Balakrishna Eradi, J.
1. The petitioner in this case is a registered trade union representing the workmen (staff members) employed in the factory of Messrs. J. & P. Coats (India) Private Limited, Koratty. Two members of the clerical staff of the company by name N.M. Abraham and K. Gopinath were dismissed from service by an order dated 4th May. 1973 passed by the management. That order was passed as the outcome of a domestic enquiry conducted against those two clerks on serious charges of misconduct involving fraud and dishonesty in relation to the disposal of property belonging to the company. The petitioner-union took up the case of those two employees and raised an industrial dispute. Conciliation proceedings held by the District Labour Officer, Trichur, having failed to bring about a settlement, the conciliation officer, forwarded to the Government his report under Section 12(4) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act). After considering the said report the Government ultimately passed the order Ext. P. 1 dated 15th March, 1974, informing the petitioner-union and also the management of the company about the decision arrived at by the Government not to refer the matter for adjudication. Exhibit P. 1 is in the following terms:
I am directed to inform you that Government do not find anything prima facie mala fide on the part of the management in having dismissed the two workmen. Government, therefore, do not propose to refer the matter for adjudication.
The petitioner seeks to quash Ext. P. 1 on the ground that the Government have not applied their mind to all the relevant aspects before taking a decision under Sub-section (5) of Section 12 of the Act as to whether there existed a case for reference of the dispute to the Industrial Tribunal or Labour Court for adjudicatiod.
2. Counsel for the petitioner relied strongly on the decision of our learned brother Poti, J., in Workmen of Cochin Chamber of Commerce & Industry v. State of Kerala 1976 II L.L.J. 108 : (1976) 49 F.J.R. 496, and also another unreported decision of the lame learned Judge in O.P. No. 2782 of 1973. In the first case aforementioned the sole ground on which the Government had refused to make a reference was 'as the management has taken action in accordance with the cannons of natural justice, prima facie the action of the management is not mala fide'. Pointing out that even if the dismissal of an employee was not mala fide it may nevertheless be bad for several other reasons the learned Judge held that the Government had committed an illegality in assuming that the absence of mala fide was the only question that was relevant in deciding whether or not to make a reference. After adverting in detail to the decisions of the Supreme Court in State of Bombay v. Krishnan 1960 II L.L.J. 592 : (1960) 19 F.J.R. 61, and Bombay Union of Journalists v. State of Bombay (1963) 26 F.J.R 32, regarding the scope of Section 12(5) of the Act, the nature of the duty imposed upon the Government by the said sub-section and the scope of interference by the Court with such tin order passed by the Government, the learned Judge held that interference by the Court with an order passed by the Government under Section 12(5) the Act will be justified on the grounds inter alia that the Government had not applied its mind to relevant factors, or that the satisfaction or conclusion reached by it is found to be based on an application of a wrong test or on the misconstruction of an statute. Accordingly, the order, order impugned in that case was quashed by the learned Judge on the ground that in assuming that the only question to be considered was whether the dismissal of the employee was mala fide the Government had made an irrational approach and applied a wrong test and had also omitted to consider other matters which were relevant.
3. In the unreported decision in O.P. No. 2782 of 1973 the order impugned was one parsed by the Government of India declining to refer a dispute for adjudication on the ground that 'the services of the workmen were terminated in accordance with the provisions of the Standing Orders of the company and cannot be considered as mala fide' The Central Government whose order was under challenge had not chosen to file a counter-affidavit in the case. What is worse, in spite of an order having been passed by this Court for production of the relevant file, the file was not made available to the Court. In those circumstances this Court observed that the averments contained in the original petition which remained un-contradicted had to be treated as correct. One of the averments contained in the writ petition was that during the conciliation proceedings the management had taken the stand that the services of the third writ petitioner had been terminated for 'security reasons'. It was further stated in the writ petition that the only reason for assuming the third petitioner was a security risk could possibly be an impression that he was a member of the Communist Party of India and it was contended that if what weighed with the Government in refusing to make the reference was the assumption that every Communist was a security risk the said reason was unsustainable in law Following the principle laid down in his earlier decision reported in Workmen of Cochin Chamber of Commerce & Industry v. State of Kerala, (supra) Poti, J., held that in declining to make the reference on the sole ground that the termination of service of the employee could not be considered as mala fide without adverting to any of .the other relevant factors the Central Government had committed a manifest illegality The original petition was, therefore, allowed and the impugned order was quashed.
4. Under Section 12(5) of the Act, whenever the appropriate Government takes a decision not two refer a dispute for adjudication there it a mandatory duty cast on it to record its reasons in support of the said conclusion and to communicate such reasons to the parties concerned. It is, therefore, obligatory on the part of the Government to set out in the communication issued to the parties, clearly and precisely, the grounds on which the request for reference was being declined The Government cannot, therefore, be heard to say that in addition to the reasons mentioned by them in the order certain other relevant facts or grounds not disclosed in the order had also weighed with them in reaching the conclusion that no reference need be made. We are in respectful agreement with the view taken by Poti, J. that were the termination of the service of a workman is liable to be challenged not merely on the ground that the action was taken by the management mala fide but also on various other grounds, such as irregularities in the Conduct of the domestic enquiry, victimisation or unfair labour practice, etc., it will be wholly illegal on the part of the Government to refuse to refer the dispute to arbitration on the sole ground that the action of the management is not mala fide. As pointed out by Gajendragadkar, J., in State of Bombay v. Krishnan 1960 II L.L.J. 592 : (1960) 19 F.J.R 61; the question as to whether a case for reference has been made out has to be considered by the Government in the light of all the relevant circumstances which would have a bearing on the merits of the case as well as on the incidental question as to whether a reference should nevertheless be made or not. It will be wholly wrong on the part of the Government to confine the scope of its examination of the matter only to the question whether or not the action taken by the management was mala fide and to shut out from consideration all other relevant aspects. Such a disposal of the mattes will not be a proper exercise of the function vested in the Government under Section 12(5) of the Act, Judged in the light of the above principle, it must be held that the State Government acted illegally in refusing to make a reference of the dispute on the sole ground mentioned in Exh. P. 1, namely, that the Government did not find anything prima facie mala fide on the part of the management in having dismissed the two workmen. In the center-affidavit filed on behalf of the State Government certain aspects not referred to in the order Ext. P. 1. have been attempted to be relied on in justification of the Government's decision that there was no case for making a reference of the dispute. As already pointed out earlier in this judgment, it is incumbent on the Government to pass a speaking order communicating to the concerned parties the reasons that weighed with the Government in arriving at the decision not to refer the case.
5. In the result, the original petition is allowed and Ext. P. 1, is quashed. The State Government is directed to dispose of the matter afresh in accordance with law in the light of the observations contained in this judgment. The parties will bear their respective costs.