1999 (4) TMI 485 - SC - Companies Law

Whether ex-municipal employees who were allotted to the Panchayat Service of the State Government had the status of Government servants? Held that - The functions discharged by the Steel Authority of India Ltd. or by the Bokaro Steel Plant cannot be considered as essential functions of the Government. Amongst the objects of the Steel Authority of India Ltd. set out in the memorandum of association are to carry on in India or elsewhere the trade or business of manufacturing, prospecting, raising, operating, buying, selling, importing, exporting, purchasing or otherwise dealing in iron and steel of all qualities, grades and types. These objects also include rendering consultancy services to promote and organise an integrated and efficient development of iron and steel industry and to act as an agent of the Government/public sector financial institutions in the manner set out in the objects clause. In this context a worker holding the post of a khalashi or a meter reader is not subject to the control of the Central Government nor is the power of his appointment or removal exercised by the Central Government. Control over his work is exercised not by the Government, but by the Steel Authority of India Ltd. The respondents cannot, therefore, be considered as holding an office of profit under the Central Government.

Issues Involved:
1. Improper rejection of nomination papers under Section 10 of the Representation of the People Act, 1951.
2. Applicability of Article 191(1)(a) of the Constitution regarding disqualification for holding an office of profit under the Government of India.

Issue-wise Detailed Analysis:

1. Improper Rejection of Nomination Papers under Section 10 of the Representation of the People Act, 1951:

The appeals were filed under Section 116A of the Representation of the People Act, 1951, challenging the rejection of nomination papers for the Bokaro Assembly Constituency. The Returning Officer had rejected the nominations of two respondents, Rajendra Mahto and Ashok Kumar Srivastava, on the grounds that they were managing agents of Bokaro Steel Plant, thus disqualified under Section 10 of the Act. The High Court set aside the appellant's election, ruling that the nominations were wrongly rejected.

Section 10 disqualifies a person if they are a managing agent, manager, or secretary of a company with at least 25% government shareholding. The respondents held non-executive posts (Khalashi and meter reader) and were not managing agents. The Companies Act abolished managing agencies effective April 3, 1970, and defined a managing agent as someone managing the whole or substantially the whole of a company's affairs. Neither respondent fit this definition, making the rejection of their nomination papers erroneous.

2. Applicability of Article 191(1)(a) of the Constitution:

The appellant argued that even if Section 10 was not applicable, Article 191(1)(a) of the Constitution disqualified the respondents for holding an office of profit under the Government of India. Article 191(1)(a) disqualifies a person if they hold any office of profit under the Government, except offices exempted by state law.

In *Guru Gobinda Basu v. Sankari Prasad Ghosal*, the court outlined factors to determine if one holds an office of profit under the Government, including appointing authority, power to terminate, remuneration determination, remuneration source, and control over duties. These factors need not all be present, and their importance varies case by case.

In *D.R. Gurushantappa v. Abdul Khuddus Anwar*, the court emphasized that indirect government control over a company does not constitute holding an office of profit under the Government. The disqualification under Article 191(1)(a) does not extend to offices in government-controlled companies, which is covered by Section 10 of the Representation of the People Act, 1951.

In *Biharilal Dobray v. Roshan Lal Dobray*, the court noted that the degree of government control determines if a body corporate is independent or an alter ego of the Government. However, in *Satrucharia Chandrasekhar Raju v. Vyricherla Pradeep Kumar Dev*, a teacher in a government-controlled society was not considered to hold an office of profit under the Government, emphasizing the need to examine the degree of control.

The Bokaro Steel Plant, managed by the Steel Authority of India Ltd., is a government-owned company but operates independently. The respondents' appointments, removals, and work control are managed by the company, not the Government. Thus, they do not hold an office of profit under the Government.

The High Court correctly held that the nomination papers were wrongly rejected, and the election of the appellant was set aside under Section 100 of the Representation of the People Act, 1951. The appeals were dismissed with costs.

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