Holding

The dispute is a fit case for reference and the State Government must refer it to the Labour Court.

Summary

A large number of workmen of Lucas‑T.V.S. Ltd. were dismissed for alleged misconduct; seven of them raised disputes under s.11‑A of the Industrial Disputes Act after conciliation failed. The Tamil Nadu Government refused to refer the disputes to the Labour Court, citing the fairness of the domestic inquiry, the nature of the offences, the company's defence contracts and past industrial unrest. The High Court upheld the refusal, but the Supreme Court set aside those judgments, holding that the grounds were irrelevant and that the State could not usurp the Tribunal’s adjudicatory function. The Court directed the Government to reconsider the matter without relying on the dismissed grounds and to decide within 30 days whether to refer the disputes, ultimately concluding that the case was fit for reference. The appeal was allowed and the Government was ordered to refer the disputes to the Labour Court within one month, with the Labour Court to dispose of them within four months.

Issues considered

The State Government may decline to refer an industrial dispute to the Labour Court on the basis of the fairness of the domestic inquiry and the nature of the offences.
Whether the State Government can examine the merits of the dispute or must limit itself to a prima facie assessment under s.10(1) read with s.12(5) of the Industrial Disputes Act.
Whether the grounds advanced by the Government are relevant and sufficient to refuse reference.
Whether the Supreme Court can direct the State Government to make a reference.

Legislation cited

Industrial Disputes Act, 1947s. 10(1), s. 11-A, s. 12(5)

Subjects

Industrial Disputes ActReference to Labour CourtState Government jurisdictionPrima facie examinationIndustrial unrestDisciplinary dismissalNatural justiceAdjudication

Judgment

V. VEERARAJAN & ORS.
v. A
GOVERNMENT OF TAMIL NADU & ORS.

JANUARY 14, l987

[RANGANATH MISRA & M.M. DUTT, JJ.] B
Industrial Disputes Act, 1947-Ss. JO & 12(5)-State Govern-
ment-Reference of dispute for adjudication-Fit case where reference
should be made-What is.

A large number of workmen of the respondent-company were
proceeded against by the management on certain charges, Later most of c
them were taken back to employment. On failure of conciliation in
regard to 7 of the dismissed workmen, disputes were raised under s.
11-A of the Industrial Disputes Act, 1947. The Government declined to
make a reference to the Labour Court for adjudication, A Single Judge
as well as the Division Bench rejected the Writ Petition of the workmen. D
On appeal, this Court on 9th July, 1985 set aside the judgments
passed by the Single Judge and the Division Bench and directed the
State Government to reconsider the matter without taking into account
the ground that the domestic inquiry had been conducted by the emp-
loyer according to the principles of natural justice and the punishment
E
imposed was not disproportionate to the gravity of the offence commit-
ted by the dismissed workmen and come to decision within 30 days
whether it would make a reference of the industrial dispute to the
Labour Court.

The Government again declined to make a reference stating: (I) F
that the company manufactures and supplies certain items to the
Defence Department; (2) that there was industrial unrest followed by
violence and stoppage of work in the establishment due to inter-union
rivalry; (3) that the management charge-sheeted the workmen under
specific provisions of the standing order; (4) that the workmen
themselves had admitted the charges against them; (5) that in view of G
the proven charges and the need to preserve industrial peace in the
establishment it was not a fit case for adjudication both on expediency
and on mertis.

When the appeal came up for further hearing, on behalf of the
appellants-workmen it was contended that the grounds given in support H

997
998 SUPREME COURT REPORTS [1987] l S.C.R.

of the order are totally irrelevant, immaterial and do not justify the A
A refusal to refer the dispute.

On behalf of the respondents it was contended: (I) that the statute
authorises the State to take a prima facie view of the matter for ascer-
taining whether it was a fit case wherein exercise of jurisdiction under Sec-
B tloo 10(1) read with 12(5) was called for and a reference was warranted; (2) ).
that the State Government in declining to make a reference has kept
itself within the limit set by law; (3) that the grounds advanced in j
support of refusal to make a referen~e were clearly tenable and indi-
cated that a broad and overall view of the matter was taken by the State
Government; (4) that since the jurisdiction of this Court is not appellate ~
J
and order of the State Government is administrative in character, no
c interference was warranted; and (5) that ifthe grounds advanced by the
State Government were neither germane nor relevant, the· matter 'f
should go back to the State Government fC)r fresh disposal as it is not for
this Court to direct a reference to be made.

D Allowing the Appeal,

HELD: I. I It is open to the State Government to take the broad
features into consideration while exercising jurisdiction under s. I 0( I)
of the Industrial Disputes Act, 1947. If the dispute in question raises a
question of law the appropriate Government should not purport to ~
E reach a final conclusion on the said question of law because that would
normally lie within the jurisdiction of ,the Industrial Tribunal. Simi-
larly, on disputed questions of fact, the appropriate Government can-
not purport to reach final conclusions for that again would be the ~

province of the Industrial Tribunal. [10038; 1004A-B]

F 1.2 S. IO permits appropriate Government to determine whether
m.pnte 'exists or is apprehended' and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication. [1004F-G I

1.3 There may be exceptional cases in which the State Govern-
ment may, on a proper examination of the demand, come to a conclu-
r
sion that the demands are either perverse or frivolous and do not merit
G
a reference. Government should be very slow to attempt an examination
\
of the demand with a view to decline reference and Courts will always }
be vigilant whenever the Government attempts to usurp the powers of
the Tribunal for adjudication of valid disputes. To allow the Govern-
ment to do so would be to renders. IO and s. 12(5) of the Industrial
H Disputes Act nugatory. [1005A-C]
V. VEERARAJAN v. GOVT. OF T.N. [MISRA J.] 999

Bombay Union of Journalists v. State. of Bombay, [1964] 6 SCR
22 = AIR 1964 S.C. 1617 M.P. Irrigation Karamchari Sangh v. State of A
M.P., [1985] 2 SCC 103 & Ram Awtar Sharma & Ors. v. State of
Haryana & Anr., [1985] 3 SCC 189, relied upon.

2. This is a fit case where a reference should he made. In the order
of this Court on July 9, 1985 it had been clearly stated that a direction. B
to make a reference would have been given hut for the submission
advanced on behalf of the counsel for the respondents that the matter
should go hack and the State Government should he given an opportunity
of giving other valid reasons, if any, in support of its order. [lOOSG; 1006A]

Nirmal Singh v. State of Punjab & Ors., [1984] Lab IC 1312 &
Sankari Cement Alai Thozhilalar Munnetra Sangam & Anr. v. c
Management of India Cements Ltd., [1983] 1L.L.J.460, referred to.

3. The matter should go back to the State Government for fresh
disposal and the State Government should make its order of reference
within one month and the Labour Court to which the dispute may ·be D
referred shall dispose of the reference within four months from the date
. of the receipt of the reference. [1006C-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 31-!4
of 1985.
E
From the Judgment and Order dated 20. 11. 1984 of the Madras
High Court in Writ Appeal No. 178 of 1982

M.K. Ramamurthy, Ambrish Kumar and Rajaraman for the
Appellants.
f
K. Parasaran, Attorney General, G.L. Sanghi, Dr. Y.S. Chitale,
A.V. Rangam, T.V. Ratnam and A.T.M. Samanth for the Res-
pondents.

The Judgment of the Court was delivered by
G
RANGANATH MISRA, J. 154 workmen were proceeded
against by the management of Lucas-T.V.S. Limited, Madras, for
wilful disobedience of lawful orders of superiors, acts subversive of
good and proper behaviour within the establishment after authorised
hours of work without permission and shouting of slogans within the
establishment amounting to misconduct under Standing Orders. Later H
1000 SUPREME COURT REPORTS [1987] I S.C.R.

A 134 of them were taken back to cmpioyment. In regard to 7 of the
dismissed workmen conciliation was undertaken and upon its failure,
disputes raised under section 11-A of the Industrial Disputes Act were
asked to be referred to the Labour Court for adjudication. When
Government declined to make a reference, the High Court was
moved. The learned Single Judge rejected the writ petition and the
B Division Bench upheld such rejection. This appeal by special leave is
against the order of the Division Bench of the High Court.

This Court on July 9, 1985 after hearing counsel for parties came
to the conclusion.

"Now it is clear from the order made by the State Govern-
c ment on I !th October, 1979 which order has been reaf-
firmed by the State Govt. by its order dated 3rd May, 1981,
that the only ground on which the State Government re-
fused to make a reference, of the dispute to the labour
court was that, in its opinion the domestic inquiry had been
D conducted by the 3rd respondent (employer) according to
the principles of natural justice and the punishment
imposed by the 3rd respondent on the appellants was not
disproportionate to the gravity of the offence committed by
them. This is also borne out from paragraph 6 of the
counter-affidavit filed on behalf of the tst respondent
E ........ where it has been clearly stated that tile Labour
Department of the Government of Tamil Nadu opined that
the management had conducted a fair and proper inquiry
and also taken in c'1nsideration the gravity of the offence
before dismissing the appellants and the punishment im-
.posed on the appellants was not dispropo-tionate having
F regard to the nature of the charges proved against them.
This ground on which the State Government has acted in
refusing to refer the dispute to the labour court is clearly
an irrelevant ground. It is now settled law as a result of the
decisions of this Court in Workmen of Syndicate Bank,
Madras v. Government of India & Anr., [1985] l L.L.J. 93
G and Ramawatar Sharma and Ors., v. State of Haryana &
Anr., [1985] 1 Scale 713 that the appropriate Government
cannot decline to make reference of an industrial dispute
arising out of the termination of the service of a workman
on the ground that the domestic inquiry resulting in the
termination of the services of the workman was in the opi-
H nion of the State Government in conformity with the
V. VEERARAJAN v. GOVT. OF T.N. (MISRA J.] 1001

principles of natural justice and that the punishment
imposed on the workman was not disproportionate to the A
offence with which he was charged ....... "

"We would therefore have ordinarily allowed the
appeal and set aside the judgments of the learned Single
Judge and the Division Bench of the High Court and B
directed the State Government to make a reference of the
industrial dispute between the appellants and the 3rd
respondent. But Dr. Chitale appearing on behalf of the 3rd
respondent urged that there might be some other relevant
grounds which may still be required to be considered by the
State Government before deciding whether to make a c
reference or not and the case should therefore go back to
the State Government to reconsider the question in the
same manner in which this Court directed \he State
Government to reconsider in the Workmen of Syndicate
Bank case (supra). But this is a case in which more than 7
years have elap•ed since the appellants were dismissed D
from service and they are still nowhere near a reference.
We would therefore set aside the judgments passed by the
learned Single Judge and the Division Bench and direct the
State government to reconsider the matter without taking
into account the aforesaid irrelevant ground and come to a
decision within a period of 30 days from the date of receipt E
of the copy of this order whether it would make a reference
of the industrial dispute to the Labour Court. We would
keep the appeal pending before us and as soon as the deci-
sion is reached by the State Government, which of course
should be within a period of 30 days from the date of re-
ceipt of the copy of this order by the State Government, F
intimation of such decision shall be given to the Court so
that the Court can then consider whether the decision
reached by the State Government is legally justified or not.
We are informed that V. Kondiah the 2nd appellant has
already settled the dispute with the 3rd respondent and
therefore the question of making a reference of the dispute G
will have to be considered by the State Government only in
regard to the remaining 6 appellants."

After the matter went back the State Government has made the
following order: H
1002 SUPREME COURT REPORTS [!987] 1 S.C.R.

"Accordingly the Government have re-examined the con- A
A. ciliation report first read above and all other connected
relevant records and consider that it is not necessary to
refer the cases of Thiruvalargal K. Arinathan, A.C.
Kabaleswaran, V. Srinivasan, V. Veerarajan, P. Subrama-
nian and H. Indirarajan for adjudication both on merits
B and on expediency for the following reasons: ~

( l) Lucas-T. V.S. Limited are suppliers of some
items to the Defence.

(2) There was industrial unrest followed-by violen°"
and stoppage of work in this establishment in 1977 due to
c inter union rivalry.

Again there was industrial unrest due to inter union
. rivalry in this establishment in 1978 employing 2400 work-
men. To avoid recurrence of such incidence and stoppage
D of work again in 1978 the Management took disciplinary
action against 154 workmen. The Management took back
134 workmen out of 154. The seven workmen are among
those who were dismissed considering the gravity of the
offence.

E (3) The Management charge-sheeted these seven
workmen under the specific provisions of the standing
orders for misconduct such as wilful disobedience of lawful
orders of the superiors, acts of subversive of good and
proper behaviour within the establishment, being within
the establishment after authorised hours of work without "
F permission shouting slogans within the establishment etc.

(4) All the workmen admitted the charges framed
against them during the enquiries and hence the Manag-
ment dismissed them from service based on these enquiries
and taking into account their past services.
G
(5) Since the workmen themselves have admitted the
charges against them. The Government consider that the
charges have been proved.

(6) The Government also considered the nature of
H proven charges and the quantum of punishment imposed
V. VEERARAJAN v. GOVT. OF T.N. (MISRA J.] 1003
A.
on them with a view· to decide the question whether the
reference should be made or not. A

(7) Considering the proven charges and the need to
preserve industrial peace in the establishment the Govern-
·.( ment consider that this is not a fit case for adjudication
both on expediency and on merits. B

No action is considered necessary in respect of the
case of Thiru A. Kondaiah who has settled his accounts

"
finally with Management."

With reference to the order made by t.he State Government the
y appeal has been further heard. Mr. Rainamurthi for the appellants, c
learned Attorney General for the Government of Tamil Nadu and Dr.
Chitale for the Management have advanced their respective conten-
tions.

The seven grounds given in support of the order refusing to make D
a reference have been challenged by Mr. Ramamurthi as irrelevant.
The facts that the Company manufactures and supplies certain items to
the Defence Department of the Union of India and there was indus-
f. trial unrest followed by violence and stoppage of work, according to
learned counsel, are not germane and relevant for the purpose of
deciding as to whether the dispute raised by the six workmen should be E
referred to industrial adjudication. So far as the third ground is con-
cerned, according to Mr. Ramamurthi, it is in effect repetition of the
earlier grounds which this Court found to be irrelevant. The language
has been changed and the grounds have been made descriptive and
detailed. Coming to the 4th ground it is contended that all the 154 ·
delinquent workmen had accepted their guilt when negotiation for a F
settlement was undertaken. There was no justification for the em-
ployer to discriminate between 134 workmen who were restored to
service and the remaining 20 including the six appellants to whom
re-employment was not given. Mr. Ramamurthi states that ground No.
5 is totally irrelevant. Similarly, grounds nos. 6 and 7 are not at all
material and do not justify the refusal to refer the dispute. In support G
of the appeal the learned counsel has further contended that in a .series
-4.
of decisions beginning with the case of Bombay Union of Journalists v.
State of Bombay, [1964) 6 SCR 22=AIR 1964 SC 1617 this Court has
clearly laid down that it is open to the State Government to take the
broad features into consideration while exercising jurisdiction under
section IO( l) of the Act. If the dispute in question raises a question of H
1004 SUPREME COURT REPORTS [1987] I S.C.R.

A law the appropriate Government should not purport to reach a final
conclusion on the said question of law because that would normally lie
within the jurisdicti~m of the Industrial Tribunal. Similarly, on dis-
puted questions of fact, the appropriate Government cannot purport
to reach final conclusions for that again would be the province of the
Industrial Tribunal. Gajendragadkar, J. as he then was speaking in ;.
B that case indicated:

" .... it would not be possible to accept the plea that the
appropriate Government is precluded from considering l
even prima facie the merits of the dispute when it decides r
the question as to whether it' power to make a reference
should be exercised under section IO( 1) read with the sec-
c tion 12(5), or not. If the claim made is patently frivolous, "f
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
D 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 facie 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 section IO( 1) ...... "
E
Mr. Ramamurthi also placed reliance on the decision in the case of
M.P. Irrigation Karamchari Sangh v. State of M.P., [1985] 2 SCC !03
where it has been said:

"There, while conceding a very limited jurisdiction to the
F State Government to examine patent frivolousness of the
demands, it is to be understood as a rule, that adjudication
of demands made by workmen should be left to the
Tribunal to decide. Section lO permits appropriate
Government to determine whether dispute 'exists or is
apprehended' and then refer it for adjudication on merits.
G The demarcated functions are ( 1) reference, (2) adjudica-
tion. When a reference is rejected on the specious plea that )
the Government cannot bear the additional burden, it
constitutes adjudication and thereby usurpation of the
power of a quasi-judicial Tribunal by an administrative
authority namely the appropriate Government ..... What
H the State Government has done in this case is not a prima
V. VEERARAJAN v. GOVT. OF T.N. [MISRA J.] !005

facie examination of the merits of the question involved."
A
"There may be exceptional cases in which the State
Government may, on a proper examination of the demand,
come to a conclusion that the demands are either perverse
or frivolous and do not merit a reference. Government
should be very slow to attempt an examination of the B
demand with a view to decline reference and courts will
always be vigilant whenever the Government attempts to
usurp the powers of the Tribunal for adjudication of valid
disputes. To allow the Government to do so would be to
render Section 10 and Section 12(5) of the Industrial
Disputes Act nugatory."
c
In the case of Ram Awtar Sharma & Ors. v. State of Haryana &
Anr., [ 1985) 3 SCC 189 the ratio in the Bombay Union of Journalists'
case has been reiterated.

Learned Attorney General for the State of Tamil Nadu submit- o
ted that the statute authorises the State to take a prima facie view of
the matter for the purpose of ascertaining whether it was a fit case
wherein exercise of jurisdiction under section IO( 1) read with section
+ 12(5) of the Act was called for and a reference was warranted. The
State Government in declining to make a reference in the present case
has kept itself within the limit set by law as delineated by this Court. E

Dr. Chitale contended that the grounds advanced in support or
refusal to make a reference were clearly tenable and indicated that a
broad and overall view of the matter was taken by the State Govern-
ment. Since the jurisdiction of this Court is not appellate and the order
of the State Government is administrative in character, no interfer- i.:
ence was warranted. Dr. Chitale further added that if we took view
that the grounds advanced by the State Government were neither
germane nor relevant, the matter should go back to the State Govern-
ment for afresh disposal as it is not for this Court to direct a reference
to be made.
G
Having heard learned counsel for the parties we are of the view
that this is a fit case where a reference should be made~In the order of
this Court in the present case on July 9, 1985 it has been clearly stated
that a direction to make a reference would have been given but for the
submission advanced by Dr. Chitale that the matter should go back
and the State Government should be given an opportunity of giving H
1006 SUPREME COURT REPORTS [1987] 1 S.C.R.

A other valid reasons, if any, in support of its order. In the case of
Nirmal Singh v. State of Punjab & Ors., [ 1984] Lab IC 1312 this Court
gave a direction that reference be made forthwith. Similarly, in the
case of Sankari Cement Alai Thozhilalar Munnetra Sangam & Anr. v.
Management of India Cements Ltd., ( 1983] I L.L.J. 460 this court gave a
direction for making of a reference. ).
8
The criticism advanced by Mr. Ramamurthi in regard to the
reasons given by the State Government seem to be well-founded and
we are of the opinion that the respondent-State Government should
have a direction to refer the dispute for adjudication by the labour ~
court. The State Government's order should be made within one
C month from to-day and the Labour Court to which the dispute may be
referred shall have a direction to dispose of the reference within four 1
months hence from the date of receipt of the reference. The appellants
shall be entitled to costs. Hearing fee is assessed at Rs. 3,000 and is
recoverable from Respondent No. l.

A.P.J. Appeal allowed.