9911796707
TMI Blog1998 (3) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... sers 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 Kamataka as cotton purchaser and junior 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. The 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 chal- lenged 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice versa, issue of the 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 diectors. 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 corpo-ration, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwal v. General Manager, Hindustan Steel Ltd AIR 1970 SC 1150; Sabhajit Tewary v. UOI AIR 1975 SC 1329 ; Hindustan Steel Works Construction Ltd v. State of Kerala AIR 1997 SC 2275; and Steel Authority of India Ltd v. Shri Ambica Mills Ltd AIR 1997 SCW 4408. 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 the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aimants had made their aforesaid claim petitions before the respon- dent-labour court well before the expiry of the prescribed period of six months from the date of coming into effect of section 10(4A). 17. The term 'employer' 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 ) . 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 wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 ) C.V. Raman v. Management of Bank of India, AIR 1988 SC 1369, ( 3 ) Air India Statutory Corpn. s case ( supra ) , ( 4 ) Padam Bahadur Khanka v. National Institute for Training 1987 (II) CLR 457 (Bora.), ( 5 ) Bombay Telephone Canteen Employees' Association v. MTNL 1989 (58) FLR 161 (Bom.), ( 6 ) India Airport Employees' Union v. International Airports Authority of India [1995] Lab. IC 1890 (Bom.) and ( 7) An unreported judgment of a learned Single Judge of Andhra Pradesh High Court in WP 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 the Bombay High Court is that the National Institute for Training, established and run by the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified 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 Co. Ltd. v. Dominion Bank AIR 1937 PC 279. So, it legally follows that lifting of the corporate 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere 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, 1947 was the Central Government and not the State Government...." (p. 84) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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.... (p. 85) '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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1901] 2 KB 781, 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 principles." (p. 86) 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...." (p. 86) 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 ) 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 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioning 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 Toob Corpn. v. C.B. Imannual AIR 1969 SC 1306., Heavy Engg. Mazdoor Union v. State of Bihar AIR 1970 SC 82 and in S.L. Agarwal v . General Manager, Hindustan Steel Ltd AIR 1970 SC 1150 that the Praga Tools Corpn., Heavy Engineering Corpn. Ltd. and Hindustan Steel Ltd. 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...." (p. 1331) In its another Constitution Bench decision in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi AIR 1975 SC 1331, dealing wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking from the Government which is the previous employer...." (p. 744) 34. In its recent decision in the case of Steel Authority of India ( supra ) the Supreme Court found the appellant - Steel Authority of India Ltd. (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 S.L. Agarwal case ( supra ) and Western Coal Fields case AIR 1992 SC 697 ( sic ) , the 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 following is 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the meaning of section 37. We find little legal justification for Mr. Gururajan in his submission that the Supreme Court in its Three-Judge Bench decision in Air India Statutory Corpn.'s case ( supra ) . In that case of Air India Statutory Corpn. ( supra ) has taken a contrary view with the one held in Heavy Engg. Mazdoor Union's case ( supra ) . In that case of AIR India Statutory Corpn. ( supra ) the interpretation of the definition of 'appropriate Government' as given in section 2(1)( a ) of the Contract Labour (Regulation and Abolition) Act, 1970 ('the Contract Labour Act') 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 Govern-ment. 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 Governmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Union's case ( supra ) is correct in law" ? It is left open by making the following observation: 'From its perspective and on deeper consideration, we are of the considered view that the Two-Judge Bench in "Heavy Engineering Mazdoor Union's 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 Corpn.'s ( supra ) , the Supreme Court has not said that the law declared by it in Heavy Engg. Mazdoor Union'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 Engg. Mazdoor Union's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dships of the 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 ('the RPFO') established by the Central Government for that State under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('the PF Act'). Having regard to the various provisions of the PF 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, the 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 v. Bhagatrarn AIR 1975SC 1331, 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 Fund Organisation is governmental in character and does not pertain to any industry to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in Heavy Engg. Mazdoor Union'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 corpo-ration 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 corpora- tion 'carries on its business under the authority of the Central Govern- ment' and, therefore, it is the 'appropriate Government' to make a reference of an industr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
