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Full Case Details
P.B. GAJENDRAGADKAR, J
- On February 18, 1955, the respondents filed in the Bombay High Court a petition under Article 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 (“the appellant”) calling upon it to refer the
said dispute for industrial adjudication under Section 10(1) and Section 12(5) of the Act. To this
application the company was also impleaded as an opponent. This petition was heard by Tendolkar, J. He
held that Section 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
. – These two appeals arise from an industrial dispute between the
Firestone Tyre and Rubber Co. of India Ltd., and its workmen (“the respondents”), and they raise a short
and interesting question about the construction of Section 12(5) of the Industrial Disputes Act 14 of 1947.
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 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 1952- - The respondents then informed the company 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
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
Section 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
conciliator 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 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 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 Section 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 Section 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 for industrial adjudication that has given rise
to the present proceedings.
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appellant to reconsider the question of making or refusing to make a reference under Section 12(5)
ignoring the fact that there was a slow-down and taking into account only such reasons as are germane to
the question of determining whether a reference should or should not be made. - 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 clause 23(c) of the Standing Orders of the
company wilful 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 respondents 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 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 dispute raised by them in regard to bonus as well as classification was not to
be referred for adjudication under Section 12(5). It is in the light of these facts that we have to consider
whether the validity of the order passed by the appellant refusing to refer the dispute for adjudication
under Section 12(5) can be sustained. - Let us first examine the scheme of the relevant provisions of the Act. Chapter III which consists of
Section 10 and 10-A 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 clauses (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 in contemplated 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
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
Section 10(1) deals with disputes relating to a public utility service, and it provides that where a notice
under Section 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 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
Section 10(1) but is limited under the second proviso to Section 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 Section 10-A 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 Section 10, and it provides that they
may so refer it to such person or persons as may be specified in the arbitration agreement; and Section 10-
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A(3) requires that on receiving such an arbitration agreement the Government shall, within fourteen days,
publish the same in the Official Gazette. Section 10-A(4) prescribes that the arbitrator or arbitrators shall
investigate the dispute and submit the arbitration award to the appropriate Government; and Section 10-
A(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 as are vested in a civil court when trying a suit in
respect of the matters specified by clauses (a) to (d). A Conciliation Officer, however, stands on a
different footing. Under Section 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 compelling the production
of documents. - Section 12 deals with the duties of Conciliation Officers. Under Section 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
Section 22 has been given, the Conciliation Officer shall hold conciliation proceedings in respect of it.
The effect of Section 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 Section
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 it has in substance the same binding character as an award under Section
18(3). Sometimes efforts at conciliation do not succeed either because one of the parties to the dispute
refuses to cooperate 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 Section 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 Section 12(5). In construing Section 12(5), therefore, it is necessary to bear in mind the background
of the steps which the Conciliation Officer has taken under Section 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 referred to in sub-section (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
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reference. Where the appropriate Government does not make such a reference it shall record and
communicate to the parties concerned its reasons 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 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 Section 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 Section 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 Section 10(1) for that is the only section which confers power on the
appropriate Government to make a reference. - It is true that Section 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 Section 12(5). The High Court was apparently inclined to take the view that in cases
falling under Section 12(5) reference can be made only under Section 12(5) independently of Section
10(1). In our opinion that is not the effect of the provisions of Section 12(5). If it is held that in cases
falling under Section 12(5) reference can and should be made only under Section 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 lockout 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 Section 10(1). It would thus be clear that if a reference is made only under Section
12(5) independently of Section 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 Section 23 and 24 prohibit
the commencement of strikes and lock-outs during the pendency of proceedings therein specified, and so
even in the case of a reference made under Section 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 clear that the continuance of a lock-out or strike is deemed to be illegal only if an order
prohibiting it is passed under Section 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 Section 10(1). What is true about this power
is equally true about the power conferred on the appropriate Government by Sections 10(4), (5), (6) and
(7). In other words, the material provisions contained in sub-sections (3) to (7) of Section 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 Section 12(5) the reference must ultimately be made
under Section 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 Sections 10(1) and 12(5). - Besides, even as a matter of construction, when Section 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 Section 10(1); indeed Section 12(5)
occurs in a Chapter dealing with the procedure, powers and duties of the authorities under the Act; and it
would be legitimate to hold that Section 12(5) which undoubtedly confers power on the appropriate
29
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 Section 10(1). In other
words, when Section 12(5) says that the Government may make such reference it really means it may
make such reference under Section 10(1). Therefore it would not be reasonable to hold that Section 12(5)
by itself and independently of Section 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 Section 12(5),
it is bound to base its decision only and solely on a consideration of the report made by the Conciliation
Officer under Section 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 Section 12(5) should be based is
the said report. There is no doubt that having regard to the background furnished by the earlier provisions
of Section 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 Section 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 Section 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 consider whether there
are any other relevant or material 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 Section 10(1) could be exercised by the Government even in
dealing with cases under Section 12(5) provided 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
Section 12(5) is complied with. - We have already noticed that Section 12 deals with the conciliation proceedings in regard to all
industrial disputes, whether they relate to a public utility service or not. Section 12(1) imposes an
obligation on the Conciliation Officer to hold conciliation proceedings in regard to an industrial dispute in
respect of public utility service provided a notice under Section 22 has been given. If in such a dispute the
efforts at conciliation fail and a failure report is submitted under Section 12(4) Government may have to
act under Section 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 Section
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 Section 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 Section 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 Section 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 and decide whether there is a case for
reference. If it is satisfied that there is such a 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 therefor. The
question which arises 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.
30 - It is urged for the respondent that where power is conferred on an authority and it is coupled with,
the performance of a duty the words conferring power though directory must be construed as mandatory.
The argument is that Section 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 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 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 Section 10(1) it
would not be easy to read the relevant portion of Section 12(5) as imposing an obligation on the
Government to make a reference. Section 12(5) when read with Section 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 Section 13. This section deals with
the duties of Boards and is similar to Section 12 which deals with Conciliation Officers. A dispute can be
referred to a Board in the first instance under Section 10(1) or under Section 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 Section 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 Section 10, it shall record and communicate to the parties concerned its reasons therefor. The
provisions of Section 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 Section 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 Section 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 Section 10(1). Incidentally this fortifies the conclusion that
whenever reference is made the power to make it is to be found under Section 10(1). Now, in regard to
cases falling under Section 13(4) since the reference has to be made under Section 10 there can be no
doubt that the considerations relevant under the second proviso to Section 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 Section 13(4) if
a reference has to be made, it would clearly be under Section 10(1). This position is implicit in the
scheme of Section 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 Section 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 Section 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 Section 13, Section 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 Section 13 it would be
difficult to accept the argument that a prior stage when Government is acting under Section 12(5) it is
obligatory on it to make a reference as contended by the respondent.
31 - The controversy between the parties as to the construction of Section 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 therefor. 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 therefor and it appears that the 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 Section 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 Section 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 Section 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 Section 10(1) is for instance contrary to the provisions of Section 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 Section 12(5) if Government does not record and communicate to the parties concerned
its reasons therefor 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 Section 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 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 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 Section 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 Section 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 Section 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. Cooperation 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
32
since their conduct during a substantial part of the relevant year offended against the standing orders that
was a fact which 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 Section 12(5). 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 cooperation 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 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 Government 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 Section 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 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 notwithstanding 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 benefitted 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. Similarly, 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 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 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
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are unable to hold 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 Section 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.
