Misc. Petn. No. 616 of 1965

27th October, 1966.

Petitioner Counsel: C. L. Dudhia, for s
Respondent Counsel: S. P. Naik, for No. 1 and P. P. Khambatta with R. P. Bhatt (for No. 2), .

Cases Cited:
Jalan Trading Co. Pvt. Ltd. v. Mill Mazdoor Union, (1967) AIR 1967 SC 691 (V 54),(1965-66) 29 FJR 463 [Para 6]
Bombay Union of Journalists v. State of Bombay, (1964) AIR 1964 SC 1617 (V 51),(1964) 6 SCR 22 [Para 7]
Workers of Bukingham and Carnatic Co. v. Commr. of Labour and Chief Conciliation Officer, (1964) AIR 1964 Mad 538 (V 51),1964 (1) Lab LJ 253 [Para 12]
State of Bombay v. K.P. Krishnan, (1960) AIR 1960 SC 1223 (V 47),63 Bom LR 127 [Para 13]

JUDGMENT

JUDGEMENT :-By this petition, the petitioners challange the decision of the State of Maharashtra, being the first respondent herein, contained in the letters dated 25th September 1965 (Ex. 'M' to the petition) and 6th November 1965 (Ex. 'O' to the petition), whereby the first respondent refused to refer the dispute between the second respondent and the workmen employed in it at its head office at Bombay.

2. The relevant facts that are not in dispute shortly, stated are :

The second respondents are a limited company incorporated under the Indian Companies Act, having its sugar factory at Harigaon and its head office at Bombay. The second respondents have more than 4000 workers employed at its factory at Harigaon and have about 21 employees working at its head office at Bombay. There are two Unions of workers - One representing the workers employed at the second respondents' factory at Harigaon and the other representing the staff employed at the 2nd respondents' head office establishment at Bombay. The Union representing the workers employed at the factory at Harigaon is Sakhar Kamgar Sabha, Shrirampur (hereinafter referred to as the said Union). The workers employed at the second respondents' head office are represented by the first petitioner, a Trade Union incorporated under the Indian Trade Unions Act, 1926. The second and the third petitioners are the workmen employed at the head office establishment of the second respondent, and are members of the first petitioner Union.

3. By the letter dated 31st January 1965, addressed to the 2nd respondent the first petitioner made a demand for bonus for the year ending 30th September 1964. On 23rd February 1965, the first petitioner sent a reminder to the second respondent. The second respondent by its letter dated 25th February 1965, replied to the first petitioner, informing it that the second respondent was negotiating with the said Union in connection with the claim for bonus for the relevant year and if any settlement were arrived at between the second respondent and the said Union, the terms thereof would be applied to the workmen employed at its head office establishment at Bombay. By its reply dated 27th February 1965, the first petitioner wrote to the second respondent that it would prefer to negotiate a settlement with the second respondent independently of what may be agreed upon by the second respondent with the said union, and in case the second respondent refused to negotiate, the first petitioner would refer the matter to the conciliation officer. The first petitioner thereafter by its letter dated 27th April 1965 addressed to the Deputy Commissioner of Labour, requested him to intervene in the bonus issue for the aforesaid year. It appears that some correspondence was exchanged between the first petitioner and the Assistant Commissioner of Labour. In the meanwhile, on 11th June 1965, an agreement was arrived at between the second respondent and the said union representing over 4000 workers of the second respondent at its factory at Harigaon, in connection with the payment of bonus for the relevant year. By the said agreement, the second respondent agreed to pay bonus at the rate of 3/12th of the basic earnings of the workers during the said year. The second respondent by its letter dated 17th June 1964 informed the Assistant Commissioner of Labour about the aforesaid agreement arrived at with the said Union, and agreed to pay the same quantum of bonus to the workmen at its head office establishment at Bombay. The dispute raised by the first petitioner regarding the bonus for the workmen at the head office establishment of the second respondent was admitted in conciliation on or about 18th June 1965. The second respondent by its letter dated 11th August 1965 addressed to the Conciliation Officer intimated to him that in the past the second respondent had paid bonus to the head office staff on the basis of the agreement reached with the said Union, and under the circumstances the first petitioner's claim for bonus should not be accepted. The first petitioner by its letter dated 20th August 1965 addressed to the Conciliation Officer, contended that the agreement reached by the said union with the second respondent on the claim for bonus was not binding on the petitioners. As the conciliation proceedings before the Conciliation Officer failed, he submitted his failure report to the first respondent on or about 31st August 1965. Thereupon, the first petitioner by its letter dated 9th September 1965 requested the first respondent to refer the said dispute for adjudication to the Industrial Tribunal under the Industrial Disputes Act, 1947

(hereinafter referred to as the said Act). The first respondent by its letter dated 25th September 1965 refused to refer the said dispute to the adjudication of the Industrial Tribunal for the reasons mentioned therein. I would prefer to reproduce the reasons assigned by the first respondent in its own words as set out in the said letter :

"...............and that Government is satisfied that there is no case for reference thereof under Sub-Section (5) of the said Section 12 for the reason that the management has offered to the workmen bonus at the same rate at which it has paid bonus to its factory workmen, numbering over 4000, under an agreement reached with their representative union under the Bombay Industrial Relations Act 1946, which was applicable to them, and there cannot be a different rate of bonus for the workmen working in the head office of the company numbering over 20 only."

The first petitioner thereupon by its letter dated 1st November 1965, pointed out to the first respondent that the said dispute was pending before the appropriate authorities at the relevant period, namely, 29th May 1965 or thereafter, and therefore, the Bonus Act. 1965 was applicable and as the second respondent did not file any calculation as per the Bonus Act, 1965, the bonus agreed to be paid under the said agreement with the said union was not at all adequate and not binding on the first petitioner. The first respondent by its letter dated 6th November 1965 turned down the request made by the first petitioner and, inter alia stated "that the dispute in question is not covered by the Payment of Bonus Act, as it was not pending before Government or any other authority under the Industrial Disputes Act immediately before 29th May 1965." On these facts, the first petitioner has approached this Court for issue of a writ of mandamus against the first respondent for quashing its decision refusing to make a reference contained in the letters dated 25th September 1965 and 6th November 1965, and to direct the Industrial Tribunal for adjudication in accordance with the provisions of the said Act.

4. Both the respondents have resisted the petition and have filed the respective affidavits of D.Y. Konkar, dated 30th September 1966 and of Jamshed Dinshaw Kapadia, dated 24th October 1966.

5. The petitioners have attacked the decision of the first respondent contained in the aforesaid letters on several grounds mentioned in para 6 of the petition. The chief grounds on which the petitioners have challenged the said decision are two-fold (1) As the dispute regarding bonus far the year 1963-64 was pending before the appropriate Government and/or authority under the said Act immediately before 29th May 1965, the bonus to the workmen was payable in accordance with the provisions of the Bonus Act, 1965, and therefore, the finding of the first respondent that the Bonus Act, 1965, was not applicable is erroneous. (2) The decision arrived at by the first respondent is based on considerations extraneous and not germane to the issue.

6. At the hearing of the petition before me, Mr. Dudhia, appearing on behalf of the petitioners, has confined his attack only on the second ground mentioned here-in-above. Mr. Dudhia has conceded, and in my opinion rightly, that having regard to the judgement of the Supreme Court in Jalan Trading Co. Pvt. Ltd. v. Mill Mazdoor Union, (1965-661) 29 FJR 463 : (AIR 1967 SC 691) adjudging void certain provisions of Bonus Act being violative of Article 14 of the Constitution of India, it is not open for him to question the impugned decision of the first respondent on the first ground hereinabove mentioned. The sole ground which survives for consideration of the Court is, whether the reasons assigned by the first respondent for refusing to refer the said dispute to the Industrial Tribunal are extraneous and not germane to the issue.

7. Before I proceed to consider the rival contentions of the parties, it is convenient at this stage to state the law on the subject that falls for my determination. The law on the subject has been well settled by the judicial pronouncement of the Highest Court of the land. The law on the subject enumerated in two decisions of the Supreme Court reported in State of Bombay v. K.P. Krishnan, 63 Bom LR 127 : (AIR 1960 SC 1223) and Bombay Union of Journalists v. State of Bombay, AIR 1964 SC 1617 may be summarised thus : The provisions contained. in Section 10(1) of the Industrial Disputes Act, 1947 read with Section 12(5) thereof indicate that the appropriate Government has to consider the expediency of making or refusing to make a reference, and for that purpose to consider all the relevant facts, and if the Government comes to the conclusion that it will not be expedient to make a reference, it would be within its jurisdiction to refuse to make such a reference. But in case the Government refuses to make a reference, then it is incumbent upon the Government to give reasons for refusing to make such a reference. If the appropriate Government in refusing to make a reference acts honestly and bona fide, the Court will not interfere with its conclusion, and will not exercise its jurisdiction under Article 226 of the Constitution of India. The Court is not sitting in appeal over the order of refusal made by the appropriate Government under Section 10(1) read with Section 12(5), and is not, therefore, entitled to consider the propriety or correctness of the reasons assigned by the Government for its order of refusal to make a reference. If, however, the appropriate Government refuses to make a reference irrelevant considerations, or en extraneous grounds or acts mala fide the Court would certainly interfere by issuing the appropriate

of law clearly emerge from the aforesaid two decisions of the Supreme Court.

8. It has been strenuously urged by Mr. Dudhia for the petitioner that the Government in refusing to make a reference has taken into consideration extraneous points not germane to the inquiry. Mr. Dudhia submits that the first respondent has assigned reasons for refusing to make the reference, and those reasons indicate that the Government has taken into account irrelevant matters foreign to the question before it. On this aspect of the matter, Mr. Dudhia contends that the settlement arrived at between the said Union on the part and the second respondent on the other, was not based on the well established principles of law relating to payment of bonus, and therefore, the first respondent was not justified in refusing to refer the dispute to the Industrial Tribunal. Now, it is nowhere alleged in this petition that the agreement arrived at between the second respondent and said Union was not based on well settled principles of law relating to payment of bonus, Mr. Dudhia was at pains to find out such an averment in the petition, but he has not been able to show the same to me. He has, however, referred me to the letter dated 20th August 1965 addressed by the first petitioner to the conciliation officer (Ex. J to the Petition), wherein it is inter alia stated

"Hence if as one can make out from the earnings of the Company, the Union in Shrirampur has accepted a bonus less than what the workmen are entitled to in the strict application of bonus formula or as provided in the Bonus Ordinance, such a lower bonus need not necessarily be accepted by the workmen in the Head Office for the simple reason that the service conditions here and the benefits the workmen at this end get are less than what the benefits the workmen at Factory are getting."

At the highest the above letter indicates that the first petitioner had raised a contention before the conciliation officer that the bonus accepted by the said Union is less than what the workmen were entitled to in strict compliance with the bonus formula. From the statement reproduced hereinabove, it is not possible to reach to the conclusion that the settlement arrived at between the second respondent and the said Union was not based on the well settled principles of law relating to the payment of bonus to the workmen. If what Mr. Dudhia says is correct, namely that the well settled principles of law relating to payment of bonus were not complied with, then that fact would have been averred in the petition in the forefront. It is highly improbable that the said Union which represents more than 4000 workers would agree to accept any formula Contrary to law or not in conformity with the well settled principles of law relating to payment bonus.

9. Mr. Dudhia next contended that the reason assigned by the first respondent namely that there would be two different rates of bonus one for the workmen working in the head office of the company and the other for the workmen represented by the said Union is irrelevant and extraneous. In support of his aforesaid contention Mr. Dudhia strongly relied upon the aforecited decision of the Supreme Court reported in 63 Bom LR 127 : (AIR 1960 SC 1223) and in Particular on the following passage :

"Similarly, even in regard to the claim for bonus, if the respondents are able to show that the profits earned by the company during the relevant year compared to the profits earned during the proceeding years justified their demand for additional bonus, it would plainly be a punitive art to refuse to refer such a dispute solely the ground of their misconduct. In this connection it may be relevant to remember that for the said misconduct the company did take disciplinary action as it thought fit and necessary, and yet it paid the respondents bonus to which it thought they were entitled. Besides, in considering the question as to whether a dispute in regard to bonus should be referred for adjudication or not it is necessary to bear in mind the well established principles of industrial adjudication which govern claims for bonus. A claim for bonus is based on the consideration that by their contribution to the profit of the employer, the employees are entitled to claim a share in the said profits, and so any punitive action taken by the Government by refusing to refer for adjudication an industrial dispute for bonus would, in our opinion, be wholly inconsistent with the object of the Act. If the Government had given some relevant reasons which were based on, or were the consequence of, the misconduct to which reference is made it might have been another matter."

10. Now the aforecited case is clearly distinguishable from the present case. In that case, the workers had pressed four demands to the company, and they were in respect of gratuity holidays classification of certain employees and for payment of unconditional bonus for the financial year ending October 31st 1953. The conciliation officer, however admitted into conciliation only two of such demands and they were in respect of classification of certain employees and the bonus for the year 1952-53, and the remaining two demands were not admitted into conciliation. As the conciliation proceedings proved infructuous, a failure report was submitted by the conciliator. On receipt of that report the Government considered the matter and came to conclusion that the dispute in question should not be referred to the Industrial Tribunal for adjudication, and the said decision was communicated to the workers' Union. The Government refused to refer the said dispute to the Tribunal was that

"The workmen resorted to go slow during the year 1952-53." That decision of Government was challenged before this Court. This Court took the view that the reasons assigned by Government were extraneous and not germane, and therefore quashed and set aside the said decision. The appellate Court also took the same view, and the matter was taken to the Supreme Court. Their Lordships of the Supreme Court confirmed the finding of this Court and held that the Government relied upon wholly irrelevant or extraneous considerations. Now the facts of that case are entirely different from the facts of the present case. In that case, the reason assigned by the Government namely, that the workers resorted to go slow, was not at all germane to the dispute which was sought to be referred by the workmen to the Industrial Tribunal. The dispute which was sought to be referred by the workmen to the Tribunal related to classification of certain employees and the bonus. Now, 'resorting to go slow' policy by the workers can have no relevance to the classification of the employees. It is thus clear that the reason assigned by Government for not referring the dispute for adjudication of the Industrial Tribunal was clearly extraneous. There was no doubt that in that case Government wanted to take punitive measures in order to maintain discipline amongst the workers and their Lordships of the Supreme Court have held that it is not open to Government to take punitive measures in the guise of expediency of refusing to refer the dispute to the Industrial Tribunal. One more fact which appears to have weighed with the Supreme Court was that even after the workers had resorted to go slow policy the company had paid bonus. On the aforesaid facts the Court came to the conclusion that there was extraneous considerations which weighed with the Government in refusing to refer the dispute to the Industrial Tribunal.

11. In the present case, can we say that the reasons assigned by the 1st respondent are totally irrelevant ors extraneous to the object of the Act ? Now, 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 result in more production and improve national economy. Co-operation between capital and labour is essential for maintenance of increased production and industrial peace. It would, therefore, be open to the Government to take into consideration the fact that if two rates of bonus were declared, one for the workers at the head office and the other for the workers at the factory, it would lead to unrest amongst the workers, the consequences whereof would adversely affect the production and endanger the industrial peace. Now, it is not disputed that the said Union represents more than 4000 workers and the first petitioner represents 17 workers out of which workers have accepted the bonus on the basis of the said agreement arrived at between the second respondent and the first petitioner.

Now, if the first respondent had acceded to the request made by the petitioners and referred the dispute to the Industrial Tribunal, and in case, the Industrial Tribunal were to hold that the bonus payable to the workers of Bombay should not be 3/12th as agreed upon by the said Union, but should be more, there is every likelihood of discontentment amongst the workers at the factory. Thus, the first respondent was justified in taking into consideration all the aforesaid facts whilst arriving at the decision to refuse to refer the dispute to the Industrial Tribunal, I think the reasons assigned by the Government are germane to the issue involved before it and there is nothing extraneous or foreign about the same. As the Government has not taken into consideration any foreign factors in arriving at its decision contained in the letter of 25th September 1965, I do not think that the decision arrived at by the Government should be quashed or set aside.

12. It may be convenient at this stage to deal with one contention urged by Mr. Khambatta for the second respondent. Mr. Khambatta submits that Government whilst rejecting the application made by the first petitioner to refer the dispute to the Industrial Tribunal had to apply its mind and prima facie come to the conclusion as to whether any case was made out by the petitioners for reference of the dispute to the Industrial Tribunal, and in this case, Government has after taking into consideration all the relevant facts, come to the conclusion that there was no prima facie case for making a reference to the Industrial Tribunal, and therefore, the Court should reject the contention urged by the petitioner. In support of his aforesaid submission Mr. Khambatta relied upon the following passage appearing at page 1622 of the aforecited decision of the Supreme Court reported in AIR 1964 SC 1617 :

"Besides, in dealing with this contention it is necessary to remember that in entertaining an application for a writ of mandamus against an order made by the appropriate Government under S. 10(1) read with Section 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 would be idle to suggest that in giving reasons to a party for refusing to make a reference under Section 12(5), elaborate order indicating exhaustively all the reasons that weighed in its mind in refusing to make a reference. It is no doubt desirable that party concerned should be told clearly and precisely the reasons why no reference is made, because the object of Section 12(5) appears to be to require the appropriate Government to state its reasons

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. If it appears that the reasons given show that the appropriate Government took into account a consideration which was irrelevant or foreign, that no doubt, may "justify the claim for a writ of mandamus. But the argument that of the pleas raised by the appellants two have been considered and not the third, would not necessarily entitle the party to claim a writ under Art. 226."

In my view this contention of Mr. Khambatta seems to be well founded and should be accepted. In my opinion, the first respondent after considering all the facts and circumstances of the case did not think it expedient to refer the dispute to Industrial Tribunal as requested by the petitioner and in doing so the 1st respondent has not taken into consideration any irrelevant or extraneous matters.

13. At this stage I will like to refer to certain line of argument adopted by Mr. Naik on behalf of the first respondent. Mr. Naik has urged that the agreement arrived at between the second respondent and the said Union is binding on the petitioner. I may at the outset state that this contention urged by Mr. Naik is not to be found in the affidavit in reply filed on behalf of the first respondent. But as the argument urged by Mr. Naik raises pure question of law, I permitted Mr. Naik to urge that point. In support of his aforesaid contention Mr. Naik placed reliance upon the judgment of the Madras High Court reported in Workers of Bukingham and Carnatic Co. v. Commissioner of Labour and Chief Conciliation Officer, 1964 (1)Lab LJ 253 : (AIR 1964 Mad 53811 do not think it necessary to set out in detail the facts of that case, as in my opinion that judgment has no bearing whatsoever to the facts of the present case. The Madras High Court has held on construction of Sec. 18(3) of the Industrial Disputes Act that the settlement reached through conciliation is binding on persons not actually parties thereto. Relying upon the aforesaid decision, Mr. Naik contends that the settlement reached between the said Union and the second respondent is binding not only against the said Union and its members, but also against the first petitioner and its members. I am unable to accept the argument advanced by Mr. Naik. The above ratio laid down by the Madras High Court in the aforesaid decision is based on construction of Section 18(3) of the Act Section 18 of the Act lays down the persons on whom settlement and awards are binding Section 18(3) of the Act provides that

"A settlement arrived at in the course of conciliation proceedings under this Act... .....................shall be binding on :

(a) XX XX XX

(b) XX XX XX

(c) XX XX XX

(d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part."

Therefore, before the settlement can be binding on persons not parties thereto, it must be arrived at in course of conciliation proceedings under the Industrial Disputes Act. Now, in the present case, the settlement that has been arrived at between the second respondents and the first petitioner has not been arrived at under the provisions of the said Act, but has been arrived at under the provisions of the Bombay Industrial Relations Act, 1946, with the result that the provisions contained in Sub-Section (3) of Section 18 are not at all attracted. My attention was also drawn to Section 114 of the Bombay Industrial Relations Act, 1946, wherein it is provided that 'a registered agreement, or a settlement, submission or award shall be binding upon all persons who are parties thereto, provided ................"

Thus the provisions contained in the Industrial Disputes Act and the Bombay Industrial Relations Act are materially different on this point. Under the Bombay Industrial Relations Act the agreement is made binding on the parties thereto and not to others. I, therefore reject the contention urged by Mr. Naik on this point.

14. As the only ground urged by Mr. Dudhia for attacking the decision arrived at by Government fails, the petition is liable to be dismissed.

15. The result is that the petition is dismissed. Rule discharged.

16. On the question of costs, Mr. Dudhia contended that no order as to costs should be made. Mr. Bhatt appearing on behalf of the second respondent has not pressed for costs, but Mr. Naik appearing on behalf of the first respondent, has pressed for the costs of Government. Normal principle of law is that costs must follow the event. Nothing is pointed out to me by Mr. Dudhia as to why I should depart from the normal principles of law. I, therefore direct that the petitioners do pay to the first respondent costs of the petition. There will be no order as to costs as between the petitioners and the second respondent.

Petition Dismissed