SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.

Page 1 Friday, February 14, 2025

Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

1960 SCC OnLine SC 99 : (1961) 1 SCR 227 : AIR 1960 SC 1223 :

(1961) 2 SCJ 360 : (1960) 2 LLJ 592

In the Supreme Court of India

(BEFORE B.P. SINHA, C.J. AND J.L. KAPUR, P.B. GAJENDRAGADKAR, K. SUBBA
RAO AND K.N. WANCHOO, JJ.)

STATE OF BOMBAY … Appellant;

Versus
K.P. KRISHNAN AND OTHERS (AND CONNECTED
APPEAL) … Respondents.
Civil Appeals Nos. 37 & 38 of 1957*, decided on August 18, 1960
Advocates who appeared in this case:
C.K. Daphtary, Solicitor-General of India, R. Ganapathy Iyer and R.H.
Dhebar, for the Appellant (In CA No. 37 of 57) and Respondent 6 (in
CA No. 38/57);
S.D. Vimadalal and I.N. Shroff, for the Appellant (In CA No. 38/57)
and Respondent 6 (in CA No. 37/57);
Rajni Patel, S.N. Andley, J.B. Dadachanji, Rameshwar Nath and P.L.
Vohra, for Respondents 1 and 3 to 5 (In both the appeals);
S.B. Naik and K.R. Chaudhuri, for Respondent 2 (In both the
appeals).
The Judgment of the Court was delivered by
P.B. GAJENDRAGADKAR, J.— These two appeals arise from an
industrial dispute between the Firestone Tyre and Rubber Co. of India
Ltd., (hereafter called “the company”) and its workmen (hereafter
called “the respondents”), and they raise a short and interesting
question about the construction of Section 12(5) of the Industrial
Disputes Act 14 of 1947 (hereafter called “the Act”). It appears that the
respondents addressed four demands to the company; they were in
respect of gratuity, holidays, classification of certain employees and for
the payment of an unconditional bonus for the financial year ended
October 31, 1953. The respondents' union also addressed the Assistant
Commissioner of Labour, Bombay, forwarding to him a copy of the said
demands, and intimating to him that since the company had not
recognised the respondents' union there was no hope of any direct
negotiations between the union and the company. The Assistant
Commissioner of Labour, who is also the Conciliation Officer, was
therefore requested to commence the conciliation proceedings at an
early date. Soon thereafter the company declared a bonus equivalent to
1/4 of the basic earnings for the year 1952-53. The respondents then
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 2 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

informed the company that they were entitled to a much higher bonus
having regard to the profits made by the company during the relevant
year and that they had decided to accept the bonus offered by the
company without prejudice to the demand already submitted by them
in that behalf. After holding a preliminary discussion with the parties
the Conciliation Officer examined the four demands made by the
respondents and admitted into conciliation only two of them; they were
in respect of the classification of certain employees and the bonus for
the year 1952-53; the two remaining demands were not admitted in
conciliation. The conciliation proceedings initiated by the conciliator,
however, proved infructuous with the result that on July 5, 1954, the
conciliator made his failure report under Section 12(4) of the Act. In his
report the conciliator has set out the arguments urged by both the
parties before him in respect of both the items of dispute. In regard to
the respondents' claim for bonus the conciliator made certain
suggestions to the company but the company did not accept them, and
so it became clear that there was no possibility of reaching a settlement
on that issue. Incidentally the conciliator observed that it appeared to
him that there was considerable substance in the case made out by the
respondents for payment of additional bonus. The conciliator also dealt
with the respondents' demand for classification and expressed his
opinion that having regard to the type and nature of the work which
was done by the workmen in question it seemed clear that the said
work was mainly of a clerical nature and the demand that the said
workmen should be taken on the monthly-paid roll appeared to be in
consonance with the practice prevailing in other comparable concerns.
The management, however, told the conciliator that the said employees
had received very liberal increments and had reached the maximum of
their scales and so the management saw no reason to accede to the
demand for classification. On receipt of this report the Government of
Bombay (now the Government of Maharashtra) considered the matter
and came to the conclusion that the dispute in question should not be
referred to an Industrial Tribunal for its adjudication. Accordingly, as
required by Section 12(5) on December 11, 1954, the Government
communicated to the respondents the said decision and stated that it
does not propose to refer the said dispute to the Tribunal under Section
12(5) “for the reason that the workmen resorted to go slow during the
year 1952-53”. It is this decision of the Government refusing to refer
the dispute for industrial adjudication that has given rise to the present
proceedings.
2. On February 18, 1955, the respondents filed in the Bombay High
Court a petition under Article 226 of the Constitution praying for the
issue of a writ of mandamus or a writ in the nature of mandamus or
other writ, direction or order against the State of Maharashtra
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 3 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

(hereafter called “the appellant”) calling upon it to refer the said

dispute for industrial adjudication under Section 10(1) and Section 12
(5) of the Act. To this application the company was also impleaded as
an opponent. This petition was heard by Tendolkar, J. He held that
Section 12(5) in substance imposed an obligation on the appellant to
refer the dispute provided it was satisfied that a case for reference had
been made, and he came to the conclusion that the reason given by the
appellant for refusing to make a reference was so extraneous that the
respondents were entitled to a writ of mandamus against the appellant.
Accordingly he directed that a mandamus shall issue against the
appellant to reconsider the question of making or refusing to make a
reference under Section 12(5) ignoring the fact that there was a slow-
down and taking into account only such reasons as are germane to the
question of determining whether a reference should or should not be
made.
3. Against this decision the appellant as well as the company
preferred appeals. Chagla, C.J., and Desai, J,. who constituted the court
of appeal, allowed the two appeals to be consolidated, heard them
together and came to the conclusion that the viewtaken by Tendolkar,
J. was right and that the writ of mandamus had been properly issued
against the appellant. The appellant and the company then applied for
and obtained a certificate from the High Court and with that certificate
they have come to this Court by their two Appeals Nos. 37 and 38 of
1957. These appeals have been ordered to be consolidated and have
been heard together, and both of them raise the question about the
construction of Section 12(5) of the Act.
4. Before dealing with the said question it would be convenient to
state one more relevant fact. It is common ground that during a part of
the relevant year the respondents had adopted go-slow tactics.
According to the company the period of go-slow attitude was seven
months whereas according to the respondents it was about five
months. It is admitted that under clause 23(c) of the Standing Orders
of the company wilful slowing-down in performance of work, or
abatement, or instigation thereof, amounts to misconduct, and it is not
denied that as a result of the go-slow tactics adopted by the
respondents disciplinary action was taken against 58 workmen
employed by the company. The respondents case is that despite the go
-slow strategy adopted by them for some months during the relevant
year the total production for the said period compares very favourably
with the production for previous years and that the profit made by the
company during the relevant year fully justifies their claim for
additional bonus. The appellant has taken the view that because the
respondents adopted go-slow strategy during the relevant year the
industrial dispute raised by them in regard to bonus as well as
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 4 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

classification was not to be referred for adjudication under Section 12

(5). It is in the light of these facts that we have to consider whether
the validity of the order passed by the appellant refusing to refer the
dispute for adjudication under Section 12(5) can be sustained.
5. Let us first examine the scheme of the relevant provisions of the
Act. Chapter III which consists of Section 10 and 10-A deals with
reference of dispute to Boards, Courts or Tribunals. Section 10(1)
provides that where the appropriate Government is of opinion that any
industrial dispute exists or is apprehended, it may at any time by order
in writing refer the dispute to one or the other authority specified in
clauses (a) to (d). This section is of basic importance in the scheme of
the Act. It shows that the main object of the Act is to provide for cheap
and expeditious machinery for the decision of all industrial disputes by
referring them to adjudication, and thus avoid industrial conflict
resulting from frequent lock-outs and strikes. It is with that object that
reference in contemplated not only in regard to existing industrial
disputes but also in respect of disputes which may be apprehended.
This section confers wide and even absolute discretion on the
Government either to refer or to refuse to refer an industrial dispute as
therein provided. Naturally this wide discretion has to be exercised by
the Government bona fide and on a consideration of relevant and
material facts. The second proviso to Section 10(1) deals with disputes
relating to a public utility service, and it provides that where a notice
under Section 22 has been given in respect of such a dispute 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. It is thus clear that in regard to cases falling under
this proviso an obligation is imposed on the Government to refer the
dispute unless of course it is satisfied that the notice is frivolous or
vexatious or that considerations of expediency required that a reference
should not be made. This proviso also makes it clear that reference can
be made even if other proceedings under the Act have already
commenced in respect of the same dispute. Thus, so far as discretion of
the Government to exercise its power of referring an industrial dispute
is concerned it is very wide under Section 10(1) but is limited under
the second proviso to Section 10(1). Section 10(2) deals with a case
where the Government has to refer an industrial dispute and has no
discretion in the matter. Where the parties to an industrial dispute
apply in the prescribed manner either jointly or separately for a
reference of the dispute between them the Government has to refer the
said dispute if it is satisfied that the persons applying represent the
majority of each party. Thus, in dealing with this class of cases the only
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 5 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

point on which the Government has to be satisfied is that the persons

applying represent the majority of each party; once that test is satisfied
the Government has no option but to make a reference as required by
the parties. Similarly Section 10-A deals with cases where the employer
and his workmen agree to refer the dispute to arbitration at any time
before the dispute has been referred under Section 10, and it provides
that they may so refer it to such person or persons as may be specified
in the arbitration agreement; and Section 10-A(3) requires that on
receiving such an arbitration agreement the Government shall, within
fourteen days, publish the same in the Official Gazette. Section 10-A(4)
prescribes that the arbitrator or arbitrators shall investigate the dispute
and submit the arbitration award to the appropriate Government; and
Section 10-A(5) provides that such arbitrations are outside the
Arbitration Act. Thus cases of voluntary reference of disputes to
arbitration are outside the scope of any discretion in the Government.
That in brief is the position of the discretionary power of the
Government to refer industrial disputes to the appropriate authorities
under the Act.
6. The appropriate authorities under the Act are the conciliator, the
Board, Court of Enquiry, Labour Court, Tribunal and National Tribunal.
Section 11(3) confers on the Board, Court of Enquiry, Labour Court,
Tribunal and National Tribunal all the powers as are vested in a civil
court when trying a suit in respect of the matters specified by clauses
(a) to (d). A Conciliation Officer, however, stands on a different footing.
Under Section 11(4) he is given the power to call for and inspect any
relevant document and has been given the same powers as are vested
in civil courts in respect of compelling the production of documents.
7. Section 12 deals with the duties of Conciliation Officers. Under
Section 12(1) the Conciliation Officer may hold conciliation proceedings
in the prescribed manner where an industrial dispute exists or is
apprehended. In regard to an industrial dispute relating to a public
utility service, where notice under Section 22 has been given, the
Conciliation Officer shall hold conciliation proceedings in respect of it.
The effect of Section 12(1) is that, whereas in regard to an industrial
dispute not relating to a public utility service the Conciliation Officer is
given the discretion either to hold conciliation proceedings or not, in
regard to a dispute in respect of a public utility service, where notice
has been given, he has no discretion but must hold conciliation
proceedings in regard to it. Section 12(2) requires the Conciliation
Officer to investigate the dispute without delay with the object of
bringing about a settlement, and during the course of his investigation
he may examine all matters affecting the merits and the right
settlement of the dispute and do all such things as he thinks fit for the
purpose of inducing the parties to come to a fair and amicable
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 6 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

settlement. The duty and function of the Conciliation Officer is, as his
very name indicates, to mediate between the parties and make an
effort at conciliation so as to persuade them to settle their disputes
amicably between themselves. If the Conciliation Officer succeeds in his
mediation Section 12(3) requires him to make a report of such
settlement together with the memorandum of the settlement signed by
the parties to the dispute. Section 18(3) provides that a settlement
arrived at in the course of conciliation proceedings shall be binding on
the parties specified therein. It would thus be seen that if the attempts
made by the Conciliation Officer to induce the parties to come to a
settlement succeeds and a settlement is signed by them it has in
substance the same binding character as an award under Section 18
(3). Sometimes efforts at conciliation do not succeed either because
one of the parties to the dispute refuses to cooperate or they do not
agree as to the terms of settlement. In such cases the Conciliation
Officer has to send his report to the appropriate Government under
Section 12(4). This report mustset forth the steps taken by the officer
for ascertaining the facts and circumstances relating to the dispute and
for bringing about a settlement thereof together with a full statement of
such facts and circumstances and the reasons on account of which in
his opinion a settlement could not be arrived at. The object of requiring
the Conciliation Officer to make such a full and detailed report is to
apprise the Government of all the relevant facts including the reasons
for the failure of the Conciliation Officer so that the Government may be
in possession of the relevant material on which it can decide what
course to adopt under Section 12(5). In construing Section 12(5),
therefore, it is necessary to bear in mind the background of the steps
which the Conciliation Officer has taken under Section 12(1) to (4). The
Conciliation Officer has held conciliation proceedings, has investigated
the matter, attempted to mediate, failed in his effort to bring about a
settlement between the parties, and has made a full and detailed report
in regard to his enquiry and his conclusions as to the reasons on
account of which a settlement could not be arrived at.
8. 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-
section (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. If 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
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 7 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

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. The High Court has held that the word
“may” in the first part of Section 12(5) must be construed to mean
“shall” having regard to the fact that the power conferred on the
Government by the first part is coupled with a duty imposed upon it by
the second part. The appellant and the company both contend that this
view is erroneous. According to them the requirement that reasons
shall be recorded and communicated to the parties for not making a
reference does not convert “may” into “shall” and that the discretion
vesting in the Government either to make a reference or not to make it
is as wide as it is under Section 10(1) of the Act. Indeed their
contention is that, even after receiving the report, if the Government
decides to make a reference it must act under Section 10(1) for that is
the only section which confers power on the appropriate Government to
make a reference.
9. It is true that Section 12(5) provides that the appropriate
Government may make such reference and in that sense it may be
permissible to say that a power to make reference is conferred on the
appropriate Government by Section 12(5). The High Court was
apparently inclined to take the view that in cases falling under Section
12(5) reference can be made only under Section 12(5) independently
of Section 10(1). In our opinion that is not the effect of the provisions
of Section 12(5). If it is held that in cases falling under Section 12(5)
reference can and should be made only under Section 12(5) it would
lead to very anomalous consequences. Section 10(3) empowers the
appropriate Government by an order to prohibit the continuance of any
strike or lockout in connection with an industrial dispute which may be
in existence on the date of the reference, but this power is confined
only to cases where industrial disputes are referred under Section 10
(1). It would thus be clear that if a reference is made only under
Section 12(5) independently of Section 10(1) the appropriate
Government may have no power to prohibit the continuance of a strike
in connection with a dispute referred by it to the Tribunal for
adjudication; and that obviously could not be the intention of the
legislature. It is significant that Section 23 and 24 prohibit the
commencement of strikes and lock-outs during the pendency of
proceedings therein specified, and so even in the case of a reference
made under Section 12(5) it would not be open to the employer to
declare a lock-out or for the workmen to go on strike after such a
reference is made; but if a strike has commenced or a lock-out has
been declared before such a reference is made, there would be no
power in the appropriate Government to prohibit the continuance of
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 8 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

such a strike or such a lock-out. Section 24(2) makes it clear that the
continuance of a lock-out or strike is deemed to be illegal only if an
order prohibiting it is passed under Section 10(3). Thus the power to
maintain industrial peace during adjudication proceedings which is so
essential and which in fact can be said to be the basis of adjudication
proceedings is exercisable only if a reference is made under Section 10
(1). What is true about this power is equally true about the power
conferred on the appropriate Government by Sections 10(4), (5), (6)
and (7). In other words, the material provisions contained in sub-
sections (3) to (7) of Section 10(1) which are an integral part of the
scheme of reference prescribed by Chapter III of the Act clearly
indicate that even if the appropriate Government may be acting under
Section 12(5) the reference must ultimately be made under Section 10
(1). Incidentally it is not without significance that even in the petition
made by the respondents in the present proceedings they have asked
for a writ of mandamus calling upon the appellant to make a reference
under Sections 10(1) and 12(5).
10. Besides, even as a matter of construction, when Section 12(5)
provides that the appropriate Government may make such reference it
does not mean that this provision is intended to confer a power to make
reference as such. That power has already been conferred by Section 10
(1); indeed Section 12(5) occurs in a Chapter dealing with the
procedure, powers and duties of the authorities under the Act; and it
would be legitimate to hold that Section 12(5) which undoubtedly
confers power on the appropriate Government to act in the manner
specified by it, the power to make a reference which it will exercise if it
comes to the conclusion that a case for reference has been made must
be found in Section 10(1). In other words, when Section 12(5) says
that the Government may make such reference it really means it may
make such reference under Section 10(1). Therefore it would not be
reasonable to hold that Section 12(5) by itself and independently of
Section 10(1) confers power on the appropriate Government to make a
reference.
11. The next point to consider is whether, while the appropriate
Government acts under Section 12(5), it is bound to base its decision
only and solely on a consideration of the report made by the
Conciliation Officer under Section 12(4). The tenor of the High Court's
judgment may seem to suggest that the only material on which the
conclusion of the appropriate Government under Section 12(5) should
be based is the said report. There is no doubt that having regard to the
background furnished by the earlier provisions of Section 12 the
appropriate Government would naturally consider the report very
carefully and treat it as furnishing the relevant material which would
enable it to decide whether a case for reference has been made or not;
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 9 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

but the words of Section 12(5) do not suggest that the report is the
only material on which Government must base its conclusion. It would
be open to the Government to consider other relevant facts which may
come to its knowledge or which may be brought to its notice, and it is
in the light of all these relevant facts that it has to come to its decision
whether a reference should be made or not. 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 the 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 based on a consideration of relevant facts and
circumstances, and the second part of Section 12(5) is complied with.
12. We have already noticed that Section 12 deals with the
conciliation proceedings in regard to all industrial disputes, whether
they relate to a public utility service or not. Section 12(1) imposes an
obligation on the Conciliation Officer to hold conciliation proceedings in
regard to an industrial dispute in respect of public utility service
provided a notice under Section 22 has been given. If in such a dispute
the efforts at conciliation fail and a failure report is submitted under
Section 12(4) Government may have to act under Section 12(5) and
decide whether there is a case for reference. Now, in dealing with such
a question relating to a public utility service considerations prescribed
by the second proviso to Section 10(1) may be relevant, and
Government may be justified in refusing to make a reference if it is
satisfied that the notice given is frivolous or vexatious or that reference
would be inexpedient. Just as discretion conferred on the Government
under Section 10(1) can be exercised by it in dealing with industrial
disputes in regard to non-public utility services even when Government
is acting under Section 12(5), so too the provisions of the second
proviso can be pressed into service by the Government when it deals
with an industrial dispute in regard to a public utility service under
Section 12(5).
13. It would, therefore, follow that on receiving the failure report
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 10 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

from the Conciliation Officer Government would consider the report and
other relevant material and decide whether there is a case for
reference. If it is satisfied that there is such a case for reference it may
make a reference. If it does not make a reference it shall record and
communicate to the parties concerned its reasons therefor. The
question which arises at this stage is whether the word “may” used in
the context means “shall”, or whether it means nothing more than
“may” which indicates that the discretion is in the Government either to
refer or not to refer.
14. It is urged for the respondent that where power is conferred on
an authority and it is coupled with, the performance of a duty the words
conferring power though directory must be construed as mandatory. As
Mr Justice Coleridge has observed in Reg. v. Tithe Commissioners1.
“The words undoubtedly are only empowering; but it has been so often
decided as to have become an axiom, that, in public statutes, words
only directory, promissory or enabling may have a compulsory force
where the thing to be done is for the public benefit or in advancement
of public justice”. The argument is that Section 12(5) makes it
obligatory on the Government to record and communicate its reasons
for not making the reference and this obligation shows that the power
to make reference is intended to be exercised for the benefit of the
party which raises an industrial dispute and wants it to be referred to
the authority for decision. It may be that the legislature intended that
this requirement would avoid casual or capricious decisions in the
matter because the recording and communication of reasons postulates
that the reasons in question must stand public examination and
scrutiny and would therefore be of such a character as would show that
the question was carefully and properly considered by the Government;
but that is not the only object in making this provision. The other
object is to indicate that an obligation or duty is cast upon the
Government, and since the power conferred by the first part is coupled
with the duty prescribed by the second part “may” in the context must
mean “shall”. There is considerable force in this argument. Indeed it
has been accepted by the High Court and it has been held that if the
Government is satisfied that there is a case for reference it is bound to
make the reference.
15. On the other hand, if the power to make reference is ultimately
to be found in Section 10(1) it would not be easy to read the relevant
portion of Section 12(5) as imposing an obligation on the Government
to make a reference. Section 12(5) when read with Section 10(1) would
mean, according to the appellant, that, even after considering the
question, the Government may refuse to make a reference in a proper
case provided of course it records and communicates its reasons for its
final decision. In this connection the appellant strongly relies on the
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 11 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

relevant provisions of Section 13. This section deals with the duties of
Boards and is similar to Section 12 which deals with Conciliation
Officers. A dispute can be referred to a Board in the first instance under
Section 10(1) or under Section 12(5) itself. Like the Conciliation Officer
the Board also endeavours to bring about a settlement of the dispute.
Its powers are wider than those of a conciliator but its function is
substantially the same; and so if the efforts made by the Board to
settle the dispute fail it has to make a report under Section 13(3).
Section 13(4) provides that if on receipt of the report made by the
Board in respect of a dispute relating to a public utility service the
appropriate Government does not make a reference to a Labour Court,
Tribunal or National Tribunal under Section 10, it shall record and
communicate to the parties concerned its reasons therefor. The
provisions of Section 13 considered as a whole clearly indicate that the
power to make a reference in regard to disputes referred to the Board
are undoubtedly to be found in Section 10(1). Indeed in regard to
disputes relating to non-public utility services there is no express
provision made authorising the Government to make a reference, and
even Section 13(4) deals with a case where no reference is made in
regard to a dispute relating to a public utility service which means that
if a reference is intended to be made it would be under the second
proviso to Section 10(1). Incidentally this fortifies the conclusion that
whenever reference is made the power to make it is to be found under
Section 10(1). Now, in regard to cases falling under Section 13(4) since
the reference has to be made under Section 10 there can be no doubt
that the considerations relevant under the second proviso to Section 10
(1) would be relevant and Government may well justify their refusal to
make a reference on one or the other of the grounds specified in the
said proviso. Besides, in regard to disputes other than those falling
under Section 13(4) if a reference has to be made, it would clearly be
under Section 10(1). This position is implicit in the scheme of Section
13. The result, therefore, would be that in regard to a dispute like the
present it would be open to Government to refer the said dispute under
Section 12(5) to a Board, and if the Board fails to bring about a
settlement between the parties Government would be entitled either to
refer or to refuse to refer the said dispute for industrial adjudication
under Section 10(1). There can be no doubt that if a reference has to
be made in regard to a dispute referred to a Board under Section 13
Section 10(1) would apply, and there would be no question of
importing any compulsion or obligation on the Government to make a
reference. Now, if that be the true position under the relevant
provisions of Section 13 it would be difficult to accept the argument
that a prior stage when Government is acting under Section 12(5) it is
obligatory on it to make a reference as contended by the respondent.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 12 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

16. The controversy between the parties as to the construction of

Section 12(5) is, however, only of academic importance. On the
respondents' argument, even if it is obligatory on Government to make
a reference provided it is satisfied that there is a case for reference, in
deciding whether or not a case for reference is made Government would
be entitled to consider all relevant facts, and if on a consideration of all
the relevant facts it is not satisfied that there is a case for reference it
may well refuse to make a reference and record and communicate its
reasons therefor. According to the appellant and the company also
though the discretion is with Government its refusal to make a
reference can be justified only if it records and communicates its
reasons therefor and it appears that the said reasons are not wholly
extraneous or irrelevant. In other words, though there may be a
difference of emphasis in the two methods of approach adopted by the
parties in interpreting Section 12(5) ultimately both of them are agreed
that if in refusing to make a reference Government is influenced by
reasons which are wholly extraneous or irrelevant or which are
notgermane then its decision may be open to challenge in a court of
law. It would thus appear that even the appellant and the Company do
not dispute that if a consideration of all the relevant and germane
factors leads the Government to the conclusion that there is a case for
reference the Government must refer though they emphasise that the
scope and extent of relevant consideration is very wide; in substance
the plea of the respondents that “may” must mean “shall” in Section 12
(5) leads to the same result. Therefore both the methods of approach
ultimately lead to the same crucial enquiry : are the reasons recorded
and communicated by the Government under Section 12(5) germane
and relevant or not?
17. It is common ground that a writ of mandamus would lie against
the Government if the order passed by it under Section 10(1) is for
instance contrary to the provisions of Section 10(1)(a) to (d) in the
matter of selecting the appropriate authority; it is also common ground
that in refusing to make a reference under Section 12(5) if Government
does not record and communicate to the parties concerned its reasons
therefor a writ of mandamus would lie. Similarly it is not disputed that
if a party can show that the refusal to refer a dispute is not bona fide or
is based on a consideration of wholly irrelevant facts and circumstances
a writ of mandamus would lie. 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 judicial 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
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 13 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

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. After an elaborate argument on the construction
of Section 12(5) was addressed to us it became clear that on this part
of the case there was no serious dispute between the parties. That is
why we think the controversy as to the construction of Section 12(5) is
of no more than academic importance.
18. That takes us to the real point of dispute between the parties,
and that is whether the reason given by the appellant in the present
case for refusing to make a reference is germane or not. The High Court
has held that it is wholly extraneous and it has issued a writ of
mandamus against the appellant. We have already seen that the only
reason given by the appellant is that the workmen resorted to go slow
during the year 1952-53. It would appear prima facie from the
communication addressed by the appellant to the respondents that this
was the only reason which weighed with the Government in declining to
refer the dispute under Section 12(5). It has been strenuously urged
before us by the appellant and the company that it is competent for the
Government to consider whether it would be expedient to refer a
dispute of this kind for adjudication. The argument is that the object of
the Act is not only to make provision for investigation and settlement of
industrial disputes but also to secure industrial peace so that it may
lead to more production and help national economy. Cooperation
between capital and labour as well as sympathetic understanding on
the part of capital and discipline on the part of labour are essential for
achieving the main object of the Act; and so it would not be right to
assume that the Act requires that every dispute must necessarily be
referred to industrial adjudication. It may be open to Government to
take into account the facts that the respondents showed lack of
discipline in adopting go-slow tactics, and since their conduct during a
substantial part of the relevant year offended against the standing
orders that was a fact which was relevant in considering whether the
present dispute should be referred to industrial adjudication or not. On
the other hand, the High Court has held that the reason given by the
Government is wholly extraneous and its refusal to refer the dispute is
plainly punitive in character and as such is based on considerations
which are not at all germane to Section 12(5). This Court has always
expressed its disapproval of breaches of law either by the employer or
by the employees, and has emphasised that while the employees may
be entitled to agitate for their legitimate claims it would be wholly
wrong on their part to take, recourse to any action which is prohibited
by the standing orders or statutes or which shows wilful lack of
discipline or a concerted spirit of non cooperation with the employer.
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 14 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

Even so the question still remains whether the bare and bald reason
given in the order passed by the appellant can be sustained as being
germane or relevant to the issue between the parties. 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. In exercising
its power under Section 10(1) it would not be legitimate for the
Government for instance to say that it does not like the appearance,
behaviour, or manner of the secretary of the union, or even that it
disapproves of the political affiliation of the union, which has sponsored
the dispute. Such considerations would be wholly extraneous and must
be carefully excluded in exercising the wide discretion vested in the
Government. In the present case it is significant that the company has
voluntarily paid three months bonus for the relevant year
notwithstanding the fact that the workmen had adopted go-slow tactics
during the year, and the report of the conciliator would show prima
facie that he thought that the respondents' claim was not at all
frivolous, The reasons communicated by the Government do not show
that the Government was influenced by any other consideration in
refusing to make the reference. It is further difficult to appreciate how
the misconduct of the respondents on which the decision of the
Government is based can have any relevance at all in the claim for the
classification of the specified employees which was one of the items in
dispute. If the work done by these employees prima facie justified the
claim and if as the conciliator's report shows the claim was in
consonance with the practice prevailing in other comparable concerns
the misconduct of the respondents cannot be used as a relevant
circumstance in refusing to refer the dispute about classification to
industrial adjudication. It was a claim which would have benefitted the
employees in future and the order passed by the appellant deprives
them of that benefit in furtue. Any considerations of discipline cannot,
in our opinion, be legitimately allowed to impose such a punishment on
the employees. Similarly, even in regard to the claim for bonus, if the
SCC Online Web Edition, © 2025 EBC Publishing Pvt. Ltd.
Page 15 Friday, February 14, 2025
Printed For: Dhruv Singh, Jindal Global University
SCC Online Web Edition: https://www.scconline.com
© 2025 EBC Publishing Pvt. Ltd., Lucknow.
-----------------------------------------------------------------------------------------------------------------------------------------------------------

respondents are able to show that the profits earned by the company
during the relevant year compared to the profits earned during the
preceding years justified their demand for additional bonus it would
plainly be a punitive action to refuse to refer such a dispute solely on
the ground of their misconduct. In this connection it may be relevant to
remember that for the said misconduct the company did take
disciplinary action as it thought fit and necessary and yet it paid the
respondents bonus to which it thought they were entitled. Besides, in
considering the question as to whether a dispute in regard to bonus
should be referred for adjudication or not it is necessary to bear in mind
the well-established principles of industrial adjudication which govern
claims for bonus. A claim for bonus is based on the consideration that
by their contribution to the profits of the employer the employees are
entitled to claim a share in the saidprofits, and so any punitive action
taken by the Government by refusing to refer for adjudication an
industrial dispute for bonus would, in our opinion, be wholly
inconsistent with the object of the Act. If the Government had given
some relevant reasons which were based on, or were the consequence
of, the misconduct to which reference is made it might have been
another matter. Under these circumstances we are unable to hold that
the High Court was in error in coming to the conclusion that the
impugned decision of the Government is wholly punitive in character
and must in the circumstances be treated as based on a consideration
which is not germane and is extraneous. It is clear that the Act has
been passed in order to make provision for the investigation and
settlement of industrial disputes, and if it appears that in cases falling
under Section 12(5) the investigation and settlement of any industrial
dispute is prevented by the appropriate Government by refusing to
make a reference on grounds which are wholly irrelevant and
extraneous a case for the issue of a writ of mandamus is clearly
established. In the result we confirm the order passed by the High
Court though not exactly for the same reasons.
19. The appeals accordingly fail and are dismissed with costs, one
set of hearing fees.
———
*
Appeals from the Judgment and Order dated August 30, 1955, of the former Bombay High
Court in Appeals Nos. 55 and 56 of 1955, arising out of the judgment and order dated June
23, 1955, of the said High Court in Misc. Application No. 80 of 1955.

1
(1849) 14 QB 459, 474 : 117 ER 179, 185

Disclaimer: While every effort is made to avoid any mistake or omission, this casenote/ headnote/ judgment/ act/ rule/
regulation/ circular/ notification is being circulated on the condition and understanding that the publisher would not be
liable in any manner by reason of any mistake or omission or for any action taken or omitted to be taken or advice
rendered or accepted on the basis of this casenote/ headnote/ judgment/ act/ rule/ regulation/ circular/ notification. All
disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
this text must be verified from the original source.