MANU/UP/1479/2018

Equivalent Citation: 2018(4)ADJ844, 2018(III)C LR646, [2018(157)FLR787], 2018(3)LLN283(All), (2018)2UPLBEC 1524

IN THE HIGH COURT OF ALLAHABAD

Special Appeal No. 2094 of 2011
Decided On: 27.03.2018
Appellants: Kshetriya Sri Gandhi Ashram
Vs.
Respondent: State of U.P. and Ors.
Hon'ble Judges/Coram:
Amreshwar Pratap Sahi and Rajeev Misra, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Ashwani K. Misra and Vrindavan Mishra
For Respondents/Defendant: C.S.C., Gopal Narain, Shyam Narain and Sudhanshu Narain
ORDER
Rajeev Misra, J.
1 . Challenge in this special appeal is to the judgment and order dated 19.7.2011,
passed by the learned Single Judge, whereby the learned Single Judge has not only
dismissed the writ petition filed by the petitioner appellant but has also imposed an
exemplary cost of Rs. 21 lacs upon the petitioner-appellant.
2 . We have heard Mr. Abhishek Tripathi, Advocate, holding brief of Mr. Vrindavan
Mishra, the learned counsel for the petitioner-appellant, the learned Standing Counsel
representing the respondent Nos. 1 to 4 and Mr. Sudhanshu Narain, the learned counsel
representing the respondent No. 5.
3 . The petitioner-appellant filed C.M.W.P. No. 1794 of 1993 (Kshetriya Sri Gandhi
Ashram Vs. State of U.P. and Others) claiming the following reliefs:-
"(a) a writ order or direction in the nature of certiorari quashing the impugned
order of reference dated 2.5.1993 passed by the respondent No. 2 (Annexure
No. 1 to the petition)
(b) a writ or direction in the nature of writ of prohibition against Labour court,
Gorakhpur, respondent No. 4 commanding the respondent No. 4 not to proceed
further in Adjudication Case No. 72 of 1993 pursuant to impugned order of
reference
(c) any other writ, order or direction as this Hon'ble Court may deem fit and
proper in the circumstances of the case
(d) award cost of the petition to be paid to the petitioner."
4 . The aforesaid writ petition came up for admission on 12.12.1995 before a learned
Single Judge and the following interim order was passed:-

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 "Notice on behalf of respondent No. 1 to 4 has been accepted by the learned
Standing Counsel. The petitioner is directed to service respondent No. 5 by
Dasti notice as also by registered post. Steps will be taken within seven days.
The petitioner will also file an affidavit of service within two weeks thereafter.
The respondents are directed to file counter affidavit within three weeks.
List for admission after six weeks.
In the meantime, the proceedings before the labour court in adjudication case
No. 72 of 1993 shall continue but final orders shall not be passed until further
orders of this Court."
5 . Subsequent to the order dated 12.12.1995, passed by the writ Court, no counter
affidavit was filed by the State respondents i.e. the respondent Nos. 1 to 4 in the writ
petition, even when the impugned order dated 2.5.1993 was passed by the respondent
No. 2 the Joint Secretary, Ministry of Labour, Anubhag-I, Kanpur. A counter affidavit
was filed by the respondent No. 5, the Union of the workmen supporting the impugned
order dated 2.5.1993 to which the petitioner-appellant had filed his rejoinder affidavit.
6. From the pleadings raised in the writ petition, it transpires that the writ petition was
filed, challenging the order dated 2.5.1993, passed by the respondent No. 2 the Joint
Secretary, Ministry of Labour, Anubhag-I, Kanpur, whereby, a reference was made to
the Labour Court, Gorakhpur for adjudication of an alleged industrial dispute pertaining
to 48 workmen, in terms of section 4K of the U.P. Industrial Disputes Act, 1947.
7. The challenge to the aforesaid order was laid by the petitioner-appellant primarily on
the ground that earlier also the Additional Labour Commissioner, U.P. Kanpur, vide
order dated 20.6.1991 had declined to make a reference in terms of Section 4K of the
U.P. Industrial Disputes Act, 1947. A perusal of the said order which is on the record of
the present Special Appeal at page 175 of the paper book, will go to show that the
reference was declined by the State Government on the ground of undue and excessive
delay. It is the case of the petitioner-appellant that the order dated 20.6.1991 was
neither challenged by the respondent No. 5 i.e. the Union of the Workmen nor by any of
the individual workmen. As such, the same was allowed to become final. The State
Government without considering the aforesaid, and also the fact that the services of the
48 workmen came to an end in the year 1981 could not by any stretch of imagination
form an opinion that an industrial dispute pertaining to the alleged termination of 48
workmen would be in existence in the year 1993 i.e. after 13 years, straight away
passed the order dated 2.5.1993, making a reference of the alleged industrial dispute to
the labour court, Gorakhpur in terms of section 4K of the U.P. Industrial Disputes Act,
1947.
8. As already noted above, on the aforesaid facts, the writ petition was entertained by
the learned Single Judge and an interim order had also been passed on 12.12.1995. The
writ petition remained pending for 17 years and was ultimately dismissed by the learned
Single Judge by means of the impugned judgment and order dated 19.7.2011 with an
exemplary cost of Rs. 21 Lacs.
9 . Feeling aggrieved by the aforesaid judgment and order dated 19.7.2011, the
petitioner-appellant has come up in appeal.
10. The present special appeal came up for admission on 1.11.2011 before a Division
Bench and following interim order was passed:-

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 "Admit.
Issue notice.
Till further orders of the court, part of the order dated 19.7.2011 awarding the
cost for Rs. 21 lakhs is stayed. It would be open to the labour court to pass
final award."
11. Having perused the pleadings raised in the writ petition, the counter affidavit as
well as the rejoinder affidavits, as well as the judgment of the learned Single Judge, the
following two questions arise for determination in the present Special Appeal.
(i) Whether a reference made by the State Government under Section 4K of the
U.P. Industrial Disputes Act, 1947 can be challenged by an employer on the
ground that the same has been made after excessive delay thereby causing
prejudice to the employer?
(ii) Whether in the facts and circumstances of the case, the imposition of Rs. 21
Lacs as exemplary cost upon the petitioner-appellant is justified?
12. With regard to the question No. 1, it would be appropriate to mention here that the
challenge to the reference made by the State Government in terms of Section 4K of the
U.P. Industrial Disputes Act, 1947 was made primarily on five grounds. Firstly, the
services of the 48 workmen whose cause was espoused by the union in the year 1993
had been terminated in the year 1981. Secondly, the Conciliation proceedings had failed
to which there was no challenge by the Union or the workmen. Thirdly, the Additional
Labour Commissioner, U.P. Kanpur vide order dated 20.6.1991 had declined to refer the
alleged industrial dispute in terms of section 4K of the U.P. Industrial Disputes Act,
1947 on the ground of excessive delay. Fourthly, the order dated 20.6.1991 was
allowed to become final as the same was never challenged either by the workers' union
or by any individual workman. Lastly, it was pleaded that the State Government without
considering the aforesaid facts suo-moto made a reference in terms of Section 4K of the
U.P. Industrial Disputes Act, 1947, 13 years from the date of the alleged termination of
the services of the workmen and after more than three years from the date of the
passing of the order dated 20.6.1991.
1 3 . The learned Single Judge dealt with the question regarding inordinate and
excessive delay in seeking a reference and referred to the judgment in the case of
Nedungadi Bank Ltd. Vs. K.P. Madhavankutty MANU/SC/0049/2000 : (2000) 2 SCC 455,
and observed as follows: "the Court in para 6 said that law does not prescribe any time-
limit for Appropriate Government to exercise its power under Section 10 of the Act. It is
not that this power can be exercised at any point of time and to revive matters which
had since been settled. Power is to be exercised reasonably and in a rational matter. If
at the time of reference made by the Government, no industrial dispute existed or could
be even said to have apprehended, reference cannot be made."
14. Thereafter, referring to the case of Director, Food and Supplies, Punjab Vs. Gurmit
Singh MANU/SC/7305/2007 : 2007 (5) SCC 727, the learned Single Judge observed as
follows: "Court said that delay in making reference for adjudication can be considered
by adjudicating authority for moulding relief but reference itself cannot be declined for
adjudication by the Labour Court or the Tribunal on the ground of relief. The Court also
observed if there is a stale claim, reference can be challenged by the employer by way
of writ petition contending since the claim is belated there was no industrial dispute.
But where the existence of industrial dispute is not challenged, the reference is valid."

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15. Finally referring to the case of U.P.S.R.T.C. Vs. Babu Ram MANU/SC/8209/2006 :
(2006) 5 SCC 433, the learned Single Judge observed as follows: "the Apex Court
clearly observed that delay in seeking reference cannot be treated by applying universal
formula. It would depend on facts of each individual case but one thing is certain that if
no industrial dispute is existing or even could have been apprehended, there would be
no occasion for making reference and in observing so, it referred to and relied on its
earlier decision in Nedungadi Bank Ltd. (supra). The Court also observed where the
employer comes with a plea that due to inordinate delay material evidence it has lost, in
such case also delay in making reference may be fatal, but not always."
16. Even after referring the aforesaid judgments, the learned Single Judge has omitted
to record a finding that on the date when the reference was made by the State
Government vide impugned order dated 2.5.1993, an industrial dispute was in existence
or is continuing and whether such a reference suffered from the vice of inordinate and
excessive delay.
1 7 . The issue as to whether a reference made by the State Government should be
stayed by the High Court at the behest of the employer or only when the reference has
been answered by the labour court, can the employer challenge the same, was
considered in the celebrated case of D.P. Maheshwari Vs. Delhi Administration, reported
in MANU/SC/0236/1983 : AIR 1984 SC 153. Following was observed by the Apex Court
in paragraph 1 of the judgment.
"It was just the other day that we were bemoaning the unbecoming devices
adopted by certain employers to avoid decision of industrial disputes on merits.
We noticed how they would raise various preliminary objections, invite decision
on those objections in the first instance, carry the matter to the High Court
under Article 226 of the Constitution and to this Court under Article 136 of the
Constitution and delay a decision of the real dispute for years, sometimes for
over a decade. Industrial peace, one presumes, hangs in the balance in the
meanwhile. We have now before us a case where a dispute originating in 1969
and referred for adjudication by the Government to the Labour Court in 1970 is
still at the stage of decision on a preliminary objection. There was a time when
it was thought prudent and wise policy to decide preliminary issues first. But
the time appears to have arrived for a reversal of that policy. We think it is
better that tribunals, particularly those entrusted with the task of adjudicating
labour disputes where delay may lead to misery and jeopardise industrial
peace, should decide all issues in dispute at the same time without trying some
of them as preliminary issues. Nor should High Courts in the exercise of their
jurisdiction under Article 226 of the Constitution stop proceedings before a
Tribunal so that a preliminary issue may be decided by them. Neither the
jurisdiction of the High Court under Article 226 of the Constitution nor the
jurisdiction of this Court under Article 136 may be allowed to be exploited by
those who can well afford to wait to the detriment of those who can ill afford to
wait by dragging the latter from Court to Court for adjudication of peripheral
issues, avoiding decision on issues more vital to them. Article 226 and Article
136 are not meant to be used to break the resistance of workmen in this
fashion. Tribunals and Courts who are requested to decide preliminary
questions must therefore ask themselves whether such threshold part-
adjudication is really necessary and whether it will not lead to other woeful
consequences. After all tribunals like Industrial Tribunals are constituted to
decide expeditiously special kinds of disputes and their jurisdiction to so decide
is not to be stifled by all manner of preliminary objections journeyings up and

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 down. It is also worthwhile remembering that the nature of the jurisdiction
under Article 226 is supervisory and not appellate while that under Article 136
is primarily supervisory but the Court may exercise all necessary appellate
powers to do substantial justice. In the exercise of such jurisdiction neither the
High Court nor this Court is required to be too astute to interfere with the
exercise of jurisdiction by special tribunals at interlocutory stages and on
preliminary issues."
18. However, subsequent to the aforesaid judgment of the Apex Court, much water has
flown and now the Apex Court has itself observed in the subsequent judgments that the
State Government can refuse to refer an alleged industrial dispute in case of excessive
and undue delay or no industrial dispute is pending.
19. From a perusal of the impugned judgment, we find that the learned Single Judge
has not recorded any finding that even after an expiry of a period of 13 years from the
date of the alleged termination of the workmen or three years after the passing of the
order dated 20.6.1991 by the Additional Labour Commissioner, U.P., Kanpur wherein it
has been stated that the State Government refuses to make a reference under Section
4K of the U.P. Industrial Disputes Act, 1947 on the ground of excessive and undue
delay, an industrial dispute did exist. Nor has the learned Single Judge considered the
fact that the State Government had itself refused to refer the alleged industrial dispute
vide order dated 20.6.1991.
20. From the discussions made herein above, the inescapable conclusion is that the
learned Single Judge did not answer the solitary question involved in the writ petition
i.e. whether after an expiry of a period of 13 years, the reference could be made by the
State Government in terms of Section 4K of the U.P. Industrial Disputes Act, on account
of excessive and undue delay, and no industrial dispute existed particularly, when the
claim of the union to make a reference of the alleged industrial dispute stood rejected
vide order dated 20.6.1991.
21. Coming to the second question involved in the appeal, we find that the learned
Single Judge has imposed an exemplary cost of Rs. 21 Lacs upon the petitioner-
appellant as a mode of compensation. This huge amount of compensation has been
awarded on the ground that because of the filing of the writ petition, the claim of the
workmen espoused by the respondent No. 5 could not be answered. We are afraid as to
how such a finding could have been recorded by the learned Single Judge when the
learned Single Judge himself took the view that a reference which has been made even
after an expiry of a sufficient time period, suffers from the vice of excessive and undue
delay. According to us, the imposition of exemplary cost of Rs. 21 Lacs on the
petitioner-appellant was wholly unwarranted in the facts and circumstances of the case.
22. The Apex Court in the case of Salem Advocate Bar Association, T.N. Vs. Union of
India, MANU/SC/0450/2005 : (2005) 6 SCC, 344 in paragraph 36 and 37 of the
judgment together with the editorial note appended thereto has observed as follows:-
"36. Section 35 of the Code deals with the award of costs and section 35-A with
the award of compensatory costs in respect of false or vexatious claims or
defences. Section 95 deals with grant of compensation for obtaining arrest,
attachment or injunction on insufficient grounds. These three sections deal with
three different aspects of the award of costs and compensation. Under Section
95 costs can be awarded up to Rs. 50,000 and under Section 35-A, the costs
awardable are up to Rs. 3000. Section 35-B provides for the award of costs for

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 causing delay where a party fails to take the steps which he was required by or
under the Code to take or obtains an adjournment for taking such step or for
producing evidence or on any other ground. In the circumstances mentioned in
Section 35-B an order may be made requiring the defaulting party to pay to the
other party such costs as would, in the opinion of the court, be reasonably
sufficient to reimburse the other party in respect of the expenses incurred by
him in attending court on that date, and payment of such costs, on the date
next following the date of such order, shall be a condition precedent to the
further prosecution of the suit or the defence. Section 35 postulates that the
costs shall follow the event and if not, reasons thereof shall be stated. The
award of the costs of the suit is in the discretion of the court. In Sections 35
and 35-B, there is no upper limit of amount of costs awardable.
37. Judicial notice can be taken of the fact that many unscrupulous parties take
advantage of the fact that either the costs are not awarded or nominal costs are
awarded on the unsuccessful party. Unfortunately, it has become a practice to
direct parties to bear their own costs. In large number of cases, such an order
is passed despite Section 35(2) of the Code. Such a practice also encourages
filing of frivolous suits. It also leads to taking up of frivolous defences. Further
wherever costs are awarded, ordinarily the same are not realistic and are
nominal. When Section 35(2) provides for cost to follow the event, it is implicit
that the costs have to be those which are reasonably incurred by a successful
party except in those cases where the Court in its discretion may direct
otherwise by recording reasons thereof. The costs have to be actual reasonable
costs including the cost of the time spent by the successful party, the
transportation and lodging, if any, or any other incidental cost besides the
payment of the court fee, lawyer's fee, typing and other cost in relation to the
litigation. It is for the High Courts to examine these aspects and wherever
necessary make requisite rules, regulations or practice direction so as to
provide appropriate guidelines for the subordinate courts to follow."
2 3 . The question regarding imposition of cost, recently came up for consideration
before the Apex Court in the case of Sanjeev Kumar Jain Vs. Raghbir Saran Charitable
Trust and Others reported in MANU/SC/1285/2011 : 2012 (1) SCC 455. The following
was observed by the Apex Court in paragraph 7.2, 7.3 and paragraph 10, which are
quoted hereunder:-
"7.2 In Ashok Kumar Mittal, this Court pointed out that present system of
levying meagre costs in civil matters (or no costs in some matters), is wholly
unsatisfactory and does not act as a deterrent to vexatious or luxury litigation
borne out of ego or greed, or resorted to as a 'buying-time' tactic and that a
more realistic approach relating to costs may be the need of the hour. This
Court had also observed that the question whether we should adopt suitably,
the western models of awarding actual and more realistic costs is a matter that
requires to be debated and that should engage the attention of Law Commission
of India. This Court also observed:
"One view has been that the provisions of Sections 35 and 35A CPC do
not in any way affect the wide discretion vested in by High Court in
exercise of its inherent power to award costs in the interests of justice
in appropriate civil cases. The more sound view however is that though
award of costs is within the discretion of the court, it is subject to such
conditions and limitations as may be prescribed and subject to the

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 provisions of any law for the time being in force; and where the issue
is governed and regulated by Sections 35 and 35A of the Code, there is
no question of exercising inherent power contrary to the specific
provisions of the Code. Further, the provisions of Section 35A seems to
suggest that even where a suit or litigation is vexatious, the outer limit
of exemplary costs that can be awarded in addition to regular costs,
shall not exceed Rs. 3000/-. It is also to be noted that huge costs of
the order of Rs. Fifty thousand or Rs. One lakh, are normally awarded
only in writ proceedings and public interest litigations, and not in civil
litigation to which Section 35 and 35A are applicable. The principles
and practices relating to levy of costs in administrative law matters
cannot be imported mechanically in relation to civil litigation governed
by the Code."
7.3 In Vinod Seth, this Court observed as under:
"48. The provision for costs is intended to achieve the following goals:
(a) It should act as a deterrent to vexatious, frivolous and
speculative litigations or defences. The specter of being made
liable to pay actual costs should be such, as to make every
litigant think twice before putting forth a vexatious, frivolous
or speculative claim or defence.
(b) Costs should ensure that the provisions of the Code,
Evidence Act and other laws governing procedure are
scrupulously and strictly complied with and that parties do not
adopt delaying tactics or mislead the court.
(c) Costs should provide adequate indemnity to the successful
litigant for the expenditure incurred by him for the litigation.
This necessitates the award of actual costs of litigation as
contrasted from nominal or fixed or unrealistic costs.
(d) The provision for costs should be an incentive for each
litigant to adopt alternative dispute resolution (ADR) processes
and arrive at a settlement before the trial commences in most
of the cases. In many other jurisdictions, in view of the
existence of appropriate and adequate provisions for costs, the
litigants are persuaded to settle nearly 90% of the civil suits
before they come up to trial.
(e) The provisions relating to costs should not however
obstruct access to courts and justice. Under no circumstances
the costs should be a deterrent, to a citizen with a genuine or
bona fide claim, or to any person belonging to the weaker
sections whose rights have been affected, from approaching
the courts.
At present these goals are sought to be achieved mainly by sections 35,
35A and 35B read with the relevant civil rules of practice relating to
taxing of costs.
49. Section 35 of the Code vests the discretion to award costs in the

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 courts. It provides that normally the costs should follow the event and
court shall have full power to determine by whom or out of what
property, and to what extent such costs are to be paid. Most of the
costs taxing rules, including the rules in force in Delhi provide each
party should file a bill of cost immediately after the judgment is
delivered setting out: (a) the court fee paid; (b) process fee spent; (c)
expenses of witnesses; (d) advocate's fee; and (e) such other amount
as may be allowable under the rules or as may be directed by the court
as costs. We are informed that in Delhi, the advocate's fee in regard to
suits the value of which exceeds Rs. 5 lakhs is : Rs. 14,500/- plus 1%
of the amount in excess of Rs. 5 lakhs subject to a ceiling of Rs.
50,000/-. The prevalent view among litigants and members of the bar
is that the costs provided for in the Code and awarded by courts neither
compensate nor indemnify the litigant fully in regard to the expenses
incurred by him.
50. The English Civil Procedure Rules provide that a court in deciding
what order, if any, to make in exercising its discretion about costs
should have regard to the following circumstances:
(a) the conduct of all the parties;
(b) whether a party has succeeded on part of his case, even if
he has not been wholly successful; and
(c) any payment made into court or admissible offer to settle
made by a party which is drawn to the courts attention.
'Conduct of the parties' that should be taken note by the court includes:
(a) conduct before, as well as during, the proceedings and in
particular the extent to which the parties followed the relevant
pre-action protocol;
(b) whether it was reasonable for a party to raise, pursue or
contest a particular allegation or issue;
(c) the manner in which a party has pursued or defended his
case or a particular allegation or issue; and
(d) whether a claimant who has succeeded in his claim, in
whole or in part, exaggerated his claim.
Similar provisions, with appropriate modifications may enable proper
and more realistic costs being awarded.
51. As Section 35 of the Code does not impose any ceiling the desired
object can be achieved by the following:
(i) courts levying costs, following the result, in all cases (non-
levy of costs should be supported by reasons); and
(ii) appropriate amendment to Civil Rules of Practice relating to
taxation of costs, to make it more realistic in commercial
litigation.

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 52. The provision relating to compensatory costs (Section 35A of the
Code) in respect of false or vexatious claims or defences has become
virtually infructuous and ineffective, on account of inflation. Under the
said section, award of compensatory costs in false and vexatious
litigation, is subject to a ceiling of Rs. 3,000/-. This requires a realistic
revision keeping in view, the observations in Salem Advocates Bar
Association (supra). Section 35B providing for costs for causing delay
is seldom invoked. It should be regularly employed, to reduce delay.
53. The lack of appropriate provisions relating to costs has resulted in
a steady increase in malicious, vexatious, false, frivolous and
speculative suits, apart from rendering Section 89 of the Code
ineffective. Any attempt to reduce the pendency or encourage
alternative dispute resolution processes or to streamline the civil justice
system will fail in the absence of appropriate provisions relating to
costs. There is therefore an urgent need for the legislature and the Law
Commission of India to re-visit the provisions relating to costs and
compensatory costs contained in Section 35 and 35A of the Code.
1 0 . Learned counsel for the respondents submitted that in awarding actual
costs, the High Court was merely following the decision of a three-Judge Bench
of this court in Salem Advocates Bar Association. He drew our attention to para
37 of the said decision (which is extracted in the judgment of the High Court),
in particular, the observation that "costs have to be actual reasonable costs
including the cost of time spent by the successful party, the transportation and
lodging, if any, and any other incidental costs besides the payment of the court
fee, lawyer's fee, typing and other costs in relation to the litigation." The High
Court has also assumed that the above observations of this Court in Salem
Advocates Bar Association enabled it to award "actual" costs. The High Court
has opened its order with the following words:
"The importance of this decision lies not in any substantial question of
law having been decided - indeed, no question of law was urged before
us, only issues touching upon facts. The importance lies in the nature
of the dispute between the parties, which is a purely commercial
dispute in which litigation expenses have touched the sky. In our
opinion, the only way in which a successful litigant can be
compensated financially is by awarding actual costs incurred by him in
the litigation. The Supreme Court has recommended this course of
action and we think the time has come to give more than serious
weight and respect to the views of the Supreme Court. We have
endeavoured to do just that in this appeal by awarding to the
respondents the actual litigation expenses incurred by them, which is a
staggering Rs. 45,00,000/-."
We are afraid that the respondents and the High Court have misread the
observations of this Court in Salem Advocates Bar Association. All that this
Court stated was that the actual reasonable cost has to be provided for in the
rules by appropriate amendment. In fact, the very next sentence in para 37 of
the decision of this Court is that the High Courts should examine these aspects
and wherever necessary, make requisite rules, regulations or practice
directions. What has been observed by this court about actual realistic costs is
an observation requiring the High Courts to amend their rules and regulations

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 to provide for actual realistic costs, where they are not so provided. We have
noticed that Section 35 does not impose a restriction on actual realistic costs.
Such restriction is generally imposed by the rules made by the High Court. The
observation in Salem Advocates Bar Association is a direction to amend the
rules so as to provide for actual realistic costs and not to ignore the existing
rules. The decision in Salem Advocates Bar Association is therefore of no
assistance to justify the award of such costs. The Rules permit costs to the
awarded only as per the schedule. Therefore, as the Rules presently stand.
Whatever may be the 'actual' expenditure incurred by a party, what could be
awarded as costs is what is provided in the Rules."
24. In the light of the ratio laid down by the Apex Court, the view taken by the learned
Single Judge for imposition of such an exemplary cost appears to us to be
unsustainable. Accordingly, we raised a pointed query to Mr. Sudhanshu Narain, the
learned counsel representing the respondent No. 5, regarding the justification for
imposing an exemplary cost of Rs. 21 Lacs. He however, could not come out with any
case law or legal provision to support the exemplary cost awarded by the learned Single
Judge.
25. Consequently, the inescapable conclusion is that the cost awarded by the learned
Single Judge against the petitioner-appellant cannot be sustained. In view of the finding
recorded by the learned Single Judge himself, in the impugned judgment that a
reference which suffers from the vice of excessive and undue delay can be challenged
by the employer and the facts of the present case clearly exemplify the aforesaid
proposition, it cannot be authoritatively said on the facts of the present case that that
the petitioner-appellants had misused the extra ordinary/discretionary remedy available
under Article 226 of the Constitution of India. From the facts of this case it cannot be
said that the appellant had no stable or arguable case or that the appellant by it's
conduct was responsible for the delay in the disposal of the petition. The learned single
judge has himself commented upon the system and therefore to attribute causes for
inflicting exemplary fine on the appellant is not desirable.
26. For all the reasons stated above, we could have allowed the appeal in toto but in
view of the interim order dated 12.12.1995, passed by the learned Single Judge,
whereby the proceedings before the labour court were allowed to continue except with
the limited injunction that the final award shall not be delivered coupled with the
limited interim order dated 1.1.2011, passed in the present special appeal, we leave it
open for the petitioner-appellant to raise all such pleas and grounds before the labour
court itself as no challenge to the aforesaid interim orders was made by the petitioner-
appellant.
27. In view of the discussions made herein above, the special appeal succeeds in part.
The imposition of cost of Rs. 21 Lacs awarded by the learned Single Judge stands
quashed. The labour Court shall proceed to finally decide the reference if not already
decided, after taking into consideration the objections of the petitioner-appellant
regarding the undue and excessive delay in the making of the reference and its effect, if
any, upon the rights of the petitioner-appellant.
2 8 . With the aforesaid directions, the present special appeal is partly allowed but
without costs.
© Manupatra Information Solutions Pvt. Ltd.

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