State Of Bombay vs K.P. Krishnan And Ors.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 18 August 1960

Coram: B.P. Sinha, J.L. Kapur, K. Subba Rao, K.N. Wanchoo, P.B. Gajendragadkar

In this case the Court observed that the two appeals originated from an industrial dispute between Firestone Tyre and Rubber Co. of India Limited, hereinafter referred to as the company, and its workmen, hereinafter referred to as the respondents. The dispute concerned four separate demands that the respondents had addressed to the company. The first demand related to gratuity, the second to holidays, the third to the classification of certain employees, and the fourth to the payment of an unconditional bonus for the financial year that ended on 31 October 1953. The respondents’ trade union also sent a copy of these demands to the Assistant Commissioner of Labour, Bombay, and informed the Commissioner that because the company had not recognised the union, direct negotiations between the union and the company were unlikely. Consequently the Assistant Commissioner, who also acted as the conciliation officer, was asked to commence conciliation proceedings as soon as possible.

Shortly thereafter the company announced that it would pay a bonus equal to one‑quarter of the basic earnings for the year 1952‑53. Upon receiving this announcement the respondents told the company that, in view of the profits earned by the company during that year, they were entitled to a substantially higher bonus. The respondents further stated that they would accept the bonus offered by the company, but only without prejudice to their earlier demand for a larger bonus. After an initial discussion with both parties, the conciliation officer examined the four demands and decided to admit only two of them into the conciliation process. The two demands that were admitted concerned the classification of certain employees and the bonus for the year 1952‑53; the other two demands, relating to gratuity and holidays, were excluded from conciliation.

The conciliation proceedings that were subsequently conducted by the conciliator failed to achieve a settlement. As a result, on 5 July 1954 the conciliator filed a failure report under section 12(4) of the Industrial Disputes Act, 1947. In that report the conciliator set out the arguments advanced by both the company and the respondents with respect to each disputed item. Regarding the respondents’ claim for a bonus, the conciliator made several suggestions to the company, but the company rejected those suggestions, making it clear that no settlement could be reached on that point. The conciliator noted, however, that the case presented by the respondents for the payment of an additional bonus appeared to have considerable merit. With respect to the classification demand, the conciliator expressed the opinion that, given the type and nature of the work performed by the workmen in question, the work was essentially clerical and that placing those employees on the monthly‑paid roll would be consistent with the practice observed in other comparable enterprises.

The management, on the other hand, told the conciliator that the employees in question had already received generous salary increments and had reached the maximum scale for their positions, and therefore the management saw no justification for acceding to the classification demand. After receiving the conciliator’s failure report, the Government of Bombay, now the Government of Maharashtra, examined the matter and concluded that the dispute should not be referred to an industrial tribunal for adjudication. Accordingly, in accordance with section 12(5) of the Act, on 11 December 1954 the Government communicated its decision to the respondents, stating that it would not refer the dispute to a tribunal because the workmen had resorted to a go‑slow during the year 1952‑53. This refusal by the Government to refer the dispute for industrial adjudication gave rise to the present appeal before this Court.

In this case, the Court noted that the conciliator had reported that the work performed by the disputed employees was mainly clerical and that placing those employees on the monthly‑paid roll was consistent with the practice of similar enterprises. The management, however, replied that the employees had already received generous salary increments, had reached the ceiling of their pay scales, and therefore saw no justification for re‑classifying them. After receiving the conciliator’s failure report, the Government of Bombay, now the Government of Maharashtra, examined the matter and decided that the dispute should not be referred to an industrial tribunal for adjudication. Pursuant to section 12(5) of the industrial relations Act, the Government, on 11 December 1954, communicated its decision to the respondents, stating that it would not refer the dispute because the workmen had resorted to a go‑slow during the year 1952‑53. This refusal to refer the dispute formed the basis of the present suit. On 18 February 1955, the respondents filed a petition in the Bombay High Court under article 226 of the Constitution, seeking a writ of mandamus or any similar writ, direction or order directing the State of Maharashtra—hereinafter called the appellant—to refer the dispute to an industrial tribunal under sections 10(1) and 12(5) of the Act. The company was impleaded as an opponent. The petition was heard by Justice Tendolkar, who held that section 12(5) in substance imposed a duty on the appellant to refer the dispute when a case for reference was made out. He found that the reason offered by the appellant—namely the workmen’s go‑slow—was extraneous to the statutory criteria, and consequently the respondents were entitled to a mandamus. Accordingly, he ordered that a mandamus be issued directing the appellant to reconsider the question of reference under section 12(5), ignoring the go‑slow and basing the decision solely on reasons relevant to whether a reference should be made. Both the appellant and the company appealed this order. The Court of Appeal, consisting of Chief Justice Chagla and Justice Desai, allowed the two appeals to be consolidated, heard them together, and affirmed the view of Justice Tendolkar that the writ of mandamus was correctly granted against the appellant. After obtaining a certificate of fitness from the High Court, the appellant and the company brought two separate appeals—numbers 37 and 38 of 1957—before this Court. These appeals were ordered to be heard together, and both raised the question of the construction of section 12(5) of the Act.

The two appeals were heard together, and each of them presented the question of how section 12(5) of the Act should be interpreted. Before addressing that issue, the Court found it necessary to set out an additional relevant fact. It was undisputed that, during a portion of the year in question, the employees adopted a go‑slow tactic. The company maintained that this go‑slow period lasted for seven months, whereas the employees claimed it lasted about five months. Under clause 23(c) of the company’s standing orders, any deliberate slowing down of work, reduction of output, or encouragement of such conduct constitutes misconduct. Consequently, disciplinary action was taken against fifty‑eight workmen who were employed by the company. The employees argued that, despite their adoption of the go‑slow strategy for several months, the total production for that year compared very favorably with production in previous years, and that the profit earned by the company fully justified their claim for an additional bonus. The employer, on the other hand, contended that because the employees had pursued a go‑slow during the relevant year, the industrial dispute concerning bonus and classification should not be referred for adjudication under section 12(5). The Court therefore had to determine whether the order issued by the employer, refusing to refer the dispute for adjudication under section 12(5), could be sustained in light of these facts.

The Court then examined the structure of the relevant provisions of the Act. Chapter III, comprising sections 10 and 10A, deals with the reference of industrial disputes to Boards, Courts, or Tribunals. Section 10(1) provides that when the appropriate Government is of the opinion that an industrial dispute exists or is likely to arise, it may at any time, by written order, refer the dispute to any one of the authorities listed in clauses (a) to (d). This provision is fundamental to the Act’s scheme because it shows that the primary purpose of the legislation is to establish a cheap and speedy mechanism for the resolution of all industrial disputes by referring them to adjudicatory bodies, thereby avoiding industrial conflict caused by frequent lock‑outs and strikes. The provision contemplates reference not only of existing disputes but also of disputes that may be anticipated. Accordingly, the provision confers a wide, and arguably absolute, discretion on the Government to either refer or refuse to refer an industrial dispute. Such discretion must be exercised in good faith and on the basis of relevant and material facts. The second proviso to section 10(1) deals specifically with disputes concerning a public utility service. It states that when a notice under section 22 has been served in respect of such a dispute, the Government shall, unless it finds the notice to be frivolous or vexatious or considers it inexpedient to act, make a reference under this subsection even if other proceedings under the Act concerning the same dispute have already begun. This proviso thus imposes an obligation on the Government to refer the dispute unless it is satisfied that the notice is frivolous, vexatious, or that expediency requires otherwise. It also makes clear that reference may be made despite the existence of other parallel proceedings. Hence, while the Government’s discretion to refer an industrial dispute under section 10(1) is generally very broad, it is limited by the conditions set out in the second proviso. Section 10(2), which follows, addresses situations in which the Government is required to refer a dispute but has no…

In a case where a notice has been served concerning a dispute, the appropriate Government was required to refer the matter unless it was convinced that the notice had been made frivolously or vexatiously, or that making a reference would be inexpedient. Even if other proceedings under the Act had already been initiated with respect to the same dispute, the Government could still be obliged to refer the dispute under the sub‑section. The Court explained that the second proviso to section 10(1) created a mandatory duty to refer, subject only to the Government’s satisfaction that the notice was frivolous, vexatious, or that expediency demanded otherwise. Consequently, the provision allowed a reference even when parallel proceedings were already in progress. The Court further observed that, while the Government’s discretion to refer an industrial dispute under section 10(1) was broadly expansive, this discretion was expressly narrowed by the second proviso to that same subsection. Section 10(2), on the other hand, dealt with situations where the Government had no discretion at all. When either jointly or separately the parties to an industrial dispute applied in the manner prescribed for a reference, the Government was bound to refer the dispute provided it was satisfied that the applicants represented the majority of each party. In such cases the sole condition for the Government was the majority‑representation test; once satisfied, the Government had no alternative but to make the reference as demanded by the parties.

The Court then turned to section 10A, which governed voluntary arbitration agreements entered into by an employer and his workmen before any reference under section 10 had taken place. Under this provision the parties could refer the dispute to an arbitrator named in their arbitration agreement, and section 10A(3) required the Government, within fourteen days of receiving the agreement, to publish it in the Official Gazette. Section 10A(4) stipulated that the appointed arbitrator or arbitrators must investigate the dispute and forward the arbitration award to the appropriate Government, while section 10A(5) expressly excluded such arbitrations from the scope of the Arbitration Act. Accordingly, voluntary references to arbitration were placed outside any Governmental discretion. The Court summarized that the discretionary power of the Government to refer industrial disputes under the Act was therefore confined to the circumstances described in sections 10(1) and 10(2). The appropriate authorities for dealing with industrial disputes under the Act were listed as the conciliator, the Board, the Court of Enquiry, the Labour Court, the Tribunal and the National Tribunal. Finally, section 11(3) was noted to confer on the Board, Court of Enquiry, Labour Court, Tribunal and National Tribunal all the powers enjoyed by a civil court when trying a suit concerning the matters specified in clauses (a) to (d); a conciliation officer was mentioned subsequently.

The Court explained that the position of the conciliation officer differs from that of the other authorities mentioned earlier. Under section 11(4) the officer is expressly empowered to summon and examine any relevant document, and he possesses the same authority as a civil court to compel the production of such documents. Section 12 then sets out the duties that attach to the conciliation officer. Clause 12(1) directs the officer to conduct conciliation proceedings in the manner prescribed by law whenever an industrial dispute exists or is anticipated. Where the dispute relates to a public‑utility service and a notice has been served under section 22, the officer is obligated to hold conciliation proceedings on that dispute. This provision therefore creates a distinction: for disputes that do not involve a public‑utility service the officer may, at his discretion, decide whether to hold conciliation proceedings; but for a public‑utility dispute, once the statutory notice has been issued, the officer has no discretion and must proceed with conciliation. Section 12(2) adds that the officer must investigate the dispute without delay with the aim of achieving a settlement. In the course of his investigation the officer may examine every matter that bears upon the merits and the appropriate settlement of the dispute, and he may take any step that he considers necessary to persuade the parties to reach a fair and amicable resolution. The role of the officer, as his title suggests, is essentially that of a mediator who seeks to bring the parties together and encourage them to resolve their differences without resorting to adjudication. If the officer succeeds in obtaining a settlement, section 12(3) requires him to file a report of that settlement together with a memorandum of the settlement signed by the parties. Section 18(3) then provides that any settlement reached through the conciliation process is binding on the parties specified in the settlement. Consequently, when the officer’s mediation results in a signed settlement, that settlement acquires the same binding effect as an award made under section 18(3). On occasions, however, the officer’s attempts at conciliation may fail because one of the parties refuses to cooperate or the parties cannot agree on settlement terms. In such circumstances, section 12(4) mandates that the officer forward a report to the appropriate Government. The report must detail the steps the officer took to ascertain the facts and circumstances of the dispute, the efforts made to bring about a settlement, a full statement of the relevant facts and circumstances, and the reasons, in the officer’s opinion, why a settlement could not be achieved. The purpose of requiring such a comprehensive report is to inform the Government of all material facts and the reasons for the failure of conciliation, thereby enabling the Government to decide on the next course of action under section 12(5).

The Court explained that the purpose of requiring the conciliation officer to submit a full report is to furnish the Government with every material fact, including the reasons why the conciliation process failed, so that the Government possesses the information necessary to decide what action to take under section 12(5). In interpreting section 12(5), the Court stressed that one must keep in view the entire background of the steps undertaken by the conciliation officer pursuant to sections 12(1) through 12(4). Accordingly, the officer must have conducted conciliation proceedings, carried out an investigation of the dispute, attempted mediation, failed to secure a settlement, and then prepared a comprehensive and detailed report setting out the facts discovered, the inquiry undertaken, and the officer’s conclusions about why a settlement could not be achieved. Section 12(5), which is the provision under consideration in these appeals, provides that after the Government has examined the report referred to in subsection (4), it may, if it is satisfied that a case exists for referral, refer the dispute to a Board, Labour Court, Tribunal or National Tribunal. Conversely, if the Government decides not to refer the matter, it is obliged to record its reasons and communicate those reasons to the parties involved. Thus, the provision obliges the Government to review the officer’s report and to determine whether the facts support a case for reference. Where the Government is convinced that a case for reference exists, it may make the reference; where it is not convinced, it may decline to refer, but it must nonetheless set out and communicate to the parties its reasons for declining, which amount to the reasons for not being satisfied that a case for reference exists. The High Court had held that the word “may” in the first limb of section 12(5) should be read as “shall” because the power to refer is paired with a mandatory duty to explain any decision not to refer. Both the appellant and the company disputed this interpretation, arguing that the requirement to give reasons does not transform “may” into “shall” and that the Government’s discretion to refer or not to refer is as wide as that provided under section 10(1) of the Act. They further contended that, even after receiving the report, the Government could only refer a dispute under the authority of section 10(1), which alone confers the power to make a reference. The Court noted that, while it is correct that section 12(5) merely states that the Government may make a reference, this language does grant the Government the power to refer a dispute, albeit subject to the accompanying duty to explain any refusal to do so.

The High Court seemed to favor the interpretation that, in matters governed by section 12(5), a reference could be made solely under that provision and independently of section 10(1). The Court held that this was not the true effect of section 12(5). It was pointed out that if references under section 12(5) were required to be made only under that clause, the result would be highly anomalous. Section 10(3) authorised the appropriate Government, by order, to prohibit the continuation of any strike or lock‑out connected with an industrial dispute that existed on the date of the reference, but that power applied only to disputes referred under section 10(1). Consequently, a reference made solely under section 12(5) without reference to section 10(1) would leave the Government without any authority to stop a strike that continued after the dispute had been referred to the tribunal, a situation that could not have been intended by the legislature. It was noted that sections 23 and 24 barred the commencement of strikes and lock‑outs while the specified proceedings were pending; therefore, even when a reference was made under section 12(5), an employer could not declare a lock‑out and workers could not strike after that reference. However, if a strike or lock‑out had already begun before the reference, the Government would lack the power to order its termination. Section 24(2) clarified that a lock‑out or strike was deemed illegal only when an order under section 10(3) prohibited it. Thus, the essential power to preserve industrial peace during adjudication existed only when a reference was made under section 10(1). The same reasoning applied to the powers conferred by sections 10(4), 10(5), 10(6) and 10(7). In other words, the substantive provisions contained in subsections (3) to (7) of section 10(1), which form an integral part of the reference scheme in Chapter III, indicated that even if the Government acted under section 12(5), the reference ultimately had to be made under section 10(1). It was also observed that the respondents’ petition sought a writ of mandamus directing the appellant to make a reference under both sections 10(1) and 12(5). Finally, it was argued that, as a matter of construction, the language of section 12(5) stating that the Government “may make such reference” does not itself create an independent power to make a reference, because that power already existed in section 10(1).

It was observed that the provision of Section 12(5) was not intended to create a separate power to make a reference. That power had already been granted by Section 10(1). Moreover, Section 12(5) appears in a chapter that deals with the procedure, powers and duties of the authorities under the Act. Accordingly, it was held that Section 12(5) merely confers on the appropriate Government the authority to act in the manner specified in the subsection, namely, to make a reference if it concludes that a case for reference exists, and that such authority must be sourced in Section 10(1). In other words, when Section 12(5) states that the Government may make such a reference, it is understood to mean that the reference must be made under the authority of Section 10(1). Therefore, it would be unreasonable to hold that Section 12(5), standing alone and independent of Section 10(1), confers a distinct power on the appropriate Government to make a reference.

The next issue examined was whether, while exercising the power under Section 12(5), the appropriate Government was obliged to base its decision solely on the report prepared by the conciliation officer under Section 12(4). The High Court’s judgment appeared to suggest that the Government’s conclusion under Section 12(5) should be based only on that report. While it is undeniable that, given the background established by the earlier provisions of Section 12, the Government will naturally give careful attention to the report and treat it as a key source of material for deciding whether a case for reference exists, the language of Section 12(5) does not limit the Government to that report alone. The Government is free to consider any other relevant facts that come to its knowledge or that are brought to its attention. In light of all such relevant facts, the Government must decide whether a reference should be made. The central question for the Government under Clause 12(5)(a) is whether there is a case for reference. This requires an initial assessment of whether a prima‑facie case for reference exists on the merits. If the Government finds that a prima‑facie case does exist, it may then examine whether any additional relevant or material facts justify refusing to make the reference. The determination of whether a case for reference has been made must be undertaken considering all the circumstances that bear on the merits of the case, as well as any incidental considerations that may affect the decision to refer.

The Court observed that the discretion granted to the Government by section 10(1) to consider all relevant facts could be exercised even when the Government acted under section 12(5). This exercise of discretion had to be carried out in good faith, the final decision had to be based upon a careful consideration of relevant facts and circumstances, and the Government also had to fulfil the second part of section 12(5). The Court noted that section 12 governed conciliation proceedings for every industrial dispute, irrespective of whether the dispute concerned a public‑utility service. Under section 12(1) the conciliation officer was obliged to conduct conciliation proceedings once a notice under section 22 had been served. If those efforts failed and the officer submitted a failure report under section 12(4), the Government was then required to act under section 12(5) and determine whether a case existed for referring the dispute to the appropriate authority. In dealing with a dispute that involved a public‑utility service, the Court held that the considerations laid down in the second proviso to section 10(1) could be relevant. Accordingly, the Government could lawfully refuse to make a reference if it was convinced that the notice was frivolous or vexatious, or if making a reference would be inexpedient. The Court further explained that just as the discretion under section 10(1) could be exercised for industrial disputes that did not involve public‑utility services, the same discretion and the provisions of the second proviso could also be invoked by the Government when it dealt with a public‑utility dispute under section 12(5).

The Court then explained the procedure that followed the receipt of a failure report. Upon receiving the report, the Government was required to examine the report together with any other material it considered relevant and to decide whether a case for reference existed. If the Government was satisfied that such a case existed, it was authorised to make a reference. Conversely, if the Government chose not to refer the dispute, it was obliged to record the reasons for that decision and to communicate those reasons to the parties involved. The Court identified the pivotal question of whether the word “may” used in the statutory provision imposed a mandatory duty (“shall”) or merely indicated a discretionary power. The respondent argued that when a power is coupled with a duty, language that appears directory must be read as compulsory. Citing the observation of Mr. Justice Coleridge in Reg. v. Tithe Commissioners, the Court noted that although the words are technically empowering, long‑standing judicial interpretation has treated such directory or permissive language in public statutes as having a compulsory effect when the act is undertaken for the public benefit.

The Court observed that the phrase “advancement of public justice” reflected the view that section 12(5) imposed a duty on the Government to record and communicate the reasons when it chose not to make a reference. That duty, the Court noted, indicated that the power to refer an industrial dispute was intended to be exercised for the benefit of the party who raised the dispute and sought a decision from the appropriate authority. The Court considered that the Legislature may have introduced this requirement to prevent casual or capricious decisions, because requiring the Government to record and communicate its reasons meant that those reasons would be subject to public examination and scrutiny, thereby demonstrating that the Government had considered the matter carefully and properly. However, the Court added that this was not the sole purpose of the provision. A further purpose, according to the Court, was to impose an obligation on the Government; since the power granted in the first part of the provision was coupled with the duty prescribed in the second part, the word “may” in that context was to be read as “shall”. The Court noted that this argument carried considerable weight and had been accepted by the High Court, which held that once the Government was satisfied that a case for reference existed, it was bound to make the reference. The Court then turned to the alternative argument that, if the power to make a reference ultimately derived from section 10(1), it would be difficult to interpret section 12(5) as creating an enforceable obligation to refer. Reading section 12(5) together with section 10(1), the appellant contended, would allow the Government, even after considering the issue, to refuse a reference in a proper case, provided that it recorded and communicated the reasons for its final decision. In support of this position, the appellant relied heavily on the provisions of section 13. The Court explained that section 13 dealt with the duties of Boards and was analogous to section 12, which dealt with conciliation officers. A dispute could be referred to a Board initially under section 10(1) or directly under section 12(5). Like a conciliation officer, a Board sought to settle the dispute, although its powers were broader; nevertheless, its function remained substantially the same. Consequently, if a Board’s efforts to settle a dispute failed, it was required to make a report under section 13(3). Section 13(4) provided that if, upon receiving such a report concerning a dispute involving a public utility service, the appropriate Government did not refer the matter to a Labour Court, Tribunal or National Tribunal under section 10, it had to record and communicate its reasons to the parties concerned. The Court concluded that, when read as a whole, the provisions of section 13 clearly indicated that the power to refer disputes that had been sent to a Board lay in section 10(1).

In this matter the Court observed that the authority to refer a dispute was undeniably located in section 10(1). It noted that for disputes involving non‑public utility services there was no specific provision giving the Government power to refer, and even section 13(4) dealt with situations where no reference was made concerning a public utility dispute; consequently, if a reference were to be made it would have to arise under the second proviso of section 10(1). This observation reinforced the conclusion that whenever a reference was effected, the power to do so was to be found in section 10(1). The Court further explained that for cases falling within section 13(4), because a reference must be made under section 10, the considerations enumerated in the second proviso of section 10(1) would be applicable, and the Government could legitimately justify its refusal to refer on any of the grounds specified in that proviso. Moreover, the Court stated that for disputes not covered by section 13(4), if a reference were required, it would clearly be under section 10(1), a result that was implicit in the overall scheme of section 13. Accordingly, the Court held that in a dispute such as the present one the Government could refer the matter to a Board under section 12(5); should the Board fail to achieve settlement, the Government would be entitled either to refer the dispute to industrial adjudication under section 10(1) or to decline to do so. The Court emphasized that there was no compulsion or obligation on the Government to make a reference, and that if this interpretation of the relevant provisions of section 13 were correct, it would be difficult to accept the respondent’s argument that the Government was bound to refer at the earlier stage when acting under section 12(5). The Court described the controversy over the construction of section 12(5) as merely academic. It observed that even assuming the respondent’s position that the Government was obligated to refer when it was satisfied that a case for reference existed, the Government would still be entitled to assess all relevant facts to determine whether such a case existed, and if after that assessment it was not satisfied, it could lawfully refuse to refer and would have to record and communicate the reasons for its refusal. The Court noted that the appellant and the company contended that although discretion rested with the Government, any refusal to make a reference could be justified only if the Government recorded and communicated its reasons, and that it appeared that the said …

The Court observed that the parties, although emphasizing different interpretative approaches to section 12(5), ultimately agreed on a single point. Both parties accepted that if the Government refuses to refer a dispute to the appropriate authority and the refusal is based on reasons that are wholly extraneous, irrelevant, or not germane, then that refusal may be subject to judicial challenge. The Court further noted that even the appellant and the company do not dispute the proposition that when all relevant and germane factors are considered and they lead the Government to conclude that a case for reference exists, the Government is obliged to make the reference. While the parties stressed that the range of considerations is very wide, the substantive effect of the respondents’ argument that the word “may” in section 12(5) should be read as “shall” is the same. Consequently, both interpretative methods converge on the essential inquiry: whether the reasons recorded and communicated by the Government under section 12(5) are genuinely relevant and germane.

The Court then identified several points of common ground. It is undisputed that a writ of mandamus may be issued against the Government if an order made under section 10(1) contravenes the specific provisions of that section, such as clauses (a) to (d) concerning the selection of the appropriate authority. It is also agreed that if the Government declines to make a reference under section 12(5) without recording and communicating its reasons to the affected parties, a writ of mandamus lies. Moreover, it is not contested that a party may obtain a mandamus if it can demonstrate that the Government’s refusal to refer the dispute is not made in good faith or is based on wholly irrelevant facts. Although an order issued under section 12(5) is classified as an administrative order and its reasons may not be directly justiciable in terms of their propriety or adequacy, the Court clarified that a mandamus proceeding does not constitute an appeal against the Government’s decision. Nevertheless, if the Court is satisfied that the reasons for refusal are extraneous and irrelevant, it is empowered to issue a writ of mandamus even concerning such an administrative order. After a detailed discussion on the construction of section 12(5), the Court found that there was no material dispute between the parties on that issue, rendering the controversy purely academic. The real dispute, therefore, concerns whether the specific reason given by the appellant for refusing to make a reference in the present case is germane or not.

The Court examined whether the justification offered by the appellant for refusing to make a reference under section 12(5) was relevant to the dispute. The High Court had concluded that the justification was wholly irrelevant and had therefore granted a writ of mandamus against the appellant. The record showed that the sole reason supplied by the appellant was that the work‑men had adopted a go‑slow during the year 1952‑53. From the communication sent by the appellant to the respondents, it appeared that this was the only consideration that had influenced the Government’s decision to decline a reference under section 12(5). The appellant and the company vigorously contended that the Government possessed the competence to assess whether it would be expedient to refer a dispute of this nature to industrial adjudication. Their argument rested on the view that the purpose of the Act was not merely to provide for the investigation and settlement of industrial disputes but also to secure industrial peace, thereby enhancing production and contributing to the national economy. They emphasized that cooperation between capital and labour, along with mutual understanding and discipline, was essential to achieving the principal objective of the Act, and that it would be mistaken to assume that the Act compelled the referral of every dispute to industrial adjudication. Accordingly, they submitted that the Government could legitimately take into account the fact that the respondent had exhibited a lack of discipline by employing go‑slow tactics, which had contravened the standing orders, and that this factual circumstance was relevant when deciding whether the present dispute should be referred for adjudication. By contrast, the High Court held that the reason furnished by the Government was entirely extraneous, that the refusal to refer the dispute was plainly punitive, and that it was based on considerations unrelated to section 12(5). The Court reiterated its long‑standing disapproval of violations of law by either employer or employees and stressed that, while employees may legitimately press their claims, they must not resort to actions prohibited by standing orders or statutes, nor demonstrate a wilful lack of discipline or a concerted refusal to cooperate with the employer. Nevertheless, the central question remained whether the simple and unqualified reason set out in the appellant’s order could be sustained as germane or relevant to the dispute between the parties. The Court acknowledged that considerations of expediency could not be dismissed when the Government contemplated exercising its power to make a reference; however, it cautioned that the Government could not mask wholly irrelevant or extraneous factors as matters of expediency. For example, the Government might, in assessing expediency, inquire whether the dispute raised a claim that was stale, contrary to the provisions of the Act, or inconsistent with any agreement between the parties, and if such infirmities were found, a refusal to refer could be justified. Yet, even in evaluating expediency, the Government must act without a punitive motive, must consider the question fairly and reasonably, and must rely only on facts and circumstances that are genuinely pertinent.

In this case the Court observed that the Government may refuse to refer a dispute to industrial adjudication when the dispute presents a claim that is considerably old, conflicts with the provisions of the Act, or is inconsistent with any agreement that exists between the parties, and that such a refusal is permissible if the Government concludes that the dispute suffers from infirmities of that nature. However, the Court emphasised that even when the Government is assessing whether it would be expedient to make a reference, it must not act in a punitive manner. The Government must consider the question in a fair and reasonable way and must confine its assessment to facts and circumstances that are directly relevant to the dispute.

The Court further held that it would be improper for the Government, while exercising the discretion conferred by section ten paragraph one, to refuse a reference on the basis of personal disapproval of the appearance, behaviour, or manner of the union secretary, or on the ground of disapproval of the political affiliation of the union that has sponsored the dispute. Such considerations are wholly extraneous and must be excluded from the exercise of the wide discretion vested in the Government.

Turning to the facts of the present case, the Court noted that the company had voluntarily paid a three‑month bonus for the relevant year despite the fact that the workmen had adopted go‑slow tactics during that year. The conciliator’s report indicated on its face that the claim made by the respondents was not frivolous. The reasons communicated by the Government for refusing to make a reference did not reveal any influence of considerations other than those directly related to the dispute. The Court found it difficult to understand how the misconduct of the respondents, which formed the basis of the Government’s decision, could be relevant to the claim for classification of the specified employees, which was one of the items in dispute.

The Court observed that if the work performed by those employees prima facie justified the classification claim and if, as the conciliator’s report showed, the claim was consistent with the practice prevailing in comparable concerns, then the respondents’ misconduct could not be used as a relevant circumstance to refuse reference of the classification dispute to industrial adjudication. The claim would have provided a future benefit to the employees, and the order passed by the appellant deprives them of that benefit. In the Court’s view, considerations of discipline cannot be legitimately employed to impose such a punishment on the employees.

Similarly, with respect to the claim for bonus, the Court held that if the respondents could demonstrate that the profits earned by the company during the relevant year, when compared with the profits of preceding years, justified their demand for an additional bonus, then to refuse reference of that dispute solely on the ground of the respondents’ misconduct would be a punitive action. The Court noted that, for the alleged misconduct, the company had taken disciplinary action it deemed appropriate and necessary, yet it still paid the respondents the bonus it considered they were entitled to. Consequently, the Court concluded that the Government’s refusal to refer the dispute was not based on any relevant consideration and was instead punitive in character.

The Court explained that when deciding whether a dispute concerning bonus entitlement should be referred to industrial adjudication, it is necessary to consider the well‑established principles that normally govern such bonus claims. Under those principles, a claim for bonus arises because employees, by contributing to the employer’s profits, acquire a right to share in those profits. Consequently, the Court held that any action taken by the Government that refused to refer a bonus‑related industrial dispute for adjudication would amount to a punitive measure that contradicts the purpose of the applicable Act. The Court noted that the refusal would only be justified if the Government had provided reasons directly connected with, or arising from, the misconduct alleged against the employees; in the absence of such a connection the refusal could not be sustained. In the present case, the Court found that the Government’s decision was wholly punitive and rested on considerations that were neither relevant nor appropriate to the issue of bonus entitlement. Accordingly, the Court was unable to accept any claim that the High Court had erred in characterising the Government’s decision as punitive and extraneous. The Court reaffirmed that the Act was enacted to enable investigation and settlement of industrial disputes, and that, where the provisions of section 12(5) apply, the Government may not block investigation and settlement by refusing to make a reference on grounds that are irrelevant or extraneous. The Court therefore concluded that a writ of mandamus was the proper remedy to compel the Government to act. In light of this reasoning, the Court confirmed the order previously issued by the High Court, although it was not based on exactly the same grounds. The Court consequently held that the appeals failed and dismissed them, ordering the appellants to bear the costs, including one set of hearing fees, and dismissed the appeals outright.