IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:28..02..2005. CORAM THE HON’BLE MR.MARKANDEY KATJU, CHIEF JUSTICE and THE HON’BLE MR.JUSTICE D.MURUGESAN W.A.No.3622 of 2002 ------- O.N.G.C. Madras Port Contract Employees’ Union, Rep. by its Secretary, No.8, Venkatesapuram 2nd Street, Ice House, Triplicane, Chennai – 600 005. ..Appellant/ 3rd Respondent Vs. 1. The Management of Oil and Natural Gas Corporation Ltd., Rep. by its Regional Director, Southern Regional Business Centre, No.8, Gandhi Irwin Road, Egmore, Chennai – 600 008. 2. The Government of India, Ministry of Labour, Rep. by its Under Secretary, Shram Shakti Bhavan, Rafi Marg, New Delhi – 110 001. 3. The Assistant Labour Commissioner (C) – II, Ministry of Labour, Shastri Bhavan, Haddows Road, Chennai – 600 006. https://hcservices.ecourts.gov.in/hcservices/ 4. The Transport and Dock Workers Union, rep. by its Secretary, No.9, II Line Beach, Chennai – 600 001. 5. M/s.Pandian Transport, rep. by its Proprietor Mr.Pandian, No.40, M.S.Koil Street, Royapuram, Chennai – 600 013. ..Respondents/ Petitioner and Respondents1,2,4&5 PRAYER: Writ Appeal filed against the order of the learned single Judge dated 19.04.2002 passed in W.P.No.21407 of 2000, as stated therein. ---------- For Appellant :: Mr.K.M.Ramesh For Respondent – 1 :: Mr.Ranganatha Reddy For M/s.King and Patridge Respondent No.2 :: No Appearance --------- J U D G M E N T THE HON’BLE THE CHIEF JUSTICE This writ appeal has been filed against the impugned order of the learned single Judge dated 19.04.2002 passed in W.P.No.21407 of 2000. 2. We have heard learned counsel for the parties, and perused the record. 3. The writ petitioner (1st respondent in this Writ Appeal) had filed the writ petition praying for quashing of the order of the first respondent therein (Union of India) dated 17.11.1999, and the corrigendum dated 13.10.2000. By the https://hcservices.ecourts.gov.in/hcservices/ order dated 17.11.99 the following reference had been made by the Central Government under Sections 10(1) and 10(2-A) of the Industrial Disputes Act, 1947 to the Industrial Tribunal, Chennai referring the following matter to the Tribunal. “Whether the demand of ONGC Madras Port Contract Employees Union for regularization of 42 contract labourers listed in Annexure ‘A’ is justified? If so, to what relief the workmen are entitled?” 4. The subsequent corrigendum dated 13.10.2000 states:- “In this Ministry’s order of even number dated 17.11.1999, in the schedule thereof, the number of contract workman appearing in second sentence may be read as 54.” 5. The writ petitioner (1st respondent in this writ appeal) is a public sector corporation. In the course of its business it made an attempt to discover oil and natural gas in the sea near Chennai. By January 1995 it was found that no oil or natural gas was available at Chennai, and hence the exploration activities were wound up. During the exploration activities the petitioner had to transport material and other supplies from on-shore to off-shore. For this purpose a contract for stevedoring, shipping services, loading and unloading of materials and transport of materials, etc., was entered into between the petitioner and the 5th respondent in the writ petition, M/s.Pandian Transports, and for executing this contract M/s.Pandian Transports had engaged dock workers who are covered by the Dock Workers (Regulation of Employment) Act, 1948. This contract between the writ petitioner and M/s.Pandian Transports was for a period of one year commencing from 18.09.1994. The contract was terminated w.e.f.04.01.1995. 6. The 4th respondent in the writ petition namely., the Transport and Dock Workers Union raised demands in respect of wages payable to them. It may be mentioned that M/s.Pandian Transport had entered into a settlement under Section 18(1) of the Industrial Disputes Act on 29.08.1994 with the aforesaid 4th respondent-Union. On the termination of the contract between the petitioner and the 5th respondent, the said Union made a demand on the 5th respondent for payment of earned wager for the month of December, 1994 and 3 days in January, 1995 https://hcservices.ecourts.gov.in/hcservices/ i.e., upto 3.1.1995. Thereafter, the petitioner received a copy of the communication dated 29.05.1995 by the 4th respondent addressed to the 5th respondent stating that the 5th respondent had paid all the dues to the workers including the earned wages for the period from 10.09.1994 to 03.01.1995, but the PF amount for the period 01.12.1994 to 03.01.1995 remained unpaid. This was however settled by the 5th respondent on 24.05.1996. Thus, it is alleged that all the claims of the personnel had been fully settled by 1996. 7. The 4th respondent-Union sought to raise an industrial dispute with respect to revision of wages of the workmen of the 5th respondent, and the petitioner-Corporation was also impleaded as a party in the conciliation proceedings. The petitioner-Corporation took the stand in conciliation proceedings that there was no privity of contract between the petitioner-Corporation and the members of the 4th respondent – Union, and the members of the 4th respondent were employees of the contractor (the 5th respondent) and not of the petitioner. According to the petitioner-Corporation, it had no control over the said contract labour (the members of the 4th respondent), and the consideration for the said contract was on the basis of the tonnage of the material lifted and not on the basis of the personnel engaged. The Assistant Labour Commissioner sent his failure of conciliation report on 30.01.1995. Thereafter, on 19.09.1995 the first respondent passed an order specifically stating that the dispute was not fit for adjudication, as the workmen were never employed by ONGC, but were employed by various contractors, and hence no dispute existed against the petitioner-Corporation for their employment. 8. It may be mentioned that after the termination of the contract between the petitioner-Corporation and the 5th respondent on 03.01.1995 and settlement of accounts between them, the petitioner-Corporation directed the 5th respondent transport to clear certain materials of the petitioner- Corporation lying in the godown within Madras Harbour precincts in respect of which the earlier contract was validated for a period of three months with effect from 03.09.1996. In respect of this work, the 5th respondent had entered into a Memorandum of Understanding on 27.06.1996 with the 4th respondent for carrying out the said work on a consolidated sum of Rs.2 lakhs per month without any claim for P.F., bonus, kits, liveries, etc., The said work was completed https://hcservices.ecourts.gov.in/hcservices/ and the 5th respondent settled the account with the 4th respondent. 9. It is alleged that long after the termination of the contract as aforesaid the personnel engaged by the 5th respondent, who were then members of the 4th respondent –Union, formed another Union under the name and style of ONGC Madras Port Employees Union, the 3rd respondent in the writ petition. The petitioner-Corporation alleged that this was done with a view to make unlawful demand and for illegal enrichment of some people. The 3rd respondent-Union tried to raise an industrial dispute and sent a communication dated 21.08.1997 to the Regional Labour Commissioner, Chennai stating that the petitioner-Corporation had without any rhyme or reason terminated the contract with the 5th respondent under which their members were engaged and all of a sudden they had been rendered jobless. The Assistant Labour Commissioner (C) held that there was failure of conciliation stating that ONGC earlier awarded contract for shipping, stevedoring services, etc., on need basis. However, the 1st respondent-Central Government passed the impugned order dated 17.11.1999 referring the dispute on 42 workmen to the Industrial Tribunal, Chennai, which was revised later by a corrigendum dated 13.10.2000 increasing the number of contract labourers to 54. 10. The main submission of the petitioner-Corporation before the learned single Judge was that the Central Government had not applied its mind before passing the impugned reference order, particularly since it had earlier refused to make a reference. It was alleged that the impugned reference order was passed mechanically without due application of mind, and was arbitrary and illegal. 11. It is true that there is no absolute bar in making a reference order after an earlier reference had been refused by the Central Government; vide Avon Services (Production Agencies) Private Limited Vs. Industrial Tribunal, 1979 (I) LLJ. This is because the decision to make or not to make a reference is an administrative decision and not a quasi- judicial decision, vide State of Madras Vs. C.P.Sarathy, 1953 (I) LLJ 174. 12. In Western India Match Company Ltd., Vs. Their Workmen, 1970 (II) LLJ 256 = 1973 (2) LLN 357 the Supreme Court observed https://hcservices.ecourts.gov.in/hcservices/ “In the light of the nature of the function of the Government and the object for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer, it cannot change its mind on a reconsideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference. But where it reconsiders its earlier decision it can make the reference only if the dispute is an industrial one and either exists at that stage or is apprehended and the reference it makes must be with regard to that and no other industrial dispute”. 13. In Binny Limited Vs. Their Workmen, 1972 (I) LLJ 47 the facts were that the Government had declined twice to make a reference of the dispute, and hence the subsequent reference was challenged as invalid. The Supreme Court rejected this contention holding that merely because on two previous occasions the Government had declined to make a reference would not entail the Court to conclude that there is no subsequent cause for reference at a later date. 14. In Ram Avtar Sharma and Another Vs. State of Haryana and Another, 1985 (II) LLJ 187 the Supreme Court reiterated that while exercising the power of making a reference under Section 10(1) of the Industrial Disputes Act the Appropriate Government performs an administrative act and not a judicial or quasi-judicial act. Being an administrative function the Appropriate Government cannot delve into the merits of the dispute and determine the lis. Under Section 10 of the Industrial Disputes Act the Appropriate Government is to be satisfied that an Industrial Dispute exists or is apprehended and this may permit the 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 and not for industrial peace and harmony. 15. However, in the same decision in Ram Avtar Sharma’s Case (supra) the Supreme Court also observed (vide para-6): - “every administrative determination must be based on grounds relevant and germane to the exercise of power. If the administrative determination is based on irrelevant, extraneous or https://hcservices.ecourts.gov.in/hcservices/ grounds not germane to the exercise of power it is liable to be questioned in exercise of the power of judicial review”. 16. In State of Bombay Vs. K.P.Krishnan & Others, 1960 (II) LLJ 592 it was held that a writ of mandamus would lie against the Government if the order passed by it under Section 10(1) of the Industrial Disputes Act is based or induced by reasons as given by the Government which are extraneous, irrelevant and not germane to the determination. In such a situation the Court would be justified in issuing a writ of mandamus even in respect of an administrative order. May be the Court may not issue a 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. 17. Thus, in view of the aforesaid observations of the Supreme Court in Ram Avtar Sharma’s Case (supra) it has to be held that there is a limited power of judicial review of the administrative order under Section 10(1) of the Industrial Disputes Act for making or refusing to make a reference, and it cannot be said that the writ court is totally shut out from interfering with an order making or refusing to make a reference under Section 10(1) of the Industrial Disputes Act. 18. In Sultan Singh Vs. State of Haryana, 1996 (2) SCC 66 the Supreme Court observed that since an order making reference under Section 10(1) of the Industrial Disputes Act is an administrative order, no opportunity of hearing need be given to the employer before passing the reference order even if earlier reference had been refused, and no reasons need be recorded. 19. The learned counsel for the appellant submitted that as held by the Supreme Court in Avon Services Case (supra) it is not absolutely necessary that there ought to be some fresh material before the Government for reconsideration of its earlier decision (refusing to make a reference). The Government may reconsider its decision on account of some new facts brought to its notice or for any other relevant consideration and such other relevant consideration may include the threat to industrial peace by the continued https://hcservices.ecourts.gov.in/hcservices/ existence of the industrial dispute without any attempt at resolving it and that a reference would at least bring the parties to the talking table. 20. The learned counsel for the appellant also relied on the decision of the Sultan Singh’s Case (supra) wherein it was observed (vide para-4): - “Sub-Section (5) of Section 12 of the Industrial Disputes Act does not enjoin the Appropriate Government to record reasons for making reference under Section 10(1). It enjoins to record reasons only when it refuses to make a reference”. 21. We agree with the learned counsel for the appellant that no opportunity of hearing need be given to the employer nor reasons recorded in the reference order even if earlier reference had been refused, and no fresh material is required for making a reference as held in Avon Services Case (supra). 22. However, 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. 23. The law in England earlier was that only a judicial or quasi-judicial order was subject to judicial review, but an administrative order was not subject to judicial review. However, subsequently after the historical decision of the House of Lords in the Wednesbury Case (infra) the law was changed, and it became accepted that even an administrative order is subject to judicial review, though on certain limited grounds. 24. To quote the classic passage from the judgment of Lord Greene M.R. in Associated Provincial Picture House Ltd., Vs. Wednesbury Corporation, 1947 (2) All E.R. 680:- “It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word ‘unreasonable’ in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the https://hcservices.ecourts.gov.in/hcservices/ things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in law. He must call his own attention to the matters which he is bound to consider. He must exclude from his consideration matters which are irrelevant to what he has to consider. If he does not obey those rules, he may truly be said, and often is said, to be acting ‘unreasonably’. Similarly, there may be something so absurd that no sensible person could ever dream that it lay within the powers of the authority.” 25. In the Constitutional Bench decision in Bikas Chatterjee Vs. Union of India and Others, 2004(7) SCC 634 the Supreme Court observed that even the decision of the President of India on a petition under Article 72 of the Constitution of India is open to judicial review, but on very limited grounds. 26. In the same Constitutional Bench decision (supra) reliance was placed on the Division Bench decision of the Supreme Court in Satpal Vs. State of Haryana, 2000 (5) SCC 170 where the grounds of judicial review were stated as follows:- “(i) the Governor exercising the power under Article 161 himself without being advised by the Government; or (ii) the Governor transgressing his jurisdiction; or (iii) the Governor passing the order without application of mind; or (iv) the Governor’s decision is based on some extraneous consideration; or (v) mala fides.” 27. When even the decision of the President of India under a Constitutional provision is subject to judicial review (though on very limited grounds) there can be no doubt that the decision of the Central Government under Section 10 of the Industrial Disputes Act will also be subject to judicial review, though again on very limited grounds. Hence there is no total exclusion of judicial review against such a decision. One of the grounds given for judicial review in Satpal’s case (supra) is non-application of mind before taking the decision or reliance on some extraneous considerations. (the Wednesbury Principle) 28. As long back as in 1891 the House of Lords was called upon to consider the scope of some of the provisions of the Licensing Act, 1872 which gave discretion to the Magistrates https://hcservices.ecourts.gov.in/hcservices/ in granting certain licenses. The question for decision was as to the nature of the discretion granted. Lord Halsbury L.C. speaking for the House observed in Susannah Sharp Vs. Wakefield, 1891 AC 173 at p.179: “ ‘discretion’ means when it is said that something is to be done within the discretion of the authorities that that something is to be done according to the rules of reason and justice, not according to private opinion: Rooke’s Case, according to law, and not humour. It is to be, not arbitrary, vague and fanciful, but legal and regular”. 29. In Padfield Vs. Minister of Agriculture, Fisheries and Food, 1968 (1) All E.R. 604 the facts were that the appellants in that appeal made a complaint to the Minister of Agriculture, Fisheries and Food, United Kingdom under Section 19(3) of the Agricultural Marketing Act, 1958 asking that the complaint be referred to the committee of investigation established under that enactment. The Minister refused to refer the complaint to the committee of investigation, and his decision was challenged in Court. The House of Lords held that “Where a statute conferring a discretion on a Minister to exercise or not to exercise a power did not expressly limit or define the extent of his discretion and did not require him to give reasons for declining to exercise the power, his discretion might nevertheless be limited to the extent that it must not be so used, whether by reason of misconstruction of the statute or other reason, as to frustrate the object of the statute which conferred it, and although the Minister had full or unfettered discretion under Section 19(3) of the Agricultural Marketing Act, 1958, he was bound to exercise it lawfully viz., not to mis-direct himself in law, nor to take into account irrelevant matters, nor to omit relevant matters from consideration”. 30. In the same decision Lord Upjohn observed:- “My Lords, on the basic principles of law to be applied there was no real difference of opinion, the great question being how they should be applied to this case. The Minister in exercising his powers and duties conferred on him by statute can only be controlled by a prerogative order which will only issue if he acts unlawfully. Unlawful behaviour by the Minister may be stated with sufficient accuracy https://hcservices.ecourts.gov.in/hcservices/ for the purposes of the present appeal (and here I adopt the classification of Lord Parker C.J. in the divisional court): (a) by an outright refusal to consider a relevant matter; or (b) by mis-directing himself in point of law, or (c) by taking into account some wholly irrelevant or extraneous consideration; or (d) by wholly omitting to take into account a relevant consideration. There is ample authority for these propositions which were not challenged in argument. In practice they merge into one another and ultimately it becomes a question whether for one reason or another the Minister has acted unlawfully in the sense of misdirecting himself in law, that is, not merely in respect of some point of law but by failing to observe the other headings which I have mentioned”. 31. The above view of the House of Lords was followed by the Supreme Court in Rohtas Industries Ltd., Vs. S.D.Agarwal, AIR 1969 SC 707 (vide paragraphs 30 to 35). 32. Thus, it is well settled that on certain limited grounds administrative orders are subject to judicial review. As observed by the Supreme Court in State of Orissa v. Gokulananda Jena , (2003) 6 SCC 465 (vide para-6): - “ It is to be noted that an administrative order is amenable to the writ jurisdiction under Article 226 of the Constitution of India” 33. As observed by the Supreme Court in Tata Cellular v. Union of India, AIR 1996 SC 11, in proceedings and decisions taken in administrative matters, the scope of judicial review is confined to the decision making process and does not extend to the merits of the decision taken. In the present case, there is definite infirmity in the decision making process, which led to the impugned reference order. That infirmity was that the Central Government did not take into account the objections raised by the writ petitioner before making the reference. Hence, the decision was vitiated not because of infirmity in the merits of the decision, but because of the infirmity in the decision making process. https://hcservices.ecourts.gov.in/hcservices/ 34. In Indian Railway Construction Company Ltd. v. Ajay Kumar, (2003) 4 SCC 579), the Supreme Court observed (vide para-14): - “ If the power has been exercised on non- consideration or non-application of mind to relevant factors, the exercise of power will be regarded as manifestly erroneous” 35. As regard reference orders under Section 10(1) of the Industrial Disputes Act, the Supreme Court in National Engineering Industries Ltd. Vs. State of Rajasthan and Others, 2000 (1) SCC 371 observed (vide paragraph-24) :- “It will be thus seen that the High Court has jurisdiction to entertain a writ petition when there is an allegation that there is no industrial dispute and none apprehended which could be the subject- matter of reference for adjudication to the Industrial Tribunal under Section 10 of the Act. Here it is a question of jurisdiction of the Industrial Tribunal, which could be examined by the High Court in its writ jurisdiction. It is the existence of an Industrial Dispute, which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it. If there is no industrial dispute in existence or apprehended the appropriate Government lacks power to make any reference”.(Emphasis supplied) 36. Similarly, in Bongaigaon Refinery & Petrochemicals Ltd. Vs. Samijuddin Ahmed, 2001 (9) SCC 557 the facts were that the appellant-company had challenged an order of reference under Section 10(1) of the Industrial Disputs Act by filing a writ petition in the High Court. The learned single Judge held that the reference was entirely mis-conceived inasmuch as the employment given to the respondent was obtained on concealment of material facts, and hence withdrawn. Inasmuch as the respondent never joined the employment of the appellant the question of making a reference to test the validity of termination of service of the respondent did not arise. Hence, the reference order dated 2.6.1995 was quashed. The respondent filed a writ appeal which was allowed and against that order the appeal was filed before the Supreme Court. https://hcservices.ecourts.gov.in/hcservices/ 37. The Supreme Court allowed the appeal holding that the documentary evidence filed on behalf of the appellant clearly went to show that the respondent had never entered into the employment of the appellant. He was offered an employment under a special scheme