Judgment D.P.SINHA, J. 1. The petitioner, namely, the Sone Valley Portland Cement Co. Ltd., Japla was liable to pay compulsory statutory bonus as provided in S. 10 of the Payment of Bonus Act, 1965 (hereinafter referred to as the Act) to its employees for the year 1974- It made a representation dated the 5th August, 1975 (Annex. 2) before the first respondent, namely, the State of Bihar, in the Ministry of Labour and Rehabilitation (respondent No. 2 is Joint Labour Commissioner and respondent No. 3 is the Labour Superintendent) praying for exemption from payment of the bonus for that year under S. 36 of the Act on the ground that during the said year the petitioner had suffered a loss of Rs. 7,72,506/- and that it had been suffering loss continuously since 1963 with the result that the total losses from 1968 to 1974 amounted to 186 lakhs of rupees which was two and half times its paid up capital. The grievance of the petitioner is that its representation has been rejected by the Government (first respondent) without considering the financial position and other relevant circumstances of the establishment of the petitioner placed in the representation and without assigning any reason by its order dated the 3rd January, 1976 (Annex. 1), though in such a case it was obligatory on the part of the Government to pass a speaking order clearly indicating the ground or grounds on which it had refused to grant exemption. The petitioner has, therefore, prayed that the impugned order rejecting the prayer of the petitioner be quashed and the first respondent be directed to consider the financial position and other relevant circurcumustances of the petitioners establishment and the a to pass a speaking order, under S. 36 of the Act. 2. A counter affidavit has been filed on behalf of the respondents in which it has been asserted that the representation of the petitioner had been fully considered by the Government and having regard to the circumstances obtaining in respect of the factories and establishments similarly placed, the Government had issued the order refusing to grant exemption. 2. A counter affidavit has been filed on behalf of the respondents in which it has been asserted that the representation of the petitioner had been fully considered by the Government and having regard to the circumstances obtaining in respect of the factories and establishments similarly placed, the Government had issued the order refusing to grant exemption. , According to the respondents the decision by which the Government (respondent No. 1) had refused to grant the exemption is not justiciable inasmuch as the Government was entitled to decide the matter on its subjective satisfaction and it has also to keep in mind that the exemption was not against the public interest 3. The order dated the 3rd January, 1976 (Annex, 1) by which the Government (respondent No. 1) has refused to grant exemption under S. 36 of the Act has been assailed by learned counsel appearing on behalf of the petitioner on the following two grounds. First, that it is not a speaking order. Second, that the counter-affidavit filed on behalf of the respondents shows that the decision had been arrived at on the basis of matters extraneous to the question at issue and in taking those extraneous matters into account, the Government (the first respondent) had acted against the express provisions of S. 36 of the Act. 4. On the other hand, learned counsel appearing on behalf of the respondents contended that the decision was not justiciable inasmuch as the first respondent was entitled to take the decision on its subjective satisfaction and that in the circumstances the order was not vitiated either on the ground that it was not a speaking order or that it had been passed on the basis of some extraneous matter also. 5. The contention raised by learned counsel appearing on behalf of the petitioner has force as it is well founded. The provisions of S. 36 of the Act are as follows : "36. Power of exemptionIf the. 5. The contention raised by learned counsel appearing on behalf of the petitioner has force as it is well founded. The provisions of S. 36 of the Act are as follows : "36. Power of exemptionIf the. appropriate Government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of the opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to impose, such establishment or class of establishments from all or any of the provisions of this Act." 6. It is quite manifest from the said provisions read with the provisions of S. 10 of the Act that the order which the appropriate Government may pass under S. 36 will have civil consequences. If the prayer is allowed the employees will suffer pecuniary loss by being deprived of the statutory bonus payable to them under S. 10 which has to be paid irrespective of whether or not any profit has been earned by the employer. If, on the other hand the petition is rejected, the employer may be hit hard financially. In such a situation the matter has got to be considered objectively in a quasi judicial manner, strictly within the guidelines laid down by the legislature in S. 36 itself and the appropriate Government must state the reasons on the basis of which it has formed the opinion that the establishment concerned is or is not entitled to exemption so that a competent court of law may examine whether or not the appropriate Government has acted in accordance with the provisions of the section. Section 36 provides that before forming an opinion whether or not exemption should be granted the appropriate Government must take into account the financial position and other relevant circumstances of the establishment or class of establishments concerned. It does not authorise the appropriate Government to form its opinion on the basis of the circumstances, relating to other "factories and establishments similarly placed". But in this case the impugned order does not state the ground or grounds of rejection and it simply states that it is not possible to grant the exemption. It does not authorise the appropriate Government to form its opinion on the basis of the circumstances, relating to other "factories and establishments similarly placed". But in this case the impugned order does not state the ground or grounds of rejection and it simply states that it is not possible to grant the exemption. It is however, admitted in the counter-affidavit that some extraneous matters that is, matters relating to other factories and establishments said to be similarly placed, had been taken into account for the decision. The guidelines provided in S. 36 for the exercise of the power of the appropriate Government with regard to grant of exemption have been advisedly engrafted in the section to avoid the allegation that the legislature had delegated excessive and uncontrolled power to the State Government in a matter which involves civil consequences to persons concerned. It is well established that where the legislature provides that a certain power should be exercised within certain limits and that its decision should be based on a consideration of certain prescribed materials, then the authority exercising the power must act within the said limits and base its decision on those materials only. If the authority exercises the power not on a consideration of the materials on the basis of which the law requires it to act but on some other materials, then it is quite plain that the act becomes vitiated and it cannot be sustained. In the circumstances of this case, it is manifest that the respondents had misdirected themselves and acted beyond the scope of the express provisions and deviated from the guidelines contained in S. 36 of the Act, in taking the impugned decision on the basis of the matters relating to other factories and establishments alleged by them to be similarly placed. 7. The argument of the learned counsel for the State that the appropriate Government was entitled to take an absolutely subjective view of the matter and to decide the question of grant of exemption on whatever materials it thought fit to take into account, irrespective of the provisions of S. 36 of the Act, is too hollow and spacious to be accepted. There was clearly the duty by virtue of the provisions of S. 36 to act and consider objectively, the financial position and the circumstanceg of the petitioners establishment and to form an opinion on the basis of those materials only and the public interest and the decision or the opinion was not to be influenced bv the financial position and the circumstances relating to other factories and establishments alleged to be similarly placed, as has been done in this case. 8. The view that the matter required objective assessment is supported by the following observations of the Supreme Court in the cases of State of Orissa V/s. Dr. (Miss) Binapani Del, ( AIR 1967 SC 1269 ) (at p. 1271, para. 9) "If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case." 9. While considering the vires of S. 36 of the Act, the Supreme Court has observed in the case of Jalan Trading Co. (Pvt.) Ltd. V/s. Mill Mazdoor Sabha (AIR 1967 SC 691) that the condition for the exercise of the power under S. 36 is that the Government holds the opinion that it is not in the public interest to apply all or any of the provisions of the Act to an establishment or class of establishments and that opinion is founded on a consideration of the financial position and other relevant circumstances of the establishment or class of establishments and that Parliament has clearly laid down the principles and has given adequate guidance to the appropriate Government in implementing the provisions of S. 36. It was further observed that whether in a given case, power has been properly exercised by the appropriate Government or not, may be considered when occasion arises. 10. It was further observed that whether in a given case, power has been properly exercised by the appropriate Government or not, may be considered when occasion arises. 10. The decision of the Supreme Court in the case of Jalan Trading Co., (AIR 1967 SC 691) had been noticed and considered by Pathak J., on a difference of opinion between two other Judges of the Assam and Nagaland High Court who constituted a Division Bench, in the case of Amal Kumar Ghatak V/s. State of Assam (AIR 1971 Assam & Naga 32): (1971 Lab IC 189). The following observations in the judgment of the said case fully support the view that I have taken: (at P. 38) "25. It is thus clear that the appropriate Government while exercising the power under the provisions of S. 36 must be guided by the principles and guidance provided in the section itself. In exercising this power the appropriate Government must act justly and fairly and not arbitrarily or capriciously. The provisions of S. 36 require that while forming its opinion as to the public interest, the appropriate Government must have due regard to the financial position and other relevant circumstances of any establishment or class of establishments. This would necessarily mean that the order under S. 36 should be speaking order. 26. Though the formation of opinion as to public interest by itself may be an administrative action, S. 36 requires that the Government, before forming such an opinion must have an objective view regarding the financial position and other relevant circumstances of the establishment or class of establishments concerned. The order passed under S. 36 must be passed justly and fairly and for that purpose the order should show that the Government have considered the financial position and other relevant circumstances of the establishment or class of establishments concerned." 11. The case of Srinathpur Tea Co. Ltd. V/s. State of West Bengal (1971 Lab IC 1011) (Cal), which was a decision of a single Judge of the Calcutta High Court may also be noticed. It had been held in that case that the decision under S. 36 was justiciable and hence the order must be a speaking one. 12. The case of Srinathpur Tea Co. Ltd. V/s. State of West Bengal (1971 Lab IC 1011) (Cal), which was a decision of a single Judge of the Calcutta High Court may also be noticed. It had been held in that case that the decision under S. 36 was justiciable and hence the order must be a speaking one. 12. Since the order of respondent No. 1 under challenge, is not a speaking order and the counter-affidavit reveals that the said respondent had formed the opinion on certain extraneous matters, outside the scope of S. 36 of the Act, it is hereby quashed and the question as to whether exemption prayed for by the petitioner should or should not be granted is remitted back to respondent No. 1 with a direction that it should deal with and dispose of the matter according to the law, in the light of the observations made above. The application is allowed but there will be no order as to COStS. M.P.SINGH, J. 13 I agree.