Case: M/s. Hochtlef Gammon Vs. State of Orissa and Others

and that is a matter to be determined by looking at the Act and its scope and object in conferring a discretion upon the Minister rather than by the use of adjectives." .... a decision of the Minister stands on quite a different basis; he is a public officer charged by Parliament with the discharge of a public discretion affecting Her Majestys subjects; if he does not give any reason for his decision it may be, if circumstances warrant it, that a court may be at liberty to come to the conclusion that he had no good reason for reaching that conclusion and order a prerogative writ to issue accordingly."That was a case where the Minister had given elaborate reasons and it was, therefore, possible for their Lordships of the House of Lords to consider the reasons given by the Minister in elaborate detail and show how he had misdirected himself. They also pointed out that by merely keeping silent the Minister cannot avoid the Court considering the whole question.The principles deducible from the decisions of this Court and the above decision of the House of Lords which, though not binding on us, appeals to us on principle may be set out 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 They 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 t hat the Executive 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. It 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 scrutiny. Even if the Executive 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.Judged by these tests the order of the State Government is unsustainable. Here the Government did not say that it considered it inexpedient to refer the question for adjudication or that the considerations put forward by the appellant before it were irrelevant. Neither the Labour Commissioner nor the Government seem to have noticed that this contract is not one of the usual kind wherein a contractor undertakes to do a certain work for a certain sum. In that case the question of profit and loss or as between the contractor and the party for whom he is executing the work any question as to who was to pay labour would not arise whether it is with regard to wages or bonus. The contractor will have to bear the full cost o material as well as the full liability for paying the workmen on any head whatsoever. In this contract the company had to pay for the material as well as labour. The appellant got paid only for its professional services. There was in any case in A the contract no provision that the appellant was to incur any item of expenditure or make any payment in relation to the workman. In such a contract it would be unusual if it was to be considered that the appellant were expected to pay the bonus for the workman. This however need not be taken as our final view on this point. But it is a relevant Matter for consideration by the Government in deciding whether to refer the matter to the Tribunal or not. Furthermore, when the question of bonus in this case arose what is known as t he Full Bench formula was holding the field in the matter of payment of bonus. If the bonus were to be paid by the appellant it could hardly be brought within that formula. As the company had certainly not begun production at that stage it would be difficult to calculate the bonus with reference to the business of the company either. The mistake that the Labour Commissioner committed was in not realising that the dispute concerned not Cr merely two parties but three because from t he beginning the appellant had made it clear that they would pay the bonus if the necessary amount was paid to them by the company.We have set out the facts of this case at considerable length and considered the whole question. We think that the Governments order in this case really amounts to an outright refusal to consider relevant matters and the Government also misdirected itself in point of law in wholly omitting to take into account the relevant considerations which as held by the House of Lords is unlawful behavior. It has failed to realise that in effect the contractor employed labour for the company wh() was the real paymaster. It held failed to take into account the fact that the workmen wanted the bonus from either the company or the appellant. Naturally the workmen were not interested who paid them as long as they were paid. It would bear repetition to say again that the. Original mistake arose out of the assumption by the Labour Commissioner that this was a case of an ordinary contract which would apply to other contractors also. He had apparently not seen the contract between the company and the appellant and that mistake was adopted by the State Government and they stuck to it inspite of the application made to them by the appellant after the disposal of the earlier appeal by this Court, giving all relevant facts. It does not appear from the communication of the Government to the appellant that they had applied their mind to any of the considerations set out in the appellants application.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]It is apparent from their reply that the Government had not applied their mind to the facts placed before them. There was at least an arguable case on the point as to who was liable to pay the bonus and in that case the company would have been a necessary and appropriate party. Even if the Government thought that the company was not a necessary party the question as to who was liable to pay the bonus was a very relevant question and that made the company a necessary or at least a proper party. The attitude of the appellant had throughout been that their contract was a cost contract, that the company had to pay labour and whilehave employed the workmen the employer was really the company. That contention may or may not be upheld by the Tribunal. Ultimately if the Tribunal should hold that the appellant is the party responsible for payment of bonus the question as between the company on the one hand and appellant on the other may have to be decided by arbitration as provided in the contract between them or otherwise. It appears to us, therefore, that not only was this an appropriate question to be referred to the Industrial Tribunal for adjudication but even the company should be interested in getting itself impleaded as a party so as to put forward any contention which it may decide to put forward as regards the question whether bonus was payable and if so the quantum thereof, as also the question as to who would be liable to pay the bonus instead of adopting, as we have said earlier, an ostrich likepower of the Courts in relation to the orders of the appropriate Government in the matter of referring industrial disputes for adjudication is no longer inby these tests the order of the State Government is unsustainable. Here the Government did not say that it considered it inexpedient to refer the question for adjudication or that the considerations put forward by the appellant before it were irrelevant. Neither the Labour Commissioner nor the Government seem to have noticed that this contract is not one of the usual kind wherein a contractor undertakes to do a certain work for a certain sum. In that case the question of profit and loss or as between the contractor and the party for whom he is executing the work any question as to who was to pay labour would not arise whether it is with regard to wages or bonus. The contractor will have to bear the full cost o material as well as the full liability for paying the workmen on any head whatsoever. In this contract the company had to pay for the material as well as labour. The appellant got paid only for its professional services. There was in any case in A the contract no provision that the appellant was to incur any item of expenditure or make any payment in relation to the workman. In such a contract it would be unusual if it was to be considered that the appellant were expected to pay the bonus for the workman. This however need not be taken as our final view on this point. But it is a relevant Matter for consideration by the Government in deciding whether to refer the matter to the Tribunal or not. Furthermore, when the question of bonus in this case arose what is known as t he Full Bench formula was holding the field in the matter of payment of bonus. If the bonus were to be paid by the appellant it could hardly be brought within that formula. As the company had certainly not begun production at that stage it would be difficult to calculate the bonus with reference to the business of the company either. The mistake that the Labour Commissioner committed was in not realising that the dispute concerned not Cr merely two parties but three because from t he beginning the appellant had made it clear that they would pay the bonus if the necessary amount was paid to them by the company.We have set out the facts of this case at considerable length and considered the whole question. We think that the Governments order in this case really amounts to an outright refusal to consider relevant matters and the Government also misdirected itself in point of law in wholly omitting to take into account the relevant considerations which as held by the House of Lords is unlawful behavior. It has failed to realise that in effect the contractor employed labour for the companywas the real paymaster. It held failed to take into account the fact that the workmen wanted the bonus from either the company or the appellant. Naturally the workmen were not interested who paid them as long as they were paid. It would bear repetition to say again that the. Original mistake arose out of the assumption by the Labour Commissioner that this was a case of an ordinary contract which would apply to other contractors also. He had apparently not seen the contract between the company and the appellant and that mistake was adopted by the State Government and they stuck to it inspite of the application made to them by the appellant after the disposal of the earlier appeal by this Court, giving all relevant facts. It does not appear from the communication of the Government to the appellant that they had applied their mind to any of the considerations set out in the appellants application.