Once Reference Is Accepted, Should Be Decided On Merits: Rajasthan High Court Quashes Labour Court Order Rejecting Reference As Defective

The Rajasthan High Court set aside an order of the Labour Court which had dismissed a reference as defective after spending 20 years on its adjudication, opining that once a reference was accepted the Labour Court was duty bound to answer it on its merits.

Justice Munnuri Laxman was hearing a plea wherein the petitioners had alleged that they were orally terminated from employment by respondent Food Corporation of India. Pursuant to failure of the conciliation, the Government examined the failure report and after considering existence of an Industrial Dispute, made a reference before the Labour Court.

The Labour court accepted the reference, issued notice and evidence was submitted. After trial was completed and arguments were heard and the Labour Court passed an order holding that the reference was bad as it did not mention the date of oral termination. Examining the labour court's order the high court said:

"The Labour Court accepted the reference and took almost 20 years to adjudicate the reference by undertaking all exercises including the leading of evidence and hearing of the proceedings. After such a long period was taken, the Labour Court dismissed the reference holding that the reference was defective. The defectiveness ought to have been considered by the Labour Court before the reference was accepted for adjudication.

In the present case, the Labour Court accepted the reference for adjudication. Once such reference is accepted, the Labour Court is duty bound to answer the reference. Any shortcoming in the reference has to be read along with the evidence led by the parties. The Labour Court ought to have decided the claim on the basis of evidence on record and ought to have adjudicated the matter on merits instead of dismissing the reference holding that it is defective".

The petitioners argued that once the reference was accepted, Labour Court could not have abdicated its function to answer the same and the reference could not have been rejected based on a technical defect at that stage. It was submitted that if there is no mention of the date of oral termination in the reference order, adjudication of such issue falls under the incidental matter which the Labour Court has power to decide.

The respondent submitted that the Labour Court has rightly dismissed the claim holding that the reference is incomplete and there is no indication in the reference as to the date of oral termination.

After hearing the contentions, the Court agreed with the argument by the petitioners, and opined that the defectiveness should have been considered before the reference was accepted for adjudication.

Further the Court made a reference to Section 10(4) of the Industrial Disputes Act, 1947, to observe that the Labour Court had to confine its adjudication to the points made in the reference for adjudication.

It held that the absence of date of oral termination was a matter incidental to the adjudication to the main points. Hence, instead of dismissing the reference, the Labour Court should have adjudicated the reference on the date of oral termination as an incidental issue.

Accordingly, the petition was allowed, and the matter was remanded back to the Labour Court with a direction to adjudicate the reference within 2 months.

Title: Narayan Bairwa & Ors. v District Manager, Food Corporation of India

Citation: 2026 LiveLaw (Raj) 138

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