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TMI Blog1969 (3) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... officer who was not competent to pass such order under clause 7 of the terms and conditions of appointment. He also contended that clause 7 applied only to persons who had been continued in service after the period of probation without an order of confirmation and that it did not apply to him as he had been duly confirmed in service from September 5, 1962. According to him some three letters had been issued to him in July and September, 1966, calling for his explanation as to certain acts of negligence, etc., and that he had given satisfactory explanation to all those letters. He also submitted that his services had been terminated without following the procedure indicated in the standing orders. By a subsequent affidavit the petitioner took additional grounds to support his application for the writs mentioned above. He has stated that the Indian Oil Company Limited was a Government undertaking, acting as an agent or instrument of Government, and that the application of clause 7 in his case, without applying it to grade III officers, was discriminatory and violative under article 14 of the Constitution. According to him the corporation is an "authority" within the meaning of articl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to article 4 of the articles of association is to be a "private company" with the characteristics as detailed therein. The share capital of the company is Rs. 85 crores divided into 8,50,000 equity shares of Rs. 1,000 each. It is undisputed that all the shares are owned by the Union Government and that the shares are held by four different officers of the Union Ministry on behalf of the President. Article 10 of the articles of association states that the shares shall be under the control of the board of directors subject to the provisions of the Companies Act and the articles and to the rights of the President. Article 116(23) of the articles of association empowers the directors, without prejudice to the general powers "to appoint and at their discretion remove or suspend such secretaries, officers, clerks, agents and servants as they may from time to time think fit, and to determine their powers and duties and fix their salaries or emoluments and require security in such instances and to such amounts as they may think fit". It is unnecessary to read the proviso which refers to appointments to posts carrying a salary in excess of Rs. 2,250. From the memorandum and articles of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporations and companies are not citizens within the meaning of article 32, their Lordships referred to the doctrine of lifting the veil in trying to ascertain the real nature of the corporation or the company. Mr. Iyengar, appearing for the petitioner, contended that this was a case where the doctrine of lifting the veil should be applied to the defendant-company in order to find out that in reality the defendant is the Union Government and not, as it purports to be a company registered under the Companies Act. The doctrine was discussed by their Lordships who stated also its limitations. They observed : "Thus, at present, the judicial approach in cracking open the corporate shell is somewhat cautious and circumspect. It is only where the legislative provision justified the adoption of such a course that the veil has been lifted. In exceptional cases where courts have felt 'themselves able to ignore the corporate entity and to treat the individual shareholder as liable for its acts', the same course has been adopted. Summarising his conclusions, Gower has classified seven categories of cases where the veil of a corporate body has been lifted. But it would not be possible to evol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "Further, all local or other authorities within the territory of India include all authorities within the territory of India whether under the control of the Government of India or the Governments of various States and even autonomous authorities which may not be under the control of the Government at all." They proceeded further and stated : "These decisions of the court support our view that the expression 'other authorities' in article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities ...The State, as constituted by our Constitution, is further specifically empowered under article 298 to carry on any trade or business. The circumstance that the board under the Electricity (Supply) Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the board must be excluded from the scope of the word 'State' as used in article 12." Their Lordships referred to the other provisions of the Electricity (Supply) Act which show that powers conferred on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nmental, and not commercial functions, an inference that it is an agent of the Government may readily be made." In the eye of law a corporation or a company is its own master and is fully answerable like any other person to the body contemplated under the Act and the articles of association. The servants of the respondent-company as already stated are appointed by the directors or any other officer duly authorised by them. They are not therefore civil servants who can claim benefit of the constitutional protection granted either under article 311 or the rules framed under the proviso to article 309 by the President. Since in our view the respondent-company is neither a State nor an agent or instrument of the State as contended by the learned advocate for the petitioner, the case of the petitioner must solely rest on the terms and conditions of his service as contained in exhibit A and the order that the respondent would pass while terminating the services of the petitioner would be an order wholly in the exercise of the powers conferred by the terms of the contract and not under any statute or law. The result of this position would be that a writ cannot be issued against the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to a statute under which it is set up or governed or a public duty or responsibility imposed on such person, authority or body by such a statute." In their Lordships' view, it was not open to the High Court to have given a declaration against a company registered under the Companies Act and not set up under any statute or having any public duties and responsibility to perform under such a statute. At this stage Mr. Iyengar submits that we should not express our views on the factual merits of the case regarding the terms of appointment as embodied in exhibit A, and the legality of the order of termination under exhibit G, since his client's case is likely to be affected in one way or the other, if he decides to pursue his normal remedies in a civil court. While we refrain from discussing the merits of the case in pursuance of this submission, we should like to observe that the petitioner's contention that clause 7 applicable to him was violative of article 14 of the Constitution does not merit serious consideration, in view of our finding that the respondent is neither a State nor a statutory authority. Article 14 of the Constitution prohibits the State from denying to any per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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