Subramonian Poti, J.
1. In these two cases similar questions arise for decision. The petitioners in these cases were employed by the Cochin Chamber of Commerce and Industry, Cochin as sworn measures. They were charged with negligence and dereliction of duty and after enquiry they were dismissed from service. Their cases were taken up by their unions, one of them by the Cochin Commercial Employees' Association, Cochin-1 and the other by the Mercantile Employees' Association, Calicut. The Government ultimately, by Ext. P3 order in both these cases informed the parties that they do not propose to refer the matter for adjudication. The ground stated was:
As the management has taken action in accordance with the canons of natural justice, prima facie the action of the management is not mala fide.
This was the sole ground. The State Government was under a duty to communicate the reasons for not making a reference under Section 10(1) of the Industrial Disputes Act, 1947 and evidently it was such reason that was communicated by Ext. P3 in both the cases.
2. In both these petitions the challenge is to this decision of the Government by which they informed the unions that they do not propose to refer the dispute for adjudication. The ground on which attack is made to this order is that the reason mentioned in Ext. P3 is irrelevant and extraneous and has no relation to the decision to be reached by the Government.
3. Section 10(1) of the Industrial Disputes Act, 1947 (referred to hereinafter as the Act) as originally enacted, opened with the words 'where any industrial dispute exists or is apprehended'. It was subsequently amended by Section 3 of the Industrial Disputes (Amendment) Act, 1952 to read as it appears in the section now as 'where the appropriate Government is of opinion that any industrial dispute exists or is apprehended'. As the section originally stood the Courts had taken the view that the decision of the Government as to whether reference was to be made or not was amenable to judicial review and the Court can even look into the question whether the industrial dispute exists or is apprehended. It was so decided by the High Court of Madras in Kandan Textile Ltd. v. Industrial Tribunal 1949--I L.L.J. 218, Rajus Cafe v. Industrial Tribunal 1951 L.L.J. 875 and T.D. Ramayya Pontula v. Kutty & Rao (Engineers) Ltd. 1949 L.L.J. 13. The vagueness of the term 'if any Industrial Dispute exists or is apprehended' was pointed out by the Supreme Court in United Commercial Bank Ltd. v. U.P. Bank Employees Union 1952--II L.L.J. 577, by Chandrasekhara Iyer, J. Later the Supreme Court considered the scope of the section in State of Madras v. C.D. Sarathy 1953--I L.L.J. 174 and stated the law on the question. The amendment was evidently intended to remove the vagueness pointed out by the Supreme Court in 1952--II L.L.J. 577.
4. Though the order of the Government under Section 10(1) is an administrative order Section 12(5) imposes a duty on the Government in cases coming to its notice on report of conciliation proceedings to record and communicate reasons where the Government decides not to refer. In such cases the reasons indicated in the order of the Government may call for examination when the order is under challenge. It is not necessary to discuss this question in detail, for the section has received interpretation by the Supreme Court in a number of decisions. In the leading case on the subject, State of Bombay v. Krishnan 1960--II L.L.J. 592, at 602, Gajendragadkar, J. discussing the scope of Section 12(5) said thus:
The order passed by the Government under Section 12(5) may be an administrative order and the reasons recorded by it may not be justiciable in the sense that their propriety, adequacy or satisfactory character may not be open to judical scrutiny; in that sense it would be correct to say that the Court hearing a petition for mandamus is not sitting in appeal over the decision of the Government; nevertheless if the Court is satisfied that the reasons given by the Government for refusing to make a reference are extraneous and not germane, then the Court can issue, and would be justified in issuing, a writ of mandamus even in respect of such an administrative order.
Again the learned Judge said at page 603 thus:
Though considerations of expediency cannot be excluded when Government considers whether or not it should exercise its power to make a reference, it would not be open to the Government to introduce and rely upon wholly irrelevant or extraneous considerations under the guise of expediency. It may for instance be open to the Government in considering the question of expediency to enquire whether the dispute raises a claim which is very stale, or which is opposed to the provisions of the Act, or is inconsistent with any agreement between the parties, and if the Government comes to the conclusion that the dispute suffers from infirmities of this character, it may refuse to make the reference. But even in dealing with the question as to whether it would be expedient or not to make the reference Government must not act in a punitive spirit but must consider the question fairly and reasonably and take into account only relevant facts and circumstances .
As to the scope of examination by the Government in this matter, the learned Judge observed--
The problem which the Government has to consider while acting under Section 12(5)(a) is whether there is a case for reference. This expression means that Government must first consider whether a -prima facie case for reference has been made on the merits. If the Government comes to the conclusion that a prima facie case for reference has been made, then it would be open to the Government also to consider whether there are any other relevant or material facts which would justify its refusal to make a reference. The question as to whether a case for reference has been made out can be answered in the light of all the relevant circumstances which would have a bearing on the merits of a case as well as on the incidental question as to whether a reference should nevertheless be made or not. A discretion to consider all relevant facts which is conferred on the Government by Section 10(1) could be exercised by the Government even in dealing with cases under Section 12(5) provided of course the said discretion is exercised bona fide, its final decision is biased on a consideration of relevant facts and circumstances, and the second part of Section 12(5) is complied with.
In the case of Bombay Union of Journalists v. State of Bombay 1964--I L.L.J. 351, this question was further examined by the Supreme Court and Gajendragadkar, J. speaking for the Bench said thus at page 355 of the report:
Besides, in dealing with this contention, it is necessary to remember that in entertaining an application for a writ of mandamus against an order made by the appropriate Government under Section 10(1) read with Section 12(5), the Court is not sitting in appeal over the order and is not entitled to consider the propriety or the satisfactory character of the reasons given by the said Government. It would be idle to suggest that in giving reasons to a party for refusing to make la reference under Section 12(5), the appropriate Government has to write an elaborate order indicating exhaustively all the reasons that weighed in its mind in refusing to make a reference. It is no doubt desirable that the party concerned should be told clearly and precisely the reasons why no reference is made, because the object of Section 12(5) appears to be to require the appropriate Government to state its reasons for refusing to make a reference, so that the reasons should stand public scrutiny; but that does not mean that a party challenging the validity of the Government's decision not to make a reference can require the Court in writ proceedings to examine the propriety or correctness of the said reasons. If it appears that the reasons given show that the 'appropriate Government took into account a consideration which was irrelevant or foreign that no doubt may justify the claim for a writ of mandamus. But the argument that of the pleas raised by the appellants two have been considered and not the third, would not necessarily entitle the party to claim a writ under Article 226.
5. In a case where power is exercised by the Government under Section 10(1), if the Government is of the opinion that no reference need be made, the satisfaction reached by the Government, even if it be subjective, is open to examination to the extent of scrutinising the reasons indicated in the order under Section 12(5) to see whether they are irrelevant or extraneous.
6. The question as to how far judicial review of a decision reached by the Government on its subjective satisfaction is permissible arose for an exhaustive consideration by the Supreme Court of India in the recent case reported in Khudiram Das v. State of W.B. A.I.R. 1975 S.C. 550. The question there concerned the satisfaction of a detaining authority under the Maintenance of Internal Security Act. Dealing with the grounds on which a Judicial review would be possible the Court enumerated the following as available grounds: (1) Where the authority has not applied its mind. (2) The power is exercised dishonestly or for an improper purpose. (3) The power is exercised under the dictation of another person and not independently. (4) Where the authority has disabled itself from applying its mind to the facts of any individual case by self-created rules of policy or in any other manner. (5) Where the satisfaction of the authority is based on application of a wrong test of the misconstruction of a statute. Where this happens, the satisfaction of the authority would not be in respect of the thing in regard to which it is required to be satisfied. (6) The satisfaction must be grounded on materials which are of rationally probative value. (7) If they are to be found in the statute expressly or by implication matters which the authority ought to have regard to, then, in exercising the power, the authority must have regard to those matters, Ground No. 6 was furrier elaborated in the judgment of the learned Judge thus:
The grounds on which the satisfaction is based must be such as a rational human being can consider connected with the fact in respect of which the satisfaction is to be reached. They must be relevant to the subject-matter of the inquiry and must not be extraneous to the scone and purpose of the statute. If the authority has taken into account, it may even be with the best of intention, as a relevant factor something which it could not properly take into account in deciding whether or not to exercise the power or the manner or extent to which it should be exercised, the exercise of the power would be bad. Pratap Singh v. State of Punjab A.I.R. 1954 S.C. 72.
7. The Supreme Court considered a further ground on which subjective satisfaction reached by the authority can be successfully challenged and it observed that this ground is of late becoming increasingly important. Reference was made to the following passage in Sharpe v. Wakefield  A.C. 173 at179:.When it is said that something is to be done within the discretion of the authorities...that something is to be done according to the rules of reason and justice, not according to private opinion...according to law and not humour. It is to be, not arbitrary, vague, fanciful, but legal and regular.
The Supreme Court took the view that the power of the Court to interfere in such a case is not as an appellate authority to override a decision taken by the statutory authority, but as a judicial authority, which is concerned, and concerned only, to see whether the statutory authority has contravened the law by acting in excess of thebe power which the Legislature has confided in it. As to the scope of this power the Court observed--
It is true that this ground in a sense tends to blur the dividing line between the subjective satisfaction and objective determination but the dividing line is very much there howsoever faint or delicate it may be, the Courts have never failed to recognise it.
8. It would appear from the order of Government Ext. P3, that it takes the view that absence of mala fides is the only question that is relevant in refusing to make a reference. May be the dismissal of an employee is not mala fide. But it may be bad for several other reasons. To assume that no mala fide is shown and, therefore, there is no scope for referring the dispute would certainly be to apply a wrong test. In a case before this Court, in Kottayam Plywood Workers' Union v. Govt. of Kerala 1962--I L.L.J. 344, the petitioner sought the issue of a writ of mandamus directing the State Government to refer the dispute between the petitioner and the management for adjudication. The order of the Government in that case read--
From the reports received it is seen, that the retrenchment is for bona fide purposes, The case is, therefore, not a fit; one for adjudication.
The case of the workmen was that there was no need for retrenchment as they could have been given alternate employment. They further took the stand that the employer had contravened the provisions of the Act in effecting retrenchment, The order of the Government refusing to refer based solely upon the reason that the retrenchment was for a bona fide purpose was found to be bad. Since the order did not show that the grounds on which retrenchment was questioned by the workmen were considered, but on the other hand indicated that it considered the question of bona fides when that question was not raised and had solely based its decision on the ground of bona fides the Court found that the order called for interference. The Court took the view that the State Government had failed to consider the relevant facts before passing the impugned order.
9. Section 11A of the Act was introduced in the Act by an amendment which came into force on 15-12-1971. That section conferred powers of an appellate nature in the Labour Courts, Tribunals and National Tribunals, The scope of the power under Section 11A has been considered by the Supreme Court in Workmen of Firestone lyre & Rubber Co. v. Management 1973--I L.L.J. 276. This section makes a change in the law by conferring on the Labour Courts: Tribunals and National Tribunals appellate power which enables it to examine a case on the merits and if satisfied that the order of discharge or dismissal was not justified, set aside such order and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment. Exhibit P3 in both these cases are passed subsequent to the commencement of operation of Section 11A of the Act and, therefore, Section 11A would have applied to any enquiry before a Labour Court, or Tribunal in case there had been a reference. It is, therefore, said for the petitioners in this case that one of the relevant questions to be considered would have been whether evidence recorded at the domestic enquiry would have justified the conclusion reached by the management and further whether in the circumstances of the case the punishment would be merited, These would have been open to consideration and would have been relevant in the event of a reference. It is also said that apart from the question of mala fides of the management in dismissing the workmen there may be other pleas available by way of challenge to an order dismissing the workmen. Even, before Section 11A found its place in the Act there were grounds recognised in law for interference with the punishment imposed upon the workmen by the management after enquiry. Grounds of victimization or unfair labour practice were grounds so recognised as available in law. The irregularity of the proceedings by which the ultimate punishment was imposed in the domestic enquiry was also a ground for examination. Evidently the Government in Ext. P3 order seems to have considered only whether action had been taken in accordance with the principles of natural justice and found that it had been so taken and the Government thereupon has come to the conclusion that prima facie the action was not mala fide. It is pointed out by the petitioners' counsel that the fact that the proceedings lave been taken in accordance with the principles of natural justice has absolutely no relevance to the rending or conclusion that there is no mala fides. Mala fides is not related to proceedings being in accordance with a proper procedure. Proceedings may be in accordance with rules or requirements of the principles of natural justice. But nevertheless they can be mala fide. Proceedings may not be in accordance with rules and may violate the canons of natural justice. That need not render them mala fide. These two have no relation with each ether. The Government by saying that since the proceedings have been taken in accordance with the principles of natural justice prima facie it is not mala fide has made a very irrational approach and its approach has further been quite irrational in saying that since there is no mala fides no reference is to be made as if that is the sole ground on which reference could be made. It is particularly so when the scope of an enquiry before an Industrial Tribunal has considerably been enlarged by reason of Section 11A of the Act. I am in agreement with learned Counsel for the petitioners that the order of the Government shows that the Government has chosen to apply a wrong test and the approach is quite irrational. 'The reasons stated by it are not supported by the facts stated in the very order and the reasons do not lead to the conclusion or decision that there need be no reference.
10. Learned Counsel Sri P.K. Kurian no doubt attempted very vehemently to show that if there be several reasons and the Government consider only one of the reasons, even so its decision must be upheld. In other words, if mala fides could be one of the reasons for challenging an order of termination of services and that has been considered by the Government and the Government is prima facie satisfied of the absence of mala fides the fact that other reasons have not been considered may not be material. What should be the reasons to be considered will vary from case to case. It is the reason relevant for the case which calls for consideration and if there is no such consideration the Government cannot seek to uphold its order which is based upon material not relevant to the issue.
11. Of course, I do realise the difficulty of the Government in stains a proper reason in every case. But when the statutory requirement of Section 12(5) is that the reasons should be recorded and communicated, what is required to be recorded is not some reason or other but reasons which have relevance to the conclusion reached by the Government, which, adjudged by the normal test of cause and effect, are intelligible.
12. In the result the original petitions are allowed. Exhibit P3 in both the cases are quashed, the Government is directed to go into the matter afresh and decide the question of reference under Section 10(1) of the Act. Reasons under Section 12(5) of the Act will be recorded and communicated in accordance with law in the event Government feels no reference is called for. Parties are directed to suffer costs.