Workmen of New City Engineering Works vs Government of Tamil Nadu and Another

V. Kanagaraj, J.—The petitioner Thozhilalar Sangam has filed this writ petition against the respondents praying to issue a writ of

certiorarified mandamus to call for the records of the first respondent in G. O. (T) No. 185, dated February 21, 1991 and to quash the same and

further direct the first respondent to refer the demands of the petitioner for adjudication.

In the affidavit filed in support of the writ petition, the petitioner would submit that the workmen numbering about 185 employed by the second

respondent had put in many years of continuous service ranging from 5 to 30 years; that the second respondent was paying low wages to them

besides not regularising the services of 79 workmen, that such and various other demands made on the part of the petitioner Sangam have not

been considered by the second respondent in late 1982 and early 1983, they were pressing to comply with their demands and since they were not

responded, they had to resort to strike work from March 15, 1983 consequent to which the second respondent announced a small wage increase

further conceding to regularise the services of 79 workmen and a settlement to that effect had also been signed u/s 12(3) of the Industrial Disputes

Act, 1947 (hereinafter referred to as the ''Act'').

The further submissions of the petitioner are that the partners of the second respondent did not relish these developments and started victimizing

the workers, and they also started diverting the funds of the firm into their personal accounts by raising inflated vouchers and writing false accounts

in order to show the loss accounts to establish that the firm has become sick. Then they attempted to retrench the workmen under pretext that they

were surplus and applied for permission from the Commissioner of Labour and since the Commissioner did not yield, they did not pay the

petitioner workmen their wages from October, 1986 and were not given any work from March, 1987; that such an undesired labour practice had

been devised by the partners of the second respondent firm with a view to victimize the workmen. Ultimately, the petitioners were not allowed to

enter into the premises of the two factories from March, 1987 and thereby the second respondent locked out the two factories in an unlawful

manner.

The petitioners would further submit that they made representation to the District Collector and the Labour Officials of Coimbatore District

which resulted in a settlement reached u/s 12(3) of the Act dated April 9, 1988. Though there were anomalies regarding the dues of the workmen,

the settlement was entered into on April 9, 1988 much to the knowledge of the members of the petitioner-Sangam; that the said amount had to be

paid by the second respondent on or before June 10, 1988, but the same was not paid; that the petitioner-Sangam served a notice of five demands

such as, (i) lifting of the lockout; (ii) salary dues and bonus amount for the years 1985-86 and 1986-87 to be paid with interest at 18 per cent; (iii)

the present management should continue to run the two factories on concessional terms; (iv) each of the workmen to be given a sum of Rs. 3,000

as interim relief; and (v) the Employees Provident Fund dues should be remitted immediately.

That this dispute was enquired into by the Joint Commissioner (Labour) on file which was sent to the Assistant Commissioner, Labour-III,

Coimbatore for further conciliation which he initiated, but the settlement was not fructified resulting in a conciliation failure report sent u/s 12(4) of

the Act to the first, respondent and the first respondent declined to refer the demands of the petitioner workmen for adjudication vide G.O.(T) No.

185, dated February 21, 1991 stating that:

Since the second respondent''s establishment is not functioning from March, 1987 and the workers have agreed to receive their legal dues such

as, compensation, gratuity, bonus and other benefits by accepting the closure of the establishment in the 12(3) settlement and that the issue of

closure of the establishment is finalised as per Industrial Disputes Act, there is no valid industrial dispute.

That aggrieved of the first respondent''s order, the petitioner Sangam filed a reconsideration petition with the Governor of Tamil Nadu on May 7,

1991 and the same was taken up for consideration on the file No. 2/12076/91 of the Deputy Commissioner of Labour, Coimbatore, and was

again enquired by him and on his report, the first respondent was pleased to reject the reconsideration petition in their letter dated February 24,

1992 stating that no valid grounds existed; that while conciliation proceedings were pending before the Joint Commissioner of Labour,

Coimbatore, the petitioners were reliably given to understand that the second respondent had entered into an agreement to sell the two factories

with land, machineries and goodwill to a third party; that the third party, who entered into the agreement came forward to settle the dues of the

petitioner, but a sum lesser than what had been stipulated in Section 12(3) settlement and hence, the offer was turned down and in result, the

petitioners have come forward to file the above writ petition challenging the order made by the first respondent in G.O.(T) No. 185, dated

Febraury 21, 1991 thereby declining to refer the matter for adjudication on such and other grounds raised in the grounds of writ petition.

In the counter-affidavit filed on behalf of the first respondent, it would be submitted that in between the management and another Sangam

Affiliated to AITUC, there had been a settlement u/s 12(3) of the Act dated April 9, 1988 wherein it was agreed that the establishment would be

permanently closed and that the legal dues to the workers would be paid as per law before June 10, 1988; that the said'' union agreed to the terms

and signed the settlement; that since the management did not pay the dues of the workmen as per the settlement, prosecution had been launched in

the Magistrate''s Court u/s 29 of the Act and the same is pending; that subsequent to that, the petitioner Sangam raised a dispute on five demands

(extracted supra), that since those demands were covered by Section 12(3) settlement, the Government passed orders declining to refer the

dispute for adjudication as per the order impugned.

The further submissions of the first respondent in the counter affidavit are that since the unit remained closed and the workers suffered without

wages, the District Collector on representation made on the part of the petitioner union, called for the parties and on discussion eventually, a

settlement was effected by the Joint Commissioner of Labour, Coimbatore with the consent of parties; that in the settlement reached u/s 12(3),

dated April 9, 1988, it was agreed that the establishment would be permanently closed (Clause-I) and to pay the legal dues to the workers on or

before June 10, 1988 and having agreed to the terms of the settlement and that since the demands were covered by the settlement Government

passed order declining to refer the matter for adjudication and on such grounds, the first respondent would pray for dismissing the writ petition.

During arguments, the learned counsel appearing for the petitioner besides emphasising the grounds raised in the writ petition, would submit the

recent decision of a single Judge of this Court delivered in Cheran Transport Employees'' Union Vs. Government of Tamil Nadu and Another,

wherein in para 28 the learned single Judge has held as follows at p. 1217:

In all these cases, the first respondent-Government of Tamil Nadu refused to refer the matter for adjudication only on the ground that charges are

in respect of the settlement u/s 12(3) of the Act. It is stated by the learned Senior counsel for the petitioner that the said settlement u/s 12(3) of the

Act is under challenge at the instance of the petitioner-Union in the Writ Petition No. 68 of 1993. It is further stated that the said writ petition as

admitted on January 6, 1993 and notice was ordered in the W.M.P. No. 111 of 1993 seeking direction to the Assistant Commissioner of Labour

(Conciliation) to send failure report to the first respondent-Government. In view of the allegation made, against the management, and in view of the

fact that settlement u/s 12(3) of the Act is under challenge before this Court, I am of the view that the first respondent ought to have referred the

matter for adjudication. It is further stated that even though the management and the Government were aware of the pendency of the earlier

proceedings, they have not chosen to refer the same. In a matter like this, the appropriate statutory authority has to consider the claim of both

parties based on oral and documentary evidence; accordingly the orders of the first respondent declining to refer the matter for adjudication cannot

be sustained. For this reason and for the reasons mentioned above, the impugned orders are liable to be set aside.

Assessing the case of the writ petitioner of acts pleaded by parties and having regard to the materials placed on record and upon hearing the

learned counsel for both what is gathered is that the pertinent question that is to be answered in this case is whether on the part of the first

respondent-Government insofar as it declined to refer the dispute for adjudication, is it justified and whether the writ petition seeking to quash the

Government order passed by the first respondent declining reference and directing the first respondent to refer the dispute for adjudication is to be

complied with.

Very many decisions could be cited on this subject wherein judgments have been rendered by the Apex Court and by different High Courts.

The first of such is delivered in Ram Avtar Sharma and Others Vs. State of Haryana and Another, , wherein regarding making a reference u/s

10(1) of the Industrial Disputes Act, it has been held that the appropriate Government performs an administrative act and not a judicial or quasi-

judicial Act; that being an administrative function, the appropriate Government cannot delve into the merits of the dispute and determine the lis; that

u/s 10, the appropriate Government is to be satisfied that an Industrial Dispute exists or the scheme is frivolous or bogus or putforth for extraneous

and irrelevant reasons and not for industrial peace.

The second judgment that could be cited for the proposition is one delivered by the Apex Court in M.P. Irrigation Karamchari Sangh Vs.

State of M.P. and Another, , wherein it is held that the reasons given by the State Government to decline reference are beyond the powers of the

Government under the relevant Sections of the Industrial Disputes Act. What exactly the conditions of service of the employees and in what

manner their conditions of service could be improved are matters which are the special preserve of the appropriate tribunals to be decided in

adjudicatory processes and are not ones to be decided by the Government in a prima facie examination of the demand. This proposition of law

also aptly applies to the case in hand wherein the Government have unreasonably declined to make reference the dispute for adjudication.

The third decision that is relevant at this juncture is one delivered in Shaw Wallace and Co. Ltd. Vs. State of Tamil Nadu and Others, , which

is a landmark judgment in which the Court on an analysis of the various decisions of the Supreme Court rendered earlier has evolved certain

principles as to what should be the attitude of the Government in making its reference for adjudication, how the Government should act in the

circumstances of the case and what are the circumstances under which the Government may refuse to make reference. None of these five points

evolved wherein the Government may refuse to make a reference as extracted below has been taken care of and considered in the case in hand.

They are:

On an analysis of the various decisions of the Supreme Court and the other case, the following principles emerge:

(1) the Government would normally refer dispute for adjudication;

(2) the Government may refuse to make reference if;

(b) the claim is opposed to the provisions of the Act;

(c) the claim is inconsistent with any agreement between the parties;

(d) the claim is patently frivolous;

(e) the impact of the claim on the general relations between the employer and the employees in the region is likely to the adverse;

(f) the person concerned is not a workman as defined by the Act;

(3) the Government should not act on irrelevant and extraneous considerations;

(4) the Government should act honestly and bona fide;

(5) the Government should not embark on adjudication of the dispute; and

(6) the Government would not refuse reference on the ground that domestic enquiry was fairly and properly held and punishment awarded was

appropriate.

The next land mark decision on the subject is that of the Apex Court decided viz., (i) Shaw Wallace & Company case, (supra) (ii) Binny

Limited v. Government of Tamil Nadu, (1989) 2 L.L.N. 515, wherein both would lay emphasis on one point that is when there is a settlement or

agreement between parties which is already in subsistence and in force until it is lawfully terminated, no industrial dispute could be lawfully raised

touching the matters covered by the settlement.

Analysing the case in hand in assessment on an overall consideration of the facts and circumstances and the position of law, it is clear that the

Government in making a reference u/s 10(1) of the Industrial Disputes Act is performing an Administrative Act and not judicial or quasijudicial Act

and it is not upto the Government to delve into the facts in order to go into the merits of the dispute and determine the same, that the Government

would normally refer the dispute for adjudication and in the rarest of the rare cases, if the Government is of the opinion that in all fours it is not a

matter to be referred for arbitration and it would assign reasons in a convincing manner.

From the facts of the case in hand, though a settlement had been reached u/s 3 of the Act during the pendency of the settlement or agreement

regarding those aspects, there cannot be a reference made for adjudication by the Government and the case in hand, even though a settlement is

said to have been reached on April 9, 1988, it had not been implemented and the amount agreed had not been paid to the petitioner employees

resulting in the petitioner-Sangam serving a notice containing five demands seeking further conciliation and this dispute having been enquired into by

the Joint Commissioner and the Assistant Commissioner (Labour), Coimbatore for further conciliation, nothing turned out fruitful and hence a

conciliation failure report was sent u/s 12(4) of the Act to the first respondent and the first respondent declined to refer the demand of the

petitioner workmen for adjudication as per the order impugned dated February 21, 1991. The manner in which the first respondent Government

have arrived at declining for adjudication touches the very root of the subject in dispute and as per the decisions of the upper fora of law, the act of

the Government in making the reference being administrative, it cannot go into such question which are purely the matter for adjudication as it had

been made clear from the judgments cited above. Hence, having gone into merits of the case in passing the impugned order, the first respondent

Government have committed grave errors of law.

Secondly, on such grounds of merit declining to make a reference is mistake that had occurred as a result of the first mistake of having gone

into the merit for assessment of the subject. The fact that the factory has been closed is not an impediment for making reference by the first

respondent for adjudication.

Apart from the above legal propositions, the various factual instances brought forth especially in the charter of demands (Five demands as

extracted in para No. 4 above) could be answered only by the Tribunal by way of adjudication and hence it is but proper the matter has to be

referred to the judicial forum constituted under the Act and in all Probabilities, the impugned order refusing reference as passed by the first

respondent becomes liable to be quashed.

In result, the above writ petition succeeds and the same is allowed. The first respondent is directed to refer the demands of the petitioner for

adjudication. No costs.

Consequently, W.M.P. No. 3370 of 1992 is closed.