B.N. Srikrishna, J.
1. This Writ Petition under Article 226 of the Constitution of India challenges an Order dated 6th April, 1994 made by the Second Respondent, State of Maharashtra, in exercise of its powers under sub-section (6) of Section 25-N of the Industrial Disputes Act, 1947 (hereinafter referred to as "the Act").
2. The petitioner : Is a Registered Trade Union representing the workmen employed in the industrial establishment of the First Respondent, which employs about 250 workmen at Thane. The First Respondent made an Application on 20th October, 1993 to the Appropriate Government under Section 25-N(1) of the Act and sought permission to retrench 26 workmen employed in its industrial establishment. By an order made on 5th January, 1994 by the Secretary to the Government of Maharashtra (Labour), the permission sought for retrenchment of 26 workmen by the First Respondent by its Application dated 20th October, 1993, read with its Application dated 7th November, 1993, was rejected. On 6th April, 1994 the Second Respondent made the impugned Order by which "the aforesaid matter" pertaining to the application made by the First Respondent was referred for adjudication under sub-section (6) of section 25-N of the Act to the Industrial Tribunal at Thane. As a matter of fact, a perusal of the Order of Reference indicates that the said Order was made at the instance of the First Respondent, who had requested the Second Respondent to "refer the said order passed on the 5th January, 1994, for review, to the Industrial Tribunal for adjudication". It is not in dispute that the petitioner was neither given notice of such representation made by the First Respondent, nor given opportunity of making representation against it for hearing. The Order of Reference virtually was a bolt from the blue to the workmen and the Petitioner. Being aggrieved by the said order passed behind its back, the petitioner is before this Court and impugns the said order.
3. Shri Ganguli, learned Advocate appearing for the petitioner'. urged the following contentions in support :-
(a) That an obligation to hear parties likely to be prejudicially affected must be read as inherent in sub-section (6) of the Section 25-N of the Act.
(b) That the principle of audi alteram partem is an essential ingredient of natural justice and must govern every order - judicial or administrative - made by the State, which has the same civil consequence.
4. Shri Ganguli having relied on a judgment of a Division Bench of the Madras High Court (per Chief Justice Dr. A. S. Anand as His Lordship then was) and Mr. Justice D. Raju (as His Lordship then was) reported in 1991 II CLR 275 in Workmen of Kempf (I) Ltd. represented by Kempf Employees Union, through its General Secretary, Coimbatore v. Government of Tamil Nadu (represented by Secy. Labour and Employment Deptt.) Madras and Ors. The contentions raised in the said case being identical with the contention raised in this Writ Petition, and in-depth analysis of the judgment of the Madras High Court is called for.
5. In Kempfs case (supra), the employer made an Application under section 25-O(1) of the Act on 15th April, 1990 for permission to close down its industrial establishment. The Competent Authority, after giving notice to and hearing the workmen and other interested persons including the workers' union, and conducting an enquiry, by a reasoned Order dated 9th June, 1990, refused to grant permission sought to close down the industrial unit. The employer filed an appeal to the State Government which was treated as an application for review under Section 25-O(5) of the Act. By an order dated 6th September, 1990, the State Government referred the industrial dispute as to justifiability of the closure of the industrial establishment and the relief, if any, due to the employer and the workmen for adjudication by an Industrial Tribunal. The workmen challenged the said Order of Reference before the Madras High Court and a learned Single Judge dismissed the Writ Petition by holding that sub-section (6) of Section 25-N did not cast an obligation on the Appropriate Government to give notice to or hear the affected party before an application for review is heard or a decision to refer the matter for adjudication to the Tribunal is taken. The workmen carried the matter in Appeal to the Division Bench. After.setting out the provisions of Section 25-O of the Act, and analysing the scheme of the section, the Madras High Court pointed out that though the power of review was not an inherent power, Parliament has vested the said power in the Appropriate Government under sub-section (6), so that the Appropriate Government may, either suo motu or on application made by one of the affected parties, review its order granting or refusing to grant the permission for closure under sub-section (2), or may refer the matter for adjudication to a Tribunal. The Division Bench of the Madras High Court also noticed that Section 25-O(5) of the Act was silent as regards the procedure to be followed while exercising the power, there being no express provisions therein as to the circumstances under which the power could be exercised or the mode of exercise of power and requirement of notice to parties. It was then pointed out by the Court that the power of review conferred by sub-section (5) of section 25-O was not a limited power of review of correcting any patent or apparent error or clerical or other mistake, but amounted to a power to re-examine the matter of refusal of grant of permission to close an industrial establishment. Consequently, the Division Bench was of the view that the review undertaken under sub-section (5) of section 25-O was nothing but a fresh adjudication on merits of the application and the procedure to be followed or dealing with such an application must conform to the one contained in sub-section (2) of section 25-O of the Act. The Division Bench observed :
"Therefore, when the exercise of review is undertaken under sub-section (5) of an application made by the employer or any workman, it is nothing but a fresh adjudication on merits of the application and the procedure to be followed or dealing with such an application, in our opinion, must conform to the one contained in sub-section (2) of section 25-O of the Act. To that extent, it is permissible to hold that sub-section (5) of section 25-O is only an extension of section 25-O(2) of the Act and the procedure contemplated thereunder, which is both fair and just, must be followed, otherwise sub-section (5) may even suffer from the vice of unconstitutionality, as containing neither any guidelines nor the procedure for exercising the power of review. It is, however, possible to save the provision of sub-section (5) from being declared unconstitutional, by harmoniously reading into it, the requirements of sub-section (2). The right of hearing which is contemplated by sub-section (2) must be read to be inherent in sub-section (5) also. There is no doubt that the principles of natural justice can be excluded by a statute in a given case, but, such an exclusion has to be considered in the light of the provisions of the statute concerned. Since, as already notice, section 25-O(5) of the Act does not contain any guidelines nor does it indicate the factors which should weigh with the authority to review its earlier order, or the extent to which the power of review would extent, the only way to harmoniously'construe the provision is to read into the provisions of section 25-O(5), the requirements contained in section 25-O(2) of the Act, i.e. the requirements of audi alteram partem and of the necessity to record reasons."
6. Apart from the emphasising the obligation to give notice to the parties and hear the affected party as being inherent and inbuilt in the scheme of section 25-O, the Madras High Court also approached the problem on first principles. Referring to the judgments of the Supreme Court in Travancore Rayons v. Union of India ; Liberty Oil Mills v. Union of India and Maneka Gandhi v.
Union of India , the High Court took the view that the authorities indicated that at least a minimum hearing is not only necessary, but desirable, to avoid the charge of arbitrariness, as the observance of the principle of natural justice is nothing but pragmatic requirement of fair play in action. The purpose of following the principle of natural justice being basically to prevent miscarriage of justice, the rules of natural justice operate as an implied mandatory procedural requirement, non-observance whereof often vitiates exercise of power. It was also pointed out that the rule of audi alteram partem was devised to ensure a just and healthy check on,the abuse or misuse of power and the Courts in this country have been very zealous to guard it. Observed the Division Bench of the Madras High Court :
"... There cannot be, indeed, any undue expansion of the principles of natural justice without reference to the administrative realities and other factors, but the fact remains that it is "un-tenable hearsay to lock-jaw the victim or act behind his back" by tempting invocations."
Even on first principles, the Division Bench of the Madras High Court was inclined to hold that an obligation to give notice to and hear the party affected before an order granting or refusing permission to close down the industrial establishment, forms a prelude to refer the dispute to adjudication, which must be read as implied in the provisions of sub-section (6) of section 25-N of the Act.
7. The scheme of Section 25-O of the Act is very much pari materia with the scheme of section 25-N. While the permission sought under section 25-O is for closing down an undertaking, permission is required to be sought under section 25-N for retrenchment of workmen to whom the procedure of Chapter VB of the Act applies. Basically, the scheme of both sections is that an application has to be made by the employer to the Appropriate Government/Competent Authority and the Appropriate Government or Competent Authority would grant or refuse the permission sought by a speaking Order. Such order would remain in operation for one year from the date of the order unless it is reviewed or referred for adjudication of a Tribunal. This basically is the scheme of both section 25-N and section 25-O. The observations made by the Madras High Court in dealing with sub-section (5) of Section 25-O are very relevant and material while considering implications under sub-section (6) of section 25-N, since the two sections, though, separate, are identically worded and operate almost along parallel lines.
8. At this juncture, it would be appropriate to refer to the judgment of the Supreme Court on which the decision in Kempf (supra) rests. In Travancore Rayon's case (supra), the Supreme Court pointed out that recording reasons for passing an order and conveying it to the affected party is required for two purposes - (i) so that the aggrieved party may come to know of the reasons and has an opportunity to demonstrate whether the reason which persuaded the authority to pass the order adverse to its interest was irrational and irrelevant, and, (ii) the very obligation to record reasons and convey them to the affected party operates as deterrent against possible arbitrary action by the authority concerned. In the words of the Supreme Court in Travancore Rayon (supra).
"Necessity to give sufficient reasons which disclose proper appreciation of the problem to be solved, and the mental process by which the conclusion is reached in cases where a non-judicial authority exercises normally performing executive or administrative functions, this Court would require to be satisfied that the decision has been reached after due consideration of the merits of the dispute, uninfluenced by extraneous considerations of policy or expediency. The Court insists upon disclosure of reasons in support of the order on two grounds : one, that the party aggrieved in a proceeding before the High Court or this Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject this case were erroneous, the other, that the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power."
9. In Liberty Oil Mills (supra), while dealing with clause 9B of the Import and Exports (Control) Act, which does not require hearing to be given to the party affected, the Supreme Court had to consider the implication of an order which was made "without assigning any reason." Even in such a situation, the Court observed :
".... We must make it clear that 'without assigning reasons' only means that there is no obligation to formulate reasons and nothing more. Formal reasons may lead to complications when the matter is still under investigation. So the authority may not give formal reasons, but the skeletal allegations must be mentioned in order to provide an opportunity to the person affected to make his representation. Chapter and verse need not be quoted, details may not be mentioned and an outline of the allegations should be sufficient."
10. That in a democratic set up governed by the Constitution and the Rule of Law, there is an obligation to act reasonable and fairly-both in matters of substantive and procedural requirement - is a proposition too well entrenched to need any further elaboration.
11. In Neelima Misra v. Harinder Kaur Paintal 1990 I LLN 792, commenting upon the trend of judicial thinking on this subject, the Supreme Court observed :-
"The shift now is to a broader notion of 'fairness' or 'fair procedure' in the administrative action. The administrative officers are concerned, (sic) the duty is not so much to act judicially as to act fairly (see Keshav Mills Co. Ltd, v. Union of India , Mohinder Singh Gill v. Chief Election
Commissioner , Swadeshi Cotton Mills v. Union of
India M. S. Nally Bharat Engineering Co. Ltd.
v. State of Bihar & Ors. 1990 I CLR 736. For this concept of fairness, adjudicative settings are not necessary, nor is it necessary to have lis inter parties. There need not be any struggle between two opposing parties giving rise to lis. There need not be resolution of lis, inter parties. The duty to act judicially or to act fairly may arise in widely different circumstances. It may arise expressly or impliedly depending upon the context and considerations. All these types of non-adjudicative administrative decision-making are now covered under the general rubric of fairness in the administration. But when even such an administrative decision unless it affects one's personal rights or one's property rights, or, the loss or prejudicially affected something which would judiciary be called at least a privilege does not, involve the duty to act fairly consistent with the rules of natural justice. We cannot discover any principle contrary to this concept."
12. Against the backdrop of the aforesaid principle of Natural Jus tice, the Madras High Court found no difficulty concluding that, either on the scheme of Section 25-O or on the principle of fairness and fair procedure in administration, an obligation to hear the workmen before making a reference of a matter, after the permission for retrenchment had been earlier refused, must be read as inherent in the sub-section which empowers the Government to act.
13. In my view, similar obligation exists even under sub-section (6) of section 25-N. When the initial application is made under sub-section (1) of section 25-N for permission to retrench workmen, there is an obligation to give notice to the workmen and hear the parties before an order is made granting or refusing permission. It would indeed be strange if, after such an order (a quasi-judicial speaking order) is made, the legal effect of such order could be drastically changed by suo motu review or suo motu reference of the matter to the Industrial Tribunal, without even giving notice to and hearing the workmen affected. Hence, on both counts - the scheme of the section and on the principle of Natural Justice - I am in respectful agreement with the views expressed in Kempf (supra).
14. Shri Pai, learned A.G.P. appearing for the Second Respondent, however, contends that the Madras High Court has followed its own view that the power of the Government under section 10 to review its decision and make a reference, once it had been declined, was subject to an obligation to hear the affected party. He contends that our High Court has not accepted this view, but has taken the contrary view that, even after having declined reference of an industrial dispute on one occasion, while exercising power under section 10 of the Act, the Government's power is not exhausted and it can, at any time, review its action and decide to refer the industrial dispute for adjudication without hearing any of the affected parties. He brings to my notice a judgment of the Division Bench of our High Court in Automobile Corpn. of Goa Ltd. v. State of Goa & Ors. 1992 I CLR 336 per Sukumaran and Dr. E. Da Silva, JJ. a contends that this judgment fully support the proposition canvassed by him. A careful perusal of this judgment shows that this judgment does depart from the view taken by the Madras and Rajasthan High Courts as to the power of review of the appropriate Government under section 10 of the Act. Our Division Bench doubtless takes the view that the Government's power, is not ex-hausted and, for a subsequent exercise of that power, the Government is not required to hear any party. The reason the 'refor is indicated in paragraph 8 of the judgment by the following observations :
"... Mark the words that proclaim that the Government has got powers to make a reference when an industrial dispute exists or is even apprehended. That is an indication about the width of the powers which are in the Government for the above purpose."
Again in paragraph 11, it is stated :
"This submission has neither legal logic nor theoretical justification to support, Counsel conceded that for the first time in making a reference, there is no necessity for the Government to hear the parties and conduct an inquiry in the matter before making such a reference. If that be so, there could not be any difference in relation to a subsequent exercise of that power, which under the decision of the Apex Court, the Government is possessed of in the matter."
15. In my judgment, the situation contemplated by the judgment of the Division Bench in Automobile Corporation's case is qualitatively' different from the situation presented to me; the contents of section 10 and Section 25-N, insofar as they relate to the prerequisite condition for exercise of power, are materially different. While under section 10 the Government can exercise the power of reference of a dispute to an adjudicatory body where it is "of the opinion that any industrial dispute exists or is apprehended", the power under section 25-N is confined to "review its order granting or refusing to grant permission under sub-section (3) or refer the matter or, as the case may be, cause it to be referred, to a Tribunal for adjudication." While exercising power under section 10, the Government is required to be satisfied about the existence of an industrial dispute or it should be of the opinion that an industrial dispute is apprehended. The Government can then identify and formulate the industrial dispute in its order of reference for adjudication by the appropriate forum. In the case of exercise of power under sub-section (6) of section 25-N, however, the situation is materially different. There is no identification and formulation of the industrial dispute as the dispute is already before the appropriate Government by way of application made under sub-section (1) of section 25-N. All that the Government does is to refer the matter to the Tribunal for adjudication. For the reasons given by our Division Bench in Automobile Corpn, of Goa Ltd. (supra), the interpretation put upon sub-section (6) of section 25-O must equally apply to sub-section (6) of section 25-N. The Division Bench was persuaded to take the view that there was no ab initio obligation upon the Government to hear the party before referring an industrial dispute for adjudication. No such obligation could be spelt out if, at a subsequent stage, it decided to refer the industrial dispute for adjudication. The converse is true in the case of section 25-N. Under this section, the Government is not empowered to grant or refuse permission to retrench workmen, unless it gives notice of such an application to the workmen and hears them. Such an obligation having arisen even ab initio, it is difficult to visualise that, at a subsequent stage, a quasi-judicial speaking order made by the appropriate Government, after notice to and hearing of affected parties, could be drastically departed from by exercise of power under sub-section (6) of section 25-N without as much as a notice of hearing to the party affected. For these reasons, I am of the view that the decisions of our High Court in Automobile Corpn. of Goa (supra) does not help in advancing the proposition canvassed by the learned Additional Government Pleader.
16. Shri Puri, learned Advocate appearing for the First Respondent, relied on the judgment of the Supreme Court in Workmen of Meenakshi Mills Ltd. v. Meenakshi Mills Ltd. & Anr. 1992 I CLR 1010 and contended that the issue canvassed 'in the present Writ Petition is no longer res integra, as it has been concluded by the Supreme Court. He drew my attention to the discussions in paragraphs 51 to 55, wherein the Supreme Court has rejected Contention Ill. I am unable to see the relevance. Contention Ill urged before the Supreme Court was that, as no provision had been made for appeal or revision against the order passed by the appropriate Governmen 't or authority granting or refusing to grant permission for retrenchment of workmen under sub-section (2) of section 25-N, nor was there a provision for review, section 25-N suffers for the same infirmity as was found by the Supreme Court in section 25-O of the Act in its judgment in Excel Wear etc. v. Union of India & Ors. 1979 I SCR 1009. The Supreme Court rejected Contention Ill by pointing out that by the mere reason of absence of a revision or appeal or review in a statute, it could not be postulated that the action taken under the said statute was arbitrary or uncanalised so as to render it unconstitutional, regard being had to several factors such as, on whom the power was conferred, whether on a high official or a petty officer, the nature of the power of the authority or body on whom it is conferred, is it to be exercised ob ectively by reference to some existing facts or tests, and whether or not it is a quasi-judicial power requiring that authority or body to observe principles of natural justice in making the order. It was also pointed out that the last mentioned factor particularly ensures application of mind on the part of the authority or body only to pertinent or germane material on record, excluding the extraneous or irrelevant factors and also subjects the order of the authority or body to judicial review on grounds of perversity, extraneous influence, mala fides and other blatant infirmities. I am afraid that this authority does not advance the contention canvassed by Shri Puri. He, taking the line of the argument of the learned A.G.P. also contended that the power of reference conferred upon the Government under sub-section (6) of section 25-N of the Act was identical in content with the power of reference found in section 10 of the Act. Therefore, all judgment interpreting the scope and ambit of such power under section 10 must equally apply in the instant case. He further contended that, at least as far as this Court is concerned, the view taken is that an order of reference, though once declined, can be subsequently made by the Appropriate Government without notice or hearing to the affected party. Consequently, in his submission, the two contingencies contemplated by sub-section (7) of section 25-N are uninhibited by any precondition of notice of hearing to any party. It is not possible to accept this sweeping contention. I have already extensively referred to the judgment of the Madras High Court in Kempf's case, wherein the learned Judges have pointed out that, if no in-built contention of audi alteram partem is read in sub-section (6) of section 25-N, then,that sub-section would be open to challenge on the ground of infringement of Article 14 of the Constitution of India, as enabling the executive to make an arbitrary order without restriction of any kind. It is precisely io uphold the constitutionality of the section that it is necessary to read it down as containing an inbuilt restriction as indicated by the Madras High Court. The contention of Shri Puri, therefore, must fail. In my judgment, the provisions of sub-section (6) of section 25-N of the Act must be read down as containing an in-built restriction that before the Appropriate Government or the Competent Authority makes an order thereunder it must give notice and hearing - at least an opportunity of making a representation - to the party likely to be affected by the decision of the Appropriate Government or Competent Authority. It is, of course, trite to say that such a hearing need not be an elaborate hearing of the nature given by a Court of law, but one that is tailored to suit the requirements of the section. Nonetheless, the authority must comply with this minimal requirement, failing which its action becomes vitiated.
17. In the petitioner's case, the petitioner was not even given notice by the Appropriate Government/the Competent Authority that it was exercising its power under sub-section (6) of section 25-N of the Act or that, despite the earlier Order dated 5th January, 1994, the matter was being referred for adjudication to the Industrial Tribunal under sub-section (6) of section 25-N. Consequently, the impugned order of reference is bad in law, vitiated and liable to be interfered with.
18. In the result, the writ petition is allowed. Rule is made absolute. The impugned Order of Reference dated 6th April, 1994 made by the Appropriate Government (Exhibit 'E' to the petition) is hereby quashed and set aside. The Appropriate Government shall, if it desires to exercise its power under sub-section (6) of section 25-N of the Act, do so only after giving due notice of its intention to do so and after giving hearing to the petitioner on behalf of the workmen. There shall be no order as to costs.
19. Writ petition allowed.