1. Industrial dispute regarding bonus and employee classification — Conciliation failure — Government refusal to refer dispute for adjudication based on workmen's misconduct — Writ of mandamus issued. (Para 1 , 4 )
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1960 Supreme(SC) 182
SUPREME COURT OF INDIA
18th August, 1960
B.P. SINHA, C.J.I., J.L. KAPUR, P.B. GAJENDRAGADKAR, K. SUBBA RAO, AND K.N. WANCHOO, JJ.
1. State of Bombay (now Maharashtra) (in C. A. No. 37 of 1957); (2) Firestone Tyre and Rubber Co., (in C. A. No. 38 of 1957), Appellants
Versus
K. P. Krishnan and others in both the appeals), Respondents.
Civil Appeals Nos. 37 and 38 of 1957.
Advocates appeared
Mr. C. K. Daphtary, Solicitor-General of India, (M/s. R. Ganpathy Iyer and R. H. Dhebar, Advocates, with him), for appellant; (In C. A. No. 37 of 1957) and Respondent No. 6 (In C. A. No. 38 of 1957); M/s. S. D. Vimadalal and I., N. Shroff, Advocates, for Appellant, (In C. A. No. 38 of 1957) and Respondent No. 6 (In C. A. No. 37 of 1957); 1224 Mr. Rajni Patel, Advocate and M/s. S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, Advocates of M/s. Rajinder Narain and Co., for Respondents Nos. 1 and 3 to 5. (In both the appeals); (In both the appeals), M/s. S. B. Naik and K. R. Chaudhuri, Advocates, for Respondent No. 2.
Advocates:
C.K.DAFTARY, I.M.SHROFF, J.B.DADACHAN, K.R.CHAUDHARY, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAJNI PATEL, RAMESHWAR NATH ROY, S.B.Naik, S.D.VIMADALAL, S.N.ANDLEY
C.K.DAFTARY, I.M.SHROFF, J.B.DADACHAN, K.R.CHAUDHARY, P.L.VOHRA, R.Ganapathy Iyer, R.H.Dhebar, RAJINDAR NARAIN, RAJNI PATEL, RAMESHWAR NATH ROY, S.B.Naik, S.D.VIMADALAL, S.N.ANDLEY
The Government's discretion to refuse referring an industrial dispute under Section 12(5) of the Industrial Disputes Act must be based on germane and relevant facts. Refusals based on punitive or extraneous considerations, such as "go-slow" tactics, are illegal and subject to a writ of mandamus.
Headnote:(A) Industrial Disputes Act, 1947 - Sections 10(1) and 12(5) - Reference of industrial dispute - Discretion of Government - The power of the appropriate Government to refer a dispute under Section 12(5) is ultimately derived from Section 10(1). While the Government possesses wide discretion to refer or refuse a reference, such discretion must be exercised bona fide and based on relevant and material facts. If a reference is refused, the Government must record and communicate the reasons therefor. A refusal based on reasons that are wholly extraneous, irrelevant, or punitive in character is unsustainable in law. (Paras 8, 9, 11 and 17)
(B) Constitution of India - Article 226 - Writ of Mandamus - A writ of mandamus lies against the Government if the refusal to refer an industrial dispute is not bona fide, is based on a consideration of wholly irrelevant facts and circumstances, or if the Government fails to record and communicate the reasons for such refusal. (Para 17)
Facts of the case:
Workmen raised demands regarding the classification of certain employees and the payment of an additional bonus. Following the failure of conciliation proceedings, the conciliation officer submitted a failure report. The appropriate Government refused to refer the dispute for industrial adjudication on the sole ground that the workmen had resorted to "go-slow" tactics during the relevant year. The High Court issued a writ of mandamus directing the Government to reconsider the reference, ignoring the "go-slow" factor as an extraneous consideration.
Findings of Court:
The reason provided by the Government for refusing the reference was found to be punitive and extraneous. The misconduct of adopting "go-slow" tactics had no relevance to the claim for employee classification and was inconsistent with the principles governing bonus claims based on profits. The court held that while considerations of expediency are relevant, they cannot be used as a guise to introduce punitive or irrelevant considerations.
Issues: Whether the word "may" in Section 12(5) of the Industrial Disputes Act is mandatory or directory, and whether the adoption of "go-slow" tactics by workmen is a germane reason for the Government to refuse a reference to industrial adjudication.
Ratio Decidendi: The Government's discretion to refuse a reference under Section 12(5) must be based on germane and relevant factors. A decision to refuse a reference based on punitive grounds or extraneous considerations, such as disciplinary misconduct, is illegal and justifies the issuance of a writ of mandamus to ensure the investigation and settlement of industrial disputes.
Result: Appeals dismissed.
Legal Category Hierarchy
- labour and industrial law
- administrative law
Table of Contents
2. Whether Section 12(5) of the Industrial Disputes Act imposes a mandatory obligation to refer disputes or grants discretionary power based on relevant considerations. (Para 8 , 14 , 15 )
3. Government's discretion to refuse reference must be bona fide and based on germane facts; punitive reasons based on misconduct are extraneous to the merits of the dispute. (Para 11 , 16 , 17 , 18 )
4. Refusal to refer an industrial dispute under Section 12(5) is invalid if based on extraneous, irrelevant, or punitive considerations rather than the merits of the case. (Para 17 , 18 )
5. Appeals dismissed and High Court order confirmed. (Para 19 )
6. Does Section 12(5) of the Industrial Disputes Act confer an independent power to refer disputes?
No. The power to make a reference is primarily conferred by Section 10(1). Section 12(5) provides the procedure following conciliation failure, but the reference is ultimately made under Section 10(1) to ensure the government can exercise essential powers, such as prohibiting strikes under Section 10(3). (Para 9 , 10 )
7. Is the government bound to base its decision to refer a dispute solely on the conciliation officer's report?
No. While the government must consider the report, it may also consider other relevant facts brought to its notice. The decision must be bona fide and based on a consideration of whether a prima facie case for reference exists on the merits. (Para 11 )
8. Does the word may in Section 12(5) imply a mandatory obligation to refer the dispute if a case is made out?
The court found the distinction academic, but noted that regardless of whether may means shall or may, any refusal to refer must be based on germane and relevant reasons, not extraneous factors. (Para 13 , 14 , 15 , 16 )
9. Can the government refuse to refer an industrial dispute for adjudication based on the misconduct of the workmen?
No. Refusing a reference solely on punitive grounds, such as go-slow tactics, is considered extraneous and irrelevant, especially when the dispute concerns merits like employee classification or bonus claims based on profit contribution. (Para 18 )
Judgment
GAJENDRAGADKAR, J. : These two appeals arise from an industrial dispute between the Firestone Tyre and Rubber Co. of India Ltd., (hereafter called the company) and its workmen (hereinafter called the respondents), and they raise a short and interesting question about the construction of S. 12 (5) of the Industrial Disputes Act 14 of 1947 (hereinafter called the Act). 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 year 1952-53. The 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 year 1952-53; the 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 the monthly-paid roll 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 year 1952-53". It 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 th
