STATE OF BOMBAY versus K. P. KRISHNAN AND OTHERS. (AND CONNECTED APPEAL)

August r8.

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STATE OF BOMBAY v. K. P. KRISHNAN Ar-.D OTHERS. (AND CONNECTED APPEAL) (B. P. SINHA, c. J., J. L. KAPUR, P. B. GAJENDRAGADKAR, K. SuBB<). RAo and K. N. WANCHOO, JJ.)

Industrial Dispute - Failure of conciliation - Appropriate Government's power of reference~Order of refusal-Ilea.sons, if must be germane to the issue-Classification-Bonus-Industrial Dis putes Act, r947 (r4 of r947), ss. r2(5), ro(r).

Section r2(5) of the Industrial Disputes Act, r947, properly construed, does not by itself confer the power on the appropriate Government to make a reference. That power is really contai ned in s. ro(r) of the Act. In deciding whether it should or should not make a reference under s. 12(5) of the Act the appro priate 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. ro(r), and where it refused to make a reference it must record and com municate its reasons therefor to the parties concerned. Such reasons, however, must be germane, and not extraneous or irrele vant, to the dispute.

But in exercising such wide powers as are conferred by s. 10(1), the appropriate Government must act fairly and reason ably 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 additio nal 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 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 considera tions 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.

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The claim of bonus being also prima facic justified by the profits earned <luring the relevant yrar in accorcianrr ,,·ith v.ell St(lte 0 / Bombay ~:l'ttlcd principles of industrial adjudication, thr order of refusal "·as in the nature of a punitive action that y,.·as ''•h01ly inr.onsis-

v. I<1i.~li11a11 trnt with the object of the Act.

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6- Other.;,

CrvIL APPELLATE ~OS. 37 & 38 of 1957.

JURISDICTION: Civil Appeals

Appeals from the judgment and order dated August 30, 1955, of the former Bombay High Court in Appeals Nos. 55 and 56 of I 955, a.rising 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, R. Gana pathy Iyer and R. H. Dhehar, for the appellant (in C. A. No. 37 of 57) and respondent l"o. 6 (in C. A. No. 38/57).

S. D. Vimadalal and I. N. Shroff, for the appellant (in C. A. No. 38/57) and respondont No. 6 (in C. A. No. 37/57.)

Rajni Patel, S. N. Andley, J.B. Dadachanji, Ramesh war Nath and P. L. Vohra, for respondents Noa. I 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

Gajrnd,acadko' J. GAJENDRAGADKAR J.-These two appeals arioe from an industrial disputo betwcon the Firestone Tyre and Rubber Co. of India Ltd., (hereafter called the company) and its workmen (here!'fter called the res pondents), and they raise a short and interesting question about the construction of s. 12(5) of the Industrial Disputes Act 14 of 194 7 (hereafter called the Act). lt appears that the respondents addressed four demands to the company ; they were in respect of gratuity, holidays, classification of certain emplo yees and for the payment of an unconditional bonus for the financial year ended October 31, 1953. The respondents' union also addressed t.hc Assistant Com missioner .of Labuur, Bombay, forwarding to him a

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copy of the said demands, and intimating to him that since the company had not recognised the respon- dents' union there was no hope of any direct negotia- State 0~.Bombay tions between the union and the company. The K. P. J«ishnan Assistant Commissioner of Labour, who is also the conciliation officer, was therefore requested to com- mence the conciliation proceedings at an early date. Cajendragadkar ]. Soon thereafter the company declared a bonus equi- valent to 1/4 of the basic earnings for the yea1 1952- the company 53. The respondents then informed that they were 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 clemands made by the respondents and admitted into .conciliation only two of them ; they were in respect. of the classification of certain employees a.nd the bonus for the year 1952-53; the two remaining demands were not.ohdmitted 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 the parties set out the arguments urged by both before him in respect of both the items of dispute. In regard to the rnspondents' 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 con- siderable substance in the case made out by the respondents for payment of additional bonus. The con- ciliator 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

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ta.ken 011 the monthly-pa.id roll appeared to be in con- sona.nce with the practice prevailing iu other com- para. e concerns. The management, however, told K. 1•. Kmhnan the concilia.t-Or that the said employees ha.d received very liberal increments and had reached the maxi. mum of their scales and so the management saw no Gaje,.dragadk°' J. reason to accede t-0 the demand for classification. On receipt of this report the Government of Bombay (now the Government of Maharashtra.) considered the matter and ca.me to the conclusion that the dispute in question should not be referred to a.n industrial tribu nal for its adjudication. Accordingly, a.s required by s. 12(5) on December II, 1954, the Government com municated to the respondents the said decision and stated that it does not propose t-0 refer the said dispute to the tribunal under s. 12(5) "for the reason that the workmen resorted to go slow during the year 1952- 53 ". It is this decision of the Government refusing to refer the dispute fo~ 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 manda-· mus or· a writ in the nature of ma.ndamus or other writ., direction or order against the State of ~faha­ rashtra (hereafter ca.lied the appellant) calling upon it to refer the said dispute for industrial adjudication under B. 10(1) and s. 12(5) of the Act. To this appli cation the company was also impleaded as an oppon ent. This petition was heard by Tendolkar J. He held thats. 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 ma.de, and he ca.me to the conclusion that the reason given by the appellant for refusing to make a reference was so extraneous that the respondents were entitled t-0 a writ of mandamus against the appellant. Accordingly he directed that a mandamus shall issue against the appellant to reconsider the question of ma.king or refusing to make a reference under s. 12(5) ignoring the fact that there was a slow-down and ta.king into account only such reasons a.a a.re germane to the

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question of determining whether a reference should or should not be made.

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h gainst t 1s uecis10n t e appe ant as we as t e

State of Bombay v. company preferred appeals. Chagla, C. J., and K. P. Krishnan Desai, J., who constitut.ed the Court of Appeal, allow- ed the two appeals to be consolidated, heard them together and came to the conclusion that the view Gajendragadkar J. ta;ken 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 certific!l<te 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.

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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 wilful slowing down in performance·of work, or abatement, or insti gation thereat: 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 ~he total production for the said period compares very favourably 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 di3pute 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

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the validity of the order passed by tho appellant refu- sing to refer the dispute for adjudication under s. 12{5)

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· can be sustained.

K. P. Kli<hHon e- Others

· Lot us first examine the scheme of the relevant provisions of the Act. Chapter III which eonsists of ss. 10 and lOA dee.ls with reference of dispute to G•1••d•«~adha• 1 Boa.rcls, Courts or Tribunals. Section 10(1) pmvides tha.t whore the appropriate Government is of opinion that any industrial dispute exists or is e.pprehendod, it may at any time by order in writing refer the dis pute to one or the other authority specified in els. (e.) 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 machi nery for tho decision of all industrial disputes by referring them to e.djudice.tion, and thus a.void indus trial conflict resulting from frequent lock-outs and It is with that object that reference i•' con strikes. 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 e.n industrial dispute as therein provided. :\a.ture.Uy this wide discretion. has to bo exorcised by the Government bona fide and on e. con sideration of relevant and material facts. The second proviso to s. 10(1) dee.ls with disputes relat.ing to a public utility service, and it provides that where e. notice undor s. 22 has been given in respect of such e. dispute the a.pproprie.te Government shall, unless it considers that the notice has been frivolously or vexa tiously given or that it would be inexpedient so to do, make a reference under this sub-section notwithstand ing that any other proceedings under this Act in res pect of tho 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 he mado. This proviso abo makes it clear that referenc•l can be made even if other proceedings under the Act

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ha.ve a.lrea.dy commenced in respect of the sa.me dis- pute. Thus, so fa.r a.s discretion of the Government stat, of Bombay to exercise its power of referring a.u industrial dispute is concerned it is very wide under s. 10(1) but is limit- K. P, K6shnan ed under the second proviso to s. 10(1). Section 10(2) dee.ls with. a ca~e where the Governm~nt has t? refer Gajrnd;;;;,dkar J. an industrial dispute a.nd has no d1scret1on Ill the matter. Where the parties to a.n industrial dispute apply in the prescribed manuer either jointly or sepa- rately for a reference of the dispute between them the Government has to refer the sa.id dispute if it is satis- fied 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 majorty of each party ; once that test •is satisfied the Government has no option but to make a refer. ence a.s required by the parties. Similarly s. lOA 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 agree ment; and s. 10A(3) requires that on receiving such a.n arbitration agreement the Government shall, with in 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 t_he appropriate Govern ment; and s. 10A(5) provides that such arbitrations a.re outside the Arbitration Act. Thus cases of volun tary 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

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as are vested in 8, civil court when trying a suit in respect of the matters specified by els, (a) to (d), A concilia.tion officer, however, stands on a different J{. P. Krishna" foot.ing, Under H. 11(4) he is given the power to call for and inspect. any refovant document and has been given the same powers as are vested iu civil courts in

. Gar,,J•agad••r f. respect of compelling the production of documents.

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Section 12 dealH with tho duties of conciliation officers. Under s. 12( 1) the conciliation officer may hold conciliation proceedings in the prescribed manner wht're an industrial dispute exiots or is apprehended. ln regard to au industrial dispute relating to a. public utility service, where notice under s. 22 has been gh·en, the eouciliatiou officer shall hold conciliation proceed ings in respect of it. The effoct 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 discretiOu either to hold conciliation proceed ings or not, in regard to a dispute in respect ofa µublic utility service, where notice has been given, he ha.H 110 discretion but must hold conciliation proceediugs in regard to it. Section 12(2) requires the conciliation officer to investigate the dispute without delay with the object of bringing a.bout a settlement, and dnriug the course of his inveHtiga.tion he may examine ail matters affecting the merits and t.lie right settlement of the dispute and do all such thinga as hf: thinks fit for the purpose of ind uciug the parties tu come to a fair and amicable set,tlemont. The duty and function of the conciliation offic<•r is, a.s liis very name> ir>dicr.tes, to mediate between tho parties and make an effort at conciliation so as to persuade them to settle their dis putes amicably between themselves. Jf 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 scttlem<"nt arrived at in the eourse of coucilintion proceedings shall be binding on the parties specified t.hercin. Tt would thus be seen that if the attempts made by the conciliation officer to induce tho parties to come to a settlement succeeds and a. settlument is signed by them

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it has in substance the same binding character as an award under s. 18(3). Sometimes efforts at concilia- tion o not succee eit er ecause one o the parties f to the dispute refuses to co-operate or they do not agree K. P. K•i;hnan as to the terms of settlement. In such cases the con- ciliation officer has to send his report to .the appro- priate Government under s. 12(4). This report must Ga1endragadkar J. 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 opinon a settle- ment 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 t,he con- ciliation officer so that the Government ma.y be in possession of the relevant material on which it can decide what course to adopt under s. 12(5). In cone struing s. 12(5), therefore, it is necessary to bear in mind the background of the steps which the concilia- tion officer has taken under s. 12(1) to (4). The con- ciliation officer has held conciliation proceedings, bas investigat<Jd the matter, attempted to mediate, failed in his effort to bring about a settlement between the parties, and has made a full an(! detailed report in regard to his enquiry and his conclusions as to the reasons on account of which a settlement could not be arrived a.t.

Section 12(5) with which we are concerned in the present appeals provides that if, on a consideration of the report referred to in sub-section (4), the appropriate Government is satisfied that there is a case for refer ence to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate Govermenment does not make such a reference it shall record and communicate to the par ties concerned therefor. 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

its reasons

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reference. If it is satisfied that a. ca.se for reference has not been ma.de out it may not make such a. reference; 1 ' of Hombay but in such a. case it she.II record and communicate to K. P. K'ish""" the parties concerned its reasons for not ma.king the reference which .in the context means its reasons for not being satisfied that there is a case for reference. Gaj••d,agadka' J. 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 fa.ct that the power conferred on the Government by the first pa.rt is coupled with a duty imposed upon it by the second part. The appel lant and the company both contend that this view iR erroneous. According to them tho requirement that reasons shall be recorded and communicated to the parties for not ma.king 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 refer ence it must a.ct under s. 10(1) for that is the only the appropriate section which confers power on Government to make a reference.

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It is true thats. 12(5) provides that the appropriate Government may make such reference and in that .sense it ma.y be permissible t-0 sa.y that a. p-0wer to make reference is conferred on the appropriate Govnn ment 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 ma.de only under s. 12(5) In our opinion that is not independently of s. 10(1). the effect of the provisions of s. 12(5). If it is held that in cases falling under s. 12(5) reference can a.nd should be ma.de 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 a.ny 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 a.re referred under s. 10(1). It would thus be clear that if a. refer ence 1s ma.de only under s. 12(5) independently of

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State of Bombay v.

s. 10(1) the appropriate Government may have no Power to prohibit the continuance of a strike in con- nection with a dispute referred by it to the tribunal for adjudication ; and that obviously could not be the K. P. K,i,hnan 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- Ga;end,agadka' J. in specified, and so even in the case of a reference made under s. 12(5) it would not be open to the emp- loyer to declare a Jock-out or for the workmen to go on strike after such a reference is made ; but if a strike has commenced or a Jock-out has been declared before such a reference is made, there would be no power in the appropriate Government to prohibit the continu- ance of such a strike or such a Jock-out. Section 24(2) makes it clear that the continuance of a Jock-out or strike is deemed to be illegal only if an order prohibit- ing it is passed under s. 10(3). Thus the power to maintain industrial peace during adjudication proceed- ings which is so essential and which in fact can be said to be the basis of adjudication proceedings is exer- cisable 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 part 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 Incidentally it is not without made under s. 10( l ). significance that even in the petition made by the res- pondents 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 refer ence as such. That power has already been conferred by s. 10(1); indeed s. 12(5) occurs in a Chapter deal ing with the procedure, powers and duties of the

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State of liombay v.

authorities under the Act; and it would be legitimate to hold thats. 12(5) which undoubtedly confers power on t e appropriate Government t•J act in the manner K. P. r:,;,1,,,a,, specified by it, the power to ma.kc 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). Ga1rnd.agadka. 1- In other words, when s. 12(5) says that the Govern ment may make such reference it- really means it may make such reference tmder s. IO ( l). Therefore it,, would not be reason11.ble to hold that s. 12(5) by itself and independently of s. 10(1) confors power on the a.ppropriat.e Government to make a. reforence.

Tho next point to consider is whether, while the appro;iri11.te Govornment acts undnr s. 12(5), it is bound to ha.se its decision only and solely on a. con sideration 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 Govern ment under s. 12(5) should be based is tho said report. ThNe 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 whe ther 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 mat.Prial on wbich Government must base its con clusion. It would be open to the Government to con sider other relevant facts which may come to its knowledge or which may be brought to itR notice, and . it is in the light of a.II these relevant facts that it ha.a 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. l2(5)(a.) is whe ther 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 com'ls to tho conclusion that a. prima. facie case for reference has been made then it would be open to the Government also lo con sider whether there a.ro any other rolevant or material

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facts which would justify its refusal to make a refer- ence. The question as to whether a case for refer- ence has been made out can be answered in the light of all the relevant circumstances which would have a K. P. [{,;,1.nan bearing on the merits of the case as well as on the inci- dental question as to w he th er a referenee should nevertheless be made or not. A discretion· to consider Ga1endrngadkar f · all relevant facts which is conferred on the Govern- ment by s. 10(1) could be exercised by the Govern- ment 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.

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We have already noticed thats. 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 satis fied that the notice given is frivolous or vexatious or that reference would be inexpedient. Just as discre tion 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 provi simrn 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 fai lure report from the conciliation officer Government would consider the report and other relevant material

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a.nd decide whether . there is a. ca.se for reference. If it is satisfied tha.t there is such a. ca.se for reference k 1t oes not ma. e a. re er. 1t ma.y ma. e a. re1erence. K P. K"''"'"" ence it shall record a.nd communicate to the pa.rties concerned its reasons therefor. The question which . . a.rises a.t this sta.ge is whether the word "ma.y " used Ga;endrnc•dk•, J. in the context mea.ns " aha.II ", or whether it means nothing more than " may " which indicates tha.t the discretion is in the Government either to refer or not to refer.

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f

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It is urged for the respondent tha.t where power is conferred on a.n authority a.nd it is coupled with. the performance of a. duty the words conferring power though directory must be construed a.s mandatory. As Mr. Justice Coleridge ha.s observed in Reg. v. Tithe ). "The words undoubtedly a.re only Commissioners (1 empowering ; but it ha.s been so often decided a.s to ha.ve become an a.xiom, tha.t, in public statute,, words only directory, permissory or enabling may ha.ve a. 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 res.sons for not ma.king the reference a.nd this obliga.tion shows tha.t the power to make reference is intended to be exercised for the benefit of the pa.rt y which raises a.n industria.l dispute a.nd wa.nts it to be reforred to the authority for decision. It ma.y bo tha.t the Legisla.ture intended tha.t this requirement would a.void ca.sua.l or capricious decisions in the ma.tter beca.use the record ing a.nd communication of reasons postulates tha.t the reasons in question must stand public exa.mina.tion a.nd scrutiny a.nd would therefore be of such a. cha.r a.cter a.s would show tha.t the question wa.s ca.refully a.nd properly considered by the Government; but tha.t is not the only object in ma.king this provision. The other object is to indicate tha.t an obligation or duty is ca.st upon tho Government, a.nd since the power conferred by the first pa.rt is coupled with the duty prescribed by the second pa.rt" may " in the context must mea.n" aha.II ". There is considerable force in

(1) (18+9) If Q.B. 159. 47+: 117 E.R. 179, 185.

z960

- ; ; b 5 '"" ·~. om ay K. P. Krishnan & Others . - ·

1 !3.C.R. SUPREME COURT REPORTS

241

this argument. Indeed it has been accepted by the High Court and it has been held that if the Govern- ment 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 Ga;endragadkar J. obligation on the Government to make a reference. Section 12(5) when read withs. 10(1) would mea.n, according to the appellant, that, even after consider- ing the question, the Government ma.y refuse to make a reference in a proper . case provided of course it records and communicates its reasons for its final deci. In this connection the appellant strongly relies sion. on the relevant provisions of s. 13. This section <lea.ls 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 lloard also endeavours to bring about a settlement of ,the dispute. Its powers are wider than those of a concilia~r 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). Sec- tion 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 therefor. The provisions of s. 13 considered as a whole clearly indicate that the power to make a refer- ence in regard to disputes referred to the Board are undoubtedly to be found ins. 10(1). Indeed in regard to disputes relating to non-public utility services there is no express provision made authorising the Govern- ment 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). Incid- entally this fortifies the conclusion that whenever

31

242

SUPREME COURT REPORTS

[1961]

-

v. ·

'96°

,,. Others

reference is made the power to make it is to be found St~(• vf Bomba under s .. 10(1). Now, in regard to cases falling under Y s. 13(4) smce the reference has to be made under s. 10 K. P. Krishnan there can be no doubt tha.t the considerations relevant under the eecond proviso to s. 10(1) would be relevant · · and Government may well justify their refusal ~o Gajendra1adhr J. make a reference on one or the other of the grounds specified in the said proviso. Besides, in regard to dis putes other than those falling under s. 13(4) if a refer ence has to be made, it would 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 Boa.rd, a.nd if the Boa.rd 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 ha.s to be ma.de in regard to a dis pute referred to a. Boa.rd under s. 13 s. 10(1) would apply, and there would be no question of importing auy compulsion or obligation on the Government to make a reference. Now, if tha.t be the true position under the relevant provisions of s. 13 it would be diffi cult to a.ocept the argument tha.t a. prior sta.ge when Government is acting under s. 12(5) it is obligatory on it to ma.ke a reference e.s contended by the respondent. The controversy between the parties a.s to the con struction of s. 12(5) is, however, only of academic importance. On the respondents' argument, even if it is obligatory on Government to make e. reference provided it is satisfied that there is a. case for reference, iu deciding whether or not e. oa.se for reference is made Government would be entitled to consider a.II relevant facts, a.nd if on a consideration of a.II the rele vant facts it is not satisfied that there is a case for reference it ma.y well refuse to make e. reference a.ncl record e.nd communicate its reasons therefor. Accord ing to the a.ppelle.nt and the company also though the discretion is with Government its refusal to make e. reference ce.n be justified only if it records e.nd com municates its reasons therefor e.nd it a.ppea.rs that the

1 S.C.R. SUPREME COURT REPORTS

243

.;;, others

,960 -

sa.id rea.sons 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 State of Bombay the parties in interpreting s. 12(5) ultimately both of K. P. ~risknan them ere a.greed that if in refusing to make a refer- ence Government is influenced by reasons which are wholly extraneous or irrelevant or which are notGaJendragadkar J. 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 ex- in sub-· tent of relevant consideration is very wide; stance 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 re- corded and communicated by the Government under s. 12(5) germane and relevant or not ?

It is ,;otnmon ground that a writ of mandamus would he against the Government if the order passed by it under s. 10(1) is for instance contrary to the pro visions of s. lO(l)(a) to (d) in the matter of selecting tho 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 therefor a writ of manda mus 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 manda mus 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 satisfac tory character may not 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; never theless ff the court is satisfied that the reasons given

244

SUPRE}!E COt;RT IiEPORTS

[I!illl]

v.

r96o

,-;. Others

by the Government for refusing to make a. reference State of 801111,,.,, ~ro extra.neons a.nd n~t g?~ma.~e t~cn, the court, ca.n · issue, and would be JU'3t1tied m 1ssumg, a. writ of 1<. r. I<"'"""" ma.nda.mus even in reRpcct of such a.n a.dministrativo order. After a.n elaborate 11.rgument on the construc tion of s. 12(5) wa.s addressed to us it became clear Ga;cnd•agadka• J. that on this pa.rt of the c11.se there W!l.S no serious dis. pute between the parties. That is why we think the controverny as to the construction of s. 12(5) is uf no more tba.n a.ciirlemic importance.

That takes us to tho real point of rlispute between the parties, a.nd that is whether the reason given by the appellant in the present ca.an for refusing to make a. reference is germane or not. The Higb Court has held that it iR wholh· !'Xlraneous and it ha8 i~sued a writ of mandamus against the appellant. We have already seen that the only reason given by the appel lant is that the workmen resorted to go slow during It would appear primn. facie from the year 1952 53. 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 It hits been strenuously urged dispute under 8. 12(5). before us by t be appellant and the company that it is competent for the Government to consider whether it would be <'xpedient to refer a dispute of this kind for a<ljudiea.tion. The argument is that. the object of the Act is not only t.o make provision for inYcstigation a.nd settlement of industrial disputes but also to secure industrial peace so that it may lead to more production and help national economy. Co-op<'ration botwec11 capita.I and labour 11.s well as sympathetic understand in~ 011 the pa.rt of capital and discipline on the part of labour am e"senf.ial for achievin~ the main object of the Act; and so it would not be right tu 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 8howcd lack of discipline in adopting go-slow tactics, and since their c-011duct <luring a substantial part of the rrleva.nt yl'ar offend ed against the standing orders that was a fact which

1 S.C.R. SUPHEME COUHT HEPOHTS

245

v.

1960

{~ ot11m

was relevant in considering whether the present dis- pute should be referred to industrial adjudicatiou or State of Bombay not. On the other hand, the High Court has held that the reason given by the Government is wholly K. l'. Iirishnan extraneous and its refusal to refer the dispute is plain- ly punitive in character and as such is based on . . - considerations which are not at all germane to s. 12(5). Ga1wdrngadkar f. This Court has always expressed its. disapproval of breaches of law either by the employer or by the em- ployees, and has emphasised that while the employees may be entitled to agitate for their legitimate clitims 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 disci- pline or a concerted spirit of non-co-operation with the employer. Even so the questiou still remains whether the bare and bald reason given in the order passed by the appellant can be sustained as bring germane or relevant to the issue between the parties. Though considerations of expedim1cy cannot be excluded when Government considers whether or not it should exercise its power to make a reference it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous con- siderations under the guise of expediency. J t 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 oppoRP-d to the provisions of the Act,· or is inconsistent with any agreement between the parties, and if the Govern ment comes lo 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 inake the reference Government must not a.ct in a punitiv'e· spirit but must consider the question fairly and reasonably and take into account oulv relevant ·facts and circumstances. In exercising its power under s. 10(1) it would not he legitimate for the Government for instance to say ,that it does not like die appear ance, behaviour, or manner of tho secretary of the union, or even tha~ it cli~approves of the political

246

SUPHE:l-lE COU!tT HEPOHTS

LI96I]

0

f

b

d

d

i96o

& others --

Stale of Bon1bay v.

K. P. liw•••• discretion vested in the Government.

affiliation of the uuion, which has sponsorri the dis pute. Such considerations would be wholly extraneous ] 'd h ' in exercising t. e w1 e an must e care ully exc ude In the present case it is significant that the company has voluntarily pa.id three months bonus for the relevant year not- G•;rnd>•godka, J. 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 a.II frivolous. The reasons communicated by the GO\·ernment do not show that tho 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 tho decision of the Government. is hased can have any relevance at all in the claim for the classification of the specified emplo yees which was one of the it~ms 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 tho respondents cannot be used as a relevant circum stl\nce in refusing to rPfer the dispute a.bout classifica tion to industrial adjudication. lt was a claim which would hR.ve bcnefiteri the cm µloyees in future and the order passed by tbe appellant deprives them of that benefit in furtue. Any considerations of disci pline cannot, in our opinion, be legitimately allowed to impose such a. punishment on the employees. Simi la.rly, eveu in reg;i.rd to the claim for bonus, if tho respondents a.re able to 8how that the profits ca.med by the company during the relevant year compared to the profits cu.med during the preceding years ju8ti fiod their dema.nd for additional hon us it would plain ly be a punitive action ~o 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 disci plinary action as it thougl1t fit a.nd nccessa.ry, a.nd yet it paid the respondent8 bonu~ to which it thought they were entitled. Besides, in considering the question

1 S.C.R. SUPREME COURT REPORTS

247

-

.

I

1

i96o

& Others

Slate of Be»nbay v.

as to whether a d;spute in regard to bonus should be referred for adjudication or not it is necessary to bear in mind the wel -established princip es of indus- trial adjudication which govern claims for bonus. A K. P. Krishnan claim for bonus is based on the consideration that by · their contribution to the profits of the employer the employees are entitled to claim a share in the said Ga;endragadkar J. 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 mis- conduct to which reference is made it might have been another matter. Under these circumstances we a.re unable to bold that the High Court was in error in coming to the conclusion that the impugned deci- sion of the Government is wholly punitive in charac- ter 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 a.re 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 a.re dismissed

with costs, one set of hearing fees.

Appeals dismissed.