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Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2423 OF 2009 (Arising out of SLP [C] No.18717/2006]

Sarva Shramik Sangh … Appellant

Vs.

Indian Oil Corporation Ltd. & Ors. … Respondents

J U D G M E N T

R.V.RAVEENDRAN, J.

Leave granted.  The  appellant  union  represents  the  canteen  workers  of  the  

contractor engaged by Indian Oil Corporation Ltd. (‘IOC’ for short)  

for running its canteen at its Western Region Marketing Division at  

Mumbai. The appellant union filed W.P.No.1267/1999 in the Bombay  

High  Court  on  behalf  of  the  said  workers  seeking  the  following  

reliefs: (i) a direction to the Central Advisory Contract Labour Board  

and Union of India to hold an investigation under section 10 of the  

Contract Labour (Regulation and Abolition) Act, 1970 (’CLRA Act’  

for  short),  on  its  application  dated  29.12.1998  and  make  an  order

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abolishing the contract  labour  system in  regard to workmen in  the  

canteen of Marketing division of IOC; and (b) a direction to IOC to  

absorb/regularize the services of the said workers. The writ petition  

was dismissed for want of prosecution on 11.11.2003.

2. Thereafter  the  appellant  again  approached  the High Court  in  

W.P.No.853/2004 contending that the contracts between IOC and the  

canteen contractor was sham and bogus and seeking a direction to the  

Union of India to make a reference of the dispute raised by them in  

regard to the demand for permanency of the canteen workers to the  

Industrial  Tribunal.  The  High  Court  vide  order  dated  22.4.2004  

disposed  of  the  said  writ  petition  with  a  direction  to  the  Central  

Government to consider and dispose of the request for reference with  

a  further  direction  to  maintain  status  quo  in  regard  to  concerned  

workmen till disposal of the reference application. In pursuance of it  

conciliation  proceedings  were  held  and  the  Assistant  Labour  

Commissioner  (Central)-III,  Mumbai,  sent a Failure of Conciliation  

Report  dated  2.9.2004,  Government  of  India  by  order  dated  

21.12.2004  refused  to  make  a  reference  of  the  dispute  under  

section 10(1) of the Industrial Disputes Act, 1947 (‘ID Act’ for short).  

The Labour Ministry of the Government of India was of the view that

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the dispute, prima facie, was not fit for adjudication, as “the workmen  

in respect of whom the dispute was raised were not appointed by the  

management  of IOC but  were engaged by the contractor  holding a  

valid and legal contract.”

3. The  said  order  was  challenged  by  the  appellant  in  W.P.No.  

1673/2005 seeking a mandamus to the Government of India to refer  

the  dispute  raised,  to  the  Industrial  Tribunal  for  adjudication.  The  

appellant  contended  that  the  central  government  had  usurped  the  

power and function of the Industrial Tribunal, by deciding the very  

issue that required to be referred to and decided by the Tribunal. The  

said writ petition was dismissed by the High Court by the impugned  

order  dated  19.8.2006  on  the  following  two  grounds  :  (i)  The  

appellant had earlier filed WP No.1267/1999 for abolition of contract  

labour in the canteen in the establishment  of IOC. The said earlier  

petition (W.P.No.1267/1999) was dismissed on 11.11.2003 for non-

prosecution and attained finality; and once having sought the relief of  

abolition of contract labour, the appellant was estopped from seeking  

any other  relief  by contending that  the contract  was sham and not  

genuine.  (ii)  The  order  dated  21.12.2004  of  the  appropriate  

government did not suffer from any infirmity or arbitrariness, when

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examined with reference to the principles laid down by this Court in  

Avon  Services  Production  Agencies  (P)  Ltd.  v.  The  Industrial   

Tribunal [1979 (1) SCC 1]. The said order is challenged in this appeal  

by special leave.   

4. The contentions urged by the parties give rise to the following  

questions for determination :

(i) whether  in  view of  the  stand  taken  by  the  appellant  in  WP  No.1267 of 1999 ,  the appellant was estopped from taking a  different stand in the subsequent writ petition (WP 1673/2005).

(ii) whether  the  decision  of  the  central  government  refusing  reference requires interference.

Re : Question (i)

5. The appellant submits that the contract labour can take the plea  

that the contract between the principal employer and the contractor is  

sham and bogus and that they are, in law, the employees of IOC and  

not  of the contractor;  and that alternatively  they can plead without  

prejudice to the first plea, that assuming the contract is genuine, the  

contract labour system should be abolished under Section 10 of the  

CLRA Act. On the same principle, the contract labour can, on the plea  

that  the  contract  between  principal  employer  and  the  contractor  is  

sham and nominal, first claim the relief that contract labour system  

should be abolished and they should be absorbed; and if such relief is

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refused or found to be inappropriate, then seek a declaration that they  

are really the direct employees of the principal employer.

6. On the other hand, the first respondent-IOC contended that the  

appellant cannot be permitted to take contradictory and inconsistent  

stands. It is submitted that the prayer in the first writ petition was on  

the assumption that there was a valid contract between IOC and the  

canteen contractor and the workers were in fact the employees of  the  

contractor, and that the contract labour system for the canteen in the  

establishment  of  IOC  (marketing  department)  should  be  abolished  

under the CLRA Act and that after such abolition, the workers should  

be absorbed as  employees of  the  IOC. It  is  contended that  having  

taken such a specific stand in the first petition, the appellant cannot in  

the second petition take a plea that the contract entered between the  

IOC and  the  canteen  contractor  was  sham and bogus  and that  the  

canteen  workers  were  really  the  employees  of  the  IOC.  Strong  

reliance  was placed on the following observations of  this  Court  in  

Steel Authority of India Ltd. v. Union of India [2006 (12) SCC 233,  

for short referred to ‘SAIL-II’] :

“The  workmen  whether  before  the  Labour  Court  or  in  writ  proceedings, were represented by the same union. A trade union  registered under the Trade Unions Act is entitled to espouse the  cause  of  the  workmen.  A  definite  stand  was  taken  by  the  employees  that  they had been working under the contractors.  It

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would,  thus,  in  our  opinion,  not  lie  in  their  mouth  to  take  a  contradictory  and  inconsistent  plea  that  they  were  also  the  workmen  of  the  principle  employer.  To  raise  such  a  mutually  destructive plea is impermissible in law. Such mutually destructive  plea, in our opinion, should not be allowed to be raised even in an  industrial adjudication. Common law principles of estoppel, waiver  and acquiescence are applicable in an industrial adjudication.”

7. On an examination of the pleadings in W.P.No.1267/1999 and  

W.P.No.1673/2005,  we  find  that  the  issues  for  consideration,  the  

parties to the cause, the cause of action and the reliefs claimed were  

all different in the two cases. In the first petition, relief was sought  

under the Contract  Labour  (Regulation & Abolition)  Act,  1970 for  

abolition of contract labour system in the operation of canteen in the  

marketing  establishment  of  IOC  and  for  absorbing  the  canteen  

workers  as  employees  of  IOC.  In  the  second  petition,  relief  was  

sought under the Industrial Disputes Act, 1947 for making a reference  

under sec. 10(1)(c) to the Industrial Tribunal to decide whether the  

contract between IOC and the canteen contractor was sham, nominal  

and a mere camouflage to avoid extension of labour law benefits to  

the workers in question, and whether the canteen workers were the  

direct employees of IOC.  

8. The assumption that the appellant had taken inconsistent stands  

in the two writ petitions is not correct. Even in the first writ petition,

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the appellant had contended that though the contractors changed from  

time  to  time,  the  workers  in  the  canteen  remained  the  same  with  

continuity of service; that IOC had  mala fide and illegally kept the  

workers as contract labour in order to keep them in a permanent state  

of insecurity and to deny them the wages and privileges available to  

permanent  workers;  that  IOC  was  actually  controlling,  and  

supervising the canteen; and that only as a camouflage, the contractor  

was  shown  as  running  the  canteen   to  create  a  pretence  that  the  

workmen of IOC were the workers of the contractor, when in fact they  

were the employees of IOC. In short, the appellant had contended that  

the contract was sham and nominal, in the first petition. Even in the  

second writ petition (WP No. 1673/2005) the contention was that the  

contract was sham and a camouflage to avoid extending benefits of  

regular employees to the canteen workers.  Therefore, the High Court  

committed a serious error in assuming that in the first writ petition,  

the appellant had conceded that the contract between the IOC and the  

canteen contractor was valid and genuine and that in the second writ  

petition the appellant had taken a contrary stand that the contract was  

sham and a camouflage.  

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9. The  stand  of  the  appellant  and  the  workers  was  always  

consistent.   But before the decision of a Constitution Bench of this  

Court in  Steel Authority of India Ltd. v. National Union Waterfront   

Workers [2001 (7) SCC 1, for short referred to as ‘SAIL-I), it  was  

thought  that  the  appropriate  relief  available  was  to  seek  an  

investigation and abolition of contract  labour under the CLRA Act  

and consequently seek absorption.   Therefore the prayer was made  

with  reference  to  the  CLRA  Act  in  the  first  petition.   In  SAIL-I  

rendered on 30.8.2001, this Court held that even if there was an order  

under  section  10  of  CLRA Act  prohibiting  contract  labour  in  any  

process or operation, there would be no automatic absorption of the  

contract labour by the principal employer. It was also held that it is  

always open to the contract labour to urge that the contract was sham  

and nominal by raising an industrial  dispute  under the ID Act and  

such dispute will have to be decided by the industrial adjudicator and  

not by the High Court; and if on enquiry, the industrial adjudicator  

found  that  the  contract  was  sham  and  merely  a  camouflage  for  

denying  labour  law  benefits  to  the  workers  in  question,  it  could  

declare  so  and hold that  the  contract  labour  were  really  the  direct  

employees of the principal employer. When it became clear after the  

constitution bench decision in SAIL-I that if the case of the workmen

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is that the contract between the principal employer and the contractor  

was sham and merely a camouflage to deny benefits to the workers,  

then they could raise a dispute and approach the industrial adjudicator,  

the  appellant  sought  a  reference  of  the  dispute  to  the  industrial  

adjudicator,  and  when  such  a  reference  was  refused,  rightly  

approached  the  High  Court  by  way  of  second  writ  petition.  This  

means that the appellant had prayed for a particular relief in the first  

writ petition, and when such relief was found to be inappropriate and  

the  law was clarified in SAIL-I,  on the same fact  raised a dispute  

which was the proper remedy, and as the dispute was not referred to  

the Industrial Tribunal, approached the High Court seeking a direction  

to  the  Central  Government  for  making  a  reference.  There  is  thus  

neither inconsistency nor any estoppel.  

10. The assumption  that  there  is  an absolute  bar  on inconsistent  

pleas being taken by a party, is also not sound. What is impermissible  

is  taking  of  an  inconsistent  plea  by  way  of  amendment  thereby  

denying the other side, the benefit of an admission contained in the  

earlier  pleading.  Mutually  repugnant  and  contradictory  pleas,  

destructive  of  each  other  may  also  not  be  permitted  to  be  urged  

simultaneously  by  a  plaintiff/petitioner.  But  when  there  is  no

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inconsistency in the facts alleged, a party is not prohibited from taking  

alternative  pleas  available  in  law.  Similarly,  on  the  same  facts,  

different or alternative reliefs can also be claimed. When the case of  

the workers is  that the contract  was sham and nominal, they could  

seek a relief that they should be declared as the direct employees of  

the principal employer; and if that contention failed and it is found  

that the contract was valid, then they can seek issue a direction to the  

Central Government to consider their representation for abolition of  

contract labour. Similarly where the workers contend that the contract  

between principal employer and the contractor was sham and merely a  

camouflage  to  deny them the  benefits  of  labour  laws,  and if  their  

prayer for relief under CLRA Act is rejected, they can then seek relief  

under  the  ID  Act.  The  contention  of  IOC  that  on  account  of  the  

dismissal of the first petition, the second petition for a different relief  

was  barred  either  by  principle  of  res  judicata  or  by  principle  of  

estoppel is liable to be rejected.

11. We will next consider whether the decision in SAIL-II relied on  

by the respondents, is in any way applicable. That decision related to a  

dispute raised by the contract labour employed by VISL (an unit of  

SAIL)  for  prohibition  of  employment  of  contract  labour  in  the

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process/operation in which they were employed and they should be  

absorbed  as  regular  permanent  employees  of  VISL.  The  state  

government  referred the  said  dispute  to  the  Tribunal  under  section  

10(1)(c) of the ID Act. Before the Labour Court, VISL contended that  

as the matter  related to regulation and abolition of contract  labour,  

governed  by  the  provisions  of  the  CLRA  Act,  there  could  be  no  

reference of the dispute to the Labour Court for adjudication under  

section 10(1)(c) of the ID Act. It was also submitted that as the state  

government had not issued any notification prohibiting employment  

of  contract  labour  in  terms  of  section  10  of  the  CLRA  Act,  the  

contract labour did not have a legal right to claim absorption.  

11.1) At  that  stage,  presumably  to  get  over  the  said  objection  

regarding  maintainability,  the  workmen  filed  an  additional  claim  

statement alleging that the contract entered into between VISL and the  

contractor was sham and bogus and they should be deemed to be the  

direct employees of the management. The Labour Court held that the  

dispute  referred  was  whether  the  contract  workers  who  were  

employed in the particular nature of contract work were justified in  

demanding absorption as regular employees; that the said dispute pre-

supposed  that  the  employees  were  contract  workers  under  the

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contractors and the question therefore was whether the contract labour  

system should be abolished and contract workers had to be absorbed  

by the principal employer; that the employees who sought absorption  

by VISL were contract labour was evident from the averments made  

in the claim statement; and that the only remedy available to them was  

to file writ petition seeking a direction to the central government to  

take a decision under section 10 of CLRA Act to prohibit employment  

of  contract  labour.  The  Labour  Court  held  that  the  question  under  

reference  related  to    abolition  of  contract  labour  and  as  the  said  

question  could  be  decided  only  by  appropriate  Government  under  

section 10 of the CLRA Act, the dispute was not maintainable under  

ID Act. Therefore the Labour Court made an award holding that the  

reference was not maintainable.

11.2) The said award of the Labour Court was challenged in the High  

Court. A learned single Judge allowed the writ petition and directed  

the Union of India to treat the writ petition as a petition submitted by  

the Union raising an industrial dispute in terms of section 2(k) read  

with section 12(1) of the ID Act as also under the provisions of CLRA  

Act.  The  learned  Judge  further  directed  the  central  government  to  

refer  the  said  dispute  to  the  Industrial  Tribunal.  The  appeal  filed

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against the said judgment of the learned Single Judge was dismissed  

by a division bench. Aggrieved thereby SAIL approached this Court.  

It is in that background this Court held that the workmen having taken  

a definite stand that they were working under the contractors, and as  

the dispute that was referred was one which arose under the CLRA  

Act, the workmen could not, by amending the claim statement filed  

before the Labour Court, take a contradictory and inconsistent  plea  

that  the  contract  between  VISL  and  the  contractor  was  sham and  

bogus  and  they  were  the  direct  employees  of  VISL.  This  Court  

observed that it was impermissible to raise such mutually destructive  

pleas in law, having regard to the principles of estoppel, waiver and  

acquiescence which were also applicable in industrial adjudication.  

11.3) We  have  referred  to  the  factual  situation  in  detail  to  

demonstrate  that  the  said  observations  made  in  the  context  of  the  

peculiar  facts  of  that  case,  where  the  reference  by  the  state  

government under the ID Act was in regard to a specific dispute that  

they were employees of the contractor and that after prohibiting the  

contract labour system under section 10 of the CLRA Act, they should  

be absorbed as direct employees of VISL. This court therefore held  

that in such a reference under ID Act, raising a contention that the

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contract between VISL and the contractor was bogus and sham and  

that  they were direct  employees of  principal  employer contradicted  

the case on the basis of which the reference was sought and reference  

was made, and the two contentions being mutually destructive, such a  

plea which would destroy the very reference could not be permitted to  

be raised. The decision in SAIL-II is therefore of no assistance to the  

respondents.  What  was  held  to  be  impermissible  in  SAIL-II was  

raising  inconsistent  and  mutually  destructive  pleas  in  the  same  

proceedings. It does not bar a particular relief being sought in a writ  

petition, and when it is found that such a relief was inappropriate, then  

seeking appropriate relief in a different proceedings.  

11.4) The facts are completely different here. The issue in the first  

writ petition was with reference to section 10 of CLRA Act. The issue  

in the second petition was whether the dispute (relating to their claim  

that they were the direct employees of IOC) should be referred under  

section  10(1)(c)  of  the  ID  Act.  The  decision  in  SAIL  II will  not  

therefore apply. When the parties are different, issues are different,  

reliefs are different, the question of either res judicata, or finality of  

proceedings, acquiescence or estoppel will not arise.

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Re : Question (ii)

12. It is true that making a reference under section 10(1) of the ID  

Act is within the discretion of the appropriate government. Referring  

to  the  unamended  section  10(1)  of  ID  Act  this  court  in  State  of  

Madras v. C.P.Sarathy [1953 (4) SCR 334], laid down the following  

principles:  

(i) The  government  should  satisfy  itself,  on  the  facts  and  circumstances  brought  to  its  notice,  in  its  subjective  opinion  that an ‘industrial dispute’ exists or is ‘apprehended.

(ii) The factual existence of a dispute or its apprehension and the  expediency  of  making  reference  are  matters  entirely  for  the  government to decide.

(iii) The order making a reference is an administrative act and it is  not a judicial or a quasi-judicial act.

(iv) The  order  of  reference  passed  by  the  government  cannot  be  examined by the High Court in its jurisdiction under art 226 of  the Constitution to see if the government had material before it  to  support  the  conclusion  that  the  dispute  existed  or  was  apprehended.

12.1) The opening words of section 10 of ID Act “if any industrial  

dispute  exists  or  is  apprehended  the  appropriate  government  may”  

were replaced by the words “where the appropriate government is of  

the opinion that any industrial dispute exists or is apprehended it may  

at  any  time”  by  Act  18  of  1952.  The  issue  was  thereafter  again

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considered in  Rohtas Industries Ltd.  v.  SD Agarwal [AIR 1969 SC  

707]. After referring to the propositions in Sarathy, this Court held :

“This  interpretation  of  s  10(1) is  based on the language of that  provision as well as the purpose for which the power in question  was given and the effect of a reference.  That decision cannot be  considered  as  an authority  for  the  proposition  that  whenever  a   provision  of  law  confers  certain  power  on  an  authority  on  its   forming a certain opinion on the basis of certain facts, the courts   are precluded from examining whether the relevant facts on the   basis of which the opinion is formed had in fact existed.”

(emphasis supplied)

12.2) The  amended  section  10  was  considered  in  Western  India  

Match Co.  v.  Western  India  Match Co.  Workers’  Union [1970 (1)  

SCC  225].  This  court,  again,  after  referring  to  the  observation  in  

Sarathy that the order of the government is an administrative function,  

observed thus :    

“…….the government cannot go into the merits of the dispute, its  function being only to refer such a dispute for adjudication so that  the industrial relations between the employer  and the employees  may  not  continue  to  remain  disturbed,  and  the  dispute  may  be  resolved through a judicial process as speedily as possible.”

12.3) In  State of Bombay v. K.P. Krishnan [1961] 1 SCR 227, this  

court referred to the scope of section 10(1) thus :  

“Section 10(1) provides that where the appropriate Government is  of opinion that any industrial dispute exists or is apprehended, it  may at any time by order in writing refer the dispute to one or the  other authority specified in clauses (a) to (d). This section is of  basic importance in the scheme of the Act. It shows that the main  object of the Act is to provide for cheap and expeditious machinery  for  the  decision  of  all  industrial  disputes  by  referring  them  to  adjudication,  and  thus  avoid  industrial  conflict  resulting  from

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frequent lock-outs and strikes. It is with that object that reference is  contemplated not only in regard to existing industrial disputes but  also  in  respect  of  disputes,  which  may  be  apprehended.  This  section  confers  wide  and  even  absolute  discretion  on  the  Government  either  to  refer  or  to  refuse  to  refer  an  industrial  dispute as therein provided. Naturally this wide discretion has to be  exercised by the Government bona fide and on a consideration of  relevant and material facts.”

This court clarified that the writ court can direct the government to  

reconsider whether a reference should be made or not after leaving out  

the relevant and extraneous considerations.  

12.4) In Bombay Union of Journalists & Ors. v. The State of Bombay   

& Anr. [1964] 6 SCR 22, this court once again discussed the scheme  

of reference and observed:  

“…  section  10(1)  confers  discretion  on  the  appropriate  Government  either  to  refer  the  dispute,  or  not  to  refer  it,  for  industrial adjudication according as it is of the opinion that it is  expedient to do so or not … in entertaining an application for a  writ  of  mandamus  against  an  order  made  by  the  appropriate  Government  under s.  10(1) read with s.  12(5),  the Court  is  not  sitting in appeal over the order and is not entitled to consider the  propriety or the satisfactory character of the reasons given by the  said  Government.  …  It  is  no  doubt  desirable  that  the  party  concerned should be told clearly and precisely the reasons why no  reference is made, because the object of s. 12(5) appears to be to  require the appropriate Government to state its reason for refusing  to  make  a  reference,  so  that  the  reasons  should  stand  public  scrutiny;  but  that  does  not  mean  that  a  party  challenging  the  validity of the Government’s decision not to make a reference can  require the court in writ proceedings to examine the propriety or  correctness of the said reasons.”

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This court however made it clear that if the appropriate government  

refuses  to  make  a  reference  for  irrelevant  considerations,  on  

extraneous grounds or  acts  mala fide,  a  party  would be entitled  to  

move the High Court for a writ of mandamus.  

12.5) This  position  was  reiterated  in  Hochtif  Gammon  v.  State  of  

Orissa [1975 (2) SCC 649]. In Hochtif Gammon, this Court observed  

thus:

“The executive have to reach their decisions by taking into account  relevant  considerations.  They  should  not  refuse  to  consider  relevant matter nor should 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 that 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. If they  give reasons that they are not good reasons, the courts 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.”

12.6) Thereafter  the  matter  came  up  for  consideration  in  Avon  

Services (supra) relied upon by the High Court. In Avon Services, this  

Court reiterated the principles thus:  

“Section 10(1) confers a discretionary power and this discretionary  power can be exercised on being satisfied that an industrial dispute  exists or is apprehended. There must be some material before the

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Government  on  the  basis  of  which  it  forms  an  opinion that  an  industrial dispute exists or is apprehended. The power conferred on  the  appropriate  Government  is  an  administrative  power  and the  action  of  the  Government  in  making  the  reference  is  an  administrative act. The formation of an opinion as to the factual  existence  of  an  industrial  dispute  as  a  preliminary  step  to  the  discharge  of  its  function  does  not  make  it  any  the  less  administrative in character. Thus the jurisdictional facts on which  the  appropriate  Government  may  act  are  the  formation  of  an  opinion that an industrial dispute exists or is apprehended which  undoubtedly is a subjective one, the next step of making reference  is  an  administrative  act.  The  adequacy  or  sufficiency  of  the  material on which the opinion was formed is beyond the pale of  judicial  scrutiny.  If the action of the Government in making the  reference is impugned by a party it would be open to such a party  to show that what was referred was not an industrial dispute and  that the Tribunal had no jurisdiction to make the Award but if the  dispute  was  an  industrial  dispute,  its  factual  existence  and  the  expediency  of  making  a  reference  in  the  circumstances  of  a  particular case are matters entirely for Government to decide upon,  and it will not be competent for the Court to hold the reference bad  and quash the proceedings for want of jurisdiction merely because  there was, in its opinion, no material before Government on which  it could have come to an affirmative conclusion on those matters.

Merely because the government rejects a request for a reference or  declines to make a reference, it cannot be said that the industrial  dispute  has  ceased  to  exist…...  The  industrial  dispute  may  nonetheless continue to remain in existence and if at a subsequent  stage the appropriate government is satisfied that in the interest of  industrial  peace  and  for  promoting  industrial  harmony  it  is  desirable to make a reference, the appropriate government does not  lack power to do so under s 10(1), nor is it precluded from making  the reference on the only ground that on an earlier occasion it had  declined to make the reference.”          

12.7) In Ram Avtar Sharma vs. State of Haryana [1985 (3) SCC 189],  

this Court considered a refusal by the government as it found that the  

services of the employee were terminated only after charges against  

him were proved in a domestic enquiry, that this Court held that a

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clear case of grant of writ of mandamus was made out on the ground  

of the following reasoning:  

“The  assumption  underlying  the  reasons  assigned  by  the  Government are that the enquiry was consistent with the rules and  the standing orders,  that  it  was fair  and just  and that  there was  unbiased  determination  and  the  punishment  was  commensurate  with the gravity of the misconduct.……. The reasons given by the  Government  would  show  that  the  Government  examined  the  relevant papers of enquiry and the Government was satisfied that it  was  legally  valid  and  that  there  was  sufficient  and  adequate  evidence to hold the charges proved. It would further appear that  the  Government  was  satisfied  that  the  enquiry  was  not  biased  against the workmen and the punishment was commensurate with  the gravity of the misconduct charged. All these relevant and vital  aspects  have  to  be  examined  by  the  Industrial  Tribunal  while  adjudicating upon the  reference  made to it.  In  other  words,  the  reasons  given  by  the  Government  would  tantamount  to  adjudication which is  impermissible.  That  is  the function of the  Tribunal  and  the  Government  cannot  arrogate  to  itself  that  function.  Therefore  if  the  grounds  on  which  or  the  reasons  for  which the Government declined to make a reference under Section  10 are irrelevant, extraneous or not germane to the determination,  it is well settled that the party aggrieved thereby would be entitled  10  move  the  Court  for  a  writ  of  mandamus.  It  is  equally  well  settled that where the Government purports to give reasons which  tantamount  to adjudication and refuses to make a reference,  the  appropriate Government could be said to have acted on extraneous,  irrelevant  grounds or  grounds not  germane to the  determination  and a writ of mandamus would lie calling upon the Government to  reconsider its decision.”  

12.8) In  Telco  Convoy  Drivers  Mazdoor  Sangh vs.  State  of  Bihar  

[1989 (3) SCC 271], this Court held that while exercising power under  

section 10(1) of the Act, the function of the appropriate government is  

an administrative function and not a judicial or quasi-judicial function.  

In  performing  this  administrative  function  the  government  cannot

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delve  into  the  merits  of  the  dispute  and  take  upon  itself  the  

determination of the lis,  which would certainly be in excess of the  

power conferred on it by section 10 of the Act. However, there may  

be exceptional cases in which the state government may, on a proper  

examination of the demand, come to a conclusion that the demands  

are either perverse or frivolous and do not merit a reference. But the  

government should be slow to attempt an examination of the demand  

with a view to declining reference and courts will always be vigilant  

whenever  the  government  attempts  to  usurp  the  powers  of  the  

Tribunal  for  adjudication  of  valid  disputes,  and  to  allow  the  

government to do so would be to render section 10 and section 12(5)  

of  the  Act  nugatory.  Where,  as  in  the  instant  case,  the  dispute  is  

whether the persons raising the dispute are workmen or not, the same  

cannot be decided by the government in exercise of its administrative  

function  under  section  10(1).  When  the  dispute  was  whether  the  

convoy drivers were employees or workmen of TELCO, that is to say,  

whether there was relationship of employer and employees between  

TELCO and the convoy drivers,  the  Deputy Labour Commissioner  

and/or  the  state  government  was  not  justified  in  holding  that  the  

convoy  drivers  were  not  workmen  and  accordingly,  no  reference  

could  be  made.  When  it  is  found  that  the  dispute  should  be

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adjudicated by the Industrial Tribunal and the state government had  

persistently declined to make a reference under section 10(1) despite  

chances given by High Court and Supreme Court to reconsider the  

matter, the court would direct the government to make a reference of  

the dispute to the appropriate industrial tribunal. The principles were  

reiterated in Sultan Singh vs. State of Haryana [1996 (2) SCC 66 and  

Secretary,  Indian  Tea  Association  vs.  Ajit  Kumar  Barat [2000  (3)  

SCC 93].  

  13. Thus it can safely be concluded that a writ of mandamus would  

be issued to the appropriate government to reconsider the refusal to  

make a reference, where (i) the refusal is on irrelevant, irrational or  

extraneous  grounds;  (ii)  the  refusal  is  a  result  of  the  appropriate  

government  examining  the  merits  of  the  dispute  and  

prejudging/adjudicating/determine the dispute; (iii) the refusal is mala  

fide or dishonest or actuated by malice; (iv) the refusal ignores the  

material available in the failure report of the Conciliation Officer or is  

not supported by any reason.   

14. This case is squarely covered by the decisions in  Ram Avtar  

Sharma and  Telco  Convoy  Drivers  Mazdoor  Sangh.  The  state

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government has examined the merits of the dispute and has refused to  

make  the  reference  on  the  ground  that  the  workers  were  not  the  

employees of IOC, when the very dispute that required reference was  

whether the workers should be considered as the employees of IOC.    

15. In  view  of  the  above  we  allow  this  appeal   and  direct  the  

Central  Government  to  reconsider  the  matter  in  the  light  of  the  

observations above and take an appropriate decision on the request for  

reference of the dispute to the Industrial adjudicator. As and when the  

state government makes the reference, it is for the Industrial Tribunal  

to  consider  the dispute  on merits,  on the basis  of  materials  placed  

before it, uninfluenced by the observations of the High Court or this  

Court.  

…………………………J. (R V Raveendran)

New Delhi; …………………………J. April 13, 2009. (Lokeshwar Singh Panta)