Holding

The State Government exceeded its jurisdiction and cannot refuse to refer the dispute; all questions must be referred to the appropriate Industrial Tribunal.

Summary

The M.P. Irrigation Karamchar Sangh, a trade union, demanded a special Chambal allowance, dearness allowance equal to Central Government employees, and payment of strike wages from 1966. After settlement attempts failed, the dispute was reported under Section 12(4) of the Industrial Disputes Act, 1947, but the State Government refused to refer it to the appropriate Industrial Tribunal, citing financial burden and policy concerns. The High Court directed the Government to consider reference, yet it again declined, and the matter proceeded through multiple writ petitions and a Special Leave Petition. The Supreme Court held that the Government’s reasons for refusing reference went beyond its limited power to examine only patent frivolousness and amounted to an unlawful adjudication, usurping the Tribunal’s jurisdiction. Consequently, the Court set aside the High Court’s order, allowed the appeal, and directed the State Government to refer all three questions to the Tribunal.

Issues considered

Whether the State Government can refuse to refer a dispute to the Industrial Tribunal on the ground of financial burden or policy considerations under Sections 10 and 12(5) of the Industrial Disputes Act, 1947.
Whether the demands concerning Chambal allowance, dearness allowance, and strike wages fall within the definition of ‘industry’ under the Act.
What is the scope of the appropriate Government’s power to make a prima facie examination of a dispute versus the Tribunal’s exclusive jurisdiction to adjudicate.

Legislation cited

Industrial Disputes Act, 1947s. 10, s. 12(4), s. 12(5)
Trade Unions Act

Subjects

Industrial Disputes ActSection 10Section 12(5)reference to tribunaltrade unionallowancesusurpation of jurisdictionprima facie examinationindustry definition

Judgment

1019
i

A
M. P. IRRIGATION KARAMCHARI SANGH
I
' v.

THE STATE OF M. P. AND ANR.
B
27th February, 1985

[D. A. DESAI, V. BALAKRISHNA ERADI AND V. KHALID, JJ]

Reference of disputes to Courts/Tribunal by the appropriate Gtnernment
under uctlon JO (I) of the Industrial Disputes Act, 1947-Nature scope of th• c
jurisdiction of the State Government under section 10 read with section 12 (5)
of the Act.

The appellant is a trade union registered under the Trade Unions
Act. It represents employees in the Chambal Project of Government Or
Madhya Pradesh in Gwalior Division. The union raised lhree demands,
namely, (1) Cbambal allowance; (2) Dearness allowance equal to that of the D
Central Government employees; and (3) Wages for the period of strike
lasting 20 days in the year 1966 and served notices of these demands on
the Deputy Chief Engineer, Major Project Chambal Since the attemp11
for settlement by the canciliatioa officer failed, a full report of the dispute
under section 12 (4) of the Act was sent to the State Government which,
by its order dated 15. 3. 1969, refused to refer the matter to the concerned
E
Tribunal. The appellant took the matter before tho High Court by filing
Miscellaneous Petition No. 29 / 69 for a mandamus to the State Government
to refer the matter for adjudication. The High Court allowed the writ
Petition, and directed the State Government to consider the question whe..
tber a reference was oecessarJ or not. The Government again refused to
refer the dispute to the Tribunal, taking the stand that the provisions of the
Industrial Disputes Act were not applicable to the workmen in the Chambal
Scheme as it was not 'Industry~. The appellant approached the High
F
Court for the second time by filing Miscellaneous Petition No. 4S of 1970
and challenged tho said orders. The High Court allowed the petition and
directed the Government to take suitable action under section 12 (5) of the
Act. The Governm;.!ot challenged the said decision before the Supreme
Court by filing SLP No. 933 of 1972 without succes. Later, by its order G
dated 13. 1. 72, the State Government referred to the Tribunal only the
third question of payment of wages for the sh ike period and declined to
refer the other two questions for the reasons that (a) the Government was
not in a position to bear the additional burden and (b) the grant of the
special allowance claimed would invite similar demands by other employees
which would affect tho entire administration. The appellant was perforcell H
1020 SUPRllMB conr Rl!PORTS [1985) 2 S.C.R.

A to approach the Hillh Court, for the third time, bJ way of a Miscellaneous
Petition No. 127 of 1972 for a direction to tho State to refer the other two
demands also. In the meanwhile, the Supreme Court by its decision dated
July 20, i°978 confirmed the High Court's order that Chambal Project was
an 'industry' within the meaning of the Act. whereupon the Government
revicwtd the matter and passed an order on 3. 5. 19 aivioa aditional
8 reasons for declininr to refer the dispute for adjudication namely, (a) the )
State Government was not in a position and therefore cannot pay Central '
DA to any of its employees in any department and (b) the work charged
employees who get a consolidated salary are not entitled to Chambal allow ..
ance under the rules. The High Court, by its decision dated 8th August
1980 dismissed the petition holding that the reasons given by the Court
are germane and relevant. Hence the appeal by special leave.
c
Allowing tho appeal, tho Court,

HELD : I.I Tho reason• given by the State Government to decline
reference are beyond the powers of the Government under the relevant
sections of the Industrial Disputes Act. [1026C]
D
1.2 While conceding a very limited jurisdiction to the Sta to Govern-
ment to examine patent frivolousness of the demands, it is to be understood
as a rnle, that adjudication of demands made by workmen should be left to
the Tribunal to decide. Section 10 permits appropriate Government to
determine whether dispute "exists or is apprehended" and then refer it for
E adjudication on merits. The demarcated functions are (!) reference, (2) •
adjudication. [102SH; I026A]

1.3 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 the
State Government had done in this case is not a prima facie examination. of
F the merits· of the question ionolved.. To say that granting of dearness
allowance equal to that of the employees of the Central Government would
cost additional financial burden on the Government is to make a unilateral
decision without necessary evidence and without giving an opportunity to
the workmen to rebut this conclusion. This virtually amounts to a final
adjudication of the demand itself. The demand can never be characterised
as either perverse or frivolous. The conclusion so arrived at robs the
G employees or an opportunity to place evidence before the Tribunal and to
substantiate tho reasonableness of the demand. [10268-E]

J .4 What exactly are the conditions of service of the employees and
in what manner their conditions of service could be improved are matters
which are the special preserve of the Ctppropriate Tribunals 10 be decided in
1
adjudicatory processes and arc not onee to be decided by the Government on
a prima facie examination of the demand. The question whether the emp.
M. P. !1Rl.GATION IC. SANGH v. M. P. STATE (Kha/id, J.) 1021

i loyees were/were not entitled to the Chambal allowance as they are in A
receipt of a consolidated pay relates to the conditions of service of the
employees Further this demand also cannot be said to be either perverse
or frivolous. [!026F·G]

1.5 However, there may be exceptional cases in which the State
Governmentj may, on a proper examination of the demand, come to a
conclul!lion that the demands are either perverse or frivolous and do not
B
merit a reference. Government should be very slow to attempt an exami-
nation of the demand with a view to decline reference and Courts will
always be vi1Bant whenever the Government altempts to usurp the power.;
of the Tribunal for adjudication of valid disputes. T-o allow the Govern~
ment to do 10 would be to render section 10 and section 12 (5) or the
Industrial Disputes Act nugatory. [1026G·H; IO!fA]
c
Bombay Union of Jouroali•ts v. State of Bombay AIR 1964 SC 1617,
e~plainod and followed.

CIVIL APHU.ATI JW!l!SDICTION: Civil Appeal No. 8454 (NL)
of 1983. D

From the Judgment and order dated the 8th August, 1980 of
the Madhya Pradesh High Court Bench at Gwalior in Civil Miscella-
neous Petition No. 127 of 1972.

H.K. Puri, for the Appellant. E

A .K. Sanghi for the Respondent.

The Judgment of the Court was delivered by

F
KHALID. J. This is an appeal, by special leave, against the
Judgment dated lith August, 1980, by the High Court of Madhya
Pradesh at Jabalpur in Civil Miscellaneous Petition No. 127 of
1972.

2. The appdlant is a trade union registered under the Trade G
Union Act. It represents employees in the Chambal Hyde! Irriga-
tion Scheme under the Department of Chambal Project of Govern·
ment of Madhya Pradesh in Gwalior Division. The union raised
three demands and served notices of these demands on the Deputy
Chief Engineer, Major Project, Chambal, Bhopal. The demands
were: (!) Chambal allowance; (2) Dearness allowance equal to
that of the Central Government employees; and (3) Wages for the
8
1022 SUPIUJME COUl\T 1lBPOl\TS (1985) 2 s.C.lt.
A period of strike lasting 20 days in the year 1966. Copies of these
notices were sent to the Assistant Labour Commissioner, Indore
and the Secretary, Government of Madhya Pradesh. The Deputy
Chief Engineer did not respond to the demands. There-upon, the
Asssistant Labour Commissioner, Gwalior, at the instance of the
union tried for a settlement, but did not succeed. He sent a report
B under Section 12A) of the Industrial Disputes Act. The State
Government, the Jirst respondent in the appeal refused to refer the
matter to the concerned Tribunal by its order dated 15.3.1969.
The appellant took the matter before the High Court by filing
Miscella.neous petition No. 29/69 for a mandamus to the State
Government to refer the dispute for adjudication. The High Court
c allowed the writ petition, quashed the order of the State Govern-
ment dated 15th March, 1969, and directed it to consider the
question whether a reference was necessary or not. When the
matter went back to the Government, the Government took the
stand that the provisions of the Industrial Disputes Act were not
D applicable to the workmen in the Chambal Hyde! Irrigation Scheme
since the Scheme was not an Industry and hence again refused to
refer the dispute to the Tribunal. The appellant pursued the matter
further by filing miscellaneous petition No. 45 of 1970 before the
High Court. The High Court allowed the petition and d•rected the
Government to take suitable action under Section 12(5) of the Act. '
E The Government challenged this decision before this Court by filing
S.L.P.No. 933 of 1972, without success. The matter, therefore, went
back to the Government again. By its order dated 13.1.1972, the
State Government referred only one question to the Tribunal and
that related to the wages for the strike period but declined to refer
the other two questions. The reason given for this was : (I) that
F the Government was not in a position to bear the additional burden;
and (2) that grant of the special allowance claimed would invite
similar demands by other employees which would affect the entire
administration. Miscellaneous Petition No. 127 of 1972 was, there-
fore, filed for a direction to the State to refer the other two demands
also. In the meanwhile, this Court as per its decision dated July
G 20, 1978, bad confirmed the decision of the High Court that
Chambal Project was an Industry within the meaning of the Indus-
trial Disputes Act. After this decision was rendered by this Court,
the Government reviewed the matter and passed an order on 3.5.1979
giving additional reasons for refusing "to refer the dispute for adjudi-
cation. The reasons stated were as under :
M. P. IRRIGATION K. SANGH v. M. P. STATE (Kha/id, J.) 1023
1 A
"(1) That the State Government was not in a position
to pay dearness allowance equal to that of Central Govern-
ment employees. In the present situation the State
Government would not pay dearness allowance equal
to that of Central Government employees to any particular
department. The qufstion of such payment to the peti-
tioners, therefore, does not arjse. B

(2} The work ;:barged employees were already given a
consolidated pay. Therefore, there was no justification for
paying such employees the Chambal allowance. The rules
regulating the service conditions of the work-charged emplo-
yees of the Chambal division do not provide for payment c
of Chambal allowance to them."

3. Before the High Court, it was contended by the appellant
that the State Government had by refusing to refer the dispute to
the Tribunal giving the above reasons taken upon itself the power
D
to decide the dispute and had usurped the powers of the Trihunal.
It was further contended that the question raised related to the
conditions of service of the employees and was, therefore, a matter
primarily to be decided by the Tribunal. The High Court repelled
the contention and held as follows :
E
"It is now 12 years that the matter has been pending.
But it would appear from the history of the case that the
delay has been mostly due to the fact that the case was
pending before various Courts. The Government has not
materially changed its stand. As regards Chambal allow-
ance, they were, from the very inception, taking the stand F
· that the work-charged employees of the Project were given
a consolidated salary and the service conditions did not
warrant payment of extra allowance. Now the rules regu-
lating service conditions of the work-charged employees of
the project did not contain the provision for payment of
Chambal allowance to them. The Government was of the G
opinion that prima facie no case arises, particularly, when
the extra benefit was already being granted to them. The
Government undoubtedly could no decide the matter finally,
but they could certainly consider whether a prima facie
case for reference has been made out on merits. If no case
is made out, it would be open to the Government to refuse
If
1024 SiJPR!lMll COURT RBPOatS [1985] 2 s.c.R.

A to refer such a q1testiou and it could not be said that the
Government was usurping the functions of the Tribunal and
deciding the case finally. In our opinion, the State Govern-
ment's order could not be said to be punitive and it takes
into account the entitlement of the Chambal employees for
the Chambal allowance.
B
As regards the other question, the State Government
are on a firmer ground. Since the Government is not
paying dearness allowance equal to that of the Central
Government employees to the employees in any other
c department in the State, there is no reason to discriminate
and pay the same to the Chambal employees. This is what
the State Government have stated and we think that if the
allowance at the rate payable to the Central Government
employees is not paid to a11y one in the State, the Govern-
ment was justified in holding that no prima facie case has been
D made out by the petitioner for referring this dispute to the
Tribunal. The State Government have also considered the
question of expediency that by payment of such allowance
to the Chambal employees alone, there would be dissatis-
faction amongst the other employees of the State. Both
these reasons are germane and relevant. The Government
E here was not deciding the case finally. It has to deeide
question of expediency and whether a prima facie case has
been made out ...... "

In support of this conclusion the High Court relied upon the
observations made by this Court in Bombay Union of Journalists
F v. State of Bombay( 1) and held that the Government was not preclu-
ded from making a prima facie examination of the merits oithe
dispute wbile considering whether a reference was necessary or not.
It was further held that "the two reasons given by the State Govern-
ment fulfilled necessaty test laid down by the orders of this Court
earlier and the various Supreme Court decisions cited by the peti-
G tioners."

4. In the appeal before us, it was contended that the approach
made by the High Court was erroneous and that the High Court
had failed to properly delineate the jurisdiction of the Government 9'
under Section IO read with Section 12(5) of the Industrial Disputes 1
11 (1) AJ.11.. 1964 i.e. 1819.
M. P. IRRIGATION K. SANGH v. M. P. STATE (Khaftd, J.) 1025

Act. It was contended before us that the question raised by the
appellant had to be decided by the Tribunal on evidence to be
adduced before it and it could not be decided by the Government on
a prima facie examination of the facts of the case. This submis-
sion was met with the plea that the Government had in appropriate
cases at least a limited jurisdiction to consider on a prima facie
B
examination of the merits of the demands, whether they merited a
reference or not.

5. We have considered the rival contentions raised before m.
The High Court apparently has relied upon the following passage in
Bombay Union of Journalists v. State of Bombay, (Supra) C

" ............ 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 whether its power to make a
reference should be exercised under Section 10(1) read with D
Section 12(5) or not. If the claim made is patently frivo-
lous, 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
employeei in tho ro11ion is likely to be adverse, the appro-
priate Government may take that into account in deciding I
whether a reference should be made or not."

We find that the approach made by the High Court was wrong
and the reliance on the above passage on the facts of this case, is
misplaced and unsupportable. This Court had made it clear in the
same Judgment in the sentence preceding the passage quoted above
that it was the province of the Industrial Tribunal to decide the
disputed questions of fact.

" ...... Similarly, on disputed questions of fact, the
appropriate Government cannot purport to reach final
conclusions, for that again would be the province of the G
Industrial Tribunal ...... "

Therefore, while conetdin111 nry limited jlll'isdietion to tho
State Government to examine patent frivolousness of the demands,
it is to be understood as a rule, that adjudication of demands made
1026 SUPREME COURT REORTS [1985] 2 S.C.R.
A
by workmen should be left to the Tribunal to decide. Section JO
permits appropriate Governmenf to determine '1>hether dispute
'exists or is apprehended' and then refer it for adjudication on
~erits. The demarcated functions are (1) reference, (2) adjudica-
uon when a reference is rejected on the specious plea that the
B Government cannot bear the additional burden, it constitutes adjudi- ,•
cation and thereby usurpation of the power of a quasi judicial Tribu-
nal by an administrative authority namely the Appropriate Govern-
ment. Jn our opinion, the reasons given by the State Government
•
to decline reference are beyonj the powers of the Governm~nt
under the relevant sections of the Industrial Disputes Act. What
c the State Government has done in this case is not a prima facie
examination of the merits of the question involved. To say that
granting of dearness allowance equal to that of the employees of
the Central Government would cost additional financial burden on
the Government is to make a unilateral decision without necessary
evidence and without giving an opportunity to the workmen to
D rebut this conclusion. This virtually amounts to a final adjudication
of the demand itself. The demand can never be characterised as
either preverse or frivolous. The conclusion so arrived at robs the
employees of an opportunity to place evidence before the Tribunal
and to substantiate the reasonableness of the demand.

E 6. Same is the case with the conclusion arrived at by the •
High Court accepting the stand of the State Government that the
employees were not entitled to the Chambal allowance as the same
was included in the consolidated pay. This question, in fact, relates
to the conditions of service of the employees. What exactly are the
conditions of service of the employees and in what manner their
F
conditions of service could be improved are matters which are the
special preserve of the appropriate Tribunals to be decided in adjudi·
catory processes and are not ones to be decided by the Government
on a prima facie examination of the deniand. This demand again
can never be said to be either perverse or frivolous.
G
7. There may be exceptional cases in which the State Govern·
ment 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 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 dis-
H
M. P. IRRIGA1ION I:. SANGH v. M. P. srATa (Khalid, J.) 1027

putes. To allow the Government to do so would be to render A
Section 10 and Section 12(5) of the Industrial Disputes Act nuga-
tory.

8. We have no hesitation to hold that in this case, the
•• Government had exceeded its jurisdiction in refusing to refer the
B
dispute to the Tribunal by making its own assessment unilaterally
of the reasonableness of the demands on merits. The High Court
erred in accepting the plea of the Government that refusal to refer
the demands in this case was justified, The demands raised in this
case have necessarily to be decided by the appropriate Tribunal on
merits.
c
9. In the result, we set aside the Judgment of the High Court,
allow this appeal and direct the State Government to refer all the
questions raised by the appellant to the appropriate Tribunal. The
apoeal is allowed with costs to the appellant quantified at
Rs. 2,500.
D

S.R . Appeal allowed.

•