Kanti Cotton Mills Ltd. vs The State of Saurashtra and Others

Shah, C.J.—This is a petition by the Kanti Cotton Mills of Surendranagar for the issue of certain writs to the State of Saurashtra and opponent. No. 2 under Article 226 of the Constitution. The workmen employed in the Mill are members of two labour unions viz., the Rashtriya Mill Majoor Sangh and the Mill Kamdar Sangh, and they had made demands on the Mills through their unions for minimum wages, occupational wages, dearness allowance etc. The main demands of the two unions were common excepting that the clerical staff of the mill was included in the demands made by the Rastriya Mill Majoor Singh and that the said Union''s demands were a little lower than those made by the Mill Kamdar Sangh. The conciliation proceedings which were taken in the wake of the demands having failed, the conciliation officer made a failure report and thereupon the State Government referred the demands of the Rashtriya Mill Majoor Sangh to the adjudication of the Industrial Tribunal by an order dated 24th September 1950. The conciliation proceedings in respect of the dispute between the Mills and the Mill Kamdar Sangh, which were held later, also having failed, their dispute was referred separately to the Industrial Tribunal by a Notification dated I5th November 1950. The Mill Company on its part, made Certain demands on the two Unions by its letter dated 20th October 1950. Conciliation proceedings were also taken in, respect, of these demands, and these having failed the conciliation officer made a failure report on 19th December 1950 (Ex. 18). The Petitioner Mills thereupon asked the Government to refer these demands to the Industrial Tribunal for adjudication, and as the Government did not refer them, the Petitioner filed the present petition on the 25th April 1951.

The main pleas taken by the Petitioner are that the Industrial Tribunal of Shri N.L. Vyas, opponent No. 2, was not legally and validly constituted inasmuch as the notification constituting the said Tribunal was not issued by the Rajpramukh or by his order, and that opponent No. 2 had therefore, no jurisdiction to adjudicate the disputes referred to him by. the Government. We have dealt with this precise objection in-- Kadiani Bai v. State AIR 1951 Sau. 79 and have there held that Rule 11 of the Rules of Business framed in pursuance of Section 6 of the Saurashtra State Regulation, of Government Ordinance 1948, is not mandatory but only directory because it does not lay down that, if the provisions of the affirmative rule are not complied with, adverse consequences will follow. Hence where a notification bringing into force in the State of Saurashtra the Bombay Prohibition Act 1949, as adapted and applied by the Saurashtra State, is signed by a person who is a. Secretary to the Government of Saurashtra, the mere fact that the orders continued in the notification are not expressed to be made by or by order of the Rajpramukh does not make such orders ipso facto invalid. We have there referred to and followed the decisions reported in -- J.K. Gas Plant Manufacturing Co, (Rarnpur) Ltd. v. Emperor AIR 1947 F.C. 38, and -- Mahomed Yasin Nurie Vs. Shripat Amrit Dange, , and have not allowed the decision in --Lateef Ahamad v. State AIR 1950 Madh B 34, which latter has been cited to us by Mr. Patwari for the Petitioner. After hearing Mr. Patwari we do not see any reason to change the view we have taken in ''Kadiani Bai Naidu''s case and we therefore, reject this contention of the Petitioner.

Mr. Patwari next urged that the later reference to adjudication made by the Government, relating to the demands of the Mill Kamdar Sangh, was inconsistent with the earlier reference inasmuch as the demands relating to minimum wages and dearness allowance made therein were higher than those contained in the former reference, that such inconsistent-references were ultra vires the power of the State Government and were not in accordance with the procedure established by law, and that opponent No. 2 had, therefore, no jurisdiction to proceed with the said references. The references in question were made u/s 10(1)(c) of the Industrial Disputes Act 1947, as adapted and applied by the State of Saurashtra by Ordinance No. VI of 1948, which says that if any Industrial Dispute exists or is apprehended the appropriate Government may, by order in writing, among other things, refer the dispute to a Tribunal for adjudication. No doubt the demands as to a minimum wage of Rs. 30/ and dearness allowance at 100 per cent of that paid to the Textile workers of Ahmedabad made by the Mill Kamdar Sangh were higher than those made by the Rashtriya Mill Majdoor Sangh, but they do not on that account become inconsistent, and since the said demands had been made by a registered Union, the Government did have the power to refer them to adjudication and a separate reference for the same was in no way incompetent Evidently a common award will be made in respect of the two references and there is no danger of inconsistent awards being made. u/s 15(2) of the Industrial Disputes Act, the appropriate Government shall by order in writing declare the award made by the Tribunal to be binding unless it thinks it inexpedient to give effect to the award or any part thereof under the proviso to Section 15(2). and u/s 18 of the Act, the award which is declared by the Government to be binding u/s 15(2) shall be binding on all parties to the industrial dispute; and where such party is composed of workmen, it shall be binding on all persons who were employees 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 become subsequently employed in that establishment. Therefore the award will be binding on all workmen, and there is no substance in the apprehension entertained by Mr. Patwari that the award may create an anomalous position in respect of some of the workers. The decision will be binding on all the workmen whether they are members of a particular union or otherwise.

Another contention, made at a later stage of the hearing, is that the Industrial Disputes Act, 1947, has been amended by Section 34 of the Industrial Disputes (Appellate Tribunal) Act No. XLVIII of 1950, which came into force: on 20th May 1950, that this latter Act extends to the whole of India except the State of Jammu and Kashmir, and that the two references to adjudication, which were made subsequent to that date, should therefore, have been made under the Industrial Disputes Act XIV as amended by Act XLVIII of 1950 and inasmuch as they have not been made in this manner they are invalid. Entry No. 22 of the concurrent List in the Seventh Schedule to the Constitution empowers the State Legislature to make laws relating to Industrial and Labour disputes, and the Saurashtra State has promulgated Ordinance No. VI of 1948 called the Industrial Disputes Act 1947, (Adaptation) Ordinance, 1948, so that the Saurashtra State has its own law on this subject. The said Ordinance is still in force. No. amendment is made by Act XLVIII of 1950 in Sections 7 and 10 of the Industrial Disputes Act, and there is thus no conflict between the provisions of the Saurashtra Ordinance and the Central Act. it was competent to the State Government therefore, and in fact it was necessary to make the references under the Industrial Disputes Act XIV of 1947 as adapted and applied in Saurashtra by Ordinance No. VI of 1948, and the references in question are, therefore; perfectly valid.

Mr. Patwari has next urged that the failure of the Saurashtra Government to refer the disputes relating to the demands made by the Petitioner mills denies to the Petitioner equality before the law and the equal protection of the laws guaranteed by Article 14 of the Constitution. The contention is that whereas the State Government has referred the demands of the labour unions for adjudication, it has failed to refer to adjudication the Petitioner''s demands and it. has thereby made'' an invidious and discriminatory distinction between the employees on the one hand and the employer on the other. Article 13 of the Constitution provides that all laws in force in the territory of India immediately before the Commencement of this Constitution, in so far as they are inconsistent with the provisions of Part III relating to fundamental rights shall, to the extent of such inconsistency be void, and Article 13(2) prohibits the State from making any laws which take away or abridge the fundamental rights and renders void any law made in contravention of the said clause. Now so far as a reference to adjudication is concerned, Section 10(1)(c) distinctly provides that if any industrial dispute exists or is apprehended, the Government may refer the same to a Tribunal for adjudication. The law does not prescribe a different treatment in this respect, and it contemplates that the Government may refer the dispute to adjudication, whether it arises from demands made by the employer or from the demands made by the employees. The Industrial Disputes Act does not contain any discriminatory provisions, and it does not deny to the employer equality before the law or the equal protection of the laws. The Act does not prescribe any distinction between the class of the employers and the class of the employees, No doubt in the application of the provisions of the Act, and certain distinction, is bound to occur but that is inevitable. Dealing with a similar point Chagla C.J. has held in -- Dhanraj Mills Ltd. Vs. B.K. Kocher and Another, , as follows:

If a law is so passed as to make discrimination or deny the application of equality to such law, such a. law can be challenged under Article 226 as offending against Article 14.

A clear distinction must foe borne in mind between the law and the administration of the law. If the law itself permits discrimination, even though the law'' may appear to be fair and undiscriminatory, the Court may interfere, and say we are more concerned with how the law actually works rather than how it appears in black and white in the statute book. One may even have a case where in exercising the discretion vested in officers under the statute the State may, as a policy of administration, require its officers to exercise the discretion unfairly and unequally. We can imagine that even in such a case the Court may interfere and say that although administrative orders are being challenged, administrative orders suggest behind them a policy of the state of discrimination. But when a subject comes to the Court and challenges a specific act of an individual officer as being in contravention of Article 14, the officer in acting contrary to Article 14, is really acting contrary to the law and not in conformity with or in consonance with the law. When the law; invests an officer with a discretion, the law assumes that the officer will exercise the discretion bona fide and not dishonestly, arbitrarily or capriciously, and if he does so in this latter manner, he is really going contrary to the law. In such a case, the subject comes to the Court not for protection under Article 14, but for protection against the dishonest, arbitrary or capricious act of the officer. The Court is not powerless to give the subject protection against a dishonest officer, but the protection cannot be sought under Article 14 or under Article 228.

As I stated, the Industrial Disputes Act does not provide for any discrimination between the employers and the employees in the matter of the Government referring the disputes to the adjudication of Industrial Tribunals, and the law in question, therefore, does not infringe the fundamental right guaranteed by Article 14.

Mr. Patwari''s next contention is, and, that is his principal contention, that the State. Government was bound to refer the demands of; the Petitioner mills to adjudication under, Section 10(1)(c) of the Act, and it had no. discretion in the matter, and for this purpose Mr. Patwari asked us to construe the word ''may'' occurring in Section 10(1)(c) as meaning ''shall''. Section 10 which is the only Section, in Chapter III of the Act deals with reference _of disputes to Boards, Courts or Tribunals, and Sub-clause (1) thereof says that where- any, industrial dispute exists or is apprehended, the; Government may make a reference to a Tribunal for adjudication. The proviso to the Section deals with a dispute relating to a public utility service, and in the case of such a dispute, it enacts that the Government shall make a reference u/s 10(1), notwithstanding that any other proceedings under the Act in respect of the dispute may have commenced, unless it considers that the notice given u/s 22 has been frivolously or vexatiously given or that it would be inexpedient to make a reference.

The distinction between the main provisions of Section 10(1) and those of the proviso is clear, and whereas in the case of disputes other than those relating to a public utility service, the Government may make a reference to adjudication it being a matter entirely within its. discretion, in the case of disputes relating to a public utility service, the Government has to make a reference, that being a duty cast on it, unless the Government Considers that the notice is frivolous or vexatious, or, which gives a wider discretion to the Government, that it would be inexpedient to make such a reference. Similarly u/s 10(2) where the parties apply, whether jointly or separately, for a reference of the dispute to a board, Court or Tribunal the Government shall make the reference, if it is satisfied that the persons applying represent the majority of each party. Under Sub-section (2), therefore, there is an obligation on the Government to make the reference. The scheme of Section 10, therefore, itself recognises a distinction between the words ''may'' and ''shall'', and that distinction must be observed in the application of the Section.

The decision in -- Free Press Labour Union v. State of Madras AIR 1952 Mad 74, (decided on the 4th July 1951) which is a decision of a Single Judge, was cited by Mr. Patwari in support of his contention that ''may'' should be read as ''shall'', and that there was a duty cast on the Government to make a reference even in case covered by Section 10(1) of the Act. The facts of that case were that after the failure of conciliation and the report to that effect by the conciliation officer u/s 12(4) of the Act, the Government had declined to make a reference as requested by the, workers. Government had also not recorded; the reasons for not referring the dispute nor had communicated the same to the parties as required by Section 12(5) of the Act. The learned Judge held that it was the duty of the Government to make a reference, and that in any event as the Government had failed to comply with the provisions of Section 12(5), it was a case in which a writ should issue directing the Government to make a reference., In appeal the Division Bench took a different view and held that ''may'' in Section 10(1) of the Act could not be construed to mean ''shall'', and it also held that after the conciliator''s report that a settlement could not be arrived at and the conciliation had failed, one of the two courses open to the Government u/s 12(5) was either to refer the dispute for adjudication, or refuse to do so, and in the latter case to record its reasons for so doing, and to communicate them to the parties concerned. But the Government could not be. obliged to refer the dispute to a Tribunal 1 State of Madras v. Free Press Labour Union 1951 LLJ 756 (Mad). In -- Bagaram v. State of Bihar AIR 1950 Pat 337 (FB), also the view taken was that it was purely discretionary with the Government whether to make a reference in matters covered by Section 10, (1) of the Act or not.

Chagla, C.J.

took a similar view in State Transport Kamgar Sabha v. State of Bombay 1951 Tab. L.J. 745 (Bom.). The dispute in that case related to a public utility service, viz., the Bombay Road Transport Corporation, and the learned Judge held that in the case of an Industrial dispute which does not relate to a public utility service, it is left entirely to the discretion of Government whether to make a reference or not. When Government deals with a dispute relating to a public utility service, it must start with the consideration that it was its obligation to refer to one of the authorities. (sic) pendency of the reference. In the case of a dispute relating to a non-public utility service. the discretion was whether to refer or not, and that discretion was wider. In the case of a public utility service, the discretion was to (sic) Section 12(6) in refusing to refer the conclusion is that something extraneous has weighed on the mind of the Government in refusing to make a reference, then the conclusion may be that the Government, have failed to discharge their statutory obligation, under the proviso to Section. 10. (1).

The view of the learned Chief Justice, viz., that where the reasons disclosed that something extraneous had weighed on the mind at the Government in refusing to make a reference it might be concluded that the Government bad failed to discharge their statutory obligation under the proviso to Section 10(1) is confined to a dispute relating to a public utility service, and as the dispute before us does not relate to a public utility service, we do not consider it expedient to examine the correctness or otherwise of that view. So far as Section 10(1) of the Act is concerned, there can be no question that there is no duty cast on the Government to make a reference, and that the Government may in its discretion, which is very wide and is entirely Government''s own, make a reference or may not make a reference. Section 10(1) is an independent provision and is not controlled by Section 12(5) so far as it relates to the exercise of the Government''s discretion to make or not to make a. reference. Section 12(5) says that if, on a consideration of the conciliator''s report u/s 12(4), the Government is satisfied that there is a case for reference to a Board or Tribunal, it may make a reference, and where the Government does not make such a reference, which means that the Government is not satisfied that there is a case for reference, it shall record and communicate the reasons therefor, to the parties concerned so that where the Government chooses not to make a reference, its only obligation is to record the reasons and to communicate the same to the parties, and the obligation does not extend any further. The reasons thus recorded and communicated to the parties are not within the purview of the Court''s scrutiny in a case falling u/s 10(1)(c). Therefore as there was no duty on the Government to refer the dispute relating to the Petitioner''s demands to adjudication of the Tribunal, the'' Government cannot be directed by a writ to make the reference.

As I stated the report of the conciliation officer u/s 12(4) relating to the Petitioner''s demands was made on 19th December 1950, and the present petition was filed on 25th April 1951. Till then the Government had not recorded and communicated the reasons to the parties for not making the reference, and this the Government has done on 12th September 1951 pending the hearing of the petition. Among other things, these reasons have, been (sic) the Saurashtra Government of the Saurashtra Textile Labour Investigation Committee pre sided over by Sir Hasidhbhai Divatia, and to the recommendations of the said Committee and to the correspondence that passed between the Petitioner and the government (sic) the Court in the some of a dispute of a non- public utility service covered by Section 10(1) I do not consider it necessary to enter into a detailed scrutiny of the reasons However, after carefully considering whatever Mr. Patwari had to urge in support of the Petitioner''s allegations that the reasons are vague capricious and mala fide, I am not at all satisfied that it is so, and that on the contrary the Government had good reasons for not referring the dispute to adjudication.

I will refer in brief to the Mills'' demands and the reasons stated by the Government (His Lordship then considered the demands and the reasons and proceeded as follows:)

The reasons stated by the Government are in no way vague, capricious or mala fide, nor even fanciful, arbitrary and unjust as the Petitioner has chosen further to characterise them. They are good and appropriate in the circumstances and there is really no substance in these allegations of the Petitioner. Equally there is no merit in the suggestion made by Mr. Patwari that the decision was influenced by extraneous considerations, and I am unable to find any such extraneous circumstances.

Mr. Patwari finally urged that the reasons were communicated very late viz.; pending the hearing of this petition, but whether the reasons were given early or late is altogether immaterial to the merits of the dispute. Even if the reasons had not been communicated, this Court might have called upon the Government to do so by a suitable writ to that effect. That position has now passed and the fact remains that the Government has communicated its reasons to the Petitioner u/s 12(5) of the Act.

However, as I said, the propriety of the reasons is outside the scope of the Court''s scrutiny since there is no duty cast on the Government to refer a dispute to adjudication in a case falling u/s 10(1)(c) of the Act. The result is that the Petitioner is not entitled to any of the writs prayed for and this petition is accordingly dismissed. The Petitioner will pay opponent No. 1 and No. 2''s costs in one set and will bear its own. No order as to the costs of the remaining opponents.

Chhatpar, J.

I agree with the order proposed by the learned Chief Justice, but I express no opinion whether Section 10(1) is to be construed independently of Section 12(5) which imposes on the Government the obligation to record and communicate the reasons for not making a reference. Even if it were permissible for the Court to scrutinise the reasons, the limits of enquiry must be confined to the consideration of the question whether the satisfaction of the Government about making a reference or not was bona fide and based upon relevant reasons and in such cases the Court cannot go into the sufficiency of the reasons, as this is a matter for the subjective decision, of the Government, and cannot be substituted by an objective test in a Court of law The Petitioners in the present case have failed to prove either that the reasons given by the Government were irrelevant or that the decision not to make a reference is vitiated by mala fides.