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TMI Blog1981 (5) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst 16 of its workmen, 11 of whom having been impleaded as respondents 4 to 14 in this petition. The workmen did not appear at the domestic enquiry and consequently on the basis of the ex parte findings recorded during enquiry proceedings, orders for dismissal were passed against all the 16 workmen. An industrial dispute having been raised, by an order dated 12th June, 1973 respondent No. 1, referred to the Industrial Tribunal 1, Allahabad, certain issues between the petitioner and its workmen including the propriety of the dismissal of the aforesaid 16 workmen. During the pendency of the aforesaid reference, the petitioner and its workmen entered into what has been described as a Settlement on the 16th July, 1973 duly signed by the parties including the dispute regarding the dismissal of the 16 workmen. The settlement, inter alia, provided that the question whether the termination of the services of the aforesaid 16 workmen was justified and or legal would be referred to Sri B. B. Lal, Adviser to the Governor, U. P. and his findings will be binding on both the parties. The so-called Settlement further provided that both the parties would submit a petition to the State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d paid the workmen who had been laid-off l/3rd of their wages as ex gratia amount. Respondent Nos. 3 to 14, who remained dissatisfied with the order of Sri Lal filed a writ petition in this Court which was dismissed as being premature. Respondent No. 1 having been moved by respondent No. 3 to make a reference under Section 4-K of the Act of an industrial dispute relating to dismissal of respondent Nos. 4 to 14 rejected the representation on the ground that the Award of Sri B. B. Lal was final and binding on the parties. Respondent Nos. 3 to 14 thereupon filled in this Court Misc. Writ Petition No. 6004 of 1974 challenging the decision of the State Government refusing to make a reference of the dispute. It is alleged that in that writ petition a counter-affidavit was filed on behalf of the Government of Uttar Pradesh wherein the stand was taken that the findings given by Sri B. B. Lal were binding on both the parties to the dispute and since some of the workmen had already availed of the benefits given by Sri Lal it was not open to the petitioner to challenge the remaining part of the findings which went against the workmen. On the 22nd August, 1977, an application was made by the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement or the workmen concerned in some form or the other before making a reference in the first instance itself. He, however, contended that once the Government had refused to make a reference because either in its opinion there was no industrial dispute or it was not expedient to made one, the employer could act on the expectation that there would be a quietus and to proceed to arrange his affairs on that basis and if the Government in respect of the same dispute altered its mind at a later stage, it was incumbent on it to bring to the notice of the management the material on which it proposed to make a reference and to take into consideration the management's version before taking a decision to refer the dispute for adjudication He relied on the decision of the Supreme Court in A. K. Kraipak v. Union of India Smt. Meneka Gandhi v. Union of India A.I.R. 1978 S.C. 587 and Mohinder Singh Gill v. Chief Election Commissioner A.I.R. 1978 S.C. 875 for the contention that the principles of natural justice were attracted even to an administrative decision if the Civil rights of a party were affected or his or its legitimate expectations were jeopardised. He submitted that in the We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns to public services and it was not concerned with the question whether a party had a right to pre-hearing in circumstances such as we are dealing with. In Meneka Gandhi's case the Maxim Audi-al-terumpartem was applied where the decision affected the fundamental rights of Smt. Meneka Gandhi. In Mohinder Singh Gill's case the Supreme Court applied that principle to a decision which affected the appellant's legitimate expectations to a civil right, namely, to be declared elected to a Parliamentary seat which was put in eopardy by an order of the Election Commission purporting to have been passed in exercise of powers vested in it under Article 324 of the Constitution, Section 133 of the Respresentation of People Act, 1951 and all other powers enabling it so to do to cancel the poll which had already taken place in the constituency. 6. None of these decisions are authorities for the proposition that the precepts of natural justice are of universal application to all administrative actions in respective of the characteristics of the proceedings or its impact on those concerned. Instead of indiscriminately applying the maxim, we must keep in mind the note of warnin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd opportunity of hearing arises only by implication from the duty to act fairly or to use the words of Lord Morris of Berth-y-Gest from 'fair-play in action', it may equally be excluded where haying regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its implication and even warrants its exclusion. There are certain well recognised exceptions to the audi alteram partem rule established by judicial decisions and they are summarised by S.A. de Smith in Judicial Review of Administrative Action, 2nd Edn. at page 168 to 179. If we analyse these exceptions a little closely, it will be apparent that they do not in any way militate against the principle which requires fair-play in administrative action. The word 'exception' is really a misnomer because in these exclusionary cases, the audi alteram partem rule is held inapplicable not by way of an exception to 'fair-play in action but because nothing unfair can be inferred by not affording an opportunity to present or meet a case. The audi alterant partem rule is intended to inject justice into the law and it cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Norwest Hoist Ltd. v. Secretary of State for Trade (supra). Section 165(2) of the Company's Act, 1948 to the extent relevant was in the following terms: Without prejudice to their power under the last foregoing section, the Board of Trade-(a) shall appoint one or more competent inspectors to investigate the affairs of a company and to report there (b) may do so if it appears to the Board that there are circumstances suggesting...(ii) that the persons concerned with its formation or the management of its affairs having in connection therewith been guilty of fraud, misfeasance or other misconduct toward it or towards its members.... It was under this section that the Minister appointed two gentlemen Mr. Davies and Mr. Harding, Queen's counsel and a Chartered Accountant as inspectors to investigate the affairs of the Norwest Hoist Ltd. The Secretary of the Company wrote to the Secretary of State that he had been instructed by the Board of Directors of the above named company that it did not appear to the board that there were any circumstances which would justify the exercise of his discretionary power under the section to appoint inspectors. He went on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the Frey case, (supra; the decision of the authority was merely to refer certain tenancy agreements to a rent tribunal, the substantive decision whether or not to reduce the rents would be made by the rent tribunal after a hearing of the contentions on either side, and was not being made by the local authority.... Now in this case the decision of the Secretary of State is a mere decision to order an extraordinary audit. Like the local authority in Frey's case he has no power to demand information before deciding whether or not to order the audit. Like the rent tribunal in Frey's case, on the other hand the district auditor has wide powers to require information to be provided: see Section 225 of the Act of 1933. Both on the authority of Frey's case, and on principle, I would hold that in deciding whether or not to order an extraordinary audit the Secretary of State is bound not by the Wednesbury standards but by the Frey's standards. Before the Court of Appeal again it was argued that the principles of natural justice applied and accordingly both sides should have been heard before the inspectors were appointed. The contention was repelled by Lord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case [1971] Ch. 388, 403. The passage reads: Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is nothing inherently unjust in reaching such a decision in the absence of the other party. To my mind that passage applies precisely to the present case. The only conceivable distinction between the present case and that passage is the use of the words to prosecute or raise proceedings. Here the raising of proceedings has taken the form ordering an investigation by the inspectors at which the person involved will have their opportunity of stating their case. That, to my mind, is a distinction without a difference.... But it seems to me it is quite impossible as Mr. Brodie in argument would require him to do in reaching that decision, which is simply a decision to cause further inquiries to be made, to hear what the company has to say about it in advance. It is unfortunate if the announcement by the minister that he is appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind arises because there is no right in the tenant which can be infringed. 12. Paul Jackson in Natural Justice II Edn. page 109 has noticed the distinction between Legitimate expectation and a mere hope in the following words: As example of (he distinction between a legal right or legitimate expectation, on the one hand, and personal disappointment at an unwelcome decision on the other, is provided by Brown v- A.U.E.W. [l976] I.C.R. 147. A and B had been candidates in union election. A won but the executive council set the result aside and ordered a second election. A appealed to the union appeal body which upheld the contention that the executive council had no right to set aside the first result. In the meantime, however, the second ballot had been held, in which B obtained the greater number of votes. B claimed that he had a right to be heard by the appeal body before it reached its conclusion on the validity of the executive council's decision. Walton, J., found, on the true construction of the rules, that the council had no power to set aside the first ballot, and hence the appeal body had no option but to reach the conclusion it did. However, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer, it cannot change its mind on a reconsideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference.... The reason given in these decisions is that the function of the Government either under Section 10(1) of the Central Act or a similar provision in a State Act being administrative principles such as res judicata applicable to judicial Acts do not apply and such a principle cannot be imported for consideration when the Government first refuses to refer and later changes its mind. In fact, when the Government refuses to make a reference it does not exercise its power; on the other hand it refuses to exercise its power and it is only when it decides to refer that it exercises its power. Consequently, the power to refer cannot be said to have been exhausted when it has declined to make a reference 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 appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment subsequently does make a reference. It merely suggested that in all fairnesse the Government is expected to take such matters into account while making a reference and yet explicitly held that these are matters which have nothing to do with the power or jurisdiction of the Government to act under Section 4-k. In fact, as held by the Supreme Court when in the first instance the Government either by omission or by a positive order declines to make a reference, there is no exercise of the power under Section 4-k of the Act and, therefore, in our opinion when the State Government ultimately does choose to make a reference the question of affording the management an hearing before taking a different decision does not and cannot arise. 15. In Binny Limited v. Their Workmen (supra) we are unable to discover any observation which can be of any help to the petitioner in support of the contention that if at one stage the Government had declined to make a reference it must act either only when fresh material comes to its notice which were not in existence earliar or not within its knowledge at the time when it declined to make a reference or because it had done so on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and a threat to direct action may become imminent and the Government may as well reconsider the decision and make the reference. It is, therefore, not possible to accept the submission that if the Government had on an earlier occasion declined to make a reference unless it be shown that there was some fresh or additional material before the Government the second reference would be incompetent. It has not been shown that the dispute has ceased to exist and the very existence of the dispute enables the Government to exercise the power under Section 10(1) and it has been rightly exercised. The view which we are taking is in accord with the decision of this Court in Binny Ltd. v. Their Workmen (supra). In this case the Supreme Court clearly rejected the submission that if the Government had on an earlier occasion declined to make a reference unless it is shown that there was some fresh material before it a second reference would be incompetent. It positively rules that the continuance of the industrial dispute is by itself a relevant consideration. 17. Applying the tests discussed above and keeping in mind the nature of the decision, other practical consideration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is imperatively needed to ensure a cease-fire arrangement in the industrial and commercial area between the disputants it should be required to go through the self-defeating ritual of issuing notices and hearing the parties we have advisedly used the word ritual because in such circumstances notice to and hearing parties would amount to nothing else in view of the fact that a decision to make a reference under Section 4-k beyond causing some inconvenience not to one alone but to both parties does not by itself decide any of the issues in controversy. An order of reference of its own force, does not affect substantive right of the parties, which have to be ultimately decided by the Industrial Tribunal of the Labour Court when it comes to be seized of the adjudication case. In the proceedings before the Industrial Tribunal or the Labour Court the parties to the dispute have a right to lead evidence, to cross-examine witnesses and to a full-fledged hearing. It is the award rendered which really affected the rights of the parties. We are consequently of the view that the principles laid down in Prey's and Norwest Hoist Ltd.. cases clearly apply to a decision to make a reference u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of the reference being made later without his being heard and thus can proceed to arrange his affairs accordingly and hence when if without hearing it or him an order is passed under Section 4-K his legitimate expectation are thwarted is also, meritless. In view of the Supreme Court decision in Western India Match Co, Ltd.. (supra) and the subsequent judgment of the same Court, the petitioner must have been well aware and should have been conscious of the fact that since the industrial dispute in question had not been resolved in any manner contemplated by the Act the Government was free at any stage to refer it to the Industrial Court or Tribunal under Section 4-k. The petitioner thus had no business to build up any legitimate expectation that a reference will not be made at a later stage. At best the petitioner had hope that since the Government had once refused to make a reference of the dispute it will not do so in future. If employer had no right to be heard in the first instance before a reference is made under Section 4-K of the Act, we see no reason to hold that he acquires such a right merely because the exercise of power had been deferred. 20. Before makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se given by us. 24. The next submission made by the learned Counsel for the petitioner was that the Tribunal had erred in law in holding that the Reference was competent since on the facts such dispute as existed between the parties stood finally and completely resolved as a consequence of the settlement arrived at between the parties and the review order of Sri B. B. Lal which had been given effect to. It was submitted that merely because a number of issues were in dispute and relief had only been partially granted, it could not be reasonably urged that the dispute continued to exist since it had been clearly settled between the parties that the order passed by Sri B. B. Lal would be binding on the parties. It was urged that the settlement entered into between the parties to abide by the decision of Sri Lal amounted to a settlement as defined in Section 2(t) of the Act and had been duly registered in accordance with the requirement of Section 6-B thereof. This contention, in our opinion, has no force and must be rejected. An industrial dispute once raised can come to an end only if it has been resolved in one of the manners contemplated by the Act, It can also disintegrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute failure on the part of the State Government to apply its mind to the expediancy or otherwise of making a reference. This contention, in our judgment, has no merit. Respondents Nos. 4 to 14 as well as respondent No. 3, the union which espoused their cause remained throughout dissatisfied with the order of dismissal of 11 workmen and consistently continued to agitate their grievance. They filed a writ petition in this Court challenging the order of Sri B. B. Lal refusing to accept the workmen's demand for their reinstatement. When the writ petition was dismissed, respondent No. 3 moved the State Government for a reference of the dispute under Section 4-K of the Act. On the Government's refusal to do so, writ petition No. 6004 of 1974 was filed for a mandamus to the State Government to refer the dispute to a Tribunal. The writ petition was got dismissed as not pressed only when an assurance was obtained by the workmen from the Government that the dispute would be referred for adjudication. From the impugned order of the Tribunal on the basis of material before it, it appears that in the subsequent agreements reached between the management and the union in 1974 and 1978 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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