Judgment :- W.P.No.20172/2007 has been filed by United Labour Federation against the order of the Government of Tamil Nadu in G.O. (D) No.362 L & E (C) Dept. dated 15. 2007 declining to refer for adjudication the Industrial Dispute raised by it on 08. 2006. 2. W.P.No.28487/2007 has been filed by M/s. Dynaspede Integrated Systems Private Limited (Dynaspede) challenging the order in G.O. (D) No. 589 dated 08. 2007 referring for adjudication the charter of demands raised by United Labour Federation as against the Management of Dynaspede and Hosur Electronics and General Engineering Private Limited (HEGE). 3. Since common points arose for determination, both Writ Petitions shall stand disposed by this court under common order. 4. Briefly stated case of the Petitioner – Labour Federation is as follows:- .(i) M/s. Dynaspede engaged in the manufacture of load cells, eddy current drives, panel boards etc. for export and also for defence and other requirements. Dynaspede was operating in Plot No.136-A and 135, SIPCOT Industrial Complex, Hosur. In the said factory, 110 workers are employed of whom 57 are members of the Petitioner Union. .(ii) In the year 1989 when the workers started a Union, under the name Hosur Electronics and General Engineering Workers Union, the Management of Dynaspede is alleged to have imposed an illegal lock out and took signatures from the workers under a settlement entered into u/s.18 (1) of Industrial Disputes Act, wherein the Management claimed to have closed down the Unit and settled the terminal benefits of the workers and brought them on the rolls of a new company by name Hosur Electronics and General Engineering Private Limited (HEGE) formed by the Management of Dynaspede . It is alleged that Dynaspede continued to operate the Unit with the same work force. (iii) Case of the Petitioner is that only to create a smoke screen, lease infavour of HEGE was entered and the entire purpose was for Dynaspede to evade its legal obligations towards its workers. .(iv) On 08. 2006 Petitioner – Labour Federation raised an Industrial dispute as against the Management of Dynaspede and HEGE wherein it was contended that Dynaspede is the real employer of the said workmen and that the workmen are therefore entitled to be made permanent in the service of Dynaspede . Union also sought that the workers be allowed to work in the premises of Dynaspede at No.135/136-A, SIPCOT Industrial Complex, Hosur. Union also sought that the workers be allowed to work in the premises of Dynaspede at No.135/136-A, SIPCOT Industrial Complex, Hosur. .(v) Case of the Petitioner is that under G.O. (D) No.362 dated 15. 2007, the said Industrial dispute was declined to be referred for adjudication on the ground that the factory of Dynaspede was closed in the year 1989 and that the workers had accepted compensation pursuant to the settlement. 5. Alleging that the order declining to refer the dispute for adjudication is not sustainable in law, W.P.No.20172/2007 has been filed. 6. Challenging the order of reference for adjudication of the charter of demands raised by the Petitioner – Federation, Dynaspede has filed W.P.No.28487/2007 on the ground that Dynaspede should be excluded from adjudication. 7. Mr. V. Prakash, learned Senior Counsel for the Petitioner Federation has contended that Petitioner Federation were made to work in the same factory and therefore, Dynaspede cannot take shelter under the settlement. Learned Senior Counsel for the Petitioner Federation further submitted that u/s.10(1) of I.D.Act, Government is discharging purely administrative function and while so, in the present case, Government has gone into the merits of the matter which could be decided only by Labour Court. Learned Senior Counsel for the Petitioner Federation further submitted that declining to refer the dispute, the Government has not understood the nature of the dispute and the impugned order is vitiated by non-application of mind. 8. I have carefully considered the contentions and examined the materials on record. 9. Mr. Sanjay Mohan, learned counsel for Dynaspede has submitted that settlement is placed on high pedestal and unless the settlement is shown to have been secured on fraud and unfair methods, there cannot be any further reference to Industrial Tribunal. Learned counsel for the Dynaspede further submitted that since earlier there was a settlement in 1989, Government has rightly declined to refer the dispute. 10. Dynaspede was carrying out manufacturing functions at the premises located at Hosur and the factory was closed and all the employees are said to have been discharged from services an Industrial dispute arose. According to Dynaspede and HEGE after negotiations, lease deed arrived at between Dynaspede and HEGE under which the premises was rented out to HEGE and lease deed to that effect was entered into between Dynaspede and HEGE on 112. According to Dynaspede and HEGE after negotiations, lease deed arrived at between Dynaspede and HEGE under which the premises was rented out to HEGE and lease deed to that effect was entered into between Dynaspede and HEGE on 112. 1989 and the same was extended from time to time after negotiations between both the companies. It was re-placed by a fresh lease deed dated 01.09.2005. 11. Case of Dynaspede is that it has got nothing to do with the employment of the employees of HEGE or their conditions of service and Dynaspede has no control or supervision over the affairs of the property leased out to HEGE or manufacturing activity and the workmen of HEGE are solely under the control and supervision of HEGE. 12. Per contra, the stand of Petitioner Federation is that the alleged lease deeds and pay slips of the workers are only paper arrangements and the employees of HEGE are actually the employees of Dynaspede . Learned counsel for Petitioner Federation urged that the employees Provident Fund continued to be paid in the name of Dynaspede and the entire purpose of exercise was to evade the legal obligations of Dynaspede towards its workers. 13. In (2000) 2 LLN 25 [Secretary, Indian Tea Association v. A.K. Barat], the Honble Supreme Court summarised the law relating to the powers of Government while making a reference of a dispute as follows:- .(1) The appropriate government would not be justified in making a reference under S.10 of the Act without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or apprehended and if such a reference is made, it is desirable wherever possible, for the government to indicate the nature of dispute in the order of reference. .(2) The order of the appropriate government making a reference under S.10 of the Act is an administrative order and is not a judicial or quasi-judicial one, and the court, therefore, cannot canvass the order of reference closely to see if there was any material before the government to support its conclusion, as if it was a judicial or quasi-judicial order. .(3) An order made by the appropriate government under S.10 of the Act being an administrative order, no lis is involved as such an order is made on the subjective satisfaction of the government. .(3) An order made by the appropriate government under S.10 of the Act being an administrative order, no lis is involved as such an order is made on the subjective satisfaction of the government. (4) If it appears from the reasons given that the appropriate government took into account any consideration irrelevant or foreign material, the court may in a given case consider the case for a writ of mandamus. .(5) It would, however, be open to a party to show that what was referred by the government was not an industrial dispute within the meaning of the Act." 14. At the time of closure of Dynaspede when the Industrial dispute arose, after negotiations, settlement was arrived at between the workmen and Dynaspede. The terms of settlement are as follows:- AThe workmen agree that they will not prosecute further the industrial dispute in reference No.A2/47850/89 which was pending before the Joint Commissioner of Labour (Conciliation), Madras and since ended in failure. AThe workmen hereby withdraw the authorization given to Hosur Electronics Engineering and General Employees Union affiliated to C.I.T.U. to sponsor their cause before any and all the authorities under the various labour statutes. AThe management and the workmen agree that each of the workmen will be paid additional compensation in the form of 1½ months wages and a lumpsum of Rs.1500/-for the period of closure in order to ameliorate their hardship. By virtue of this, the workmen agree not to press for their demands for full wages or any other monetary compensation for the period of closure. AThe management agree to sell the two wheeler vehicles that were availed by the workmen at the written down book value as on date of this settlement. This amount will be paid by the workmen within 7 days from the collection of their vehicles. AIn view of the closure of the manufacturing activities, the workmen collectively appealed to the management about the hardship and suggested a rehabilitation approach to be independent enterprenures and assist the management in organising the manufacturing. The management considered the appeal of the workmen and agreed to extend all co-operation in the formation of the workmen venture by providing necessary infrastructure. AThe management and the workmen agree that apart from above, the closure compensation payable as per the provisions of which have been offered but not claimed will be collected by all workmen. The management considered the appeal of the workmen and agreed to extend all co-operation in the formation of the workmen venture by providing necessary infrastructure. AThe management and the workmen agree that apart from above, the closure compensation payable as per the provisions of which have been offered but not claimed will be collected by all workmen. AIn view of the overall settlement, the workmen agree that they have no claims against the management like, re-instatement, back wages and this settlement shall terminate the employer-employee relation between the workmen and the management. The workmen agree that they have no claims whatsoever, against the management either monetary or otherwise." 15. Government refused to make the reference on the following grounds:- "Dispute between workmen and Management was settled and as per the terms of settlement, workmen received the benefits. "Workmen have raised Industrial dispute and the same was dismissed for nonappearance of the workmen. "As per the terms of settlement, workmen received the closure compensation and workmen further agreed that they have no further claim against the Management. "After Dynaspede was closed, the premises was let out on lease to HEGE. 16. The impugned order declining to refer the dispute for adjudication is assailed contending that Government is discharging purely an administrative function and that Government could only form an opinion as to whether Industrial dispute exists or apprehended and it cannot adjudicate the dispute itself on merits. 17. Placing reliance upon 1987 (1) LLJ 177 [M/s.Shaw Wallace & Co. Ltd. v. State of Tamil Nadu, rep. by the Commissioner and Secretary, Labour Dept. and others], learned Senior Counsel for the Petitioner forcibly contended that normal rule is to make reference and declining reference is only an exception. On analysis of various decisions of the Supreme Court and other cases, in Shaw Wallace & Cos Case, Division Bench of this Court has summarized the principles for referring the dispute for reference to the Tribunal or Labour Court. In the said decision, this Court has held as under:- .(1) The Government would normally refer the dispute for adjudication. On analysis of various decisions of the Supreme Court and other cases, in Shaw Wallace & Cos Case, Division Bench of this Court has summarized the principles for referring the dispute for reference to the Tribunal or Labour Court. In the said decision, this Court has held as under:- .(1) The Government would normally refer the dispute for adjudication. .(2) The Government may refuse to make reference, if .(a) the claim is very stale; .(b) the claim is opposed to the provisions of the Act; .(c) the claim is inconsistent with any agreement between the parties; .(d) the claim is patently frivolous; .(e) the impact of the claim on the general relations between the employer and the employees in the region is likely to be adverse; .(f) the person concerned is not a workman as defined by the Act; .(3) The Government should not act on irrelevant and extraneous considerations; .(4) The Government should act honestly and bonafide; .(5) The Government should not embark on adjudication of the dispute; and .(6) The Government should not refuse reference on the ground that domestic enquiry was fairly and properly held and punishment awarded was appropriate." 18. In 1989 II LLJ 558 [Telco Convoy Drivers Mazdoor Sangh and another v. State of Bihar and others], the Supreme Court has held as follows:- "..... the issue as to whether the convoy drivers are workmen of Telco and whether a master and servant relationship exists between the convoy drivers and Telco is a matter which cannot be decided by the Government......" 19. In 2002 (3) LRI 83 [Sharad Kumar v. Govt. of NCT of Delhi and others], the Supreme Court has held as under:- " .... order of the Government was clearly erroneous as the Government could not arrogate to itself the power to adjudicate the question and to hold that the appellant was not a workmen." 20. Assailing the impugned order in the light of the above principles, it was argued that in the present case Government has exceeded the scope of its power and gone into the merits of the matter and therefore, the order of Government is not sustainable. Assailing the impugned order in the light of the above principles, it was argued that in the present case Government has exceeded the scope of its power and gone into the merits of the matter and therefore, the order of Government is not sustainable. It was further argued that the subject matter of dispute relates to the period after 1989 when Dynaspede was operating in the same factory with the name board HEGE and piercing the veil of the company would indicate that both Dynaspede and HEGE are not two distinct and separate entities but are one and the same entity. 21. Learned Senior Counsel for the Petitioner Federation further argued that the Industrial dispute has been raised by the Petitioner on 08. 2006 on genuine and valid ground and the question whether Dynaspede is the real employer and whether the workers are entitled to permanency on its rolls are the issues which could be decided only by the Industrial Tribunal upon the reference of the dispute for adjudication. 22. Making of an order of reference u/s10(1) of the Act is undoubtedly an administrative function of the appropriate government based upon its own opinion with respect to the existence or apprehension of an industrial dispute and its subjective satisfaction as to whether it would be expedient to make a reference or not. The nature of power of the Government u/s.10(1) of I.D. Act is purely an administrative function. Considering the power of Government u/s.10(1) of I.D. Act to make/refuse reference or dispute for adjudication in Shaw Wallace & Cos case, Division Bench of this Court has held as under:- "Discretion given in Section 10 (1) read with Section 12 (5) has to be exercised in such a manner that it would not exceed the limits prescribed for the sphere of reference and enter into the territory of adjudication. What the Government is expected to decide before making a reference is whether on a prima facie examination of the facts of the case there is a dispute which requires a trial or adjudication by a tribunal or a Court. Government cannot take the function of adjudication. If the claim is patently frivolous or if the admitted facts are so glaringly against workmen not warranting trial or adjudication by tribunal or court, then the Government would be justified in refusing to make a reference. Government cannot take the function of adjudication. If the claim is patently frivolous or if the admitted facts are so glaringly against workmen not warranting trial or adjudication by tribunal or court, then the Government would be justified in refusing to make a reference. If the claim is stale and belated it need not be referred for adjudication. Where a reference would not be conducive to industrial peace in the region or would have an adverse impact on the general relation of employer and employee the Government would be justified in such cases to refuse to make reference." 23. Normally, Industrial Disputes are referred by the Government u/s.10(1) of I.D. Act for adjudication and it would not open to adjudicate the merits of the issues, however, Government ought not to mechanically refer the disputes for adjudication. It is open to the Government to look into so as to form a prima facie opinion as to whether any disputes exist between the parties. In doing so, the Government is entitled to look into as to whether any dispute exists, whether it is stale and whether the issue is covered under any settlement which is in force. 24. There are certain matterswhich cannot be referred for adjudication on account of certain statutory provisions even if those matter are existing or apprehended industrial disputes. When the issue covered by a settlement, it cannot be referred because it ceases to be an Industrial Dispute. Disputes regarding matters covered by a settlement arrived at between the parties cannot be referred to adjudication during continuance of such settlement. The law is well settled that if there is a binding settlement which has not been terminated in accordance with the procedure laid down in the Act, no Industrial dispute can be raised with regard to the items which formed the subject matter of settlement. Such matters cannot be the subject matter of reference u/s.10 (1) of the I.D.Act. .25. Observing that parties bound by settlement cannot be allowed to raise an Industrial Dispute with respect to the matters covered by the settlement, in 1989 1 LLJ 180 [The Management of Binny Ltd. (B & C Mills) v. The Govt. of Tamil Nadu and others], in Para 32, the Division Bench of this Court held as under:- ."32. .25. Observing that parties bound by settlement cannot be allowed to raise an Industrial Dispute with respect to the matters covered by the settlement, in 1989 1 LLJ 180 [The Management of Binny Ltd. (B & C Mills) v. The Govt. of Tamil Nadu and others], in Para 32, the Division Bench of this Court held as under:- ."32. The bar to the reference of a dispute covered by a settlement is the direct result of the legal position that when a dispute between the workers and the employer is concluded by a settlement which binds them, no industrial dispute relating to any item covered by the settlement can come into existence or can be apprehended, which can be referred by the Government under Section 10 of the Act. It is only when a dispute exists or is apprehended that the question arises whether a reference should or should not be made. If during the period of operation of settlements fresh disputes could be raised with respect to the subject matters covered by such settlements, the purpose of the Act to achieve peaceful and harmonious industrial relations by settlements will be completely foiled. The object of Sections 18 and 19 of the Act is to achieve industrial peace with regard to the subject-matter of the settlements for the duration of the settlement/agreement. Obviously, therefore, if there is to be industrial peace for the period contemplated, then the parties bound by a settlement cannot be allowed to raise an industrial dispute with regard to the matters covered by that settlement. ...... " .26. Observing that the settlement to be treated as agreement every workmen in AIR 1998 SC 554 : (1998) 1 SCC 650 [P. Virudhachalam and others v. Management of Lotus Mills and another], the Supreme Court has held as under:- ."It has to be kept in view that the Act is based on the principle of collective bargaining for resolving industrial disputes and for maintaining industrial peace. Thus principle of industrial democracy is the bed-rock of the Act. The employer or a class of employers on the one hand and the accredited representatives of the workmen on the other are expected to resolve the industrial dispute amicably as far as possible by entering into the settlement outside the conciliation proceedings or if no settlement is reached and the dispute reaches conciliator even during conciliation proceedings. The employer or a class of employers on the one hand and the accredited representatives of the workmen on the other are expected to resolve the industrial dispute amicably as far as possible by entering into the settlement outside the conciliation proceedings or if no settlement is reached and the dispute reaches conciliator even during conciliation proceedings. In all these negotiations based on collective bargaining individual workman necessarily recedes in background. The reins of bargaining on his behalf is handed over to the union representing such workman. The unions espouse the common cause on behalf of all their members. Consequently, settlement arrived at by them with management would bind at least their members and if such settlement is arrived at during conciliation proceedings, it would bind even non-members. Thus, settlements are the live wires under the Act for ensuring industrial peace and prosperity. ....." 27. In (2003) 1 LLJ 993 [ Premier Mills Ltd. Hosur, rep. by Dy. General Manager v. State of Tamil Nadu, Labour & Employment Dept. and others], there was existence of valid settlement in several industrial establishments. Since, settlement are in force in respect of many establishments, there was no justification for making reference. In the said decision Justice P.K. Misra has held as follows:- "7. It has been contended that in view of the existence of valid settlement in several industrial establishments, there was no justification for making a reference. It has been submitted that a reference can be made under Section 10(1) only if a dispute is in existence or a dispute is apprehended and since settlements are in force in respect of many of the establishments, no reference could have been made as it cannot be said that any dispute was in existence or even apprehended. 8. It is true that a reference under Section 10(1) of the Act can be made only when an industrial dispute exists or is apprehended and as such it is not expected of the Government to make reference under Section 10(1) in respect of Industrial establishments where settlements are still in operation. ....." 28. While considering the present case in the light of the above decision, there was a valid settlement between Dynaspede and its workmen on 112. 1989 and the settlement arrived at is binding to all parties concerned. The terms of settlement settles all the issues and the settlement is antithesis of any dispute. ....." 28. While considering the present case in the light of the above decision, there was a valid settlement between Dynaspede and its workmen on 112. 1989 and the settlement arrived at is binding to all parties concerned. The terms of settlement settles all the issues and the settlement is antithesis of any dispute. So long as settlement stands, creation of HEGE cannot be challenged in 2006. HEGE was born out of settlement. When HEGE born out of settlement, the question whether Dynaspede has set up HEGE cannot be gone into nearly after two decades. 29. It is not the case of the Petitioner Federation that over the passage of time, HEGE had no role of play and Dynaspede had taken over the Management. The facts and circumstances of the case would only indicate that workmen have acquiesced in the settlement. When the parties have arrived at settlement, Government was justified in declining to refer the dispute by referring to the terms of settlement. .30. There is nothing to show that Government omitted to take into consideration any relevant materials or formed its opinion upon irrelevant materials and there is no reason to interfere with the impugned order. 31. Learned counsel for the 3rd Respondent-Dynaspede contended that terms of settlement would reveal that the erstwhile employees of Dynaspede after obtaining settlements in full, had decided to form Company viz., HEGE way back in the year 1989. Whether the employees themselves formed the Company HEGE is the question to be adjudicated by the Industrial Tribunal and this Court does not propose to express any opinion on that aspect. The merits of the above contentions of Dynaspede cannot be gone into at this stage and has to be determined only by the Industrial Tribunal. 32. Insofar as, certain aspects like payment of allowance, payment of conveyance, medical allowance, House rent allowance and grant of Casual Leave etc., Government has made an order of reference in G.O. (D) 589 dated 01.08.2007 u/s.10(1) of I.D. Act (subject matter of dispute in W.P.No.28487/2007). Learned counsel for the 3rd Respondent has submitted that creation of HEGE is covered by 1989 settlement and therefore, Dynaspede should be excluded from the adjudication and only the employer HEGE can be roped into the adjudication proceedings under I.D. Act. Learned counsel for the 3rd Respondent has submitted that creation of HEGE is covered by 1989 settlement and therefore, Dynaspede should be excluded from the adjudication and only the employer HEGE can be roped into the adjudication proceedings under I.D. Act. It was further argued that Dynaspede could not be construed to be a principal employer and the arrangements between the Dynaspede and HEGE is only lease of plant and machineries and Dynaspede cannot be made a party in adjudication proceedings. 33. It is relevant to note that over the years, Employment Provident Fund and others were continued to be paid in the name of Dynaspede. In such circumstances, the Government on being satisfied that Dynaspede is also a necessary party to the adjudication. To avoid any possible objections, in my considered view that Dynaspede is a necessary party to the adjudication on the reference. The delay of 18 years would not vitiate the reference in G.O. (D) . 589 dated 08. 2007. .34. In respect of payment of allowance and other aspects, Government has formed its opinion with respect to the existence or apprehension of industrial dispute. Power to make an order of reference arises only when necessary opinion is formed by appropriate Government with respect to the existence or apprehension of the industrial dispute. With respect to the existence or apprehension of industrial dispute, Government is the sole Arbiter and its opinion is final. Government has equally formed an opinion for resolving the industrial dispute, both Dynaspede and HEGE are necessary parties and the same cannot be challenged. 35. G.O. (D) 589 dated 08. 2007 is sought to be quashed on the ground of delay. Placing reliance upon (2007) 5 SCC 727 [Director Food and Supplies, Punjab and Another v. Gurmit Singh, learned counsel for the 3rd Respondent contended that dispute between the employees and Management arose in 1989 and the dispute is sought to be raised after a long delay of 18 years and that over the years nobody has kept the dispute alive. Insofar as, reference in the impugned order G.O.(D) No.589 L & E (C) dated 08. 2007, learned counsel for Dynaspede is not right in contending that there was non-application of mind. 36. Insofar as, reference in the impugned order G.O.(D) No.589 L & E (C) dated 08. 2007, learned counsel for Dynaspede is not right in contending that there was non-application of mind. 36. There is nothing to show that Government based its opinion on certain irrelevant and extraneous consideration and left out certain vital materials and the impugned order of reference in G.O. (D) 589 dated 01.08.2007 cannot successfully be challenged. 37. In the result, W.P.Nos.20172/2007 and 28487/2007 are dismissed. Interim Stay already granted in W.P.No.28487/2007 is vacated. The Industrial Tribunal shall expedite further proceedings and dispose the matter as expeditiously as possible. Consequently, connected Mps. are closed.