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Full Case Details
The respondents’ union had addressed four demands to the Firestone Tyre and Rubber Co. of
India Ltd. 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 was the
Conciliation Officer, was 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 1952-53. 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 the 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 did 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 was this decision of the Government refusing to refer the dispute for industrial adjudication
that gave rise to the present proceedings.
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
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nature of mandamus or other writ, direction or order against the State of Maharashtra calling
upon it to refer the said dispute for industrial adjudication under Section 10(1) and Section
12(5) of the Industrial Disputes Act, 1947.
It was common ground that during a part of the relevant year the respondents had adopted goslow tactics. The respondent’s case was that despite the go-slow strategy adopted by them for
some months during the relevant year the total production for the said period compared very
favourably with the production for previous years and that the profit made by the company
during the relevant year fully justified their claim for additional bonus. The appellant had
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). The question before the court was: whether the
order passed by the appellant refusing to refer the dispute for adjudication under Section
12(5) could be sustained.
P.B. GAJENDRAGADKAR, J. – 5. 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
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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-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
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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 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
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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 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
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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. - 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
147
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 endeavors 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
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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. - 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 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 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.
149 - 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 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 emphasized 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 willful 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
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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 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.
