1969 (3) TMI 87 - SC - Companies Law

Whether a corporation is an agent of he State Held that - The fact that a minister appoints the members or directors of a corporation and he is entitled to call for information, to give directions which are binding on the directors and to supervise over the conduct of the business of the corporation does not render the corporation an agent of the Government. Such an inference that the corporation is the agent of the Government may be drawn where it is performing in substance governmental and not commercial functions. 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 pn 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. The contention that the appropriate Government to make the aforesaid reference was the Central Government and not the State Government has no merit and cannot be sustained. The second contention that the questions referred to were regulated by the company s standing orders and an application for a modification of the said standing orders relating to those questions was actually pending before the certifying authority .under the Industrial Employment (Standing Orders) Act precluded a reference thereof under section 10 of the Act requires no discussion as it is covered by the decision in Management of Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v. Workmen 1967 (9) TMI 140 - SUPREME COURT and Management jf Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. v. S.S. Railway Workers Union 1968 (9) TMI 115 - SUPREME COURT . Appeal dismissed.

Issues:
1. Determination of the appropriate Government for making a reference under section 10 of the Industrial Disputes Act, 1947.
2. Validity of the reference made by the State Government of Bihar to the industrial tribunal regarding festiva holidays and off day on the second Saturday in a month.
3. Interpretation of the term "appropriate Government" in relation to an industry carried on under the authority of the Central Government.
4. Whether a company incorporated under the Companies Act and having extensive control by the Central Government is considered an industry carried on under the authority of the Central Government.

Analysis:
1. The judgment dealt with the issue of determining the appropriate Government for making a reference under section 10 of the Industrial Disputes Act, 1947. The appellant-union contended that the company, being incorporated under the Companies Act with extensive control by the Central Government, should be considered an industry carried on under the authority of the Central Government, making it the appropriate Government for the reference. However, the court analyzed the definition of "appropriate Government" and concluded that the company, despite Central Government's contributions and control, was not an industry directly carried on by the Central Government, thus upholding the State Government's authority to make the reference.

2. The validity of the reference made by the State Government of Bihar to the industrial tribunal regarding festiva holidays and the off day on the second Saturday in a month was challenged. The appellant-union argued that the questions referred were already pending before the certifying authority under the Industrial Employment (Standing Orders) Act, 1946, and therefore could not be considered industrial disputes for adjudication. The court, relying on precedents, dismissed this contention, stating that the issues covered by the reference were not precluded from adjudication under section 10 of the Act.

3. The interpretation of the term "appropriate Government" in relation to an industry carried on under the authority of the Central Government was a crucial aspect of the judgment. The court examined the company's incorporation under the Companies Act and its separate legal personality, emphasizing that the company's powers and functions were derived from its memorandum and articles of association, not as an agent of the Central Government. The court clarified that the mere contributions and control by the Central Government did not establish the company as an industry carried on under the authority of the Central Government.

4. The judgment delved into whether a company incorporated under the Companies Act and having extensive control by the Central Government could be considered an industry carried on under the authority of the Central Government. The court highlighted the distinct legal persona of a company, separate from its shareholders, and emphasized that powers and functions of an incorporated company are governed by its memorandum and articles of association. The court concluded that despite Central Government's contributions and control, the company did not operate as an agent of the Central Government, thereby dismissing the appellant-union's contentions.

In conclusion, the Supreme Court dismissed the appeal, upholding the validity of the reference made by the State Government and emphasizing that the company, despite Central Government's contributions and control, was not an industry carried on under the authority of the Central Government. The judgment provided a detailed analysis of the legal principles surrounding the determination of appropriate Government for industrial disputes and the distinct legal status of a company incorporated under the Companies Act.

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