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Atic Employees Union v. State Of Gujarat
Factual and Procedural Background
This petition under Article 226 of the Constitution was filed by a petitioner-union challenging the order dated 8 February 1984 passed by the first respondent, the State of Gujarat, which refused to refer an industrial dispute to the Industrial Court under Section 10 of the Industrial Disputes Act. The principal dispute raised by the petitioner-union on behalf of its members was that respondent 2 (the employer-company) required workers to sign written undertakings before being permitted to resume duties after a lockout that had been imposed for a considerable time. The State's reference application had been decided after hearing representatives of both the union and the employer, and the State rejected the application for reference, giving detailed reasons.
The State held the union's claim to be patently frivolous and found that making a reference would likely adversely affect general relations between employers and employees in the region. The State placed reliance on the Supreme Court decision in Bombay Union of Journalists v. State of Bombay (A.I.R. 1964 S.C. 1617) in support of its approach.
The personnel officer of the third respondent filed an affidavit-in-reply giving workforce statistics: total strength 1,501 employees; 951 employees had signed the bonds/undertakings and of these 43 had subsequently cancelled the bond; 527 employees did not sign and 43 employees who had signed later cancelled the bond (the affidavit text repeats the cancellation figure). Following intervention by the Collector and District Magistrate and the District Superintendent of Police, Valsad, an arrangement was reached under which a substantial number of employees agreed to sign undertakings to be kept in custody of the Collector/DM pending the present proceedings; the Court was informed that about 592 workmen had signed under that arrangement.
Legal Issues Presented
- Whether the State (first respondent) was justified in exercising its discretion under Section 10(1) of the Industrial Disputes Act (read with Section 12(5)) to refuse to refer the dispute for adjudication by the Industrial Court.
- Whether the union's claim concerning the employer's insistence on written undertakings was patently frivolous or otherwise inappropriate for reference, taking into account its impact on industrial peace and employer-employee relations in the region.
- Whether the High Court should, in exercise of its jurisdiction under Article 226, interfere with the State's discretionary refusal to refer the dispute.
Arguments of the Parties
Petitioner-Union's Arguments
- The petition (brought under Article 226) challenged the State's order refusing to refer the industrial dispute under Section 10 of the Industrial Disputes Act. The union contended that the requirement to sign written undertakings before resuming duty raised issues warranting adjudication.
- Before the Court, Sri Mishra (advocate for the petitioner-union) stated that the undertakings signed by concerned workmen under the arrangement were executed "without prejudice to the rights and interests of the workmen concerned."
Respondent-Company's Arguments (Respondent 2)
- The company had insisted on written undertakings at the time the lockout was lifted to preserve industrial peace and to provide a moral sanction for resumption of work after agitations that had turned violent.
- Through counsel Sri K.S. Nanavati and the affidavit of the personnel officer of the third respondent, the company pointed to workforce numbers showing a large number had signed and resumed work; many who signed continue to work peacefully, and adjudication about illegality of undertakings at this stage would disturb industrial peace and could provoke further unrest among those who had already signed.
- The company disputed the union's assertion that the signed undertakings were without prejudice to workmen's rights.
First Respondent / State's Position
- The State refused to refer the dispute for industrial adjudication under Section 10 on the grounds that the claim was patently frivolous and that a reference would likely adversely affect employer-employee relations in the region.
- The State relied on the Supreme Court's decision in Bombay Union of Journalists v. State of Bombay (A.I.R. 1964 S.C. 1617) concerning the scope of the appropriate Government's discretion when deciding whether to refer disputes under Section 10(1) read with Section 12(5) of the Industrial Disputes Act.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Bombay Union of Journalists v. State of Bombay, A.I.R. 1964 S.C. 1617 | The Supreme Court explained that the appropriate Government, when deciding whether to make a reference under S.10(1) read with S.12(5), exercises a discretion and is entitled to undertake a prima facie examination of the merits; it may refuse to refer if the claim is patently frivolous, clearly belated, or likely to adversely affect industrial relations. | The first respondent's decision refusing the reference relied on this principle. The High Court accepted that principle and applied it to hold that the State could lawfully refuse reference here because the claim was treated as frivolous and a reference would likely disrupt industrial peace. |
Court's Reasoning and Analysis
The High Court (Majumdar, J.) reviewed the first respondent's reasons and found them "well borne out on the facts and in the circumstances of the case." The Court's analysis followed these steps:
- Context and Nature of Lockout: The Court noted that there had been a lingering lockout in the respondent company arising out of employee agitations which had turned violent. At the time the lockout was lifted, the company required written undertakings to preserve industrial peace and provide a moral sanction for resumption of work.
- Scope of State's Discretion: The Court accepted the legal principle from Bombay Union of Journalists that the appropriate Government has discretion under S.10(1) and S.12(5) to refuse a reference after a prima facie examination — in particular when a claim is patently frivolous or its referral would adversely affect regional industrial relations.
- Factual Basis for Refusal: The Court referred to affidavit material and submissions showing that out of a total strength of 1,501 employees a large number had signed the undertakings and resumed work (figures in the record: 951 signed, 43 of those subsequently cancelled; 527 did not sign; the affidavit repeats that 43 cancelled). The Court accepted the company's contention that many of those who signed were working peacefully, and that adjudication at that stage could disturb peace and encourage further unrest among those already working.
- Amicable Arrangement and Subsequent Conduct: The Court took into account a subsequent development: following intervention by the Collector and District Magistrate and the District Superintendent of Police, Valsad, an arrangement was reached under which employees agreed to sign undertakings to be kept in custody of the Collector/ DM pending the present proceedings. The Court was informed that about 592 workmen had signed pursuant to that arrangement, and a cyclostyled copy of the conditions had been placed on record.
- Assessment of Practical Consequences: Given the arrangement and the practical effect on industrial peace, the Court concluded that any reference at that stage would be academic and not in the interest of the workmen, the company, or industrial harmony. This practical consideration reinforced the reasonableness of the State's discretionary refusal.
- Reservation of Contested Legal Questions: The Court clarified that questions about the legal effect of the undertakings (including in possible back-wages proceedings) remain open and may be litigated before the appropriate Tribunal; it did not decide disputed contentions about whether the undertakings were signed without prejudice to workmen's rights.
- Interim Protective Direction: Because undertakings had been placed in custody under the arrangement, the Court directed that the District Magistrate and Collector, Valsad, should not part with the undertakings to respondent 3 at least until 30 June 1984, to enable the petitioner-union to pursue any further appeal to the Supreme Court.
Holding and Implications
Holding: DISPOSED OF
The Court dismissed the petition and declined to interfere with the first respondent's order refusing to refer the dispute for adjudication. Notice was discharged with no order as to costs.
Direct Effects and Immediate Consequences:
- The State's refusal to refer the dispute under Section 10 of the Industrial Disputes Act is upheld by this Court on the grounds stated in the order (claim treated as frivolous; adverse impact on industrial relations; subsequent amicable arrangement making reference academic).
- The undertakings signed pursuant to the arrangement before the Collector and District Magistrate, Valsad, are to be kept in the custody of the District Magistrate and Collector and not to be handed over to respondent 3 at least until 30 June 1984, to permit any further appeal to the Supreme Court by the petitioner-union.
- The Court expressly left open the legal controversies relating to the validity or effect of the undertakings, including any back-wages claims; those issues may be fully contested before the appropriate Tribunal.
No new legal precedent was declared by this judgment; the decision applies established principles concerning the discretion of the appropriate Government under Section 10(1) read with Section 12(5) of the Industrial Disputes Act, as articulated in the cited Supreme Court authority.
Majumdar, J.:— In this petition, under Art. 226 of the Constitution, the petitioner-union has sought the intervention of this Court against the order, dated 8 February, 1984, passed by the first respondent-State of Gujarat refusing to refer an industrial dispute for adjudication by the Industrial court under S. 10 of the Industrial Disputes Act on the ground that the dispute raised is not of such a nature which requires adjudication by the Industrial Court. It is pertinent to note that the main dispute which was raised by the petitioner-union on behalf of its members was that respondent 2 company, which is the employer, was insisting that the workers should sign written undertakings before they can be permitted to resume duties after lifting of the locokout which had remained imposed by the company for quite some time. The reference application was decided by the first respondent after hearing the representatives of the petitioner-union as well as respondent 2 employer. Detailed reasons are given by the first respondent for rejecting the application for reference. It has been held that claim raised in the dispute by the union is patently frivolous and the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse and that it is, therefore, not desirable to make reference as prayed for. Reliance is placed on the decision of the Supreme Court in the case of Bombay Union of Journalists v. State of Bombay, [A.I.R 1964 S.C 1617], in that connection. P.B Gajendragadkar, J., speaking for the Supreme Court in the aforesaid judgment laid down as under:
“When the appropriate Government considers the question as to whether a reference should be made under S. 12(5), it has to act under S. 10(1) of the Act and S. 10(1) confers discretion on the appropriate Government either to refer the dispute, or not to refer it, for industrial adjudication according as it is of the opinion that it is expedient to do so or not. In other words, in dealing with an industrial dispute in respect of which a failure report has been submitted under S. 12(4), the appropriate Government ultimately exercises its power under S. 10(1) subject to this that S. 12(5) imposes an obligation on it to record reasons for not making the reference when the dispute has gone through conciliation and a failure report has been made under S. 12(4). It is true that if the dispute in question raises questions of law, the appropriate Government should not purport to reach a final decision on the said questions of law, because that would normally be within the jurisdiction of the Industrial Tribunal. Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclusions, for that again would be province of the Industrial Tribunal. But it would not be possible to accept the plea that the appropriate Government is precluded from considering even prima facie the merits of the dispute when it decides the question as to wheteher its power to make a reference should be exercised under S. 10(1) read with S. 12(5) or not. If the claim made is patently frivolous, or is clearly belated, the appropriate Government may refuse to make a reference. Likewise, if the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not. It must, therefore, be held that a prima faice examination of the merits cannot be said to be foreign to the enquiry which the appropriate Government is entitled to make in dealing with a dispute under S. 10(1).”
2. In our view, the reason given by the first respondent for rejecting the reference application are well borne out on the facts and in the circumstances of the case. It is pertinent to note that there was a lingering lockout in respondent-company which arose out of certain agitations of the employees which had turned violent. At the time when the lockout was lifted, in order to preserve industrial peace, and with a view to providing for a moral sanction for the concerned employees, respondent 2 company had asked the concerned employees to resume work after signing a written undertaking. If the first respondent found that by insisting on such an undertaking, the industrial peace was going to be maintained and that the dispute raised was a frivolous one, and hence, no reference was required, we cannot say sitting under Art. 226 that the reasons put forward by the first respondent are in any way perverse or unreasonable. We may note at this stage that in response to the notice issued by this Court pending admission of this petition, the personnel officer of the third respondent concern has filed his affidavit-in-reply opposing the present petition. It has been pointed out in Para. 3.3 of the affidavit-in-reply that total strength of the workmen of the company was 1,501. Out of 1,501, employees, 951 employees have signed the bands and out of 951, 43 workmen subsequently cancelled the bond; while 527 employees did not sign and 43 employees who had signed the bonds subsequently cancelled the same. It thus appears that out of total employees aggregating 1,501, large number of employees had signed such undertakings and resumed their work. About 500 and odd employees, however, refused to sign those undertakings and raised an industrial dispute for reference to the appropriate authority under the Industrial Disputes Act. Sri K.S Nanavati for the concern informs us that subsequently a large number of employees who had signed the undertakings and resumed work are working peacefully and if any dispute is now raised by the remaining employees for adjudication of the Tribunal about the illegality of the said undertaking, peace and tranquillity in the campus is likely to be affected and a substantial number of employees who have signed the undertakings are likely to raise further dispute. If the State Government in exercise of its discretion found that referring such a dispute for industrial adjudication would raise spirit of discontent on the part of a substantial number of workers who had already signed such undertakings and resumed work and it would amount to giving fillip to industrial unrest on spot and in that view, if the reference is refused, we cannot say that such discretionary order of the State Government is in any way perverse or uncalled for or it is liable to be interfered with in exercise of our powers under Art. 226 of the Constitution of India.
3. We may also note a further development in this connection which will have a direct impact on the result of the present proceedings. On account of the intervention of Collector and District Magistrate, Valsad, as well as the District Superintendent of Police, Valsad, the concerned employees represented by the petitioner-union have agreed to sign the undertakings which earlier respondent 2 company insisted that they should sign before they resume the duties, and that they have agreed to sign the undertakings which will remain in the custody of the Collector and District Magistrate awaiting the final decision in the present proceedings and the concerned employees will be permitted to resume their duties after signing such undertakings. We have been informed by the learned advocates for the parties that at least about 592 workmen represented by the petitioner-union have signed such undertakings. A cyclostyled copy of the conditions of the arrangement reached by the petitioner-union and the respondent-company before the Collector and the District Magistrate and the District Superintendent of Police, Valsad, has been put on record of this case.
4. In view of the aforesaid amicable arrangement between the parties, in our view, any reference at this stage would be totally academic and not in the interest of the workman or the respondent-company or in the interest of the industrial peace and harmony. Even on this additional ground the order of the first respondent stands justified and is not required to be interfered with at this stage. However, we may clarify that in the back-wages proceedings which may be initiated by the petitioner-union on behalf of the concerned employees, all the legal pleas can be raised by both the sides in challenge and defence of the undertakings. Sri Mishra, learned advocate for the petitioner-union, made it clear before us that the undertakings have been signed by the concerned workmen as per the aforesaid arrangement without prejudice to the rights and interest of the workmen concerned. Sri Nanavati for the respondent-company disputed this contention. We need not express any opinion on this controversy as that question will also remain open for the decision by the concerned Tribunal.
5. Before parting with this order, we may observe that the arrangement arrived at between the petitioner-union and second respondent-industry before the Collector and the District Magistrate, Valsad, indicates that the signed undertakings of the concerned employees will be kept in the custody of the District Magistrate awaiting decision in the present proceedings in this Court and also awaiting decision of the Supreme Court in any appeal from the said decision, if any. As the present petition is being disposed of by our present order, it would be obvious that as per the arrangement between the parties, the District Magistrate, Valsad, will have to keep custody of these signed undertakings awaiting orders of the Supreme Court in further appeal, if any that may be filed by the petitioner-union. In that view of the matter, in our view, interest of justice will be served if we direct the District Magistrate and Collector, Valsad, not to part with the undertakings signed by the concerned employees in favour of respondent 3 atleast for a reasonable period which, in our view, should be up to 30 June, 1984, to enable the petitioner-union to obtain proper orders from the Supreme Court in further appeal, if any, which the petitioner-union may choose to file.
6. Subject to the aforesaid observations and clarification, the petition stands disposed of. Notice discharged with no order at to costs.
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