Allahabad High Court
U.P. Khadi And Village Industries ... vs Prescribed Authority & Others on 28 July, 2010
Author: V.K.Shukla
Bench: V.K.Shukla
Court No. 21 Civil Misc. Writ Petition No. 30523 of 1992 Uttar Pradesh Khadi and Village industries Board Blanket Factory Versus The Prescribed Authority and others Hon'ble V.K.Shukla,J Present writ petition in question has been filed questioning the validity of the order dated 31.07.1992 passed by Prescribed Authority under Minimum Wages Act, 1948, holding that during the period w.e.f. 27.07.1990 to 31.12.1990, wages paid to workmen was less than the minimum wages prescribed.
Brief background of the case is that respondent no. 2 to 33 have been employed as skilled and semi skilled labours in Woollen Blanket making establishment of petitioner and same is scheduled employment within the meaning of Section 2(1) (g) of Minimum Wages Act, 1948. Petitioner's claim that under Government Order dated 05.01.1987 as extended from time they are exempted from provision of Minimum Wages Act, 1948, as such order impugned could not have been passed.
Counter affidavit has been filed and therein it has been stated that the establishment in question has not at all been falling within the scope and ambit of exemption clause and under Government Order dated 19.02.1988 which specially deals with Khadi and Gramodog Institution in U.P. which are run and controlled by U.P. Khadi and Village Industries Commission, and therein petitioner's establishment was not at all exempted rather request was made to exempt, and as such action which has been taken is rightful action within the four corners of the law.
Pleadings inter se parties have been exchanged and thereafter present writ petition has been taken up for final hearing and disposal.
Learned counsel for the petitioner Sri Rajiv Sharma, Advocate contended with vehemence that petitioner's establishment was exempted as such provision of Minimum Wages Act, 1948 could not have been enforced, as such writ petition in question deserves to be allowed.
Countering said submission Sri A.K.Srivastava, Advocate on the other 2 hand contended that petitioner's establishment was not at all exempted and they have been requesting to accord exemption and same had never been accorded, as such rightful opinion has been formed.
After respective arguments have been advanced factual position which is emerging that Minimum Wages Act, 1948 was enforced requiring minimum wages to be fixed in respect of certain employment under aforesaid Act. Section. Section 2 (b) of Minimum Wages Act, 1948, defines appropriate Government; Section 2(e) defines employer; Section 2(g) scheduled employment; Section 3 deals with fixing of minimum rates of wages; Section 4 deals with minimum rate of wages; Section 5 deals with procedure for fixing and revising minimum wages; Section 11 provides for wages in kind; Section 12 deals with ensuring payment of minimum rates of wages; Section 13 deals with fixing hours for a normal working day etc.; Section 14 deals with overtime; Section 20 deals with claims; Section 21 provides single application in respect of number of employees; section 22 deals with penalties for certain offences; Section 24 deals with bar of filing suit and Section 26 deals with exemptions and exceptions and sub-section (2) of Section 26 specifically provides that appropriate Government may, for special reason direct for non-application of provision of the Act for as may specified in respect of scheduled employment.
In the present case petitioner's contention is that on account of Government Order dated 05.01.1987 as extended from time to time, petitioner's establishment stands exempted. Relevant extract of the Government Order dated 05.01.1087 is being extracted below:
"WHEREAS the Government Departments, Public undertakings, Corporations and Local Bodies are orgnized sectors and the employees working in Scheduled employment under them are granted reasonable wages and other facilities which are revised from time to time in consultation with Finance Department and/ or public Enterprises Bureau of the State Government;
Now, THEREFORE, in exercise of the powers under sub-Section (2) of Section 26 of the Minimum Wages Act, 1948(Act No. XI of 1948) the Governor is pleased to direct that with effect from the date of publication of this Notification in the Gazette the provisions of the said Act shall not apply to the employees working in scheduled employment 3 under State Government Departments and under the Public Undertakings, Corporations and Local Bodies owned or controlled by the State Government, for a period of one year."
Petitioner's further contention is that it is Public undertaking owned/ controlled by State Government in this background in term of sub-Section (2) of Section 26 of Minimum Wages Act petitioners stand excluded.
On record there is Notification dated 19.02.1988 wherein following order has been passed:
"The Governor is pleased to order the publication of the following English Translation of notification no. 648/XXX VI 13-6,5 Sd dated February, 19 1988 for general information.
No 648/XXXVI 3-6(s)-..
Dated Lucknow, February, 19, 1988 In exercise of the powers under sub-section (2) of Section 26 of the Minimum Wages Act, 1948 (Act No. XI of 1948 the Governor is pleased to direct that the provisions of the said Act shall not apply for a period of one year from the date of publication of this notification in the Gazette to the employees of Khadi and Gram Udyog Institutions in Uttar Pradesh which are run and /or controlled by the Uttar Pradesh Khadi and Village Industries Board or Khadi and Village Industries Commission and which continuing of are of the following Employments:-
1. Employment in match industry
2. Employment in potteries,ceramies or refractries
3. Employment in washing or toilet soap silicate or soap power of detergent manufactory
4. Employment in tanneries and leather manufactory
5. Employment in leather goods manufactory
6. Employment oil milk
7. Employment in Khandsari
8. Employment in rice mill, flour mill or Dal mill
9. Employment wood works and furniture
10. Employment in shops
11. Employment in any commercial establishment.
By order D.K. Mittal Sachiv Government order dated 19.02.1988 is specific, inasmuch as it 4 specially exempts institution which are run and controlled by U.P. Khadi and Gram Udyog in Uttar Pradesh vis-a-viz the employments covered therein.
State Government it self has drawn distinction in between two set of establishment i.e. establishment under State Government Department and under Public Sector Undertaking, Corporations and Local Bodies owned or controlled by the State Government and the establishment run and/ or controlled by U.P. Khadi and Village Industrial Board or by U.P.Khadi and Village Industrial Commission and has treated the same differently.
In the case of Ajay Hasia and others Vs. Khalid Mujib Sehravardi and others reported in AIR 1981 SC 487, Hon'ble Apex Court in reference of Article 12 of the Constitution of India took the view that corporation is instrumentality or agency of the Government and it is immaterial for this purpose whether the corporation is created by a statute or under a statute. Relevant paragraph 11 of the said judgment is being quoted below:
"We may point out that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government Company or a company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetical origin, it would be an "authority" within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression "authority" in Article 12."
Accepting the position that, petitioners are instrumentality/agency of the Government, keeping in view its constitution and deep pervasive control of the Government, can such instrumentality/agencies be treated at par with Government of India.
Answer to such an issue has already been given by Hon'ble Apex Court.
5In Western Coal Fields Limited V. Special Area Development Authority Colaba and another, (1982)1 SCC 125, it is held that even though the entire share capital of Companies has been subscribed by the Government of India, it cannot be predicated that Companies themselves so owned comes within the definition of Government of India. The Companies which are incorporated under the Companies Act, have a corporate personality of their own, distinct from the Government of India. The lands and buildings are vested in and owned by the Companies; the Government of India only owns the share capital. In this case reference is made, among others, to the case of Heavy Engineering Mazdoor Union V. State of Bihar, AIR 1970 SC 88. In this case it is held that a Company incorporated under the Companies Act and the entire share holding of which is contributed by the Central Government (a Central Government Company) does not carry on an industry under the authority of the Central Government within the meaning of Section 2(a) of the Industrial Disputes Act, 1947 It is emphasized that an incorporated company has a separate existence and law recognizes it as a judicial person separate and distinct from its members. The mere fact that the entire share capital of the Company is contributed by the Central Government and the fact that all its shares are held by the President and certain Officers of the Central Government do not make any difference to that position. Relevant extract of the said judgment, paragraphs 20, 21A are being quoted below:-
"20. The third contention of the Attorney General flows from the provisions of Art. 285(1) of the Constitution which says that the property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. Section 127A(2) of the Madhya Pradesh Municipalities Act and section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable, inter alia, on "buildings and lands owned by or vesting in the Union Government". Relying on these provisions, it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India, the lands and buildings owned by the companies cannot be subjected to property tax. The short answer to this contention is that even though the entire share capital of the appellant companies has been subscribed by the Government of India, it cannot be predicated that the companies themselves are owned by the Government of India. The companies, which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government of India. The lands and buildings are vested in and owned by the companies: the Government of India only owns the share capital. In Rustom Cavasjee Cooper v. Union of India (The Banks Nationalisation case) 6 it was held:
"A company registered under the Companies Act is a legal person, separate and distinct from its individual members. Property of the Company is not the property of the shareholders. A shareholder has merely an interest in the Company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the profit."
In Heavy Engineering Mazdoor Union v. The State of Bihar & Ors., the Heavy Engineering Corporation Limited was incorporated under the Companies Act and its entire share capital was contributed by the Central Government. It was therefore a Government Company under section 617 of the Companies Act. On the question as to whether the Corporation carried on an industry under the authority of the Central Government within the meaning of section 2(a) of the Industrial Disputes Act, 1947, it was held by this Court that an incorporated company has a separate existence and the law recognises it as a juristic person, separate and distinct from its members. The mere fact that the entire share capital of the respondent company was contributed by the Central Government and the fact that all its shares were held by the President and certain officers of the Central Government did not make any difference to that position. 21A. The decision of this Court in the Andhra Pradesh State Road Transport Corporation v. The Income-tax Officer & Anr. puts the matter beyond all doubt. In that case, the Andhra Pradesh Road Transport Corporation claimed exemption from taxation under article 289 of the Constitution by which, the property and income of a State is exempt from union taxation. This Court, while rejecting the Corporation's claim, held that though it was wholly controlled by the State Government it had a separate entity and its income was not the income of the State Government. Gajendragadkar, C. J., while speaking for the Court, referred to the judgment of Lord Denning in Tamlin v. Hansaford in which the learned Judge observed:
"In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government".
In Pennington's Company Law, 4th Edition, pages 50-51, it is stated that there are only two decided cases where the court has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate the evasion of legal obligations. The learned author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn, J. to the effect that as a general rule, a corporation will be looked upon as a legal entity and an exception can be made "when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime", in which case, "the law will regard the corporation as an association of persons". In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have 7 regard to the realities of the situation. The appellant companies were incorporated under the Companies Act for a lawful purpose. Their property is their own and it vests in them. Under section 5(1) of the Coal Mines (Nationalisation) Act, 26 of 1973, which applies in the instant case, the right title and interest of a nationalised coal mine vest, by direction of the Central Government, in the Government company. If the lands and building on which respondent 1 has imposed the property tax cannot be regarded as the property of the Central Government for several other purposes like attachment and sale, there is no reason why, for taxing purposes, the property can be treated as belonging to that Government as distinct from the company which has a juristic personality."
Judgements quoted above clears the issue that Central Government /State Government can create its instrumentality or agency within the meaning of Article 12, through legislation by way of statute or under the Companies Act, or societies Registration Act or by any other mode prescribed by law and such establishments will have their separate entity, distinct from Government. U.P. Khadi, & Village Industries Board, has been established under U.P. Act No. 10 of 1960 for development of Khadi and Village Industries, and is body corporate having perpetual succession and common seal, with power subject to provisions of Act, to acquire, hold and dispose of property and to contract and by the said name, sue and be sued. Establishment owned and controlled by U.P. Khadi and Village Industries Board, can not in be this background said by any stretch of imagination to be establishments owned and controlled by State Government.
Once specific Government Order has been there according exemption to certain establishment run and controlled by petitioner and therein woollen industries has not at all been covered then petitioner cannot take recourse of Government Order 05.01.1987.
In the present case, there is on record letter dated 23.09.1991 Annexure-CA-3 sent by petitioners themselves requesting for grant of exemption and at no point of time said request had ever been accepted. Government Order, relied upon the petitioner dated 05.01.1987, covered employees, whose wages were fixed with consultation of finance department or Public Enterprises Bureau of State Government, and before the Prescribed Authority in his statement petitioners witness categorically denied of having any knowledge on said score. All these distinctive feature 8 has been taken note of while passing the impugned order in question.
In these circumstances and in this background view taken by Prescribed Authority is rightful view and same warrants no interference by this Court.
Consequently, present writ petition is dismissed. Dated 19.07.2010 Dhruv