Case: State of Bombay Vs. K.P. Krishnan and Ors

It appears that the respondents addressed four demands to the company; they were in respect of gratuity, holidays, classification of certain employees and for the payment of an unconditional bonus for the financial year ended October 31, 1953. The respondents union also addressed the Assistant Commissioner of Labour, Bombay, forwarding to him a copy of the said demands, and intimating to him that since the company had not recognised the respondents union there was no hope of any direct negotiations, between the union and the company. The Assistant Commissioner of Labour, who is also the conciliation officer, was therefore requested to commence the conciliation proceedings at an early date. Soon thereafter the company declared a bonus equivalent to 1/4th of the basic earnings for the yearThe respondents then informed the company that they were entitled to a much higher bonus having regard to the profits made by the company during the relevant year and that they had decided to accept the bonus offered by the company without prejudice to the demand already submitted by them in that behalf. After holding a preliminary discussion with the parties the conciliation officer examined the four demands made by the respondents and admitted into conciliation only two of them; they were in respect of the classification of certain employees and the bonus for the yearthe two remaining demands were not admitted in conciliation. The conciliation proceedings initiated by the conciliator, however, proved infructuous with the result that on July 5, 1954, the conciliator made his failure report under S. 12 (4) of the Act. In his report the conciliator has set out the arguments urged by both the parties before him in respect of both the items of dispute. In regard to the respondents claim for bonus the conciliator made certain suggestions to the company but the company did not accept them, and so it became clear that there was no possibility of reaching a settlement on that issue. Incidentally the conciliator observed that it appeared to him that there was considerable substance in the case made out by the respondents for payment of additional bonus. The conciliator also dealt with the respondents demand for classification and expressed his opinion that having regard to the type and nature of work which was done by the workmen in question it seemed clear that the said work was mainly of a clerical nature and the demand that the said workmen should be taken on theroll appeared to be in consonance with the practice prevailing in other comparable concerns. The management, however, told the conciliator that the said employees had received very liberal increments and had reached the maximum of their scales and so the management saw no reason to accede to the demand for classification. On receipt of this report the Government of Bombay (now the Government of Maharashtra) considered the matter and came to the conclusion that the dispute in question should not be referred to an industrial tribunal for its adjudication. Accordingly, as required by S. 12 (5) on December 11, 1954, the Government communicated to the respondents the said decision and stated that it does not propose to refer the said dispute to the tribunal under S. 12 (5) "for the reason that the workmen resorted to go slow during the yearIt is this decision of the Government refusing to refer the dispute for industrial adjudication that has given rise to the present proceedings.2. On February 18, 1955, the respondents filed in the Bombay High Court a petition under Art. 226 of the Constitution praying for the issue of a writ of mandamus or a writ in the nature of mandamus or other writ, direction or order against the State of Maharashtra (hereafter called the appellant) calling upon it to refer the said dispute for industrial adjudication under S. 10 (1) and S. 12 (5) of the Act. To this application the company was also impleaded as an opponent. This petition was heard by Tendolkar J. He held that S. 12 (5) in substance imposed an obligation on the appellant to refer the dispute provided it was satisfied that a case for reference had been made, and he came to the conclusion that the reason given by the appellant for refusing to make a reference was so extraneous that the respondents were entitled to a writ of mandamus against the appellant. Accordingly he directed that a mandamus shall issue against the appellant to reconsider the question of making or refusing to make a reference under S. 12 (5) ignoring the fact that there was aand taking into account only such reasons as are germane to the question of determining whether a reference should or should not be made.3. Against this decision the appellant as well as the company preferred appeals. Chagla, C. J. and Desai, J., who constituted the Court of Appeal, allowed the two appeals to be consolidated, heard them together and came to the conclusion that the view taken by Tendolkar, J. was right and that the writ of mandamus had been properly issued against the appellant. The appellant and the company then applied for and obtained a certificate from the High Court and with that certificate they have come to this Court by their two Appeals Nos. 37 and 38 of 1957

Court's reasoning:
The tenor of the High Courts judgment may seem to suggest that the only material on which the conclusion of the appropriate Government under S. 12 (5) should be based is the said report. There is no doubt that having regard to the background furnished by the earlier provisions of S. 12 the appropriate Government would naturally consider the report very carefully and treat it as furnishing the relevant material which would enable it to decide whether a case for reference has been made or not; but the words of S. 12 (5) do not suggest that the report is the only material on which Government must base its conclusion. It would be open to the Government 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 its decision whether a reference should be made or not. The problem which the Government has to consider while acting under . S. 12 (5) (a) is whether there is a case for reference. This expression means that Government must first consider whether a prima facie case for reference has been made on the merits. If the Government comes to the conclusion that a prima facie case for reference has been made then it would be open to the Government also to consider whether there are any other relevant or material facts which would justify its refusal to make a reference. The question as to whether a case for reference has been made out can be answered in the light of all the relevant circumstances which would have a bearing on the merits of a case as well as on the incidental question as to whether a reference should nevertheless be made or not. A discretion to consider all relevant facts which is conferred on the Government by S. 10 (1) could be exercised by the Government even in dealing with cases under S. 12 (5) provided of course the said discretion is exercised bona fide, its final decision is based on a consideration of relevant facts and circumstances, and the second part of S. 12 (5) is complied with.It would, therefore, follow that on receiving the failure report from the conciliation officer Government would consider the report and other relevant material and decide whether there is a case for reference. If it is satisfied that there is such a case for reference it may make a reference. If it does not make a reference it shall record and communicate to the parties concerned its reasons therefor. The question which arises at this stage is whether the word "may" used in the context means "shall", or whether it means nothing more than "may" which indicates that the discretion is in the Government either to refer or not to refer.On the other hand, if the power to make reference is ultimately to be found in S. 10(1) it would not be easy to read the relevant portion of S. 12 (5) as imposing an obligation on the Government to make a reference. Section 12(5) when read with S. 10(1) would mean, according to the appellants, that, even after considering the question, the Government may refuse to make a reference in a proper case provided of course it records and communicates its reasons for its final decision. In this connection the appellant strongly relies on the relevant provisions of S. 13. This section deals with the duties of Boards and is similar to S. 12 which deals with conciliation officers. A dispute can be referred to a Board in the first instance under S. 10 (1) or under S. 12 (5) itself. Like the conciliation officer the Board also endeavours to bring about a settlement of the dispute. Its powers are wider than those of a conciliator but its function is substantially the same; and so if the efforts made by the Board to settle the dispute fail it has to make a report under S. 13(3). Section 13(4) provides that if on receipt of the report made by the Board in respect of a dispute relating to a public utility service the appropriate Government does not make a reference to a Labour Court, Tribunal or National Tribunal under S. 10, it shall record and communicate to the parties concerned its reasons therefor. The provisions of S. 13 considered as a whole clearly, indicate that the power to make a reference in regard to disputes referred to the Board are undoubtedly to be found in S. 10 (1). Indeed in regard to disputes relating toutility services there is no express provision made authorising the Government to make a reference, and even S. 13 (4) deals with a case where no reference is made in regard to a dispute relating to a public utility service which means that if a reference is intended to be made it would be under the second proviso to S. 10(1). Incidentally this fortifies the conclusion that whenever reference is made the power to make it is to be found under S. 10(1). Now, in regard to cases falling under S. 13(4) since the reference has to be made under S. 10 there can be no doubt that the considerations relevant under the second proviso to S. 10(1) would be relevant and Government may well justify their refusal to make a reference on one or the other of the grounds specified in the said proviso. Besides, in regard to disputes other than those falling under S. 13(4) if a reference has to be made, it would clearly be under Section 10 (1). This position is implicit in the scheme of Section 13. The result, therefore, would be that in regard to a dispute like the present it would be open to Government to refer the said dispute under Section 12 (5) to a Board, and if the Board fails to bring about a settlement between the parties Government would be entitled either to refer or to refuse to refer the said disputes for industrial adjudication under S. 10(1). There can be no doubt that if a reference has to be made in regard to a dispute referred to a Board under S. 13, S. 10(1) would apply, and there would be no question of importing any compulsion or obligation on the Government to make a reference. Now, if that be the true position under the relevant provisions of S. 13 it would be difficult to accept the argument that at a prior stage when Government is acting under S. 12 (5) it is obligatory on it to make a reference as contended by theother words, though there may be a difference of emphasis in the two methods of approach adopted by the parties in interpreting S. 12(5) ultimately both of them are agreed that 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.It would thus appear that even the appellant and the company do not dispute that if a consideration of all the relevant and germane factors leads the Government to the conclusion that there is a case for reference the Government must refer though they emphasise that the scope and extent of relevant consideration is very wide; in substance the plea of the respondents that "may" must mean "shall" in S. 12(5) leads to the sameorder passed by the Government under S. 12(5) may be an administrative order and the reasons recorded by it may not be justiciable in the sense that their propriety, adequacy or satisfactory character may not be open to judicial scrutiny; in that sense it would be correct to say that the court hearing a petition for mandamus is not sitting in appeal over the decision of the Government; nevertheless if the court is satisfied that the reasons given by the Government for refusing to make a reference are extraneous and not germane then the court can issue, and would be justified in issuing, a writ of mandamus even in respect of such an administrative order.After an elaborate argument on the construction of S. 12(5) was addressed to us it became clear that on this part of the case there was no serious dispute between the parties. That is why we think the controversy as to the construction of S. 12(5) is of no more than academicHigh Court has held that it is wholly extraneous and it has issued a writ of mandamus against the appellant. We have already seen that the only reason given by the appellant is that the workmen resorted to go slow during the yearIt would appear prima facie from the communication addressed by the appellant to the respondents that this was the only reason which weighed with the Government in declining to refer the dispute under S.between capital and labour as well as sympathetic understanding on the part of capital and discipline on the part of labour are essential for achieving the main object of the Act; and so it would not be right to assume that the Act requires that every dispute must necessarily be referred to industrial adjudication. It may be open to Government to take into account the facts that the respondents showed lack of discipline in adoptingtactics, and since their conduct during a substantial part of the relevant year offended against the standing orders that was a fact which was relevant in considering whether the present dispute should be referred to industrial adjudication or not. On the other hand, the High Court has held that the reason given by the Government is wholly extraneous and its refusal to refer the dispute is plainly punitive in character and as such is based on considerations which are not at all germane to S. 12(5). This Court has always expressed its disapproval of breaches of law either by the employer or by the employees, and has emphasised that while the employees may be entitled to agitate for their legitimate claims it would be wholly wrong on their part to take recourse to any action which is prohibited by the standing orders or statutes or which shows wilful lack of discipline or a concerted spirit ofwith the employer. Even so the question still remains whether the bare and bald reason given in the order passed by the appellant can be sustained as being germane or relevant to the issue between the parties.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.It may for instance be open to the Government in considering the question of expediency to enquire whether the dispute raises a claim which is very stale, or which is opposed to the provisions of the Act, or is inconsistent with any agreement between the parties, and if the Government comes to the conclusion that the dispute suffers from infirmities of this character, it may refuse to make the reference.But even in dealing with the question as to whether it would be expedient or not to make the reference Government must not act in a punitive spirit but must consider the question fairly and reasonably and take into account only relevant, facts and circumstances.In exercising its power under S. 10(1) it would not be legitimate for the Government for instance to say that it does not like the appearance, behaviour or manner of the secretary of the union, or even that it disapproves of the political affiliation of the union, which has sponsored the dispute. Such considerations would be wholly extraneous and must be carefully excluded in exercising the wide discretion vested in the Government. In the present case it is significant that the company has voluntarily paid three months bonus for the relevant year notwithstanding the fact that the workmen had adopted goslow tactics during the year, and the report of the conciliator would show prima facie that he thought that the respondents claim was not at all frivolous. The reasons communicated by the Government do not show that the Government was influenced by any other consideration in refusing to make the reference. It is further difficult to appreciate how the misconduct of the respondents on which the decision of the Government is based can have any relevance at all in the claim for the classification of the specified employees which was one of the items in dispute.If the work done by these employees prima facie justified the claim and if as the conciliators report shows the claim was in consonance with the practice prevailing in other comparable concerns the misconduct of the respondents cannot be used as a relevant circumstance in refusing to refer the dispute about classification to industrial adjudication. It was a claim which would have benefited the employees in future and the order passed by the appellant deprives them of that benefit in future. Any consideration of discipline cannot, in our opinion, be legitimately allowed to impose such a punishment on the employees. Similarly, even in regard to the claim for bonus, if the respondents are able to show that the profits earned by the company during the relevant year compared to the profits earned during the preceding years justified their demand for additional bonus it would plainly be a punitive action to refuse to refer such a dispute solely on the ground of their misconduct.In this connection it may be relevant to remember that for the said misconduct the company did take disciplinary action as it thought fit and necessary, and yet it paid the respondents bonus to which it thought they were entitled. Besides, in considering the question as to whether a dispute in regard to bonus should be referred for adjudication or not it is necessary to bear in mind the well established principles of industrial adjudication which govern claims for bonus.A claim for bonus is based on the consideration that by their contribution to the profits of the employer the employees are entitled to claim a share in the said profits, and so any punitive action taken by the Government by refusing to refer for adjudication an industrial dispute for bonus would, in our opinion, be wholly inconsistent with the object of the Act. If the Government had given some relevant reasons which were based on, or were the consequence of, the misconduct to which reference is made it might have been another matter. Under these circumstances we are unable to hold that the High Court was in error in coming to the conclusion that the impugned decision of the Government is wholly punitive in character and must in the circumstances be treated as based on a consideration which is not germane and is extraneous. It is clear that the Act has been passed in order to make provision for the investigation and settlement of industrial disputes, and if it appear that in cases falling under S. 12(5) the investigation and settlement of any industrial dispute is prevented by the appropriate Government by refusing to make a reference on grounds which are wholly irrelevant and extraneous a case for the issue of a writ of mandamus is clearly established.In the result we confirm the order passed by the High Court though not exactly for the same reasons.