Karnataka High Court
Cotton Corporation Of India ... vs G.C. Odusumath And Others on 25 March, 1998
Equivalent citations: ILR1998KAR2553, 1998(6)KARLJ181, (1999)ILLJ19KANT
Bench: Ashok Bhan, Mohamed Anwar
JUDGMENT
1. These appeals have arisen out of a common order dated 19-9-1995 of the learned Single Judge passed in Writ Petition Nos. 28462 and 28463 of 1993 coupled with Writ Petition Nos. 17698 and 17709 of 1995 dismissing all these petitions of the appellant-corporation. By the said petitions the common interim orders dated 24-5-1993 and 21-1-1995 made by respondent 3-Labour Court in Reference Nos. 377 of 1988 and 380 of 1988 were challenged by the appellant (hereinafter referred to as the 'corporation').
2. The facts of the industrial dispute leading to the aforesaid references pending before the respondent-Labour Court are as stated under:
The workman Sri G.C. Odusmath, who is respondent 1 ('R1' for short) and Sri C.M. Vidyananda, respondent 2 ('R2' for short) were appointed by the corporation as Junior Cotton Purchasers and they had been serving as such 'workmen' of the Corporation. In the year 1986 both were deputed to Bellary town in the State of Karnataka as Cotton Purchaser and Jr. Cotton Purchaser, respectively. While they were so serving under the corporation at Bellary a domestic enquiry was held against them on the charge of misconduct of accepting the bribe of Rs. 5,000/- each from one V.B. Patil in connection with the discharge of their official duties. The enquiry officer was appointed by the corporation. After enquiry into the alleged misconduct of the workmen, he submitted an enquiry report to the management holding both workmen guilty of the said charge. That report was accepted by the corporation management and the workmen were dismissed from service by its respective orders both dated 2-6-1987, The said orders of dismissal were challenged by the workmen before the Appellate Authority. The same were confirmed by the latter under his order dated 9-11-1987. Thereupon, Writ Petition No. 79 of 1988 was filed by R2 workman before this Court challenging the said order of his dismissal. That writ petition came to be dismissed by this Court on the preliminary ground that workman was required to raise an industrial dispute before the concerned Regional Labour Commissioner (C) in respect of his dismissal by the management, and, therefore, liberty was reserved for him to do so.
3. Thereafter, both workmen made respective petitions before the concerned Regional Labour Commission (Central) in No. 95(1)88-D4. Then, the endorsements dated 17-9-1988 in TPM/CR/40 of 1988-89 and dated 17-2-1988 in PTN/CR/41 of 1988-89 were issued to the respective workmen by the said Labour Commissioner stating that they can directly raise the industrial dispute before respondent 3-Labour Court. It was then which workmen made their respective claim petitions under Section 2A of Industrial Disputes Act, 1947 ('The Act' for short) read with Section 10(4-A) thereof (as amended by Karnataka Act 5 of 1988 with effect from 7-4-1988) in Reference Nos. 377 of 1988 and 380 of 1988, respectively, against the management's said orders of dismissal.
4. Before the Labour Court preliminary objection relating to its jurisdiction was raised by the corporation contending that the said Reference Nos. 377 of 1988 and 380 of 1988 on its file were not valid references since they were not made by the 'appropriate Government' which was the Central Government in respect of appellant-corporation, and, therefore, the respondent-Labour Court established under Section 7 of the Act by the State of Karnataka was not competent to adjudicate upon the disputes between the parties. On this objection the preliminary question as to which Government is the appropriate Government in relation to the corporation for the purpose of making a reference of an industrial dispute was raised by the respondent-Labour Court and was decided by its order dated 25-4-1993 against the corporation holding that the appropriate Government for the purpose is the State Government and, therefore, the Labour Court had the jurisdiction to entertain the said references and adjudicate the dispute between the parties.
5. That order dated 24-5-1993 of the Labour Court was challenged by the appellant-corporation before the learned Single Judge in Writ Petition Nos. 28462 and 28463 of 1993.
6. The fairness of the domestic enquiry conducted by the management against workmen (R1 and R2) was also questioned by them before the Labour Court. Therefore, an issue was raised on the point and the order dated 21-1-1995 was passed thereon by it holding that the domestic enquiry held by the management against both workmen was not fair and proper. Aggrieved by the said order, Writ Petition Nos. 17698 of 1995 and 17709 of 1995 were filed by the appellant-corporation challenging the same. These two writ petitions are dismissed by the learned Judge, of course rightly in our opinion, on the ground that it is open for the corporation to challenge the said interim order dated 21-1-1995 when the final award is passed by the Labour Court and if the corporation chooses to challenge it. This portion of the impugned common order of the learned Judge is, therefore, justifiable and the same is also not seriously challenged and agitated in these appeals before us. Hence we confirm the same.
7. However, Mr. Gururajan seriously challenges the legality of the impugned order passed upholding and affirming the respondent-Labour Court's finding that in relation to appellant-corporation it is the State Government and not the Central Government which is the 'appropriate Government' for the purpose of making the said references viz., Reference Nos. 377 of 1988 and 388 of 1988 and, therefore, it has the jurisdiction to adjudicate upon the said disputes.
8. Mr. R. Gururajan, relying on certain authorities, vehemently sought to substantiate his contention that regard being had to the composition, structure, functional aspects and the nature of activity of the appellant-corporation it is the Central Government which is the 'appropriate Government' within the meaning of Section 2(a)(i) of the Act and not the State Government. So arguing he maintained that the impugned findings to the contrary of the learned Single Judge as also that of the Labour Court are not sustainable in law.
9. On the other hand, learned Senior Counsel Mr. Narasimhan appearing for the workmen (respondents 1 and 2) argued at length in support of the impugned order and reliance was placed by him also on various decisions of the Supreme Court.
10. To appreciate the rival contentions put forward by both sides it is necessary to examine the object, structural composition and the functional aspect of the corporation as they have a direct nexus with the determination of the question of 'appropriate Government' within the meaning of Section 2(a)(i) of the Act in relation to the corporation concerning the industrial disputes in the instant ease.
11. The appellant-corporation i.e., Cotton Corporation of India, is a Company incorporated under the Companies Act, 1956 in the year 1970. Out of its 50,000 equity shares of Rs. 100/- each, 49,998 shares are held by the President of India. Of the remaining 2 shares one is held by Additional Secretary to Government of India, the then Ministry of Foreign Trade and presently the Ministry of Textiles; and another is held by the Textile Commissioner, Government of India, Bombay. Thus it is a Government Company under Section 617 of the Companies Act.
12. The Corporation carries on its business of import of raw cotton from abroad and is engaged in purchase, sale, transport of industrial/or man-made fibre or fabrics of any kind. This business activity of the corporation is subject to the policy, directions and instructions of the Central Government issued from time to time. Besides, the various Articles of the Memorandum and Articles of Association of the corporation, produced as Annexure-A, indicate that allotment of shares, transfer of shares, conversion of shares, sub-division and consolidation of shares into stocks and vice-versa, issue of new shares, increase or reduction of the company's capital are all made subject to the approval and directions of President of India. The Chairman and Directors of the Corporation are appointed and are liable to be removed by him. Their pay and allowances are as determined by him. He is the authority to fill any vacancy in the office of the Director on its Board of Directors. Acquisition of properties, capital asset and borrowing should be subject to his approval. Matters relating to Provident Fund, Gratuity, commission on profits require his approval. He appoints the Auditors for the company on the advise of the Comptroller and Auditor General of India who in turn has the power to direct the manner in which the accounts of the company are to be audited. Thus, there cannot be and there is no dispute that by virtue of various relevant provisions in the Memorandum and Articles of Association of the Corporation, the Central Government has deep and pervasive control over it in the matter of carrying on its said business for which it is established.
13. Mr. Gururajan, therefore, advanced his argument before us that the aforementioned structural composition and functional aspects of the appellant corporation clearly go to show that the corporation is carrying on its business i.e., industry, under the authority of the Central Government, and, as such, it is the Central Government which is the 'appropriate Government' within the meaning of Section 2(a)(i) of the Act in relation to the corporation concerning any industrial dispute. He sought to distinguish the authority of Supreme Court in Heavy Engineering Mazdoor Union v State of Bihar and Others, wherein it is laid down that with all the Central Government's deep and pervasive control of the type stated above, any Company incorporated under the Companies Act remains a distinct juristic entity separate from its shareholders/members and, therefore, the Company in holding its property and carrying on its business as a separate juristic person will not become an agent or servant of the Central Government so as to hold that the Company carries on its business under the authority of the Central Government. Mr. Gururajan proposed to rely on a recent decision of Supreme Court in Air India Statutory Corporation v United Labour Union and Others, in support of his contention that once the incorporated company is found to be carrying on its business with the Central Government exercising its deep and pervasive control over its business activity and all its functional aspects it must be held as the company run under the authority of the Central Government and, therefore, for the purpose of referring a dispute to the Labour Court under Section 10 of the Act the 'appropriate Government' with respect thereto within the meaning of Section 2(a)(i) of the Act is the Central Government.
14. Mr. Narasimhan, learned Senior Counsel for workmen, repelling the contention of Mr. Gururajan argued that the law laid down by the two Judges Bench of Supreme Court in the case of Heavy Engineering Mazdoor Union, supra, holds the field and no divergent or contrary view is taken by the Supreme Court in its decision in the case of Air India, Statutory Corporation, supra, as maintained by Mr. Gururajan. Support for this submission was sought to be derived by Mr. Narasimhan from a number of decisions of Supreme Court and other High Courts, particularly from the following decisions:
1.Praga Tools Corporation v C.V. Imanual and Others.
2. Heavy Engineering Mazdoor Union's case, supra.
3.Dr. S.L. Agarwal v General Manager, Hindustan Steel Limited.
4.Sabhajit Tewary v Union of India and Others .
5.Hindustan Steel Works Construction Limited v State of Kerala.
6.Steel Authority of India Limited v Shri Ambica Mills Limited.
15. Certain material provisions of the Act in the light of which the legality and correctness of the impugned order has to be examined must be borne in view. Section 7 of the Act deals with creation of Labour Courts. It states that 'appropriate Government' may, by notification in the official Gazette constitute one or more Labour Courts for adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under this Act. Clause (a) of Section 2 defines the "appropriate Government" for which it is either the Central Government or State Government depending upon the industry concerning which industrial dispute has arisen as envisaged in sub-clauses (i) and (ii) of Section 2(a). The Labour Courts envisaged under Section 7 are constituted by the Government of Karnataka and the Central Government as well in the State of Karnataka. Section 10 deals with reference of industrial disputes to the competent authorities under the Act including the Labour Courts. The relevant portion of Section 10 which is material for our purpose is extracted below:
"10. Reference of dispute to Boards, Courts or Tribunals.--
(1) Where the appropriate Government is of the opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing.--
(a).....
(b).....
(c) refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, if it relates to any matter specified in the Second Schedule, to a Labour Court for adjudication; or
(d)....:
Provided also that where the dispute in relation to which the Central Government is the appropriate Government, it shall be competent for the Government to refer the dispute to a Labour Court or an Industrial Tribunal, as the case may be, constituted by the State Government".
Section 2A of the Act contemplates that any dispute between the employer and the workman connected with or arising out of the discharge, dismissal, retrenchment or termination of the workman by his employer shall be deemed to be an industrial dispute notwithstanding that no other workman or any union of workmen is a party to a dispute. By Karnataka Amendment Act of 1987, the sub-section (4-A) is incorporated after sub-section (4) of Section 10 in the Act which reads:
"10(4-A) Notwithstanding anything contained in Section 9-C and in this section, in the case of a dispute falling within the scope of Section 2A the individual workman concerned may within six months from the date of communication to him of the order of discharge, dismissal, retrenchment or termination or the date of commencement of the Industrial Disputes (Karnataka Amendment) Act, 1987, whichever is later, apply, in the prescribed manner to the Labour Court for adjudication of the dispute and the Labour Court shall dispose off such application in the same manner as a dispute referred under sub-section (1)".
This provision was brought into effect from 7-4-1988.
16. The copies of the claim petitions of both workmen are produced as Annexures-C and J at pages 118 and 437 of the appellant's paper book. They are both dated 20-9-1988, thereby indicating that they were filed in the Labour Court on or about 20-9-1988. It means that the workman claimants had made their aforesaid claim petitions before the respondent-Labour Court well before the expiry of the prescribed period of six months from the date of coming into effect of Section 10(4-A).
17. The term 'employer1 in relation to an industrial dispute stipulated under Section 10 is defined by Section 2(g) as:
"(g) 'employer' means --
(i) in relation to any industry carried on by or under the authority of any department of (the Central Government or a State Government), the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;
(ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority";
18. There is no dispute that the appellant-corporation is an 'industry' within the meaning of the term defined by Section 2(j) and that the disputes in question raised by the workmen are the 'industrial disputes' within the meaning of its definition contained in Section 2(k) of the Act. But, as indicated, the corporation had raised a serious objection before the Labour Court as to its competence and jurisdiction to entertain the said claim petitions of the workmen and adjudicate upon-the disputes.
The grounds on which this objection was raised were that the references were not made to the respondent-Labour Court by the Central Government which was the appropriate Government in relation to the corporation, and that it is the Labour Court constituted by the Central Government which has exclusive jurisdiction and is competent to try those references and decide the disputes.
19. By its considered order the respondent-Labour Court negatived the above contention raised before it for the corporation and held that the appropriate Government concerning the corporation is the State Government and not the Central Government and, therefore, it had jurisdiction to decide the disputes under references. That order of the Labour Court when challenged by the employer Corporation is upheld by the learned Single Judge by his order impugned in these appeals.
20. Section 2(a)(i) of the Act defines the 'appropriate Government'. Its material portion is as extracted below:
"2. (a) 'appropriate Government' means.--
(i) in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government, or by a railway company or concerning any such controlled industry as may be specified in this behalf by the Central Government .... the Central Government. .".
21. It is an undisputed fact that the appellant-corporation has not been declared a 'controlled industry' in terms of Section 2(g), muchless specified by the Central Government as a 'controlled industry' concerning which the "appropriate Government" in relation to any industrial dispute is the Central Government thereby bringing it within the ambit of the definition of 'appropriate Government' contained in Section 2(a)(i). It is also an admitted position of the corporation that it is not run by the Central Government. Its case projected before us is that having regard to the depth and pervasive control of the Central Government over the functioning of the corporation it is for all legal intent and purpose run "under the authority of the Central Government" and, therefore, it is the Central Government which is the appropriate Government for the said purpose. Substantiating his contention Mr. Gururajan proposed to draw support from the decisions in: (1) Regional Provident Fund Commissioner, Karnataka v Workmen represented by General Secretary, Karnataka Provident Fund Employees' Union and Another ; (2) C.V. Raman v Management of Bank of India and Another ; (3) Air India Statutory Corporation, supra; (4) Padam Bahadur Khanka v National Institute for Training and Others; (5) Bombay Telephone Canteen Employees' Association v Mahanagar Telephone Nigam Limited, Bombay; (6) India Airport Employees' Union v International Airports Authority of India and (7) An unreported judgment of a learned Single Judge of Andhra Pradesh High Court in W.P. Nos. 6480 and 7535 of 1989, decided on 21-12-1994 (a copy whereof is produced in these appeals).
22. No doubt the definition of 'appropriate Government' in Section 2(a)(i) states that if an industry is run under the authority of the Central Government then in relation to any industrial dispute concerning it the Central Government is the appropriate Government for the purpose of making a reference of dispute to the Labour Court under the Act.
23. The case of Padam Bahadur Khanka, supra, is clearly distinguishable. The legal proposition stated therein by Bombay High Court is that the National Institute for Training established and run by the Government of India with the assistance of the United Nations through International Labour Organisation for the purpose of imparting education is an industry concerning which the appropriate Government is the Central Government in relation to any industrial dispute connected therewith. Obviously, that proposition is inapplicable in the case in hand in that the appellant herein is a company not established and run by the Central Government but it is registered under the Companies Act and is governed by its articles in its functioning.
24. Evidently, the only material question that calls for consideration in these appeals is:
Whether or not appellant-corporation "carries on its business under the authority of the Central Government" within the meaning of Section 2(a)(i), it being a private limited company incorporated under the Companies Act?
In this regard it is essential to bear in mind the correct legal position of an incorporated company as borne out by the relevant provisions of the Companies Act, since it has the direct bearing on the answer to this question.
25. Section 9 of the Companies Act states that the provisions of this Act shall have overriding effect on the memorandum of association and articles of a company registered thereunder to the extent they are repugnant with the provisions in the Act.
26. Section 34 thereof deals with the effect of registration of a company and it stipulates that on registration the company shall become a body corporate capable forthwith of exercising all the functions of an incorporation company and having perpetual succession and common seal. Section 36 provides for the effect of memorandum and articles of association. It states:
"Section 36. Effect of Memorandum and Articles.--(1) Subject to the provisions of this Act, the memorandum and articles shall, when registered, bind the company and the members thereof to the same extent as if they respectively had been signed by the company and by each member, and contained covenants on its and his part to observe all the provisions of the Memorandum and of the Articles.
(2) All money payable by any member to the company under the memorandum or articles shall be a debt due from him to the company".
Section 48 runs:
"Section 48. Execution of Deeds.--(1) A company may, by writing under its common seal, empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf in any place either in or outside India.
(2) A deed signed by such an attorney on behalf of the company and under his seal where sealing is required, shall bind the company and have the same effect as if it were under its common seal".
Section 49 envisages, inter alia, that subject to the exceptions stated therein "all investments made by a company on its own behalf shall be made and held by it in its own name".
27. These and other provisions of the Companies Act maintain a clear distinction between a company's legal entity and its actions, assets, rights and liabilities on the one hand, and the individual shareholders and their actions, assets, rights and liabilities on the other. (See EBM Company Limited v Dominion Bank). So, it legally follows that lifting of the corporation veil of a company as a rule is not permissible in law unless otherwise provided by clear words of the statute or by very compelling reasons such as where fraud is intended to be prevented or trading with enemy company is sought to be defeated.
28. While construing the term 'appropriate Government' respecting a Company or Corporation in relation to an industrial dispute between 'employer' and 'workman' the definition of 'employer' in Section 2(g) of the Act needs be taken note of. In this regard the ruling of the Division Bench of Calcutta High Court in Carlsbad Mineral Water Manufacturing Company v P.K. Sarkar, may be recalled with full advantage. In that case the identical question as the one in the instant case had arisen for determination of their Lordships. The appellant-company in that case was a limited company which was engaged in manufacture and supply of soda water. The appeal before it had arisen out of an industrial dispute between that company and its workmen. His Lordship Harris, C.J. speaking for the Bench said on the question:
"It seems to me that what is referred to in Section 2(a)(i) and Section 2(g)(i) is any industry owned by Government which is being carried on by Government itself either through a department or by some authority created by Government to carry on that industry. An industry carried on by or under the authority of Government is a Government industry which as I have said may be carried on direct by Government or by somebody or person nominated by Government for that purpose. No business owned and carried on by a private person or a limited company can be a business carried on by or under the authority of Government".
Another pertinent observation made therein was:
"If the business of manufacturing and supplying these mineral waters was carried on by authority of Government the workmen would be the workmen of Government. But such obviously is not the case".
29. Again the same question, arose subsequently for consideration of Supreme Court in the case of Heavy Engineering Mazdoor Union, supra, (for short 'Heavy Engineering case'). In that case the Heavy Engineering Corporation Limited, Ranchi was a company incorporated under the Companies Act. It was a Government Company. Its entire share capital was contributed by the Central Government in that its shares were held by the President of India and certain officers of the Central Government. Large extent of power was conferred on the Central Government in respect of the functioning of the company. Certain disputes arose between the company and its workmen relating to number of festival holidays and whether the second Saturday in a month be declared as a off day. These two questions were referred by the State Government of Bihar to the Industrial Tribunal for its adjudication. One of the two Labour Unions of the Company viz., Mazdoor Union then filed writ petition under Articles 226 and 227 of the Constitution in the High Court of Patna questioning the validity of the said reference on two grounds. The first ground alone is relevant for our purpose and it was:
"..... that the appropriate Government to make the said reference under Section 10 of the Industrial Disputes Act, 1957 was the Central Government and not the State Government".
Before the High Court it was conceded that the said company was not an industry carried on by the Central Government, but it was seriously contended for the petitioner-Mazdoor Union that it was in fact and in law the industry run under the authority of the Central Government in view of the extensive powers wielded by it in the affairs of the company. This contention of the company was rejected by the High Court which held that the State Government was the appropriate Government and not the Central Government for making the said reference to the Labour Court and, therefore, it was a valid reference. The Supreme Court, in appeal, while dealing with this question in the light of the relevant provisions of the Act observed:
"Under Section 2(a) 'appropriate Government1 (leaving aside the words which are not relevant for our purposes) means (i) in relation to any industrial dispute concerning an industry carried on by or under the authority of the Central Government, .... the Central Government, and (ii) in relation to any other industrial dispute, the State Government. As was done before the High Court, Mr. Nag, appearing for the appellant-union, conceded that he would not contend that the company is an industry carried on by the Central Government but argued that it is an industry carried on under the authority of the Central Government and therefore it is that Government and not the State Government which is the appropriate Government for making a reference under Section 10 of the Act. The first question raised by the appellant-union, therefore, turns solely upon the construction of the words "carried on under the authority of the Central Government". The contention was primarily grounded on the fact that the entire share capital of the company has been contributed by the Central Government, all its shares are held by the President and certain officers of the Central Government presumably its nominees and extensive control is vested in the Central Government".
The Supreme Court discussing the amplitude of the definition of term 'appropriate Government' contained in Section 2(a)(i) further proceeded to observe:
"It is an undisputed fact that the company was incorporated under the Companies Act and it is the company so incorporated which carried on the undertaking. The undertaking, therefore, is not one carried on directly by the Central Government or by any one of its departments as in the case of posts and telegraphs or the railways. It was, therefore, rightly conceded both in the High Court as also before us that it is not an industry carried on by the Central Government. That being the position, the question then is, is the undertaking carried on under the authority of the Central Government? There being nothing in Section 2(a) to the contrary, the word 'authority' must be construed according to its ordinary meaning and therefore must mean a legal power given by one person to another to do an act. A person is said to be authorised or to have an authority when he is in such a position that he can act in a certain manner without incurring liability, to which he would be exposed but for the authority, or, so as to produce the same effect as if the person granting the authority had for himself done the act.
There clearly arises in such a case the relationship of a principal and an agent. The words 'under the authority of mean pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master. Can the respondent-company, therefore, be said to be carrying on its business pursuant to the authority of the Central Government? That obviously cannot be said of a company incorporated under the Companies Act whose constitution, powers and functions are provided for and regulated by its memorandum of association and the articles of association. An incorporated company, as is well known, has a separate existence and the law recognises it as a juristic person separate and distinct from its members. This new personality emerges from the moment of its incorporation and from that date the person subscribing to its memorandum of association and others joining it as members are regarded as a body incorporate or a corporation aggregate and the new person begins to function as an entity. Its rights and obligations are different from those of its shareholders. Action taken against it does not directly affect its shareholders. The company in holding its property and carrying on its business is not the agent of its shareholders. An infringement of its rights does not give a cause of action to its shareholders. Consequently, it has been said that if a man trusts a corporation he trusts that legal persona and must look to its assets for payment; he can call upon the individual shareholders to contribute only if the Act or charter creating the corporation so provides".
At para 4 of its judgment, the Supreme Court has thrown further light on the legal position of a company incorporated under the Act:
"The company so incorporated derives its powers and functions from and by virtue of its memorandum of association and its articles of association. Therefore, 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 are held by the President and certain officers of the Central Government does not make any difference. The company and the shareholders being, as aforesaid, distinct entities the fact that the President of India and certain officers hold all its shares does not make the company an agent either of the President or the Central Government".
As regards the true position of the Central Government in a Government Company, the Supreme Court held:
"It is true that besides the Central Government having contributed the entire share capital, extensive powers are conferred on it, including the power to give directions as to how the company should function, the power to appoint directors and even the power to determine the wages and salaries payable by the company to its employees. But these powers are derived from the company's memorandum of association and the articles of association and not by reason of the company being the agent of the Central Government. The question whether a corporation is an agent of the State must depend on the facts of each case. Where a statute setting up a corporation so provides such a corporation can easily be identified as the agent of the State as in Graham v Public Works Commissioners, wherein Phillimore, J. said that the Crown does in certain cases establish with the consent of Parliament certain officials or bodies who are to be treated as agents of the Crown even though they have the power of contracting as principals".
In the same paragraph it has further stated:
"In the absence of a statutory provision, however, a commercial corporation acting on its own behalf even though it is controlled wholly or partially by a Government department, will be ordinarily presumed not to be a servant or agent of the State".
Further at para 6 of the judgment the Supreme Court considered the definition of 'appropriate Government' as given in Section 2(a)(i) with reference to the meaning of 'employer' given in Section 2(g) of the Act and held:
"In this connection the meaning of the word 'employer' as given in Section 2(g) of the Act may be looked at with some profit as the legislature there has used identical words while defining 'an employer. An employer under clause (g) means, in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government the authority prescribed in that behalf or where no such authority is prescribed, the head of the department. No such authority has been prescribed in regard to the business carried on by the respondent-company. But that does not mean that the head of the department which gives the directions, as aforesaid or which supervises over the functioning of the company is the employer within the meaning of Section 2(g). The definition of the employer, on the contrary, suggests that an industry carried on by or under the authority of the Government means either the industry carried on directly by a department of the Government, such as the posts and telegraphs or the railways, or one carried on by such department through the instrumentality of an agent. We find that the view which we are inclined to take on the interpretation of Section 2(a) is also taken by the High Courts of Calcutta, Punjab and Bombay. (See Carlsbad Mineral Water Manufacturing Company, supra; Cantonment Board, Ambala v State of Punjab and Abdul Rehaman Ab-dul Gafur v Mrs. E. Paul".
Therefore, the contention of appellant Mazdoor Union that considering the extensive control of the Central Government over the Heavy Engineering Corporation Limited, its industry was obviously run under the 'authority of the Central Government' and, as such, appropriate Government within the meaning of Section 2(a)(i) of the Act was the Central Government and not the State Government was held by Supreme Court as untenable and not correct. The view taken by the Division Bench of the Calcutta High Court in Carlsbad Mineral Water case is thus upheld and approved by Supreme Court in Heavy Engineering case.
Further, the ratio laid down in Heavy Engineering case finds its consistent approval in subsequent decisions of Supreme Court also.
30. In Sabliajit Tewari's case, supra, the Constitution Bench of Supreme Court dwelt on the question whether a person holding certain post as an employee of a Society registered under the Societies Registration Act could claim protection of Article 311 of the Constitution against any action of the employer touching the conditions of his service. It was contended on behalf of appellant-employee in that case that any such company or society functioning under pervasive control of the Central Government falls within the scope of 'other authorities' occurring in Article 12 of the Constitution which defines 'the State' for the purposes of Part III thereof. Rejecting this contention, the Supreme Court at para 5 of its judgment reiterated the law enunciated in its earlier decisions referred to therein, stating:
"This Court has held in Praga Tools Corporation's case, supra, Heavy Engineering Mazdoor Union's case, supra, and in S.L. Agarwal's case, supra, that the Praga Tools Corporation, Heavy Engineering Corporation Limited and Hindustan Steel Limited are all companies incorporated under the Companies Act and the employees of these companies do not enjoy the protection available to Government servants as contemplated in Article 311. The companies were held in those cases to have existence independent of the Government and by the law relating to corporations. These could not be held to be departments of the Government".
31. In its another Constitution Bench decision in Sukhdev Singh and Others v Bhagatram Sardar Singh Raghuvanshi and Another, dealing with similar question referring to the exposition of the law made in Heavy Engineering approvingly, the Supreme Court at para 127 of its judgment affirmed the ruling:
"In the absence of a statutory provision, however, a commercial corporation acting on its own behalf, even though it is controlled wholly or partially by a Government department, will be ordinarily presumed not to be a servant or agent of the State".
32. In S.C. Agarwal's case, supra, their Lordships held:
"We must, therefore, hold that the corporation which is Hindustan Steel Limited in this case is not a department of the Government nor are the servants of it holding posts under the State. It has its independent existence and by law relating to Corporations it is distinct even from its members".
32-A. In Food Corporation of India Workers' Union v Food Corporation of India and Others, while examining the width and content of the expression "industry carried on by or under the authority of the Central Government' occurring in the definition of 'appropriate Government' as given in Section 2(a)(i) of the Act, the Supreme Court held:
"The width and content of the expression 'any industry carried on by or under the authority of the Central Government' as used in the definition of expression 'appropriate Government' in Section 2(a)(i) of the Industrial Disputes Act, 1947, has been held to mean pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master".
33. Another three Bench decision of Supreme Court in Gurushanthappa v Abdul Khuddus Anwar and Others, has ruled:
"When a Government undertaking is taken over by the Company as a going concern, the employees working in the undertaking are also taken over and since, in law, the Company has to be treated as an entity distinct and separate from the Government, the employees, as a result of the transfer of the undertaking, become employees of the Company and cease to be employees of the Government. Since employees are covered by the definition of workmen under the Industrial Disputes Act in whose cases, on the transfer of the undertaking, the provisions of Section 25FF of that Act will apply. As a workman, he will under Section 25FF of the Industrial Disputes Act, become an employee of the new employer, viz., the Company, which takes over the undertaking from the Government which is the previous employer".
34. In its recent decision in the case of Steel Authority of India, supra, the Supreme Court found the appellant Steel Authority of India Limited (SAIL), the company incorporated under the Companies Act was fully owned by the Government of India and was controlled by the Central Government in the matter of carrying on its business. Relying on its Constitution Bench decision in Agarwal's case, supra and Western Coal Fields case, Supreme Court held:
"In view of the above decisions of this Court, we have no hesitation to hold that the High Court erred in thinking that SAIL was a department of Union of India and most of the reasons given in judgment are based on this wrong premise".
The legal proposition enunciated in the Western Coal Fields case, supra, on which reliance was placed by their Lordships in the case of Steel Authority of India, supra.
"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 subject 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 Government of India. The lands and buildings are vested in and owned by the companies, the Government of India only owns share capital".
35. In the case of Hindustan Steel Works Construction Limited, supra, the Supreme Court has thrown sufficient light on the legal effect of the deep and pervasive control of the Central Government over an incorporated company. Their Lordships held:
"There may be deep and pervasive control of the government over the appellant-company and the appellant-company, on such account may be an instrumentality or agency of the Central Government and as such a 'State' within the meaning of Article 12 of the Constitution. Even though the appellant-company is an agency or instrumentality of the Central Government, it cannot be held to be a department or establishment of the Government in all cases, such instrumentality or agency has been held to be a third arm of the Government in Ajay Hasia v K.M. Sehravardi, but it should not be lost sight of that it was only in the context of enforcement of fundamental rights against the action of Government and its instrumentalities or agencies it was held that such agencies were the third arm of the Government and they cannot avoid constitutional obligation. There is no question of enforcing any fundamental right in the instant case".
36. From the above stated pronouncements of Supreme Court the legal position thus becomes clear that whatever be the extent, depth and sweep of the control of the Central Government over a company registered under the Companies Act in connection with its affairs and functioning, yet it remains a separate juristic person in its existence distinct from the Central Government and that it cannot be stated and held as the one carrying on its business "under the authority of the Central Government", unless it is so specified by it by reason of the industry being controlled by the Central Government so as to bring it within the meaning of Section 2(a)(i).
37. We find little legal justification for Mr. Gururajan in his submission that the Supreme Court in its three (in line 3, two is got corrected as three as per Court order dated 18-7-1998) Judge Bench decision in Air India Statutory Corporation case, supra, has taken a contrary view with the one held in Heavy Engineering case. In that case of Air India Statutory Corporation, the interpretation of the definition of "appropriate Government" as given in Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, 1970 ('Contract Labour Act' for short), was dealt and considered by the Supreme Court for the purpose of judging the validity of the Central Government's notification issued under Section 10 of the Contract Labour Act prohibiting the contract labour for sweeping, cleaning and watching of buildings,owned or occupied by the establishments in respect of which the "appropriate Government" under the said Act was the Central Government. The contention raised before the Supreme Court questioning the validity of the said notification was that it was the State Government and not the Central Government which was the appropriate Government within the meaning of Section 2(1)(a) of the Contract Labour Act to issue notification under Section 10 thereof abolishing the contract labour. Prior to its amendment by Amending Act 14 of 1986 according to unamended Section 2(1)(a) thereof, the "appropriate Government" in relation to any establishment pertaining to any industry "carried on by or under the authority of the Central Government" or pertaining to any such "controlled industry as may be specified in this behalf by the Central Government" was the Central Government. By the Amendment Act 14 of 1986 the definition of the "appropriate Government" contained in Section 2(a) of the Act (Industrial Disputes Act, 1947) was adopted as the definition of the "appropriate Government" in Section 2(1)(a) of the Contract Labour Act also. Interpreting the term "appropriate Government" under its definition in Section 2(1)(a) of the Contract Labour Act, the Supreme Court observed that the object of that Act, which is a social welfare measure, to further the general interest of the community of the workmen as opposed to the particular interest of the individual entrepreneur and that the Act seeks to achieve a public purpose i.e., regulation of conditions of contract labour and to abolish it when it is found to be of perennial nature etc., must be kept informed inasmuch as these objectives are intended towards establishment of social and economic democracy in which every workman realises the socio-economic justice as envisaged in the preamble, Articles 14, 15 and 21 and the directive principles of Constitution of India. It was in this constitutional perspective the Supreme Court further said that in interpreting the term "appropriate Government" the judicial orientation should be from private law principle to public law interpretation harmoniously fusing the interest of the individual entrepreneur and the interest of the community. In that backdrop of the constitutional aims and the object of Contract Labour Act, the Supreme Court further observed that the interpretation of "appropriate Government" in Heavy Engineering case, made applying the principles of private law may not be a justifiable approach subserving the particular objectives of the Constitution and the Labour Contract Act. Though a question was raised at para 9 of its judgment: "whether the view taken in Heavy Engineering case is correct in law"? It is left open by making the following observation in para 28:
"From its perspective and on deeper consideration, we are of the considered view that the two-Judge Bench in Heavy Engineering case narrowly interpreted the words 'appropriate Government' on the common law principles which no longer bear any relevance when it is tested on the anvil of Article 14".
In the case of Air India Statutory Corporation, the Supreme Court has not said that the law declared by it in Heavy Engineering's case, supra, to the effect that irrespective of the deep and pervasive control of the Central Government over a Corporation registered under the Companies Act, i.e., industry, the company retains its separate existence as a juristic entity independent of the Central Government and, therefore, the Central Government cannot be the "appropriate Government" concerning such corporation for the purpose of making a reference of an industrial dispute to the Labour Court under Section 10 of the Act, is wrong and, therefore, it was overruled. Hence, the law laid down by Supreme Court in Heavy Engineering case holds the field for the said purpose as it operates in altogether a different field than the one which is obtainable in Air India Statutory Corporation case, supra.
38. So the unreported decision of the learned Single Judge of the Andhra Pradesh High Court in Writ Petition Nos. 6480 and 7535 of 1989, decided on 21st December, 1994 (the copy of which is produced for the appellant) cannot be treated as a good law as it runs against the weight of the law laid down by Supreme Court. The case of India Airport Employees' Union, supra, cited by Mr. Gururajan is also of little avail to the appellants because the question which arose before their Lordships was the same question which subsequently fell for consideration of Supreme Court in the case of Air India Statutory Corporation, supra. The decision of Supreme Court in C.V. Roman, supra, upon which reliance was sought to be placed by Mr. Gururajan also does not further the case of the appellant in that the question that arose therein for consideration of their Lordships was whether the State Bank of India and the Nationalised Banks can be said to be "establishments under the Central Government" as contemplated by clause (c) of Section 4(1) of Tamil Nadu Shops and Establishments Act, 1947. This question was examined by the Supreme Court in the context of various provisions and the statutes by which the said Banks were created i.e., State Bank of India Act, 1955 and the Banking Companies Acquisition and Transfer of Undertaking Act, 1970. Evidently the said question has little relevance to the question involved for decision in the instant case. Same question was dealt with and considered by the Bombay High Court in Bombay Telephone Canteen Employees' Association's case, supra, also and it is covered by the Supreme Court decision in Air India Statutory Corporation's case. Likewise, the decision of Punjab and Haryana High Court in Bhimsain Prabhakar v H.R. Chaturvedi relied on by Mr. Gururajan is also not of much relevance to the question under consideration in its statutory context in the case on hand.
39. Another decision of the Supreme Court on which reliance was had by Mr. Gururajan to support his contention was the case of Regional Provident Fund Commissioner, supra. The question for consideration which arose before their Lordships of Supreme Court was whether the Government of a State can be treated as the 'appropriate Government' under Section 2(a) of the Industrial Disputes Act in relation to any industrial dispute concerning the office of the Regional Provident Fund Organisation ('R.P.F.O.' for short) established by the Central Government for that State under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ("The P.F. Act' for short). Having regard to the various provisions of the Provident Fund Act and the nature of the business carried on by the Central Board, the State Board, the Regional Committee and the Regional Provident Fund Commissioner, Supreme Court concluded on the question thus:
"Institutions engaged in matters of such high public interest or performing such high public functions as observed by Mathew, J. in Sukhdev Singh's case, supra, by virtue of their very nature performed Governmental functions. They are truly the agents of the Government and they function under the authority of the Government as provided in the statute.
We have no doubt that the business of the Provident Funds Organisation is governmental in character and does not pertain to any industry to which the Provident Funds Act applies. The management and workmen of industries to which the Provident Funds Act applies contribute to the funds established under that Act. The business of the statutory bodies functioning under that Act is not the business of industries whose managements and workmen make contributions to the said funds. In addition to the above feature the provisions of Section 5-B(2) of the Provident Funds Act which reads: 'A State Board shall exercise such powers and perform such duties as the Central Government may assign to it from time to time' clearly envisage that the State Board is an agent of the Central Government. In the absence of the State Board the Regional Committee constituted under Paragraph 4 of the Scheme is required to function under the control of the Central Board. The Regional Provident Fund Commissioner who is appointed by the Central Government is also under the control of the Central Board and the Central Government".
40. This authority of the Supreme Court is also inapplicable to the present case for the reasons too obvious. R.P.F.O. is a statutory body which exercises such powers and performs such duties under the statute as the Central Government may assign to it from time to time. R.P.F.O. Commissioner is appointed by the Central Government and he works under the control of the Central Government. The functions performed by R.P.F.O. are governmental in character. It functions as an agent of the Central Government. These are the peculiar features of R.P.F.O. which distinguish it from the Corporation. In the absence of these features, by no canon of construction the Corporation which is a non-statutory entity whose functions and business activity i.e., industry are controlled by its articles and the provisions of the Companies Act be equated with that of a statutory institution like the R.P.F.O. so as to hold that the corporation carries on its business under the authority of the Central Government as its agent. The decision of Bombay High Court in Bombay Telephone Canteen Employees' Association's case, supra, is also distinguishable on similar lines inasmuch as the respondent-industry therein i.e., Mahanagar Telephone Nigam Limited, Bombay, was found exclusively carrying on public utility telephone service as an agent of the Central Government and thus it satisfied the exception carved out by Supreme Court in Heavy Engineering's case, supra.
41. In the present case the Corporation is not either created or run by the Central Government. Nor is it a statutory corporation. The authority to control its management and business affairs is not vested in the Central Government by any statute. Such authority is conferred, on it by the Articles of the Corporation and the exercise thereof is entirely subject thereto and to the relevant provisions of the Companies Act. The corporation carries on its said business i.e., industry, in its own right as a distinct legal person independently of the Central Government. The trade in which it is engaged is not its exclusive monopoly. Indisputably other traders are also carrying on the said business. In that view of the matter, we find that merely because the Central Government is shown to be having extensive power and control over the corporation in the matter of its functioning and business by virtue of its Articles, it cannot be stated that the corporation 'carries on its business under the authority of the Central Government' and, therefore, it is the 'appropriate Government' to make a reference of an Industrial dispute to the Labour Court under Section 10 of the Act. Hence, we are in respectful agreement with the view so taken by the learned Single Judge and we hold that the 'appropriate Government' within the meaning of Section 2(a)(i) of the Act for the purpose of making a reference of an industrial dispute concerning the Corporation to a Labour Court under Section 10 of the Act is the 'State Government' and not the 'Central Government'.
42. As a result, we hold that the references in question pending before the respondent-Labour Court are valid references in law and it has the jurisdiction to try and adjudicate upon them. Therefore, we do not find any good ground to interfere with the impugned judgment.
43. In the result, for the reasons stated above, we find no merit in these appeals. Therefore, they are dismissed.