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I S.C.R. SUPREME COURT REPORTS 227

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.

August r8.

228 SUPilE!\!E COlJHT REPOHTS [ 1961]

196o 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

v. "·as in the nature of a punitive action that y,.·as ''•h01ly inr.onsis-

/( P I<1i.~li11a11 trnt with the object of the Act.

6-Other.;,

CrvIL APPELLATE JURISDICTION: Civil Appeals

~OS. 37 & 38 of 1957.

Appeals from

the judgment and order dated August

30, 1955, of the former Bombay High Court in Appeals

Nos. 55 and 56 of 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

I S.C.R. SUPREME COURT REPORTS 229

copy

of the said demands, and intimating to him that

ig6o

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 & Others

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-

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

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

set out the arguments urged by both the parties

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

230 SCPREME COCRT REPORTS l!961]

.

z96o ta.ken 011 the monthly-pa.id roll appeared to be in con-

s

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, sona.nce with the practice prevailing iu other com-

1att o1 on1uay bl

v. para. e concerns. The management, however, told

K. 1•. Kmhnan the concilia.t-Or that the said employees ha.d received

& Others 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

1 S.C.R. SUPREME COURT REPORTS 231

•

question of determining whether a reference should or r96o

should not be made.

A h

• -. h !I II h State of Bombay

gainst t 1s uecis10n t e appe ant as we as t e v.

company preferred appeals. Chagla, C. J., and K. P. Krishnan

Desai, J., who constitut.ed the Court of Appeal, allow- & Othm

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.

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

232 SUPRE:\IE COUHT REPORTS [1961]

•

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60

the validity of the order passed by tho appellant refu-

5

- 1

-8

1

sing to refer the dispute for adjudication under s. 12{5)

tale 0 Ottl HlY •

v. · can be sustained. · ·

K. P. Kli<hHon Lot us first examine the scheme of the relevant

e-Others 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

strikes. It is with that object that reference i•' con­

templated not only in regard to existing industrial

disputes but also in respect of disputes which may be

apprehended. This section confers wide and even

absolute discretion on the Government either to refer .

or to refuse to refer 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

1 S.C.R. SUPREME COURT REPORTS 233

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 v.

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) & Othm

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

JO

234 SUPREME COURT REPORTS [ l 96 l]

1

9

60

as are vested in 8, civil court when trying a suit in

respect of

the

matters specified by els, (a) to (d), A

Stalt of /Jo1r.ba)•

v. concilia.tion officer, however, stands on a different

J{. P. Krishna" foot.ing, Under H. 11(4) he is given the power to call

"-011;;rs 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.

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

1 S.C.R. SUPREME COURT REPORTS 235

it has in substance the same binding character as an I96°

award under s. 18(3). Sometimes efforts at concilia-

d d h b

f

Stat~ of Bornbay

tion o not succee eit er ecause one o the parties v.

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-&-Oehm

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 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

236 SCPREME CO"CRT REPORTS [1961]

r96o reference. If it is satisfied that a. ca.se for reference has

not been ma.de out it may not make such a. reference;

51

"

1

' of Hombay but in such a. case it she.II record and communicate to

v.

K. P. K'ish""" the parties concerned its reasons for not ma.king the

& Othm 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

section which confers power on

the appropriate

Government to make

a reference.

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)

, independently of s. 10(1). In our opinion that is not

the effect of the provisions of s. 12(5). If it is held

that in cases falling under s. 12(5) reference can 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

1 S.C.R. SUPREME COURT REPORTS 237

s. 10(1) the appropriate Government may have no r96o

P

ower to prohibit the continuance of a strike in con-

State of Bombay

nection with a dispute referred by it to the tribunal v.

for adjudication ; and that obviously could not be the K. P. K,i,hnan

intention of the Legislature. It is significant that & Othm

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

made under

s.

10( l ). Incidentally it is not without

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

238 SUPREME COGRT REPORTS [1961]

r~6o authorities under the Act; and it would be legitimate

to hold thats. 12(5) which undoubtedly confers power

State of liombay h . -

v. 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

c~ Othm 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

l S.C.R. SUPREME COURT REPORTS 239

facts which would justify its refusal to make a refer-r96o

ence. The question as to whether a case for refer-

. State of Bombay

ence has been made out can be answered in the light v.

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-& Othen

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.

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

240 SUPREME COt:RT REPORTS [1961]

i96o a.nd decide whether . there is a. ca.se for reference.

S

,

8 1

If it is satisfied tha.t there is such a. ca.se for reference

1

"

1

' 0

•

0

'" '"Y

. k ~ If . d k f

· v. 1t ma.y ma. e a. re1erence. 1t oes not ma. e a. re er.

K P. K"''"'"" ence it shall record a.nd communicate to the pa.rties

<>-01hm 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.

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

Commissioners (

1

). "The words undoubtedly a.re only

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.

1 !3.C.R. SUPREME COURT REPORTS 241

this argument. Indeed it has been accepted by the z960

High Court and it has been held that if the Govern-

5

-;; b

ment is satisfied that there is a case for reference it is '"" ·~. om ay

bound to make the reference. K. P. Krishnan

On the other hand, if the power to make reference is & Others

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.

sion.

In this connection the appellant strongly relies

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]

'96° 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

v. · 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

· · ,,. Others 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

sa.id rea.sons are not wholly extraneous or irrelevant. ,960

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-.;;, others

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-

tent of relevant consideration is very wide; in

sub-·

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]

r96o 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

v. · 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

,-;. Others 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

the year 1952 53. It would appear primn. 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 8. 12(5). It hits been strenuously urged

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

was relevant in considering whether the present dis-

1

9

60

pute should be referred to industrial adjudicatiou or State of Bombay

not. On the other hand, the High Court has held v.

that the reason given by the Government is wholly K. l'. Iirishnan

extraneous and its refusal to refer the dispute is plain-{~ ot11m

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]

i96o affiliation of the uuion, which has sponsorri the dis­

pute. Such considerations would be wholly extraneous

Stale of Bon1bay d b f ] d ' h 'd

v. an must e care ully exc ude in exercising t. e w1 e

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

& others 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

0

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

stlce 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

as to whether a d;spute in regard to bonus should i96o

be referred for adjudication or not it is necessary to

1 I

Slate of Be»nbay

bear in mind the wel -established princip es of indus- v.

trial adjudication which govern claims for bonus. A K. P. Krishnan

claim for bonus is based on the consideration that by & Others

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.