-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 2882 OF 2005 Jeroo Dastur, residing at 92-B, ) 1st floor, Bhiwandi House, Cumballa Hill, ) Mumbai-400 036 & 12 others )... Petitioners versus 1. Union of India, acting through ) Asstt. Labour Commissioner-Central III, ) Shram Raksha Bhawan, Eastern Express ) Highway, Sion, Mumbai. ) 2. Standard Chartered Bank, ) 23-25, Mahatma Gandhi Road, ) Mumbai-400 001. )..Respondents Mr. G.I. Sodhi for the petitioners. Mr. A.D. Shetty with Ms. Rita Joshi for the respondents. CORAM: SWATANTER KUMAR, C.J. & DR. D.Y. CHANDRACHUD, J. Judgment reserved on : October 26, 2007 Judgment delivered on: November 01, 2007 JUDGMENT (Per Swatanter Kumar, C.J.): 13 petitioners in this petition claim that they joined Standard Chartered Bank, respondent No.2, at various points of time and served for number of years. They were appointed in the capacity of Clerks and Typists. They are workmen within the meaning of Section 2 (s) of the -2- Industrial Disputes Act, 1947, hereinafter referred to as “the Act”. The Petitioners had various claims against the management of respondent No.2 and their claims were turned down. The allegation of the petitioners is that respondent No.2 had been intimidating its employees to resign failing which it was threatened that they would not be paid their lawful dues. Under this threat held out by respondent No.2, they were made to sign letters that bartered away the rights vested in them under the law. In order to fight for the legal rights, the petitioners submitted an application before the Regional Labour Commissioner (Central), under the provisions of the Act for conciliation. Pursuant thereto, respondent No.1 took cognizance and came to realise that there exists an industrial dispute between the parties. Notice on the demand of the petitioners was issued to respondent No.2 on 27th October, 2003. The respondents represented their case before the concerned authorities. According to the petitioners, their services had been terminated wrongfully and they showed the said authorities that they had not voluntarily resigned, as claimed by respondent No.2. The matter remained pending before respondent No.1. Vide an order dated 6th January, 2004, the petitioners were informed that no dispute existed between the parties as they had resigned voluntarily of their own accord and as such no reference could be made. This finding recorded by -3- respondent No.1 was contrary to its earlier view which had been taken on 27th October, 2003, when after looking into the matter the authorities had issued notice to respondent No.2 patently demonstrating that the dispute existed between the parties. 2. The order dated 6th January, 2004, by which the reference of industrial dispute on the basis of letter of demand dated 29th September, 2003 was denied to the petitioners primarily on the ground that they had resigned from the services and had accepted full and final settlement of dues from respondent No.2. The said order reads as under:- “Government of India Ministry of Labour, Office of the Regional Labour Commissioner (Central) Shramraksha Bhavan, Opp.RCF Building, Shiv Srushti Road, Sion, Mumbai-400 022. No. B.ALC(C)-III/7(99)/2003 Dated: January 6, 2004. To Shri Jeroo J. Dastur, 92-B, 1st floor, Bhiwandi House, Cumballa Hill, Mumbai-400 036. Sub: Industrial dispute raised by S/Shri Jeroo Dastur and 10 other workmen against the management of Standard Chartered Bank, Mumbai, over alleged illegal termination of -4- their services. Dear Sir (s), Please refer to your demand letter dated 29.9.2003 submitted in this office on the above subject. After going through the records and submissions, it is evident that S/Shri Jeroo Dastur and 10 other workmen have resigned from the services and accepted the full and final settlement dues from the Standard Chartered Bank. Therefore, the instant dispute is treated as disposed off in this office. Yours faithfully, Sd/- (A.L. Kamble) Conciliation Officer and Assistant Labour Commissioner, (Central)-III, Mumbai.” 3. The contention raised on behalf of the petitioners is that they had submitted a demand to the Regional Labour Commissioner, with a copy to respondent No.2 which was duly received by them, wherein they had raised various controversies including the fact that the letters were got signed from the petitioners as a result of undue influence and coercion etc. and that they were entitled to reinstatement with full back wages as per the rights vested in them according to law. It was a detailed demand notice and in the light of that, the Appropriate Government had no jurisdiction to enter upon the merits of the dispute and pass the -5- impugned order. Such exercise of jurisdiction by the authorities was beyond the scope and limitation of Section 10 of the Act. 4. The main contention on behalf of the respondents was that there existed no industrial dispute between the parties which was capable of being referred for adjudication or determination to the Labour Court in accordance with the provisions of the Act. The Appropriate authority was competent to record full and final satisfaction of the dues and consequently could deny the reference as claimed by the petitioners. 5. In the case of Rohtas Industries Limited vs. S.D. Agarwal, AIR 1969 SC 707, the Supreme Court clearly stated that the purpose of the powers vested in the Appropriate Government under Section 10 (1) of the Act was to give effect to the legislative intent. The opinion arrived at by the authority on the basis of certain facts could be examined by the Court and the Courts are not precluded from examining whether the relevant facts on the basis of which the opinion is formed had in fact existed. A subtle distinction was drawn that the existence of circumstances but not the opinion was open to judicial scrutiny. It is not the adequacy or the sufficiency of the material which is open to judicial review but the very existence of it can be looked into. It is also a -6- settled principle of law that the Appropriate Government performs an administrative act and not judicial or quasi judicial act. Reference can be usefully made to a recent judgment of this Court dated 16th August, 2007, in the case of Grindlays Bank Employees Union vs. Union of India and another (Writ Petition No. 1110 of 2007), where the Court discussed the scope and ambit of the powers in the Appropriate Authority while exercising the powers under Section 10 of the Act. The Court held as under:- 4. The scope of section 10 of the Industrial Disputes Act, 1947 was the subject matter of detailed examination by a Division Bench of this Court in a very recent judgment in the case of National Organic Chemical Industries Ltd vs. State of Maharashtra and ors, ( Writ Petition No.451 of 2007 decided on 19th April 2007), and after discussing various matters the Court held as under: "5. Having stated the factual matrix of the case we will prefer to examine the law in relation to the ambit and scope of section 10(1) of the Act and the limitations of judicial review in relation to an order of reference referring an industrial dispute to the Labour Court. In the case of Shri Subhash Chand vs Government of NCT and Anr, reported in 117(2005) DLT 527, a Division Bench of the Delhi High Court had an occasion to discuss, in some elaboration, the law on the subject. The court has held as under: “Reference to the development of law in this regard is necessitated for the reason that somewhat divergent views have been expressed by the Courts while explaining the scope and limitations of jurisdiction vested in the appropriate Government -7- while exercising its administrative power of making a reference under Section 10(1)(c) of the Act. 6. Reference to the decision of the Constitutional Bench of the Supreme Court in the case of State of Madras v. C.P. Sarathy, 1953 SCR 334 can be usefully made at the very outset. It was observed: "But, it must be remembered that in making a reference under section 10(1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it anytheless administrative in character. The Court cannot, therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi- judicial determination. 7. Explaining the ratio of the decision in Sarathy's case (supra), in Western India Match Co. Ltd. v. Western India Match Co. Workers Union, MANU/SC/0375/1970 it was observed as under : "In the State of Madras v. C.P. Sarathy, this Court held on construction of Section 10(1) of the Central Act that the function of the appropriate Government thereunder is an administrative functions. It was so held presumably because the Government cannot go into the merits of the dispute its function being only to refer such a dispute for adjudication so that the industrial relations between the employer and his employees may not continue to remain disturbed and the dispute may be resolved through a judicial process as speedily as possible." 8. After referring to the earlier decisions on the subject in "Shambhu Nath Goyal v. Bank of Baroda, Jullundur, MANU/SC/0283/1978 it was held that "in making a reference -8- under section 10(1), the appropriate Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character." Thus, there is a considerable body of judicial opinion that while exercising power of making a reference under Section 10(1), the appropriate Government performs an administrative act and not a judicial or quasi-judicial act." 9. The scope and scheme of Sections 10 and 12 of the Act were also examined by the Supreme Court in State of Bombay v. K.P. Krishnan and Ors., MANU/SC/0199/1960. It was held therein as under : "Even if the appropriate Government may be acting under section 12(5) by itself and independently of Section 10(1) does not confer power on the appropriate Government to make a reference. While deciding whether a reference should be made under section 12(5) it would be open to the appropriate Government to consider, besides the report of the Conciliation Officers other relevant facts which may come to its knowledge or which may be brought to its notice. 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 to Section 10(1) 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)." 10. It was further held by the Supreme Court that "whether Section 12(5) is construed as making it obligatory on the Government to make a reference when it is satisfied that there is a case for reference or as only conferring a discretion, if in refusing to make a reference Government is influenced by reasons which are wholly extraneous or -9- irrelevant or which are not germane, then its decision may be open to challenge in a court of law. 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." 11. Again in Bombay Union of Journalists and Ors. v. The State of Bombay and Anr., MANU/SC/0135/1963, which has been relied upon by both the parties, the relevant scheme of the Act as disclosed by Section 12 viz.-a-viz. the powers of the appropriate Government under Section 10 was discussed. It was held therein as under : "When the appropriate Government considers the question as to whether a reference should be made under section 12(5), it has to act under section 10(1) of the Act, and Section 10(1) confers discretion on the appropriate Government either to refer the dispute, or not to refer it, for industrial adjudication according as it is of the opinion that it is expedient to do so or not. In other words, in dealing with an industrial dispute in respect of which a failure report has been submitted under Section 12(4), the appropriate Government ultimately exercises its power under section 10(1), subjects to this that Section 12(5) imposes an obligation on it to record reasons for not making the reference, when the dispute has gone through conciliation and a failure report has been made under Section 12(4)." 12 However, it was further held by the Supreme Court which also needs re-production and it is re-produced hereunder : "But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of -10- the dispute when it decides the question as to whether its power to make a reference should be exercised under section 10(1) read with Section 12(5), or not. If the claim made is patently frivolous, or is clearly belated, the appropriate Government my refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not. It must, therefore, be held that a prima facie examination of the merits cannot be said to be foreign to the enquiry which the appropriate Government is entitled to make in dealing with a dispute under section 10(1)." 13 A reference to a Supreme Court ruling in The M.P. Irrigation Karamchari Sangh v. State of M.P. and Anr., MANU/SC/0221/1985 is also very much relevant. In an appeal before the Supreme Court it was contended that the High Court had failed to properly delineate the jurisdiction of the Government under Section 10 read with Section 12(5) of the Act. It was contended before the Supreme Court that question raised by the appellant had to be decided by the Tribunal on evidence to be adduced before it and it could not be decided by the Government on a prima facie examination of the facts of the case. This submission was met with the plea that the Government had in appropriate cases at least a limited jurisdiction to consider on a prima facie examination of the merits of the demands, whether they merited a reference or not. 14. After considering the rival contentions of the parties the Hon'ble Supreme Court observed as under : "..................But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its power to make a -11- reference should be exercised under Section 10 (1) read with Section 12(5) or not. If the claim made is patently frivolous, or is clearly belated, the appropriate Government may refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not." 15. It was then held by the Supreme Court as under : "We find that the approach made by the High Court has wrong and the reliance on the above passage on the facts of this case, is misplaced and unsupportable. This Court had made it clear in the same Judgment in the sentence preceding the passage quoted above that it was the province of the Industrial Tribunal to decide the disputed questions of fact." ".........Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclusions, for that again would be the province of the Industrial Tribunal..................." 16. It was then finally held by the Supreme Court as under : "While conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, that adjudication of demands made by workmen should be left to the Tribunal to decide. Section 10 permits appropriate Government to determine whether dispute "exists or is apprehended" and then refer it for adjudication on merits. The "demarcated functions are (1) reference; (2) adjudication. When a reference is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes -12- adjudication and thereby usurpation of the power of quasi-judicial Tribunal by an Administrative authority, namely, the Appropriate Government. There may be exceptional cases in which the State Government may, on a proper examination of the demand come to a conclusion that the demands are either perverse or frivolous and do not merit a reference. Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the government attempts to usurp the powers of the Tribunal for adjudication of valid disputes. To allow the Government to do so would be to render Sections 10 and 12(5) of the Industrial Disputes Act nugatory." 17 The observations of the Supreme Court in Ram Avtar Sharma and Ors. v. State of Haryana and Anr., MANU/SC/0228/1985 that making or refusing to make a reference under section 10(1), the Government cannot dwelve into the merits of the dispute also needs attention. The relevant portion of the judgment reads as under : "Now if the Government performs an administrative act while either making or refusing to make a reference under Section 10 (1), it cannot delve into the merits of the dispute and take upon itself the determination of lis. "That would certainly be in excess of the power conferred by Section 10. Section 10 requires the appropriate Government to be satisfied that an industrial dispute exits or is apprehended. This may permit the appropriate Government to determine prima facie whether an industrial dispute exits or the claim is frivolous or bogus or put forth for extraneous and irrelevant reasons not for justice or industrial peace and harmony. Every Administrative determination must be based on grounds relevant and germane to the exercise of power. If the -13- administrative determination is based on grounds irrelevant, extraneous or not germane to the exercise of power it is liable to be questioned in exercise of the power of judicial review." 18 The judgment of the Supreme Court in Workmen of Syndicate Bank, Madras v. Government of India and Anr., MANU/SC/0214/1984, is also very much relevant for throwing light on the powers of the Government under section 10 of the Act. The relevant portion is re-produced hereunder : "We are of the view that the ground on which the Government of India has refused to refer the dispute relating to the imposition of punishment of stoppage of three increments of Shri Murugavelu to the Industrial Tribunal is not a valid ground. It would not be right for the Government of India to refuse to make the reference on the ground that the charges of misconduct against the worker were proved during a duly constituted departmental enquiry and penalty was imposed on the worker after following the required procedure. If such a ground were permissible it would be the easiest thing for the management to avoid a reference to adjudication and to deprive the worker of the opportunity of having the dispute referred for adjudication even if the order holding the charges of misconduct proved was unreasonable or perverse or was actuated by mala fides or even if the penalty imposed on the worker was totally disproportionate to the offence said to have been proved. The management has simply to show that it has held a proper inquiry after complying with the requisite procedure and that would be enough to defeat the worker's claim for adjudication. Such a situation cannot be countenanced by law. We must, therefore, set aside the order dated 2.4.1981 passed by the Government of India declining to make a reference of the industrial dispute for adjudication to the industrial Tribunal." 19 Again the observations of the Supreme Court in Telco Convoy Drivers Mazdoor Sangh and Anr. v. State of Bihar and Ors., MANU/SC/0605/1989, which are relevant for the proposition under consideration are re-produced as under : -14- "While exercising power under Section 10(1) the function of the appropriate Government is an administrative function and not a judicial or quasi judicial function, and that in performing this administrative function the Government cannot delve into the merits of the dispute and take upon itself the determination of the lis, which would certainly be in excess of the power conferred on it by Section 10. It is true that in considering the question of making a reference under section 10(1), the Government is entitled to form an opinion as to whether an industrial dispute "exists or is apprehended" is not the same thing as to adjudicate the dispute itself on its merits." 20. Reading the above judgments of the highest Court of the land shows that provisions of Section 10 of the Act were construed not quite liberally. The jurisdiction of the State Government was stated to be an administrative function and not a judicial or quasi judicial function. Formation of an opinion under Section 10(1) of the Act was relatable to whether an industrial dispute existed or is apprehended. It was not the same thing as to adjudicate the dispute itself on merits'. In other words, the appropriate Government was not competent to travel beyond the limits of forming a prima facie opinion with regard to existence of the dispute or that an industrial dispute was apprehended. The Government was not competent to directly or indirectly determine the merits of the dispute. Formation of an opinion without encroaching upon the domain of adjudication was the essence of powers vested under Section 10(1) of the Act. 21. The Industrial Law, developed as a result of subsequent amendments to the Act as well as by judicial pronouncements by different Courts, is having far reaching effects on the various facets of this law. Section 11(a) was incorporated in the Act by Section 3 of the Industrial Disputes Amendment Act, 1971 with effect from 15th December, 1971. The purpose of this amendment was primarily to enlarge the scope of the adjudication process before the Industrial Court or Tribunal and vest powers of wider magnitude in the -15- Courts. The basic intent was to prevent the unfair labour practice by the Management and to ensure that the workman was not subjected to victimisation. This Section really did not effect the power of the Government under Section 10(1) of the Act in relation to refer or not to refer an industrial dispute to the Labour Court or Tribunal in exercise of its administrative power. One obvious conclusion of this amendment is that a workman can also claim a reference even with regard to the quantum of punishment even in a case of proven misconduct. He could raise an issue that the punishment inflicted upon him was ex-facie disproportionate to the gravity of the misconduct. The Government would have hardly any jurisdiction to decline a reference even of this kind within the purview and scope of the provisions of Section 10 of the Act. A Division Bench of Punjab and Haryana High Court in Ramphal v. State of Haryana, 1995 (4) SLR 184 took this view which was subsequently followed in various judgments including the Full Bench of that Court in the case of Radhey Shyam v. State of Haryana, 1997 (6) SLR 1. 22 Section 2(a) was inserted in this Act by Amendment Act