IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19.09.2007 CORAM: THE HONOURABLE MR.JUSTICE ELIPE DHARMARAO AND THE HONOURABLE MR.JUSTICE S.TAMILVANAN Writ Appeals No.977 and 978 of 1999 AND WAMP. No.133 of 2007 The Management of EID Parry (India) Ltd. Pugalur 639 113. ..Appellant in both the W.As. Vs. 1. The Govt.of Tamil Nadu rep.by the Secretary to Government Labour & Employment Department Fort St.George Madras 9. 2. The Presiding Officer Industrial Tribunal Chennai 600 104. 3. The Management of Nava Bharat Ferro Alloys Ltd. Madras 6. 4. The Secretary Pugalar Sarkarai Alai Podhu Thozhilalar Sangam Pugalur. 5. The Secretary Pugalur Sarkarai Alai Thozhilalar Sangam (AITUC) Pugalur. 6. The Secretary Pugalur Sarkarai Alai Thozhilalar Sangam (LPF) Pugalur. 7. The Secretary Pugalur Sarkarai Alai Anna Thizhilalar Munnetra Sangam (ATP) Pugalur. 8. The Secretary DSA Company Staff and Workers Union Pugalur. 9. The Secretary Deccan Sugars National Workers Union Pugalur (INTUC) 10.The Secretary, DSA Company Workers Union (CITU) Pugalur. ..Respondents in both the W.As. For appellants in both W.As. : Dr.Rajeev Dhawan, SC for M/s.T.S.Gopalan & Co. For R.4 to R.6 in both the W.As. : Mr.A.L.Somayaji, SC for M/s.T.R.Rajaraman For R.1 in both the W.As : Mr.R.Viduthalai, Advocate General assisted by Mr.G.Sankaran, Spl. G.P. For R.9 in both the W.As. : Mr.Dhamodharan For others : No Appearance COMMON JUDGMENT ELIPE DHARMARAO, J. By an agreement dated 30.10.1992, the Deccan Sugars Undertaking at Pugalur was transferred from Nava Bharat Ferro Alloys Limited (third respondent herein) to EID Parry (India) Limited (the appellant herein), which caused non-employment of 651 workmen. As against such transfer, the workers undertook protests, which turned violent. Then, the matter was referred to the Industrial Tribunal by the Government by their G.O.(D) Nos.318, dated 30.4.1993, considering the fact that there exists an industrial dispute to be adjudicated by the Industrial Tribunal. Aggrieved, the appellant herein has filed W.P.No.11407 of 1993 while the Management of third respondent has filed W.P.No.12539 of 1993, both praying to issue a Writ of Certiorari calling for the records of the Government in G.O.(D) No.318, dated 30.4.1993 and quash the same. The appellant Management has also filed W.P.No.11408 of 1993, praying to issue a Writ of Prohibition, prohibiting the Industrial Tribunal from proceeding to adjudicate the dispute referred to it by the Government in G.O.(D) No.318, dated 30.4.1993. The reference was challenged by the appellant and the third respondent Managements on the grounds that since the workmen were paid compensation, they cannot challenge the agreement and no such industrial dispute arose and that even regarding the said reference, a judicial review would lie. 2. The learned single Judge, considering all the facts and circumstances of the cases and holding that there exists an industrial dispute, which should be adjudicated by the industrial tribunal, as has been referred by the Government, has dismissed the writ petitions filed by both the Managements. Both the Managements have preferred Writ Appeals, wherein the Division Bench, held that there is no dispute that the referring power of the Government, though an administrative one in nature, is amenable to judicial review. The Division Bench, after perusing the files produced by the learned Additional Advocate General, had found that the Government had sufficient materials before taking a decision under Section 10(1) of the Industrial Disputes Act Act and the only requirement of Section 10(1) of the Industrial Disputes Act is formation of an opinion based on factual existence of industrial dispute or apprehended dispute which is abundantly available though the adequacy of which cannot be gone into under Article 226 of the constitution of India and that the Government had applied their mind and arrived at a conclusion that an Industrial dispute exists and after perusal of the G.O. file it is clear that no extraneous considerations were taken note of as claimed by the Management. With such observations, the Division Bench has dismissed all the writ appeals by its common judgment dated 6.1.2006. 3. Aggrieved against the said common judgment of the Division Bench of this Court rendered in W.A.Nos.977 and 978 of 1999, the appellant herein has preferred SLP (Civil) No.3840 of 2006 before the Honourable Supreme Court and Their Lordships of the Honourable Supreme Court, by the order dated 1.9.2006, have disposed of the said SLP. The Order of the Honourable Supreme Court dated 1.9.2006, as amended by the order dated 13.9.2006, reads as follows: "Having heard Dr.Rajiv Dhawan, learned senior counsel appearing on behalf of the petitioner and Mr.R.Venkataramani, learned senior counsel appearing on behalf of the State of Tamil Nadu, we are of the opinion that interest of justice would be subserved if the Division Bench of the High Court is requested to give an opportunity to the parties as the records were produced by the State after the judgment was reserved. The petitioner to file its response in relation to the records of these proceedings on the basis whereof a reference has been made by a notification dated 30.4.1993 in terms of Section 10(1)(d) of the Industrial Disputes Act, 1947. Keeping in view the fact that the parties have filed their respective written submissions before the High Court, we are of the opinion that the petitioner may be allowed to inspect the records produced by the State whereupon it may file its comments with regard thereto supported by an affidavit. The Division Bench may hear the parties confined only to the records filed by the State and the affidavits filed by the parties in relation thereto, if any. We hope and trust, keeping in view the fact that only limited hearing is required to be given by the Bench, which has passed the order, the matter would be taken up and disposed of within four weeks. The special leave petition is disposed of accordingly." 4. Thus, the remand made by the Honourable Supreme Court at the instance of the appellant herein is confined only to the records filed by the State and the affidavits filed by the parties in relation thereto and nothing more. 5. However, Dr.Rajiv Dhawan, the learned senior counsel appearing for the appellant has argued many things like res judicata, the aspect of judicial review into the matters of reference etc. and also relied on the following judgments: 1. ONGC MADRAS PORT CONTRACT EMPLOYEES UNION vs. THE MANAGEMENT OF OIL AND NATURAL GAS CORPORATION LTD. [2005 (2) CTC 1], 2. NEWSPAPERS LTD. vs. INDUSTRIAL TRIBUNAL, UTTAR PRADESH AND OTHERS [1957(2) LLJ 1], 3. HOCHTIEF GAMMON vs. STATE OF ORISSA AND OTHERS [(1975) 2 SC 649], 4. M/s.SHAW WALLACE AND COMPANY LTD. vs. STATE OF TAMIL NADU [1988 (1) LLJ 177], 5. NATIONAL ENGINEERING INDUSTRIES LTD. vs. STATE OF RAJASTHAN AND OTHERS [(2000) 1 SCC 371], 6. WORKERS OF SAGAR TALKIES (SOUTH INDIA CINEMA EMPLOYEES' ASSOCIATION) vs. ODEON CINEMA, MADRAS AND OTHERS [1957 (1) LLJ 639], 7. MAHARASHTRA STATE ELECTRICITY BOARD vs. INDUSTRIAL TRIBUNAL, BOMBAY AND OTHERS [1965(2) LLJ 458], 8. WORKMEN OF BRAHMPUTRA TEA ESTATE vs. THE INCOMING MANAGEMENT OF BRAHMPUTRA TEA ESTATE AND OTHERS [1969 (2) LLJ 685] and 9. TERI OAT ESTATES (P) LTD. vs. U.T. CHANDIGARH AND OTHERS [(2004) 2 SCC 130]. 6. In ONGC MADRAS PORT CONTRACT EMPLOYEES UNION vs. THE MANAGEMENT OF OIL AND NATURAL GAS CORPORATION LTD. [2005 (2) CTC 1], the Division Bench of this Court has held: "... the law is now well settled that even an administrative order is subject to judicial review, though on much more limited grounds than a quasi-judicial order. In other words, the grounds for challenging an administrative order are much narrower than the grounds available for challenging a quasi-judicial order. However, it cannot be said that an administrative order can never be challenged at all." It has also been held that: "... it was therefore incumbent upon the Central Government to have atleast recorded a prima facie finding whether the workmen concerned were employees of the writ petitioner or only employees of the contractor, and whether the claim of the workmen concerned had already been settled. The writ petitioner had raised specific objections to this effect before the Assistant Labour Commissioner in conciliation proceedings. In our opinion these objections were certainly relevant in deciding whether to make a reference or not, but it appears that they were not taken into consideration. In our opinion, the Central Government has not complied with the dicta of the Supreme Court in National Engineering Industries V. State of Rajasthan [2000 (1) SCC 371] and Bangaigaon Refinery & Petrochemicals Ltd. V. Samijuddin Ahmed [2001 (9) SCC 557] and hence the reference order is vitiated." 7. In NEWSPAPERS LTD. vs. INDUSTRIAL TRIBUNAL, UTTAR PRADESH AND OTHERS [1957(2) LLJ 1], a three Judge Bench of the Honourable Supreme Court has held: "In spite of the fact that the making of a reference by the Government under the Industrial Disputes Act is the exercise of its administrative powers, that is not destructive of the rights of an aggrieved party to show that what was referred was not an 'industrial dispute' at all and therefore the jurisdiction of the Industrial Tribunal to make the award can be questioned, even though the factual existence of a dispute may not be subject to a party's challenge." 8. In HOCHTIEF GAMMON vs. STATE OF ORISSA AND OTHERS [(1975) 2 SC 649], a three Judge Bench of the Honourable Apex Court has held: "The breach of Section 25F is no doubt a serious matter and normally the appropriate Government would refer a dispute of this kind for industrial adjudication; but the provision contained in Section 10(1) read with Section 12(5) clearly shows that even where a breach of Section 25F is alleged, the appropriate Government may have to consider the expediency of making a reference and if after considering all the relevant facts the appropriate Government comes to the conclusion that it would be inexpedient to make the reference, it would be competent to it to refuse to make such a reference. If the appropriate Government refuses to make a reference for irrelevant considerations, or on extraneous grounds, or acts mala fide, that, of course, would be another matter; in such a case a party would be entitled to move the High Court for a writ of mandamus." ".... The courts have power to see that the Execution acts lawfully. It is no answer to the exercise of that power to say that the Executive acted bona fide nor that they have bestowed painstaking 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 reconsider the matter in the light of relevant matters, though the propriety, adequacy or satisfactory character of those reasons may not be open to judicial review. Even of the Execution considers it inexpedient to exercise their powers they should state their reasons and there must be material to show that they have considered all the relevant facts." 9. In M/s.SHAW WALLACE AND COMPANY LTD. vs. STATE OF TAMIL NADU [1988 (1) LLJ 177], their Lordships of the Honourable Supreme Court have formulated the following principles regarding reference: "(1) The Government would normally refer the dispute for adjudication; (2) The Government may refuse to make reference, if - (a) the claim is very stale; (b) the claim is opposed to the provisions of the Act; (c) the claim is inconsistent with any agreement between the parties; (d) the claim is patently frivolous; (e) the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse; (f) the person concerned is not a workman as defined by the Act; (3) The Government should not act on irrelevant and extraneous considerations; (4) the Government should act honestly and bona fide; (5) The Government should not embark on adjudication of the dispute; and (6) The Government should not refuse reference on the ground that domestic enquiry was fairly and properly held and punishment awarded was appropriate." 10. In NATIONAL ENGINEERING INDUSTRIES LTD. vs. STATE OF RAJASTHAN AND OTHERS [(2000) 1 SCC 371], a Three Judge Bench of the Honourable Apex Court has held: "Existence or apprehension of an industrial dispute is a condition precedent for making a reference. High Court can entertain a writ petition impugning a reference on the ground of non-existence of an actual or apprehended industrial dispute. But, Industrial Tribunal cannot examine the validity of a reference...." 11. In WORKERS OF SAGAR TALKIES (SOUTH INDIA CINEMA EMPLOYEES' ASSOCIATION) vs. ODEON CINEMA, MADRAS AND OTHERS [1957 (1) LLJ 639], a Division Bench of this Court, has held: ".... when as in this case the persons concerned were never employed by the employer, such persons cannot be deemed to be workmen. At the most, one can spell out a contract to employ the old workers of Sagar Talkies; but a mere contract, by itself, could not bring about the relationship of employer and employee, or employer and workman." 12. In MAHARASHTRA STATE ELECTRICITY BOARD vs. INDUSTRIAL TRIBUNAL, BOMBAY AND OTHERS [1965(2) LLJ 458], their Lordships of the Honourable Apex Court have held that: "... the mere similarity of business is not the decisive test. It is not enough that the business should be of the same nature, but it must be the same business which is carried on by the transferor.... On an evaluation of all the factors, we are of the view that the conclusion to which the tribunal reached, namely, that the Board was a successor-in-interest of the company, cannot be sustained." 13. In WORKMEN OF BRAHMPUTRA TEA ESTATE vs. THE INCOMING MANAGEMENT OF BRAHMPUTRA TEA ESTATE AND OTHERS [1969 (2) LLJ 685], a three Judge Bench of the Honourable Supreme Court, agreeing with the contentions of the learned Solicitor General appearing on behalf of the first respondent therein that it was not the successor-in-interest of the Tea Company nor did he claim through the Receiver, who was one of the parties to the Reference, before the Labour Court, has held that the view of the Labour court, that the first respondent is not liable to answer any of the claims of the workmen concerned, is perfectly justified." 14. In TERI OAT ESTATES (P) LTD. vs. U.T. CHANDIGARH AND OTHERS [(2004) 2 SCC 130], their Lordships of the Honourable Supreme Court have held: "Exercise of statutory power or discretion by administrative authority affecting fundamental right, should be in consonance with doctrine of proportionality." 15. Citing the above judgments, Dr.Rajeev Dhawan, the learned senior counsel appearing for the appellant would submit that since no dispute, much less an industrial dispute lies between the appellant, third respondent and the workmen, the reference made by the first respondent Government even against the appellant, without proper appreciation of the facts and circumstances of the case and without application of mind and without recording any finding whether the workmen concerned were employees of the appellant or only the employees of the third respondent company and further in the absence of any conciliation proceedings, is bad in law. 16. On the contrary, repudiating the arguments advanced on the part of the learned senior counsel for the appellant, the learned Advocate-General would submit that the Government has taken into consideration all the facts and circumstances of the case and applying its mind has referred the matter for adjudication since in the considered opinion of the Government, there exists an industrial dispute to be adjudicated by the Industrial Tribunal. The learned Advocate General would further submit that all the judgments cited by the learned senior counsel for the appellant are rendered after an Award has been passed by the Labour Court and therefore, the appellant should have waited for the passing of the Award instead of filing the present writ petition against the reference itself. The learned Advocate General would further submit that whatever the contentions raised or objections taken regarding the reference that he is not answerable or that he is not a necessary party to the dispute has to be raised before the Tribunal, but not by questioning the main reference itself. In support of his contentions, the learned Advocate-General has relied on the following judgments: 1. STATE OF MADRAS vs. C.P.SARATHY [AIR 1953 SC 53], 2. RAM AVTAR SHARMA vs. STATE OF HARYANA [AIR 1985 SC 915], 3. GURMAIL SINGH AND OTHERS ETC. vs. STATE OF PUNJAB AND OTHERS [1991 (2) LLJ 76 (SC)], 4. N.T.C. (SOUTH MAHARASHTRA) LTD. vs. RASHTRIYA MILL MAZDOOR SANGH [(1993) 1 SCC 217] and 5. SULTAN SINGH vs. STATE OF HARYANA [(1996) 2 SCC 66]. 17. In STATE OF MADRAS vs. C.P.SARATHY [AIR 1953 SC 53], the Constitutional Bench of the Honourable Supreme Court has held: "This is, however, not to say that the Government will be justified in making a reference under S.10(1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry. It is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference. But, it must be remembered that in making a reference under S.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 any the less 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 it was a judicial or quasi-judicial determination. No doubt, it will be open to a party seeking to impugn the resulting award to show that what was referred by the Government was not an industrial dispute within the meaning of the Act, and that, therefore, the Tribunal had no jurisdiction to make the award. But, if the dispute was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters..." 18. In RAM AVTAR SHARMA vs. STATE OF HARYANA [AIR 1985 SC 915], their Lordships of the Honourable Apex Court have held as follows: "While exercising power under S.10(1), the function performed by the appropriate Government is an administrative function and not a judicial or quasi-judicial function." "If the Government performs an administrative act while either making or refusing to make a reference under S.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 S.10. S.10 requires the appropriate Government to be satisfied that an industrial dispute exists or is apprehended. This may permit the appropriate Government to determine prima facie whether an industrial dispute exists 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. Therefore, the court may not issue writ of mandamus, directing the Government to make a reference but the court can after examining the reasons given by the appropriate Government for refusing to make a reference come to a conclusion that they are irrelevant, extraneous or not germane to the determination and then can direct the Government to reconsider the matter." 19. In GURMAIL SINGH AND OTHERS ETC. vs. STATE OF PUNJAB AND OTHERS [1991 (2) LLJ 76 (SC)], the Three Judge Bench of the Honourable Apex Court has held that fictitious transfer of ownership of an undertaking will not fall under Section 25FF of the Industrial Disputes Act. 20. In N.T.C. (SOUTH MAHARASHTRA) LTD. vs. RASHTRIYA MILL MAZDOOR SANGH [(1993) 1 SCC 217], the Three Judge Bench of the Honourable Apex Court has held: "However, such transfer may not in all cases amount to the termination of employment. The proviso to Section 25-FF deals with the matter as to in what circumstances the transfer by itself would not be considered as termination of employment and the workmen need not be paid the retrenchment compensation. The reading of Section 25-FF as a whole, therefore, shows that unless the transfer falls under the proviso, the employees of the undertaking concerned are entitled to claim compensation against the transferor and they cannot make any claim for re-employment against the transferee of the undertaking. But when the transfer falls under the said proviso, the transfer does not result in the termination of the contract of employment." 21. In SULTAN SINGH vs. STATE OF HARYANA [(1996) 2 SCC 66], their Lordships of the Honourable Apex Court have held that sub-section (5) of Section 12 of the Act does not enjoin the appropriate Government to record reasons for making reference under S.10(1) and it enjoins to record reasons only when it refuses to make a reference. 22. Citing the above judgments, the learned Advocate General would submit that the transfer of undertaking itself is mala fide and therefore, as has been held by the Honourable Apex Court in Gurmail Singh's case (supra), such a fictitious transfer of ownership of an undertaking will not fall under Section 25FF of the Act and therefore, the Government is correct in referring the matter for adjudication. 23. Mr.A.L.Somayaji, the learned senior counsel appearing for the workers would submit that labour agitation is an industrial dispute and therefore, the Labour Court has to adjudicate upon the matter. The learned senior counsel has also submitted that the entire case has to be confined only to the remand made by the Honourable Supreme Court i.e. only with reference to the records. Replying to the argument of the learned senior counsel appearing for the appellant that in the absence of any conciliation proceedings, the reference is bad, Mr.Somayaji, would submit that the letters written by the Labour Commissioners, narrating the entire facts and circumstances of the case, can be construed as conciliation failure reports. He would further submit that the Government is not restrained to refer the matter when it has satisfied that there exists an industrial dispute to be adjudicated upon by the Labour Court. 24. Regarding the question of res judicata as pointed out by the learned senior counsel for the appellant, based on the decision of the learned single Judge of this Court in WORKMEN OF DECCAN SUGARS vs. NAVA BHARAT FERRO ALLOYS LTD. [1993 (2) LLN 173), it is to be mentioned that the learned single Judge, considering the issue regarding the validity of the transfer and whether in a case of transfer of undertaking, the employer is bound to comply with the requirements of S.25-N and 25-O of the Act, and finding that the claim of the workmen that transfer of undertaking would amount to closure of undertaking has no merit, dismissed the writ petition in limine. This judgment was rendered by the learned single Judge, without notice to the management and at the instance of the learned counsel for the petitioners therein and therefore, as has already been held by the Division Bench of this Court, it cannot be held to be operating as a res judicata. 25. At this juncture, it is also to be mentioned that though a common judgment has been passed by the Division Bench of this Court on 6.1.2006 in Writ Appeals No.977 to 979 of 1999, only the appellant in Writ