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Management of theatre Sanjaya Vs. the State and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKarnataka High Court
Decided On
Case NumberW.P. Nos. 3016 of 1978, 57 of 1979 and 6625 of 1981
Judge
Reported inILR1984KAR539; (1984)IILLJ400Kant
ActsPayment of Bonus Act - Sections 22; Industrial Disputes Act, 1947 - Sections 2A, 10, 10(1), 10(5), 12, 12(1), 12(4), 12(5), 20(2), 22, 25F, 25FFF, 31, 33, 33(1), 33(2), 33A and 38
AppellantManagement of theatre Sanjaya
RespondentThe State and ors.
Excerpt:
- integrated child development service programme. integrated child development service programme (icds) : [d.v. shylendra kumar,j] scheme envisaged for providing proper social conditions and atmosphere for the informal development of the personality of the child expansion of anganawadi centres selection of anganawadi workers - guidelines procedure composition of selection committee modification of selection committee-government order statement of objections filed on behalf of the state government, government sought to bring about a variation to the composition of the selection committees-selection of large number of anganawadi centres by the committees constituted in terms of government order - notification to that effect challenge as to validity of government orders held,.....orderbopanna, j. 1. the question for consideration in this case is whether the state government has got the power under s. 10(1)(c) of the industrial disputes act, 1947 to make a reference after it had earlier refuse to make such a reference admittedly the dispute was one under s. 2a of the industrial disputes act, 1947 (14 of 1947). 2. the contention of the petitioner is that in the light of the ruling of this court in indian telephones industries ltd. v. state of karnataka and others, [1978-i l.l.j. 544], the state government after refusing to make a reference at an earlier point of time is precluded from making a reference without hearing the parties to the dispute, since certain civil consequences flow from its earlier order refusing to make the reference. 3. mr. subba rao, learned.....
Judgment:
ORDER

Bopanna, J.

1. The question for consideration in this case is whether the state Government has got the power under S. 10(1)(c) of the Industrial Disputes Act, 1947 to make a reference after it had earlier refuse to make such a reference Admittedly the dispute was one under S. 2A of the Industrial Disputes Act, 1947 (14 of 1947).

2. The contention of the Petitioner is that in the light of the Ruling of this Court in Indian Telephones Industries Ltd. v. State of Karnataka and others, [1978-I L.L.J. 544], the State Government after refusing to make a reference at an earlier point of time is precluded from making a reference without hearing the parties to the dispute, since certain civil consequences flow from its earlier order refusing to make the reference.

3. Mr. Subba Rao, learned counsel appearing for the workman has maintained that the power of the State Government to make a reference under S. 10(1)(c) of the Industrial Disputes Act is now well settled by the decision of the Supreme Court in the case of M/s. Avon Services Production Agencies (P) Ltd. v. Industrial Tribunal, Haryana and Others [1979-I L.L.J. 1]. In that case, the Supreme Court has held that the power of the State Government is not exhausted even after declining to make the reference at an earlier point of time under S. 10(1)(c) of the Act. Therefore, he maintained that the judgment of the Division Bench of this Court in Indian Telephone Industries case referred to above is no longer good law.

4. Mr. Prabhakar, the learned counsel appearing for the Management contended that the Indian Telephone Industries case has been followed by the Calcutta High Court in the case of American Express International Banking Corporation v. Union of India and others [1979-II L.L.J. 22], and this Court in the Indian Telephone Industries case (supra) followed the decision of the Madras High Court in Tiruchy Steel Rolling Mills Ltd., v. S. Gnanasambandan and others, (1974) 46 F.J.R. 158. Since the Supreme Court has directly dealt with this point on facts which are similar to the facts of this case, I think it is more appropriate that this matter should be referred to a Division Bench for consideration whether the Indian Telephone Industries case was rightly decided and whether this case is covered by the Indian Telephone Industries case (supra).

5. Accordingly, this Writ Petition is referred to a Division Bench.

Malimath, J.

1. This case has come before us on a reference made by Justice Bopanna on the ground that the view expressed by a Division Bench of this Court in the Indian Telephone Industries Ltd. v. State of Karnataka and Others (supra), that where the Government once refused to make a reference after hearing both the parties and later makes a reference at the instance of one of the parties without giving an opportunity to make representations to the management, the decision to refer is illegal, require reconsideration in the light of the subsequent decision of the Supreme Court in M/s. Avon Services Production Agencies (P) Ltd. v. Industrial Tribunal, Haryana and Others, (supra).

2. The undisputed facts of the case are as follows :

The 3rd respondent was working as an Assistant Manager under the Petitioner-Management. A disciplinary enquiry was held against him in respect of certain charges of misconduct and he was dismissed from service on 11th February, 1977. The 3rd respondent raised an Industrial Dispute before the Assistant Labour Commissioner and Conciliation Officer, Bangalore Division II, Bangalore. Ultimately, the State Government made an order on the 3rd November, 1977 as per Ex. 'A' declining to refer the dispute between the parties for adjudication under S. 10 of the Industrial Disputes Act on the ground that the workman not having made out a prima facie case to show that the management's action offended the principles of natural justice, the case does not merit reference for adjudication. Thereafter the State Government made the impugned Order under S. 10(1)(o) of the Act on the 17th January, 1978 as per Exhibit 'B' referring the dispute for adjudication to the Labour Court at Bangalore. In the Writ Petition presented by the management, this order of reference is challenged.

3. One of the important contentions raised by the Petitioner-Management is that order of reference is not legal and valid the Petitioner-Management not having been given an opportunity of being heard before the order or reference was made, the State Government having earlier declined to refer the same dispute by its endorsement dated 3rd November, 1977.

4. In support of the Petitioner's contention reliance is placed on the decision of this Court in the Indian Telephone Industries case (supra). A Division Bench of this Court consisting of Justice Bhimiah and Justice Puttaswamy has held in that decision that the Government having once declined to make a reference if it proposes to refer the same dispute for adjudication under S. 10(1) of the Act, it is under an obligation to follow the principle of audi alteram partem and give an opportunity to the parties of being herd before making an order referring the dispute. Relying on the decision of the Supreme Court in M/s. Avon services Production Agencies Private Ltd.'s case, (supra) it was contended on behalf of the 3rd respondent that the decision of this Court in Indian Telephone Industries Limited must be regarded as having been overruled. As Justice Bopanna felt that there is considerable force in the submission made on behalf of the 3rd respondent, the learned Single Judge to the Division Bench.

5. Though there is no categorical observation in the judgment of the Supreme Court in Messrs. Avon Services Production Agencies (P) Ltd's case (supra) to the effect that the State Government is not required to give an opportunity of hearing to the parties when it proposes to make a reference of a dispute under S. 10(1) of the Industrial Dispute Act, it having declined to make a reference of such dispute on an earlier occasion, the observation of the Supreme Court particularly those contained in paragraphs 7 and 8 of the Judgment indicate that the principle of audi alteram partem has no application. It is useful to extract the following observation in paragraph 7 of the judgment :

'...... It was said that once an industrial dispute is raised and the Government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such dispute would no more be in existence between the employer and the concerned employer and that the Government cannot spring a surprise by sub sequently unilaterally making the reference without any fresh or additional material being brought to its notice. Section 10(1) enables the appropriate Government to make reference of industrial dispute which exists or is apprehended at any time to one of the authorities mentioned in the Section. How and in what manner or through what machinery the Government is apprised of the dispute is hardly relevant ....'

It has been further laid down that the only requirement for taking action under Section 10(1) of the Act is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended. How and in what manner or through what machinery the material is collected by the Government has been held to be not relevant. The only principle purpose of given an opportunity of hearing as contended on behalf of the management is to enable them place material before the Government in regard to the existence or otherwise of the industrial dispute. If as held by the Supreme Court that it is not relevant as to how and in what manner or thorough what machinery the Government is apprised of the dispute, it follows that it would not relevant as to how and in what manner or through what machinery the Government is apprised of the dispute, it follows that it would not be necessary for the Government to notify the parties if the Government has received satisfactory material from other sources.

6. In paragraph 8 [in 1979-I L.L.J. 1] of the Judgment the Supreme Court has observed as follows :

'.... A refusal of the appropriate Government to make a reference is not indicative of an exercise of power under S. 10(1), the exercise of the power would be a positive act of making a reference. Therefore, when the Government declines to make a reference the source of power is neither dried up nor exhausted. It only indicates that the Government for the time being refused the exercise the power but that does denude the power. The power to make the reference remains intact and can be exercised if the material and relevant considerations for exercise of power being the continued existence of the dispute and the wisdom of referring it, in the lager interest of industrial peace and harmony. Refusal to make the reference does not tantamount to saying that the dispute, if at all existed, stands resolved. On the contrary the refusal to make a reference not compelling the parties to come to a talking table or before a quasi-judicial Tribunal would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well re-consider the decision and make the reference. It is, therefore, not possible to accept the submission that if the Government had on an earlier occasion declined there was a reference unless it be shown that there was some fresh or additional material before the Government the second would be incompetent ....'

It is clear from this observation of the Supreme Court that the Government exercise the power under S. 10(1) of the Act only when a positive order is made and not when the Government declines to make a reference. It therefore, follows that the Government having declined to make an order of reference on an earlier occasion makes a reference of the same dispute at a subsequent stage, the Government must be regarded as having exercised its power under S. 10 of the Act for the first time when it makes the reference. If the parties are not entitled to an opportunity of being heard on the first occasion, it logically follows that they would not be entitled to such an opportunity when on the second occasion the Government chooses to make a reference.

7. The learned counsel for the Management, however, contended that in the light of the principle laid down by this Court in the Indian Telephone Industrial Ltd.'s case (supra), if the parties are entitled an opportunity of being heard when the Government proceeds to make a reference under S. 10(1) after having earlier declined to make a reference, they would be equally entitled to such an opportunity when the State Government makes a reference when the matter comes up for its consideration on the first occasion itself. In our opinion, having regard to the nature of the power that is required to be exercised by the State Government under S. 10(1) of the Act, it is not possible to take the view that it has civil consequences. If the exercise of the power under S. 10(1) of the Act has civil consequences, when the State Government makes such a reference on an earlier occasion, how can it be said that it does not involve civil consequences, when the same power is exercise when the matter comes up for consideration before the Government of the first occasion It is necessary to bear in mind that the power of making a reference under S. 10(1) is required to be exercised essentially for the purpose of maintaining industrial peace and harmony. That object itself may be defeated by the inevitable delay involved by the process of hearing of the parties. In our opinion, the better view to take is that the parties are not entitled to an opportunity of being heard when the State Government exercises its power under S. 10(1) of the Act whether that power comes to be exercised when the matter comes up for consideration on the first, second or any subsequent occasion.

8. The observations of the Supreme Court Limited's case (supra) appear to be inconsistent with the view taken by this Court in the Indian Telephone Industrial Limited's case. We are therefore of the opinion that, it is more appropriate that we should have an authorities pronouncement by the Full Bench.

9. For the reasons stated above, exercise of the powers conferred by S. 7 of the Karnataka High Court Act, 1861, we refer the following question for the opinion of the Full Bench :

'Whether the principle of audi alteram partem is applicable, when the Government having declined to make a reference of an Industrial Dispute under S. 10(1) of the Industrial Disputes Act, for adjudication at a subsequent stage.'

Rama Jois, J.

1. The question referred for the opinion of the Full Bench reads :-

'Whether the principle of audi alteram partem is applicable, when the Government having declined to make a reference of an Industrial Dispute under S. 10(1) of the Industrial Disputes Act, for adjudication, proposes to refer such a dispute for adjudication at a subsequent stage.'

2. Sri B. C. Prabhakar, learned counsel for the petitioners (employers) and Sri M. C. Narasimhan and Sri K. Subba Rao, learned counsel for the respondents (workmen) addressed arguments in support of their respective contentions. Sri G. S. Ullal, a senior member of this Bar, who said that he was appearing for an employer, in a similar case pending before this Court, addressed arguments with our permission, in support of the contention of Sri B. C. Prabhakar.

3. Sri Prabhakar's sub missions may be summarised as follows : The power conferred under S. 10(1) of the Industrial Disputes Act, (hereinafter referred to as 'the Act') to refer industrial disputes for adjudications is no doubt an administrative power. All the same an order made under S. 10(1) of the Act referring a dispute for adjudication by the Labour Court or Tribunal, visits the management with certain civil consequences flowing from Ss. 31 and 33 of the Act. In view of the decisions, of the Supreme Court in A. K. Kraipak v. Union of India : [1970]1SCR457 , Maneka Gandhi v. Union of India, : [1978]2SCR621 , Mohinder Singh Gill v. Chief Election Commissioner : [1978]2SCR272 and S. L. Kapoor v. Jagmohan (A.I.R. 1981 S.C. 137), it is well settled that an administrative order having civil consequences could not be made without complying with rule of natural justice, viz., affording of an opportunity to the party concerned to have his say in the matter. It is evident from these decisions that unless in a given case either expressly or by necessary implication, the application of rule of natural justice is excluded, the compliance with that rule is mandatory. Therefore though undoubtedly the Government has the power to refer a dispute for adjudication notwithstanding an earlier order refusing to refer the same dispute as held by the Supreme Court in Western India Watch Co. Ltd. v. Western India Watch Co. Workers' Union : (1970)IILLJ256SC and Avon Services Production Agencies v. Ind. Tribunal, Haryana, (supra), as far as a case, in which an order under sub-s. (5) of S. 12, refusing to make a reference had been made and communicated to the concerned parties if the Government at any subsequent point of time intends to change its mind and to refer that dispute, it could make a decision only after complying with the rules of natural justice. Such hearing could be in any manner, as found convenient or necessary, and an opportunity to submit a representation against the proposal might be sufficient compliance with the rule, but an order made without giving any opportunity would be bad on the ground of violation rule of natural justice.

4. Per contra, he sub missions made by the learned counsel for respondents, were : In the nature of things, the power conferred under S. 10(1) of the Act gives no scope for invoking the rule of natural justice. By an order made therein the Government just refers the dispute for adjudication and does nothing more. The opposite party would have ample opportunity to defend itself before the Labour Court or Tribunal, as the case may be. The order does not result in any civil consequence. The consequences said to flow from Ss. 31 and 33 of the Act are remote to the order of reference. A decision refusing to refer is no exercise of power at all as emphatically laid down by the Supreme Court in Avon's case (supra) and is no decision in favour of the concerned party. Under S. 10(1) of the Act, the Government is given the widest power to refer a dispute for adjudication a any time if it is of opinion that it is necessary to do so. Conciliation proceeding is only optional and is not a condition precedent for making a reference. This is also evident from S. 20(c) of the Act, which indicates that even during the pendency of a conciliation proceeding it is open for the Government to make reference. Further under S. 10(1) of the Act the Government can refer even an apprehended dispute for adjudication. Therefore S. 10(1) of the Ac by necessary implication excludes the application of the rule of natural justice.

5. The rival contentions urged, give rise to the following points for consideration :

(1) What are the principles, which should govern the decision regarding applicability or non-applicability of the rule of natural justice in respect of an administrative decision, which results in civil consequences against the party concerned

(2) Does an order made under S. 10(1) of the Act referring a dispute for adjudication, when the matter comes up before the Government on the first occasion or when the matter comes up after there had been an earlier decision refusing to make the reference, visits the management with civil consequences

(3) If, civil consequences do follow from an order made under S. 10(1) of the Act, whether the observance of rule of natural justice is excluded by necessary implication under all circumstances

6. First Point :

Rule of natural justice is applicable to administrative decisions resulting in civil consequences also, is no longer open to question and indeed was not questioned by the learned counsel for the workmen. But they maintained that in the nature of things the power conferred under S. 10(1) of the Act excludes their applicability. Therefore, it is necessary to ascertain the situations in which the rule of natural justice is required to be observed as also those in which their applicability must be held to have been excluded.

In the case of Kraipak (supra), the Supreme Court said :-

'The dividing line between an administrative power and a quasi-judicial power is quite thin and is being gradually obliterated. For determining whether a power is an administrative power or a quasi-judicial power one has to look the nature of the power conferred, the person or persons on whom it is conferred, the framework of the law conferring that power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised. In a Welfare State like ours it is inevitable that the organ of the State under our Constitution is regulated and controlled by the rule of law.

With the increase of the power of the administrative bodies it has become necessary to provide guidelines for the just exercise of their power. To prevent the abuse of that power and to see that it does not become a new despotism, Courts are gradually evolving the principles to be observed while exercising such powers. In matters like these public good is not advanced by a rigid adherence to precedents. New problems call for new solutions. It is neither possible nor desirable to fix the limit of a quasi-judicial power. But for the purpose of the present case we shall assume that the power exercised by the selection board was an administrative power and test the validity of the impugned selections on that basis.

* * * *The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past it was thought that it included just two rules, namely (1) no one shall be a justice in his own cause (Nemo debet case judex propria causa) (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem).

** ** **In the case of Maneka Gandhi, the Supreme Court, commenced to discuss the question of applicability of rules of natural justice with these prefatory remarks :-

'..... Natural justice is a great humanising principle intended to invest law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action,' and reiterated the ratio in Kraipak (supra) on the point (vide paragraphs 59-61). Again in the case of Mohinder Singh (supra), the Supreme Court said thus :

'43. Indeed, natural justice is a pervasive facet of secular law where a spiritual touch enlivens legislation, administration and adjudication, to make fairness a creed of life. It has many colours and shades, many forms and shapes and, save where valid law excludes, it applies when people are effected by acts of authority. It is the bone of healthy government.' 47. It is fair to hold that subject to certain necessary limitations natural justice is now a brooding omnipresence although varying in its play.

48. Once we understand the soul of the rules as fairplay in action-and is so-we must hold that it extends to both the fields. After all, administrative power in a democratic set up is not allergic to fairness in action and discretionary executive justice cannot degenerate into unilateral injustice. Nor is there ground to be frightened of delay, inconvenience and expense, if natural justice gains access. For fairness itself is a flexible pragmatic and relative concept, not a rigid, ritualistic or sophisticated abstraction. It is not a bull in a china shop, nor a bee in one's bonnet. Its essence is good conscience in a given situation; nothing more-but nothing less. The 'exceptions' to the rules of natural justice are a misnomer or rather are but a shorthand form of expressing the idea that in those exclusionary cases nothing unfair can be inferred by not affording opportunity to present or meet a case. Text-book experts and ratios from rulings can be heaped, but they all converge to the same point that audi alteram partem is the justice of the law, without, of course, making law lifeless, absurd, stultifying, self-defeating or plainly contrary to the commonsense of the situation.'

The principles which can be deduced from the aforesaid decisions of the Supreme Court are :-

(1) Compliance with the rule of natural justice, namely, the requirement to hear the party or consider his representation before an administrative decision which results in civil consequences against him, is taken must be considered as a condition precedent for the exercise of such power unless its applicability is excluded :

i) either expressly, or

ii) by necessary implication, in that the observance of the rule would make the law lifeless, absurd, stultifying self-defeating or plainly contrary to the situation, as indicated by the underlined portion of the judgment in Mohinder Singh's case (supra) extracted above.

7. Second Point

The question is whether an order made under S. 10(1) of the Act visits the management with any civil consequences The learned counsel for the employer said, it does. He pointed out to Ss. 33 and 31 of the Act in that regard. He submitted that the consequences, which would ensue from these provisions, the moment an order of reference is made under S. 10(1) of the Act are certainly civil consequences.

(ii) The learned counsel for the workmen maintained that no civil consequences flow directly from an order of reference, and the consequences which flow from S. 33 are too remote having no nexus to the order or reference.

(iii) What are civil consequences The Supreme Court, in Mohinder Singh's case (supra) explained thus : '... But what is a civil consequence, let us ask ourselves, by passing verbal booby-traps 'Civil consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence.'

It is true that when an order of reference is made the Government does not decide the dispute, but only authorises its adjudication by the Tribunal constituted under the provisions of the Act. But there are certain provisions in the Act which bring about certain consequences the moment a dispute is referred for adjudication.

The most important section in this behalf is S. 33 of the Act. It reads :

'33. (1) During the pendency of any conciliation proceeding before a Conciliation Officer or a Board or of any proceeding before an Arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall -

(a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding;

or

(b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending.

(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute for, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman -

(a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or

(b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman :

Provided that no such workman shall be discharged, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer.

(3) Notwithstanding anything contained in sub-s. (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute -

(a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceedings; or

(b) by discharging or punishing, whether by dismissal or otherwise, such protected workman.

Save with the express permission in writing of the authority before which the proceeding is pending.

Explanation : For the purposes of this subsection, a 'protected workman', in relation to an establishment, means a workman who, being a member of the executive or other office bearer of a registered trade union connected with the establishment, is recognised as such in accordance with rules made in this behalf. * * * *

The provisions of S. 33, as it is clear from its wording, come into operation against an employer when a conciliation proceeding or a dispute becomes pending and in this case, we are concerned with the latter. The consequences which flow from S. 33, the moment a dispute is referred under S. 10(1) of the Act have been explained by the Supreme Court in the case of Tata Iron & Steel Co. v. Modak, : (1965)IILLJ128SC thus :

'It is quite clear that S. 33, imposes a ban on the employer exercising his common law, statutory, or contractual right to terminate the services of his employees according to the contract or the provisions of law governing such service. In all cases where industrial disputes are pending between the employers and their employees, it was thought necessary that such dispute should be adjudicated upon by the Tribunal in a peaceful atmosphere, undisturbed by any subsequent cause for bitterness or unpleasantness. It was, however, realised that if the adjudication of such disputes takes long, the employers cannot be prevented absolutely from taking action which is the subject-matter of S. 33(1) and (2). The Legislature, therefore, devised a formula for reconciling the need of the employer to have liberty to take action against his employees, and the necessity for keeping the atmosphere calm and peaceful pending adjudication of industrial disputes. In regard to actions covered by S. 33(1), previous permission have to be obtained by the employer, while in regard to actions falling under S. 33(2), he has to obtain subsequent approval subject to the conditions which we have already considered. In that sense, it would be correct to say that the pendency of an industrial dispute is in the nature of a condition precedent for the applicability of S. 33(1) and (2). * * * *

On the other hand, there are several considerations which do not support the argument of the appellant that as soon as the main industrial dispute is decided, the application made by it for approval under S. 33(2) should automatically come to an end. As we have already indicated the application of the appellant, can, in a sense, be treated as an incidental proceeding; but it is a separate proceeding all the same, and in that sense, it will be governed by the provision of S. 33(2)(b) as an independent proceeding. It is not an interlocutory proceeding properly so called in its full sense and significance; it is a proceeding between the employer and his employee who was no doubt concerned with the main industrial dispute along with other employers; but it is nevertheless a proceeding between two parties in respect of a matter not covered by the said main dispute. It is, therefore, difficult to accept the argument that a proceeding which validly commences by way of an application made by the employer under S. 33(2)(b) should automatically come to an end because the main dispute has in the meanwhile been decided.'

Section 31 of the Act reads -

'31. (1) Any employer who contravenes the provisions of S. 33 shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to one thousand rupees, or with both.

(2) Whoever contravenes any of the provisions of this Act or any rule made thereunder shall, if no other penalty is elsewhere provided by or under this Act for such contravention, be punishable with fine which may extend to one hundred rupees.'

Having regard to the consequences which would ensue, as a result of the application of S. 33, for which an order of reference under S. 10(1) is a condition precedent, I find it difficult to accept the plea of the respondents that civil consequences do not ensue from an order of reference, or even if they ensue, by force of Ss. 33 and 31, they are remote and not direct. They cannot be regarded as remote at all not only because the coming into existence of an industrial dispute is a condition precedent for the applicability of S. 33, but they become automatically applicable the moment a dispute is referred for adjudication under S. 10(1).

8. Third Point :

The third and the most crucial question is, whether having regard to the width of the power, conferred under S. 10(1) and the object and purpose for which it is conferred, the observance of the rule of natural justice is impliedly excluded Section 10(1) of the Act, which confers power on the appropriate Government to make a reference, reads -

'10. (1) Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing -

(a) refer the dispute to a Board for promoting a settlement thereof; or

(b) refer any matter appearing to be connected with or relevant to the dispute to a Court for inquiry; or

(c) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, if it relates to any matter specified in the Second Schedule, to a Labour Court for adjudication, or

(d) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, whether it relates to any matter specified in the Second Schedule or the Third Schedule, to a Tribunal for adjudication :

Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under Clause (c) :

Provided further that where the dispute relates to a public utility service and a notice under S. 22 has been given, the appropriate Government shall, unless it considers that the notice has been frivolously or vexatiously given or that it would be inexpedient so to do, make a reference under this sub-section notwithstanding that any other proceedings under this Act in respect of the dispute may have commenced.'

Section 12(5) of the Act reads :

'12. Duties of conciliation officers :

* * * *(5) If, on a consideration of the report referred to in sub-s. (4) the appropriate Government is satisfied that there is a case for reference to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate Government does not make such a reference, it shall record and communicate to the parties concerned its reasons therefor.'

Section 20(2)(c) of the Act reads -

'20. Commencement and conclusion of proceedings :

* * * *(2) A conciliation proceeding shall be deemed to have concluded -

* * * *(c) When a reference is made to a Court, Labour Court, Tribunal or National Tribunal under S. 10 during the pendency of conciliation proceedings.'

Section 10(1) gives wide power to the Government to refer an industrial dispute whether existing or apprehended between management and workmen of an industry and that such power could be exercised at any time. Having regard to the force of the language of the section it is indisputable that notwithstanding an earlier refusal to refer a dispute the Government has the power to refer the same dispute at a later point of time and this position is no longer open to doubt in view of the exposition of the scope and width of the power of S. 10(1) of the Act by the Supreme Court in Wimco and Avons cases (supra). The purpose for which the answer is conferred obviously is to ensure speedily disposal of disputes between management and workmen of industries, so as to ensure industrial peace which is so essential not only from the point of view of welfare of the workers but also from point of industrial production and National Economy, which are of paramount importance to the society.

The controversy however is whether S. 10(1) excludes the application of rule of natural justice. In other words does compliance with the rule before referring a dispute, be regarded as concomitant with S. 10(1) of the Act generally or atleast in the case of a dispute where there has been an earlier decision, under the latter part of S. 12(5) refusing to refer that very dispute for adjudication.

9. An analysis of S. 10(1) read with Ss. 12(5) and 20(2)(c) of the Act indicates, that an order of reference could be made if the Government is of the opinion that it is necessary to do so under the following five circumstances :

(1) When a dispute exists between Management and Workmen of an industry though no conciliation proceeding had been initiated, or if initiated even during the pendency of conciliation proceeding.

(b) Even when a dispute between a Management of an industry and its workmen is apprehended.

(3) When any other establishment is interested in or likely to be affected by a decision in a dispute concerning another establishment has been or is being referred for or pending adjudication as provided in S. 10(5) of the Act.

(4) After the conclusion of conciliation proceeding in terms of S. 12 of the Act read with the rules prescribing the procedure for holding conciliation proceedings and the receipt of the report of the Conciliation Officer.

(5) Even after there had been an earlier communication under latter part of S. 12(5) of the Act declining to make reference of the same dispute.

The five circumstances in which an order of reference could be made, in my opinion, can be classified into three categories viz.,

i) Category 1 : Cases in which the observance of rule of natural justice is excluded by necessary implication;

ii) Category 2 : Cases in respect of which the Statute itself provides for hearing both the parties before making an order under S. 10(1), i.e., in other words, the requirement of the observance of rule of natural justice is inbuilt into the provision; and

iii) Category 3 : Cases in which, the observance of the rule of natural justice must be regarded as obligatory.

In my view, the first three circumstances set out in paragraph 9 fall under Category-1, the fourth circumstances falls under Category-2 and the fifth falls under Category-3 and I shall indicate hereinafter the reasons in support of the view which I am persuaded to take.

10. First Category in which the rule of natural justice is excluded : Section 10(1) confers power on the appropriate Government which is coupled with the responsibility, to maintain industrial peace, by ensuring smooth and speedy adjudication of industrial disputes. Therefore, whenever it comes to the notice of the Government, whatever be the source, that an industrial dispute exists or is apprehended between a management and its workmen, and it forms an opinion that settlement of that dispute expeditiously through the adjudicatory machinery provided under the Act, is necessary it can straight away refer the dispute for adjudication. The section does not require that conciliation proceeding should precede any such decision. Indeed in such a case, initiation of a conciliation proceeding would be inexpedient as it might result in procrastination of the dispute and continuation of industrial unrest. In such a case, any delay in making the reference might result in the situation turning from bad to worse. To insist in such a case on the observance of the rule of natural justice would be meaningless, absurd and inconsistent with the very purpose for which the power is conferred. Likewise would be the case when a dispute in respect of an establishment has already been referred or is being referred and the Government through representation or otherwise comes to know that another establishment is interested or likely to be affected thereby, it has the power to club the dispute between the management and workmen of such another establishment, with the former, as is provided for in S. 10(5) of the Act. In such a case the insistence of an opportunity to hear might defeat the very purpose for which the power is conferred, because if such opportunity were to be given it might so happen that in the meanwhile the Labour Court or the Tribunal, as the case may be, might make an award in such a dispute and that would defeat the very purpose sought to be achieved by sub-s. (5) of S. 10 of the Act. Therefore the reasonable view to take on the interpretation of S. 10(1) is that in all such cases, the requirement of hearing of the party concerned stands statutorily excluded by necessary implication, notwithstanding the fact that such administrative orders have the civil consequences. It is well settled, natural justice cannot supplant the law.

11. Second Category in which the rule of natural justice is in-built : These are cases in which an Order of Reference is made under S. 10(1) after the consideration of the reports of the Conciliation Officer, in terms of the first part of S. 12(5) of the Act. Section 12(1) empowers the Conciliation Officer to hold Conciliation proceedings in the prescribed manner. Section 38 empowers the Government to frame rules for giving effect to the provisions of the Act and in particular to regulate the procedure of Conciliation Officers, rules have been framed under the Act. Rules 9, 10 and 10-A of the Industrial Dispute (Karnataka Rules read) :-

'9. CONCILIATION PROCEEDINGS IN PUBLIC UTILITY SERVICE :-

(1) The Conciliation Officer, on receipt of a notice of a strike or lock out given under Rule 72 or 73, shall forthwith arrange to interview both the employer and the workmen concerned with the dispute at such places and at such times as he may deem fit and shall endeavour to bring about a settlement of the dispute in question.

(2) Where the Conciliation Officer receives no notice of a strike or lockout under Rule 72 or 73 but he considers it necessary to intervene in the dispute, he may give a formal information in writing to the parties concerned declaring his intention to commence conciliation proceedings with effect from such date as may be specified therein.

10. CONCILIATION PROCEEDINGS IN NON-PUBLIC UTILITY SERVICE :-

Where the Conciliation Officer receives any information about an existing or apprehended Industrial Dispute which does not relate to public utility service and he considers it necessary to intervene in the dispute, at such place and at such time as he deems fit he shall give formal intimation in writing to the parties concerned declaring his intention to commence conciliation proceedings with effect from such date as may specified therein.

10A. PARTIES TO SUBMIT STATEMENTS :- The employer or the party representing workmen involved in the Industrial Dispute shall forward a statement setting forth the specific matters in dispute to the Conciliation Officer concerned whenever his intervention in the dispute is required.'

Rules 9, 10 and 10A of the Industrial Dispute (Central) Rules are identical. The procedure prescribed for Conciliation Officers provide ample opportunity to both the parties, i.e., the management and workmen of an establishment to have their full say in connection with the dispute. Under S. 12(4) the Conciliation Officer, in a case where there is no settlement, has to submit a report together with the reasons, on account of which no settlement could be arrived at. The first part of sub-s. (5) of S. 12 requires the Government to consider the said report and further provides that if on such consideration the Government is satisfied that there is a case for making a reference, it can proceed to make the order. Thus, in this category of cases, the requirement of rule of natural justice is in-built into the provision. The parties are either heard or their representations considered before the Conciliation Officer submits his report to the Government.

12. Learned counsel for the workmen maintained that if the contention urged for the management is sound, then it would become necessary for the Government to comply with the rules of natural justice in this category of cases also before passing an order under S. 10(1) of the Act after receipt of the report of the Conciliation Officer and that such compliance was not at all intended by S. 10(1) of the Act.

13. I am not impressed by the submission. In administrative law, it is well settled that though the final decision to be valid, has to be taken by the designated authority, the responsibility, to hold the required inquiry, to hear the parties and to make a report, to the designated authority can always be delegated. See Prodyat Kumar v. Chief Justice of Calcutta, : [1955]2SCR1331 . Such delegation could be either by the order of the designated authority or by statutory entrustment. Therefore the rule of natural justice to hear a party, before taking an administrative decision, does not require that the hearing must be by the very officer or authority, who is empowered to take the final decision. An opportunity to have the say before another officer or person to whom that responsibility is delegated by the officer or authority to take the decision or to whom that responsibility is statutorily entrusted, is sufficient and fulfils the requirement of that rule. Analysing a similar procedure followed under S. 4-K of the U.P. Industrial Disputes Act, the Supreme Court in Mahabir Jute Mills v. Shibban Lal [1975-II L.L.J. 326] observed :

'... A perusal of this notification would clearly show that the jurisdiction of the Conciliation Board is very limited. The procedure prescribed for the Board does not involve any adjudicatory process but is purely of an exploratory nature and what the Board has to do is to make an effort to bring about an amicable settlement between the management and the workers, and if it fails to do so it has to send a detailed report to the Government. This is the limited area within which the Board has to function. Nevertheless it is not disputed in this case that the Conciliation Board had held a full investigation in the matter, heard the parties and framed as many as 33 issues after going into the matter and then the Chairman and the members sent their reports. Thus before making the reports, all the rules of natural justice were fully complied with : the parties were given hearing their points of view were fully considered.'

Therefore the procedure prescribed for holding conciliation proceedings enables the parties to file their statements and/or make their sub missions before the Conciliation Officers functioning under S. 12 of Act. On consideration of his report the Government is required to take its decision to refer or not to refer a dispute for adjudication and that procedure certainly conforms to rule of natural justice and, therefore, it can be said that in this category of cases, the statute itself has incorporated the rule of natural justice.

14. Third category in which rule of natural justice should be complied with. The third category of cases to which the present cases belong, in my opinion, stand entirely on a different footing. Learned counsel for the workmen maintained that it was not. They argued that a refusal to make a reference is no decision at all and, therefore, there was absolutely no difference between a reference ordered under S. 10(1) of the Act for the first time or after an earlier communication to the parties refusing to make the reference. In support of this, they placed reliance on the following paragraphs in Avon's case (supra).

'... Section 10(1) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended. There must be some material before the Government on the basis of which it forms an opinion that an industrial dispute exists or is apprehended. The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference in an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making reference is an administrative act. The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny. If the action of the Government in making the reference is impugned by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the Tribunal had no jurisdiction to make the Award but if the dispute was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before Government on which it could have come to an affirmative conclusion on those matters. (See : State of Madras v. C. P. Sarathy, [1953-I L.L.J. 174]).

* * * *... It was said that once an industrial dispute is raised and the Government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such a dispute would no more be in existence between the employee and the concerned employer and that the Government cannot spring a surprise by sub sequently unilaterally making the reference without any fresh or additional material being brought to its notice. Section 10(1) enables the appropriate Government to make reference of an industrial dispute which exists or is apprehended at any time to one of the authorities mentioned in the Section. How and in what manner or through what machinery the Government is apprised of the dispute is hardly relevant.

* * * *... The only requirement for taking action under S. 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended. This is an administrative function of the Government as the expression is understood in contradistinction to judicial or quasi-judicial function. Merely because the Government rejects a request for a reference or declines to make a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a review of any judicial or quasi-judicial order or determination. The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference, the appropriate Government does not lack power to do so under S. 10(1), nor is it precluded from making the reference on the only ground that on an earlier occasion it had declined to make the reference. The expression 'at any time' in S. 10(1) will clearly negative the contention that once the Government declines to make a reference the power to make a reference under S. 10(1) in respect of the same dispute gets exhausted. Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process. In Western India Watch Co. Ltd. v. Western India Watch Co. Workers Union (supra) an identical contention was raised in respect of a reference made under S. 4(k) of the U.P. Industrial Disputes Act which is in pari materia with S. 10(1) of the Act. Negativing this contention this Court observed as under :

'In the light of the nature of the function of the Government and the object for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer, it cannot change its mind on a re-consideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference. But where it reconsiders its earlier decision it can make the reference only if the dispute is an industrial one and either exists at the stage or is apprehended and the reference it makes must be with regard to that and no other industrial dispute.'

It follows that the Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer.'

and pointed out, it was, in view of the clear position enunciated in the aforesaid paragraph the Division Bench, which made, the order of reference, to the Full Bench, was of the view that the earlier Division Bench decision of this Court in the case of I.T.I. v. State of Karnataka [1978-I L.L.J. 544] required reconsideration.

15. At the out set, it should be pointed out that the question which arises for consideration in these cases is not that whether the appropriate Government having made and communicated to the parties to a dispute an order in terms of latter part of S. 12(5) of the Act, refusing to refer a dispute for adjudication has no power at all to refer the same dispute for adjudication at a subsequent point of time under S. 10(1) of the Act as was raised in Wimco and Avon's cases (supra), but the precise question which arises for consideration is whether or not, in such a case, the Government is required to comply with the rule of audi alteram partem before making such reference, notwithstanding the fact that power to make a reference in such a case is indisputably available under, a traceable only to S. 10(1) of the Act.

16. In order to appreciate the point, it is necessary to understand the scope of S. 12 and the nature of the communication required to be given under sub-s. 5 thereof. These aspects have been fully explained by the Supreme Court in the following three cases :

State of Bombay v. K. P. Krishnan [1960-II L.L.J. 592 at 598], Bombay Union of Journalists v. State of Bombay [1964-I L.L.J. 351] and Prem Kakar v. State of Haryana : [1976]3SCR1010 .

Relevant portion of the decision in the case of K. P. Krishnan reads :

'Section 12(5) with which we are concerned in the present appeals provides that if, on a consideration of the report referred to in sub-s. (4), the appropriate Government is satisfied that there is a case for reference to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor. This Section requires the appropriate government to consider the report and decide whether a case for reference has been made out. It the Government is satisfied that a case for reference has been made out it may make such reference. If it is satisfied that a case for reference has not been made out it may not make such a reference; but in such a case it shall record and communicate to the parties concerned its reasons for not making the reference which in the context means its reasons for not being satisfied that there is a case for reference'.

This view was reiterated in the case of Bombay Union of Journalists (supra). Again in the case of Prem Kakar (supra), the Supreme Court explained the scope of later part of S. 12(5) thus :-

'... Under S. 12(5) of the Act if, on a considerations of the report referred to in sub-s. (4), the appropriate Government is satisfied that there is a case for reference, it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.'

It is equally well settled that thought rule of natural justice must be complied with before making an administrative order affecting a party there is no obligation to make a speaking order. In Mahabir Jute Mills' case (supra) the Supreme Court said :-

It is well settled that while the rules of natural justice would apply to administrative proceeding, it is not necessary that the administrative orders should be speaking orders unless the statue specifically enjoins such a requirement.'

Therefore the position is that thought the Government is not obliged to give reasons in an order made by it under S. 10(1) of the Act referring a dispute for adjudication, it is bound to give reason when if refuses to make a reference in view of statutory requirement, i.e., of S. 12(5) of the Act and communicate the same to the parties as laid down by the Supreme Court in the three decision, viz, K. P. Krishnan, (supra), Bombay Union of Journalists (supra) and Prem Kakar (supra).

17. Learned counsel for the workmen pointed out that the decision in Avon's case (supra) indicates that an order refusing to make a reference under S. 10(1) of the Act, is no decision at all and the power under S. 10(1) remains intact and on the plain language of the Section, the power under it can be exercised at any time to refer the same dispute, which, on an earlier occasion, it had refused to refused to refer. In fact it is not also the case of the employers that an endorsement refusing to make a reference is a decision under S. 10(1) of the Act or such a decision precludes the Government from making a reference as was sought to be argued for the concerned management in the cases of Wimco and Avon. all that they say that the refusal to refer a dispute is a statutory decision taken under the latter part of and in conformity with, S. 12(5) of the Act and that circumstance which shows, that after, an elaborate conciliation proceeding in which both parties had their say in the matter and the Conciliation Officer submitted his report, the Government for reasons recorded, declined to make, the reference, which in other words, as explained by the Supreme Court in Kreshnan's case (supra), means that the Government was not satisfied that there was a case for reference, is an important aspect bearing on the question of applicability of rule of natural justice for the exercise of power under S. 10(1), in all such cases. Therefor, the learned counsel maintained that if the Government at a later point of time, considers that a different view is called for, and that the same dispute should be referred for adjudication, which power certainly it has, it must, having regard to the principal of natural justice the essence of which is fair play, afford an opportunity to the management to have its say, if any, against making a reference of such a dispute and considering their say, proceed to make an appropriate order.

18. Having given my careful consideration to the question, I am persuaded to take the view that in the third category of cased there is justification to hold that the observance of rule of natural justice must be regarded as obligatory and that it is not impliedly excluded.

19. The learned counsel for the employees maintained that as the power to make an order referring a dispute is traceable only to S. 10(1) of the Act it would be illogical to hold that rule of natural justice would apply in one set of cases and not in another set of cases.

20. I am not impressed by the submission. In this behalf, I may quote, the observation of the Supreme Court in P. K. Roy v. Union of India [1970-I L.L.J. 633], as regards the applicability of principle of natural justice to a special situation. That was a case in which the Central Government was exercising its power to effect integration of service personnel under S. 115(5) of the States Reorganisation Act. According to the normal procedure prescribed, one opportunity to the concerned persons to object to a provisional equation of posts and seniority, was required to be given and it had been given. But still, owing to a special circumstance, namely the emergence of a new factor, namely, change of inter-se seniority of certain officers coming from one of the integrated areas, which had repercussion on the seniority position, the Supreme Court held that a second opportunity ought to have been given. The relevant observation are :

'... Normally speaking, we should have thought that one opportunity for making a representation against the preliminary list published would have been sufficient to satisfy the requirements of law. But the extent and application of the doctrine of natural justice cannot be imprisoned within the straight jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case.'

The above observations postulate that there can be no rigid or inflexible formula as to the applicability of the rule of audi alteram partem. Though the source of power to take an administrative decision is one and the same all the situations calling for the exercise of that power may not be alike in that in one situation there might be grounds to hold that the rule cannot be invoked and in another there might be grounds to hold that it cannot be excluded. Therefore it appears to me that there is no compelling reason to treat all orders made under S. 10(1) of the Act alike, for the purpose of application of the rule of natural justice. As pointed out by me in the second category of cases, i.e., in the case of references made under S. 10(1) itself on consideration of records of conciliation proceedings and the report as required under first part of S. 12(5) of the Act the requirement to comply with the rule of natural justice is inbuilt in the statutory provision. The third category of cases, are those in which, after consideration of conciliation report made in conformity with such a procedure, the Government was satisfied that there was no case for reference and accordingly refused to refer a dispute for adjudication for reasons recorded as required under latter part of S. 12(5) of the Act, but the Government, some time later, decides to refer the same dispute, the effect of which would be the setting aside of the earlier order communicated to the parties.

21. Learned counsel for the employers submitted that if the validity of an order made under S. 12(5) of the Act refusing to refer a dispute raised by a workman were to be challenged by them before this Court in a Petition under Art. 226 of the Constitution, the management would be a necessary party to such a Petition, as according to the ratio of the decision of the Supreme Court in Udit Narayan Singh v. Board of Revenue : AIR1963SC786 not only the authority which made the order but also the person in whose favour the order impugned was made are necessary parties. That being the position, learned counsel submitted that the Government cannot, without hearing the management, make an order of reference which would tantamount to the setting aside of the earlier order refusing to make reference, particularly in those cases in which such orders are made on the representation of workman, as it happens to be the position in these cases also.

22. On a careful consideration of the rival points of views, I am inclined to agree that the cases in which the procedure prescribed under S. 12 had been gone through and culminated in a considered order of refusal to make reference, stand entirely on a different footing than the first category of cases in which (i) an order is made under S. 10(1) of the Act without waiting for or otherwise than on the culmination of, conciliation proceedings, or (ii) when a dispute is apprehended, or (iii) on grounds specified in sub-s. (5) of S. 10 of the Act, and that it stands to reason to hold that if the order made and communicated under S. 12(5) of the Act is sought to be set at naught by a subsequent order made under S. 10(1) of the Act, the management should be heard, unless there are compelling circumstances in a given case not to do so.

22A. It is pertinent to note that in the nature of things conciliation proceedings would have occupied some time. There would be further time lag until the Government communicated its decision refusing to make reference under latter part of S. 12(5) of the Act. Again after further lapse of time, the Government would be changing its mind and making an order under S. 10(1) of the Act. Thus in a case of this type, when a matter has gone on for days and months, there would be no justification to exclude the applicability of the principle of natural justice on the ground that it would result in delay. No other good reason which could form the basis to exclude the principle of natural justice can be said to exist in such a case and the learned Counsel for the workmen were also unable to give any good reason for excluding the principles of natural justice in such cases. It is also necessary to note, that in a case of this type apart from the civil consequences flowing from Ss. 31 and 33 of the Act, there would also be certain other civil consequences. For instance, after the receipt of an endorsement declining to make the reference the management would certainly proceed to make such adjustment in matters of employment including condition of service. If after a lapse of time, which may be several months or years, the same dispute were to be referred, that might result in additional civil consequences such as those pointed out in Para. 23 of the judgment of this Court in the case of I.T.I. which reads :

'On the refusal of the Government to make a reference, the petitioner was entitled to legitimately expect that the dispute raised by respondent Nos. 2 to 15 had terminated and make its own arrangements to fill up the vacant posts which according to the petitioner, has also been done on the various dates mentioned in the affidavit dated 6th February, 1978 of Shri H. R. Alva, Personnel Manager of the Petitioner-Company. Apart from the fact that there has been no denial of the assertion of Shri H. R. Alva, we have no reason to disbelieve what has been stated by Shri H. R. Alva in his affidavit. In these circumstances, no argument is necessary to accept the plea of the petitioner that its legitimate expectation to act and hold to the earlier order of Government has been affected by the impugned order of the Government. Secondly, by reason of the reference, the petitioner is exposed to defending the proceedings before the Labour Court and other Courts which necessarily involves time and money. Lastly, on a reference under S. 10(1) of the Act, the Petitioner is exposed to various constraints and proceedings before the Criminal Courts also. On these facts, an order of reference made by the Government after having once rejected to make a reference, will undoubtedly have 'civil consequences' on the Petitioner. In our opinion, the views expressed by Venkataramaiah, J, in Kirloskar Coy's case [1974 II L.L.J. 537] that an order of reference will not have, 'civil consequences' is not in accord with the views expressed by our Supreme Court in Mohinder Singh Gill's case (supra) and has therefore to be held as not sound and correct. Even otherwise, with respect we find it difficult to agree with the views expressed by Venkataramaiah, J. in Kirloskar Company's case (supra), that an order of reference made by the Government after having once refused to make a reference will not have 'civil consequences'. We are also of the view that the acceptance of the contention of the respondents that in making a reference, Government has not decided anything but has only indicated a forum would amount to really begging the question and is unsound.'

23. Apart from the civil consequences which ensue under the provisions of the Act, there might be other civil consequences which in certain cases might threaten the very existence of the industry. For instance, a dispute regarding bonus under the Payment of Bonus Act is an industrial dispute. That dispute can be adjudicated only after a reference by the appropriate Government (See : S. 22 of the Payment of Bonus Act). Qualification of bonus under the Act is regulated by the relevant provisions of the Act and the scheduled thereunder. Suppose in respect of an year the Government declines to make the reference of a dispute in the matter of quantification raised by the workmen for that particular year, the management would proceed to adjust its financial affairs on that basis. It after several years, the Government were to decided to make a reference of the same dispute it might bring about serious repercussions on the finances and the working of the management's business. Thus the nature of civil consequences will vary from case to case depending on the type of dispute that is referred for adjudication. These consequences will be more telling on the affairs of the management in disputes involving financial implications which arise out of collective bargaining with the workmen.

24. For all these reasons, in the third category of cases, I do not find any justification to exclude the rule of audi alteram partem.

25. The importance and purpose of complying with the rule of natural justice was stressed by the Supreme Court in the case of S. L. Kapoor (supra), thus :-

'The matter has also been treated as an application of the general principle that justice should not only be done but should be seen to be done. Jackson's Natural Justice (1980 Edn.) contains a very interesting discussion of the subject. He says :

'The distinction between justice being done and being seen to be done has been emphasised in many cases.

* * * *'The requirement that Justice should be seen to be done may be regarded as a general principle which in some cases can be satisfied only by the observance of the rules of natural justice or as itself forming one of those rules.'

* * * * ... In R. V. Thames Magistrates' Court ex. p. Polemis, (1974) I WLR 1371, the applicant obtained an order of certiorari to quash his conviction by a stipendiary magistrate on the ground that the had not had sufficient time to prepare his defence. The Divisional court rejected the argument that, in its discretion, it ought to refuse relief because the applicant had no defence to the charge.

'It is again absolutely basic to our system that justice must not only be done but must manifestly be seen to be done. If Justice was so clearly not seen to be done, as on the afternoon in question here, it seems to me that it is no answer to the applicant to say : 'Well even if the case had been properly conducted the result would have been the same'. That is mixing up doing justice with seeing that justice is done (per Lord Widgery C.J. at p. 1375).'

In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of nature justice is unnecessary. It will comes from a person who has denied justice that the person who has been denied justice is not prejudiced. As we said earlier where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the Court may not issue its writ to compel the observance of natural justice, nor because it is not necessary to observe natural justice but because Courts do not issue futile writs. We do not agree with the contrary view taken by the Delhi High Court in the Judgment under appeal.'

Let me apply the above principle to a case of this type. It may be that even after giving an opportunity the Government finds justification to refer the dispute though it had refused to do so earlier. The circumstances that on an earlier occasion the Government was not satisfied that the dispute was worth a reference and had rendered reasons in support of its decision and communicated it to the party and in reversal of that decision the Government was referring the dispute without prior intimation and hearing of that party is likely to convey an impression to that party that it was not being dealt with fairly by the Government. In other words, such an action would be contrary to the principle 'that justice must be seen to have been done and that there should be fair play in action.

26. In the case of L.T.I. (supra), the Division Bench of this Court applying the ratio of the judgment in Mohinder Singh Gill's case (supra), held that on the facts and circumstances of that case, an order of the Government referring a dispute which had been refused to be referred by an earlier order of the State Government at the instance of workmen without hearing the management was held to be bad for non-compliance with the rule of natural justice. In that case the Division Bench had also considered the ratio of the decision of the Supreme Court in Wimco's case (supra), as to the scope of S. 10(1) of the Act which is reiterated in Avon's case (supra). Therefore I find it difficult to agree that there is anything in Avon's case (supra), which is inconsistent with the view taken in L.T.I's case (supra), as the applicability of rules of natural justice for the making of an order of reference where there was an earlier refusal, was neither raised nor decided in Avon's case (supra).

27. Learned counsel for the workmen pointed out that some of the grounds such as legitimate expectation of the management that the dispute has come to an end and on that basis it would have proceeded to make appointments in the vacancies of removed workmen, in cases where the dispute relates to termination of service, were all urged in Avon's case (supra) and were rejected and therefore to that extent the reasoning of the Division Bench Judgment no longer prevails. The submission of the learned counsel would have been unexceptionable if those grounds were urged and rejected in the context of the requirement to observe the rule of natural justice. From the judgment it is clear that those grounds were urged in support of a plea that the Government lacked power to make a reference under S. 10(1) if there was an earlier refusal and that the utter lack of substance in that plea was strongly reiterated. It is not the same thing to say that those circumstances are not relevant to the consideration of the plea that rule of natural justice should be observed before making a reference of a dispute in respect of which there had been an earlier communication under latter part of S. 12(5) of the Act.

28. The Full Bench of the Madras High Court also in the case of G. Muthukrishnan v. Administrative Manager [1980-I L.L.J. 215 at 221] after considering the decision of the Supreme Court in Avon's case (supra), has held that the rule of hearing a party before making an administrative order having civil consequence to that party, is applicable to an order of reference made under S. 10(1) if there was an earlier communication refusing to refer the same dispute. In para 11 of the Judgment, the Full Bench observed that they were unable to agree that the statement of the law in the Avon's case (supra) excluded the applicability of natural justice to a case of this type. The Calcutta High Court also in American Express International Banking Corporation v. Union of India [1979-II L.L.J. 22] has taken a similar view.

29. The learned counsel appearing for workmen relied on the Judgment of the Allahabad High Court in Indian Explosive Ltd. v. State of U. P. [1981-II L.L.J. 159] and of the Kerala High Court in Abdul Rahiman Haji v. Abdul Rahiman 1982(2) Lab. & IC 910, in which a contrary view is taken.

30. For the reasons which I have set out earlier, I respectfully agree with the view taken by the division Bench of this Court in the case of I.T.I. (supra) and the view taken by the Full Bench of the Madras High Court and the Calcutta High Court (supra) and I respectfully disagree with the view taken by the Allahabad and Kerala High Court [1981-II L.L.J. 159] and 1982(2) LIC 910.

31. In the result, my answer to the question referred for our opinion is as follows :

The principle of audi alteram partem is applicable to a case in which the Government having declined to make a reference of dispute for industrial adjudication under S. 10(1) of the Act recording and communicating such decision in accordance with the latter part of S. 12(5) of the Act, proposes to refer the same dispute for adjudication sub sequently except when -

(a) the reference becomes necessary under circumstances set out in S. 10(5) of the Act, or

(b) the Government finds that there are exceptional circumstances in which any delay in making the reference is fraught with serious consequences to industrial peace and, therefore, affording of an opportunity to the party concerned is inexpedient.

Venkatachaliah, J.

1. I have had the benefit of going through in draft the very readable opinion of my learned brother Rama Jois, J. The question referred for opinion is :

'Whether the principle of audi alteram partem is applicable, when the Government having declined to make a reference of an Industrial Dispute under S. 10(1) of the Industrial Disputes Act, for adjudication, proposes to refer such a dispute for adjudication at a subsequent stage.'

The circumstances leading up to and the occasion for the reference to the Full Bench are set-out in the opinion of Rama Jois, J. and it is not necessary to traverse them over again.

There appears a wide divergence of Judicial opinion on this question amongst the pronouncements of several High Courts. Some Courts have taken the view that rule of audi alteram partem is attracted' others hold that it is not. Yet another view is that it is attracted if the later reference is at the instance of one of the parties and not if it is made suo motu. A Division Bench of this Court in Indian Telephone Industrial Ltd. v. State of Karnataka (supra) has held that an opportunity of being heard is imperative in a case of this nature. The Referring Bench is of the view that the decision in Indian Telephone Industry's case (supra) requires reconsideration in the light of the pronouncement of the Supreme Court in M/s. Avon Services Production Agencies (P) Ltd., v. Industrial Tribunal, Haryana (supra). Rama Jois, J. is of the view that the Indian Telephone Industry's case (supra) lays down the law correctly and has, accordingly, proceeded to answer the question in the affirmative and has held that except under circumstances set out in S. 10(5) and except where any delay in making a reference is fraught with serious threat to industrial peace rendering the affording of opportunity of hearing inexpedient, a reference under S. 10(1) would be vitiated in the absence of an opportunity to be heard.

2. The apriority reasoning and assumptions supporting the case for a hearing in this administrative process is that, the appropriate Government, at that stage, decides something affecting the right of parties; that from that administrative act certain 'civil consequence' affecting the parties emanate, and that, unless some exclusionary principle could be appealed to, the rule of 'audi alteram partem' stands attracted. The contemplation of situations in the exercise of power under S. 10(1) where the rule could be said to be 'inbuilt' in the statute; when, in view of the imperatives of maintenance of industrial peace and averting of industrial unrest, an exclusionary principle operates an excludes hearings; and when such hearing is a supplement of natural justice to the statute are all merely different applications of the above reasoning and are its corollaries. In this approach, the basic premise remains that, - exceptional situations attracting the exclusionary rule apart - any exercise of power under S. 10(1) on the part of the appropriate Government which, though administrative, has certain civil consequences and affects the parties. This line of reasoning, as in hearing in its logic, makes no distinction between the exercise of power for the first time or when Government, having declined to make a reference on an earlier occasion, proposes to exercise that power at a subsequent stage. Consistently with this premise, even in the case of a reference made on the first occasion, the requirement of hearing, should be held to have been attracted, though, however, the requirement must be held to have been satisfied wherever there has been antecedent proceedings of conciliation.

3. These positions, in my opinion, bear re-examination from an altogether different point of view though, however, the force of the learned opinion of my Brother makes me unsure of my preferences and such conclusion as I reach, I must say, I do with some hesitation.

4. The supplement of natural justice, even to administrative decision-making as an aid for arriving at just decisions and for preventing miscarriage of justice is now an accepted concept. To attract the rules of natural justice it is enough if the decision, administrative though it be, has civil consequences and affects rights, interests/or even 'legitimate expectations.' It is not necessary to show further that the authority was also under a super added duty to act judicially.

An unjust decision in an administrative enquiry may have a more far-reaching effect than a decision in a quasi-judicial enquiry. Natural justice is reckoned as 'a great humanising principle intended to invest law with fairness to secure justice' and to-day, it pervades large areas of administrative action. Its great role is to 'make fairness a creed of life'. Natural justice is, indeed, 'fairness in action, and has many colours and shades, many forms and shapes'. It is the very 'bone of healthy Government' and 'prevents discretionary executive action from degenerating into unilateral injustice.' The role of 'Natural Justice' in its application to a wide variety of administrative situations has been considered in several pronouncements of the Supreme Court in Kraipak's case (supra) and Maneka Gandhi's case (supra), Mohinder Singh Gill's case (supra), Kapur's case (supra) and Swadeshi Mills Case : [1981]2SCR533 . The principles are clear; but aspects of their situational-modifications in relation to application to a given fact-situation are by no means easy. Indeed, Tucker L.J. in Russel v. Duke of Norfolk, (1949) 1 All E.R. 109, 118 said :-

'There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.'

In Kraipak's case (supra), Supreme Court said :-

'20. .. Whenever a complaint is made before a court that some principle of natural justice had been contravened, the Court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case.'

5. Though it is said, as a matter of law, that rules of natural justice are not excluded in administrative enquiries, it is equally clear that all administrative decisions do not attract them. The decision must affect the rights of parties and that civil consequences must flow from the administrative action. A civil right being adversely affected is a sinequa non for the invocation of the audi alteram partem rule.

In Maneka Gandhi's case (supra), it was observed :

'32. It is well established that even where there is no specific provision in a statute or rules made thereunder for showing cause against action proposed to be taken against an individual, which affects the rights of that individual, the duty to give reasonable opportunity to be heard will be implied from the nature of the function to be performed by the authority which had the power to take punitive or damaging action.'

'59. ... Sometimes an unjust decision is an administrative inquiry may have far more serious consequences than a decision in a quasi-judicial inquiry and hence the rules of natural justice must apply equally in an administrative inquiry which entails civil consequences ...'

'61. ... The law must, therefore, now be taken to be well settled that even in an administrative proceeding, which involves civil consequences, the doctrine of natural justice must be held to be applicable.'

6. As to what in this context are 'civil consequences' Supreme Court in Gill's cause (supra) said :

'65. .. But what is civil consequence, let us ask ourselves, by-passing verbal booby-traps 'Civil consequences' undoubtedly cover infraction of not merely property or personal rights but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation, everything that affects a citizen in his civil life inflicts a civil consequence'.

7. What, then, could the appropriate Government be said to do when it makes a reference under S. 10(1) Does it decide any question affecting the rights of parties Do civil consequences flow from the decision so as to call in this rule of natural justice to supplement the statute which does not by itself provide for a hearing

In State of Madras v. C. P. Sarathy [1953-L.L.J. 174], Supreme Court examining the Circumstances under which a reference under S. 10(1) could be made and the nature of the power that Government exercises in that behalf held that it was an administrative function of Government and a reference could be made wherever an industrial dispute existed or was apprehended.

The considerations that become germane in the performance of this administrative function are the considerations of experience guided by the necessity and urgency of maintaining industrial peace and of averting industrial unrest. Government does not decide any dispute affecting the rights of parties, though, however, it is not precluded from examining the matter prima facie in the limited background of the need to maintain a proper industrial climate. The roles of the pluralist welfare-state, include that of an industrial-manager and dispenser of social security. The executive forms an opinion whether an industrial dispute exists or is apprehended and on a consideration of the compulsions of the situation directs that that dispute be referred to and resolved by a judicial tribunal. The consideration is the primordial necessity to maintain industrial peace, lest the dispute be dragged into and fought out on the streets. Industrial adjudications are qualitatively and from the point of view of the range of their impact are not to be classed among ordinary litigations inter-parties. They are a class sui-generis.

On the nature of this power Supreme Court, in Avon's case (supra) said :

'... Section 10(1) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended ...'

'... The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference is an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character ...'

'... The adequacy of sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny.'

'... but if the dispute was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon ...'

On the question of what the appropriate Government, in referring a dispute, 'decides', the Supreme Court in Bombay Union of Journalists v. State of Bombay [1964-I L.L.J. 351] at 354 observed thus :

'(6) ... It is true that if the dispute in question raises questions of law, the appropriate Government should not purport to reach a final decision 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. But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to whether its power to make a reference should be exercised under S. 10(1) read with S. 12(5), or not. If the claim made is patently frivolous or is clearly belated, the appropriate Govt. may refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not..'

In Kirloskar Electric Company Limited v. Workmen of Kirloskar Electric Company Limited [1974-II L.L.J. 537 at 541], Venkataramiah, J. (as His Lordship then was) said :

'It should also be borne in mind that any decision taken by the State Government under S. 10 of the Act does not lead to any finality in so far as the dispute between the parties is concerned. The dispute is normally heard by Court or Tribunal presided over by Judges with judicial experience. In that situation, it cannot be said that the management would suffer any kind of prejudice if the State Government proceeds to make a reference under S. 10(1) of the Act, without hearing the parties although it has, on an earlier occasion, declined to do so ...'

8. What emerges from the foregoing is that, all that Government in making a reference could be said to do on the merits of the dispute is to examine the matter prima facie. Indeed, it is put negatively. A prima facie examination of the merits cannot be said to be foreign to the enquiry which the appropriate Government is entitled to make in dealing with a dispute under S. 10(1) of the Act.

If the administrative act addresses itself to and merely ascertains a prima facie position and such an act is merely a precursor to a full-fledged proceeding at which full opportunity is available for the parties to present their respective cases, the antecedent administrative act cannot be held to be vitiated by reason alone of want of an opportunity - not expressly secured by the statute - of being heard at that stage. The following observations of the Supreme Court in Swadeshi Mills case (supra) are, indeed, instructive :

'42. Conversely, if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude ...'

The right to be heard, where the statute does not itself impose that obligation, is thus, dependant upon civil consequences flowing from the administrative decision in question and upon no full review or appeal on merits against that decision being available to the affected party In the present case no civil consequences, let alone of a grave nature, can at all be said to flow from the decision to refer a dispute for adjudication, and, at all events, both parties have the fullest opportunity of contesting the matter on merits in the Labour Court or Tribunal. I shall advert to the effect of Ss. 31 and 33 later. The silence of the statute on a right to be heard at that stage can only be reconciled with the avowed policy of the statute. Can 'audi alteram partem' still be imported by Courts into this situation

9. Even where an administrative decision is not without an adverse effect on the rights of the parties, the circumstance that the decision is not a final determination but is merely an ascertainment of the prima facie position will be relevant and will have a bearing on the right to be heard at that stage in the absence of an express grant by the statute. Paul Jackson, in Natural Justice (Pages 112 and 113) observes :

'... It was seen that any body making a decision affecting party's right or legitimate expectations must observe the rules of natural justice. Conversely a decision which does not affect rights, because for example, it is a prelude to taking further proceedings in the course of which the party concerned will have an opportunity to be heard, will, very likely, not itself be subject to the requirements of natural justice, or only in a modification form. A fortiori, the decision by, for example, the responsible Minister or official to initiate the procedure necessary to reach a preliminary conclusion or to examine the existence of a prima facie case can be taken without first giving the person affected a hearing ...'

In Pearlberg v. Varty 1972 (2) All. E.R. 6, the question before the House of Lords was indentified thus :

'The point, and the only point, at issue in the appeal is whether the taxpayer has a right of audience before, or a right to make written representations to, the single commissioner before he gives leave under S. 6(1) of the Income Tax Management Act 1964 to raise back assessments on an application of the inspector or other officer of the Board of Inland Revenue made under that Section. The tax payer argues in favour of such a right on the basis of natural justice, or, as it was called by Bylas, J. in Cooper v. Wandsworth Board of works (1863) 14 CBNS 180 at 194, 'the justice of the Common Law'.'

The Answer, it was held, must needs be influenced by a number of factors, none of them individually though conclusive, the totality cumulatively is decisive. One of the factors contributing to a negative answer was that there was no final determination at that stage and that the taxpayer in that case would be given a reasonable opportunity of presenting his case at the proper time, if not at the stage he demanded it and that the proceedings had not yet reached the point of judicial determination. The Lord Chancellor observed :

'Despite the majestic conception of natural justice on which it was argued. I do not believe that this case involves any important legal principle at all ...'

'The third factor which affects my mind is the consideration that the decision, once made, does not make any final determination of the rights of the taxpayer. It simply enables the inspector to raise an assessment, by satisfying the commissioner that there are reasonable grounds for suspecting loss of tax resulting from neglect, fraud, or wilful default, that is, that there is a prima facie probability that there has been neglect etc., and that the Crown may have lost by it ...'

It is no doubt true that the fact that a decision is only whether a 'prima facie' case has or has not been made out is not by itself determinative of the exclusive of hearing but the consideration that the decision was purely an administrative one and full-fledged enquiry follows is a relevant - and indeed a significant - factor in deciding whether at that stage there ought to be hearing which the statute did not expressly grant.

But the position in case on hand appears to me to be a fortiori. It Government cannot be said to have decided any matter except the ascertainment of a prima facie case and a full enquiry follows in the Court or the Tribunal pursuant to the reference, it is difficult to say that at that stage rules of natural justice superimpose an obligation to hear which the statute did not expressly recognise. The question is not whether audi alteram partem is implicit : but whether the occasion for its attraction exists at all.

In Regina v. Barnet and Camden Rent Tribunal, Exparte Prey investments Ltd., 1972(2) Q.B. 342 question that arose was as to the nature of the decision that a local authority can be said to have made in referring tenancy agreements to a rent tribunal under S. 72(1) of the Rent Act, 1978. The lessor or lessee or a local authority could refer contracts of tenancy to the rent tribunal of the district. The local authority took a decision to refer the matter to the rent tribunal so that the rent tribunal may consider whether or not the rent is too high. It was held that in such a case the substantive decision whether or not to reduce the rents would be made by the rent tribunal after a hearing of the contentions on either side and was not made by the local authority. A Division Bench of the Allahabad High Court in Indian Explosive Ltd. (Fertiliser Division) Panki, Kanpur v. State of Uttar Pradesh and Others (supra) referred to this case and two other cases viz, Norwest Holst Ltd. v. Secretary of State for Trade 1978(1) Ch. Div. 202 and Asher v. Secretary of State for the Enforcement (unreported decision) said :

'10. Thus, it has been recognised by Judges of undoubted eminence that a decision on substantive rights of parties is one thing and a mere decision that another body investigate and decide on those substantive rights is quite another, and the principle of hearing is not applicable to the latter class of cases.'

I am, of course, aware of the criticism this view invites. It is said that in saying that the decision, at that stage, has no civil consequences, we ignore the restrictions on the rights of employer enjoined by S. 33 of the 'Act' and the penalties and sanctions envisaged in S. 31.

In Tata Iron and Steel Co. v. Modak : (1965)IILLJ128SC , Supreme Court referred to the bar imposed by S. 33 on the employer exercising his common-law, statutory or contractual rights to terminate the services of his employees. The pendency of an industrial dispute is a condition precedent for the invoking of S. 33(1) and (2). It is urged that these are the civil consequences stemming from an administrative decision to refer a dispute for adjudication. That there are corresponding or even stricter obligations and restrictions on the workmen is a different aspect. All the same, can it be predicated that the consequences envisaged in S. 33 and the sanctions in S. 31 are the civil consequences of an order of reference These restrictions in my opinion are statutory incidents and necessary concomitants of the adjudication itself and do not, in my opinion, admit of being called civil consequences of the order of reference itself. They are the statutory conditions attendant on the adjudication itself and not 'civil consequence' flowing from the order of reference. They are merely what may be called 'side effects'.

On this point, in Kirloskar Electric Company's case (supra) Venkataramaiah, J. said at p. 541 :

'6. .. It is also seen from the provisions of Ss. 33 and 33A of the Act to which reference was made by the learned counsel for the petitioner, that those sections do not in any take away any existing right of the management. Those sections only require the management to submit its action to the scrutiny of the Court either in the form of an application for permission to take disciplinary action against a workman or in the form of an application for approval to an action taken against a workman ... I do not think that the presence of Ss. 33 and 33A in the Act would attract the enunciation made by the Supreme Court in Kraipak's case ...'

10. In this view of the matter, I find myself unable to subscribe to the view that even if a reference is made on the first occasion, the right to be heard is a requirement for a just decision and an imperative of natural justice.

The administrative decision to refer, in my view, is not vitiated if there is no hearing at that stage. No right or interest or a legitimate expectation of a party is affected. At the worst, it may result in a 'personal disappointment' at an unwelcome decision.

11. I may now turn, first, to the power of the appropriate Government to make a reference at a subsequent stage, when earlier it had declined to make a reference and, secondly, whether the right of hearing requires to be treated as a part of the procedure in that behalf and essential for the validity of the decision.

On the first aspect, whether a reference could be made after it had been refused earlier, the law is settled that Government, undoubtedly, has that power. In Avon's case (supra), it was held :

'... The expression 'at any time' in S. 10(1) will clearly negative the contention that once the Government declines to make a reference under S. 10(1) in respect of the same dispute gets exhausted. Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process ...'

As to what are the requisite conditions for exercise of that power by Government at a subsequent stage, after having earlier declined to make a reference, and whether, to support a reference at a later stage it requires to be shown that there was some fresh or additional material brought to its notice, the pronouncement in Avon's case (supra), is also conclusive :

'The Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer. Nor is it necessary that the Government must have some fresh material made available to it subsequent to its refusal to make a reference, for the formation of a fresh opinion, for making the reference.'

* * * *'... The only requirement for taking action under S. 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended ...'

12. The question is whether at the later stage at least there is a right to be heard. The reasoning of the Division Bench in Indian Telephone Industry's case (supra), proceeds on the basis that once Government declines to refer a dispute, the employer could legitimately expect to arrange his affairs accordingly and it would be unfair to upset his apple-cart by a later unilateral decision to refer the dispute without an opportunity to the affected party of being heard.

The civil consequences, according to the Division Bench that flow from subsequent reference after an earlier refusal are :

'(i) On the refusal of the Government to make a reference, the employer is entitled to legitimately expect that the dispute raised by the workman had terminated and make its own arrangements to fill up the vacant posts. A subsequent unilateral reference without hearing adversely affects the interests or legitimate expectation of the employer;

(ii) By reason of the reference the employer is exposed to defending the proceedings before the Labour Court and other Courts which necessarily involve money;

(iii) And lastly, on a reference under S. 10(1) of the Act, the petitioner is exposed to various constraints and proceedings before the Criminal Courts also.'

After enumerating these circumstances the Division Bench observed :

'... In the light of the principles enunciated by the Supreme Court in Kraipak's case (supra) and Mohinder Singh Gill's case (supra), we hold that the Government before deciding to make a reference on the facts and circumstances of the case, was bound to provide an opportunity of hearing to the petitioner either by filing written representations or by providing an opportunity of oral hearing and by its failure to provide such an opportunity has committed a manifest illegality apparent on the face of the record resulting in substantial failure of justice to the petitioner.'

13. I have dealt with the third enunciation earlier. So far as the first two points referred to by the Division Bench as instances of 'Civil consequences' flowing from the order of reference are concerned, the reasoning, if I may say to with utmost respect, is hardly tenable in the light of the observations of the Supreme Court in Avon's case (supra). Supreme Court noticed the argument thus :

'... It was said that once an industrial dispute is raised and the Government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such a dispute would no more be in existence between the employee and the concerned employer and that the Government cannot spring a surprise by subsequent unilaterally making the reference without any fresh or additional material being brought to its notice ...'

Observations in the Judgment would show that this contention did not find favour with the Supreme Court.

Considering this argument, Supreme Court observed :

'A refusal of the appropriate Government to make a reference is not indicative of an exercise of power under S. 10(1), the exercise of the power would be a positive act of making a reference ...'

Supreme Court proceeded to observe :

'... Merely because the Government rejects a request for a reference or declines to make a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a review of any judicial or quasi-judicial order or determination. The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference, the appropriate Government does not lack power to do so under S. 10(1), nor is it precluded from making the reference on the only ground that on an earlier occasion it has declined to make the reference ...'

It is no doubt true that there is no express reference in Avon's case (supra) as to whether the requirement of a hearing is attracted or not and in that sense that case is not a binding decision on that point. But to assert that a hearing is imperative would entail the ignoring - and not giving due weight to - certain basic positions as to the nature of the power; the conditions for its exercise and as to what an order of reference can be said to decide, clarified in Avon's case (supra). To seek to be wiser than the law is the very thing by good laws forbidden. Any view as to the right of hearing at that stage of the administrative decision which merely directs that the dispute be looked into and decided 'judicially' must rest on whether anything is at all decided affecting the rights of parties at that stage and not by appeal to emotive appellations. Possibilities of abuse of the power or arbitrary or malafide exercise of that power should not colour the issue. If infirmities are imparted by those vitiating factors, parties have, undoubtedly other remedies.

It is true that even in cases of purely discretionary administrative decisions a fair hearing might make a difference even on aspects which are otherwise unarguable. Professor Wade says in Administrative Law (4th Edn., Page 455) :

'... In the case of a discretionary administrative decision, such as the dismissal of a teacher or the expulsion of a student, hearing his case will often soften the heart of the authority and alter their decision, even though it is clear from the out-set that punitive action would be justified.'

But such are not the considerations in the case under S. 10(1).

14. Learned counsel for the employers contended that it is not correct to subscribe to the view that when Government declines to make a reference it does not exercise any power under S. 10(1) at all, as such a view, it was urged, would ignore the provisions of S. 12(5) of the Act. It was said that it was an exercise of power all the same; but in a negative way. Decisions of the supreme Court in State of Bombay v. K. P. Krishnan [1960-II L.L.J. 592 at 598] Prem Kakar v. State of Haryana : [1976]3SCR1010 were referred to in support of the contention that even where the appropriate government does not make a reference, it was required to record and communicate to the parties concerned its reasons therefor. In particular, attention was invited to the following passage in K. P. Krishnan's case (supra) :

'... If it is satisfied that a case for reference has not been made out it may not make such a reference; but in such a case it shall record and communicate to the parties concerned its reasons for not making the reference which in the context means its reasons for not being satisfied that there is a case for reference.'

There were also similar observations in Prem Kakar's case (supra). This contention, if accepted, would lead to the position that the procedural requirement of S. 12(5) would determine and control the nature of the power under S. 10(1) itself. This may not be sound or permissible approach.

In Western India Watch Co. Ltd. v. Western India Watch Company Workers' Union : (1970)IILLJ256SC , Supreme Court observed :

'9. .... In fact, when the Government refuses to make a reference it does not exercise its powers; on the other hand it refuses to exercise its power and it is only when it decides to refer that it exercises its power. Consequently, the power to refer cannot be said to have been exhausted when it has declined to make a reference at an earlier stage. There is thus a considerable body of judicial opinion according to which so long as an industrial dispute exists or is apprehended and the Government is of the opinion that it is so, the fact that it had earlier refused to exercise its powers does not preclude it from exercising it at a later state. In this view, the mere fact that there has been a lapse of time or that a party to the dispute was, by the earlier refusal led to believe that there would be no reference and acts upon such belief, does not affect the jurisdiction of the Government to make the reference.'

Therefore, requirements of stating of reasons for non-exercise of the power and communications thereof to the parties cannot determine the nature of the power under S. 10(1).

15. With great respect I am unable, - in view of Avon's decision (supra), - to subscribe to the view that the Indian Telephone Industry's case (supra), lays down the law correctly. The view of Rama Jois, J., which envisages exclusionary rule in cases fraught with serious and immediate threat to industrial peace, in my opinion, introduces new dimensions to the procedure bringing into the situation many imponderables. What is or is not a case fraught with serious threat to industrial peace are matters of mere degree - and not of kind - and are all put into the scales when the appropriate Government, in its discretion, forms an opinion as to power and the effects of its exercise do not attract any hearing either pre-decisional or post-decisional, which latter, indeed, is ruled out in view of irrevocability of the consequences of the decision to refer. The Kerla High Court in Abdul Rehiman Haji v. Abdul Rahiman 1980 (2) Lab. I.C. 910, Andhra Pradesh High Court in Sri Krishna Jute Mills v. Government of Andhra Pradesh [1977-II L.L.J. 363], the Allahabad High Court in Indian Explosive Ltd's case (supra), the Travancore-Cochin High Court in Nagalinga Nadar Sons v. A.T.H.L.C.W.U. A.I.R. 1951 Travancore-Cochin 203, have all taken the view that the reference is not vitiated by the absence of a hearing at that stage.

With respect I am unable to agree with the Full-Bench view of the Madras High Court in G. Muthu Krishna v. Administrative Manager, New Horizon Sugar Mills (P.) Ltd., Pondicherry [1980-I L.L.J. 215] and of the Calcutta High Court in American Express International Banking Corporation v. Union of India [1979-II L.L.J. 22]. Indeed, in its earlier decision in B. N. Elias & Co. (P.) Ltd. v. G. P. Mukherjee : AIR1959Cal339 , the Calcutta High Court had taken a different view. In Muthukrishanan's case (supra), the Madras High Court held that if the reference made later after it was refused earlier is at the instance of one of the parties then the obligation to hear the opposite party would arise and if the reference is suo-motu, no such obligation to hear would arise. With great respect, if the supplement of natural justice is invoked on the basis that the decision has civil consequences, the question whether the reference made later was at the instance of one of the parties or was in exercise of the power of Government suo-motu, becomes hardly determinative.

With great respect, I find myself unable to concur in the conclusion proposed by learned Brother Rama Jois, J. I would answer the question referred to the Full Bench in the negative. Question answered accordingly.

Bopanna, J.

1. I have had the benefit of reading in draft the opinions of my learned Brothers Venkatachaliah, J. and Rama Jois, J. and in view of the disagreement between my learned Brothers, a third opinion has become necessary for indicating the reasons for agreeing with Rama Jois, J. and disagreeing with Venkatachaliah, J.

2. There is no material difference in the views of my learned brothers on the application of the rule of audi alteram partem to administrative decisions. Indeed Venkatachaliah, J. in Para of his opinion has opined that :

'To attract the rules of natural justice it is enough if the decision, administrative though it be, has civil consequences and affects rights, interests or even legitimate expectations. It is not necessary to show further that the authority was under a super added duty to act judicially also.'

Having observed thus, according to me, the learned Judge has differed from Rama Jois, J. on the following grounds :

a) That no civil consequences follow from an order of reference under S. 10(1) of the Industrial Disputes Act, 1947 (for short the Act);

b) The consequences envisaged in S. 33 and the sanctions in S. 31 are not civil consequences as they are statutory incidents and necessary concomitants of the adjudication itself and do not admit of being called civil consequences of the order of reference;

c) In the light of the observations of the Supreme Court in Avon [1979-I L.L.J. 1], the two civil consequences propounded by the Division Bench in ITI [1978-I L.L.J. 544] are hardly tenable (though there is no specific reference to the requirement of hearing in Avon (supra).

d) If due weight is given to the enunciation of law in Avon (supra) by the Supreme Court as to the nature of power, the conditions for its exercise and as to what an order of reference can be said to decide, the decision of this Court in ITI case (supra), is inconsistent with that of the Supreme Court;

e) To distinguish Avon (supra) on the ground that the requirement of hearing was not considered would be essaying, to quote the words of the learned Judge 'to be wiser than the law is the very thing by good laws forbidden';

f) Any view as to the right of hearing at that stage of the administrative decision which merely directs that the dispute be looked into and decided 'judicially' must rest on whether anything is at all decided affecting the rights of parties at that stage and not by appeal to emotive appellations;

g) Possibilities of abuse of the power or arbitrary or mala fide exercise of that power should not colour the issue. If infirmities are imparted by those vitiating factors, parties have, undoubtedly, other remedies;

h) The procedural requirements of S. 12(5) of the Act would not determine and control the nature of the power under S. 10(1).

3. A principle of administrative law of far-reaching consequences in the field of Industrial Relations Law arises for consideration. The language of S. 10(1) is simple and unambiguous. But its meaning becomes a little obscure when faced with practical application to disputes that are sought to be investigated and settled under the Act. R. M. Eggbeston who had made a mark for so many years both as a Barrister and as a Judge in industrial matters in Australia in a forward to book on 'Judges in Industry' said :

'The Australian system of conciliation and arbitration has had to contend with formidable constitutional obstacles, of such complexity that they are intelligible only to a lawyer who has made a special study of the voluminous case law to be found in the Commonwealth Law Reports.'

This observation is opposite to the case before us even though a simple principle of administrative law arises, as is evident from the plethora of confirming decisions of many a High Court referred to by my learned Brothers in their respective opinions and the disagreement between themselves.

4. The relevant facts and provisions of the Act bearing on the question referred to the Full Bench have been set out in detail and explained by Rama Jois, J. in his opinion and any reference to them herein would be only tautologous. So, I would straightaway proceed to issues in law on which my learned Brothers have differed. The emphasis laid on Avon (supra) by Venkatachaliah, J. for taking a different view impels me to treat as the first legal issue whether Avon (supra) laid down any law which answers the Questions referred to us for our opinion. Sitting single, I found that certain dicta of the Supreme Court in one context should not, in my considered view, cloud the ratio decided in ITI (supra) made in another context. That takes me to the question of ratio decided in Avon (supra). What cropped up for consideration in Avon (supra) was the power of the Government to make a reference after it had earlier rejected the supplication of the aggrieved party for referring the dispute to adjudication. The application of the wholesome rule audi alteram partem (in short the 'Rule') for such exercise of power after the initial refusal to refer the dispute did not arise for consideration. By the command of Art. 141 of the Constitution, Avon (supra) should be binding on this Court on the question before it, if the ratio decidendi of Avon (supra) applies to that question. Perhaps, some observations of the Division Bench in ITI (supra) as to the civil consequences of making a reference may not be valid as observed by Venkatachaliah, J. But that is not to say that the decision in ITI (supra) is inconsistent with the ruling in Avon (supra). The points raised in Avon (supra) and answered by the Supreme Court were as follows :

'1. That the Government having declined to make a reference under S. 10(1) of the Act in respect of termination of service of workmen, the Government was not competent or had no power or authority to make a reference in respect of the same dispute unless the Government must have come up with some fresh or additional material which, when the validity of the reference was challenged, must be disclosed or it must appear on the face of the reference itself. Alternatively, that after having declined to make a reference in respect of termination of service of the workmen, the Government was not competent to make a reference of an entirely different dispute touching the question of reinstatement of the workmen which was a materially different dispute, from the one raised by the Union as per its charter of demands because the demand sub sequently referred to the Tribunal was never raised before the management and therefore no such demand existed which the Government could have referred to the Tribunal under S. 10(1) of the Act.

2. That the termination of service of the workmen consequent upon the closure of painting undertaking which was a separate and independent undertaking of the appellant and the case would, therefore, be governed by S. 25FFF and not by S. 25F as held by the Tribunal and even if wages in lieu of notice and retrenchment compensation were not paid at the time of retrenchment the termination would not be invalid because the conditions of payment of wages in lieu of notice and retrenchment compensation are not conditions precedent when termination of service is brought about on account of closure of the undertaking.'

The ratio decidendi of a case, to quote Dr. A. L. Goodhart is :

'The rules for finding the principle of a case can, therefore, be summarised as follows :

1. The principle of a case is not found in the reasons given in the opinion;

2. The principle is not found in the rule of law set forth in the opinion;

3. The principle is not necessarily found by a consideration of all ascertainable facts of the case, and the judge's decision;

4. The principle of the case is found by taking account (a) of the facts treated by the judge as material, and (b) his decision as based on them;

5. In finding the principle it is also necessary to establish what facts were held to be immaterial by the judge, for the principle may depend as much on exclusion as it does on inclusion ....' (See Introduction Hampstead)

5. Therefore, the applicability of the Rule must be considered independently of Avon (supra) and its forerunners, namely, C. P. Sarathy [1953-I L.L.J. 174], Bombay Union of Journalists [1964-I L.L.J. 351], Western Indian Watch Company Workers Union, : (1970)IILLJ256SC , etc. Thus viewed, it would not be judicial hubris to have a fresh look on the question as attempted by Rama Jois, J. in paras 1 to 14 of his opinion. In my view, when Courts are confronted by the supposed impregnable facade of a judicial precedent, they would be justified in reminding themselves of the implications of the word 'binding'. A. W. B. Simpson (Oxford Essays on Jurisprudence, 149) on the doctrine of binding precedent observed :

'For a start let us consider the word binding itself, which is always a source of puzzlement wherever it appears in legal theory. Inevitably it conjures up association with the literal use of the term. This has been the source of a recurrent feature of writings on the judicial process - an uneasiness in recognising, at one and the same time, a doctrine of binding precedent and a creative power to make new law vested in the English judges. Examples of this are common enough, and in different hands the desire to deny that judges are mere machines, 'fettered' by case law, takes different forms. Lord Wright wonders 'How this perpetual process of change can be reconciled with the principle of authority and the rule of stare decisis'. Professor Stone tells us that 'The question whether a court is 'bound' by a single precedent must remain largely meaningless, with respect, however, earnestly it continues to be discussed by courts and text-book writers.'

'Sir Carleton Allen is led into paradox, and writes, 'We say that he (a judge) is bound by the decisions of higher courts; and so he undoubtedly is. But the superior court does not impose fetters upon him, he places the fetters on his own hands. He has to decide whether the case cited to him is truly opposite to the circumstances in question and whether it accurately embodies the principle which he is seeking.'

6. As the law stands now after Avon (supra), the party who has faulted can never say 'amen' for the words 'at any time' in S. 10(1) of the Act coupled with the inexhaustible reservoir of power conferred on the Government will hang like the sword of Damocles over his head, of course, all in the interest of industrial peace and harmony,. That is why I observed earlier that the meaning of S. 10(1) is a little obscure. Therefore, a schematic interpretation of S. 10 of the Act would throw some light on the applicability of the Rules as attempted by Rama Jois, J. Such interpretation is not foreign to the determination of the limitations of power conferred on the Government. CRAIES on Statute Law (Seventh Edition) may be usefully referred to in this context :

'The key to the opening of every law is the reason and spirit of the law; it is the animus imponentis, the intention of the law-maker expressed in the law itself, taken as a whole. Hence, to arrive at the true meaning of any particular phrase in a statute, the particular phrase is not to be viewed detached from its context in the statute; it is to be viewed in connection with its whole context, meaning by this as well the title and preamble as the purview or enacting part of the statute.' In By-water v. Branding, Lord Tenterden said : 'In construing Acts of Parliament we are to look not only at the language of the preamble or of any particular clause, but at the language of the whole Act. And if we find in the preamble or in any particular clause an expression not so large and extensive in its import as those used in other parts of the Act, and upon a view of the whole Act we can collect from the more large and extensive expressions used in other parts the real intention of the legislature, it is our duty to give effect to the larger expressions, notwithstanding the phrases of less extensive import in the preamble or in any particular clause.'

7. In some cases, a hearing of the parties may put an end to the adjudicatory process prescribed under Chapter III of the Act when the Government declines to make a reference. In those cases the parties had come before the Conciliation Officer earlier, filed their statements and been persuaded unsuccessfully by him to settle the dispute and thereafter his report is placed before the Government. On that report, the Government opines that it is not a fit case for reference. All may be quiet on the industrial front for some time, but the dispute may be still simmering in the cubicles of the Trade Union office and may pose another threat to industrial peace. The immediate and imminent threat to industrial peace having disappeared despite the few bouts of sparring between the parties before the dispute was raised, by the conciliation proceedings and the Government's refusal to make a reference, is there any compulsion to exclude the humanising principle of hearing the parties before a reference is made by adhering to the literal script of S. 10(1) of the Act which is silent on cases coming under S. 12(5) of the Act It should be remembered that a hearing by the Government before the reference is made, in cases falling under S. 12(5) of the Act, may promote the chances of a settlement which the Conciliation Officer could not bring about. In modern industrial democracies, adjudication is a thing of the past and therefore in cases falling under the latter part of S. 12(5) of the Act, it would be fair, just and proper to give a hearing to mitigate the rigour of absolutism of S. 10(1) of the Act and to explore another possibility of a settlement and thus avoid a confrontation in the industrial Courts and achieve the object of the Act, that is, to promote industrial peace. The workmen, in may view, have failed to demonstrate that the purpose and object of the Act would be defeated by hearing the parties in cases mentioned above.

8. The application of the Rule was considered by the Constitution Bench (Five Judges) of this Court in Puttappa's Case 1978(1) Karnataka Law Journal - 302. In that Case this Court was dealing with the interpretation of S. 14A of the Karnataka Co-operative Societies Act, 1959, as amended by Karnataka Act No. 70 of 1976, which reads as follows :

'14A (1) Notwithstanding anything contained in this Act or the rules made thereunder and the bye-laws of the co-operative societies concerned, where the Registrar is satisfied that it is essential in public interest or in the interest of co-operative movement or for the purpose of securing the proper management of any co-operative society that any two or more co-operative societies should be amalgamated to form a single co-operative society or any co-operative society should be divided or any co-operative society should be reorganised, then, the Registrar shall order the amalgamation, division or reorganisation of such co-operative societies.'

This Court in its majority (3 : 2) opinion observed :

'It is true that the provisions relating to audi alteram partem in the Karnataka Act 39 of 1975 have been omitted in S. 14A with which we are concerned. But that, in our view, is not at all conclusive of the intention of the Legislature and has little relevance to determine the nature of the power conferred on the statutory authorities. The question of applicability of audi alteram partem cannot be approached merely on the relative terms of those two enactments. It must rest on a consideration of the necessity to observe a fair procedure in the exercise of the power conferred by S. 14A. The question to be answered, in our opinion, is this : Is it fair that the Registrar or Deputy Registrar should go on amalgamating, dividing or reorganising the co-operative societies without any kind of opportunity to them ?' * * * *

Whatever might have been the medieval concept of natural justice, it must be admitted, that in recent years it has a wide ranging application in many Governmental action. Although the precise content of it was doubted from time to time. Its general applicability to Governmental action was never doubted by the Judges. One vital principle, that is, the right of a person to be given a fair hearing before he suffers in some way under the official rod, has been consistently applied by the Courts, and today, it has become one of the most essential elements in the rule of law as Professor H. W. R. Wade puts it :

'The subject-matter contains the very kernel of the problem of administrative justice.'

* * * *These decisions have no doubt brought out prominently the purpose of the application of the sacred maxim audi alteram partem. But, its application in a given case as observed by the Supreme Court in Union of India v. P. K. Roy : (1970)ILLJ633SC depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the case. It is therefore necessary to examine these aspects of the matter with particular reference to the relevant provisions in the Act.'

* * * *In our judgment, there is no warrant for the inference that the Legislature by enacting S. 14A has excluded the application of any or all the rules of natural justice. Such inference should not be drawn merely on the history of the legislation. The Court should take into consideration all the circumstances of the case including the nature of the power conferred, the purpose for which it is conferred and the consequences of the exercise of the power. If the purpose for which the power conferred is likely to be defeated by giving an opportunity to the person concerned, the Courts may be justified in not insisting on the principles of natural justice. If there is any other public purpose in the case, which could conceivably outweigh the necessity of fair procedure, the Courts may be equally justified in holding that the legislature by implication has intended to deny the said principles. But we do not find any one of these things in these cases. Judged from all the circumstances, we are firmly of the opinion that this is not a case where we should hold that the Legislature by necessary implication has excluded the application of any or all the principles of audi alters am partem.'

9. I find no good principle for departing from this rule while construing S. 10(1) of the Act in situations arising in cases falling under the latter part of S. 12(5) of the Act. It would be appropriate at this stage to note the weighty observations of the Constitution Bench of the Supreme Court in Niemla [1957-I L.L.J. 460], for a proper appreciation of the power conferred on the appropriate Government under S. 10 of the Act. Repelling the challenge to the Constitutional Validity to that Section, the Supreme Court ruled :

'It is not necessary that all these steps should be taken seriatim one after the other. Whether one or the other of the steps should be taken by the appropriate Government must depend upon the exigencies of the situation, the imminence of Industrial strife resulting in cessation or interruption of industrial production and breach of industrial peace endangering public tranquillity and law and order. If the matter brooks delay the appropriate Government may start conciliation proceedings culminating in a reference to a Board of Conciliation and also Court of Enquiry, if need be, before a full-fledged reference is made to an industrial Tribunal. If, on the other hand, the matter brooks no delay the appropriate Government may possibly refer the dispute to a Board of Conciliation before referring it for adjudication to an Industrial Tribunal or may straightaway refer it for adjudication by the Industrial Tribunal.

What step would be taken by the appropriate Government in the matter of the industrial dispute must, therefore, be determined by the surrounding circumstances, and the discretion vested in the appropriate Government for setting up one or the other of the authorities for the purpose of investigation and settlement of industrial disputes must be exercised by it having regard to the exigencies of the situation and the objects to be achieved. No hard and fast rule can be laid down as the setting up of one or the other of the authorities for the purpose of bringing about the desired end which is the settlement of industrial disputes and promotion of industrial peace and it is hardly legitimate to say that such discretion as is vested in the appropriate Government will be exercised 'with an evil eye and an unequal hand'.

In Hochtief Gammon [1975-II L.L.J. 418], the Supreme Court observed thus at P. 419 :

'The Executive have to reach their decisions by taking into into account relevant considerations. They should not refuse to consider relevant matter nor should take into account wholly irrelevant or extraneous consideration. They should not misdirect themselves on a point of law. Only such a decision will be lawful. The Courts have power to see that the should not misdirect themselves answer to the exercise of that power to say that the Executive acted bona fide nor that they have bestowed pains taking consideration. They cannot avoid scrutiny by Courts by failing to give reasons. If they give reasons and they are not good reasons, the Court can direct them to reconsider the matter in the light of relevant matters, though the propriety, adequacy or satisfactory character of those reasons may not be open to Judicial scrutiny. Even if the Executive considers it inexpedient to exercise their powers they should state their reasons and there must be material to show that they have considered all the relevant facts.'

Though there are a number of other decisions of the Supreme Court laying down the guidelines for exercise of power under S. 10 of the Act, I have singled out the above decision of the Supreme Court for a particular reason. In that case, the Supreme Court while construing S. 10 of the Act, relied on the speeches of the Law Lords of the House of Lords in Padfield (1968 A.C. 997). In Padfield the provisions of S. 19 of the Agricultural Marketing Act, 1958, which gave unfettered discretion to the Minister to refer or not to refer a complaint to the committee appointed by him to go into certain questions under the said Section of that Act came up for consideration. The Supreme Court quoted with approval the speech of Lord Upjohn as follows :

My Lords, I believe that the introduction of the adjective 'unfettered' and its reliance thereon as an answer to the appellants' claim is one of the fundamental matters confounding the Minister's attitude, bona fide though it be .... even if the section did contain that adjective I doubt if it would make any difference in law to his powers ...... But the use of that adjective, even in an Act of Parliament can do nothing to unfetter the control which the judiciary have over the executive, namely that in exercising their power the latter must act lawfully and that is a matter to be determined by looking at the Act and its scope and object in conferring a discretion upon the Minister rather than by the use of adjective.' .....

'...... A decision of the Minister stands on quite a different basis; he is a public officer charged by Parliament with the discharge of a public discretion affecting Her Majesty's subjects; if he does not give any reason for his decision it may be, if circumstances, warrant it, that a Court may be at liberty to come to the conclusion that he had no good reason for reaching that conclusion and order a prerogative writ to issue accordingly.'

In Hochtief Gammon (supra) the Supreme Court was dealing with the negative aspect of the power of the Government, i.e., its discretion to decline a reference but the discretion either to make a reference or not to make a reference is controlled by the same legal considerations. Though as held in Avon (supra), refusal to exercise the power of reference is no exercise of power at all, the parties to the dispute are entitled to presume that the Government by refusing to refer the dispute for adjudication :

a) did not act with an unequal hand and an evil eye;

b) was convinced that reference of the dispute will not bring about the object and purpose of the Act;

c) had taken all relevant matters pertaining to the dispute;

d) to put it negatively, they had not taken into account wholly irrelevant or extraneous considerations;

e) had not misdirected themselves on a point of law, and

f) therefore the reasons given for refusing to make a reference are good reasons.

10A. It these are the considerations for declining to exercise the power of reference and thereby the dispute comes to an end, may be till the Government chooses to exercise the power by a positive act, the other party or parties to the dispute in the ordinary course are lulled into a sense of security and complacency till they are disagreeably surprised by the positive exertion of power through an order of the Government making the reference of the dispute for adjudication. Consequently, the parties come under the constraints of Ss. 31 and 33 of the Act which are the legal consequences of a reference under the Act. But the words 'civil consequences' are of wider import than the words 'legal consequences' Avon's case (supra), also did not decide nor was any attempt made before the Supreme Court to challenge the power of the Government 'at any time' to make a reference before Doomsday on the ground such exertion would result in civil consequences. What Avon's case (supra), decided was that the legitimate expectation of the party was not a hindrance or bar to the exercise of power by the Government under S. 10(1) of the Act. But legitimate expectations are not civil consequences as understood in law. What are civil consequences of an administrative act is expounded in Mohinder Singh Gill : [1978]2SCR272 and both my learned Brothers have quoted extensively from that decision. The power conferred on the Government under S. 10 is a social power to create an orderly and reasonably well functioning system of labour relations. This power coupled with the power to initiate conciliation proceedings, to prohibit strikes and lockouts, to prevent layoffs, retrenchment and closure of industries to prevent variation in conditions of service and the other powers conferred on the Government for imposing penalties for violation of the provisions of the Act are intended to regulate, to support and to restrain the power of Management and the power of organised labour. 'The words 'Management' and 'Labour' are abstractions but their real meaning is that they are not persons but activities; the activity to plan and to regulate production and distribution, to co-ordinate capital and labour on the one hand, the activity to produce and distribute on the other. Labour too is an abstraction.' To the Federation of Chamber and Commerce or to the Employers' Federation, labour may mean the powerful politically affiliated unions like INTUC, AITUC & BMS, 'to a foreman it may denote a shop steward, to an employer it may mean men and women subject to his managerial power' or the union of workmen recognised by him for the purpose of collective bargaining (see Labour and the Law (Hamlyn Lecture Series) By Sir Otto Khan Freund, QC). Therefore, the civil consequences of refusing to refer an industrial dispute partake of various hues and nuances which are not comparable to those arising under Common Law or under Contract. Such consequences may arise out of disputes between employer and employer, workmen and workmen, employer and workmen (see S. 2(1)(k) of the Act). These consequences immediately affect the delegated and tenuous relationship between Management and Labour in any organised Management and Labour in any organised industry depending on the nature of the dispute. Re-opening of a Bonus dispute may have repercussions on the balance sheet and profit and loss account of the Management if it is a company and the parties right to set-on and set-off for future years. A dispute regarding basic wages and dearness allowance would result in civil consequences affecting the financial capacity of the company to pay, its reserves and working capital and so on and so forth. That is why the Government is conferred with the power u/s. 17-A of the Act in appropriate cases to declare that the Award arising out of its own reference shall not become enforceable after the expiry of 30 days from the publication in the Official Gazette. This power is an implied recognition of the that the power to resolve disputes by adjudication is not the be-all and end-all of the Act and the power to refer the dispute 'at any time' would result in civil consequences other than those mentioned in Ss. 31 and 33 of the Act. Therefore, the civil consequences from an order refusing to make the reference will have to be judged in the backdrop of the nature of these powers of the Government under the Act and the likely upsetting of the sensitive relationship between planned growth of industry and organised labour. Assuming for a moment, the consequences flowing from an Act of reference under the scheme of the Act are not consequences which immediately flow from the administrative act itself, but they are part of the proceedings incidental to the industrial dispute referred to for adjudication, there is no valid reason to make a distinction between a set of consequences which directly flow from an administrative act of reference itself and another set of consequences which incidentally flow by the operation of the Act. If it is kept in view that the main thrust of the Act is for resolving disputes of a collective nature which cannot be settled through collective bargaining i.e., negotiations between the employer and employees' representatives or through the conciliatory motions under the Act, the civil consequences of referring a dispute which in the view of the Government was not fit for adjudication at an earlier stage are too many to be enumerated. Rama Jois, J., has correctly brought out this aspect of the matter by referring to a dispute under the Payment of Bonus Act. Similarly, disputes may arise in matters arising on fixation of wages, dearness allowance, fringe benefits promotional avenues and other matters provided for under Schedules II, III of the Act. In my view, the decisions of this Court [1974-II L.L.J. 537] and the other High Courts which had taken a contrary view have missed the central theme and thrust of the Act, viz, investigation and settlement of disputes of a collective nature which cannot be adjudicated in Civil Courts but by the Special Tribunals constituted under the Act. Avon (supra) dealt with the case of termination of two workmen. The civil consequences from a dispute consequent on dismissal would not be the same as those that flow from a collective dispute which arises out of collective bargaining. It is no doubt true that the Act is a benevolent piece of legislation and the Court must always lean in favour of the workman whenever two interpretations are possible. But the concept of social justice is not confined to the interests of the workmen only and this point has been recognised by the Supreme Court in Anakapalla Co-operative Society's case [1962-II L.L.J. 621]. The employers' interests also require to be recognised while interpreting the provisions of the Act and thus viewed the entrepreneurial, financial, accounting, managerial and the industrial relations problems that the employer has to face by a reference of the dispute which, according to him, had come to an end by the earlier Government order declining to refer the dispute, are the civil consequences which flow from the reference and which impinge upon the right of the employer to regulate his business and plan the growth of his industry. Therefore, the civil consequences that could flow from an order of reference should not be understood in the narrow sense, namely, operation of the provisions of Ss. 31 and 33 of the Act. Those provisions, in my view, are designed to create a peaceful climate for a proper adjudication of the dispute referred to by the Government and in that sense I may not agree fully with the views expressed by the Division Bench in ITI (supra) with which Rama Jois, J. had agreed. The civil consequences, as noticed earlier, have a very wide connotation and may sometimes also include the legal consequences under a particular enactment which flow from an administrative order under that enactment. Indeed, my learned Brother Venkatachaliah, J. has referred to this aspect of the matter by quoting from Mohinder Singh Gill (supra) in para 6 of his opinion. The meaning of those words used by Justice Krishna Iyer would indeed indicate the sweeping and all comprehensive concept of the words 'civil consequences'. The concept of the words 'civil consequences' as distinct from 'legal consequences' varies from Act to Act depending on its object, purpose, its scheme, its social content and the modalities of the exercise of power conferred on the authorities under the Act. As observed by Justice Holmes. 'It is one of the misfortunes of the law that ideas become encysted in phrases and thereafter for a long time cease to provoke further analysis' (Hyde v. United States (1911), 225 U.S. 347, 391). Though refusal to exercise the power is not exercise of power at all as held in Avon (supra), such refusal would confer certain short-lived immunity in favour of a party to a dispute and disability against the other party and those immunities and disabilities would result in civil consequences as envisaged in Mohinder Singh Gill (supra). These words indubitably do form part of the fundamental legal conceptions and have been given their rightful place in judicial reasoning (see Wesley New comb Hohfeld on Fundamental Legal Conceptions). Therefore, in cases coming under the latter part of S. 12(5) of the Act, a right of hearing would give a chance to the parties to resolve the dispute mutually or by once again setting in motion the machinery of conciliation or in appropriate cases to maintain the status quo by putting off the negotiations or conciliatory meetings to a future date. Thus, a right of hearing would not in any way make S. 10(1) of the Act, 'lifeless, absurd, stultifying, self-defeating or plainly contrary to the common sense' of the situation brought about by the latter part of S. 12(5) of the Act. Otherwise, as Tacitus would have said : 'Graviour remedies quam delegated rant' meaning 'their remedies are more grevious than the offences' ! In this view of the matter, the decision of Supreme Court in Avon (supra) cannot be understood as laying down the ratio that no civil consequences flow from the administrative act of reference and therefore the right of hearing is also impliedly excluded in construing the provisions of S. 10(1) of the Act in cases falling under the latter category of S. 12(5) of the Act. Therefore, the mere fact that the Act envisages a full-fledged enquiry by the appropriate authority into the rights of the parties in the dispute referred to adjudication will not obliterate the civil consequences that flow from an act of the Government declining to make the reference keeping in view all the factors enunciated by the Supreme Court in Hochtief Gammon (supra) and Niemla (supra).

11. To conclude,

a) Exertion or non-exercise of power under S. 10 of the Act is governed by factors as postulated by the Supreme Court in Niemla and Hochtief Gammon (supra);

b) The exercise of or refusal to exercise such power may be challenged under Art. 226 of the Constitution on the ground that the above factors were not taken into consideration (seek K. P. Krishnan (supra);

c) In a dispute raised by the workmen, if the reference is refused, the Management is not aggrieved but the workmen are entitled to challenge the order of refusal under Art. 226 of the Constitution and in that event the Management has a right to be heard as they have the locus standi to contest, being persons interested in the dispute (seek K. P. Krishnan (supra);

d) Alternatively, if the workmen once again approach the Government or the Government exercises the power suo motu, the scheme of the Act does not exclude the right of hearing even though S. 10(1) is silent on the point;

e) A fortiori the right of representation or hearing is not dependent on the postures and procedures adopted by the workmen or taken away by the inspired or benevolent suo motu exercise of power by the Government;

f) Since an earlier decision declining to refer the dispute for adjudication gives temporary immunity from adjudicatory proceedings, taking away of that immunity by the exercise of the inexhaustible power of the Government under S. 10, which in turn generates civil consequences, cannot be done without hearing, since the soul of administrative law is fairplay in action.

These are the reasons for disagreeing from the weighty opinion of Venkatachaliah, J. and for agreeing with the conclusions of Rama Jois, J.

OPINION

In accordance with the Opinion of the majority, the question referred for the Opinion of the Full Bench is answered as follows :

The principle of audi alteram partem is applicable to a case in which the Government having declined to make a reference of dispute for industrial adjudication under S. 10(1) of the Act according and communicating such decision in accordance with the latter part of S. 12(5) of the I.D. Act proposes to refer the same dispute for adjudication sub sequently except when :-

a) the reference becomes necessary under circumstances set out in S. 10(5) of the I.D. Act, or

b) the Government finds that there are exceptional circumstances in which any delay in making the reference is fraught with serious consequences to industrial peace and, therefore, affording of an opportunity to the party concerned is inexpedient.


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