Allowed

M/S Auma India Private Ltd. v. the Secretary to Government

Karnataka HC8 Dec 2023WP/3473/2018

Case brief

AI extract

What is this about?

The High Court of Karnataka quashed an order granting sanction for prosecution against a company under the Industrial Disputes Act, 1947. The court held the sanction was unsustainable because the Government failed to apply its independent mind and relied blindly on the Labour Commissioner's recommendation without specifying violations of Schedule V.

What did the court decide?

The order dated 10.01.2018 granting sanction for prosecution was quashed; the writ petition was allowed.

M/S Auma India Private Ltd. Vs the Secretary to… — Company and Corporate | Karnataka HC (2023)

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NC: 2023:KHC:44650 WP No. 3473 of 2018

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 8^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON'BLE MS. JUSTICE JYOTI MULIMANI WRIT PETITION NO.3473 OF 2018 (L-RES)

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BETWEEN:

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M/S. AUMA INDIA PRIVATE LTD., PLOT NO.38/A AND 39/B, 2^ND PHASE, PEENYA INDUSTRIAL AREA, BENGALURU - 560 058. REPRESENTED BY ITS HEAD-HUMAN RESOURCES, SRI. VINAY.M.S.

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…PETITIONER

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(BY SRI S.N.MURTHY., SENIOR ADVOCATE FOR SRI. SOMASHEKAR., ADVOCATE)

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AND

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Digitally signed by THEJASKUMAR N Location: HIGH COURT OF KARNATAKA

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THE SECRETARY TO GOVERNMENT, DEPARTMENT OF LABOUR, VIKAASA SOUDHA, BENGALURU - 560 001.

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THE AUMA INDIA EMPLOYEES ASSOCIATION, 24, MADHUVANTI, 1^ST FLOOR, 1^ST 'A' CROSS, CHIKKABOMMASANDRA, NEW TOWN, YELAHANKA, BENGALURU - 560 065. REPRESENTED BY ITS SECRETARY.

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…RESPONDENTS

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(BY SMT. V.SPOORTHI., HCGP FOR R1; SRI. V.R.DATAR., ADVOCATE FOR R2)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, SEEKING CERTAIN RELIEFS.

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 22.11.2023, COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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Sri.S.N.Murthy., learned Senior counsel on behalf of Sri.Somashekar., for the petitioner appeared through video conferencing.

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Smt.V.Spoorthi., learned HCGP for respondent No.1 and Sri.V.R.Datar., learned counsel for respondent No.2 appeared in person.

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The first respondent vide order dated 10.01.2018 has accorded sanction for the prosecution of the petitioner. It is this order that is called into question in this Writ Petition on several grounds as set out in the memorandum of Writ Petition.

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Learned counsel for the petitioner and respondents urged several contentions.

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Sri.S.N.Murthy., learned Senior counsel placed reliance on the following decisions:

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(1) M/S.WOOLCOMBERS OF INDIA LIMITED VS. WOOLCOMBERS WORKERS' UNION AND ANOTHER - AIR 1973 SC 2758.

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(2) PEPSI FOODS LIMITED AND ORS. VS. SPECIAL JUDICIAL MAGISTRATE AND ORS. - 1998 (5) SCC 749.

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(3) SHRI DILIP SURANA OCCUPIER AND ANOTHER VS. THE STATE OF KARNATAKA AND ANOTHER - W.P.NO.54962/2013 DISPOSED OF ON 04.03.2014.

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The petition is opposed by the Union - the second respondent by filing a detailed statement of objections interalia pointing out the provisions and the fifth Schedule of the Industrial Disputes Act, 1947. In support of his contentions, Sri.V.R.Datar., learned counsel for respondent No.2 placed reliance on the following decisions:

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(1) JASWANT SINGH VS. STATE OF PUNJAB - AIR 1958 SC 124.

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(2) S.N.HADA VS. BINNY LIMITED STAFF ASSOCIATION - ILR 1987 KAR 3762.

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(3) STATE OF BIHAR AND ANOTHER VS. P.P.SHARMA, IAS, AND ANOTHER - 1992 SUPP (1) SCC 222.

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(4) MYSORE STRUCTURALS LIMITED AND OTHERS VS. STATE OF KARNATAKA AND ANOTHER - (2002) 1 SCC 477 .

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(5) STATE AND ANOTHER VS. Dr.R.C.ANAND AND ANOTHER - AIR 2004 SC 3693.

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Heard, the contentions urged on behalf of the respective parties and perused the Writ papers with utmost care.

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The real question to be determined is whether the first respondent is right in according a sanction for prosecution.

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The issue relates to the grant of permission to prosecute the petitioner. Section 34 of the I.D Act deals with cognizance of offences. This provision requires that no Court shall take cognizance of any offence punishable under the Act, or abetment of such offence, save on a complaint made by the ‘appropriate Government’ or under the authority of the ‘appropriate Government’. The object of this Section is to avoid false and frivolous complaints and thereby, save the party from harassment; and precisely for that reason, the Government is required to apply its mind and determine the propriety of filing the complaint. This Section confers two powers on the appropriate Government. Firstly, to make a complaint itself and secondly, to authorize the making of a complaint. The scheme

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of the legislation in Section 34 is that there may not be indiscriminate complaints. Therefore, when an offence under the Act has been committed, the appropriate Government will decide whether it will make the complaint itself, or whether it will authorize somebody else to make the complaint. It means that prosecution is not left either to the employer or to the employee. The phrase ‘under the authority of the appropriate Government’, implies a sanction by the Government, after it has considered the desirability of the prosecution. The object of the provision is the prevention of frivolous and harassing prosecution which should not be instituted.

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With this background, let me consider what facts I have here. In the present case, the proceedings commenced based on the complaint made by the Union. Suffice it to note that Auma India Employees Association made a complaint to the Principal Secretary to the Government, Labour Department, Vikasa Soudha, Government of Karnataka, Bengaluru on 28.08.2013. The complaint is in respect of unfair labor practices with references to clauses (1), (4), (6), (7), (13) and (15) of the fifth Schedule of the Industrial Disputes Act, 1947. The allegations that were made against the management are:

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To interfere with, and restrain workmen in the exercise of their right to organize the union (clause I)

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To encourage or discourage membership in any trade union by discriminating against any workman (clause IV)

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To abolish the work of a regular nature being done by workmen, and to give such work to contractors as a measure of breaking a strike (clause VI)

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Transferring workers from one place to another (clause VII)

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Failure to implement award, settlement, or agreement (clause XIII)

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Refusing to bargain collectively, in good faith with the recognized trade unions (clause XV).

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The true copy of the complaint is furnished along with the statement of objections and the same is marked as AnnexureR6. It is clear from the complaint that the Union has not made a complaint in respect of payment of reward leading to inducement to union members to leave the union.

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Suffice it to note that the management questioned the accord of sanction for prosecution. The Union has filed a

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detailed statement of objections. Sri.L.Kalappa, son of Laxman President of the Union has sworn to a statement of facts. The statement of objections revolves around rewards given to NonUnion /Pro Management workers. An attempt is made on behalf of the Union to contend that the management has adopted unfair labor practices and the management has made a differentiation in payment of rewards. However, a perusal of the complaint reveals that the Union has not made any complaint to the first respondent in respect of rewards leading to inducement to union members to leave the Union. The complaint is not about the payment of rewards, however, the first respondent accorded sanction for prosecution stating that by paying a reward at discretion, there is a clear differentiation and violation of the Standing order leading to inducement to Union members to leave the Union.

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It is pivotal to note that the petitioner has not been prosecuted by the first respondent for any of the allegations made in the complaint. When the complaint does not relate to the payment of the reward, the question of granting permission to prosecute the Management stating that the Management has made a differentiation in payment of rewards does not arise.

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Furthermore, there is no reference to any of the clauses of the fifth Schedule that is alleged to have been violated. The first respondent does not even specify as to which of the Clauses of the unfair labor practice is violated.

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During the argument, learned Senior Counsel

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Sri.S.N.Murthy., strenuously urged that there is no clarity in the order; the first respondent merely relied on the clarification submitted by the Labour Commissioner. Hence, he submitted that the first respondent had committed a grave error apparent on the record on account of total non-application of mind. Accordingly, he submitted that the order is liable to be quashed.

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By way of answer to this point, learned counsel Sri.V.R.Datar., submitted that the order is only an administrative decision, hence, there is no obligation to assign detailed reasonings. Learned counsel drew the attention of the Court to decision of A.K.KRAIPAK AND OTHERS VS. UNION

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OF INDIA AND OTHERS reported in 1969 (2) SCC 262 . He also drew the attention of the Court to Sections 25T and 25U of the Industrial Disputes Act, 1947. An attempt is made on behalf

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of the Union to contend that the Management has committed unfair labor practices. Accordingly, he submitted that the first respondent referred to the material on record and justified in passing the order. Hence, he prayed for the dismissal of the Writ Petition.

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The rival contentions urged on behalf of the respective parties are considered with care.

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Schedule V of the Act indeed lists unfair labor practices. Section 25T prohibits any employer, workers, or Trade Union from committing any unfair labor practice. Section 25U imposes a penalty on any person who commits any unfair labor practice, the punishment being imprisonment for a term that may extend to six months or with a fine that may extend to one thousand rupees or with both. Section 3 4 affords protection to the persons sought to be prosecuted, inter-alia for an offence punishable under Section 25 U of the Act, in as much as the Court concerned can take cognizance of the said offence punishable only on a complaint made by or under the authority of the appropriate Government. Since authorization is a prerequisite and essential for taking cognizance of an offence

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under Section 34, a conferment of such authority is not an automatic and empty formality. In making the complaint or authorizing someone else to make the complaint, the appropriate Government must, therefore, be satisfied that the facts required for making the complaint exist and that it is expedient to make the complaint. It is incumbent on the appropriate Government to satisfy itself by applying its mind to all the relevant facts, before it grants the authority. When a sanction for prosecution is sought, the authority must care to see and must satisfy itself about the genuineness of the complaint.

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It is I think to be remembered that the order of sanction should disclose the facts that had a bearing on the question as to whether an offence had been committed or not. In taking a decision that a complaint should be made for prosecuting a person for any offence committed by him punishable under the Act, the appropriate Government must apply its mind to the material before it. In the present case, the order does not even specify as to which of the clauses of the unfair labor practice is violated. It is thus evident from the order that the Government has not applied its mind to the facts and circumstances. The

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recommendations of the Labor Commissioner are being taken as though what the Labor Commissioner has done is final and that his recommendation is to be simply accepted and acted upon. There was no bar for the State Government to accept the Labor Commissioner's report and to act upon it. But the State Government had to independently consider the matter. A perusal of the order reveals that the first respondent does not even bothered to independently consider the material before it. Instead, the Government simply acts upon the recommendation of the Labor Commissioner as though it must simply affix the seal to approve the conclusion reached by the Labor Commissioner. Thus, it must be concluded that the order passed by the first respondent is a result of the decision of the Labor Commissioner and not that of the State Government. Section 34 does not give such a power to the Labor Commissioner, but, that the power there under vests with the State Governmen t. If the accord of sanction for prosecution is made without application of mind, the same shall be quashed on judicial review.

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Suffice it to note that the grant of sanction is derived from Section 34 of the Industrial Disputes Act, 1947 and if the

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authority does not act independently and passes an order under the instructions and orders of another authority, the Court would intervene in the matter, and quash the order. The decision of grant of sanction for prosecution must be taken by the State Government and the duty of taking this decision cannot be usurped by any other authority. This I think makes it clear that the sanctioning authority must apply its independent mind for the generation of genuine satisfaction whether the prosecution must be sanctioned or not. Furthermore, a perusal of the order makes it clear that the first respondent has arrived at an unjust decision and that has a more far-reaching effect. The duty to apply the mind and give reasons is the requirement of procedural fairness. The reasons given must be intelligible and must adequately meet the substance of the issue involved in the matter.

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A good deal of argument was canvassed about the nature of the power of the first respondent. The law is well settled that a quasi judicial power must be exercised reasonably and in good faith. The law is also equally settled that in cases that are classified as administrative, the administrative authority must act justly and fairly and not arbitrarily and capriciously.

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Learned counsel for the respective parties placed reliance on several decisions, but I do not think that the law is in doubt. Each decision turns on its facts. The present case is also tested in light of the aforesaid decisions.

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To conclude, I can say only this much that the accord of sanction for prosecution is unsustainable in law. For the reasons stated above, the order of the first respondent is liable to be quashed and accordingly, it is quashed.

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The Writ of Certiorari is ordered. The order dated 10.01.2018 passed by the first respondent in File No.LD 503 IDM 2013 vide Annexure-L is quashed.

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As a result, the Writ Petition is allowed .

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Sd/JUDGE

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TKN,MRP List No.: 1 Sl No.: 30

M/S Auma India Private Ltd. v. the Secretary to Government

Case brief

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M/S Auma India Private Ltd. v. the Secretary to Government

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