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TMI Blog2013 (4) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... ted company in 1924, and then eventually, into a public limited company in 1936. There is nothing on record to show that the Central Government provides any financial or budgetary support to the appellant company. The appellant company is a profitable company and meets its own working capital requirements, as well as its fixed capital requirements for all requisite purposes through internal funds generated by the re-deployment of its own profits, and also by borrowing short term funds from financial institutions. The grant given by the government to the appellant company is in fact very limited. Under the Conduct, Discipline and Review Rules applicable to the officers of the appellant company, a letter dated 31.3.1989 written by Managing Director of the company, shows that government directives on the subject have been made applicable with certain modifications as required to the terms and conditions of employment that are applicable to various organizations of the company. The company is not only a Government of India enterprise, but is also under the Administrative control of the Ministry of Petroleum, Chemicals and Fertilizers, Government of India. It is also evident f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a party to sell a particular essential commodity to another.” Thus, we do not find any force in the said appeals. The same are dismissed accordingly. As the present appeal stands abated owing to his death, and the non- substitution of his legal heirs, his legal heirs may enure the benefits of this judgment, to the extent that respondent was entitled to receive 60% of the arrears of wages due to him, from the date of his termination to the date of his superannuation. The benefit shall be calculated on the basis of periodical revision of salary and other terminal benefits which shall be paid to the LRs of the deceased employee within three months. If it is not given within three months then interest at the rate of 9% will accrue. Additionally, they shall also be entitled to all statutory benefits like gratuity, provident fund and pension, if any. - Civil Appeal Nos. 419-426 of 2004,Civil Appeal No. 926 of 2013 - - - Dated:- 20-2-2013 - B. S. Chauhan And V. Gopala Gowda,JJ. JUDGMENT 1. These appeals have been preferred against the impugned judgments and orders of the High Court of Calcutta dated 30.1.2002 and 24.12.2002 in FMA No. 301/2001, CO. 2038/1993, WP. Nos. 778/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Officer. His services were terminated vide order dated 27.2.1981, in view of Clause 11(a) of the letter of appointment which provided that the company would have a right, which would be exercised at its sole discretion, to terminate the services of such employees by giving them three calendar months notice in writing, without assigning any reason for such decision. The respondent challenged the said termination order by filing writ petition (C.R. No. 1562 (W) of 1981) in the High Court of Calcutta, praying for the issuance of a writ of mandamus, directing that the said termination order be quashed. D. The appellant company contested the said writ petition contending that it was not an authority within the meaning of Article 12 of the Constitution, and therefore was not amenable to writ jurisdiction. The terms and conditions of contractual rights and obligations could therefore, not be enforced through writ jurisdiction. The matter was decided by the learned Single Judge vide judgment and order dated 19.12.2000, holding that the appellant was neither a State, nor any other authority within the meaning of Article 12 of the Constitution, and thus the writ petition itself was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant company is a government company, and is a subsidiary of a government company, which is controlled entirely by the government and that the government has absolute control over the company. The majority judgment of the Calcutta High Court, holding the appellant company to be a State within the meaning of Article 12 of the Constitution cannot be found fault with. Even otherwise, law does not permit an employer, particularly the State or its instrumentalities, to terminate the services of its employees by adopting a hire and fire approach, as it would be hit by the equal protection clause enshrined in Article 14 of the Constitution of India (hereinafter referred to as, the Constitution ). Additionally, the respondent died long ago, and no attempt was ever made by the appellant company to substitute him with his legal heirs. Thus, the appeal stands abated qua him. The facts and circumstances of the case do not warrant any interference by this court, and the appeals are therefore, liable to be dismissed. 5. We have considered the rival submissions made by learned counsel for the parties and perused the record. There is sufficient material on record, and the Memor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, and there is no further governmental control or interference with respect to the same, such company/corporation or society cannot be held to be a State, or a State instrumentality within the meaning of Article 12 of the Constitution. In this case, this court came to the conclusion that the very formation of an independent society under the Societies Registration Act, may be suggestive of the intention that such a society, could not be a mere appendage to the State. 9. A Seven-Judge Bench of this Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology amp; Ors. (2002) 5 SCC 111 held, that while examining such an issue, the court must bear in mind whether in the light of the cumulative facts as established, the body is financially, functionally and administratively, dominated by, or is under the control of the Government. Such control must be particular to the body in question, and must be pervasive. If it is found to be so, then the body comes within the purview of State within the meaning of Article 12 of the Constitution. On the other hand, when the control exercised is merely regulatory, whether under a statute or otherwise, the same would not be adequate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government. (6) Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government. The Court also considered the cases of Ajay Hasia etc. v. Khalid Mujib Sehravardi amp; Ors. etc. AIR 1981 SC 487; and Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers Assn. amp; Anr. AIR 2002 SC 609. 10. In M/s. Zee Telefilms Ltd. amp; Anr. v. Union of India amp; Ors., AIR 2005 SC 2677, this Court, after applying tests laid down in various cases, examined the facts of that case and came to the conclusion that the body was not a State within the meaning of Article 12 of the Constitution, or for that matter, any other authority for the purposes of Article 226 of the Constitution, while observing as under : 23. The facts established in this case show the following: 1. The Board is not created by a statute. 2. No part of the share capital of the Board is held by the Government. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, in a democracy there is a dividing line between a State enterprise and a non- State enterprise, which is distinct and the judiciary should not be an instrument to erase the said dividing line unless, of course, the circumstances of the day require it to do so. (Emphasis added) 11. Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body s powers and the manner in which they are exercised. What functions have been approved to be sovereign are, the defence of the country, the raising of armed forces, making peace or waging war, foreign affairs, the power to acquire and retain territory etc. and the same are not amenable to the jurisdiction of ordinary civil courts. (Vide: N. Nagendra Rao amp; Co. v. State of A.P., AIR 1994 SC 2663; and Chief Conservator of Forests amp; Anr. v. Jagannath Maruti Kondhare etc.etc., AIR 1996 SC 2898). In Bangalore Water Supply amp; Sewerage Board v. A. Rajappa amp; Ors., AIR 1978 SC 548, this Court dealt with the terms Regal and Sov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monopolistic status for certain purposes. The State being an abstract entity, can only act through an instrumentality or an agency of natural or juridical persons. The concept of an instrumentality or agency of the government is not limited to a corporation created by a statute, but is equally applicable to a company, or to a society. In a given case, the court must decide, whether such a company or society is an instrumentality or agency of the government, so as to determine whether the same falls within the meaning of expression authority , as mentioned in Article 12 of the Constitution, upon consideration of all relevant factors. In light of the aforementioned discussion, it is evident that it is rather difficult to provide an exhaustive definition of the term authorities , which would fall within the ambit of Article 12 of the Constitution. This is precisely why, only an inclusive definition is possible. It is in order to keep pace with the broad approach adopted with respect to the doctrine of equality enshrined in Articles 14 and 16 of the Constitution, that whenever possible courts have tried to curb the arbitrary exercise of power against individuals by centres of power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court observed that: Control is a mixed question of law and fact. The control of a company resides in the voting power of its shareholders and shares represent an interest of a shareholder which is made up of various rights contained in the contract embedded in the Articles of Association. The question is, what is the nature of the control that a parent company has over its subsidiary? It is not suggested that a parent company never has control over the subsidiary. For example, in a proper case of lifting of corporate veil , it would be proper to say that the parent company and the subsidiary form one entity. But barring such case, the legal position of any company incorporated abroad is that its powers, functions and responsibilities are governed by the law of its incorporation. Control, in our view, is an interest arising from holding a particular number of shares and the same cannot be separately acquired or transferred. Each share represents a vote in the management of the company and such a vote can be utilized to control the company. 16. The need to determine and reach a conclusion as regards such an issue is of paramount importance as this Court has stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercising deep and pervasive control. Such control must be particular to the body in question, and not general in nature. It must also be deep and pervasive. The control should not therefore, be merely regulatory. 18. In West Bengal State Electricity Board amp; Ors. v. Desh Bandhu Ghosh amp; Ors. (1985) 3 SCC 116, this Court considered a case where the respondent-employee was terminated by giving him only three months notice, and without holding any enquiry or informing him about any actions on his part that were unwarranted. The court, after placing reliance on the judgment in Workmen v. Hindustan Steel Ltd. AIR 1985 SC 251, held that where a regulation enables an employer to terminate the services of an employee, in an entirely arbitrary manner and in a manner that confers vicious discrimination, the same must be struck down as being violative of Article 14 of the Constitution. Therefore, even Standing Orders must be non-arbitrary, and must not confer uncanalised and drastic powers upon the employer, which enables him to dispense with an inquiry and further enables him to dismiss an employee, without assigning any reason for the same, by merely stating, that doing so would no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India (supra); K.C. Sharma v. Delhi Stock Exchange amp; Ors., AIR 2005 SC 2884; and Punjab National Bank by Chairman amp; Anr. v. Astamija Dash, AIR 2008 SC 3182). 20. A question may also arise as regards whether the court must examine only those facts and circumstances that existed on the date on which the cause of action arose, or whether subsequent developments, are also to be taken into consideration. The aforesaid issue was dealt with by this Court in Rajesh D. Darbar amp; Ors. v. Narasingrao Krishnaji Kulkarni amp; Ors. (2003) 7 SCC 219, and therein it was held as under: The impact of subsequent happenings may now be spelt out. First, its bearing on the right of action, second, on the nature of the relief and third, on its importance to create or destroy substantive rights. Where the nature of the relief, as originally sought, has become obsolete or unserviceable or a new form of relief will be more efficacious on account of developments subsequent to the suit or even during the appellate stage, it is but fair that the relief is moulded, varied or reshaped in the light of updated facts. Subsequent events in the course of the case cannot be constitutive of substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... called) of the Company to hold office for such period and upon such terms and condition as the President of India may from time to time decide. xx xx xx 17. The Company may, subject to the provisions of Section 284 of the Act, by ordinary resolution for which special notice has been given, remove any Director before the expiration of his period of office and may be ordinary resolution of which special notice has been given, appoint another person in his stead, if the Director so removed was appointed by the Company in General Meeting or by the Board under Article 10. The person so appointed shall hold office until the date upto which his predecessor would have held office if he had not been so removed. If the vacancy created by the removal of a Director under the provisions of this Article is not so filled by the meeting at which he is removed the Board may at any time thereafter fill such vacancy under the provisions of Article 10. xx xx xx 26AA. Notwithstanding anything to the contrary contained in these Articles, so long as the company remains a Government company within the meaning of Section 617 of the Act, the President of India shall be entitled to issue from to time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant-co. (353.55 crores) 1999 91.29 0.26 2001 237 0.67 2002 20 0.06 2003 176 0.50. 24. The appellant company carries on its business in diverse fields through various Strategic Business Units (hereinafter referred to as SBUs ), and its work is being carried on by (i) an SBU for Industrial Packaging; (ii) an SBU for Greases amp; Lubricants; (iii) an SBU for Logistics Services; (iv) an SBU for Projects amp; Engineering Consultancy; (v) an SBU for Travel amp; Tour; (vi) an SBU for Leather Chemicals; (vii) an SBU for Tea Blending amp; Packaging; and (viii) an SBU for Container amp; Freight Station. 25. Undoubtedly, the business carried on by the appellant company does not confer upon it any monopolistic character, as there are several private companies that are carrying on the same business and some of these businesses are even generally carried on by individual persons. Under the Conduct, Discipline and Review Rules applicable to the officers of the appellant company, a letter dated 31.3.1989 written by Managing Director of the company, shows that government directives on the subject have been made applicable with certain modifications as required to the terms and condi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company cannot take any independent decisions with respect to the revision of pay-scales that are applicable to its employees, and the same are always subject to the approval of the Administrative Ministry. The annual budget of the company is also passed only if the same is approved by the Administrative Ministry. 26. It is evident from the material on record that all the whole time Directors of the appellant company are appointed by the President of India, and such communications are also routed through the Administrative Ministry. The appellant company is under an obligation to submit its monthly, as well as its half-yearly performance reports to the Ministry of Petroleum, Government of India. The company has also promoted the use of Hindi language in the course of official work, in consonance with the circulars/guidelines that have been issued by the Government of India. The appellant company and IBP Company Limited, had a common Chairman. The remuneration structure of the employees of the appellant company, is also in conformity with those which are applicable to the Indian Oil Corporation and IBP, as has been fixed by the Bureau of Public Enterprises, Government of India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is showing no regard for conscience; irreconcilable with what is right or reasonable. An unconscionable bargain would therefore, be one which is irreconcilable with what is right or reasonable. Legislation has also interfered in many cases to prevent one party to a contract from taking undue or unfair advantage of the other. Instances of this type of legislation are usury laws, debt relief laws and laws regulating the hours of work and conditions of service of workmen and their unfair discharge from service, as also control orders directing a party to sell a particular essential commodity to another. Thus, we do not find any force in the said appeals. The same are dismissed accordingly. 29. As we have already mentioned, the present appeal stands abated qua respondent in C.A. No. 419/2004 owing to his death, and the non- substitution of his legal heirs. We would like to clarify that his legal heirs may enure the benefits of this judgment, to the extent that respondent was entitled to receive 60% of the arrears of wages due to him, from the date of his termination to the date of his superannuation. The benefit shall be calculated on the basis of periodical revision of salary a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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