Statutory discretion in industrial dispute references cannot be controlled by mandatory judicial directions or exclusion of relevant materials.

The Supreme Court explained that the State Government's power to refer an industrial dispute under Section 4-K of the U.P. Industrial Disputes Act is discretionary and must be exercised on the materials before it. The refusal to make a reference was not shown to rest solely on a secret report or on any breach of natural justice in conciliation, because the proceedings were exploratory, the parties were heard, and no comparable denial of fair hearing was established. The Court further stated that, if reconsideration was needed, the High Court could not direct the Government how to exercise its statutory discretion or require it to disregard relevant reports; the later reference made in obedience to those directions could not survive once the directions were set aside.

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Issues: (i) Whether the State Government's refusal to make a reference under Section 4-K of the U.P. Industrial Disputes Act, 1947 could be quashed on the ground that it was influenced by a secret report and by alleged breach of natural justice in the conciliation process; (ii) whether the High Court could, after quashing the refusal order, issue mandatory directions constraining the Government's statutory discretion in deciding whether to refer the dispute for adjudication; (iii) whether the subsequent order making a reference was liable to fall once the High Court's order was set aside.

Issue (i): Whether the State Government's refusal to make a reference under Section 4-K of the U.P. Industrial Disputes Act, 1947 could be quashed on the ground that it was influenced by a secret report and by alleged breach of natural justice in the conciliation process.

Analysis: The power to refer an industrial dispute under Section 4-K is discretionary and depends on the Government's opinion formed on the materials before it. The record did not justify the finding that the impugned refusal rested solely on the secret report of the Chairman or on the Labour Commissioner's report. The conciliation proceedings were exploratory and not adjudicatory; the parties had been heard, the Board had investigated the dispute, and there was no requirement in the notification or the Act that members of the Board must disclose their individual reports to one another. The Court distinguished the authorities relied upon on natural justice, holding that the facts did not disclose any comparable denial of fair hearing or bias.

Conclusion: The refusal order could not be struck down on the grounds accepted by the High Court.

Issue (ii): Whether the High Court could, after quashing the refusal order, issue mandatory directions constraining the Government's statutory discretion in deciding whether to refer the dispute for adjudication.

Analysis: Even assuming some infirmity in the refusal order, the High Court could at most require reconsideration. It had no authority to direct the Government to ignore relevant materials or to dictate the manner in which statutory discretion under Section 4-K should be exercised. The Government was entitled to consider all relevant circumstances, including the reports placed before it.

Conclusion: The mandatory directions issued by the High Court were beyond its jurisdiction and could not stand.

Issue (iii): Whether the subsequent order making a reference was liable to fall once the High Court's order was set aside.

Analysis: The later reference order was made in obedience to the High Court's directions and was not an independent exercise of discretion. Once the foundation order of the High Court was quashed, the consequential reference order could not survive.

Conclusion: The subsequent reference order also had to be set aside.

Final Conclusion: The appeal succeeded, the High Court's order was quashed, and the consequential governmental reference order was also set aside, while leaving the Government free to exercise its statutory discretion afresh in accordance with law.

Ratio Decidendi: A statutory authority exercising administrative discretion on reference of an industrial dispute may consider all relevant materials, and a court cannot compel it to exclude relevant reports or prescribe how that discretion must be exercised unless the statute so requires.

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