National Council Of Applied ... vs Delhi Administration And Others
1985 Latest Caselaw 501 Del

JUDGMENT

1. The National Council of Applied Economic Research (hereinafter referred to as N.C.A.E.R.) was registered as a Society in the year 1956 with the principal object to undertake, aid, promote and co-ordinate economic research. The N.C.A.E.R. is entrusted with the projects requiring surveys to be carried in diverse parts of the country which often require collection of material by conducting interviews in far flung places. A dispute arose between some Interviewers and the Management of N.C.A.E.R. in the year 1975. A statement of claim was filed by the N.C.A.E.R. Employees Union before the Conciliation Officer, Delhi Administration challenging the termination of the services of these four Interviewers. A written statement was filed by the Management of N.C.A.E.R. wherein it was contended that the N.C.A.E.R. was not a commercial or business establishment and was non-profit making research body and therefore not an "industry" within the meaning of S. 2(j) of the Industrial Disputes Act and further that the four Interviewers were not "workmen" within the meaning of the Industrial Disputes Act, 1947 and the Management having lost confidence in the integrity and honesty of the four Interviewers their termination was valid. As a sequel to the failure of the conciliation proceedings a failure report was submitted to the appropriate Government. The appropriate Government did not consider the dispute a fit one for reference to the Industrial Tribunal/Labour Court, Delhi for adjudication for the reason that the services of the four Interviewers appeared to the Delhi Administration to have been terminated in accordance with the terms of the appointment letter. This decision of the appropriate Government refusing to make a reference was communicated to the parties by letter dated 21st April, 1976. The four concerned employees whose services were terminated filed a petition before this Court challenging the said order of the Delhi Administration refusing to make a reference. The said Civil Writ Petition being C.W. 718 of 1976 was admitted by this Court by an order dated 6th December, 1976. Subsequently during the pendency of the writ petition on re-consideration of the matter the Delhi Administration in exercise of its powers under S. 10(1)(c) and 12(5) of the Industrial Disputes Act, 1947 referred the dispute of the Labour Court for adjudication. The petitioner in the present writ petition has impugned this decision of the appropriate government contained in its order dated 14th November, 1977. In the meanwhile in view of the decision of the appropriate Government on re-consideration to refer the dispute for adjudication the petition filed by the workmen in this Court being C.W. 718 of 1976 on a prayer made by the workmen, was dismissed as withdrawn by this Court.

2. The main question raised at the time of the hearing of the writ petition was regarding the true scope and ambit of the expression "at any time" as occurring in S. 10 of the Industrial Disputes Act, 1947 and with regard to the jurisdiction, competency and power of the appropriate Government to review its earlier order whereby it had declined to refer the dispute for adjudication. It was contended by the learned counsel for the petitioner that there was no fresh material before the appropriate Government to re-consider its opinion when the second order was passed and since the appropriate Government on an earlier occasion had chosen not to exercise its power to refer the dispute for adjudication the right of the appropriate Government had already exhausted. It was further contended that the appropriate Government while making a reference ought to have assigned reasons for making a reference at a later stage once having rejected to do so on an earlier occasion. It was further contended that once the appropriate Government had refused to make a reference if it had to re-consider and change its mind it was imperative that it had complied with the rules of natural justice and given notice to the petitioner before making a reference. Learned counsel contended that the principle of audi alteram partem is applicable to a case in which the government once having declined to make a reference of the dispute for Industrial adjudication under S. 10(1)(c) of the Industrial Disputes Act proposes to refer the same dispute for adjudication at a subsequent stage without assigning any reasons. The learned counsel placed strong reliance on the judgment of the Punjab and Haryana High Court in M/s. Escorts Limited v. Industrial Tribunal and others (1983 Lab. I.C. 223) and the judgment of the Karnataka High Court in Management of Theatre Sanjay v. The State and others, [1984-II L.L.J. 400]. Learned counsel contended that the Supreme Court in Avon Services (Production Agencies) Pvt. Limited v. Industrial Tribunal and others [1979-I L.L.J. 1], and this Court in Khadi Gramodyog Bhavan v. Delhi Administration and others had not considered the question whether principle of audi alteram partem would be applicable in such a case.

3. Learned counsel for the respondent contended that government had the power to refer the dispute to industrial adjudication if it formed an opinion that an industrial dispute exists between the parties. This is purely an administrative decision and the government was the sole judge in regard to the factual existence of an industrial dispute and of the expediency of a reference. It was contended that the amplitude of the power could not be curtailed by the importation of other principles, the principle of audi alteram partem did not apply and the government was not obliged to give reasons for changing its mind while considering the matter afresh and making a reference even though a reference was refused on an earlier occasion. The learned counsel relied on the judgment of this Court in Khadi Gramodyog Bhavan's case (supra) and the judgment of the Supreme Court in Avon Services (Production Agencies) Pvt. Ltd. case (supra). Learned counsel further contended that while admitting this writ petition this Court had not stayed further contended that while admitting this writ petition this Court had not stayed further proceedings pending before the Labour Court. The Labour Court had proceeded with the matter and an award was already made which had been sent for publication.

4. This Court in Khadi Gramodyog case (supra) held that the fact that the appropriate government had refused to refer an industrial dispute for adjudication could not bar the government from subsequently referring the same dispute provided of course that the government exercise that right or that power on good and justifiable grounds. This Court further held that no notice was required nor was any fresh conciliation proceedings a condition precedent for making of this order by the appropriate Government.

5. It was however contended by the learned counsel for the petitioner that in view of the subsequent development of administrative law and the subsequent Full Bench judgment of the Karnataka High Court and Division Bench judgment of Punjab and Haryana High Court, the judgment of this Court in Khadi Gramodyog case (supra) was distinguishable.

6. The Division Bench of Punjab and Haryana High Court in Escorts' (supra) case inter alia came to the conclusion that the rule of audi alteram partem is attracted to the exercise of power a second time under S. 10(1) of the Industrial Disputes Act while referring the matter for adjudication after the same had been rejected earlier. The reasoning for this conclusion being that though an earlier rejection does not give a vested right to the employer to have the issue finally closed and no considerations of res judicata can arise in such a situation, the whole gamut of the industrial relation between the employer and the workman would remain in a continuous flux if despite an earlier rejection of a reference of an industrial dispute the same is reopened with impunity either independently or at the behest of the workman without any notice and behind the back of the employer. It was further held that grave and sometimes penal civil consequences may well ensue and thus principles of natural justice would inevitably be attracted in not only re-opening a rejected claim but referring it afresh for adjudication. The Punjab and Haryana High Court further opined that on reading of S. 10(1) Along with its authoritative construction it would follow that the earlier rejection of a claim to a reference of an industrial dispute has to be for indicated and recorded reasons and thus wherever an administrative order requires reasons to be give it would be a factor in favor of the right of the parties to be heard before such a considered order is reversed so as to enable them to bring before the authorities all the considerations for supporting or reversing the same.

7. The Full Bench of the Karnataka High Court delivered three separate judgments. The majority opined that the principle of audi alteram partem is applicable to make a reference of dispute for industrial adjudication under S. 10(1) of the Act, accorded and communicated such decision in accordance with the later part of S. 12(5) of the Industrial Disputes Act which proposes to refer the same dispute for adjudication subsequently except when :

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

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.

8. Ram Jois, J. held that apart from civil consequences which ensue under Ss. 31 and 33 of the Industrial Disputes Act, 1947 there may be other civil consequences which in certain cases might threaten the very existence of the industry and such consequences will be more telling on the affairs of the management in dispute involving financial implications which arise out of collective bargaining with the workmen. The circumstance 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 to the party and in reversal of that decision the government was referring the dispute without prior intimation to that party is likely to convey an impression to that party that it was not being dealt with fairly by the government and such an action would be contrary to the principle that justice must seem to have been done and there should be fair play in action.

9. Bopanna, J. observed that the Supreme Court in Hochtief Gammon, [1975-II L.L.J. 418] while dealing with the negative aspect of the power of the government i.e. the discretion to decline a reference has held that this power is controlled 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 this 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.

10. Thus when the government declines to refer a dispute the other party or parties to the dispute in the ordinary course are lulled into a sense of security and complacency and would be taken by surprise by the exercise of positive power by the government at a subsequent stage. The consequence being that the party or parties on a legitimate expectation that a final veil had been dropped on the issue may take certain steps to regulate the business and plan the growth of his industry which would be upset by a subsequent order of reference. The object of the Industrial Disputes Act, 1947 is planned growth of industry and organisation and adjudication of disputes between workmen and management was not the be-all and end-all of the Act. The consequences that may flow from an order of reference at a subsequent stage after once having declined to refer will have to be judged in this backdrop. In cases coming under the latter part of S. 12(6) 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 status quo by putting off the negotiations or conciliatory meetings to a future date.

11. To my mind, the legal consequences which according to the Karnataka High Court are likely to ensue can be resolved by adjudication by the Industrial Tribunal. The Karnataka High Court in its majority judgment has not considered the scope of the power of the Government under S. 10 of the Act. Then the Government forms its opinion on the question whether an order of reference under S. 10(1) is to be made or not it does so in prima facie examination of relevant facts and issues. This prima facie examination is done to ascertain if any industrial dispute exists or is apprehended and also whether it is expedient to make a reference. While coming to this conclusion the government also take into account whether the dispute is frivolous or relates to some belated claim and whether it is likely to have effect on the general community in that region. The final decision on the between the parties is done on adjudication by Labour Court or the Tribunal as the case may be and no final judgment is given by the government at that stage.

12. A somewhat similar question came in for consideration before the House of Lords in Wiseman and another v. Boraeman and others 1971 Appeal cases 297. The issue which arose was whether the Tribunal in determining a question between the tax-payer and the Commissioners of Inland Revenue referred to it under S. 28(5) of the Finance Act, 1961 was bound to observe the rules of natural justice and to give the tax-payers the right to see and comment upon material adverse to the tax-payer placed before the Tribunal by the Commissioners of Inland Revenue. While dismissing the appeal the House Lords held that since the Tribunal was not entitled to pronounce a final judgment against the tax-payer there was no necessity of giving to the tax-payer a right to see and reply to the statement. In that case Lord Reid observed thus :-

"Natural justice requires that procedure before any tribunal which is acting judicially shall be fair in all the circumstances and I would be sorry to see this fundamental general principle degenerate into a series of hard-and-fast rules. For a long time the courts, have, without objection from Parliament, supplemented procedure laid down in legislation where they found that to be necessary for this purpose. But before this unusual kind of power is exercised it must be clear that the statutory procedure is insufficient to achieve justice and that to require additional steps would not frustrate the apparent purpose of the legislation. If the tribunal were entitled to pronounce a final judgment against the taxpayer, justice would certainly require that he should have a right to see and reply to this statement, but all the tribunal can do is to find that there is a prima facie case against him.

It is, I think, not entirely irrelevant to have in mind that it is very unusual for there his to be a judicial determination of the question whether there is prima facie case. Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is nothing inherently unjust in reaching such a decision in the absence of the other party."

The Supreme Court in Avon Service (Production Agencies) Private Limited case (supra) has held as follows : (Para 7 of 1979-I L.L.J. 1 at page 4).

"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 be more in existence between the employee and the concerned employer and that the Government cannot spring a surprise by subsequently 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."

13. 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 to exercise the power but that does not 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 are available; they being the continued existence of the dispute and the wisdom of referring it, in the larger 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 taking table or before a quasi-judicial Tribunal would further accentuate the feelings and a threat to direct action may as well compel the Government to reconsider 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 to make a reference unless it be shown that there was some fresh or additional material before the Government the second reference would be incompetent."

14. From the above observations of the Supreme Court it is evident that the view of this Court in Khadi Gramodyog Bhavan (supra) case on the question of notice to the employer not being required when the decision not to refer a dispute is revised, has been impliedly upheld. The Supreme Court has rejected the argument that Government could not spring a surprise by subsequently unilaterally making the reference without any fresh or additional material being brought to its notice.

15. In my view, the principle of audi alteram partem would not be applicable in a case where the appropriate Government is required to make a reference of an industrial dispute for adjudication because while making such a reference the appropriate Government does not decide any question of fact or law. The Supreme Court has held that reasons are to be recorded by the appropriate Government only while refusing a reference and not while making a reference. An order making reference does not decide a dispute. It only affords an opportunity to the workmen and the Management to have the dispute adjudicated by an Industrial Tribunal. The Government only considers whether a dispute has arisen or is apprehended and whether it is expedient to refer it to an Industrial Tribunal but does not adjudicate upon dispute. Thus Government does not give a decision on merit of the dispute or determine rights of the parties to the dispute. No civil or penal consequence can be said to flow from the decision to refer a dispute for adjudication. If any other legal consequences are likely to flow as observed by Karnataka High Court; both the employer and employee would have full opportunity of contesting the matter on merits before the Labour Court and Tribunal. The Tribunal may consider all intervening circumstances. To say that principle of audi alteram partem is implicit would mean that a hearing has to be given to decide whether a hearing before the Labour Court or Tribunal ought to be given or not.

In any event since in my view the Avon Services (Production Agencies) Pvt. Ltd. case (supra) the Supreme Court has approved the view of this Court in Khadi Gramodyog Bhavan case (supra) and it is not the case of the petitioner that in the present case the opinion was revised by the Government for some ulterior reasons, I am unable to accept the contention of the petitioner that the judgment of this Court in Khadi Gramodyog Bhavan case (supra) is distinguishable. In my opinion the judgment of this Court in Khadi Gramodyog Bhavan case (supra) fully covers the present case.

16. In the result the petition is dismissed. Respondent No. 3 will be entitled to costs quantified at Rs. 500/-.