ERIRL Assignment

POWER OF REFERENCE JUDICIAL REVIEW

Can judiciary direct the AG to refer the Industrial dispute for adjudication?

Submitted by- Musheer Ahmad H11090 HRM B (2011-13)

Introduction
Section 10 of ID Act, 1947 provides wide power to the appropriate Government (henceforth referred to as AG) and the AG is the instrument to activate the adjudicatory authorities constituted in the Act. Section 10(1) starts with: 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 In State of Madras v. C.P. Sarathy1, the Supreme Court held that the factual existence of a dispute or its apprehension and the expediency of making reference are matters entirely for the AG to decide. Also by the language of the law it may seem that the AG is having absolute authority to take the decision whether in fact, any industrial dispute exists or is apprehended. However, it is implicit in the law that the AG acts reasonably based on the materials available. It has to come to an administrative decision whether the industrial dispute exists or is apprehended. If the decision of the AG is not made honestly or it is arbitrary, it is a vitiated order. In such a case the court can exercise judicial scrutiny and ask the AG to reconsider its decision or to take into consideration certain materials it might not have considered while making the decision.

Stand of Judiciary
The stand of judiciary has changed with time. I have quoted specific case laws to track that change in judicial stand over years. In Bombay Union of Journalists v. State of Bombay2 the Supreme Court held that, the reviewing court even if satisfied that the order refusing to make a reference is not proper, cannot place itself in the position of the Government and make a reference. The Government cannot be compelled to make a reference. All that the court can do is to direct the AG to properly exercise its discretionary power. In Workmen of South India Saiva Siddhanta Works Publishing Society v. Government of Madras3, a workman was dismissed from service without any chargesheet or domestic enquiry. The dispute relating to his dismissal was taken up by his fellow-workmen. But the AG refused to refer the dispute for adjudication stating that the termination of the services of the concerned workman was justified and also asked the union to advise the workmen to accept the amount offered by the management towards notice pay and compensation. In the given circumstances, a writ of mandamus was issued directing the AG to reconsider according to law the question as to whether the reference should be made or not. The court
1 2

[1953] I LLJ 174 [1961] II LLJ 727 3 [1962] II LLJ 120

also said that the AG cannot sit as an arbiter over the dispute in refusing to refer the same for adjudication. In Western India Match Co v. Western India Match Workers Union4, the Supreme Court said the power of reference is the discretionary power of AG. But the discretion is neither unfettered nor arbitrary. Whenever the discretion is exercised, it must be exercised honestly and not for corrupt or ulterior motives. The AG must act reasonably and not capriciously or arbitrarily. The order of reference made by the AG can be challenged by establishing bad faith or malafides. Since the order of reference can be challenged, the AG has to pass a speaking order, that is, the order must contain the reasons for making or not making the reference. In K.K. Kurain v. State of T.N.5 where AG declined to refer the dispute for adjudication on the ground that there was no evidence in the enquiry to show that the employee had not received the amount said to have been misappropriated by him. The High Court held that the decision of AG is vitiated because of non application of mind to relevant material and the AG was asked to reconsider its decision. In Dharam Pal v. State of Haryana6 where AG declined to refer disputes for adjudication on ground that workman absented from duty without permission or leave for continuous period of 10 days and hence lost right to continue in service. The AG order was set aside and AG was directed to reconsider the matter and take further action according to law. Initially, the Supreme Court was taking the view that the power of reference is an administrative function of State. It is for AG to form opinion to refer or not to refer the industrial dispute for adjudication. But lately, there are instances where the Supreme Court has directed the AG to refer the dispute for adjudication depending upon circumstances. One such instance was the Ananda Chandra Swain v. State of Orissa7 case. In this case, the petitioner was appointed as a machine tool operator on temporary basis. In view of his good work he was upgraded to the post of chargeman in December, 1964. While working so, he developed eye ailment because of working with surface grinding machine without adequate safety measures for which he had to undergo treatment. According to the petitioner, by the use of protective spectacles his eye sight was improving. During the period of treatment he was reverted to the post of machine tool operator on the ground that he was found not suitable due to 30% deficient eye sight. Thereafter the petitioner raised a dispute before the Assistant Labour Commissioner but without success. The petitioner was communicated that his services were terminated without assigning any reason. The case of the petitioner was taken up by Balimela Dam Project Workers' Union before the Conciliation Officer, which proved abortive. The AG then refused to make a reference on the ground that Balimeda
4 5

[1970] II LLJ 256 [1987] I LLJ 165 6 [1994] I LLJ 1064 7 [1973] I LLJ 508

Dam Project is not and industry as defined in Section 2(j). The order of AG was challenged in a writ application to Orissa High Court. The order of AG was quashed and the AG was directed to make a reference to the industrial tribunal. There are many more cases where depending upon the circumstances the Court has directed the AG to refer the dispute for adjudication. This trend has become prominent after the milestone Nirmal Singh v. State of Punjab8 case. If the dispute has gone through conciliation and a failure report has been made under Section 12(4), the AG while exercising its power under Section 10(1) is obligated by Section 12(5) to record reasons for not making reference. In Nirmal Singh v. State of Punjab case, the Labour Commissioner while exercising the powers of State Government under Section 12 for making reference, declined to refer the dispute for adjudication on the ground that the delinquent, a bank employee, was not a workman within the meaning of Section 2(s) but no reasons were given by him to justify that conclusion. All that he stated in his order was that the post held by delinquent did not fall within the category of workman. The Supreme Court declined to remand the matter to Labour Commissioner asking him to state his reasons why the delinquent was not a workman as it would entail delay and, therefore, directed the Labour Commissioner to make a reference either to the Labour Court or to the Industrial Tribunal under Section 12(5), as he considers proper. Again in Veerajan v. Govt. of Tamil Nadu9 the AG was directed to refer the dispute for adjudication. Court held that it is open to the State Government to take the broad features into consideration while exercising jurisdiction under Section 10(1) of the Industrial Disputes Act, 1947. If the dispute in question raises a question of law the appropriate Government should not purport to reach a final conclusion on the said question of law because that would normally lie within the jurisdiction of the Industrial Tribunal. Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclusions for that again would be the province of the Industrial Tribunal. Section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended' and then refer it for adjudication on merits. The demarcated functions are (1) reference, (2) adjudication. There may be exceptional cases in which the State Government may, on a proper examination of the demand, come to a conclusion that the demands are either perverse or frivolous and do not merit a reference. Government should be very slow to attempt an examination of the demand with a view to decline reference and Courts will always be vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid disputes. To allow the Government to do so would he to render Section 10 and 12(5) of the Industrial Disputes Act nugatory.

8 9

[1984] II LLJ 396 SC [1987] I LLJ 209 SC

The Supreme Court in 2000 in Secretary, Indian Tea Association v. Ajit Kumar Barat observed that the AG would not be justified in making a reference under Section 10 of IDA without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended, and if such a reference is made it is desirable, wherever possible, for the government to indicate the nature of dispute in the order of reference. The order of AG making a reference under Section 10 of the Act is an administrative act and not a judicial or quasi judicial one and the Court, therefore, cannot canvass the order of reference closely to see if there was any material before the AG to support its conclusion, as if it was a judicial or quasi-judicial order. An order made by AG under Section 10 of the Act being an administrative order no lis is involved; as such an order is made on the subjective satisfaction of the AG. If it appears that from the reasons given that the AG took into account any consideration irrelevant or foreign material, the Court may in a given case consider the case for a writ of mandamus. (Padhi, 2007) Numerous more cases can be quoted where the judiciary has directed the AG to refer the dispute for adjudication. A more recent case would be Bhika Ram v. State of Rajasthan10 where the AG refused to refer the dispute for adjudication on the ground that the workman did not competed 240 days. Such refusal was held erroneous by the Rajasthan High Court and AG was directed to refer the dispute to Labour Court.

Conclusion
Seeing the trend of judicial decisions, it can be said that judiciary is more and more interfering in the power of appropriate Government to refer for adjudication. The court while exercising its power of judicial review has directed the appropriate Government on numerous occasions to refer the dispute for adjudication. The number of writ petitions filed before the High Courts challenging the order of the AG has gone up. This increases the response time of judicial system as well as the AG. An improvement on the current system can be achieved if the power of AG to refer a case for adjudication is taken away! Since conciliation process has almost become a formality in our country where it is used only to make a bi partite agreement binding on all parties. In such a scenario, the process of conciliation officer referring the case to AG for reference and then very often judiciary interfering in the power of reference only increases problem for all parties. This can be eliminated if the case not resolved by conciliation can be directly sent to Industrial Tribunal or Labour Court. This seems more appropriate now more than ever before because Industrial Tribunal and Labour Court have now moved from status of ad hoc bodies to more or less permanent bodies.

Bibliography
Padhi, P. (2007). Labour and Industrial Laws. New Delhi: Prentice Hall India.
10

[2001] I LLJ 1014