Patna High Court
Sindri Workers' Union vs Commissioner Of Labour And Ors. on 14 August, 1958
Equivalent citations: AIR1959PAT36, 1958(6)BLJR839, (1959)IILLJ531PAT, AIR 1959 PATNA 36, (1958-59) 15 FJR 319, ILR 37 PAT 1494, 1958 BLJR 839, (1959) 2 LABLJ 531
Author: V. Ramaswami
Bench: V. Ramaswami
JUDGMENT V. Ramaswami, C.J.
1. In this case the petitioner is a registered trade union, called the Sindri Workers' Union, which is constituted of workers of the Sindri Fertilizers and Chemicals Limited, which is a private limited company with its registered office at Sindri in the district of Manbhum. Under Section 3 of the Industrial Employment (Standing Orders) Act, 1946 (Act XX of 1946), the Sindri fertilizers and Chemicals Limited (hereinafter referred to as the Company) submitted to the Labour Commissioner of Bihar at Patna the draft standing orders for the purpose of certification under the Act.
Under Section 5 (1) of the Act the Labour Commissioner of Bihar served a copy of the draft standing orders on the petitioner. In the proceedings for certification the petitioner objected that the Labour Commissioner of Bihar was not the proper authority to certify the standing orders of the company. It was contended on behalf of the petitioner that the Regional Labour Commissioner of the Union of India, whose office was at Dhanbad, was the proper certifying officer.
The Labour Commissioner, Bihar, did not consider the objection raised by the petitioner but certified the draft standing orders of the company by his order dated 24-1-1955. The petitioner took the matter in appeal before the appellate authority for standing orders, namely, respondent No. 2, and the objection taken in appeal was that the Commissioner of Labour, Bihar, was not the proper certifying officer for standing orders of the company under Act XX of 1946.
The objection was overruled by respondent No. 2 and the appeal of the petitioner was dismissed by his order dated 4-7-1956, and it was held by respondent No. 2 that the appropriate Government under Section 2 (c) of the Act was the Government of Bihar and, therefore, the Commissioner of Labour, Bihar, had jurisdiction to certify standing orders.
In these circumstances the petitioner has obtained a rule from the High Court calling upon the respondents to show cause why a writ in the nature of certiorari under Article 226 of the Constitution should not be issued for quashing the order of the Labour Commissioner, Bihar, dated 24-1-1955, certifying the draft standing orders, and also the order of the appellate authority, dated 4-7-1956. Cause has been shown in this case by the learned Government Advocate on behalf of the respondents.
2. It is necessary at this stage to set out the relevant statutory provisions. Section 2 (b) of Act XX of 1945 is in the following terms :
"2. (b) 'Appropriate Government' means in respect of industrial establishments under the control of the Central Government or a Railway Administration or in a major port mine or oilfield, the Central Government, and in all other cases, the State Government."
Section 2 (c) defines :
" 'Certifying Officer' as 'the Labour Commissioner wherever he exists or in his absence an officer appointed by the appropriate Government by notification in the official Gazette to exercise in such area as may he specified in the notification, the functions of a Certifying Officer under this Act." ' Section 2 (a) states as follows ;
"2. (a) 'Appellate Authority' means an Industrial Court, wherever if exists or in its absence an authority appointed by the appropriate Government by notification in the official Gazette to exercise in such area as may be specified in the notification, the functions of an appellate authority under this Act.'' Section 3 of the Act provides for submission of draft standing orders to the certifying officer, Section 3 reads as follows :
"3. Submission of draft standing orders.
(1) Within six months from the date on which this Act becomes applicable to an industrial establishment, the employer shall submit to the Certifying Officer five copies of the draft standing orders proposed by him for adoption in his industrial establishment.
(2) Provision shall be made in such draft for every matter set out in the Schedule which may be applicable to the industrial establishment, and where model standing orders have been prescribed, shall, so far as is practicable, in conformity with such model.
(3) The draft standing orders submitted under this section shall be accompanied by a statement giving prescribed particulars of the workmen employed in the industrial establishment including the name of the trade union, if any, to which they belong.
(4) Subject to such conditions as may be prescribed, a group of employers in similar industrial establishments may submit a joint draft of standing orders under this section."
Section 5 relates to certification of standing orders and reads as follows :
"5. Certification of standing orders :
(1) On receipt of the draft under Section 3, the Certifying Officer shall forward a copy thereof to the trade union, if any, of the workmen, or where there is no such trade union, to the workmen in such manner as may be prescribed, together with a notice in the prescribed form requiring objections, if any, which the workmen may desire to make to the draft standing orders to be submitted to him within fifteen days from the receipt of the notice.
(2) After giving the employer and the trade union or such other representatives of the workmen as may be prescribed an opportunity of being heard, the Certifying Officer shall decide whether or not any modification of or addition to the draft submitted by the employer is necessary to render the draft standing orders certifiable under this Act, and shall make an order in writing accordingly.
(3) The Certifying Officer shall thereupon certify the draft standing orders, after making any modifications therein which his order under Sub-section (2) may require, and shall within seven days thereafter send copies of the certified standing orders authenticated in the prescribed manner and of his order under Sub-section (2) to the employer and to the trade union or other prescribed representatives of the workmen."
Section 6 deals with appeals and states as follows 1 "6. Appeals. (1) Any person aggrieved by the order of the Certifying Officer under Sub-section (2) of Section 5 may, within twenty-one days from the date on which copies are sent under Sub-section (3) of that section, appeal to the appellate authority, and, the appellate authority whose decision shall be final, shall by order in writing confirm the standing orders either in the form certified by the Certifying Officer or after amending the said standing orders by making such modifications thereof or additions thereto as it thinks necessary to render the standing orders certifiable under this Act.
(2) The Appellate Authority shall, within seven days of its order under Sub-section (1), send copies thereof to the Certifying Officer, to the employer and to the trade union or other prescribed representatives of the workmen, accompanied, unless it has confirmed without amendment the standing orders as certified by the Certifying Officer, by copies of the standing orders as certified by it and authenticated in the prescribed manner."
3. The argument put forward on behalf of the petitioner is that under Section 2 (b) of the Act, the appropriate Government in respect of industrial establishments of the petitioner is the Central Government and not the Government of Bihar, and, therefore, the Labour Commissioner of Bihar had no jurisdiction to certify the draft standing orders in the present case.
It was submitted that the Sindri Fertilizers end Chemicals Limited was an industrial establishment under the control of the Central Government within the meaning of Section 2 (b) of the Act, and, therefore, the Company had to submit the draft standing orders not to the Labour Commissioner of Bihar but to the Regional Labour Commissioner of the Union of India at Dhanbad. The expression "industrial establishment" is defined in Section 2(e) of the Act as follows :
"2. (c) 'Industrial establishment' means : (i) an industrial establishment as defined in Clause (ii) of Section 2 of the Payment of Wages Act, 1936 (IV of 1936), or (ii) a factory as defined in Clause (i) of Section 2 of the Factories Act, 1934, or (iii) a railway as defined in Clause (4) of Section 2 of the Indian Railways Act, 1890 (IX of 1890), or x x x x x"
It is not disputed in this case that the Sindri Fertilizers and Chemicals Limited owns an industrial establishment within the meaning of Section 2 (e) of the Act. The question really presented for determination is whether the industrial establishment is under the control of the Central Government within the meaning of Section 2 (b) of the Act. It is not disputed that the share capital of the Company is 30 crores of rupees consisting of 3 Lakhs of shares valued at Rs. 1,000/- each and that the President of India holds 2,99,999 shares and the remaining share has been allotted to the Secretary of the Production Department, Government of India.
It appears from Article 67 of the Articles of Association that the Directors are appointed by the President who is also authorised to remove any Director from his office in his absolute discretion. It appears also from Article 110 of the Articles of Association that the President is authorised from time to time "to issue such directives as he may consider necessary in regard to the conduct of the business of the Company or Directors thereof."
The Article further provides that the President in like manner may vary or annul any such directive. The Article also imposes a duty upon the Directors to give immediate effect to directives so issued. Counsel on behalf of the petitioner referred in this connection to paragraph (12) at p. 14 of the decision of this Court in Subodh Ranjan v. Fertilizers and Chemicals Limited, AIR 1957 Pat 10 (A), where the Articles of Association of this Company have been dealt with. Counsel for the petitioner also referred to paragraphs (2), (3) and (4) of his affidavit.
These facts are not controverted on behalf of the respondents. The appellate authority has, however, taken the view that the President controls the industrial establishment not in his capacity as the head of the State but because he has been allotted the majority of shares and was, therefore, the major share-holder of the industrial establishment.
The appellate authority has taken the view that there is a distinction between the control by the Central Government and the control by the President in his capacity as a major share-holder of the industrial establishment. The appellate authority, therefore reached the conclusion that the industrial establishment was not under the control of the Central Government within the meaning of Section 2 (b) of the Act (Act XX of 1946).
In my opinion, the view taken by the appellate authority is erroneous as a matter of law. It is not disputed on behalf of the respondents that the President holds the majority of shares in the industrial establishment, not in his personal capacity but in his capacity as the head of the Central Government. It is true that as a share-holder in the Company the powers of the President are circumscribed by the Articles of Association; but as I have shown by a reference to the Articles of Association, the President holds the majority of shares and he has the power to appoint all the Directors of the Company.
The president has also been given the authority to remove any Director from his office in his absolute discretion. It is also clear from the Articles of Association that the management of the Company is subject to the full control of the President not only in matters of policy but also in other matters. Article 110 of the Articles of Association also confers power upon the President to issue any directive "in regard to the conduct of the business of the Company or Directors thereof."
The Article further provides that the President in like manner may vary or annul any of his directives and a duty is imposed upon the Directors by this Article to give immediate effect to the directives so issued by the President. It is, therefore, manifest that under the Articles of Association the President has got complete control over the working of the industrial establishment and, therefore, the appropriate Government under Section 2 (b) of the Act is the Central Government and not the State Government.
As a matter of law, Government enterprise may take various forms in a welfare State. It may take, for example, the form of a departmental administration or a departmental projects. It may also take the legal form of a Joint Stock Company in which the Government holds the majority or shares or the totality of shares and so there is complete Government control under the Articles of Association and under the provisions of the Company Law.
There is also a third type of Government enterprise, namely, the public corporation, which is established by a separate statute or charter and which is a distinct type of corporation different from the private limited company. The question of the legal form of the Government enterprise has however no real bearing on the interpretation of Section 2 (b) of Act XX of 1946.
The test for finding out whether an industrial establishment is controlled by the Central Government under Section 2 (b) is a realistic test, namely, whether the Central Government has control over the industrial establishment under the Articles of Association in the case of a private limited company or by the provisions of the special statute in the case of a public corporation.
I have shown in the present case that the Articles of Association expressly provide that the President of India should have complete control over the working of the Sindri Fertilizers Company Limited. It, therefore, follows that the appropriate Government under Section 2 (b) of Act XX of 1946 is the Central Government and not the State Government.
4. As a matter of law it does not also make any difference that the President holds the majority of shares in his name or that the authority to issue directives or the authority to appoint or remove Directors is vested in the President of India and not expressly in the Central Government by name. In this connection Article 77 and Articles 298 and 299 of the Constitution are important. Article 77 provides that "all executive action of the Government of India shall be expressed to be taken in the name of the President.'' Article 298 provides that "the executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making contracts for any purpose."
Article 299 also, provides that "all contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President, or by the Governor of the State, as the case may be, and all such contracts and all assurances of property made in the exercise of that power shall be executed on behalf of the President or the Governor by such persons and in such manner as he may direct or authorise."
Reading, therefore, the Articles of Association of the Company along with these constitutional provisions it is clear that the industrial establishment in this case is under the control of the Central Government within the meaning of Section 2 (b) of Act XX of 1946, and the Labour Commissioner of Bihar has no jurisdiction to certify the draft standing orders of the Company under Section 5 of the same Act.
I, therefore, hold that a writ in the nature of certiorari under Article 226 of the Constitution must be issued for quashing the order of the Labour Commissioner of Bihar, dated 24-1-1955, and also the order of respondent No. 2, namely, the appellate authority for standing orders, dated 4-7-1956. I would accordingly allow the application with costs. Hearing fee Rs. 200/-.
R.K. Choudhary, J.
5. I agree.