ORDER 1. At an extraordinary general meeting held on the 14th Feb., 1969, the Board of Directors of the British India Corporation Limited were authorised in pursuance of Section 293 (1) (a) of the Companies Act, 1956, to sell the assets of the two Undertakings, named, Cooper Allen Branch and the North West Tannery Branch, to the new Company which was to be promoted by and under the direction of the Government of India. The Government of India promoted the Company under the name and style of Tannery and Footwear Corporation of India, in which the entire share capital was owned by the President of India. In pursuance of Art. 97 (b) of the Articles of Association of the Tannery and Footwear Corporation of India, Kanpur, the President appointed on 5th April, 1980, Raja Harendra Singh as Director of the said Corporation for a period of five years with effect from the date on which he assumed charge of the post. By the same order, in pursuance of Art. 97 (a) of the Articles of Association, the President appointed Raja Harendra Singh as Chairman-cum-Managing Director of the said Corporation for the same period of five years. On 24th March, 1982, Raja Harendra Singh was removed by the President from the offices of the Director as wel.l as the Chairman-cum-Managing Director of the said Corporation under Art. 97 (c) of the Articles of Association. 2. Challenging the order of removal, the Petitioner's learned counsel Sri S.S. Bhatnagar raised two points before us. The first was that the petitioner held a "civil post" and, as such, was entitled to an opportunity being given under Art. 311 of the Constitution before termination of his employment. The second argument was that the rules, which are known as "Conduct, Discipline and Appeal Rules, 1979", a copy of which has been filed as Annexure `2' to the writ petition being the Rules under Art. 309 of the Constitution, applied to the petitioner. Under that rule, the removal of the petitioner amounted to penalty which could be imposed only after giving an opportunity to him, and as no such opportunity was given to the petitioner, his removal is invalid. 3. Having heard Sri S. S. Bhatnagar, learned counsel for the petitioner, we are not satisfied with either of the two points. Under that rule, the removal of the petitioner amounted to penalty which could be imposed only after giving an opportunity to him, and as no such opportunity was given to the petitioner, his removal is invalid. 3. Having heard Sri S. S. Bhatnagar, learned counsel for the petitioner, we are not satisfied with either of the two points. The first thing which is required to be considered is whether M/s. Tannery and Footwear Corporation of India Limited is a Company having distinct and separate identity and personality than that of the Union of India or it is a part of an instrumentality of the Union and being so was one of its Departments : 4. S. 617 of the Companies Act gives the definition of the expression "Government Company" which means any company in which not less than fifty one per cent of the paid-up share capital is held by the Central Government. In the instant case, the entire share capital is owned by the President. As such, it is a Government Company. It has a separate legal entity. The settled law with regard to a Corporation is that it is an association of individuals so constituted in law as to be invested with an independent collective personality. In the eye of the law, the Corporation is itself an entity or person with its own name, whose rights and obligations are distinct from those of its constituent members and it is endowed with a perpetual succession and a common seal whereby to identify its acts. 5. In Heavy Engineering Mazdoor Union v. State of Bihar, ( AIR 1970 SC 82 ) : (1970 Lab I C 212), the Heavy Engineering Corporation Limited was incorporated under the Companies Act and the share capital was contributed by the Central Government. The Supreme Court held that it was a Company under Section 617 of the Companies Act. Being an incorporated Company, it has a separate existence and the law recognises it as a juristic person, separate and distinct from its members. The Supreme Court held that it was a Company under Section 617 of the Companies Act. Being an incorporated Company, it has a separate existence and the law recognises it as a juristic person, separate and distinct from its members. The Supreme Court observed (para 4) : "This new personality emerges from the moment of its incorporation and from the date the persons subscribing to its Memorandum of Association and others joining it as members are regarded as a body incorporate or a corporation aggregate and die new person begins to function as an entity (Salomon v. Salomon & Co., 1897 AC 22)". 6. This decision of the Supreme Court has been consistently followed in several cases. We need not make a reference of those cases as in our view the settled position which has never been doubted in this regard is that a Company incorporated under the Companies Act has a separate legal entity and is a different person altogether from the shareholders to the Memorandum. The latest decision to which a reference may be made is reported in Western Coalfields Limited v. Special Area Development Authority, Corba (1982) 1 SCC 125 ; ( AIR 1982 SC 697 ). Dealing with the controversy about the status of the Government Company involved in that case, Chandrachud, C. J., after citing the decision of A.P.S.R.T.C. v. I.TCO. ( AIR 1964 SC 1486 ) observed in para 23 as follows : "In Pennington's Company Law, Fourth Edn., p. 5051 it is stated that there are only two decided cases where the Company has disregarded the separate legal entity of a company and that was done because the company was formed or used to facilitate evasion of legal obligations. The learned Author, after referring to English and American decisions, has summed up the position in the words of an American Judge, Sanborn J., to the effect that as a general rule, a Corporation will be looked upon as a legal entity and exception can be made when the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, in which case "the law will regard the corporation as an association of persons." In cases such as those before us, there is no scope for applying the doctrine of lifting the veil in order to have regard to the realities of situation. The appellant companies were incorporated under the Government Act for a lawful purpose. Their property is their own and vests in them." 7. Counsel for the petitioner attempted to make a distinction between a company in which the Central Government has only some shares and the one in which the entire share capital is owned by it. To us, it appears that the distinction made by the learned counsel is unreal and does not bring about any change in the status of the company being a separate individual. Once in a Company more than fifty-one per cent share is that of the Central Government, it becomes a Government Company. In a case where the entire share capital belongs to the government, the position does not change or vary. This aspect of the matter was also considered in the case of Heavy Engineering Mazdoor Union (1970 Lab I C 212) (supra), by the Supreme Court. It said (para 4) : "Therefore, the mere fact that the entire share capital of the respondent company was contributed by the Central Government and the fact that all its shares are held by the President and certain officers of the Central Government, does not make any difference, the Company and the shareholders being, as aforesaid, distinct entities. The fact that the President of India and certain officers hold all its shares does not make the company an agent either of the President or the Central Government." 8. Counsel for the petitioner, however, contended that the old notion of a Government company having a separate identity is losing fast its ground and the new jurisprudence, which has been evolved by the Supreme Court, does not maintain the distinction. A Company owned by the Central Government is its department and any person working in the company has to be treated as servant of the Union, to which Art. 311 of the Constitution applies. We do not find ourselves in agreement with the submission made by the learned counsel. In some cases recently decided, the Supreme Court has found that a corporation created by statute is covered by Art. 12 of the Constitution, being an authority as it is an instrumentality or agency of the government. This controversy is irrelevant for the purpose of deciding whether the petitioner held a civil post under the Union of India and, as such, Art. 311 was applicable to him. 9. This controversy is irrelevant for the purpose of deciding whether the petitioner held a civil post under the Union of India and, as such, Art. 311 was applicable to him. 9. In Som Prakash v. Union of India, ( AIR 1981 SC 212 ), this controversy has been gone into threadbare. In that case, the Supreme Court was referred to the decision in Dr. S.L. Agarwal v. General Manager, Hindustan Steel Limited, ( AIR 1970 SC 1150 ) : (1970 Lab I C 1029). In this case, the protection of Art. 311 (2) was claimed. The Supreme Court negatived the claim holding that Hindustan Steel Limited was a corporation and not a department of the government. It further found that the employees working in the Company were not the holders of civil post under the State which had its independent existence. In this view, the Supreme Court in Som Prakash v. Union of India (supra) held that the decision given in S. L. Agarwals case laid down the correct law. It observed (at p. 230) : "On the other hand, the short passage part of which we have extracted almost suggests that a Government corporation may stand on a different footing from Praga Tools Corporation ( AIR 1969 SC 1306 ) (supra). If so, it supports the view we have taken. The Hindustan Steel case (1970) 3 SCR 363 : AIR 1970 SC 1150 : (1970 Lab I C 1029), which was cited at the Bar, considered the question as to whether an employee of that company was holding a post under the Union or a State so as to claim the protection of Art. 311. This claim was negatived, if we may say so, rightly. In the present case, Art. 12 is in issue and not Art. 311 and, therefore, that citation is an act of supererogation." 10. The above decision of the Supreme Court does not leave the matter in issue before us in any doubt. The cases relied upon by the learned counsel that a corporation created by a statute is since an authority within the meaning of Art. 12, therefore, a Company should also be considered like that is not helpful to us in deciding the question as to whether Art. 311 of the Constitution applies to an employee of such a corporation. 11. The cases relied upon by the learned counsel that a corporation created by a statute is since an authority within the meaning of Art. 12, therefore, a Company should also be considered like that is not helpful to us in deciding the question as to whether Art. 311 of the Constitution applies to an employee of such a corporation. 11. From what we have said above, we find that Art. 311 applies to a person holding a civil post which means a post not connected with Defence. Person holding a post under a State is a person serving or employed under the State. There is a relationship of master and servant between the two. In the context of Arts. 309, 310 and 311, a post denotes an office. A post under the Union Government or the State Government means a post under the administrative control of the State. The State may create or abolish a post and may regulate conditions of service. In the instant case, such is not the position. The administrative control vests in the company and it is the company which has the power to frame Rules and Regulations regarding the employment of its employees. The Union of India does not have any control over this matter. 11- A. Counsel relied upon two decisions, one of which is reported in Union of India v. M, A. Chaudhary (1975) 1 Serv LR 300 : (1975 Lab I C 423) (All), and the other State of U.P. v. Audh Narain Singh, ( AIR 1965 SC 360 ). The later was a decision about the nature of employment of a Tahsildar made by the Government Treasurer. In this case, the Supreme Court held it to be a civil post, and the earlier was a decision in the case of an artist employed in All India Radio. Both of these cases, to us, appear to be distinguishable and are of no help to the petitioner in advancing his viewpoint. We have already referred to the direct decisions of the Supreme Court on this point. 12. Both of these cases, to us, appear to be distinguishable and are of no help to the petitioner in advancing his viewpoint. We have already referred to the direct decisions of the Supreme Court on this point. 12. In Sunil Kumar Dev Nath v. Mining and Allied Machinery Corporation Limited, ( AIR 1968 Cal 322 ) : (1968 Lab I C 922) and Ranjit Kumar Chatterji v. Union of India, ( AIR 1969 Cal 95 ) : (1969 Lab I C 142), the controversy involved was the same as before us in this writ petition. Both of these cases took the view that a company maintains a separate juristic entity even where it exercises statutory powers or is controlled by the government. To an employee of such a company or corporation, Art. 311 does not apply inasmuch as he does not hold a civil post under the Government of the Union within the meaning of Art. 311, so as to attract Cl. (2) thereof. We are in complete agreement with the view taken in these two cases. 13. The next argument relating to Art. 309 is based on Annexure (2) to the writ petition. This annexure applies to the case of an employee and provides for an opportunity being given where a penalty is imposed. But, where termination of service is done in pursuance of the power conferred by an agreement, the question of penalty does not arise and, as such, it has been provided in sub-cl. (c) of Cl. 23 (vi) that the service of an employee appointed under a contract or agreement in accordance with the terms of such contract or agreement can always be terminated. 14. In the instant case, we have already mentioned in the beginning that the appointment of the petitioner as Director and Chairman-cum-Managing Director was made by a composite order dated April, 5, 1980 under Art. 97 of the Articles of Association. Cl. (c) of the aforesaid Article reads : "The President shall have the power to remove any Director, including the Chairman, and the Deputy Chairman and the Chairman-cum-Managing Director and the Managing Director, if any, from office any time in his absolute discretion." 15. This Article confers absolute power on the President to dismiss the services of a Director or the Chairman. In the instant case, the impugned order has been passed under this Article. This Article confers absolute power on the President to dismiss the services of a Director or the Chairman. In the instant case, the impugned order has been passed under this Article. As the power conferred upon the President is absolute, there was no question of opportunity being given to the petitioner. The petitioner cannot make any grievance by challenging the termination order on the ground that since it was a penalty, he was entitled to an opportunity. A situation like the present does not contemplate of any opportunity. We must have in our mind at this place that the Articles of a Company are the internal regulations of the Company. They cannot be enforced by means of a writ under Art. 226 of the Constitution. 16. Counsels argument was that the rules relied upon by him were framed under Art. 309 of the Constitution, hence they are conclusive on the controversy in issue. Art. 309 provides for the enactment of rules and regulations relating to the recruitment and conditions of service of Government servants, Central and State. We have already held above that the petitioner was not a servant of the Central Government. That apart, there is nothing in the rules relied upon to show that they had been made by the Central Government under Art. 309 of the Constitution. The source or authority under which they were framed is not known. Since we have already held above that the petitioner is not a servant of the State, the rules relied upon by him cannot apply. On its own face, these rules were made for application to its employees. A Director is not an employee of the Company. It may be really difficult to define the position of Directors. To some extent they are trustees for the company and to a certain extent they are also its agents. They are not persons in the employment of the Company. The position of a Government Company is not different in this regard. Appointment of a Director takes place in accordance with the Articles of the Company. It is for that reason that the petitioner had been appointed under Art. 97. He does not have the status of an employee. 17. Counsel next argued that as the Company is an Authority within the meaning of that expression used in Art. 12 of the Constitution, Art. 14 applies to the case of the petitioner. It is for that reason that the petitioner had been appointed under Art. 97. He does not have the status of an employee. 17. Counsel next argued that as the Company is an Authority within the meaning of that expression used in Art. 12 of the Constitution, Art. 14 applies to the case of the petitioner. Whether it is an authority or not, we need not go into. Even if Art. 12 applies to the petitioner, we have found above that the order removing the petitioner from Directorship-Chairmanship was in compliance with and not in contravention of any provision of law. 18. Counsel wanted to challenge the validity of Art. 97 (c) of the Articles of Association on the ground that it had conterred absolute discretion which is capable of being arbitrarily used. We are not impressed by this argument. In a matter like the present, the argument of arbitrariness is out of question. The petitioner had been appointed under Art. 97 of the Articles of Association which conferred power on the President to terminate the directorship whenever it is so desired. Directorship is a post of trust. Hence, all those conditions which are applied to matters other than those of appointment of a trustee are foreign to the controversy. Since the petitioner lost the confidence, the President has the power to remove him. A mention of the fact that the power has been exercised by the President may also be relevant in regard to judge the argument about the nature of power being arbitrary and unguided. Under the Constitution, the President is the highest authority. The power conferred upon him cannot be challenged on the ground of arbitrariness. On merits, the petitioner could not show us anything which could convince or satisfy us that the order was arbitrary and was liable to be interfered with in the present proceedings under Art. 226 of the Constitution. 19. The power to appoint a Director is a corporate one, and is exercisable in the manner laid down in the Articles. The law imposes no restrictions on what Articles may provide in this respect. As stated above, a Director is in the position of a trustee. He stands in a fiduciary position towards the company in regard to power conferred by the Articles. He is also an agent for the company. He makes contracts on behalf of the company. The law imposes no restrictions on what Articles may provide in this respect. As stated above, a Director is in the position of a trustee. He stands in a fiduciary position towards the company in regard to power conferred by the Articles. He is also an agent for the company. He makes contracts on behalf of the company. In case of a company, a Director can be removed by the shareholders. Since the present is a case of Government Company and the shares are in the name of the President, he can remove him. 20. We had dismissed the writ petition summarily on 31-3-82 and had reserved the reasons. The reasons are being given today.