Act is to provide for cheap and
expeditious machinery for the decision of all industrial
disputes by referring them to adjudication, and thus avoid
industrial conflict resulting from frequent lock-outs and
strikes. It is with that object that reference is con-
templated not only in regard to existing industrial disputes
but also in respect of disputes which may be apprehended.
This section confers wide and even absolute discretion on
the Government either to refer or to refuse to refer an
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 14
industrial dispute as therein provided. Naturally this wide
discretion has to be exercised by the Government bona fide
and on a consideration of relevant and material facts. The
second proviso to s. 10(1) deals with disputes relating to a
public utility service, and it provides that where a notice
under s. 22 has been given in respect of such a dispute the
appropriate Government shall, unless it considers that the
notice has been frivolously or vexatiously given or that it
would be inexpedient so to do, make a reference under this
sub-section notwithstanding that any other proceedings under
this Act in respect of the dispute may have commenced. It
is thus clear that in regard to cases falling under this
proviso an obligation is imposed on the Government to refer
the dispute unless of course it is satisfied that the notice
is frivolous or vexatious or that considerations of
expediency required that a reference should not be made.
This proviso also makes it clear that reference can be made
even if other proceedings under the Act
233
have already commenced in respect of the same dispute.
Thus, so far as discretion of the Government to exercise its
power of referring an industrial dispute is concerned it is
very wide under s. 10(1) but is limited under the second
proviso to s. 10(1). Section 10(2) deals with a case where
the Government has to refer an industrial dispute and has no
discretion in the matter. Where the parties to an
industrial dispute apply in the prescribed manner either
jointly or separately for a reference of the dispute between
them the Government has to refer the said dispute if it is
satisfied that the persons applying represent the majority
of each party. Thus, in dealing with this class of cases
the only point on which the Government has to be satisfied
is that the persons applying represent the majority of each
party ; once that test is satisfied the Government has no
option but to make a reference as required by the parties.
Similarly s. 10A deals with cases where the employer and his
workmen agree to refer the dispute to arbitration at any
time before the dispute has been referred under s. 10, and
it provides that they may so refer it to such person or
persons as may be specified in the arbitration agreement;
and s. 10A(3) requires that on receiving such an arbitration
agreement the Government shall, within fourteen days,
publish the same in the official Gazette. Section 10A(4)
prescribes that the arbitrator or arbitrators shall
investigate the dispute and submit the arbitration award to
the appropriate Government; and s. 10A(5) provides that such
arbitrations are outside-the Arbitration Act. Thus cases of
voluntary reference of disputes to arbitration are outside
the scope of any discretion in the Government. That in
brief is the position of the discretionary power of the
Government to refer industrial disputes to the appropriate
authorities under the Act.
The appropriate authorities under the Act are the
conciliator, the Board, Court of Enquiry, Labour Court’)
Tribunal and National Tribunal. Section 11(3) confers on
the Board, Court of Enquiry, Labour Court, Tribunal and
National Tribunal all, the powers
30
234
as are vested in a civil court when trying a suit in
respect of the matters specified by cls. (a) to (d). A
conciliation officer, however, stands on a different
footing. Under s. 11(4) he is given the power to call for
and inspect any relevant document and has been given the
same powers as are vested in civil courts in respect of
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 14
Compelling the production of documents.
Section 12 deals with the duties of conciliation officers.
Under s. 12(1) the conciliation officer may hold
conciliation proceedings in the prescribed manner where an
industrial dispute exists or is apprehended. In regard to
an industrial dispute relating to a public utility service,
where notice under s. 22 has been given, the conciliation
officer shall hold conciliation proceedings in respect of
it. The effect of s. 12(1) is that, whereas in regard to an
industrial dispute not relating to a public utility service
the conciliation officer is given the discretion either to
hold conciliation proceedings or not, in regard to a dispute
in respect of a public utility service, where notice has
been given, he has no discretion but must hold conciliation
proceedings in regard to it. Section 12(2) requires the
conciliation officer to investigate the dispute without
delay with the object of bringing about a settlement, and
during the course of his investigation he may examine all
matters affecting the merits and the right settlement of the
dispute and do all such things as he thinks fit for the
purpose of inducing the parties to come to a fair and
amicable settlement. The duty and function of the
conciliation officer is as his very name indicates, to
mediate between the parties and make an effort at
conciliation so as to persuade them to settle their disputes
amicably between themselves. If the conciliation officer
succeeds in his mediation s. 12(3) requires him to make a
report of such settlement together with the memorandum of
the settlement signed by the parties to the dispute.
Section 18(3) provides that a settlement arrived at in the
course of conciliation proceedings shall be binding on the
parties specified therein. It would thus be seen that if
the attempts made by the conciliation officer to induce the
parties to come to a settlement succeeds and a settlement is
signed by them
235
it has in substance the same binding character as an award
under s. 18(3). Sometimes efforts at conciliation do not
succeed either because one of the parties to the dispute
refuses to co-operate or they do not agree as to the terms
of settlement. In such cases the conciliation officer has
to send his report to the appropriate Government under s.
12(4). This report must set forth the steps taken by the
officer for ascertaining the facts and circumstances
relating to the dispute and for bringing about a settlement
thereof together with a full statement of such facts and
circumstances and the reasons on account of which in his
opinion a settlement could not be arrived at. The object of
requiring the conciliation officer to make such a full and
detailed report is to apprise the Government of all the
relevant facts including the reasons for the failure of the
conciliation officer so that the Government may be in
possession of the relevant material on which it can decide
what course to adopt under s. 12(5). In construing s.
12(5), therefore, it is necessary to bear in mind the
background of the steps which the conciliation officer has
taken under s. 12(1) to (4). The conciliation officer has
held conciliation proceedings, has investigated the matter,
attempted to mediate, failed in his effort to bring about a
settlement between the parties, and has made a full and
detailed report in regard to his enquiry and his conclusions
as to the reasons on account of which a settlement could not
be arrived at.
Section 12(5) with which we are concerned in the present
appeals provides that if, on a consideration of the report
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 14
referred to in subsection (4), the appropriate Government is
satisfied that there is a case for reference to a Board,
Labour Court, Tribunal or National Tribunal, it may make
such reference. Where the appropriate Government does not
make such a reference it shall record and communicate to the
parties concerned its reasons therefore. This section
requires the appropriate Government to consider the report
and decide whether a case for reference has been made out.
If the Government is satisfied that a case for reference has
been made out it may make such
236
reference. If it is satisfied that a case for reference has
not been made out it may not make such a reference; but in
such a case it shall record and communicate to the parties
concerned its reasons for not making the reference which in
the context means its reasons for not being satisfied that
there is a case for reference. The High Court has held that
the word " may in the first part of s. 12(5) must be
construed to mean shall " having regard to the fact that the
power conferred on the Government by the first part is
coupled with a duty imposed upon it by the second part. The
appellant and the company both contend that this view is
erroneous. According to them the requirement that reasons
shall be recorded and communicated to the parties for not
making a reference does not convert " may " into " shall "
and that the discretion vesting in the Government either to
make a reference or not to make it is as wide as it is under
s. 10(1) of the Act. Indeed their contention is that, even
after receiving the report, if the Government decides to
make a reference it must act under s. 10(1) for that is the
only section which confers power on the appropriate
Government to make a reference.
It is true that s. 12(5) provides that the appropriate
Government may make such reference and in that sense it may
be permissible to say that a power to make reference is
conferred on the appropriate Government by s. 12(5). The
High Court was apparently inclined to take the view that in
cases falling under s. 12(5) reference can be made only
under s. 12(5) independently of s. 10(1). In our opinion
that is not the effect of the provisions of s. 12(5). If it
is held that in cases falling under s. 12(5) reference can
and should be made only under s. 12(5) it would lead to very
anomalous consequences. Section 10(3) empowers the
appropriate Government by an order to prohibit the
continuance of any strike or lock-out in connection with an
industrial dispute which may be in existence on the date of
the reference, but this power is confined only to cases
where industrial disputes are referred under s. 10(1). It
would thus be clear that if a reference is made only under
s. 12(5) independently of
237
s.10(1) the appropriate Government may have no power to
prohibit the continuance of a strike in connection with a
dispute referred by it to the tribunal for adjudication ;
and that obviously could not be the intention of the
Legislature. It is significant that ss. 23 and 24 prohibit
the commencement of strikes and lock-outs during the
pendency of proceedings there-’ in specified, and so even in
the case of a reference made under s. 12(5) it would not be
open to the employer to declare a lock-out or for the
workmen to go on strike after such a reference is made ; but
if a strike has commenced or a lock-out has been declared
before such a reference is made, there would be no power in
the appropriate Government to prohibit the continuance of
such a strike or such a lock-out. Section 24(2) makes it
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 14
clear that the continuance of a lock-out or strike is deemed
to be illegal only if an order prohibiting it is passed
under s. 10(3). Thus the power to maintain industrial peace
during adjudication proceedings which is so essential and
which in fact can be said to be the basis of adjudication
proceedings is exercisable only if a reference is made under
s. 10(1). What is true about this power is equally true
about the power conferred on the appropriate Government by
s. 10(4), (5), (6) and (7). In other words, the material
provisions contained in sub-ss. (3) to (7) of s. 10(1) which
are an integral Dart of the scheme of reference prescribed
by Chapter III of the Act clearly indicate that even if the
appropriate Government may be acting under s. 12(5) the
reference must ultimately be made under s. 10(1).
Incidentally it is not without significance that even in the
petition made by the respondents in the present proceedings
they have asked for a writ of mandamus calling upon the
appellant to make a reference under ss. 10(1) and 12(5).
Besides, even as a matter of construction, when s. 12(5)
provides that the appropriate Government may make such
reference it does not mean that this provision is intended
to confer a power to make reference as such. That power has
already been conferred by s. 10(1); indeed s. 12(5) occurs
in a Chapter dealing with the procedure, powers and duties
of the
238
authorities under the Act; and it would be legitimate to
hold that s. 12(5) which undoubtedly confers power on the
appropriate Government to act in the manner specified by it,
the power to make a reference which it will exercise if it
comes to the conclusion that a case for reference has been
made must be found in s. 10(1). In other words, when s.
12(5) says that the Government may make such reference it
really means it may make such reference under s. 10 (1).
Therefore it would not be reasonable to hold that s. 12(5)
by itself and independently of s. 10(1) confers power on the
appropriate Government to make a reference.
The next point to consider is whether, while the appropriate
Government acts under s. 12(5), it is bound to base its
decision only and solely on a consideration of the report
made by the conciliation officer under s. 12(4). The tenor
of the High Court’s judgment may seem to suggest that the
only material on which the conclusion of the appropriate
Government under s. 12(5) should be based is the said
report. There is no doubt that having regard to the back-
ground furnished by the earlier provisions of s. 12 the
appropriate Government would naturally consider the report
very carefully and treat it as furnishing the relevant
material which would enable it to decide whether a case for
reference has been made or not; but the words of s. 12(5) do
not suggest that the report is the only material on which
Government must base its conclusion. It would be open to
the Government to consider other relevant facts which may
come to its knowledge or which may be brought to its notice,
and it is in the light of all these relevant facts that it
has to come to its decision whether a reference should be
made or not. The problem which the Government has to
consider while acting under s. 12(5)(a) is whether there is
a case for reference. This expression means that Government
must first consider whether a prima facie case for reference
has been made on the merits. If the Government comes to the
conclusion that a prima facie case for reference has been
made then it would be open to the Government also to con-
sider whether there are any other relevant or material
239
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 14
facts which would justify its refusal to make a reference.
The question as to whether a case for reference has been
made out can be answered in the light of all the relevant
circumstances which would have a bearing on the merits of
the case as well as on the incidental question as to whether
a reference should nevertheless be made or not. A
discretion to consider all relevant facts which is conferred
on the Government by s. 10(1) could be exercised by the
Government even in dealing with cases under s. 12(5) provid-
ed of course the said discretion is exercised bona fide, its
final decision is based on a consideration of relevant facts
and circumstances, and the second part of s. 12(5) is
complied with.
We have already noticed that s. 12 deals with the
conciliation proceedings in regard to all industrial dis-
putes, whether they relate to a public utility service or
not. Section 12(1) imposes an obligation on the con-
ciliation officer to hold conciliation proceedings in regard
to an industrial dispute in respect of public utility
service provided a notice under s. 22 has been given. If in
such a dispute the efforts at conciliation fail and a
failure report is submitted under s. 12(4) Government may
have to act under s. 12(5) and decide whether there is a
case for reference. Now, in dealing with such a question
relating to a public utility service considerations
prescribed by the second proviso to s. 10(1) may be
relevant, and Government may be justified in refusing to
make a reference if it is satisfied that the notice given is
frivolous or vexatious or that reference would be
inexpedient. Just as discretion conferred on the Government
under s. 10(1) can be exercised by it in dealing with
industrial disputes in regard to non-public utility services
even when Government is acting under s. 12(5), so too the
provisions of the second proviso can be pressed into service
by the Government when it deals with an industrial dispute
in regard to a public utility service under s. 12(5).
It would, therefore, follow that on receiving the failure
report from the conciliation officer Government would
consider the report and other relevant material
240
and decide whether there is & case for reference. If it is
satisfied that there is such & case for reference it may
make a reference. If it does not make a reference it shall
record and communicate to the parties concerned its reasons
therefore. The question which &rises at this stage is
whether the word " may " used in the context means " shall
", or whether it means nothing more than " may " which
indicates that the discretion is in the Government either to
refer or not to refer.
It is urged for the respondent that where power is conferred
on an authority and it is coupled with the performance of &
duty the words conferring power though directory must be
construed as mandatory. As Mr. Justice Coleridge has
observed in Beg. v. Tithe Commissioners (1). " The words
undoubtedly are only empowering; but it has been so often
decided as to have become an axiom, that, in public
statutes, words only directory, permissory or enabling may
have & compulsory force where the thing to be done is for
the public benefit or in advancement of public justice ".
The argument is that s. 12(5) makes it obligatory on the
Government to record and communicate its reasons for not
making the reference and this obligation shows that the
power to make reference is intended to be exercised for the
benefit of the party which raises an industrial dispute and
wants it to be referred to the authority for decision. It
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 14
may be that the Legislature intended that this requirement
would avoid casual or capricious decisions in the matter
because the recording and communication of reasons
postulates that the reasons in question must stand public
examination and scrutiny and would therefore be of such a
character as would show that the question was carefully and
properly considered by the Government; but that is not the
only object in making this provision. The other object is
to indicate that an obligation or duty is cast upon the
Government, and since the power conferred by the first part
is coupled with the duty prescribed by the second part " may
" in the context must mean " shall ". There is considerable
force in
(1) (1849) 14 Q.B. 459, 474 : 117 E.R. 179, 185.
241
this argument. Indeed it has been accepted by the High
Court and it has been held that if the Government is
satisfied that there is a case for reference it is bound to
make the reference.
On the other hand, if the power to make reference is
ultimately to be found in s. 10(1) it would not be easy to
read the relevant portion of s. 12(5) as imposing an
obligation on the Government to make a reference. Section
12(5) when read with s. 10(1) would mean, according to the
appellant, that, even after considering the question, the
Government may refuse to make a reference in a proper case
provided of course it records and communicates its reasons
for its final decision. In this connection the appellant
strongly relies on the relevant provisions of s. 13. This
section deals with the duties of Boards and is similar to s.
12 which deals with conciliation officers. A dispute can be
referred to a Board in the first instance under s. 10(1) or
under s. 12(5) itself. Like the conciliation officer the
Board also endeavours to bring about a settlement of the
dispute. Its powers are wider than those of a conciliator
but its function is substantially the same; and so if the
efforts made by the Board to settle the dispute fail it has
to make a report under s. 13(3). Section 13(4) provides
that if on receipt of the report made by the Board in
respect of a dispute relating to a public utility service
the appropriate Government does not make a reference to a
Labour Court, Tribunal or National Tribunal under s. 10, it
shall record and communicate to the parties concerned its
reasons therefore. The provisions of s. 13 considered as a
whole clearly indicate that the power to make a reference in
regard to disputes referred to the Board are undoubtedly to
be found in s. 10(1). Indeed in regard to disputes relating
to non-public utility services there is no express provision
made authorising the Government to make a reference, and
even s. 13(4) deals with a case where no reference is made
in regard to a dispute relating to a public utility service
which means that if a reference is intended to be made it
would be under the second proviso to s. 10(1). Incidentally
this fortifies the conclusion that whenever
31
242
reference is made the power to make it is to be found under
s. 10(1). Now, in regard to cases falling under s. 13(4)
since the reference has to be made under s. 10 there can be
no doubt that the considerations relevant under the second
proviso to s. 10(1) would be relevant and Government may
well justify their refusal to make a reference on one or the
other of the grounds specified in the said proviso.
Besides, in regard to disputes other than those falling
under s. 13(4) if a reference has to be made, it would
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 14
clearly be under s. 10(1). This position is implicit in the
scheme of s. 13. The result, therefore, would be that in
regard to a dispute like the present it would be open to
Government to refer the said dispute under s. 12(5) to a
Board,, and if the Board fails to bring about a settlement
between the parties Government would be entitled either to
refer or to refuse to refer the said dispute for industrial
adjudication under s. 10(1). There can be no doubt that if
a reference has to be made in regard to a dispute referred
to a Board under s. 13 s. 10(1) would apply, and there would
be no question of importing any compulsion or obligation on
the Government to make a reference. Now, if that be the
true position under the relevant provisions of s. 13 it
would be difficult to accept the argument that a prior stage
when Government is acting under s. 12(5) it is obligatory on
it to make a reference as contended by the respondent.
The controversy between the parties as to the construction
of s. 12(5), is, however, only of academic importance. On
the respondents’ argument, even if it is obligatory on
Government to make a reference provided it is satisfied that
there is a case for reference, in deciding whether or not a
case for reference is made Government would be entitled to
consider all relevant facts, and if on a consideration of
all the relevant facts it is not satisfied that there is a
case for reference it may well refuse to make a reference
and record and communicate its reasons therefore. According
to the appellant and the company also though the discretion
is with Government its refusal to make a reference can be
justified only if it records and communicates its reasons
therefore and it appears that the
243
said reasons are not wholly extraneous or irrelevant. In
other words, though there may be a difference of emphasis in
the two methods of approach adopted by the parties in
interpreting s. 12(5) ultimately both of them are agreed
that if in refusing to make a reference Government is
influenced by reasons which are wholly extraneous or
irrelevant or which are not germane then its decision may be
open to challenge in a court of law. It would thus appear
that even the appellant and the Company do not dispute that
if a consideration of all the relevant and germane factors
leads the Government to the conclusion that there is a case
for reference the Government must refer though they
emphasise that the scope and extent of relevant
consideration is very wide; in substance the plea of the
respondents that " may " must mean " shall " in s. 12(5)
leads to the same result. Therefore both the methods of
approach ultimately lead to the same crucial enquiry : are
the reasons recorded and communicated by the Government
under s. 12(5) germane and relevant or not ?
It is common ground that a writ of mandamus would lie
against the Government if the order passed by it under s.
10(1) is for instance contrary to the provisions of s.
10(1)(a) to (d) in the matter of selecting the appropriate
authority ; it is also common ground that in refusing to
make a reference under s. 12(5) if Government does not
record and communicate to the parties concerned its reasons
therefore a writ of mandamus would lie. Similarly it is not
disputed that if a party can show that the refusal to refer
a dispute is not bona fide or is based on a consideration of
wholly irrelevant facts and circumstances a writ of mandamus
would lie. The order passed by the Government under s.
12(5) may be an administrative order and the reasons
recorded by it may not be justiciable in the sense that
their propriety, adequacy or satisfactory character may not
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 14
be open to judicial scrutiny ; in that sense it would be
correct to say that the court hearing a petition for
mandamus is not sitting in appeal over the decision of the
Government : nevertheless if the court is satisfied that the
reasons given
244
by the Government for refusing to make a reference are
extraneous and not germane then the court can issue, and
would be justified in issuing, a writ of mandamus even in
respect of such an administrative order. After an elaborate
argument on the construction of s. 12(5) was addressed to us
it became clear that on this part of the case there was no
serious dispute between the parties. That is why we think
the controversy as to the construction of s. 12(5) is of no
more than academic importance.
That takes us to the real point of dispute between the
parties, and that is whether the reason given by the
appellant in the present case for refusing to make a
reference is germane or not. The High Court has held that
it is wholly extraneous and it has issued a writ of mandamus
against the appellant. We have already seen that the only
reason given by the appellant is that the workmen resorted
to go slow during the year 1952-53. It would appear prima
facie from the communication addressed by the appellant to
the respondents that this was the only reason which weighed
with the Government in declining to refer the dispute under
s. 12(5). It has been strenuously urged before us by the
appellant and the company that it is competent for the
Government to consider whether it would be expedient to
refer a dispute of this kind for adjudication. The argument
is that the object of the Act is not only to make provision
for investigation and settlement of industrial disputes but
also to secure industrial peace so that it may lead to more
production and help national economy. Co-operation between
capital and labour as well as sympathetic understanding on
the part of capital and discipline on the part of labour are
essential for achieving the main object of the Act; and so
it would not be right to assume that the Act requires that
every dispute must necessarily be referred to industrial
adjudication. It may be open to Government to take into
account the facts that the respondents showed lack of
discipline in adopting go-slow tactics, and since their
conduct during a substantial part of the relevant year
offended against the standing orders that was a fact which
245
was relevant in Considering whether the present dispute
should be referred to industrial adjudication or not. On
the other hand, the High Court has held that the reason
given by the Government is wholly extraneous and its refusal
to refer the dispute is plainly punitive in character and as
such is based on considerations which are not at all germane
to s. 12(5).6 This Court has always expressed its
disapproval of breaches of law either by the employer or by
the employees, and has emphasised that while the employees
may be entitled to agitate for their legitimate claims it
would be wholly wrong on their part to take recourse to any
action which is prohibited by the standing orders or
statutes or which shows wilful lack of discipline or a
concerted spirit of non-co-operation with the employer.
Even so the question still remains whether the bare and bald
reason given in the order passed by the appellant can be
sustained as being germane or relevant to the issue between
the parties. Though considerations of expediency cannot be
excluded when Government considers whether or not it should
exercise its power to make a reference it would not be open
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 14
to the Government to introduce and rely upon wholly
irrelevant or extraneous considerations under the guise of
expediency. It may for instance be open to the Government
in considering the question of expediency to enquire whether
the dispute raises a claim which is very stale, or which is
opposed to the provisions of the Act, or is inconsistent
with any agreement between the parties, and if the Govern-
ment comes to the conclusion that the dispute suffers from
infirmities of this character, it may refuse to make the
reference. But even in dealing with the question as to
whether it would be expedient or not to make the reference
Government must not act in a punitive spirit but must
consider the question fairly and reasonably and take into
account only relevant facts and circumstances. In
exercising its power under s. 10(1) it would not be
legitimate for the Government for instance to say that it
does not like the appearance, behaviour or manner of the
secretary of the union, or even that it disapproves of the
political
246
affiliation of the union, which has sponsored the dispute.
Such considerations would be wholly extraneous and must be
carefully excluded in exercising the wide discretion vested
in the Government. In the present case it is significant
that the company has voluntarily paid three months bonus for
the relevant year not withstanding the fact that the workmen
had adopted go-slow tactics during the year, and the report
of the conciliator would show prima facie that he thought
that the respondents’ claim was not at all frivolous. The
reasons communicated by the Government do not show that the
Government was influenced by any other consideration in
refusing to make the reference. It is further difficult to
appreciate how the misconduct of the respondents on which
the decision of the Government is based can have any
relevance at all in the claim for the classification of the
specified employees which was One of the items in dispute.
If the work done by these employees prima facie justified
the claim and if as the conciliator’s report shows the claim
was in Consonance with the practice prevailing in other
comparable concerns the misconduct, of the respondents
cannot be used as a relevant circumstance in refusing to
refer the dispute about classification to industrial
adjudication. It was a claim which would have benefited the
employees in future and the order passed by the appellant
deprives them of that benefit in future. Any considerations
of discipline cannot, in our opinion, be legitimately
allowed to impose such a punishment on the employees. Simi-
larly even in regard to the claim for bonus, if the
respondents are able to show that the profits earned by the
company during the relevant year compared to the profits
earned during the preceding years justified their demand for
additional bonus it would plainly be a punitive action to
refuse to refer such a dispute solely on the ground of their
misconduct. In this connection it may be relevant to
remember that for the said misconduct the company did take
disciplinary action as it thought fit and necessary, and yet
it paid the respondents bonus to which it thought they were
entitled. Besides, in considering the question
247
as to whether a dispute in regard to bonus should be
referred for adjudication or not it is necessary to bear in
mind the well-established principles of industrial
adjudication which govern claims for bonus. A claim for
bonus is based on the consideration that by their
contribution to the profits of the employer the employees
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 14
are entitled to claim a share in the said profits, and so
any punitive action taken by the Government by refusing to
refer for adjudication an industrial dispute for bonus
would, in our opinion, be wholly inconsistent with the
object of the Act. If the Government had given some
relevant reasons which were based on, or were the
consequence of, the misconduct to which reference is made it
might have been another matter. Under these circumstances
we are unable to bold that the High Court was in error in
coming to the conclusion that the impugned decision of the
Government is wholly punitive in character and must in the
circumstances be treated as based on a consideration which
is not germane and is extraneous. It is clear that the Act
has been passed in order to make provision for the
investigation and settlement of industrial disputes, and if
it appears that in cases falling under s. 12(5) the
investigation and settlement of any industrial dispute is
prevented by the appropriate Government by refusing to make
a reference on grounds which are wholly irrelevant and
extraneous a case for the issue of a writ of mandamus is
clearly established. In the result we confirm the order
passed by the High Court though not exactly for the same
reasons.
The appeals accordingly fail and are dismissed with costs,
one set of hearing fees.
Appeals dismissed.
248