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PETITIONER: STATE OF BOMBAY

       Vs.

RESPONDENT: K. P. KRISHNAN AND OTHERS. (AND CONNECTED APPEAL)

DATE OF JUDGMENT: 18/04/1960

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SINHA, BHUVNESHWAR P.(CJ) KAPUR, J.L. SUBBARAO, K. WANCHOO, K.N.

CITATION:  1960 AIR 1223  CITATOR INFO :  R          1964 SC1617  (6)  RF         1967 SC 295  (60)  RF         1969 SC 707  (50)  R          1975 SC2226  (9)  RF         1975 SC2238  (14)  D          1976 SC1474  (8,10)  E&R        1985 SC 915  (5)  RF         1990 SC 255  (5)

ACT: Industrial   Dispute-Failure  of   conciliation--Appropriate Government’s Power of reference-Order of refusal-Reasons, if must be germane to the issue-Classification-Bonus-Industrial Disputes Act, 1947 (14 of 1947), ss. 12(5), 10(1).

HEADNOTE: Section 2(5) of the Industrial Disputes Act, 1947,  properly construed,  does  not  by itself confer  the  power  on  the appropriate  Government to make a reference.  That power  is really  contained  in  s. 10(i) of  the  Act.   In  deciding whether  it should or should not make a reference  under  s. 12(5)  of the Act the appropriate Government need  not  base its  decision  solely  on the  report  of  the  conciliation officer,  but is free to take into consideration  all  other relevant  facts and circumstances under s. 10(1), and  where it  refused  to  make a reference it must  record  and  com- municate  its  reasons therefore to the  parties  concerned. Such  reasons, however, must be germane, and not  extraneous or irrelevant, to the dispute. But  in exercising such wide powers as are conferred  by  S. 10(1),  the  appropriate  Government  must  act  fairly  and reasonably  and  not  in a  punitive  spirit,  and  although considerations of expediency may not be wholly excluded,  it must not be swayed by any extraneous considerations. Consequently, in a case where the issues in dispute  related to  a  claim of classification for specified  employees  and additional bonus and the sole ground on which the Government refused to refer the dispute for adjudication under s. 12(5) was  that the employees had adopted go-slow  tactics  during

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the  relevant  year, although the company  had  nevertheless voluntarily  paid three months’ bonus for that year and  the report  of  the conciliation officer was in  favour  of  the employees, Held, that the Government acted on irrelevant considerations and its decision being wholly punitive in character a  clear case for the issue of a writ of mandamus was made out. Held,  further,  that since the work done by  the  employees prima  facie justified the claim for classification  and  it was  in  consonance with the practice  prevailing  in  other comparable concerns, the misconduct of the respondents could be  no  ground for refusing reference as the  claim  was  in regard to the future benefit to the employees. 228 The  claim of bonus being also prima facie justified by  the profits  earned during the relevant year in accordance  with well    settled principles of industrial  adjudication,  the order of refusal was in the nature of a punitive action that was wholly inconsistent with the object of the Act.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 37 & 38  of 1957. Appeals  from the judgment and order dated August 30,  1955, of the former Bombay High Court in Appeals Nos. 55 and 56 of 1955,  arising out of the judgment and order dated June  23, 1955, of the said High Court in Misc.  Application No. 80 of 1955. C.  K.  Daphtary, Solicitor-General of India,  B.  Ganapathy Iyer and R. H. Dhebar, for the appellant (in C. A. No. 37 of 57) and respondent No. 6 (in C. A. No.  38/57). S.  D. Vimadalal and I. N. Shroff, for the appellant (in  C. A. No. 38/57) and respondent No. 6 (in C. A. No. 37/57.) Rajni Patel, S. N. Andley, J. B. Dadachanji, Rameshwar  Nath and P. L. Vohra, for respondents Nos.1 and 3 to  5 (in  both the appeals). S. B. Naik and K. R. Chaudhuri, for respondent No. 2   (in both the appeals). 1960.   August 18.  The Judgment of the Court was  delivered by 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 (hereafter  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 (hereafter  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 229 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 1/4  of  the  basic  earnings  for  the  year  195253.   The respondents  then  informed  the  company  that  they   were

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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  conci- liator  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 the 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 230 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  195253 ".  It is this decision of the Government refusing to  refer the dispute for industrial adjudication that has given  rise to the present proceedings. 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 oppon- ent.   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

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refusing  to  make a reference under s. 12(5)  ignoring  the fact that there was a slow-down and taking into account only such reasons as are germane to the 231 question of determining whether a reference should or should not be made. 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.   These  appeals have  been  ordered to be consolidated and have  been  heard together,  and  both of them raise the  question  about  the construction of s. 12(5) of the Act. Before dealing with the said question it would be convenient to  state one more relevant fact.  It is common ground  that during  a  part  of the relevant year  the  respondents  had adopted  go-slow  tactics.   According to  the  company  the period   of  go-slow  attitude  was  seven  months   whereas according  to the respondents it was about five months.   It is  admitted that under cl. 23(c) of the standing orders  of the company willful slowing down in performance of work,  or abatement,  or instigation thereof, amounts  to  misconduct, and it is not denied that as a result of the go-slow tactics adopted  by  the respondents disciplinary action  was  taken against  58  workmen employed by the company.   The  respon- dents’ case is that despite the go-slow strategy adopted  by them  for  some months during the relevant  year  the  total production for the said period compares very favorably  with the  production for previous years and that the profit  made by  the  company during the relevant  year  fully  justifies their  claim for additional bonus.  The appellant has  taken the  view  that  because  the  respondents  adopted  go-slow strategy  during  the relevant year the  industrial  dispute raised by them in regard to bonus as well as  classification was not to be referred for adjudication under s. 12(5).   It is  in  the light of these facts that we  have  to  consider whether 232 the  validity of the order passed by the appellant  refusing to refer the dispute for adjudication under s. 12(5) can  be sustained. Let  us first examine the scheme of the relevant  provisions of  the Act.  Chapter III which consists of ss. 10  and  10A deals  with  reference  of  dispute  to  Boards,  Courts  or Tribunals.    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 cls. (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 frequent  lock-outs  and strikes.   It  is with that object that  reference  is  con- templated 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

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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.   The second proviso to s. 10(1) deals with disputes relating to a public utility service, and it provides that where a  notice under s. 22 has been given in respect of such a dispute  the appropriate  Government shall, unless it considers that  the notice has been frivolously or vexatiously given or that  it would  be inexpedient so to do, make a reference under  this sub-section notwithstanding that any other proceedings under this  Act in respect of the dispute may have commenced.   It is  thus  clear that in regard to cases falling  under  this proviso an obligation is imposed on the Government to  refer the dispute unless of course it is satisfied that the notice is   frivolous  or  vexatious  or  that  considerations   of expediency  required  that a reference should not  be  made. This proviso also makes it clear that reference can be  made even if other proceedings under the Act 233 have  already  commenced  in respect of  the  same  dispute. Thus, so far as discretion of the Government to exercise its power of referring an industrial dispute is concerned it  is very  wide  under s. 10(1) but is limited under  the  second proviso to s. 10(1).  Section 10(2) deals with a case  where the Government has to refer an industrial dispute and has no discretion   in  the  matter.   Where  the  parties  to   an industrial  dispute  apply in the prescribed  manner  either jointly or separately for a reference of the dispute between them  the Government has to refer the said dispute if it  is satisfied  that the persons applying represent the  majority of  each party.  Thus, in dealing with this class  of  cases the  only point on which the Government has to be  satisfied is that the persons applying represent the majority of  each party  ; once that test is satisfied the Government  has  no option  but to make a reference as required by the  parties. Similarly s. 10A deals with cases where the employer and his workmen  agree  to refer the dispute to arbitration  at  any time  before the dispute has been referred under s. 10,  and it  provides  that they may so refer it to  such  person  or persons  as may be specified in the  arbitration  agreement; and s. 10A(3) requires that on receiving such an arbitration agreement  the  Government  shall,  within  fourteen   days, publish  the same in the official Gazette.   Section  10A(4) prescribes   that  the  arbitrator  or   arbitrators   shall investigate the dispute and submit the arbitration award  to the appropriate Government; and s. 10A(5) provides that such arbitrations are outside-the Arbitration Act.  Thus cases of voluntary  reference of disputes to arbitration are  outside the  scope  of any discretion in the  Government.   That  in brief  is  the position of the discretionary  power  of  the Government  to refer industrial disputes to the  appropriate authorities under the Act. The   appropriate   authorities  under  the  Act   are   the conciliator,  the  Board, Court of Enquiry,  Labour  Court’) Tribunal  and National Tribunal.  Section 11(3)  confers  on the  Board,  Court of Enquiry, Labour  Court,  Tribunal  and National Tribunal all, the powers     30 234 as  are  vested  in  a civil court when  trying  a  suit  in respect  of  the matters specified by cls. (a)  to  (d).   A conciliation   officer,  however,  stands  on  a   different footing.   Under s. 11(4) he is given the power to call  for and  inspect  any relevant document and has been  given  the same  powers  as are vested in civil courts  in  respect  of

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Compelling the production of documents. Section  12 deals with the duties of conciliation  officers. Under   s.   12(1)  the  conciliation   officer   may   hold conciliation  proceedings in the prescribed manner where  an industrial  dispute exists or is apprehended.  In regard  to an industrial dispute relating to a public utility  service, where  notice under s. 22 has been given,  the  conciliation officer  shall hold conciliation proceedings in  respect  of it.  The effect of s. 12(1) is that, whereas in regard to an industrial dispute not relating to a public utility  service the  conciliation officer is given the discretion either  to hold conciliation proceedings or not, in regard to a dispute in  respect  of a public utility service, where  notice  has been given, he has no discretion but must hold  conciliation proceedings  in  regard to it.  Section 12(2)  requires  the conciliation  officer  to investigate  the  dispute  without delay  with the object of bringing about a  settlement,  and during  the course of his investigation he may  examine  all matters affecting the merits and the right settlement of the dispute  and  do all such things as he thinks  fit  for  the purpose  of  inducing  the parties to come  to  a  fair  and amicable   settlement.   The  duty  and  function   of   the conciliation  officer  is  as his very  name  indicates,  to mediate   between  the  parties  and  make  an   effort   at conciliation so as to persuade them to settle their disputes amicably  between themselves.  If the  conciliation  officer succeeds  in his mediation s. 12(3) requires him to  make  a report  of such settlement together with the  memorandum  of the  settlement  signed  by  the  parties  to  the  dispute. Section  18(3) provides that a settlement arrived at in  the course  of conciliation proceedings shall be binding on  the parties  specified therein.  It would thus be seen  that  if the attempts made by the conciliation officer to induce  the parties to come to a settlement succeeds and a settlement is signed by them 235 it  has in substance the same binding character as an  award under  s. 18(3).  Sometimes efforts at conciliation  do  not succeed  either  because one of the parties to  the  dispute refuses  to co-operate or they do not agree as to the  terms of  settlement.  In such cases the conciliation officer  has to  send his report to the appropriate Government  under  s. 12(4).   This report  must set forth the steps taken  by the officer   for  ascertaining  the  facts  and   circumstances relating to the dispute and for bringing about a  settlement thereof  together  with a full statement of such  facts  and circumstances  and  the reasons on account of which  in  his opinion a settlement could not be arrived at.  The object of requiring  the conciliation officer to make such a full  and detailed  report  is to apprise the Government  of  all  the relevant facts including the reasons for the failure of  the conciliation  officer  so  that the  Government  may  be  in possession  of the relevant material on which it can  decide what  course  to  adopt under s. 12(5).   In  construing  s. 12(5),  therefore,  it  is necessary to  bear  in  mind  the background  of the steps which the conciliation officer  has taken  under s. 12(1) to (4).  The conciliation officer  has held conciliation proceedings, has investigated the  matter, attempted to mediate, failed in his effort to bring about  a settlement  between  the parties, and has made  a  full  and detailed report in regard to his enquiry and his conclusions as to the reasons on account of which a settlement could not be arrived at. Section  12(5)  with which we are concerned in  the  present appeals  provides that if, on a consideration of the  report

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referred to in subsection (4), the appropriate Government is satisfied  that  there is a case for reference to  a  Board, Labour  Court,  Tribunal or National Tribunal, it  may  make such  reference.  Where the appropriate Government does  not make such a reference it shall record and communicate to the parties  concerned  its  reasons  therefore.   This  section requires  the appropriate Government to consider the  report and  decide whether a case for reference has been made  out. If the Government is satisfied that a case for reference has been made out it may make such 236 reference.  If it is satisfied that a case for reference has not  been made out it may not make such a reference; but  in such  a case it shall record and communicate to the  parties concerned its reasons for not making the reference which  in the  context means its reasons for not being satisfied  that there is a case for reference.  The High Court has held that the  word  "  may  in the first part of  s.  12(5)  must  be construed to mean shall " having regard to the fact that the power  conferred  on  the Government by the  first  part  is coupled with a duty imposed upon it by the second part.  The appellant  and  the company both contend that this  view  is erroneous.   According to them the requirement that  reasons shall  be recorded and communicated to the parties  for  not making  a reference does not convert " may " into " shall  " and that the discretion vesting in the Government either  to make a reference or not to make it is as wide as it is under s. 10(1) of the Act.  Indeed their contention is that,  even after  receiving  the report, if the Government  decides  to make a reference it must act under s. 10(1) for that is  the only   section  which  confers  power  on  the   appropriate Government to make a reference. It  is  true  that s. 12(5) provides  that  the  appropriate Government may make such reference and in that sense it  may be  permissible  to say that a power to  make  reference  is conferred  on the appropriate Government by s.  12(5).   The High Court was apparently inclined to take the view that  in cases  falling  under s. 12(5) reference can  be  made  only under  s. 12(5) independently of s. 10(1).  In  our  opinion that is not the effect of the provisions of s. 12(5).  If it is  held that in cases falling under s. 12(5) reference  can and should be made only under s. 12(5) it would lead to very anomalous   consequences.    Section  10(3)   empowers   the appropriate   Government  by  an  order  to   prohibit   the continuance of any strike or lock-out in connection with  an industrial dispute which may be in existence on the date  of the  reference,  but this power is confined  only  to  cases where  industrial disputes are referred under s. 10(1).   It would  thus be clear that if a reference is made only  under s. 12(5) independently of 237 s.10(1)  the  appropriate Government may have  no  power  to prohibit  the continuance of a strike in connection  with  a dispute  referred by it to the tribunal for  adjudication  ; and  that  obviously  could  not be  the  intention  of  the Legislature.  It is significant that ss. 23 and 24  prohibit the  commencement  of  strikes  and  lock-outs  during   the pendency of proceedings there-’ in specified, and so even in the case of a reference made under s. 12(5) it would not  be open  to  the  employer to declare a  lock-out  or  for  the workmen to go on strike after such a reference is made ; but if  a strike has commenced or a lock-out has  been  declared before such a reference is made, there would be no power  in the  appropriate Government to prohibit the  continuance  of such  a strike or such a lock-out.  Section 24(2)  makes  it

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clear that the continuance of a lock-out or strike is deemed to  be  illegal only if an order prohibiting  it  is  passed under s. 10(3).  Thus the power to maintain industrial peace during  adjudication proceedings which is so  essential  and which  in fact can be said to be the basis  of  adjudication proceedings is exercisable only if a reference is made under s.  10(1).   What is true about this power is  equally  true about  the power conferred on the appropriate Government  by s.  10(4), (5), (6) and (7).  In other words,  the  material provisions contained in sub-ss. (3) to (7) of s. 10(1) which are  an integral Dart of the scheme of reference  prescribed by Chapter III of the Act clearly indicate that even if  the appropriate  Government  may be acting under  s.  12(5)  the reference   must   ultimately  be  made  under   s.   10(1). Incidentally it is not without significance that even in the petition made by the respondents in the present  proceedings they  have  asked for a writ of mandamus  calling  upon  the appellant to make a reference under ss. 10(1) and 12(5). Besides,  even  as a matter of construction, when  s.  12(5) provides  that  the  appropriate Government  may  make  such reference  it does not mean that this provision is  intended to confer a power to make reference as such.  That power has already  been conferred by s. 10(1); indeed s. 12(5)  occurs in  a Chapter dealing with the procedure, powers and  duties of the 238 authorities  under  the Act; and it would be  legitimate  to hold  that s. 12(5) which undoubtedly confers power  on  the appropriate Government to act in the manner specified by it, the  power to make a reference which it will exercise if  it comes  to the conclusion that a case for reference has  been made  must  be found in s. 10(1).  In other words,  when  s. 12(5)  says that the Government may make such  reference  it really  means  it may make such reference under s.  10  (1). Therefore  it would not be reasonable to hold that s.  12(5) by itself and independently of s. 10(1) confers power on the appropriate Government to make a reference. The next point to consider is whether, while the appropriate Government  acts  under s. 12(5), it is bound  to  base  its decision  only and solely on a consideration of  the  report made by the conciliation officer under s. 12(4).  The  tenor of  the High Court’s 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  back- ground  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  con- sider whether there are any other relevant or material 239

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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 the 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) provid- ed 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. We   have  already  noticed  that  s.  12  deals  with   the conciliation  proceedings in regard to all  industrial  dis- putes,  whether they relate to a public utility  service  or not.   Section  12(1)  imposes an  obligation  on  the  con- ciliation officer to hold conciliation proceedings in regard to  an  industrial  dispute in  respect  of  public  utility service provided a notice under s. 22 has been given.  If in such  a  dispute  the efforts at  conciliation  fail  and  a failure  report is submitted under s. 12(4)  Government  may have  to  act under s. 12(5) and decide whether there  is  a case  for reference.  Now, in dealing with such  a  question relating   to  a  public  utility   service   considerations prescribed  by  the  second  proviso  to  s.  10(1)  may  be relevant,  and  Government may be justified in  refusing  to make a reference if it is satisfied that the notice given is frivolous   or   vexatious  or  that  reference   would   be inexpedient.  Just as discretion conferred on the Government under  s.  10(1)  can be exercised by  it  in  dealing  with industrial disputes in regard to non-public utility services even  when Government is acting under s. 12(5), so  too  the provisions of the second proviso can be pressed into service by  the Government when it deals with an industrial  dispute in regard to a public utility service under s. 12(5). It  would, therefore, follow that on receiving  the  failure report  from  the  conciliation  officer  Government   would consider the report and other relevant material 240 and decide whether there is & case for reference.  If it  is satisfied  that  there is such & 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 therefore.   The  question  which &rises 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. It is urged for the respondent that where power is conferred on an authority and it is coupled with the performance of  & duty  the  words conferring power though directory  must  be construed  as  mandatory.   As  Mr.  Justice  Coleridge  has observed  in Beg. v. Tithe Commissioners (1).  "  The  words undoubtedly  are only empowering; but it has been  so  often decided  as  to  have  become  an  axiom,  that,  in  public statutes,  words only directory, permissory or enabling  may have  & compulsory force where the thing to be done  is  for the  public benefit or in advancement of public  justice  ". The  argument  is that s. 12(5) makes it obligatory  on  the Government  to  record and communicate its reasons  for  not making  the  reference and this obligation  shows  that  the power to make reference is intended to be exercised for  the benefit of the party which raises an industrial dispute  and wants  it to be referred to the authority for decision.   It

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may  be that the Legislature intended that this  requirement would  avoid  casual or capricious decisions in  the  matter because   the   recording  and  communication   of   reasons postulates  that the reasons in question must  stand  public examination  and scrutiny and would therefore be of  such  a character as would show that the question was carefully  and properly  considered by the Government; but that is not  the only  object in making this provision.  The other object  is to  indicate  that an obligation or duty is  cast  upon  the Government, and since the power conferred by the first  part is coupled with the duty prescribed by the second part " may " in the context must mean " shall ". There is  considerable force in (1) (1849) 14 Q.B. 459, 474 : 117 E.R. 179, 185. 241 this  argument.   Indeed it has been accepted  by  the  High Court  and  it  has  been held that  if  the  Government  is satisfied that there is a case for reference it is bound  to make the reference. 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 appellant,  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 therefore.  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 to non-public utility 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     31 242 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

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clearly be under s. 10(1).  This position is implicit in the scheme  of s. 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 s. 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 dispute 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 a prior stage when Government is acting under s. 12(5) it is obligatory on it to make a reference as contended by the respondent. The  controversy between the parties as to the  construction of  s. 12(5), is, however, only of academic importance.   On the  respondents’  argument,  even if it  is  obligatory  on Government to make a reference provided it is satisfied that there is a case for reference, in deciding whether or not  a case  for reference is made Government would be entitled  to consider  all relevant facts, and if on a  consideration  of all  the relevant facts it is not satisfied that there is  a case  for reference it may well refuse to make  a  reference and record and communicate its reasons therefore.  According to the appellant and the company also though the  discretion is  with Government its refusal to make a reference  can  be justified  only if it records and communicates  its  reasons therefore and it appears that the 243 said  reasons are not wholly extraneous or  irrelevant.   In other 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 same result.  Therefore both the  methods  of approach  ultimately lead to the same crucial enquiry :  are the  reasons  recorded and communicated  by  the  Government under s.  12(5) germane and relevant or not ? It  is  common  ground that a writ  of  mandamus  would  lie against  the Government if the order passed by it  under  s. 10(1)  is  for  instance contrary to the  provisions  of  s. 10(1)(a)  to (d) in the matter of selecting the  appropriate authority  ;  it is also common ground that in  refusing  to make  a  reference  under s. 12(5) if  Government  does  not record and communicate to the parties concerned its  reasons therefore a writ of mandamus would lie.  Similarly it is not disputed that if a party can show that the refusal to  refer a dispute is not bona fide or is based on a consideration of wholly irrelevant facts and circumstances a writ of mandamus would  lie.   The order 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

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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 244 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 academic importance. That  takes  us  to the real point of  dispute  between  the parties,  and  that  is  whether the  reason  given  by  the appellant  in  the  present  case for  refusing  to  make  a reference  is germane or not.  The High 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 year 1952-53.  It 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.  12(5).  It has been strenuously urged before us  by  the appellant  and  the  company that it is  competent  for  the Government  to  consider whether it would  be  expedient  to refer a dispute of this kind for adjudication.  The argument is that the object of the Act is not only to make  provision for investigation and settlement of industrial disputes  but also to secure industrial peace so that it may lead to  more production and help national economy.  Co-operation  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  adopting go-slow tactics,  and  since  their conduct  during  a  substantial part of  the  relevant  year offended against the standing orders that was a fact which 245 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).6  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  of non-co-operation  with  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

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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  Govern- ment  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 246 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 not withstanding the fact that the workmen had adopted go-slow 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 conciliator’s 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 considerations of  discipline  cannot,  in  our  opinion,  be  legitimately allowed to impose such a punishment on the employees.  Simi- larly  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 247 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

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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 bold 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  appears  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. The  appeals accordingly fail and are dismissed with  costs, one set of hearing fees.                              Appeals dismissed. 248