Input:
ivil Appeal No. 768 (NL) of 1973 From the order dated 27.9.1972 of the Industrial Court, Maharashtra, Bombay in Appeal (IC) No. 133 of 1971.
G.B. Pai, O.C. Mathur, section Sukumaran, Miss Meera Mathur and D.N. Mishra for the Appellant.
E Naunit Lal and Jitendra Sharma for the Respondent.
The Judgment of the Court was delivered by M.M. DUTT, J.
This appeal by special leave has been preferred by the appellant, Prakash Cotton Mills Pvt. Ltd., against the order dated September 27, 1972 of the Industrial Court, Maharashtra, Bombay directing payment of compensation by the appellant to its employees and to some badli workmen for the period from March 24, 1964 to June 10, 1964 (both days inclusive) during which the mill of the appellant had been closed down under circumstances beyond control of the appellant.
The appellant is a Company engaged in the business of manufacture of cotton textile goods and comes within the purview of the provisions of the Bombay Industrial Relations Act, 1946 (hereinafter referred to as the 'Act ').
It is not disputed that the mill of the appellant H 422 is recognised as an undertaking under section 11 of the Act.
The respondent, the Rashtriya Mill Mazdoor Sangh, is the approved, registered and representative union under section 14 of the Act, representing the employees in the cotton textile industry within the limits of Greater Bombay.
It appears that on account of the alleged failure of the appellant to pay the Central Excise duty, certain detention orders were passed by the Assistant Collector of Central Excise detaining the goods of the appellant like cotton fabrics, cotton yarn and cotton bales Lying in the premises of the appellant 's mill.
As a result of the said detention orders, the goods which were essential for the manufacturing process in the appellants mill were detained and, consequently, there was a disruption in the functioning of the appellant 's mill compelling the appellant to stop the working of the mill.
It is not necessary for us to state in detail the proceedings that were taken by the appellant against the said detention orders, but suffice it to say that the detention orders were withdrawn and the appellant started the working of the mill after June 10,1964.
The respondent Sangh demanded that the employees who were affected by the said closure from March 29, 1964 to June 10, 1964 should be paid their wages for the entire period.
As the said demand was not accepted by the appellant, the respondent filed an application before the First Labour Court, Bombay, under section 79 read with section 78 of the Act and prayed for the payment of full closure compensation to the employees affected during the aforesaid period.
The application of the respondent was opposed by the appellant.
It was contended on behalf of the appellant that as the closure was due to certain circumstances beyond the control of the appellant, the appellant was not liable to pay any compensation for such closure.
The Labour Court, after hearing the parties, by its order dated February 19,1968 held that the appellant was liable to pay closure compensation to the employees affected at the rate of 50% of the total basic wages and dearness allowance on the ground that such closure amounted to lay off within the meaning of section 2(kkk) of the , and that compensation at the same rate as prescribed by section 25C of the , namely 50% of the total wages would be payable to the employees affected by the said closure.
The appellant preferred an appeal against the said order of the 423 Labour Court to the Industrial Court, Maharashtra.
The Industrial A Court set aside the order of the Labour Court and remanded the matter to that Court for a fresh enquiry and finding on the question of liability and extent of compensation for the period of closure.
After remand, the Labour Court again held that the appellant was liable to pay closure compensation to the employees affected by the closure of the mill from March 24,1964 to June 10, 1964 at the rate of 50% of the basic wages and dearness allowance.
The appellant again preferred an appeal to the Industrial Court, Maharashtra, contending, inter alia, that it was not liable to pay any compensation on account of closure that took place under circumstances beyond the control of the appellant and that, in any event, the appellant was not liable to pay compensation to the Badli workmen.
C The Industrial Court by the impugned order dated September 27, 1972 partly allowed the appeal and directed the appellant to pay closure compensation to the employees affected by the closure for the said period from March 24, 1964 to June 10, 1964 at the rate of 50% of their basic wages and dearness allowance and further directed that where the employees had been sick and enjoyed sickness benefits for all the days or had been on privilege leave or enjoyed leave with wages for all the days or secured alternative employment for any period during the closure, such employees would not be entitled to any closure compensation for such days, but in respect of such days half of the wages payable to Badli workmen in lieu of the said three categories of workmen would be paid to the Badli workmen equitably.
Being aggrieved by the said order of the Industrial Court, the present appeal has been filed by the appellant by special leave.
Mr. G.B. Pai, learned Counsel appearing on behalf of the appellant, submits in the first instance that as the appellant had closed down the mill in accordance with the provisions of Standing orders 16 & 17, it is not liable to pay any compensation.
Standing orders 16 & 17 provide as follows: "16.
The Company may, at any time or times, in the event of a fire, catastrophe, breakdown of machinery or stop page of the power supply, epidemic, civil commotion or other cause, beyond the control of the Company, stop any machine or machines or department or departments, wholly or partially for any period or periods, without notice and without compensation in lieu of notice.
424 In the event of a stoppage of any machine or department under this order during working hours, the operatives affected shall be notified by notices put upon notice boards in the department concerned and at the time keeper 's office, as soon as practicable, when work will be resumed and whether they are to remain or leave the mill.
The period of detention in the mill shall not ordinarily exceed one hour after the commencement of the stop page.
If the period of detention does not exceed one hour, operatives so detained shall not be paid for the period of detention.
If the period of detention in the mill exceeds one hour, operatives so detained shall be entitled to receive wages for the whole of the time during which they are detained in the mill as a result of the stoppage.
In the case of piece workers, the average daily earnings for the previous month shall be taken to be the daily wages.
Any operative played off under order 16 shall not be considered as dismissed from service, but as temporarily unemployed, and shall not be entitled to wages during such unemployment except to the extent mentioned in order 16.
Whenever practicable a reasonable notice shall be given of resumption of normal work and all operatives played off under order 16, who present them selves for work, when the normal working is resumed, shall have prior right of reinstatement.
" Relying upon the provision of Standing order 16, it is urged by the learned counsel for the appellant that as the said Standing order does not make any provision for payment of compensation on account of closure of the mill, when such closure was due to circumstances beyond the control of the Company, the Industrial Court was wrong in directing payment of compensation to the employees of the appellant for the period in question including payment to the Badli workmen.
The question whether compensation should be paid to the Badli workmen will be considered by us later in this judgment.
We are, however, unable to accept the contention of the appellant that as the closure had been made in accordance with the provisions of the Standing orders 16 & 17 due to circumstances beyond the control of the appellant, the appellant is not liable to pay any compensation to its employees for the period of closure.
Nor are we in a position to accept 425 the contention of the Counsel for the appellant that the application of A the respondent Sangh before the First Labour Court was not maintainable as the closure was made under the provisions of the Standing orders 16 & 17.
In this connection, we may refer to the provision of sub section (4) of section 42 of the Act which provides as follows: "42(4).
Any employee or a representative union desiring a change in respect of (i) any order passed by the employer under standing orders, or (ii) any industrial matter arising out of the application or interpretation of standing orders, or (iii) an industrial matter specified in Schedule III, except item (5) thereof shall make an application to the Labour Court and as respects change desired in any industrial matter specified in item (3) of Schedule III, to the Industrial Court: Provided that no such application shall lie unless the employee or a representative union has in the prescribed manner approached the employer with a request for the change and no agreement has been arrived at in respect of the change within the prescribed period.
" Item No. 7 of Schedule III, referred to in sub section (4), relates to "Payment of compensation for closures".
Further, clause (a)(iii) of section 78(1) of the Act provides that a Labour Court shall have power to decide any change made by an employer or desired by an employee in respect of an industrial matter specified in Schedule III, except item (5) thereof, and matters arising out of such change.
In view of the provision of sub section (4) of section 42 read with the provision of section 78(1) (a)(iii), it is manifestly clear that an employee is entitled to challenge the refusal by the Company to pay compensation for the closure and claim such compensation before the Labour Court whether or not such closure was due to circumstances beyond the control of the Company, as enumerated in Standing order 16.
Such a contention, if accepted, will make the provision of section 42(4) and that of section 78(1)(a)(iii) of the Act nugatory.
The respondent Sangh, therefore, in our opinion, was entitled to make the application before the Labour Court claiming compensation for the period of closure even though such closure was made in accordance with the provisions of the Standing orders 16 & 17.
There is no substance in the contention of the appellant that as 426 the closure had to be made under certain compelling circumstances, the appellant was not liable to pay compensation to any of its employees.
The Standing order 16 provides that such closure can be made without notice and no compensation would be required to be paid in lieu of notice.
It is clear from Standing order 16 that it does not contemplate that when there has been a closure on account of some unavoidable circumstances, no compensation is required to be paid to the employees.
Under the circumstances, there is no substance in the contention of the appellant that as the closure had been made in accordance with Standing orders 16 & 17, it is not liable to pay any compensation.
The contention is, accordingly, overruled.
We, therefore, uphold the order of the Industrial Court directing payment of compensation to the employees of the appellant for the above period of closure.
The next question that remains to be considered is whether the Industrial Court is justified in directing payment of compensation to some of the Badli workmen.
It is not in dispute that Badli workmen get work only in the absence, temporary or otherwise, of regular employees, and that they do not have any guaranteed right of employment.
Their names are not borne on the muster rolls of the establishment concerned.
Indeed, a Badli workman has no right to claim employment in place of any absentee employee.
In any particular case, if there be some jobs to be performed and the employee concerned is absent, the Company may take in a Badli workman for the purpose.
Badli workmen are really casual employees without any right to be employed.
It has been rightly submitted by the learned Counsel for the appellant that the Badli employees could not be said to have been deprived of any work to which they had no right and, consequently, they are not entitled to any compensation for the closure.
Indeed, the Industrial Court has itself observed that to allow the claim of Badli workmen would be tantamount to penalising the appellant.
In spite of the said observation, the Industrial Court directed payment of compensation to the Badli workmen in place of certain categories of regular employees.
We fail to understand how the Industrial Court can direct payment of compensation to the Badli workmen when, admittedly, such Badli workmen, as noticed already, have no right to be employed.
It may be that the Company may not have to pay closure compensation to the three categories of employees, as mentioned by the Industrial Court, but that does not mean that the Company has to pay compensation to the Badli workmen in place of these categories of employees.
In this connection, we may refer to section 25C of the 427 which excludes a Badli workman or a A casual workman from the benefit of compensation in the case of layoff.
In the circumstances, although we uphold the order of the Industrial Court for payment of compensation to the regular employees of the appellant at the rate fixed by it, we are unable to subscribe to the view that the compensation which would have been payable to the three categories of employees, should be paid to the Badli workmen.
In other words, we hold that Badli workmen have no right to claim compensation on account of closure.
Mr. Naunit Lal, learned Counsel appearing on behalf of the respondent Sangh, has placed reliance upon the fact that in the Rashtriya Mill Mazdoor Sangh vs Apollo Mills Ltd ., l ; , this Court awarded compensation to Badli workmen.
Accordingly, it is submitted by him that it is implied that this Court must have taken the view that Badli workmen are also entitled to compensation on account of closure under Standing orders 16 & 17.
We are unable to accept the contention.
The question whether the Badli workmen are entitled to compensation or not, was not raised in Apollo Mills case (supra).
Indeed, in that case, it has been observed by this Court that the case of Badli workmen does not appear to have been separately raised and, accordingly, there is no reason not to award them compensation.
Thus it appears that nothing was decided by this Court but, as no body challenged the right of the Badli workmen to get compensation, this Court directed payment of compensation to them.
We have, however, come to the conclusion that the Badli workmen are not entitled to any compensation on account of closure under Standing orders 16 & 17.
In the circumstances, the order of the Industrial Court in so far as it directs payment of compensation to the Badli workmen is set aside and, except that, the rest of the order of the Industrial Court is affirmed.
The appeal is allowed in part to the extent indicated above.
In view of the facts and circumstances of the case, there will, however, be no order for costs.
A.P.J. Appeal allowed in part.

Output:
Certain goods which are essential for the manufacturing process in the appellant 's mill were detained by the Excise Authorities for non payment of Central Excise Duty and consequently there was a disruption in the functioning of the appellant 's mill compelling the appellant to stop the working of the mill for the period from March 24, 1964 to June 10, 1964.
The Respondent Sangh demanded that the employees who were affected by the said closure should be paid their wages for the aforesaid period.
As the said demand was not accepted by the appellant, the respondent filed an application before the First Labour Court, praying for the payment of full closure compensation to the affected employees.
The Labour Court held the appellant liable to pay closure compensation to the employees affected by the closure of the mill for the aforesaid period at the rate of 50% of the basic wages and dearness allowance.
The Industrial Court partly allowing the appeal of the appellant, directed the appellant to pay closure compensation to the employees affected by the closure for the period from March 24,1964 to June 10, 1964 at the rate of 50 per cent of their basic wages and dearness allowance and further directed that where the employees had been sick and enjoyed sickness benefits for all the days or had been on privilege leave or enjoyed leave with wages for all the days or secured alternative employment for any period during the closure, such employees would 420 not be entitled to any closure compensation for such days, but in respect of such days half of the wages payable to Badli workmen in lieu of the said three categories of workmen would be paid to the Badli workmen equitably.
In appeal to this Court, it was contended on behalf of the appellant that as the closure had been made in accordance with the provisions of the Standing orders 16 and 17 due to circumstances beyond the control of the appellant, the appellant is not liable to pay any compensation to its employees for the period of closure including payment to the Badli workmen.
Allowing the appeal in part, ^ HELD: (1) The order of the Industrial Court in so far as it directs payment of compensation to the Badli workmen is set aside and, except that, the rest of the order of the Industrial Court is affirmed.
[427F G] 2.(i) Sub section
(4) of Sec.
42 read with the provision of section 78(1)(a)(iii) of the Bombay Industrial Relations Act 1946, makes it manifestly clear that an employee is entitled to challenge the refusal by the company to pay compensation of the closure and claim such compensation before the Labour Court whether or not such closure was due to circumstances beyond the control of the company, as enumerated in Standing order 16.
The Respondent Sangh therefore, was entitled to make the application before the Labour Court claiming compensation for the period of closure even though such closure was made in accordance with the provisions of the Standing orders 16 and 17.[425E H] 2.(ii) The Standing order 16 provides that such closure can be made without notice and no compensation would be required to be paid in lieu of notice.
It is clear from Standing order 16 that it does not contemplate that when there has been a closure on account of some unavoidable circumstances, no compensation is required to be paid to the employees.
Therefore, the order of the Industrial Court directing payment of compensation to the employees of the appellant for the above period of closure is upheld.
[426A C] 3.
Badli workmen get work only in the absence, temporary or otherwise, of regular employees, and that they do not have any guaranteed right of employment.
Their names are not borne on the muster rolls of the establishment concerned.
Indeed a Badli workman 421 has no right to claim employment in place of any absentee employee.
In A any particular case, if there be some jobs to be performed and the employee concerned is absent, the Company may take in a Badli workman for the purpose.
Badli workmen are really casual employees without any right to be employed.
Therefore, the Badli employees could not be said to have been deprived of any work to which they had no right and, consequently, they are not entitled to any compensation for the closure.
It may be that the Company may not have to pay closure compensation to the three categories of employees as mentioned by the Industrial Court, but that does not mean that the company has to pay compensation to the Badli workmen in place of these categories of employees.
[426D Il] Rashtriya Mill Mazdoor Sangh vs Appollo Mill Ltd., []960] 3 SCR 231 distinguished.


Input:
Appeal No. 1985 of 1969.
Appeal from the judgment and order dated January 4, 1969 of the patna High Court in Civil Writ Jurisdiction case No. 520 of 1967.
M. C. Chagla, D. P. Singh and V. J. Francis, for the appellant.
L. M. Singhvi and U. P. Singh, for respondents Nos.
1 to 4.
4 14 The Judgment of the Court was delivered by SHAH, J.
This appeal is filed with certificate granted by the High Court of Patna under article 133 (1) (a) of the Constitution.
The appellant Hansraj Bagrecha carries on business in jute.
In the course of his business the appellant buys raw jute from producers in West Bengal, transports it to Kishanganj Railway Station (which is within the State of Bihar) and then re exports it to purchasers in West Bengal.
He also buys raw jute in Bihar and exports it to the merchants or mill owners in West Bengal by rail from Kishahganj Railway Station.
The Bihar Sales Tax Act 1959, as originally enacted did not provide for levy of purchase tax.
By the Bihar Finance Act, 1966, with effect from April 1, 1967, among others the following sections were incorporated in the Bihar Sales Tax Act, 1959 S.3A "The State Government may from tune to time, by notification declare any goods to be liable to purchase tax on turnover of purchase : Provided that general sales tax and special sales tax shall not be payable on the sale of goods or class of goods declared under this section.
" section 5A "The purchase tax on goods declared under section 3A shall be levied at the point of purchase made from a person other than a registered dealer.
" By a notification dated September 14, 1966 the Governor of Bihar declared 'jute ' as a commodity liable to purchase tax at the rate specified in the notification.
Section 42 of the Bihar Sales Tax Act by the first subsection provided : "No person shall transport from any railway station, steamer station, air port, post office or any other place, whether of similar nature or otherwise, notified in this behalf by the State Govt.
, any consignment of such goods, exceeding such quantity, as may be specified in the notification, except in accordance with such conditions as may be prescribed and such conditions shall be made with a view to ensuring that there is no evasion of tax payable under this Act.
" Section 46 of the Act invested the State Government with power to make rules for all matters expressly required or allowed by the Act to be prescribed and generally for carrying out the purposes of the Act and regulating the procedure to be followed, forms to 415 be adopted and fees to be paid in connection with proceedings under the Act and all other matters ancillary or incidental thereto.
In exercise of the powers conferred under s, 46 (1) the State of Bihar promulgated under Rules 31 B and 8C, Rule 31B, which provided "(1) No person shall tender at any railway station, steamer station, air port, post office or any other place, whether of similar nature or otherwise, notified under section 42, any consignment of such goods exceeding such quantity, as may be specified 'in the notification, for transport to any place outside the State of Bihar, unless such person has obtained a despatch permit in Form XXVIII D from the appropriate authority referred to in the Explanation to rule 31 and no person, shall accept such tender unless the said permit is surrendered to him." Rule 30(1) provided "The first purchase of goods declared under section 14 of the , shall be leviable to tax in terms of sections 3, 3A and 5A of the Act and no subsequent sales or purchases in respect of the said goods shall be liable to any tax under the Act." ' After the enactment of sections 3A and 5A the State Government issued.
a notification dated December 26, 1967 purporting to exercise power under section 42 of the Bihar Sales Tax Act, 1959 read with r. 31B of the Bihar Sales Tax Rules, 1959, notifying that no person shall tender at any railway station mentioned in Sch.
II, and consignment of goods mentioned in Sch.
I, exceeding the quantity specified for transport to any place outside the State of Bihar and no person shall accept such tender in accordance with the conditions prescribed in r. 31B of the Bihar Sales Tax Rules, 1959.
Under Sch.
I `Jute ' exceeding 800 Kg.
could not be tendered for transport without "a despatch pen nit", and Kishanganj was one of the Railway Stations mentioned in Sch.
In July 1967 the Superintendent of Commercial Taxes addres sed a letter prohibiting the railway authorities from loading jute goods and despatching them from any railway station within the Purnea District of Bihar, except on production of a "registration certificate".
By his letter dated July 10, 1967 the Station Master Kishanganj called upon the Secretary, Jute Merchants Association, Kishanganj, to produce a certificate as required in the letter of the Superintendent of Commercial Taxes, before "loading jute goods for despatch was commenced" and informed them that in default wagons allotted to the jute merchants shall be cancelled and 416 registration, fees, forfeited and that "demurrage" win be charged.
The appellants request that jute booked by him be despatched from.
Kishanganj was turned down by the railway authorities, because the registration certificate issued by the Superintendent of Commercial Taxes, Purnea for the movement of jute from the place was not produced.
The appellant then moved a petition before the High Court of Patna on August 29, 1967 challenging the validity of sections 3A, 5A, 42 and 46 and r. 31B of the Bihar Sales Tax Rules, 1959.
The High Court of Patna dismissed the petition.
With certificate granted by the High Court this appeal has been preferred by the appellant.
In support of the appeal counsel for the appellant raised three contentions : (1) that sections 3A & 5A as incorporated 4th Finance Act of 1966 infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment made by the Finance Act, 1966 did not receive the assent of the President under article 304(b) the amendment was not saved; (2) that sections 3A & 5A and r. 8C "were contrary to" section 15 of the and were void on that account; and (3) that r. 31B framed by the State Government and the notification issued on December 26, 1967 were unauthorised and liable to.
be struck down.
Article 301 of the Constitution guarantees freedom of trade, commerce and intercourse throughout the territory of India.
By article 302 the Parliament is authorised by law to impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory ofIndia as may be required in the public interest.
article 303(1) imposes restrictions upon the power which the Parliament or the Legislature of a State may exercise to make any law giving, or authorising the giving of, any preference to one State over another, or making or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.
But that clause does not operate to restrict the power of the Parliament to make any law giving, or authorise the giving of, any preference or making or authorising the making of, any discrimination, if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from 417 scarcity, of in, any part of, the territory of India Art 303 (2).
article 304 provides in so far as it is relevant "Notwithstanding anything in article 301 :or article 303, the Legislature of a State may by law (a) (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest Provided that no Bill 'or amendment for the purpose of clause (b) shall be introduced or moved in the pose Legislature, of a State without the Previous sanction of the President.
" article 304 is in terms a restriction on the freedom guaranteed by article 301.
Notwithstanding the amplitude of, the freedom of trade, commerce and intercourse throughout the territory of India, the Legislature of a State may by law impose, among others such reasonable restrictions on the,, freedom of trade,, cow or intercourse with or within that State as may be required in the public interest.
But that authority to impose reasonable, restrictions on the freedom of trade, may only be, exercised by the Legislature of a State if the Bill or amendment for the Purpose of cl.
(b) is introduced or moved in the Legislature of a State with the previous sanction of the President.
It was contended that since section 3A providing for the of purchase tax imposes a restriction on the freedom of trade,, commerce and intercourse and on that account violates the freedom of trade guaranteed by article 301, it way be saved only if it is legislation of the nature contemplated by article 304(b) and the Bill which was enacted into the Act received the previous assent of the President.
The assumption that the levy of purchase tax must be deemed in all circumstances, to violate the .
guarantee under article 30 1, and the levy will be valid only, if the Act is enacted by the State Legislature with the previous sanction of the President, cannot be accepted 'as correct.
This Court in The State of Madras vs N. K. Nataraja Mudaliar(1) examined the validity of laws which impose taxes on sale in the: light of article 301.
It was observed at p. 839 "This Article (article 301) is couched in terms of the widest amplitude, trade, commerce and, intercourse am thereby declared free and unhampered, throughout the story of India.
The freedom of trade (1) ; so declared is against the imposition of barriers or obstructions within the state as well as inter State all restrictions which directly and immediately affect the movement of trade are, declared by Art 301 to in effective.
The extent to which article 301 operates to make trade.
and commerce free has been considered by this Court in several cases In Atiabari Tea Co. Ltd. vs, The State of Assam and others(1) Gajendragadkar, speaking for himself and Wanchoo and Das Gupta JJ., observed at p. 860 ". . we think it, would be reasonable and proper to hold that restrictions, freedom from which is guaranteed by art 301 would be such restrictions as,directly and immediately restrict or impede the free flow or movement of trade." "In Automobile Transport (Rajasthan) Ltd vs The State of Rajasthan and others(2) the view expressed by Gajendragadkar, J., in Atiabari Tea Co 's case was accepted by the majority.
Subba Rao, J., who agreed with the majority observed that the freedom declared under article 301 of the Constitution of India referred to the right of free movement of trade without any obstructions by way of barriers, inter State or intra State, or other impediments operating as such barriers.
The same view was expressed in Firm A.T.B. Mehtab Majid and Company vs State of Madras and Another(3) by a unanimous Court.
It must be taken as settled law that the restrictions or impediments which directly and immediately impede or hamper the free flow of trade commerce and intercourse fall within the prohibition imposed by article 301 and subject to the other provisions of the Constitution they may be regarded as void.
But it is said that by imposing tax on sales, no restriction hampering trade is imposed.
In the Atiabari Tea Company 's case, Gajendragadkar, J., observed: "Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 30 1.
The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld.
" In a recent judgment of this Court in The Andhra Sugars Ltd. and Another vs The State of Andhra Pradesh.
and others(4) (1) ; (3)[1963] 1 S.C.R. 491.
(2)[1963] Supp.
2 section C. R 435.
(4) 21 S.T.C. 212 419 Bachawat, J., speaking for the Court after referring to, the observations made by Gajendragadkar, J., in Atiabari Tea Company 's case(1) observed "This interpretation of Article 301 was not dissented from in Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan (2) .
Normally, a tax on sale of goods does not directly impede the free movement or transport of goods.
Section 21 is no exception.
it does not impede the free movement or transport of goods and is not violative of Article 301.
" Section 21 of the Andhra Pradesh Sugar Cant (Regulation of Supply and Purchase) Act which was referred to in the judgment authorised the State Government to levy a tax at such rate, "not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
It must, therefore, be regarded as settled law that a tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does.
not do so.
" Imposition of tax of the nature of purchase tax does not by itself restrict freedom of trade, commerce or intercourse.
Imposition of tax may in certain circumstances impede free flow oftrade, commerce or intercourse.
But every tax doesn 't have that effect.
Imposition of a purchase tax by the State does not by itself infringe the guarantee: of freedom under Art.301.
The argument that imposition of sales or purchase tax must be regarded in all cases as infringing the guarantee of freedom under article 301 cannot be accepted as correct.
The appellant filed the petition out of which their appeal arises soon after the Station Master informed the Jute Merchants Association about his inability to book consignments of jute.
He has made no averments in the petition which support the plea that imposition of purchase tax "directly and immediately restricts or impedes" the free flow of trade.
Since power to impose purchase tax under section 3A on notified goods is not shown to restrict or impede the free flow of trade directly and immediately, it need not seek to derive, for its validity, support from article 304(b).
The contention that sections 3A & 5A are inconsistent with section 15 of the is without substance.
By section 14 of 'the ' certain classes of goods are declared goods of special importance in inter State trade or commerce.
Jute is one of such classes of goods.
By section 15 as (1) ; , (2) [1963] 1 section C. R, 491.
420 amended by the Central Sales Tax Second Amendment Act, XXXI ,of 1958 it is provided "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the ,sale or purchase of declared goods, be subject to 'the following restrictions and conditions, namely (a) the tax payable under that law in respect of any sale of purchase of such goods inside the state shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not, be levied at more than one stage; (b) where a tax has been levied under that law in respect of the sale or purchase inside the state of any declared goods and such goods are sold in the course of inter state trade or commerce, the tax so levied shall refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.
" By section 15 of the in respect of the declared goods on transactions of sale or purchase the tax leviable is restricted to 3 % and is not leviable at more than one stage.
There, is no dispute that the purchase tax on jute is leviable at the first point of purchase under section 3A of the Bihar Sales Tax Act, and the rate of tax also is not shown to exceed the maximum prescribed by section 15 of the .
The provisions of sections 3A & 5A of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of section 15 of the .
But, in our judgment, r. 31B of the Bihar Sales Tax, Rules, 1959 and the notification issued on December 26, 1967 are unauthorised and must be struck down.
The Bihar Sales Tax Act is enacted by the Legislature to consolidate and amend the, law relating to the levy of tax on the sale and purchase of goods in Bihar.
The State Legislature is competent in enacting sales tax legislation to make a provision which is ancillary or incidental to any provision relating to levy,; collection and recovery of sales tax and purchase tax.
_ A provision which is made by the Act or by the Rules which seeks to prevent evasion of liability to pay tax on intra State sales or purchase would therefore be within the competence of the Legislature or the authority competent to make the rules .
But the State Legislature has no power to legislate for the levy of tax on transactions which are carried on in the course of inter State trade or commerce or in the course of export.
Section 42 of the Bihar Sales Tax Act, 1959, prevents any person from transporting from any railway station, steamer station, 421 air port, post office or any other place any consignment of such goods exceeding the.quantity specified with a view to ensuring that 'there is no evasion of tax payable under the Act.
But the power under section 42 can only be exercised in respect of levy, collection and recovery of intra State or purchase tax.
It cannot be utilised for the purpose of ensuring the effective levy of Inter State sales or purchase tax.
The appellant purchased jute both within and without the State of Bihar.
In respect of transactions of purchase within the State of Bihar and despatch of goods liability to pay purchase tax at the point of purchase may arise.
In respect of goods which are purchased in the State of West Bengal and brought within the State of Bihar and then despatched to other States in the course of inter State transactions no question of levy of purchase tax under the Bihar Sales Tax Act arises.
R. 31 B framed by the State Government seeks to prohibit transport in pursuance of transactions which are inter State, for in terms it prohibits transporting of goods to any place outside the State of Bihar.
Again transport of goods for personal consumption oil use, or of goods, gifted, pledged or dealt with otherwise than by sale, falls within the injunction contained in r. 31B. The power of the State Legislature is restricted to legislate in respect of intra state transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legislate for levy of tax on sales and purchase in the course of inter State transactions.
The, power conferred by section 42 authorising the imposition of restriction on transport or movement of goods may only be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra State sale or purchase.
When r. 31B prohibits transport of goods to any place outside the State of Bihar unless a certificate is obtained from the appropriate authority, it seeks to prohibit transport of goods pursuant to transactions which may not even be of the nature of sale or purchase transactions; in any case it restricts transport pursuant to transactions in the course of inter Statetrade and commerce.
The operation of the rule is not restricted only to transactions in the course of intra State trade and commerce.
The rule authorises restrictions on inter State transactions and is on that account unauthorised.
For the same reasons the notification issued on December 26, 1967 must be regarded as also unauthorised.
In the view we have taken r. 31B and the notification issued bythe State Government on December 26, 1967 must be declared ultra vires, and since r. 31B and the notification are ultra vires the communication issued by the Superintendent of Commercial 4 22 Taxes to the Railway Authorities must also be declared unauthorised A writ will therefore issue declaring r. 31B and the notification issued by the Government of Bihar on December 26, 1967 ultra vires, and the letter written by the Superintendent of Commercial Taxes to the Railway Authorities is also declared unauthorised.
Having regard to the circumstances, we think there should be no order as to costs.

Output:
Under section 5A of the Bihar Sales Tax Act 1959 as amended by the Bihar Finance Act, 1966 the purchase tax on goods declared under section 3A was to be levied at the point of purchase made from a person other than a registered dealer.
By a notification dated September 14, 1966 the Governor of Bihar declared jute as a commodity liable to purchase tax at the rate specified in the notification.
The appellant carried on business in jute, In the course of his business he.
purchased raw jute from producers in West Bengal, transported it to Kishenganj Railway Station in Bihar and then re exported it to purchasers in West Bengal.
He also bought raw jute in Bihar and exported it to merchants and mill owners in West Bengal by rail from Kishenganj Railway Station.
After the enactment of sections 3A and 5A the State Government issued a notification dated December 26, 1967 purporting to exercise power under section 42 of the Bihar Sales Tax Act, 1959 read with r. 31B of the Bihar Sales Tax Rules, 1959 notifying that no person shall tender at any railway station mentioned in Sch.
11 any consignment of goods mentioned in Sch.
I exceeding the quantity specified for transport to any place inside the State of Bihar and no person shall accept such tender in accordance with the conditions laid down in the said R. 31B. Under Sch.
I jute exceeding 800 kg.
could not be tendered for transport without a despatch Permit and Kishenganj was one of the railway stations mentioned in Sch.
In July 1967 the Superintendent of Commercial Taxes prohibited the railway authorities from loading and despatching jute goods from any railway station in Purnea district without the production of a registration certificate.
For non production of such certificate the railway authorities refused to despatch from Kishenganj the jute goods booked by the appellant.
The appellant moved a 'writ petition in the High Court of Patna challenging inter alia the validity ,of sections 3A and 5A of the Bihar Sales Tax Act and of R.31B.
The High Court dismissed the petition.
With certificate the present appeal was filed.
In support of the petition it was urged (i) that sections 3A and 5A infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment by the Finance Act, 1966 introducing these sections did not receive the assent of the President under article 304(b) the amendment was not saved; (ii) that sections 3A and 5A were contrary to ' section 15 of the and accordingly void; (iii) that P. 31B framed by the State Government and the notification issued on December 2.6, 1967 were unauthorised and liable to be struck down.
HELD: (i) The assumption that the levy of purchase tax must be deemed in all circumstances to violate the guarantee under article 301 and 413 the levy will be valid only if the Act is enacted by the State Legislature with the previous sanction of the President cannot be accepted as correct.
Imposition of tax may in certain circumstances impede free flow of trade, commerce and intercourse.
But every tax does not have that effect.[417 G; 419 E] State of Madras vs N. K. Nataraja Mudaliar [1968] 3 S.C.R. 829, Atiabari Tea Co. Ltd. vs State of Assam, and The Andhra Sugars Ltd. vs State of Andhra Pradesh, 21 S.T.C. 212, applied.
In the present case the petitioner has made no averments in his petition which supported the plea that imposition of purchase tax directly and immediately restricts or impedes the free flow of trade.
Since power to impose purchase tax under section 3A was not shown to restrict or impede the free flow of trade directly and immediately, it need not seek to derive for its validity, support from article 304(b).
[419 G] (ii) By section 15 of the , tax liable in respect of declared goods on transactions of sale or purchase is restricted to 3% and is not leviable at more than one stage.
There was no dispute that the purchase tax on jute was leviable at the first point of purchase under section 3A of the Bihar Sales Tax Act, and the rate of tax was not shown to exceed the maximum prescribed by section 15 of the .
The provisions of sections 3A and 5A of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of section 15 of the .
[420 E] (iii) Rule 31B of the Bihar Sales Tax Rules must however be struck down as ultra vires.
[420 F] The power of the State Legislature is restricted to legislate in respect of intra State transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legislate for levy of tax on sales and purchase in the course of inter State transactions.
The power conferred by section 42 authorising the imposition of restriction or transport or movement of goods may only be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra State sale or purchase.
When r. 31B prohibits transport of goods to any place outside the State of Bihar unless a certificate is obtained from the appropriate authority, it seeks to prohibit transport of goods pursuant to transactions which may not even be of the nature of sale or purchase transactions; in any case it restricts transport pursuant to transactions in the course of inter State trade and commerce.
The operation of the rule is not restricted only to transactions in the course of intra State trade and commerce.
The rule authorises restrictions on inter State transactions and is on that account unauthorised.
For the same reasons the notification issued on December 26, 1967 must be regarded as also unauthorised.
[421 E G]


Input:
he State Government for fresh disposal and the State Government should make its order of reference within one month and the Labour Court to which the dispute may be referred shall dispose of the reference within four months from the date of the receipt of the reference.
[1006C D] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3 144 of 1985.
From the Judgment and Order dated 20.11.
1984 of the Madras High Court in Writ Appeal No. 178 of 1982 M.K. Ramamurthy, Ambrish Kumar and Rajaraman for the Appellants.
K. Parasaran, Attorney General, G.L. Sanghi, Dr. Y.S. Chitale, A.V. Rangam, T.V. Ratnam and A.T.M. Samanth for the Respondents.
Later 1000 134of them were taken back to employment.
In regard to 7 of the dismissed workmen conciliation was undertaken and upon its failure, disputes raised under section 11 A of the were asked to be referred to the Labour Court for adjudication.
When Government declined to make a reference, the High Court was moved.
The learned Single Judge rejected the writ petition and the Division Bench upheld such rejection.
This appeal by special leave is against the order of the Division Bench of the High Court.
This Court on July 9, 1985 after hearing counsel for parties came to the conclusion.
"Now it is clear from the order made by the State Government on 11th October, 1979 which order has been reaffirmed by the State Govt.
by its order dated 3rd May. 1981, that the only ground on which the State Government refused to make a reference, of the dispute to the labour court was that, in its opinion the domestic inquiry had been conducted by the 3rd respondent (employer) according to the princi ples of natural justice and the punishment imposed by the 3rd respondent on the appel lants was not disproportionate to the gravity of the offence committed by them.
This is also borne out from paragraph 6 of the counter affidavit filed on behalf of the 1st respond ent . . where it has been clearly stated that the Labour Department of the Government of Tamil Nadu opined that the management had conducted a fair and proper inquiry and also taken in consideration the gravity of the offence before dismissing the appellants and the punishment imposed on the appellants was not disproportionate having regard to the nature of the charges proved against them.
This ground on which the State Government has acted in refusing to refer the dispute to the labour court is clearly an irrelevant ground.
It is now settled law as a result of the decisions of this Court in Workmen of Syndi cate Bank, Madras vs Government of India & Anr., and Ramawatar Sharma and Ors., vs State of Haryana & Anr., ; that the appropriate Government cannot decline to make reference of an industrial dispute arising out of the termination of the service of a workman on the ground that the domestic inquiry resulting in the termination of the services of the workman was in the opin ion of the State Government in conformity with the 1001 principles of natural justice and that the punishment im posed on the workman was not disproportionate to the offence with which he was charged . " "We would therefore have ordinarily allowed the appeal and set aside the judgments of the learned Single Judge and the Division Bench of the High Court and directed the State Government to make a reference of the industrial dispute between the appellants and the 3rd respondent.
But Dr. Chitale appearing on behalf of the 3rd respondent urged that there might be some other relevant grounds which may still be required to be considered by the State Government before deciding whether to make a reference or not and the case should therefore go back to the State Government to reconsider the question in the. same manner in which this Court directed the State Government to reconsider in the Workmen of Syndicate Bank case (supra).
But this is a case in which more than 7 years have elapsed since the appellants were dismissed from service and they are still nowhere near a reference.
We would therefore set aside the judgments passed by the learned Single Judge and the Division Bench and direct the State government to reconsider the matter without taking into account the aforesaid irrelevant ground and come to a decision within a period of 30 days from the date of receipt of the copy of this order whether it would make a reference of the industrial dispute to the Labour Court.
We would keep the appeal pending before us and as soon as the decision is reached by the State Government, which of course should be within a period of 30 days from the date of receipt of the copy of this order by the State Government, intimation of such decision shall be given to the Court so that the Court can then consider whether the decision reached by the State Government is legally justi fied or not.
We are informed that V. Kondiah the 2nd appel lant has already settled the dispute with the 3rd respondent and therefore the question of making a reference of the dispute will have to be considered by the State Government only in regard to the remaining 6 appellants.
" After the matter went back the State Government has made the following order: 1002 "Accordingly the Government have re examined the conCilia tion report first read above and all other connected rele vant records and consider that it is not necessary to refer the cases of Thiruvalargal K. Arinathan, A.C. Kabaleswaran, V. Srinivasan, V. Veerarajan, P. Subramanian and H. Indira rajan for adjudication both on merits and on expediency for the following reasons: (1) Lucas T.V.S. Limited are suppliers of some items to the Defence.
(2) There was industrial unrest followed by vio lence and stoppage of work in this establishment in 1977 due to inter union rivalry.
Again there was industrial unrest due to inter union rivalry in this establishment in 1978 employing 2400 workmen.
To avoid recurrence of such incidence and stoppage of work again in 1978 the Management took disciplinary action against 154 workmen.
The Management took back 134 workmen out of 154.
The seven workmen are among those who were dismissed considering the gravity of the offence.
(3) The Management charge sheeted these seven workmen under the specific provisions of the standing orders for misconduct such as wilful disobedience of lawful orders of the superiors, acts of subversive of good and proper behaviour within the establishment, being within the estab lishment after authorised hours of work without permission shouting slogans within the establishment etc. (4) All the workmen admitted the charges framed against them during the enquiries and hence the Managment dismissed them from service based on these enquiries and taking into account their past services.
(5) Since the workmen themselves have admitted the charges against them.
The Government consider that the charges have been proved.
(6) The Government also considered the nature of proven charges and the quantum of punishment imposed 1003 on them with a view to decide the question whether the reference should be made or not.
(7) Considering the proven charges and the need to preserve industrial peace in the establishment the Govern ment consider that this is not a fit case for adjudication both on expediency and on merits.
No action is considered necessary in respect of the case of Thiru A. Kondaiah who has settled his accounts finally with Management." With reference to the order made by the State Government the appeal has been further heard.
Mr. Ramamurthi for the appellants, learned Attorney General for the Government of Tamil Nadu and Dr. Chitale for the Management have advanced their respective contentions.
The seven grounds given in support of the order refusing to make a reference have been challenged by Mr. Ramamurthi as irrelevant.
The facts that the Company manufactures and supplies certain items to the Defence Department of the Union of India and there was industrial unrest followed by violence and stoppage of work, according to learned counsel, are not germane and relevant for the purpose of deciding as to whether the dispute raised by the six workmen should be referred to industrial adjudication.
So far as the third ground is concerned, according to Mr. Ramamurthi, it is in effect repetition of the earlier grounds which this Court found to be irrelevant.
The language has been changed and the grounds have been made descriptive and detailed.
Coming to the 4th ground it is contended that all the 154 delin quent workmen had accepted their guilt when negotiation for a settlement was undertaken.
There was no justification for the employer to discriminate between 134 workmen who were restored to service and the remaining 20 including the six appellants to whom re employment was not given.
Mr. Rama murthi states that ground No. 5 is totally irrelevant.
Similarly, grounds nos.
6 and 7 are not at all material and do not justify the refusal to refer the dispute.
In support of the appeal the learned counsel has further contended that in a series of decisions beginning with the case of Bombay Union of Journalists vs State of Bombay, ; 1964 SC 1617 this Court has clearly laid down that it is open to the State Government to take the broad features into consideration while exercising jurisdiction under section 10(1) of the Act.
If the dispute in question raises a ques tion of 1004 law the appropriate Government should not purport to reach a final conclusion on the said question of law because that would normally lie within the jurisdiction of the Industrial Tribunal.
Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclu sions for that again would be the province of the Industrial Tribunal.
Gajendragadkar, J. as he then was speaking in that case indicated: " . 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 the sec tion 12(5), or not.
If the claim made is patently frivolous, 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 employees in the region is likely to be adverse, the appropriate Government may take that into account in deciding whether a reference should be made or not.
It must, therefore, be held that a prima facie examination of the merits cannot be said to be foreign to the enquiry which the appropriate Govern ment is entitled to make in dealing with a dispute under section 10(1) .
Mr. Ramamurthi also placed reliance on the decision in the case of M.P. Irrigation Karamchari Sangh vs State of M.P., ; where it has been said: "There, while conceding a very limited jurisdiction to the State Government to examine patent frivolousness of the demands, it is to be understood as a rule, 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 adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication.
When a refer ence is rejected on the specious plea that the Government cannot bear the additional burden, it constitutes adjudica tion and thereby usurpation of the power of a quasi judicial Tribunal by an administrative authority namely the appropri ate Government . .
What the State Government has done in this case is not a prima 1005 facie examination of the merits of the question involved.
" "There may be exceptional cases in which the State Government 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 disputes.
To allow the Government to do so would be to render Section 10 and Sec tion 12(5) of the nugatory." In the case of Ram Awtar Sharma & Ors.
vs State of Haryana & Anr.
, ; the ratio in the Bombay Union of Journalists ' case has been reiterated.
Learned Attorney General for the State of Tamil Nadu submitted that the statute authorises the State to take a prima facie view of the matter for the purpose of ascertain ing whether it was a fit case wherein exercise of jurisdic tion under section 10(1) read with section 12(5) of the Act was called for and a reference was warranted.
The State Government in declining to make a reference in the present case has kept itself within the limit set by law as deline ated by this Court.
Dr. Chitale contended that the grounds advanced in support or refusal to make a reference were clearly tenable and indicated that a broad and overall view of the matter was taken by the State Government.
Since the jurisdiction of this Court is not appellate and the order of the State Government is administrative in character, no interference was warranted.
Dr. Chitale further added that if we took view that the grounds advanced by the State Government were neither germane nor relevant, the matter should go back to the State Government for afresh disposal as it is not for this Court to direct a reference to be made.
Having heard learned counsel for the parties we are of the view that this is a fit case where a reference should be made.
In the order of this Court in the present case on July 9, 1985 it has been clearly stated that a direction to make a reference would have been given but for the submission advanced by Dr. Chitale that the matter should go back and the State Government should be given an opportunity of giving 1006 other valid reasons, if any, in support of its order.
In the case of Nirmal Singh vs State of Punjab & Ors., 12 this Court gave a direction that reference be made forthwith.
Similarly, in the case of Sankari Cement Alai Thozhilalar Munnetra Sangam & Anr.
vs Management of India Cements Ltd., this court gave a direc tion for making of a reference.
The criticism advanced by Mr. Ramamurthi in regard to the reasons given by the State Government seem to be well founded and we are of the opinion that the respondent State Government should have a direction to refer the dispute for adjudication by the labour court.
The State Government 's order should be made within one month from to day and the Labour Court to which the dispute may be referred shall have a direction to dispose of the reference within four months hence from the date of receipt of the reference.
The appel lants shall be entitled to costs.
Hearing fee is assessed at Rs. 3,000 and is recoverable from Respondent No. 1.
A.P.J. Appeal al lowed.

Output:
A large number of workmen of the respondent company were proceeded against by the management on certain charges.
Later most of them were taken back to employment.
On failure of conciliation in regard to 7 of the dismissed workmen, disputes were raised under section 11 A of the Industrial Dis putes Act, 1947.
The Government declined to make a reference to the Labour Court for adjudication.
A Single Judge as well as the Division Bench rejected the Writ Petition of the workmen.
On appeal, this Court on 9th July, 1985 set aside the judgments passed by the Single Judge and the Division Bench and directed the State Government to reconsider the matter without taking into account the ground that the domestic inquiry had been conducted by the employer according to the principles of natural justice and the punishment imposed was not disproportionate to the gravity of the offence committed by the dismissed workmen and come to decision within 30 days whether it would make a reference of the industrial dispute to the Labour Court.
The Government again declined to make a reference stat ing: (1) that the company manufactures and supplies certain items to the Defence Department; (2) that there was indus trial unrest followed by violence and stoppage of work in the establishment due to inter union rivalry; (3) that the management charge sheeted the workmen under specific provi sions of the standing order; (4) that the workmen themselves had admitted the charges against them; (5) that in view of the proven charges and the need to preserve industrial peace in the establishment it was not a fit case for adjudication both on expediency and on merits.
When the appeal came up for further hearing, on behalf of the appellants workmen it was contended that the grounds given in support 998 of the order are totally irrelevant, immaterial and do not justify the refusal to refer the dispute.
On behalf of the respondents it was contended: (1 ) that the statute authorises the State to take a prima facie view of the matter for ascertaining whether it was a fit case wherein exercise of jurisdiction under Section 10(1) read with 12(5) was called for and a reference was warranted; (2) that the State Government in declining to make a reference has kept itself within the limit set by law; (3) that the grounds advanced in support of refusal to make a reference were clearly tenable and indicated that a broad and overall view of the matter was taken by the State Government; (4) that since the jurisdiction of this Court is not appellate and order of the State Government is administrative in character, no interference was warranted; and (5) that if the grounds advanced by the State Government were neither germane nor relevant, the matter should go back to the State Government for fresh disposal as it is not for this Court to direct a reference to be made.
Allowing the Appeal, HELD: I. 1 It is open to the State Government to take the broad features into consideration while exercising jurisdiction under section 10(1) of the .
If the dispute in question raises a question of law the appropriate Government should not purport to reach a final conclusion on the said question of law because that would normally lie within the jurisdiction of the Industrial Tribunal.
Similarly, on disputed questions of fact, the appropriate Government cannot purport to reach final conclu sions for that again would be the province of the Industrial Tribunal.
[1003H; 1004A B] 1.2 section 10 permits appropriate Government to determine whether dispute 'exists or is apprehended ' and then refer it for adjudication on merits.
The demarcated functions are (1) reference, (2) adjudication.
[1004F G] 1.3 There may be exceptional cases in which the State Government 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 he vigilant whenever the Government attempts to usurp the powers of the Tribunal for adjudication of valid disputes.
To allow the Government to do so would he to render section 10 and section 12(5) of the nugatory.
[1005A C] 999 Bombay Union of Journalists vs State of Bombay, ' ; = ; M.P. Irrigation Karamchari Sangh vs State of M.P., ; & Ram Awtar Sharma upon.
This is a fit case where a reference should be made.
In the order of this Court on July 9, 1985 it had been clearly stated that a direction to make a reference would have been given but for the submission advanced on behalf of the counsel for the respondents that the matter should go back and the State Government should be given an opportunity of giving other valid reasons, if any, in support of its order.
[1005G; 1006A] Nirmal Singh vs State of Punjab & Ors., & Sankari Cement Alai Thozhilalar Munnetra Sangam & Anr.
vs Management of India Cements Ltd., [1983] 1 L.L.J. 460, referred to.


Input:
N: Criminal Appeal No. 196 of 1973.
Appeal by Special Leave from the Judgment and Order dated 7 8 1973 of the Bombay High Court in Criminal Appeal No. 222 of 1970.
section B. Bhasme, P. G. Gokhale and B. R. Agarwala for the Appellant.
M. K. Ramamurthi, M. N. Shroff, Mrs. Hemanlaika Wahi for the Respondent No. 1.
R. N. Sachthey for Respondent No. 2.
The Judgment of the Court was delivered by KOSHAL, J.
This appeal by special leave is directed against the judgment dated 7th August 1973 of the Bombay High Court upholding the conviction of Sevantilal Karsondas Modi (the sole appellant before us) for an offence under section 120 B of the Indian Penal Code read with clauses (a) and (b) of sub section (1) of section 135 of the , and a sentence of rigorous imprisonment for a year recorded by the Chief Presidency Magistrate, Bombay.
The appellant was one of 30 accused persons against whom the police initiated proceedings in the court of the trial Magistrate.
Out of them, accused Nos.
28 to 30 were not tried as they had absconded and could not be apprehended.
The case against accused Nos. 18 and 19 was allowed to be withdrawn by the learned Magistrate on an application made by the Public Prosecutor under section 1162 494 of the Code of Criminal Procedure.
Accused Nos.
14, 24, 25, 26 and 27 were discharged by the learned Magistrate for want of evidence against them.
Charges were framed by him on 10 counts against the other 20 accused who were tried in consequence.
At the trial, 266 witnesses were examined in support of the prosecution case and 6 in defence.
Accused Nos. 9, 10, 11, 15, 16, 17 and 20 were acquitted as a result of the trial, while 13 of those charged were convicted and sentenced to various terms of imprisonment.
All the 13 last mentioned went up in appeal to the High Court who acquitted accused Nos. 1, 21, 22 and 23.
Accused No. 13 happens to be the appellant before us.
He was convicted and sentenced by the learned Magistrate as aforesaid and also on a separate charge for an offence, under clauses (a) and (b) of sub section (1) of section 135 of the and sentenced to rigorous imprisonment for six months in consequence.
His conviction on that charge, however, was set aside by the High Court, against whose judgment, as already stated, special leave to appeal was granted to him by this Court.
The prosecution case in so far as it is relevant for the purpose of this appeal may be briefly stated.
V. K. Asthana, (P.W. 228) who was then the Deputy Director in the Directorate of Revenue Intelligence in the Department of Customs at Bombay and is hereinafter referred to as 'Asthana ', received information in the first half of September 1966 to the effect that flat No. 2 forming part of the building known as Sagar Mandir and situated in that locality of Bombay which is called 'Shivaji Park ' was being used for storage of smuggled gold and disbursement thereof to its purchasers.
After the flat had been kept under watch for a few days by some officials of the Department, a decision was taken by Asthana to raid the premises.
The raiding party which consisted of senior Customs officers, took positions in the vicinity of Sagar Mandir on the morning of 14th September 1966.
They included B.M. Sevalia, Preventive Officer, Bombay Customs (P.W. 7 and hereinafter referred to as 'Sevalia '), G. N. Alreja, Preventive Officer, Bombay Customs (P.W. 34 and hereinafter mentioned as 'Alreja), P. G. N. Ayengar, Appraiser in the Directorate of Revenue Intelligence (P.W. 144 and hereinafter called 'Ayengar ') and D.G. Mugwe, Principal Appraiser in the said Directorate (P.W. 152 and hereinafter referred to as 'Mugwe ').
Sevalia was deputed to watch the movements of persons entering the flat and to give a signal on the arrival of the suspects.
At about 8.50 A.M., accused No. 12 was seen entering the flat and Sevlalia alerted the other members of the raiding party by giving the agreed signal.
Half an hour later, a car stopped at the entrance to the compound of the building and 1163 accused Nos. 5, 6 and 7 alighted therefrom.
Accused No. 5 went towards the concerned flat but got suspicious on noticing the presence of strangers near the entrance.
He turned back and so did his two companions.
All three of them took to their heels but were caught by the raiding party on a direction by Mugwe.
Accused No. 12 was found inside the flat.
The person of each one of accused Nos.
5, 6 and 7 was searched and yielded 200 slabs of gold weighing 10 tolas each.
All the slabs bore foreign markings and were contained in jackets having long pockets and worn by each of the captives.
Bunches of keys exhibits K 4, K 5 and K 6 and a diary containing accounts exhibit 'O ' were found lying in the passage forming part of the flat.
Bandi exhibit J 2 was secured from a room of the flat.
A search of the person of accused No. 12 yielded keys exhibit K 2, which fitted the locks used in the flat, and sheets of accounts exhibit 'S '.
While the search was going on, accused No. 13 was found peeping from outside through a grille forming part of the flat but started running away on seeing what was happening inside.
He was chased and captured and two keys were seized from his person.
One of them was found to fit the lock on the outer door of the flat and the other to fit the latch therein.
He was also found wearing a bandi similar to bandi exhibit J 2.
At his instance four slabs of gold and 10 gold bangles, each weighing 10 tolas, were recovered from underneath the mattress lying on a bed in the flat.
Accused Nos.
5 to 7 and 13 were interrogated by the Customs officials.
The statement of accused No. 13 exhibit Z 383 was recorded by Ayengar on the 15th of September 1966.
In that statement, the appellant gave an exhaustive account of the circumstances in which he happened to come to Bombay and made his services available to the principal accused named J. K. Shah.
The long and short of the statement may be summarised thus: One day J. K. Shah called accused No. 13, gave him some cloth and sent him in the company of one Goverdhan Das to have the cloth tailored into bandis of a special type having two wide and long pockets in the front.
The cloth supplied was thick and strong.
A few days after the bandis were ready, accused No. 13 was taken to the flat in question by his sister 's husband, named Natwarlal (accused No. 12) or by accused No. 15.
Thereafter accused No. 13 visited the flat several times when he would receive bandis containing gold brought from outside and store them in the flat or would remove such bandis from the flat to other 1164 places in town.
J. K. Shah had given him keys of the flat.
Whatever gold was removed by him from the flat, was either deposited by him in a room on the second floor of a building situated in Modi Street or delivered to J. K. Shah in the latter 's office on the 3rd floor of building No. 111 situated in Tambakanta.
The room in Modi Street had a telephone the number whereof was 262283 and a key of this room was supplied to him by J. K. Shah.
He used to receive orders either from J. K. Shah or from accused No. 15 to go to the flat in Sagar Mandir and receive the gold there.
He received gold in this way on the 12th and 13th of September 1966.
On the day of his capture he was in the room in Modi Street when he received a telephone call from J. K. Shah at 11 or 11.15 A.M. requiring him to visit the flat in Sagar Mandir and find out if any trouble was brewing and that if that was so, J. K. Shah was to be informed on the telephone.
Accused No. 13 rushed to Sagar Mandir in a taxi and tried to find out from outside if there was anything wrong.
For that purpose he looked through a broken ventilator.
While he was coming towards the road on the beach nearby he was detained and was taken inside the building.
While the above statement was being recorded, accused Nos. 4, 5, 6, 7 and 8 were identified by accused No. 13 as the persons from whom he used to receive gold at Sagar Mandir.
The evidence relied upon by the prosecution against accused No. 13 may be split up under the following heads: (a) He was seen visiting the flat in Sagar Mandir on the 8th, 9th and 13th September 1966 by the Customs officials who were watching the premises under the orders of Mugwe.
(b) He was peeping into flat No. 13 between 11 A.M. and 12 noon on the 14th of September 1966.
(c) When he found that the flat was under search by officers belonging to the Customs Department, he tried to run away.
(d) He was found in possession of keys fitting the locks of the flat.
(e) He was wearing a bandi similar to bandi exhibit J 2 which is a special type of bandi suitable for carrying gold slabs secretly.
1165 (f) 4 slabs of gold and 10 gold bangles were recovered from underneath the mattress at his instance.
(g) The confession made by him and contained in statement exhibit Z 383.
The learned trial Magistrate found all the above heads to have been established and that is why he convicted and sentenced accused No. 13 on two counts.
The High Court took a different view in relation to heads (a) and (f).
It was of the opinion that the identification of accused No. 13 by the Customs officials on the 8th, 9th and 13th of September 1966 could not safely be relied upon as they had seen people coming into and going out the Sagar Mandir only from a distance and for very short periods of time so that their view of such people could possibly be mere "fleeting glances".
It further held the alleged recovery of four gold slabs and 10 gold bangles to be unreliable as the marginal witness to the recovery memo who was produced in court by the prosecution did not support it and stated that he had not seen accused No. 13 pointing out the slabs and the bangles.
The High Court concluded therefore that the charge under clauses (a) and (b) of sub section (1) of section 135 of the was not sustainable.
However it found the other heads of evidence proved and on the basis thereof upheld the conviction and sentence in relation to the charge of conspiracy to commit the other offences just above described.
After hearing learned counsel for the parties at length we find ourselves unable to uphold the impugned judgment in so far as accused No. 13 is concerned.
The circumstances that he was found peeping into the flat, that he tried to run away on seeing the Customs officials searching the premises, that he was in possession of duplicate keys of the flat and that he was found wearing a bandi similar to bandi exhibit J 2 are not incompatible with his innocence.
He was a close relation of accused No. 12 who has been found to the person really incharge of the flat and it would thus be natural for him (accused No. 13) to share the flat with the permission of accused No. 12.
In so living with his brother in law he may have been given to wear the bandi found on his person not for the purpose of carrying gold but just for use as ordinary raiment.
Again, in a city like Bombay it is not unusual for persons sharing a particular accommodation to be provided with separate sets of keys for each in order to facilitate ingress or egress at will.
Further, an innocent man finding his premises being watched by persons in authority may well feel funky at the prospect of a false implication on the basis of a mere 1166 suspicion (which may or may not be well founded and may try to make himself scarce.
Without more, the circumstances covered by heads (b), (c), (d), and (e), therefore, cannot be regarded as incriminating circumstances.
So the conviction really rests on the confession attributed to the appellant.
If it is found to be voluntary and true it may receive some support from the four heads of evidence just above described.
If, on the other hand, the confession appears to be either untrue in any material particular or having been caused by any inducement, threat or promise such as is described in section 24 of the Evidence Act, it must fall and with it fall the other heads of evidence, leaving no material to support the conviction.
As it is, we find that the appellant has been able to prove the existence of circumstances which make it highly probable that his confession is hit by the mandate in section 24 above mentioned.
Our reasons for coming to this conclusion follow.
The case set up by accused No. 13 in so far as his confession is concerned, mainly consists of a plea that it was the result of an assault on him by the Customs officers including Ayengar and Sevalia and that the latter had forced him into making an endorsement in his own hand writing under the confessional statement to the effect that statement was voluntary and had been explained to him by Sevalia.
Naturally, the story of the assault has been stoutly denied by Ayengar and Sevalia; but then the circumstances prevailing at the relevant time in the Customs House where the statement was recorded definitely indicate that all was not well with the manner in which the interrogation of various accused was being carried on.
In this connection the outstanding feature of the situation is the fact that accused No. 15 when examined by Dr. section R. Joglekar (D.W.I.) on the 16th September 1966 at 6.15 P.M. was found to have on his person seven injuries which the doctor has described thus: "(1) Ecchymosis below right eye, outer part, 1/2"x1/3".
blackish colour.
(2) Ecchymosis below left eye, middle, 1/4"X1/4" blackish colour.
(3) diffused contused area, 21/2"X3", on right thigh, upper part.
(4) Contused area on right buttock, 3" x 2", lower part, wheal (?) marks seen.
(5) diffused contused area on left thigh, back and outer part, 5" X 2", wheal (?) marks seen transverse.
1167 (6) Transverse wheal (?) marks on back of left knee.
(7) Contused area on back of left leg, 2" X 1".
According to the doctor, these injuries appeared to have been caused two to four days earlier.
Admittedly accused No. 15 was apprehended by the Customs staff on the 14th September 1966.
No explanation whatsoever is offered for his injuries by the prosecution but the stand taken by accused No. 15 himself in this behalf may be stated in his own words "At that time, there were six Customs Officers around me.
In the gallery, I was again shown the 4 keys.
I was again asked about the said keys and I had again given the same reply.
The said officers on hearing this, get enraged and began to say that I was stating falsehoods.
One of the officers then asked me to take out my clothes.
I had then worn one under wear and a pant and one bush coat and a ganji.
I was then asked to remove my pant as well as my underwear by the said officer and I did so accordingly against my will.
That officer then ordered me to sit in the position of "a chair".
I was so asked to sit like a chair without the support of a wall even to my back.
The six officers were then standing around me at that time.
After making me to sit in that chair position they began to ask me about the said keys.
I had again given the same reply about the said keys.
If I moved a little from the position of a chair given to me, I was kicked by all the officers immediately.
I was able to sit in that position for 4 5 minutes.
I used to fall down thereafter.
I used to be kicked therefor, made to stand again and asked to resume the same position.
In this way, I had fallen and had been assaulted again and again by the said officers for about an hour or so.
While I was so being questioned and made to sit in that position again and again, one of the officers had gone out and had returned with a ruler in hand having a round shape.
As I was made to sit in that position of a chair, I often used to move therefrom, the officers immediately used to assault me and I used to get up thereby.
Out of the Custom Officers the officer who had the ruler in his hand used to assault me therewith, and the other officers used to assault me with kicks.
I had been assaulted with that ruler on my left buttock, on my right buttock, on the back portion of the calf of my left, leg, on my right thigh, on the backside of my both legs etc.
1168 I had received injuries at all these places stated by me above and as a result of this assault on me, I could not even stand up.
Throughout the assault; I was being questioned again and again about the said keys by all the said officers and at every time I was stating that I did not know anything more about the same.
Thereafter I had fallen down on the ground with my face towards the ground.
All the said six officers then went away.
" This stand may not be devoid of exaggeration and embellishment but it receives great support from the testimony of Dr. Joglekar (D.W.I.) so that the probability appears to be that accused No. 15 received his injuries at the hands of the Customs staff and there being no explanation on the part of prosecution as to the situation in which he was beaten, it is reasonable to presume that the stand taken by him is correct and that the injuries were inflicted on him as a measure of coercion adopted to secure his confession.
In coming to a contrary conclusion, the High Court was mainly influenced by the fact that although accused No. 15 had filed a complaint in court against the concerned officers of the Department of Customs, he did not prosecute it but had it dismissed for default.
The High Court observed in this connection: "The only explanation for this unusual attitude offered by him to the Court is that he was afraid of vindicative attitude from the officers.
We have not been able to conceive how officers could have adopted any vindicative attitude, when accused No. 15 was not concerned with any offence.
Be that as it may, the fact remains that the complaint was not prosecuted and the evidence was recorded behind the back of the officers.
It is not possible to hold on the present material that assaulting by the officers was for the purposes of extorting some confession and such assault alone was the cause of the injuries received by him.
Beyond, therefore, creating a fog of suspicion, the injuries proved to have been caused to accused No. 15, cannot indicate that all the accused were subjected to torture, assault and pressure for giving statements to the liking of officers or compelling them to sign the prepared statements.
" We do not appreciate this approach to the determination of the voluntary nature of the confession of accused No. 15.
As we have already pointed out, the time of infliction of injuries coincided with the day on which accused No. 15 was apprehended and his confession was recorded.
In this situation it was the imperative duty of the 1169 prosecution to explain the circumstances in which it became necessary for force to be used by the Customs staff on the person of accused No. 15 and in the absence of any such explanation there is no reason why his plea should not be taken at its face value.
We are of course not directly concerned with the voluntary nature of the confession of accused No. 15 in this appeal but the circumstances discussed in the last paragraph indicate that the Custom of officials did not stick to ethical standards in the performance of their duties and, on the other hand, exhibited such a zeal in bringing the captives to book as transgressed the limits set thereon by law.
We have already alluded to the fact that the High Court itself did not regard the recovery of four gold slabs and 10 gold bangles alleged to have been made at the instance of accused No. 13 to be trustworthy.
Besides, the plea of accused No. 13 that he was coerced into making the confession was taken at the earliest opportunity, i.e., on the 20th of September 1966 which was the day next to that of his release from custody on bail.
That plea is contained in letter exhibit 29 addressed by him on that date to the Additional Collector of Customs, Bombay, which contained the following averments: "From the 14th instant at 12 noon till about 3 p.m. I was locked up along in one room with some Customs Officers who continuously interrogated me, threatened and physically assaulted me to make and sign a statement prepared by them after ascertaining a few personal questions from me pertaining to my family and myself.
I was not allowed to sleep during the entire night of the 14th/15th and was not allowed to see any person.
The statement was written out by the officers themselves in English language and it was not explained to me and my signature was obtained which I have signed in Gujarathi.
As a result of this threat, coercion and complete exhaustion, I had no alternative but to sign the statement after which only I was allowed to rest.
" Taking note of these circumstances we would consider it extremely unsafe to regard the confession exhibit Z 383 signed by the appellant as having been made by him voluntarily and therefore trustworthy.
The appellant, in our opinion, has shown the existence of circumstances which make it appear to the Court that the confession may well have been obtained in a manner which would bring it within the ambit 1170 of section 24 of the Evidence Act, it being undisputed that the concerned officers of the Department of Customs were "persons in authority" within the meaning of that expression as used in the section.
In the result the appeal succeeds and is accepted.
The judgment of the High Court is reversed, the conviction recorded against and the sentence imposed upon the appellant by the learned trial Magistrate and upheld by the High Court are set aside and he is acquitted of the charge in its entirety.
N.V.K. Appeal allowed.

Output:
On receipt of information that smuggled gold was stored in it, a large number of senior officials of the Customs Department surrounded the flat belonging to the brother in law of the appellant and started searching it.
According to the prosecution, while the search was on, the appellant was found peeping from outside through the grille forming part of the flat, and started running away, on seeing that the search was being carried on in the flat.
He was chased by the Customs Staff and caught.
Later his confession was recorded.
Along with the appellant several other persons had also been tried for the same offence.
The trial court convicted and sentenced the appellant of an offence under section 120B IPC read with section 135(1)(a) of the Customs Act.
On appeal the High Court found that the charge under section 135(1)(a) and (b) of the Customs Act was not sustainable but holding that the offence under other heads was proved, it upheld the appellant 's conviction and sentence.
It was contended on behalf of the appellant that the confession was the result of an assault on him by the Customs Officials, which not being voluntary was inadmissible in evidence under section 24 of the Evidence Act.
Allowing the appeal.
^ HELD: 1.
(i) It is unsafe to regard the appellant 's confession as voluntary and therefore trustworthy.
The concerned Customs Officials were "persons in authority" within the meaning of that expression used in section 24 of the Evidence Act.
The confession may well have been obtained in a manner which would bring it within the ambit of section 24 of the Evidence Act.
The appellant has been able to prove the existence of circumstances which make it highly probable that his confession is hit by the mandate in section 24.
[1169H 1170A, 1166C] (ii) Although there is no direct evidence that force was used on the appellant to extract a confession the surrounding circumstances prevalent at the relevant time in the Customs House where the statement was recorded indicate that all was not well with the manner in which the interrogation of various accused was being carried on.
They indicate that the Customs Officials did not stick to ethical standards in the performance of their duties and exhibited much zeal in bringing the captives to book and had transgressed the limit set by law.
[1166E, 1169B] (iii) One of the accused in this case was found to have seven injuries on his person.
The stand of that accused that he was coerced into making a confession, received support from the testimony of the doctor who examined 1161 him so that the probability appears to be that the accused received his injuries on the hands of the Customs staff.
In the absence of an explanation of the prosecution as to the situation in which he was beaten, it is reasonable to presume that the stand taken by him was correct and that the injuries were inflicted as a measure of coercion adopted to secure his confession.
Taking these circumstances into consideration, it is unsafe to regard the appellants confession too as voluntary.[1166F, 1168C, 1169G] Besides, the plea that he had been coerced into making the confession was taken at the earliest opportunity i.e. on the day following his release from custody on bail.
[1169D] 2.
Being a close relation of the owner of the flat, the appellant was perhaps sharing the flat with him and so had duplicate set of keys; his brother in law might have given the Bandi found on the appellant not for the purpose of carrying the gold but just for use as an ordinary raiment.
It is also possible that the appellant became nervous, that he thought that he would be implicated in the crime and therefore, might have started running away on seeing the Customs Officers in the house.
Therefore, these factors on which the High Court relied for sustaining his conviction cannot be regarded as incriminating circumstances.
[1165F 1166A]