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2002 DIGILAW 56 (CAL)

Jogesh Ch. Mondal v. Union of India

2002-01-30

ASHOK KUMAR MATHUR, SUBHRO KAMAL MUKHERJEE

body2002
JUDGMENT Subhro Kamal Mukherjee, J. 1. I have had the advantage of going through the draft judgment prepared by My Lord the Chief Justice. My Lord the Chief Justice opines that M/s. Balmer Lawrie and Company Limited is not an authority within the meaning of 'other authorities' in Article 12 of the Constitution of India. With utmost respect to My Lord, I regret that I cannot concur with such conclusion. 2. My Lord the Chief Justice has dealt with the matter in detail in the judgment proposed by His Lordship and since facts have been fully stated, I do not propose to repeat them in my judgment to avoid prolixity. I will only deal with those aspects, which are necessary for the purpose of expressing my opinion. 3. Presently, in the appeals and connected writ application we are concerned with the question whether M/s. Balmer Lawrie and Company Limited is an authority within the meaning of 'other authorities' and as such 'State' within the meaning of Article 12 of the Constitution of India and, therefore, amenable to the constitutional writ jurisdiction of the High Court? 4. Interpretations as to the scope of Article 12 of the Constitution of India were subject matters in various decisions of the Supreme Court of India. A large number of decisions have been cited at the Bar in course of hearing of these cases. However, I will only refer to few of the said decisions, which are, in my opinion, essential for expressing my views. 5. The Supreme Court of India in Som Prakash Rekhi vs. Union of India & Anr., reported in AIR 1981 SC 212 , formulated few tests relying upon the observations in Ramana Dayaram Shetty vs. International Airport Authority of India & Ors., reported in AIR 1979 SC 1628 . Such formulation is as under: 'We may decoct the tests for ready reference: 1. "One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government." 2. "Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality." 3. "It may also be a relevant factor......whether the corporation enjoys monopoly status which is State conferred or State protected." 4. "Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality." 3. "It may also be a relevant factor......whether the corporation enjoys monopoly status which is State conferred or State protected." 4. "If the functions of the corporation are 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." 5. "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.' "40. The finale is reached when the cumulative effect of all the relevant factors above set out is assessed and once the body is found to be an instrument or agency of Government, the further conclusion emerges that it is 'State' and is subject to the same constitutional limitations as Government." 6. The Supreme Court of India in the case of Central Inland Water Transport Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr., reported in (1986) 3 SCC 156 , made the following observations on the subject: "Article 298, as so substituted, therefore, expands the executive power of the Union of India and of each of the States which collectively constitute the Union to carryon any trade or business. By extending the executive power of the Union and of each of the States to the carrying on of any trade or business, Article 298 does not, however, convert either the Union of India or any of the States which collectively form the Union into a merchant buying and selling goods or carrying on either trading or business activity, for the executive power of the Union and of the States, whether in the field of trade or business or in any other field, is always subject to constitutional limitations and particularly the provisions relating to Fundamental Rights in Part III of the Constitution and is exercisable in accordance with and for the furtherance of the Directive Principles of State Policy prescribed by Part IV of the Constitution." "40. The State is an abstract entity and it can, therefore, only act through its agencies of instrumentalities, whether such agency or instrumentality be human or juristic. The trading and business activities of the State constitute 'public enterprise'. The State is an abstract entity and it can, therefore, only act through its agencies of instrumentalities, whether such agency or instrumentality be human or juristic. The trading and business activities of the State constitute 'public enterprise'. The structural forms in which the Government operates in the field of public enterprise are many and varied. These may consist of Government departments, statutory bodies, statutory corporations, Government companies, etc." 7. In the case of Air India Statutory Corporation vs. United Labour Union & Ors., reported in AIR 1997 SC 645 , it was observed as under: "26. From the above discussion, the following principles would emerge: (1) The constitution of the Corporation or instrumentality or agency or Corporation aggregate or Corporation sole is not of sole material relevance to decide whether it is by or under the control of the appropriate Government under the Act. (2) If it is a statutory Corporation, it is an instrumentality or agency of the State. If it is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indicia that it is controlled by or under the authority of the appropriate Government. (3) In commercial activities carried on by a Corporation established by or under the control of the appropriate Government having protection under Articles 14 and 19(2), it is an instrumentality or agency of the State. (4) The State is a service Corporation. It acts through its instrumentalities, agencies or person-natural or juridical. (5) The governing power, wherever located, must be subject to the fundamental constitutional limitations and abide by the principles laid in the Directive Principles. (6) The framework of service regulations made in the appropriate rules or regulations should be consistent with and subject to the same public law principles and limitations. (7) Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately accountable under their appropriate bye-laws or Memorandum of Association, they become the arm of the Government. (8) The existence of deep and pervasive State control depends upon the facts and circumstances in a given situation and in the altered situation it is not the sole criterion to decide whether the agency or instrumentality or persons is by or under the control of the appropriate Government. (9) Functions of an instrumentality, agency or person are of public importance following pubic interest element. (9) Functions of an instrumentality, agency or person are of public importance following pubic interest element. (10) The instrumentality, agency or person must have an element of authority or ability to effect the relations with its employees or public by virtue of power vested in it by law, Memorandum of Association or bye-laws or Articles of Association. (11) The instrumentality, agency or person renders an element of public service and is accountable to health and strength of the workers men or women, adequate means of livelihood, the security for payment of living wages, reasonable conditions of work, decent standard of life and opportunity to enjoy full leisure and social and cultural activities to the workmen. (12) Every action of the public authority, agency or instrumentality or the person acting in pubic interest or any act that gives rise to public element should be guided by public interest in exercise of public power or action hedged with public element and is open to challenge. It must meet the test of reasonableness, fairness and justness. (13) If the exercise of the power is arbitrary, unjust and unfair, the public authority, instrumentality, agency or the person acting in public interest, though in the field of private law, is not free to prescribe any unconstitutional conditions or limitations in their actions." 8. It is, however, argued that the decision in Air India Statutory Corporation (supra) has been overruled by a larger Bench in the case of Steel Authority of India Limited & Ors. vs. National Union Waterfront Workers & Ors., reported in (2001) 7 SCC 1 and as such no reliance could be placed on Air India Statutory Authority Corporation's case. 9. In my view, such contentions are not acceptable simply for the reason that in the case of Steel Authority of India Limited & Ors. (supra), the Apex Court overruled the judgment in Air India Statutory Corporation (supra) to the extent that the appropriate Government under the Contract Labour (Abolition and Regulation) Act, 1971 need not necessarily be Central Government and abolition of contract labour by publication of notification under section 10(1) of the Contract Labour (Abolition and Regulation) Act, 1971 would entitle the contract labourers to automatic absorption. The Supreme Court of India in the subsequent judgment did not overturn the findings in the earlier decision in so far as the concept of 'other authority' is concerned. 10. The Supreme Court of India in the subsequent judgment did not overturn the findings in the earlier decision in so far as the concept of 'other authority' is concerned. 10. The Supreme Court in Steel Authority of India's case (supra) observed as under: "39. There cannot be any dispute that all the Central Government companies with which we are dealing here are not and cannot be equated to the Central Government though they may be 'State' within the meaning of Article 12 of the Constitution. We have held above that being the instrumentality or agency of the Central Government would not be itself amount to having the authority of the Central Government to carryon that particular industry. Therefore, it will be incorrect to say that in relation to any establishment of a Central Government company/undertaking, the appropriate Government will be the Central Government. To hold that the Central Government is 'the appropriate Government' in relation to an establishment, the court must be satisfied that the particular industry in question is carried on by or under the authority of the Central Government. If this aspect is kept in mind it would be clear that the Central Government will be the 'appropriate Government' under the CLRA Act and the ID Act provided the industry in question is carried on by a Central Government company/an undertaking under the authority of the Central Government. Such an authority may be conferred, either by a statute or by virtue of the relationship of principal and agent or delegation of power. Where the authority, to carry on any industry for on behalf of the Central Government, is conferred on the Government company/any undertaking by the statute under which it is created, no further question arises. But, if it is not so, the question that arises is whether there is any conferment of authority on the Government company/any undertaking by the Central Government to carryon the industry in question. This is a question of fact and has to be ascertained on the facts and in the circumstances of each case." 11. The Supreme Court observed that whether a particular organization is State within the meaning of Article 12 of the Constitution of India is a question of fact and has to be ascertained on the facts and in the circumstances of each case. The Supreme Court observed that whether a particular organization is State within the meaning of Article 12 of the Constitution of India is a question of fact and has to be ascertained on the facts and in the circumstances of each case. "It is not possible to formulate an all-inclusive or exhaustive tests which would adequately answer this question. There is no cut and dried formula which would provide the correct division of corporations into those which are instrumentalities or agencies of Government and those which are not." 12. Let me, now, consider the special features of M/s. Balmer Lawrie and Company Limited to find out whether it is an other authority within the meaning of Article 12 of the Constitution of India and as such State and, therefore, amenable to the constitutional writ jurisdiction of this court. The features are as under: (a) The company is a Government company within the meaning of the Companies Act, 1956. Balmer Lawrie and Company Limited became a subsidiary of Indo-Burma Petroleum Company Limited (in short IBP) and, therefore, Government of India enterprise with effect from July 29, 1972. 61 % per cent shares of the company is held by IBP. IBP, a Government of India Undertaking, and the Government sponsored financial institutions held 85.95% per cent shares of Balmer Lawrie and Company Limited. The share holding pattern of the Government company and the Government sponsored financial institutions are as under: (i) Life Insurance Corporation 7.31% per cent. (ii) Unit Trust of India 3.67% per cent. (iii) General Insurance Corporation of India 11.94% per cent. (iv) Nationalised Banks .12% per cent. (v) IBP Company Limited 61.80% per cent. (vi) Government of U.P. .03% per cent. (vii) State Financial Corporation and Mutual Funds 1.08% per cent. 13. Government of India holds 81% per cent of the shares of IBP. IBP has been held to be State within the meaning of Article 12 of the Constitution of India by Bombay High Court in WP No. 4039 of 1987, decided on August 14, 1996. The Appeal Court upheld the decision of the learned Single Judge in Appeal No. 1277 of 1996, decided on January 16, 1997. 14. IBP preferred an application under Article 136 of the Constitution of India for Special Leave being SLP (Civil) No. 4189 of 1997. The Supreme Court of India dismissed the Special Leave Petition. The Appeal Court upheld the decision of the learned Single Judge in Appeal No. 1277 of 1996, decided on January 16, 1997. 14. IBP preferred an application under Article 136 of the Constitution of India for Special Leave being SLP (Civil) No. 4189 of 1997. The Supreme Court of India dismissed the Special Leave Petition. (b) In the advertisement published pursuant to the provisions of the Companies (Acceptance of Deposit) Rules, 1975 Balmer Lawrie and Company Limited categorically declared that it is a Government of India enterprise and is under the administrative control of the Ministry of Petroleum, Chemicals and Fertilisers, Government of India. Presently, however, the company is under the administrative control of the Ministry of Petroleum and Natural Gas. (c) The Articles of Association of the company were altered by adopting a Special Resolution passed on April 9, 1991 and in consequence thereof Article 7A was inserted. The said Article runs as under: "7A. Notwithstanding anything contained in these Articles and so long as the Company remains a Government Company, the President of India shall, subject to the provisions of Article 6 thereof and section 255 of the Act, be entitled to appoint one or more Directors [including whole time Directors(s) by whatever name 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. In the event of any conflict between this Article and Article 47 hereof, this Article shall prevail over the said Article 47." (d) Further, the said Articles of association of the company was altered by inserting Article 26AA after existing Article 26A. From the explanatory statement issued pursuant to section 173(2) of the Companies Act, 1956 it is stated that such alteration was proposed as the company received a communication dated December 16, 1993 from the Administrative Ministry asking that the company should amend its articles of association to make it obligatory on the part of the company to follow the directives of the President of India. The said Article 26AA runs as under: "26AA. The said Article 26AA runs as under: "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 time to time such directives or instructions as may be considered necessary in regard to the conduct of business and affairs of the Company. Provided that all instructions from the President of India shall be in writing addressed to the Chairman or Managing Director of the Company." (e) The company is obliged to submit monthly/halfyearly performance reports to the Administrative Ministry. The company's accounts are subject to audit by the Comptroller and Auditor General of India and being a member of the IBP-Balmer Lawrie group its accounts are placed before the Parliament. (f) The Group Personnel Department of IBP and Balmer Lawrie and Company Limited issued a message concerning promotion of Hindi as official language and there it has been admitted that the said organisation is, also, an undertaking of the Government of India; which falls under the jurisdiction of Ministry of Petroleum and Natural Gas and, therefore, it has been He company's constitutional responsibility and national duty to comply with the programme of implementing Hindi as official language in the organisation. (g) The company announces the pay scales of the officers of the company only after the Central Government gives its approval. (h) The company complies with the directives of the Central Government with regard to welfare of SC/ST and weaker sections. (i) It is stated in the annual report for the years 2000-01 that vigilance awareness week was held in various locations of the company between October 31, 2000 and November 4, 2000 in pursuance of the instructions and guidelines of the Central Vigilance Commission. A senior IPS officer, in the rank of Inspector General of Police, heads the Vigilance Department of the Company on deputation. (j) Shri S.N. Mathur, Chairman, was directed by the Administrative Ministry to hold the additional charge of Managing Director with effect from December 2000 and, accordingly, Shri S.N. Mathur took over additional charge of Managing Director besides his office of Chairman and Managing Director of IBP, the holding company. Shri A.K. Shrivastava, IA.s, was inducted on the board of the company as an Additional Director as a nominee of the Ministry of Petroleum and Natural Gas. Shri A.K. Shrivastava, IA.s, was inducted on the board of the company as an Additional Director as a nominee of the Ministry of Petroleum and Natural Gas. In the said annual report the Directors of the company recorded their sincere thanks to the Ministry of Petroleum and Natural Gas, Government of India for the valuable guidance, support and co-operation extended to the company from time to time. It is pointed out that re-constitution of the existing audit committee as per requirements of Clause 49 of the listing agreement with the stock exchange should be made before March 31, 2002 for which necessary application has been made to the Administrative Ministry on June 11, 2001. (k) The company being a Government company appointment and remuneration of the Directors are determined by the Presidential Directives. (l) The company has received a grant of Rs. 72 lac from Oil Industry Development Board during 2000-01 for research and development expenditure and the said funds has fully utilised and netted off under relevant heads of expenses. 15. We may, also, conveniently look into the provisions of sections 617, 619, 619A, 619B and 620 of the Companies Act, 1956 and it is clear that by virtue of the aforesaid provisions the Auditor of a Government company could only be appointed and re-appointed by the Central Government on the advice of the Comptroller and Auditor General of India and the Comptroller and Auditor General of India has vested with certain statutory powers to issue directions to the companies regarding maintenance of the accounts. 16. I must record here that the learned Advocates, appearing on behalf of the company, heavily relied upon the decision in the case of Anupam Ghosh vs. Union of India & Ors., reported in 1991(2) CHN 451 . A Division Bench of this court, speaking through G.N. Ray, J. (as His Lordship then was), held that Andrew Yule and Company Limited was not an instrumentality or agency of the State. I will be equally failing in my duty if I do not record the submissions advanced by the learned Advocate for the writ petitioners that the Supreme Court of India granted special leave to appeal against the said judgment and order passed in Anupam Ghsoh's case (supra) and the appeal was registered as Civil Appeal No. 976 of 1991. 17. I will be equally failing in my duty if I do not record the submissions advanced by the learned Advocate for the writ petitioners that the Supreme Court of India granted special leave to appeal against the said judgment and order passed in Anupam Ghsoh's case (supra) and the appeal was registered as Civil Appeal No. 976 of 1991. 17. By the judgment and decree dated July 24, 1991 the appeal was disposed of by the Supreme Court of India (Coram: The Chief Justice of India, M.H. Kania and Kuldip Singh, JJ.). The Supreme Court of India noted that the main question that required to be dealt with in the said case was as to the individual employee's fate in his service and, therefore, the Supreme Court considered it appropriate to leave the matter which was dealt with by the Division Bench open and went into the consideration of doing justice to the appellant. It was directed that a sum of Rs. 3 lac as compensation be paid to the employee within three months from the date of the judgment. Accordingly a decree was prepared which was as under: "That the judgment and order dated 31st August, 1990 of the High Court at Calcutta in F.M.A.T. No. 3412 of 1985 be and is hereby set aside and instead respondent Nos. 2 and 3 be and are hereby directed to pay to the appellant herein a sum of Rs. 3 (three) lacs as compensation which has been fixed taking into consideration the salary and perks drawn at the time of removal, the years of service put in and the period of service left and the general hike in the earning in future, within three months from this the 24th day of July, 1991, and when paid shall be deemed to be representing his dues for a period of 20 years for tax purpose." 18. However, matter was again listed on April 6, 1992 before the Supreme Court of India (coram: The Chief Justice of India, B.P. Jeevan Reddy and G.N. Ray, JJ.) for modification of the order and directions when it was recorded that the words "judgment and order dated 31st August, 1990 of the High Court at Calcutta in FMAT No. 3412 of 1985 be and is hereby set aside and instead" be deleted from the decree dated July 24, 1991. 19. 19. It is submitted that in the similar facts and circumstances a Division Bench of this court has held that Andrew Yule and Company Limited was not State within the meaning of Article 12 of the Constitution of India and the said decision is binding on this co-ordinate Bench. 20. A case is an authority for the proposition of law it lays down. On facts no two cases may be alike and, therefore, findings made in a case cannot be applied in a case based on different facts. Whether a particular organisation is State within the meaning of Article 12 of the Constitution of India or not is a question of fact and each case has to be examined on its peculiar facts and we are to find out whether there is deep and pervasive State control making the organisation a State agency or instrumentality. In the facts and in the circumstances, in view of my discussions above, I hold that Balmer Lawrie and Company Limited is an authority as to the 'meaning of other authorities in Article 12 of the Constitution of India. 21. The Supreme Court of India observed that concept of "State" had changed radically in recent year and the State could no longer be looked upon simply as "coercive machinery wielding the thunderbolt of authority". I find deep and pervasive State financial support and unusual degree of control over the management and policies of the company. It is not a case of taking special care, but reveals boldly a deep and pervasive control of State over this Company. The unusual degree of control over the management and policies of the company largely points out that the company is State within the meaning of Article 12 of the Constitution of India. 22. Much stress has been given to the fact that the company is carrying out commercial activities. The company carries out commercial activities under deep and pervasive control of the Administrative Ministry of Government of India, that is, the Ministry of Petroleum and Natural Gas and as such it is an instrumentality or agency of the State. Though the company conducts commercial activities according to Memorandum and Articles of Association of the company, in the facts and in the peculiar circumstances, it is an arm of the Government and, therefore, instrumentality or agency of the State. Though the company conducts commercial activities according to Memorandum and Articles of Association of the company, in the facts and in the peculiar circumstances, it is an arm of the Government and, therefore, instrumentality or agency of the State. The existence of a deep and pervasive State control depends upon the facts and in the circumstances of each case and it is not the sole criterion to decide whether the agency or instrumentality is carrying on commercial activities. The court is certainly entitled to lift the corporate veil. 23. The decision in Sabhajit Tewari vs. Union of India & Ors., reported in AIR 1975 SC 1329 , has been relied upon. In the subsequent decision of Ramana Dayaram Shetty (supra) the Supreme Court held that the decision in the case of Sabhajit Tewari (supra) did not lay down any principle or test for the purpose of determining when a corporation could be an 'authority'. If at all any test could be gleaned from the said decision, it was whether the Corporation was 'really an agency of the Government.' The Court seemed to hold, on the facts, that the Council was not an agency of the Government and was, therefore, not an 'authority'. 24. In the result, I propose to allow the appeal and set aside the judgment and order dated December 19, 2000 passed by the learned Single Judge of this court in C.R. No. 1562 (W) of 1981 and I remit the writ application to the appropriate Bench for decision on merits. I, therefore, direct that all the writ petitions be listed before the appropriate Bench for hearing on merits proceeding on the basis that Balmer Lawrie and Company Limited is an authority within the meaning of 'other authorities' in Article 12 of the Constitution of India and as such State and, therefore, amenable to the constitutional writ jurisdiction of this court. I propose let there be no order as to costs in this court.