IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1110 OF 2007 Grindlays Bank Employees Union ) a registered Trade Union bearing ) Regn No.231 dated 23.3.1944 ) having its registered office at ) Mahatma Gandhi Road, Fort ) Mumbai 400001 ) .. Petitioner. Vs 1. Union of India ) through the Ministry of Labour ) having its office at Shramshakti ) Bhavan, Rafi Marg, New Delhi 1 ) 2. Standard Chartered Bank ) having its office at 23-25 ) M.G.Road, Fort, ) Mumbai 400001 ) .. Respondents Mr Bhavesh Parmar for the petitioner. Mr. L.T Satelkar with Mr.N.R.Prajapati for respondent No.1. Mr A.D. Shetty with Ms Rita Joshi for respondent No.2 . CORAM: SWATANTER KUMAR, C.J., & Smt. RANJANA DESAI, J. Judgment reserved on 20th July 2007 Judgment delivered on 16th August 2007. JUDGMENT(PER SWATANTER KUMAR, C.J.): 1 Rule. Respondents waive service. By consent Rule made returnable forthwith. Heard both sides. 1. The demand of the petitioner union for reference of the industrial dispute raised by them vide their letter dated 11th August 2004, was declined by the Ministry of Labour, Government of India, vide their letter dated 2nd Februryar 2007, which reads as under: "No L 1201/11/2005-IR(B-1) Government of India/Bharat Sarkar Ministry of Labour/Shram Mantralaya New Delhi Dated 2.2.2007 1.The General Manager(HR) Standard Chartered Bank 23-25 Mahatma Gandhi Road Fort, Mumbai 400001 2. The General Secretary Grindlays Bank Employees Union 90 M G Road, Fort Mumbai 400001 Subject: I.D beween the management of Standard Chartered Bank Mumbai and Grindlays Bank Employees Uniion over alleged denial of salary, annual increment, bonus and others benefits to six employees. Sir I am directed to refer to the Failure of Conciliation Report No.BALC (c)III/7(64)/2004 dated 9.3.2005 from the ALC(MUMBAI) received in this Ministry on 4.4.2005 on the abvoe mentinoed subject and to say that, prima facie, this Ministry does not consider this dispute fit for adjudication for the following reasons: "The union concerned as raised the demand relating to non-payment of 2 salary, annual increment etc for which remedy lies under section 33-C(2) of the Industrial Disputes Act, 1947 by way of its computation by Labour Court and in case the employer fails to comply with direction of Labour Court, applciation may be made by the concerned workmen or his authrised representative in Form K-1 for action on recovery. It is also observed that out of six employees, four workmen reported for duty on 24.7.2002 and 7.8.2002 to Rmc and received their salary and the other two retired on 12.10.2002 and 1.2.2004 respectively. Hence prima facie no dispute subsists. Yours faithfully sd/- Ajay Kumar Desk Opfficer 1. Regional Labour Commissioner (Central)Mumbai 2. Assistant Labour Commissinoer (Central)Mumbai 3. Guard file 4. C.R.Section" 2. Aggrieved by the above order, the Grindlays Bank Employees Union has approached this Court under Article 226 of the Constitution, praying for setting aside of the said order and further for issuance of directiosn to respondent No.1 for making a reference of the disputes indicated within a period of one month. Before we dwell upon the basic issues, which require consideration of the Court, it will be useful to refer to the necessary facts resulting in passing of the order impugned in the present petition. 3. The petition union is a registered Trade Union and claims to be operating for the benefit of its employees and the workmen in the employment of the respondent Bank. With the object to establish the Resource Management Center, the bank had transferred some of its employees to the Center in the year 2000. This order of transfer was questioned by the union by raising an industrial dispute. The said industrial dispute was decided in favour of the workmen vide award dated 29th October 2002, the correctness of which was questioned by the bank by filing Writ Petition No.398 of 2003, which was dismissed, vide order dated 11th February 2003. Against the above order of the High 3 Court, Special Leave Petition was preferred, which also came to be dismissed, vide order dated 23rd February 2004. It may be noticed at this stage that even the reference made by the Central Government in relation to the industrial dispute questioning tranfers by the Central Government by its order dated 24th April 2001, was also challenged by the management in Writ Petition No.359 of 2002, and the same was also dismissed vide order of the court dated 4th March 2002. After having succeeded on all these occasions, the union again raised an industrial dispute vide their letter dated 11th August 2004 in relation to the denial of salary with malafide intention to the six workmen, who are referred to in Exhibit C to the petition. Conciliation proceedings taken before the Assistant Labour Commissinoer, who noticed that the management remained absent and there was no appearence on their behalf and that the conciliation proceedings ended with failure on 10th February 2005 vide his letter dated 9th March 2005 submitted his report accordingly to the appropriate government. The appropriate government, as already noticed, vide their letter dated 2nd February 2007, declined to make reference for the reasons aforenoticed. The short question which comes up for consideration of the court is, whether the appropriate government has transgressed its jurisdiction in declining the reference and has in any way determined the dispute on merits. 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 jdugment 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: 4 "5. Having stated the factual metrixs 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 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 5 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 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 appropriat 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 6 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 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)." 7 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 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 8 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 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 adjudication and thereby usurption of the power of 9 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 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." 10 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 : "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 11 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 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 12 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 35 of 1965 which was effective from 1.12.1965 with a clear legislative mandate to enable an individual workman to raise an industrial dispute in relation to and in the event he had been discharged, dismissed, retrenched or his services were otherwise terminated by his employer. The espousing of a cause of the workman by a Union to this particular class of cases was not mandatory. These developments would have definite impact on the scheme of this Act. Particularly, the appropriate Government is expected to be alive to the situation that the law framers have imposed an obligation upon them to consider the question of reference of an industrial dispute to the Labour Court/Industrial Tribunal effectively, meaningfully and to ensure that the unfair practices or victimisation was not permitted to prevail. The discretion of the appropriate Government under Section 10 is of wide magnitude but it must be exercised in consonance with the provisions of the Act as interpreted by judicial pronouncements. Limitations on exercise of such jurisdiction are inbuilt in various Sections of the Act and particularly Section 2(a), 11(a)