1. An interesting question has been raised in this writ petition which involves the competency and propriety of the State Government, who having refused to refer a dispute in the nature of an industrial dispute for adjudication by an Industrial Court, to once again exercise their power under S. 10 of the Industrial Disputes Act and refer the subject for industrial adjudication without hearing one of the parties, though it is common ground that the second exercise of power was at the instance of the other party. The petitioner is a beedi manufacturer in North Arcot District. He employs independent contrators for purposes of securing the beedies rolled by them, the raw material being supplied at an agreed cost by the petitioner to such an independent contractor. The independent contractor engages his own labour for purposes of rolling the beedies. Two of the workmen of the independent contractor complained that they were not given work from 5 November, 1969 and they raised an industrial dispute in that behalf before the Labour Officer, Vellore. According to the workmen of the independent contractor, they were victimized for their trade union activities. Though the petitioner had no express or implied connexion in the matter of the service of the two workmen of the independent contractor, yet the Labour Officer initiated conciliation proceedings in the presence of the petitioner as well. The Labour Officer, after an elaborate enquiry as to the nature of employment of the above workers reported a failure of conciliation. At the instance of the labour, the Labour Commissioner, Madras, intervened, who after enquiring all parties including the petitioner whose case was that he had nothing to do with the so called dispute, sent his own report on 8 April, 1970. The Government, having due regard to the first report of the Labour Officer and the later report of the Commissioner of Labour, declined to interfere and refer the case of the aforesaid two workmen for adjudication by a Labour Court or an Industrial Tribunal. The Government by G.O (Rt.) No. 1110, Labour Department, dated 25 May, 1970, passed the following order:

“The Government have considered the conciliation report read above. It is seen that the two workers surrendered their work to some other workers and that thereafter they did not work in the factory but visited it only off and on.

The non-employment resulted only out of their deliberate desertion of duty. The Government do not, therefore, refer the above issue for adjudication.”

It is seen that the Government applied their mind, weighed the material placed before them and found as a fact that the non-employment was as a result of desertion of duty and therefore, did not refer the matter for industrial adjudication. It is common ground that the municipal councillor of the division and the president of the Beedi Workers' Union, Tirupattur, made further representations on 25 June and 6 August, 1970. This is clear from Memorandum No. 43051(a) A3/70, Labour Department, dated 1 September, 1970, of the Government of Tamil Nadu. It is equally admitted that the further representations alleged to have been made by the two persons above named were not referred to the petitioner-management for their remarks or for their consideration. On the basis of such further representations which were obviously taken into consideration by the State Government, they reconsidered the matter and issued the following orders:

“On reconsideration of the orders passed in G.O (Rt.) No. 1110, Labour, dated 25 May, 1970, the Government have since referred the issue of non-employment of Ameer and Salarkhan to the Labour Court, Madras, for adjudication in G.O (Rt.) No. 1986 Labour, dated 1 September, 1970.”

Consequent upon such an internal decision made by respondent 1, the impugned notification in G.O (Rt.) No. 1986 Labour, dated 1 September, 1970, was issued by the Government in exercise of their powers conferred by S. 10(1)(c) of the Industrial Disputes Act, 1947. Under the notification the question whether the non-employment of the two workmen of the independent contractor was justified was referred to the Labour Court, Madras 1. It is significant to note that in the headnote given to this Government Order no reference is made to the further representations made by the municipal councillor of the division and the president of the union which form part of the memorandum, dated 1 September, 1970. In the impugned notification a reference is once again made to the conciliation report of the Labour Officer and to the recommendations of the Commissioner of Labour which, as I have already stated, were duly considered by the State Government when they issued the first order dated 25 May, 1970, whereunder they desisted to refer the matter for industrial adjudication. The main question argued by the learned counsel for the petitioner is that as the Government declined to refer the matter for adjudication after having weighed the pros and and cons of the subject by their order, dated 25 May, 1970, it is not open to the State Government to consider certain fresh facts and make a second reference on the same subject without giving an opportunity to the petitioner as person aggrieved or interested to make his own representations as to the fresh facts brought to their notice by the municipal councillor and the union. It is not in dispute that the said representations were made and entertained by the State Government behind the back of the petitioner and the petitioner is not aware of the contents of the representations and was never given an opportunity to contradict the averments that might have been made therein. The case of the petitioner is that respondent 1 has been influenced by these representations as from the record no other material could have prompted them to re-exercise their jurisdiction under S. 10. As the circumstances disclose a violation of the principles of natural justice the petitioner's complaint is that the Act of the Government is an abuse of the power and colourable exercise of power and is wholly without jurisdiction.

2. On the other hand, the learned Government Pleader would urge that there is no exhaustion of power when respondent 1 declined in the first instance to refer the subject for industrial adjudication and the Government have in them such inherent power to review the situation and issue orders without reference to the parties and once again call upon an Industrial Court to adjudicate the issue which is the nature of an industrial dispute. As at all times, it is the subjective opinion of the State Government that matters and as no civil consequences are involved while a bare order referring an alleged industrial dispute for adjudication is made, there is no necessity for the State Government to hear either of the parties when they review the situation and refer the matter for industrial adjudication though on a former occasion they desisted from doing so. He would add that the matters would not be different even if some new matter was considered by the State Government when it issued the second order referring the matter to the Labour Court, Madras, and it is not obligatory on the part of the State Government to hear the management at that time even though the occasion for the second reference is based on the further representations made by the municipal councillor or the trade union. The effective suggestion of the learned Government Pleader is that, as all notifications issued and orders made by the State Government in exercise of their powers under S. 10 of the Act are purely administrative in nature, no light interference with such orders is plausible or possible at this stage by this Court in exercise of its jurisdiction under Art. 226 of the Constitution.

3. Several decisions have been placed before me by either counsel to which I shall presently refer. No doubt, the jurisdiction exercised by the State Government while making a reference under S. 10(1)(c) of the Act is administrative in nature. But while it makes a reference it cannot be said that the said order, act or thing done by the Government is a pure and simple administrative act without having any impact upon the rights of parties. If the Government refuse or desist from making a reference then the right of the workman to secure an industrial adjudication in the hands of a quasi judicial Tribunal is lost. If, on the other hand, the Government exercise their power and decide to make a reference, then it has an impact upon the vested rights of the management. When once a reference is made, S. 33 would come into operation and the relative situation creates various inroads into the normal powers vested in the management qua management. During the pendency of any proceeding before a Labour Court or a Tribunal in respect of an industrial dispute, no employer shall, in regard to any matter connected with the dispute, alter to the prejudice of the workman concerned in such dispute, the conditions of service applicable to him immediately before the commencement of such proceeding; again, for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workman concerned in such dispute, save with the permission in writing of the authority before which the proceeding is pending. Further, during the pendency of any such proceeding in respect of an industrial dispute, the employer can act in accordance with the standing orders or in their absence with reference to the terms of contract whether express or implied and alter the conditions of service of the workman involved or punish a workman for any misconduct not connected with the dispute, but in all such cases after having paid the wages for one month to the workman and after having made an application to the authority before which the industrial dispute is pending for approval of the action taken by the employer. A special provision is made to protected workmen if an industrial dispute is pending adjudication. All the above are contained in Sub-cls. (1), (2) and (3) of S. 33. Any contravention of the provisions of S. 33 can be the subject-matter of a complaint in writing before an industrial adjudicator under S. 33-A. I have only referred to these sections to show that if the State Government Acts negatively or positively under S. 10 of the Act then the consequence of such action have a definite impact upon rights of either the workmen or the management. If the above is the consequence which invariably has to happen when a reference is refused or made by S. 10 of the Act, then in my view, such a refusal or exercise of power to refer certain disputes for industrial adjudication deals with rights involving civil consequences.

4. The contention, however, is that the order of reference made by the State Government under S. 10(1)(c) of the Industrial Disputes Act being purely administrative in nature, it is not susceptible to judicial review under Art. 226 of the Constitution. In recent times the net of the force, effect and usefulness of administrative law has been spread by march of times so as to catch within its fold what was once considered by Courts as non-justiciable. Even though the subject-matter initially springs from administrative action, yet in the process of exercising such a power, if a decision is taken so as to affect rights of parties, then the administrative authority should abide by the well-known principles of natural justice. This view is based on the fact that though the end is apparently executive in effect, yet the means adopted or the manner of exercise of power is likely to affect rights of third parties and may involve civil consequences as well. In those circumstances, even administrative orders can be scrutinized by Courts. Though the ultimate decision springs from administrative action and is based on subjective satisfaction of the authority, yet if such an indoor investigation forms part and parcel of a process, which may terminate in any orders adverse to the Interests of the person claiming to be heard before the authorities, then the concerned authority would be under an obligation to comply with the rules of natural justice which includes the rule of fair hearing. Justice sometimes demands that an investigation preceding a discretionary administrative decision be also conducted judicially. When the Government reviews its original orders of refusal to refer under S. 10 of the Industrial Disputes Act and re-exercises its power under that section which, no doubt, it can invoke at any time, then it makes a decision as is legally and popularly understood. Such a decision in the ultimate analysis is binding and conclusive on all the parties. It is in such a situation that an implied duty to act judicially becomes apparent. I have already referred to the aspect as to how such a decision affects both the rights of the workers as well as the management. The decision has, therefore, a constitutive quality and no longer the order can be secretive, as on that particular moment, the Government has the characteristic trappings of a quasi judicial tribunal. It cannot purely decide subjectively, but should also act objectively and avoid any appearance of injustice in the proceedings.

5. Hegde, I, of the Supreme Court in A.K Kraipak v. Union of India [(1969) 2 SCC 262 : A.I.R 1970 S.C 150], has classically summarized the content of administrative power. He said:

“The dividing line between an administrative power and a quasi judicial power is quite thin and is being gradually obliterated. For determining whether a power is an administrative power or a quasi judicial power one has to look to the nature of the power conferred, the person or persons on whom it is conferred, the framework of the law conferring that power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised. In a welfare State like India which is regulated and controlled by the rule of law, it is inevitable that the jurisdiction of the administrative bodies is increasing at a rapid rate. The concept of rule of law would lose its vitality if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirement of acting judicially in the essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered inherent in exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision. In recent years the concept of quasi judicial power has been undergoing a radical change. What was considered as an administrative power some years back is now being considered as a quasi judicial power.”

The learned Judge succinctly described the aim and operational force of the rules of natural justice. He said that the said rules are intended to secure justice or to put it negatively to prevent miscarriage of justice.

6. Thus, though certain bodies have the innocent garb of “administrative adjudication”, yet by necessity and in the light of the modern complicated involvement of such bodies with rights of others, and when its orders are likely to have an impact on civil consequences, such bodies should act objectively, follow the principles of natural justice and be not orthodoxically content with subjective action based on their opinion.

7. It is by now established that an order made by the Government either to refer or not to refer is a decision in the eye of law—Vide State of Bombay v. Krishnan (K.P) [1960-II L.L.J 592]. It is also settled that there is no limit of time within which such inherent power vested in the Government could be exercised. In D.F.O, South Kheri v. Ram Sanchi Singh [(1970) S.C.W.R 194], the Supreme Court quoting with approval the well-known case in State of Orissa v. Dr. (Miss) Binapani Dei [A.I.R 1967 S.C 1269 : 1967-II L.L.J 266] observed that the rule that a party to whose prejudice the order is intended to be passed is entitled to a hearing applied alike to judicial tribunals and bodies of persons invested with authority to adjudicate upon matters involving civil consequences and that it is one of the fundamental rules of our constitutional set-up that every citizen is protected against exercise of arbitrary authority by the State or its officers.

8. It is, therefore, seen that even though the Government has the power to act administratively at any time under S. 10 of the Industrial Disputes Act, yet it should bear in mind the ultimate principles of natural justice, for it is not only desirable in the interests of the parties whose rights they are considering and whose rights they are likely to affect, but also in order to render justice in the real sense of the term.

9. As the impugned order which prompted the Government to refer the matter when they re-exercised the power, is made solely on the further representations made by the representatives of the workmen and public man and as the management (petitioners) did not have the opportunity to rebut the content and scope of such representations, then the manner of exercise of power by the Government appears to be one, not strictly authorized in law which is undoubtedly impregnated with the principles of natural justice. The order violates the well-known rule of fair hearing and, therefore, has the appearance of injustice. If the Government suo motu changed their mind without anyone prompting them to do so and wanted to exercise their inherent power on the same materials which was considered by them in the first instance, the matters would be different. But the impugned order which is in the nature of a decision made by the Government is made on extraneous material in the sense that the petitioner did not have a fair opportunity to meet them or even know of them. In this sense there is an apparent error and there is a failure of the application of the well-known principles of natural justice.

10. For the above reasons the rule nisi is made absolute. The writ petition is allowed, and there will be no order as to costs.