IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 01.12.2010 CORAM: THE HONOURABLE MS. JUSTICE K.B.K.VASUKI W.P.Nos.26180 of 2008, 22319 of 2009 and 399 of 2010, and M.P.No.2 of 2010 Pondicherry Hindustan Lever Thozhilalar Sangham Reg.No.970/RTU/95 Represented by its President S.Pannerdassee No.48, Marriamman Koil Street, Manjini Nagar, Muthialpet, Puducherry-605 003. ... Petitioner in all WPs. Vs. 1.The Secretary to the Government, Labour Department, Government of Pondicherry, Pondicherry Union Territory. .. Res. in all WPs 2.The Commissioner of Labour, Labour Department, 2nd Floor, Vazuthavur Road, Gandhi Nagar, Pondicherry-9. Res in WP.26180/08 3.The Labour Officer Conciliation Office of the Labour Officer, No.1, Rue Suffern, Pondicherry. Res in WP.26180/08 4.The Factory Manager, Ponds Exports Ltd., Footwear Factory, PB.No.18, Vazhuthavur Road, Puducherry-9 ..Res in all WPs. 5.Inspector of Police Mettupalayam Police Station, Vazhuthavur Road, Puducherry-9. Res in WP.26180/08 6. The Presiding Officer, The Industrial Tribunal, Pondicherry, Pondicherry. .. Res in WP.399/10 PRAYER in WP.26180/2008: writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus to direct the respondents 1 and 2 to hold that the closure of Ponds Exports Limited Footwear Factory (subsidy of Hindustan Unilever Ltd.,) is illegal and in violation of statutory provisions of the Industrial Dispute Act, 1947 and null and void and to further direct the 4th respondent management to continue the petitioner union workers in service with back wages. PRAYER in WP.22319/2009 : Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus to direct the respondent/Secretary to the Government, Labour Department, Government of Puducherry, to refer the Industrial Dispute between the management of M/s.Ponds Export's Limited (subsidiary Hindustan Unilever Limited) Footwear Factory, Puducherry, and Pondicherry Hindustan Lever Thozhilalar Sangam, over the Transfer of the entire permanent workers, before the Industrial Tribunal, Puducherry for adjudication, with in a stipulated time. PRAYER in WP.339/2010 : Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Mandamus to direct the 1st respondent to amend the reference of the Industrial Dispute G.O.Rt.No.30/AIL/LAB/J/2009, dated 24.03.2009, so as to adjudicate the real dispute between the petitioner and the 3rd respondent over the illegal closure of 3rd respondent factory and consequential malafide transfer of entire permanent workers. For Petitioner : M/s.P.R.Thiruneelakandan For R3 in WP.399/10 R4 in WP.26180/08 : M/s.T.S.Gopalan For R1 in WP.399/10 RR1 to 3 & 5 in WP.26180/08 R1 in WP.22319/2009 : Government Pleader (Pondy) COMMON ORDER All the three writ petitions are arising out of dispute between the management and workmen and the consequential conciliation proceedings. While the WP.No.26180 of 2008 filed for directing the Government to hold the closure M/s.ponds exports limited foot factory as illegal, null and void and in violation of statuary provisions and to consequently direct the management to continue the petitioner union workers in service with back wages, WP.No.22319/09 is filed to direct the respondent/Government to refer the actual dispute between the petitioner Thozhilalar Sangam and the management which is over the transfer of entire permanent workers for adjudication before Tribunal. WP.No.339 of 2010 is filed to amend the dispute already referred to for adjudication before the Industrial tribunal court by including the dispute of illegal closure of factory. 2. The brief facts which are relevant for consideration herein are : The 4th respondent factory in which the workers/members of the petitioners sangam numbering 66 are permanent workers is the unit of M/s.Hindustan Unilever Ltd., and is manufacturing shoe and other allied products. The employees union and the management periodically entered into Sec.18(1) settlement periodically. The latest of such Sec.18(1) settlement was of the year 2002 for the period ending on 23.02.2006. Thereafter, the petitioner union raised charter of demands for wage revision and the same was not responded by the management and led to conciliation proceedings and pending conciliation proceedings voluntary retirement scheme was introduced and the same was not accepted by the petitioner union. In the meanwhile, the 4th respondent stopped the production and shifted certain machineries to 3rd party companies and also transferred all the permanent workers remaining in service without accepting VRS from the factory to outside state. The workers have also raised their grievances relating to compulsory Voluntary Retirement Scheme, lockout and transfer before the conciliation officer. The petitioner union has made repeated representations between October 2008 to May 2009 to the 2nd respondent/commissioner of labour in this regard marking copies to the respondents 1 and 2 . In the meanwhile charge memo is also issued against the permanent workers who refused to comply with the order of transfer. The petitioner union treating the action of the management in stopping the production and in shifting the machineries to 3rd party company and transferring all the permanent workers to other state as an attempt to illegal lockout and consequential closure filed WP.Nos..26180 of 2008 and 22319 of 2009 for the relief stated supra. In the meanwhile, the conciliation proceedings ended in failure and the same was reported to the 1st respondent/Government by the conciliation officer on 20.02.2009 and the Government has under GO.Ms.30/2009 dated 24.03.2009 referred to Industrial tribunal for adjudication the dispute as to whether the lockout by the management is illegal and if so what relief the petitioners are entitled to, leading to filing of WP.399 of 2010. 3. It is seriously considered by the learned counsel for the petitioner union that the action of the management in stopping the production and in shifting the machineries and transferring the employees amounts to illegal lockout and consequential illegal closure and transfer of employees pending conciliation proceedings amounting to unfair labour practise and illegal and in violation of the statuary provision and though the same was duly brought to the notice of conciliation officer and though the conciliation officer has in the conciliation failure report duly referred to the actual dispute existing between the parties as upon the unlawful closure of the unit and the illegal transfer of the workers the 1st respondent/Government has without properly considering the facts and circumstances under which the dispute is raised and the materials available before the same erroneously identified the actual dispute between the parties as if it is one over lockout and has referred the same for adjudication before the Industrial Dispute and the failure on the part of the Government to ascertain that the actual dispute is over lockout and consequential illegal closure and over illegal transfer of the permanent workers and to refer the same as actual dispute for adjudication before the Industrial Tribunal is arbitrary, unjustified and malafide amounting to failure of exercise of jurisdiction vested upon the Government. 4. Per contra, the learned counsel for the official respondent would seriously contend that the management due to various administrative and financial problems was compelled to stop the production and had to carry out the pending work through 3rd party companies by making use of the machineries available therein and as the members of the petitioner union did not accept VRS, the management had no other option but to transfer them from out of state and there was no attempt made on the part of management either to declare lockout or closure and the contention so raised is baseless and unfounded. It is further argued that the dispute raised before the conciliation officer is only over lockout and not closure or transfer of the employees and the consistent stand taken by the management during the course of conciliation is that there was neither lockout nor closure and the management has not submitted any application to any authority seeking permission for closure and the dispute as raised before the conciliation authority over lockout is duly investigated into and the outcome of which is the failure report which is duly submitted to the Government and the Government has on the basis of the available records rightly referred the dispute over the same for adjudication. 5. I have heard and considered the rival submissions made on all sides and perused the records. 6. The point raised for consideration herein is as to what is the actual dispute between the management and the petitioner union referred before the conciliation officer and whether it is properly referred for adjudication before the Industrial Tribunal. The serious contention raised on the side of the petitioner union, that the production is stopped, no work is allotted to the workers remaining in service and the machinaries are shifted to 3rd party companies and all the permanent workers remaining in service are transferred to outside state are not denied on the side of the management. The management has in the counter filed herein only seek to explain the circumstances under which and the reasons for which to such situation arose. 7. The perusal of the records reveal that the petitioner union had repeatedly made representations to the factory manager and to the respondents 1 and 2 and other higher officials of Labour department in this regard. They started making representation immediately after the VRS is introduced, first of it such nature its dated 29.10.2008 submitted to the conciliation officer, even in which the petitioner union has raised allegations against the management that the management has been threatening the employees who refused to accept VRS to drive them out by declaring lockout and by transferring them to northern states. It is also further stated therein, that the management has been indulging in unfair labour practise only with an intention to declare lockout. The next representation dated 06.11.2008 also contains the same allegations. In pursuance such representation the inspector of factories visited the factory premised on 06.11.2008 and found the factory to be closed without any manufacturing activity. Further representation made before the conciliation officer are on 06.02.2009 and 13.02.2009 in which the petitioner union has also raised dispute about VRS transfer and closure of the factory, the issues raised before conciliation officer in the representation dated 06.2.009 are as follows: 1/ bjhHpw;rhiy eph;thfk; fl;lha tpUg;g Xa;t[ jpl;lj;jpd; K:yk; Ml;Fiwg;g[ bra;jJ rhpah> jtwh> 2/ eph;thfk;. Ml;Fiwg;ig bjhlh;e;J murpd; mDkjp bgwhky; rl;ltpnuhjkhf Miyia K:oaJ rhpah> jtwh> 3/ eph;thfk;. Ml;Fiwg;g[ eltof;ifahf. fl;lha tpUg;g Xa;t[ jpl;lj;ij Vw;Wf;bfhs;shj bjhHpyhsh;fis gHpth';Fk; Kfkhf epue;ju bjhHpyhsh;fs; midtiua[k; gpw khepy';fSf;F gzp ,l khw;wk; bra;jJ rhpah> jtwh> 4/ eph;thfk; bjhHpw;rhiyapypUe;J ,ae;jpu';fs; kw;Wk; bjhHpw;rhh;g[ila bghUl;fis chpa muR mDkjpapd;wpnah my;yJ bjhHpyhsh; Jiw mjpfhhp mDkjpapy;yhky; ntW bjhHpw;rhiyf;F bfhz;L brd;W cw;gj;jpia bra;tJ rhpah> jtwh> The same issues are raised in the representation dated 13.02.2009 made to commissioner of labour. The failure report of conciliation dated 20.02.2009 refers to the letters dated 29.10.2008 and 06.11.2008. The conciliation failure report does in the subject column refer to the dispute as over closure of the unit, whereas, the dispute raised by the 1st respondent for the adjudication is only over lockout and not over closure or transfer. 8. In the above factual background while according to the petitioner union the actual dispute between the management and the union are over closure and transfer and the same ought to have been referred for adjudication according to the respondents the dispute raised is only over lock out and not over closure and transfer as such no reference is made either over closure or over transfer. It is further contended on the side of the management that there was neither lockout nor closure and as the transfer was on valid reason the question of making any reference over the same for adjudication before the Industrial Tribunal does not at all arise. 9. This court is not inclined to accept the contention raised on the side of official respondents and the management for the following reason: Sec.10(1) of the Act confers power on the appropriate Government to refer at any time any industrial dispute which exist or is apprehended to the authorities mentioned in the section for adjudication. The opinion which the appropriate Government is required to form before referring the dispute to the appropriate authority is about the existence of the dispute or even if the dispute has not arisen it is apprehended as imminent and requires resolution in the interest of industrial peace and harmony. 10. The Apex Court has in the judgment reported in 2006 12 SCC 233 in Steel Authority of India Vs. Union of India observed that the appropriate Government for the purpose of exercising jurisdiction under Section 10 of the Act is required to apply its mind, before making a reference, upon all the materials placed before it by the workmen and management as the case may be. The Supreme Court has in the judgment reported in 1975 II LLJ 418 in M/s.Hochtief Gammon Vs. State of Orrisa and others considered the powers of the court to interfere with an order of the Government and has observed as follows : "the executive have to reach their decisions by taking into account relevant considerations. They should not refuse to consider relevant matter nor should take into account wholly irrelevant or extraneous consideration. They should not misdirect themselves on a point of law. Only such a decision will be lawful. The courts have power to see that the Executive acts lawfully. It is no answer to the exercise of that power to say that the Executive acted bonafide nor that they have bestowed pains taking consideration. They cannot avoid scrutiny by Courts by failing to give reasons. If they give reasons and they are not good reasons, the Court can direct them to re- consider the matter in the light of relevant matters, though the propriety adequacy or satisfactory character of those reasons may not be open to judicial scrutiny, even if the executive consider it in expedient to exercise their powers they should state their reasons and there must be material to show that they have considered all the relevant facts. 11. The Supreme Court in the other judgment reported in 1979 LLJ Vol.I 1 Avon services (Production Agencies) Pvt. Ltd v. Industrial Tribunal Haryana, Faridabad and others held that the language or the format in which the demand was couched hardly the decisive of the matter. It was the substance of the matter that have to be looked into. The Division Bench of Orrisa High Court in the judgment report in 1988 2 LLJ pg75 in Orient Paper Mills Sramik Congress V. State of Orissa and others have observed that though the Government is the sole judge to decide the factual existence of the industrial dispute and the expediency to refer the dispute for adjudication the Government must before doing so consider the relevant materials and form its opinion on germane considerations and though the decision may be based on the subjective satisfaction of the state Government, if such satisfaction is based on non consideration of the relevant materials or considerations not germane to the issues then that opinion has to be interfered with under Article 226 of the Constitution of India. It is further observed therein that, if the order of reference indicates that the real grievance had not been taken into consideration than it would be within the powers of the court to direct the Government for consideration where it appears the Government had misdirected itself in making the reference in as much as the real dispute between the parties is not kept in mind, then in such a case also this court would be fully authorised to interfere with the order and direct reconsideration of the matter by the Government. 12. In the judgments reported in AIR 1962 kerala 292(V 49 c 84) in Kottayam Plywood Workers Union, Kottayam V. Government of Kerala and another the Kerala High Court observed that in making reference u/s.12(5) of the Industrial Disputes Act the appropriate Government has, no doubt, to consider very carefully the report made by a conciliation officer under S.12(4) and treat it as furnishing the relevant material which would enable it to decide whether a case for reference has been made out or not. But the report is not the only material on which the Government must base its conclusion. It is open to the Government when acting under section 12(5) 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 a decision as to whether a reference should be made or not. Thus the State Government on the question of making a reference must arrive at a decision after consideration of all relevant circumstances, which would have bearing on the merits of the case, as well as on the identical question as to whether a reference should nevertheless be made or not. 13. Thus the observation laid down by the Supreme Court and the Full Bench of Delhi High Court and the Division Bench of Orrisa High Court and Kerala High Court is that the Government is before forming an opinion as to whether any Industrial Dispute is existing or apprehended or as to what is the actual dispute exists between the parties is bound to consider all the relevant facts and materials and then to form an opinion and the failure to properly exercise such power by the Government is always the subject matter of judicial review under Article 226 of the Constitution of India. That being the ratio decidenti laid down by our Apex Court, our High Court and other High Courts regarding the nature and extent of the power vested upon the government u/s.10(1) of the Industrial Dispute Act and the manner in which the same to be exercised the core issue involved herein is to be necessarily appreciated in the light of such legal background. 14. As already referred to the petitioner sangam has in its representations repeatedly raised dispute not only over lockout but also over subsequent closure and illegal transfer of all the permanent employees to outside state as unfair labour practise. Though the original dispute raised is over lockout the subsequent representations filed by the petitioner sangam in the course of conciliation proceedings would reveal that the dispute involved is not that of mere lockout. 15. As a matter of fact, the transfer of employees is only during the pendency of the conciliation proceedings. Further, it is seriously contended by the learned counsel for the petitioner, the petitioner's sangam expressed serious apprehension in its earlier representations as if the stoppage production and non supply of materials to the workers and the shifting of machineries to other companies for doing the job work and transfer of permanent employee is with an intention to close the factory. The Thozhilalar Sangham in its repeated representations referred to two act of commission by the management fjtilg;g[ kw;Wk; MiyK:ly; thereby meaning lockout and closure in addition to transfer of employees as unfair labour practice. When, the dispute over transfer and closure is raised during the pendency of the proceedings the same is brought to the knowledge of the 1st respondent/Government through the letters dated 29.10.2008 and 06.11.2008 annexed along with the failure report and though the conciliation failure report which also refers to the same the Government ought to have considered all the material factors in the light of the records available therein and ought to have identified the actual dispute between the parties that is what the Government is legally required to do u/s.10(1) and 12(5) of the Industrial dispute Act. But the failure to consider the same while making reference by the government amounts to gross failure or improper exercise of the power vested upon the Government. 16. As rightly argued by the learned counsel for the petitioner, the Government has made the reference which is impugned herein without taking into account all the materials placed before the same by the Conciliation Officer. As a result, the Government has lost sight of the actual existing dispute apprehended and raised by the petitioner Sangam over closure and transferring the employes to outside the State. 17. As a matter of fact, the dispute regarding closure and the transfer of the permanent employees was also the subject matter of the conciliation proceedings, is clearly admitted by the official respondent, Secretary to Government/first respondent in W.P.No.399 of 2010 as well as by the factory Manager on behalf of the management in the counter filed in W.P.Nos.26180 of 2008 and 399 of 2010. The Secretary to Government/first respondent has in para 9 at page 3 of the counter affidavit filed in W.P.No.399 of 2010 specifically stated that the conciliation proceedings is initiated in respect of lock out and transfer of the employees to outside State and the conciliation failure report is also made in respect of the same and the factory Manager has specifically stated in the other writ petitions about the conciliation reference over the lock out and closure. Whereas, the order of reference impugned herein does not disclose anything as to whether the Government has considered all the materials to find out the actual dispute between the parties and to make appropriate reference and failure to do so would in my view deserve interference by this Court and would render the reference to be held to be set aside as already held by the Hon'ble Supreme Court in the judgment reported in 1960 II LLJ 592 in State of Bombay V. K.P.Krishnan and others with further direction issued to the Government to consider and make appropriate reference to the Tribunal for adjudication in the light of the principles already laid down and also the observation made by this Court herein. 18. In the result, the order of the first respondent dated 24.3.2009 in G.O.Rt.No.30/AIL/LAB/J/2009, is set aside with further direction to the State Government to reconsider and to make appropriate reference about the actual dispute between the parties for adjudication by the tribunal in the light of the legal principles already laid down in the authorities cited herein and the observations made by this court in this order. The whole exercise shall be completed within two months from the date of receipt of copy of this order. In the event of any such reference, the Tribunal concerned shall adjudicate upon the same as expeditiously as possible not later than six months from the date of receipt of reference. K.B.K.VASUKI, J tsh 19. All the three writ petitions are accordingly ordered. No costs. Consequently, connected Miscellaneous petition is closed. 01.12.2010 Index:Yes/No Internet:Yes/No tsh/rk 1.The Secretary to the Government, Labour Department, Government of Pondicherry, Pondicherry Union Territory. 2.The Commissioner of Labour, Labour Department, 2nd Floor, Vazuthavur Road, Gandhi Nagar, Pondicherry-9. 3.The Labour Officer Conciliation Office of the Labour Officer, No.1, Rue Suffern, Pondicherry. 4.Inspector of Police Mettupalayam Police Station, Vazhuthavur Road, Puducherry-9. WP.Nos.26180/2008, 22319/2009 and 399/2010 5. The Presiding Officer, The Industrial Tribunal, Pondicherry, Pondicherry.