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TMI Blog1968 (6) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... adily granted. ( c )The petitioner might also terminate the contract with the Hindus than Steel Ltd. by sending a notice with a leave application before the 19th July, in which case he would be granted all the leave that was due to him and thereafter his services would stand teminated on the expiry of that leave or on the expiry of three months from July 19, 1967, whichever was later." The petitioner was asked to intimate his option as to the three alternatives aforesaid and was also told that the relieving officer would take over charge from the petitioner on July 19, 1967, and at that time deliver to the petitioner the formal order of the President. The petitioner came to court the next day and obtained this rule, challenging the validity of the impugned letter. The petitioner's case is that the Hindusthan Steel Ltd. is a government company and that he holds a civil post under the Union of India, so that his services cannot be terminated without complying with the requirements of article 311(2) of the Constitution and that if paragraph 97( a ) of its articles of association says anything to the contrary, the said article should be held to be ultra vires article 211(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... successive days, and on the refusal of the respondents to allow him to join he came to court on September 13, 1967, and obtained this rule. The question common to both the petitions is whether the posts held by the petitioners under the Hindusthan Steel Ltd. can be held to be "civil posts under the Union" within the meaning of article 311, so as to attract clause (2) thereof. Though the cases were ably argued on behalf of the petitioners, the question appears to have already been decided by the Supreme Court in the negative, in various decisions. From the articles of association produced before me, it appears that the Hindusthan Steel Ltd. is a company formed under the Companies Act, 1956, of which all the shares are owned by the President of India and his two secretaries and no private individual can acquire its shares. Extensive powers regarding management and control are given to the President of India ( e.g. , articles 11, 44, 47, 50, 96) and powers of appointment and removal of superior officers of the company, such as the general manager, are conferred on the President (article 97). Since the special features of this company are fully dealt with by P. B. Mukharji J. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it comes under the expression " other authority " in the definition given in article 12 and that is because it exercises statutory powers conferred by the State, affecting private individuals just as any other State action might do. But the question under article 311 is not whether a corporation exercises statutory powers, but whether its employees can be held to be holding their posts or offices under the Union or a State Government. That question has not been answered nor could it be answered in favour of the petitioners in view of the other decisions of the Supreme Court where it has been held that a statutory corporation maintains its separate juristic entity even where it exercises statutory powers or is controlled by the Government: of Mafatlal v. Divisional Controller AIR 1966 SC 1364 . Above all, it cannot be forgotten that the instant cases before me relate to a non-statutory corporation or a company which exercises no statutory powers: vide Kartick v. West Bengal Small Industries Corporation Ltd. AIR 1967 Cal. 231. Hence, the cited decision of the Supreme Court relating to article 12 is of no avail to the petitioners in the instant cases. Even where a company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Bombay State Road Transport Order, 1956, and section 109 of the States Reorganisation Act, followed by an order of the Mysore Government, the employees of the Statutory Road Corporation of Bombay had become the employees of the Mysore Government to which all the rights and liabilities of the statutory corporation had been transferred by the States Reorganisation Act. There is no such situation here. ( ii ) The observations at para. 29 in Narayanaswamy v. Krishnamurthi AIR 1958 Mad. 343are also of no application to the instant cases, because the observations were made in relation to a corporation "created under a statute" and not a company formed under the Companies Act. ( iii ) Mr. Dutt, for the petitioner, relied strongly upon the provision in article 298, as amended by the Constitution (Seventh Amendment) Act, 1956, to argue that when Government takes up a business, it does so in the exercise of its "executive power" and, therefore, whatever be the agency through which Government may carry on a business, that is identified with the Government. This argument, however, overlooks the object and scope of the amendment of the article. Prior to this amendment, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1966 S.C. 1364 because, in such a case, the employee is a servant of a legal entity other than the Government. On behalf of the petitioner, in C. R. 1330 much reliance is placed upon the fact that under article 97( a ) of the articles of association of the company, the power to appoint and remove a general manager is vested in the President of India and that the petitioner's appointment letter has, in fact, been issued by a Deputy Secretary to the Government of India. Upon the latter fact, it has been argued that if the President's act, in this context, be contended to be an act of the President in his personal capacity, the letter should have been issued by the President's Secretary and not a Secretary to the Government of India, and that since the latter course has been adopted, the appointment must be held in law to be an appointment by the Government. [Technically speaking, article 77(2) of the Constitution applies when the President's action is an "executive action of the Government of India", and where the President exercises some function, not by virtue of any provision of the Constitution, but in his personal capacity, under a private treaty, e.g. , the articles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of members of the legislature from any sort of Government control or influence. When, therefore, Government has a say in the matter of appointment or removal of a person, such person should not be allowed to sit in the Legislature, even though, by such appointment, a relation of master and servant is not constituted between the Government and such person. In cases under articles 309-311, on the other hand, the test is the relationship of master and servant between the Government and such person and it can hardly be overlooked that the provisions of the Constitution in Part XIV are, in fact, modifications of the common law relating to master and servant which have been engrafted because of the fact that where the master is the Government, such modifications were considered necessary by the makers of the Constitution. I would like to reproduce the following words of the unanimous court in Guru Gobinda's case ( supra ): "We agree with the High Court that for holding an office of profit under the Government, one need not be in the service of Government and there need be no relationship of master and servant between them. The Constitution itself makes a distinction between ' the ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he manner and extent in which this question has been raised in these two countries. In England, the question has presented itself in connection with statutory corporations and not in respect of non-statutory companies. In India, cases have come up in relation to both and it is, therefore, necessary to remember the essential juristic differences between these two kinds of corporate bodies. While in England the question has arisen from the point of view of Crown privileges, as to whether these could be claimed by statutory corporations, in India, it is in the context of the liabilities of such bodies that the question has mostly come up before the courts, namely, whether their action should be regarded as "State action" for the purpose of enforcement of fundamental rights against them under article 12 or whether their servants may be regarded as civil servants for the application of the procedural safeguards under article 311. In England, it is now established that to decide whether a particular statutory corporation would be entitled to claim Crown privilege in litigation or whether it would be bound by a statute it is to be determined whether the corporation in question may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or the British Broadcasting Corporation, even though it may be presided over by a Minister of the Crown. In fact, Tamlin's case ( supra ) was decided on the analogy of a limited liability joint stock company. Since the Hindusthan Steel Ltd. is a non-statutory joint stock company, the principle applied in England, to statutory bodies exercising governmental functions, cannot be invoked in the cases before me. Under the law as it exists to-day, thus, whether in England or in India, it is impossible "to pierce the veil " in the case of a non-statutory company such as the Hindusthan Steel Ltd. The obiter of P.B. Mukharji J. in Verghese v. Union of India AIR 1963 Cal. 421 at page 427 was made in the hope of building up a "new jurisprudence ". I, too, join with him so far as the object is concerned. It is, however, not possible for the courts to overturn the juristic personality of corporations, whether statutory or non-statutory, without some progressive legislation which is yet to come. As has been pointed out by the Supreme Court in the Tata Engineering Co. case [1964] 34 Comp. Cas. 458 ; A.I.R. 1965 S.C. 40, the Legislature has already been obliged to make certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. The admitted case of the petitioner is that his service is founded on a written contract which is still subsisting. It is settled since the case of Satish Chandra v. Union of India AIR 1953 SC 250 that neither article 311(2) nor article 226 is applicable to enforce a contract of service. Whatever be the grievance of the employee, he must seek his relief under the general law and not under article 226: vide Boolchand v. Kurukshetra University AIR 1968 SC 292, 298, in the absence of any statutory right or liability, even where the contract is with the Government: Burmah Construction Co. v. State of Orissa AIR 1962 SC 1320. Both the rules are, accordingly, discharged, but without prejudice to the right, if any, of the petitioners to pursue other remedies before any other appropriate forum. I make no order as to costs. As prayed for on behalf of the petitioners, the operation of this order shall remain stayed for a period of six weeks from this date. (July 1, 1968) Mr. Dutt, on behalf of the petitioner, has made a verbal application for a certificate for leave to appeal to the Supreme Court under article 132 of the Constitution on the ground that the case invo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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