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Judgment
Ramesh Ranganathan, CJ
These two appeals are preferred against the common order passed by the learned Single Judge in Writ Petition (M/S) No. 362 of 2017 dated 17.05.2019. While Special Appeal No. 646 of 2019 is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No. 155 of 2013, Special Appeal No. 647 of 2019 is preferred against the order passed by the learned Single Judge in Writ Petition (M/S) No. 298 of 2017.
Writ Petition (M/S) No. 155 of 2013 was filed by the appellant-writ petitioner seeking a writ of certiorari to quash the gazette notification dated 08.09.2012; a writ of mandamus commanding the respondents not to enforce the said gazette notification dated 08.09.2012; and a writ of mandamus commanding the district administration of Haridwar to prevent any strike or lock-out in pursuance of the said gazette notification dated 08.09.2012.
During the pendency of Writ Petition (M/S) No. 155 of 2013, another gazette notification dated 21.01.2017 was issued challenging which the appellant-writ petitioner filed Writ Petition (M/S) No. 298 of 2017 seeking a writ of certiorari to quash the gazette notification dated 21.01.2017; a writ of mandamus commanding the respondents not to enforce the said gazette notification dated 21.01.2017; and a writ of mandamus commanding the district administration of Haridwar to prevent any strike or lock-out in pursuance of the said gazette notification dated 21.01.2017.
Facts, to the limited extent necessary, are that, in the exercise of the powers conferred under Section 3 of the Uttarakhand Industrial Disputes Act, 1947, the Government of Uttarakhand issued notification dated 08.09.2012 for a period of five years, from 01.10.2010 till 30.09.2015, fixing the wages of the employees of the appellant-writ petitioner's sugar mill. Thereafter another notification dated 21.01.2017 was issued, in the exercise of powers conferred under Section 3 of the Uttarakhand Industrial Disputes Act, 1947, prescribing wages of the employees of the appellant-writ petitioner's sugar mill for the period 01.10.2015 till 30.09.2020.
The appellant-writ petitioner questioned both the aforesaid notifications dated 08.09.2012 and 21.01.2017 in Writ Petition (M/S) No. 155 of 2013 and Writ Petition (M/S) No. 298 of 2017 respectively, among others, on the ground that the power conferred under Section 3(b) of the Uttarakhand Industrial Disputes Act, 1947 (for short the "Act") was to prevent strikes, lock-outs, etc and not to fix wages of employees of sugar mills; Section 3(b) of the Act does not confer power on the State Government to issue a notification with retrospective effect; the formula adopted by the State Government, in fixing wages of employees of sugar mills, is arbitrary and irrational; they have included variable dearness allowance twice, when employees engaged in other industries are not being extended a similar benefit; the learned Single Judge erred in dismissing Writ Petition (M/S) No. 155 of 2013 as infructuous, despite holding that there was a serious challenge to the wrong calculation made by the State Government which was required to be looked into; the learned Single Judge erred in remanding the matter to the State Government to hear all the concerned parties, pass an appropriate order, and take a decision within two months from the date of production of a certified copy of the order; and the learned Single Judge had also erred in suggesting that the State Government should consider formation of a wage board, which should look into the aspect of wages, as it would be in the interest of the State Government as well as the workers.
Mr. Navneet Kaushik, learned counsel for the appellant-writ petitioner, would contend that the power conferred on the State Government, under Section 3 of the Act, is to prevent strikes, lock-outs etc and not to fix wages; under the guise of exercising power under Section 3 of the Act, the State Government has taken upon itself the task of periodically revising the wages of employees in sugar mills; such a power is not available to the State Government under Section 3 of the Act; in any event the State Government lacks jurisdiction to issue a notification with retrospective effect; giving retrospective effect to the notifications affects the appellant-writ petitioner's vested rights to continue paying its employees' wages at the contracted rates; by the impugned notifications, a heavy financial liability has been fastened on the appellant-writ petitioner to pay wages to its employees with retrospective effect; though an interim order was passed, during the pendency of the writ petition, granting stay of the notification to the extent it was given retrospective effect, as a result of the order under appeal the appellant-writ petitioner would now be required to pay wages to its employees from a date anterior to the impugned notifications; and the order under appeal therefore necessitates interference.
Mr. Arvind Kumar Sharma, learned counsel for the respondent-workmen, would fairly state that Section 3 of the Act does not confer power on the State Government to issue a notification with retrospective effect; the learned Single Judge was however justified in refraining from interference with the impugned notifications; the satisfaction of the State Government, in issuing such a notification, is subjective; and the jurisdiction of this Court, under Article 226 of the Constitution of India, cannot be invoked to interfere with such notifications, since the decision of the State Government prohibiting strikes and lock-outs would not, unlike a Court of appeal, be examined by this Court in judicial review proceedings under Article 226 of the Constitution of India.
Ms. Pooja Banga, learned Brief Holder for the State of Uttarakhand, would contend that the impugned notifications are in order, and no interference is warranted therewith.
Section 3 of the Act confers power on the State Government to prevent strikes, lock-outs etc and thereunder if, in the opinion of the State Government, it is necessary or expedient so to do for (i) securing the public safety or (ii) securing the convenience or (iii) securing the maintenance of public order or (iv) securing supplies and services essential to the life of the community or (v) for maintaining employment, the State Government may, by general or special order, make provisions for any of the matters specified in clauses (a) to (g) thereunder. The provision which the State Government is empowered to make, in terms of Section 3(b) of the Act, is to require the employers, the workmen or both to observe, for such period as may be specified in the order, such terms and conditions of employment as may be determined in accordance with the order.
The object of Section 3 of the Act, as is evident from its heading, is to prevent strikes, lock-outs etc. It is only in the process of preventing strikes or lock-outs can the State Government require both the employer and the workmen to observe, for the period specified in the order, the terms and conditions of employment which would include wages. While the State Government would, undoubtedly, have the power, in the process of preventing strikes and lock-outs, to fix the wages to be paid by the employer to its workmen, Section 3(b) cannot be used as a ruse only to fix wages even in such cases where the possibility, of strikes or lock-outs taking place, is absent.
The satisfaction of the State Government, of the existence of the conditions stipulated in Section 3 of the Act, is no doubt subjective. If the facts alleged are presumed to be true, there is a causal connection between the facts alleged and the purpose of the order, and the formation of the opinion is not malafide, then the sufficiency of the grounds and the truth of the grounds is not germane. (Suraj Pal Sahu v. State of Maharashtra : (1986) 4 SCC 378 ; Barium Chemicals Ltd. v. Company Law Board : AIR 1967 SC 295 ). Whether the material before the State Government was sufficient or not is not for the Courts to decide by applying an objective test as it is a matter of subjective satisfaction of the State Government. (Kanuji S. Zala v. State of Gujarat : (1999) 4 SCC 514 ).
Since the satisfaction under Section 3 of the Act is that of the State Government, this Court, in proceedings under Article 226 of the Constitution of India, would not substitute its satisfaction for that of the Government. The subjective satisfaction of the State Government in passing an order under Section 3 of the Act is, however, not wholly immune from judicial review. There is an area, limited though it be, within which the validity of the subjective satisfaction can be subjected to judicial scrutiny. As subjective satisfaction is a condition precedent for exercise of the power conferred on the State Government, the Court can always examine whether the requisite satisfaction has been arrived at. If it is not, the condition precedent would not be fulfilled, and the exercise of power would be illegal. (Khudiram Das vs. State of W.B. : (1975) 2 SCC 81). Existence of circumstances, relevant to the inference as the sine qua non for action, must be demonstrable. If the action is questioned on the ground that no circumstances, leading to an inference of the kind contemplated by the Section, exists, the action might be exposed to interference unless the existence of the circumstances is made out. It is not reasonable to say that Section 3 of the Act permitted the State Government to say that it has formed the opinion on circumstances which it thinks exist. Since the existence of "circumstances" is a condition fundamental to the making of an opinion, the existence of the circumstances, if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusions of certain definiteness. (Barium Chemicals Ltd. Vs. Company Law Board : AIR 1967 SC 295 ; Swadeshi Cotton Mills vs. Union of India : (1981) 1 SCC 664).
If there be found in the Statute, expressly or by implication, matters which the authority ought to have regard to, then, in exercising the power, the authority must have regard to those matters. The authority must call its attention to the matters which it is bound to consider. (Khudiram Das vs. State of W.B. : (1975) 2 SCC 81). Formation of opinion must be preceded by application of mind as regards consideration of relevant factors and rejection of irrelevant ones. (Hindustan Petroleum Corpn. Ltd. v. Darius Shapur Chenai : (2005) 7 SCC 627; Devinder Singh v. State of Punjab : (2008) 1 SCC 728). While the formation of opinion is subjective, existence of circumstances relevant to the inference, as the sine qua non for action, must be demonstrable. (Barium Chemicals Ltd. Vs. Company Law Board : AIR 1967 SC 295 ; Swadeshi Cotton Mills vs. Union of India : (1981) 1 SCC 664). In the formation of opinion regard must be had to the conditions stipulated in Section 3 of the Act together with all other factors relevant for the exercise of that power. Formation of opinion must be based on objective considerations. (India Cement Ltd. v. Union of India : (1990) 4 SCC 356; Rajesh Kumar v. Dy. CIT : (2007) 2 SCC 181). The satisfaction of the authority must be grounded "on materials which are of rationally probative value". The grounds on which the satisfaction is based must be such as a rational human being can consider as being connected with the fact in respect of which the satisfaction is to be reached. They must be relevant to the subject-matter of the inquiry and must not be extraneous to the scope and purpose of the Statute. If the authority has taken into account, it may even be with the best of intention, as a relevant factor something which it could not properly take into account in deciding whether or not to exercise the power or the manner or extent to which it should be exercised, exercise of the power would be illegal. (Khudiram Das vs. State of W.B. : (1975) 2 SCC 81; Pratap Singh v. State of Punjab : AIR 1964 SC 72; Machindar v. King : AIR 1950 FC 129).
Existence of the circumstances, stipulated in Section 3 of the Act, is a condition precedent for the formation of the requisite opinion and, if the existence of those conditions is challenged, Courts are entitled to examine whether those circumstances existed when the order was made. (Rohtas Industries Ltd v. S.D. Agarwal : AIR 1969 SC 707). If it is shown that the circumstances do not exist, or that they are such that it is impossible for anyone to form an opinion therefrom, the opinion can be challenged on the ground of non-application of mind or perversity or on the ground that it was formed on collateral grounds and was beyond the scope of the Statute. (Barium Chemicals Ltd. Vs. Company Law Board : AIR 1967 SC 295 ). If the satisfaction, regarding the existence of any of the conditions stipulated in Section 3 of the Act, is based on no evidence or on irrelevant and extraneous considerations, the Court will be justified in quashing such an illegal order. (Swadeshi Cotton Mills vs. Union of India : (1981) 1 SCC 664). Before passing an order under Section 3 of the Act, there must be material available with the State Government, based on which it can form a reasonable opinion of the existence of the conditions specified under Section 3 of the Act, for it to make a general or special order making provision, among others, for the terms and conditions of employment which would include payment of the determined amount as wages.
As is evident from Section 3 of the Act itself, the power conferred on the State Government is a preventive measure i.e. to prevent strikes or lock-outs. While the State Government can, undoubtedly, issue a notification, prescribing terms and conditions of employment thereunder with a view to prevent strikes and lock-outs, the terms and conditions of employment which may be specified in the order can only be from the date of the order, and not from a period anterior thereto. Section 3 of the Act does not confer power on the State Government to prescribe terms and conditions of employment for a period anterior to the date of the notification issued by the State Government, under Section 3 of the Act, preventing strikes or lock-outs. It is unnecessary for us to dwell on this aspect any further, since Mr. Arvind Kumar Sharma, learned counsel for the respondent-workmen, has fairly stated that Section 3 of the Act does not confer power on the State Government to prescribe wages from a date anterior to the date of the notification.
Consequently for the period from 01.10.2010 till 08.09.2012, (i.e. the date stipulated in the notification as the date from which the terms and conditions of employment were to operate, till the actual date of the notification), fixation of enhanced wages must be and is, accordingly, set aside. Likewise for the period from 01.10.2015 till 21.01.2017 (i.e. from the date on which the notification was to come into force with retrospective effect till the actual date of the notification), the obligation placed by the notification, on the appellant-writ petitioner to pay enhanced wages, is also set aside. However for the period from 08.09.2012 till 30.09.2015 (in terms of the first notification) and from 21.01.2017 till date (in terms of the second notification), we see no reason to interfere with the order under appeal or with the notifications impugned in the writ petitions, more so as the appellant-writ petitioner have already paid these amounts to the workmen; and setting aside the notifications for this period would enable the appellant-writ petitioner to recover the amounts paid to the respondent-workmen.
While great stress is placed by Mr. Navneet Kaushik, learned counsel for the respondent-writ petitioner, on the error in fixation of wages, more particularly the variable dearness allowance, Courts would defer, in matters such as these, to Executive wisdom, mainly because it lacks the expertise required to determine such issues. The appellant-writ petitioner's interests in this regard have been adequately safeguarded by the order under appeal passed by the learned Single Judge, as the State Government has now been directed to hear all the concerned parties, and take a decision within two months from the date of production of a certified copy of the order.
While we may not be understood to have expressed any opinion on the merits of the decision of the State Government in fixing enhanced wages, suffice it to make it clear that, after complying with the directions issued by the learned Single Judge in the order under appeal, if the State Government is satisfied that the wages fixed by it, in terms of the notification dated 21.01.2017, needs modification, neither the order now passed by us, nor the order under appeal, shall disable them from issuing a notification afresh within one month from the date on which it takes a decision in compliance with the order passed by the learned Single Judge.
Needless to state that, since the period for which the notification dated 21.01.2017 was issued would come to an end on 30.09.2020, the State Government shall issue a notification thereafter strictly in terms of Section 3 of the Act, and on its being satisfied from the material placed before it that the conditions stipulated in Section 3 of the Act are attracted warranting such a notification being issued.
With these modifications, the Special Appeals are disposed of. No costs.