Judicial Review of the Order of Reference

The current topic under research is Judicial Review of the Order of Reference under Section 10(1) of the IDA. While dealing with the topic the researcher has relied primarily on the case laws developed in this area of law apart from that some of the important books in relevant in the labour jurisprudence such as O.P.Malhotra’s Law of Industrial Disputes and E.M. Rao’s Industrial jurisprudence has been used for having a first hand and clear understanding of the topic. As we will see the debate and the confusions surrounding the section 10(1) of the ID Act goes long back. However before going into the detailed discussion of the topic it is essential to state in brief that the object of the entire labour legislation is to promote industrial peace and harmony which would further the greater industrial development of the nation at large. To further the objectives as laid down in the ID Act different organs of government has been given different power. Also specialised bodies have been created under the act to deal with the matters and resolve the disputes expediently. In the case of Workmen of Dimakuchi v Management of Dimakuchi Tea Estate [1] principal objects of the act laid down by the court were as follows:-

The promotion of measures for securing good relation between employer and workmen.

An investigation and settlement of industrial dispute between employers and employees, employers and work men or between workmen and workmen.

The prevention of illegal strikes and lock outs

Relief to workers in the matter of lay-off and retrenchment.

Now coming to the topic in hand, here the prime attempt would be understand and follow the major decisions which has been laid down by the courts and what is the legal position emerging out of such decisions. This becomes essential in light of the facts that there have been conflicting judicial decisions dealing with the government’s power of order of reference under section 10(1) and the related aspects of the same.

Judicial Review of the Order of Reference under Section 10(1) of the IDA

The confusion surrounding section 10(1) of the IDA was first noticed by the Hon’ble SC in the case of United Commercial Bank Ltd. v UP Bank Employee Union [2] , there the matter concerned the construction of unamended section 10(1), which opened with the word “if any industrial dispute exists or is apprehended." Justice C.Iyer, posed the question that ‘whose apprehension is referred to in Act; the government or the parties or anyone else’s? The court here did not decide these questions since did not fall here for decision. But the court stated that these are interesting questions which needs to be resolved.

State of Madras v C.P.Sarathy [3] is a landmark judgement delivered by a five judge bench laying down various essential principles of dealing with the section and as we will see has been relied upon by various later judgments. In the present case criminal proceedings were initiated against the manager of one Prabhat talkies under section 29 of the ID Act on the charges that he has failed to comply with the order of the tribunal. This was challenged by him. Now brief facts preceding the criminal proceedings were that there was some dispute between the cinema hall owners and the employees association, the labour commissioner who was appointed as the conciliation officer prescribed certain minimum terms for the settlement of dispute were agreed to by the concerned respondents and five other cinema owners. However, since majority of cinema owners had refused to agree to the demand the matter was then referred to industrial tribunal. The tribunal pronounced the award and also held that the award would be binding on all the parties. This award was confirmed by the government. However the respondents had been arguing since the very beginning that there was no dispute in their establishment. Madras HC upheld the contentions of the respondent as stated that there was no dispute hence the award would not be binding. The SC held that "This view gives no effect to the words "or is apprehended" in section 10(1). In the present case, the Government referred "an industrial dispute between the workers and managements of cinema talkies in Madras City in respect of certain matters." In the given matter without going into the details of the government might have thought that the dispute is apprehended as there is overall dispute n the entire industry. Dealing with the nature of order of reference the court held that “This is, however, not to say that the Government will be justified in making a reference under section 10(1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry, and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference. But, it must be remembered that in making a reference under section 10(1) the Government is doing an administrative act and the fact that is has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. The Court cannot, therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi-judicial determination. No doubt, it will be open to a party seeking to impugn the resulting award to show that what was referred by the Government was not an industrial dispute within the meaning of the Act, and that, therefore, the Tribunal had no jurisdiction to make the award. But, if the dispute was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters."

Another very important case dealing with section 10(1) and the discretion of government to refuse the reference was dealt in the case of State of Bombay v K.P.Krishnan [4] in the present case there were certain disputes between the employee and the employer regarding the payment of bonus, however only two of the demands of the company were admitted for the conciliation. The conciliation process was futile and the report was submitted to government under section 12(4) of the IDA. The government refused to refer the dispute to industrial adjudication. The reason given by the government stated “for the reason that the workmen resorted to go slow during year 1952-53" the HC issued writ of mandamus stating that the reasons given by the court were extraneous. Now in the present case the prime matter under consideration was that on the basis of what materials the government can refuse the material. Will the cases falling under section 12(5) references can be made only under section 12(5) independently from section 10(1)? Is the government bound to base its decision only on the report made by conciliation officer under section 12(4)?

The court held that ‘reference cannot be under section 12(5) independently of section 10(1). On the point on which the government is to base its decision, the court stated that the report given by the conciliation officer would be very relevant for making the reference. But that does not suggest that report would be only relevant material. It would be open for the government to consider other relevant material on which government can base its conclusion. In dealing with the court’s power to issue writs in cases where the order in 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 reference under section 12(5) if the government refuse to record the reasons the writ of mandamus can be issued. However, when the court is hearing a writ petition for mandamus it is not sitting for appeal over the decision of the government; nevertheless if the court is satisfied that the reason given by the government for refusing to make 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.’

Another very important issue pertaining to the government’s power of ordering reference is as to what are the restrictions on the power i.e. if the appropriate government once refuses to refer the dispute can it refer the dispute later on, this is a highly contentious issue. This dispute was raised in the case of Avon Services Production Agencies (P) Ltd.v Industrial Tribunal, Haryana and Ors. [5] In the present case the employer by a letter in the year 1971 intimated few of the employees that their services were no longer required and hence they are being retrenched. The trade union espoused their cause. They put forward their demand some of which were referred for industrial adjudication on 19th February 1972. However their demand relating to the reinstatement of workers were not referred in the first instance and were referred later on by the government on 23rd November 1972. Now this reference was challenged by the appellant company. ‘Mr. O.P. Malhotra, learned counsel for the appellant raised two contentions before the court. He submitted that the Government having declined to make a reference under Section 10(1) of the Act in respect of termination of service of respondents as per its order dated 19th February 1972 was not competent or had no power or authority to make a reference in respect of the same dispute unless the Government must have come up with some fresh or additional material which, when the validity of the reference was challenged, must be disclosed of it must appear on the face of the reference itself. Alternatively it was contended that after having declined to make a reference in respect of termination of service of respondents, the Government was not competent to make a reference of an entirely different dispute touching the question of reinstatement of respondents which was a materially different dispute, from the one raised by the Union because the demand as is now referred to the Tribunal was never raised before the management and, therefore, no such demand existed which the Government could have referred to the Tribunal under Section 10(1) of the Act.’ [6] The Hon’ble court while dealing with these contentions retreated the position laid down by SC in the C.P.Sarathy [7] and held that the government’s power referring the dispute ‘at any time’ was a discretionary power. Merely because the government has refused to refer the dispute does not proves the fact that there is no dispute existing, and if at a later stage the government is satisfied that the reference is required for the purpose of protecting industrial peace it may make the reference at later stage. ‘The expression "at any time" is Section 10(1) will clearly negative the contention that once the Government declines to make a reference the power to make a reference under Section 10(1) in respect of the same dispute gets exhausted. Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process.’ [8] 

Here the court referred to the case of Western India Match Co. Ltd., v. Western India Match Co. Workers Union and Ors. [9] , in the present also the there was contention about section 4(K) of UP IDA, which required the interpretation of the term used in the section ‘at any time’. Here the court said that the expression "at any time", though seemingly without any limits, is governed by the context in which it appears. Court also stated that ordinarily the question of making a reference would arise in the cases where the conciliation proceedings have failed. However, if in the interest the industrial peace government feels that it is expedient to refer the dispute without going through such procedure it is free for the government to refer any such dispute ‘at any time’. The only requirement for reference is that an industrial dispute exists or is apprehended. It is possible for the government to refer the matter even if it has refused it earlier on the ground that certain new fact have come up or the government has failed to understood the earlier facts. Consequently, the power to make reference is not exhausted merely because the government has failed to refer the dispute at an earlier stage. There is thus a considerable body of judicial opinion according to which so long as an industrial dispute exists or is apprehended and the Government is of the opinion that is so, the fact that it had earlier refused to exercise its power does not preclude it from exercising it at a later stage.

After referring to the abovementioned decision of Western India Match Co. case , the court said that ‘when the Government declines to make a reference the source of power is neither dried up nor exhausted. It only indicates that the Government for the time being refused to exercise the power but that does not denude the power. The power to make the reference remains intact and can be exercised if the material and relevant considerations for exercise of power are available; they being the continued existence of the dispute and the wisdom of referring it, in the larger interest of industrial peace and harmony. Refusal to make the reference does not tantamount to saying that the dispute, if it at all existed, stands resolved.’ [10] 

The last aspect which is dealt under current topic is the courts power to issue the writ of mandamus against the order of the government’s power refusal of reference. Dealing with the issue of government’s power of refusal to order reference the SC in the case of Ram Avtar Sharma and Ors.Vs.State of Haryana and Anr. [11] The brief facts of the case were that the government has refused to refer the dispute here on the grounds that it was satisfied that the punishments inflicted on the workers were according to the rules and regulations. Dealing with the situations in which the court are armed with the power to review the order of refusal of reference the court held that the Government performs an administrative act while either making or refusing to make a reference under Section 10(1), it cannot delve into the merits of the dispute and take upon itself the determination of lis. That would certainly be in excess of the power conferred by Section 10. Section 10 requires the appropriate Government to be satisfied that an industrial dispute exists or is apprehended. This may permit the appropriate Government to determine prima facie whether an industrial dispute exists or the claim is frivolous or bogus or put forth for extraneous and irrelevant reasons not for justice or industrial peace and harmony. Every administrative determination must be based on grounds relevant and germane to the exercise of power. If the administrative determination is based on the irrelevant, extraneous or grounds not germane to the exercise of power it is liable to be questioned in exercise of the power of judicial review. In the case of K.P Krishnan [12] also the courts have said that in such situations the court would issue the writs of mandamus.

However there are certain grounds on which the government can refuse to make the order of reference are still in question. In the case of Telco Convoy Drivers Mazdoor Sangh and Anr. v. State of Bihar and Ors [13] the state government refuse to refer the dispute on the ground that there was no master-servant relationship between the appellant and the respondent, and hence the members of the union are not workmen of TELCO, hence it is not an industrial dispute. The division bench of SC held that while deciding that the concerned appellant are not workmen the government decided upon the merits of the case which is impressible in the present situation and the power granted to the government and so the state government was asked to refer the dispute. In another case of Secretary Indian Tea Association v Ajit Kumar Barat [14] the respondent was dismissed from the services and the concerned state government failed to refer the matter on the ground that the nature of work of the respondent clearly showed that he was not a worker hence the dispute was not an industrial dispute and hence no reference. Here also it was the division bench of the SC deciding the matter, after relying on the earlier decision of the SC on similar lines in the case of Prem Kakkar v State of Haryana upheld the decision of the government not to refer the dispute as the employee was not work men and hence no industrial dispute. Now, as we have noticed that these decisions of the court create a lot of confusion which the courts need to deal with.


After going through the details of cases in pertaining to the current topic under research and the position laid down in them it can be concluded that the order of reference of an dispute to an industrial dispute is essentially the administrative function of the government and the court does not sit into appeal to decide upon the veracity of the decision. However, if the party to dispute impugns the order he is free to challenge the decision. Also it needs to be mentioned that on certain grounds on which if the government refuses to issue an order of reference a writ of mandamus can be issued by the courts in case it feels that the order of the government was based on totally extraneous consideration and is not germane to the dispute. However as we have seen above in the cases such grounds are not very clear and the courts have decided differently on the similar facts which has caused a lot of confusion.