Research › Search › Judgment

Patna High Court · body

2008 DIGILAW 819 (PAT)

Tenughat Vidyut Nigam Ltd. v. Union Of India

2008-07-02

KISHORE K.MANDAL, SHIVA KIRTI SINGH

body2008
Judgment Shiva Kirti Singh and Kishore Kumar Mandal JJ. 1. This Letters Patent Appeal has been preferred by Tenughat Vidyut Nigam Limited (hereinafter referred to as "TVNL") a company incorporated under Companies Act, 1956 having its registered office at Vidyut Bhawan Campus, Baily Road in the town of Patna, through its secretary against judgment of learned Single Judge dated 21.6.2004 whereby the writ petition preferred by the appellant bearing CWJC. No.590 of 2003 was dismissed. 2. As noticed by the writ court, the prayer of the writ petitioner in the writ petition were as follows:- (1) To quash the order dated 27.2.2001 (Annexure-4) of the Government of Jharkhand in the Department of Water Resources and Energy whereby Tenughat Vidyut Nigam Ltd. has been declared to be an undertaking of the Government of Jharkhand in exercise of the power u/s. 47 of the Bihar State Re-organisation Act, 2000. By this order it has been further declared that in the Memorandum and Article of Assocation of the Tenughat Vidyut Nigam Ltd. the expression "Bihar" and "Bihar Rajya" be read as. "Jharkhand" and "Jharkhand Rajya" respectively; (2) To quash the order dated 24.5.2001 (Annexure-5) of the Government of Jharkhand in its Energy Department whereby in exercise of power under Art. 49(1) (b) (d) and (e) of the Articles of Association and in supersession of all the earlier orders, it reconstituted the Board of Directors of the Tenughat Vidyut Nigam Ltd; (3) To quash the order dated 31.10.2002 (Annexure-6) of the Government of India whereby it had ordered that all the assets and liabilities relating to Tenughat Vidyut Nigam Ltd. shall pass on to the State of Jharkhand with effect from such taking over by the Government of Jharkhand u/s. 47 of the Bihar Reorganisation Act 2000; (4) To quash the communication dated 2.09.2003 (Annexure-10) of the Government of India whereby in context of prayer for review of Annexure-6, the Secretary to the Government of Bihar in the Department of Energy was informed that the point of view of the Government of Bihar had been taken into consideration before passing the impugned order dated 31.10.2002 (Annexure-6). It may be stated that in the aforesaid letter inadvertently instead of the date of order dated 31.10.2002, 22.03.2003 was mentioned and by letter dated 29.10.2003 (Annexure-10/1) it has been clarified that the order dated 22.03.2003 be read as 31.10.2002. 3. It may be stated that in the aforesaid letter inadvertently instead of the date of order dated 31.10.2002, 22.03.2003 was mentioned and by letter dated 29.10.2003 (Annexure-10/1) it has been clarified that the order dated 22.03.2003 be read as 31.10.2002. 3. It is not in dispute that the erstwhile State of Bihar by a resolution dated 10.9.1987 resolved to establish Tenughat Vidyut Nigam as a company incorporate to act as a generating company under provisions of the Indian Companies Act and the Electricity (Supply) Act, 1948. TVNL with registered office at Patna was incorporated as a company and a certificate of registration dated 26.11.1987 was granted by the Registrar of the Companies. The main object of the TVNL as mentioned in the Memorandum of Association is construction, generation and maintenance of Thermal Power Stations and Projects and to sell the power so generated to Bihar State Electricity Board. The generating plant of the TVNL is at Lalpania which fell within the territorial jurisdiction of state of Jharkhand on account of Bihar Re-organisation Act, 2000 (hereinafter referred to as an "Act) which came into force w.e.f. 15.11.2000. 4. On account of formation of a new Jharkhand State from the appointed day i.e. 15.11.2000 the earlier existing State of Bihar was deprived of its territories over several districts as set out in Sec. 3 of the Act. 5. The present dispute has its roots in the impugned order of the State of Jharkhand dated 27.2.2001(Annexure-4) whereby TVNL was notified as an undertaking of the Jharkhand State in view of provisions of Ss. 47 of the Act. Its Memorandum and Articles of Association were also adopted with amendment to the effect that Bihar or Bihar State occurring in those documents will be read as Jharkhand or Jharkhand State. By the other impugned order dated 24.5.2001(Annexure-5) the State of Jharkhand proceeded to re-constitute the Board of Directors of TVNL. It is not in dispute that the Board of Directors of TVNL constituted by the Government of Jharkhand has changed the head office of TVNL and shifted it from Patna to Ranchi. It has warned the general people to deal with TVNL, Patna only at their own risk. 6. The Government of Bihar felt aggrieved and approached Government of India through letters dated 19.7.2001, 18.9.2001 and 16.10.2001 for annulling the orders of the Government of Jharkhand. It has warned the general people to deal with TVNL, Patna only at their own risk. 6. The Government of Bihar felt aggrieved and approached Government of India through letters dated 19.7.2001, 18.9.2001 and 16.10.2001 for annulling the orders of the Government of Jharkhand. After obtaining views of both the sides and holding meetings, the Government of India in the ministry of power, passed the impugned order dated 31.10.2002 (Annexure-6) accepting the claim of the State of Jharkhand that TVNL is "state" and therefore its assets and liabilities have passed on to the State of Jharkhand w.e.f. date of such take over by the Government of Jharkhand u/s. 47 of the Act. On the basis of such order, the TVNL, Ranchi by letter dated 14.11.2002 asked the Chairman of the Bihar State Electricity Board to hand over all the documents and assets of TVNL Patna to it. The Energy Minister of the Government of Bihar through letter dated 21.11.2002 requested the Minister of Power, Government of India to reconsider the decision dated 31.10.2002. The request was turned down by the impugned order dated 2.9.2003. 7. It appears that a writ petition bearing W.P.(C) No.1542/03 filed by the TVNL, Ranchi and another writ petition bearing No. W.P.(C)297/2004 filed by the States of Jharkhand in the Jharkhand High Court are still pending in that court. The issues in those writ petitions are essentially the same as in the present case and in those writ petitions a direction has been sought against TVNL, Patna to handover the records and share certificates to TVNL, Ranchi. It is also not in dispute that the State of Bihar has also filed a suit in the Supreme Court under Art. 131 of the Constitution of India against the State of Jharkhand for a decision on the issue of ownership of TVNL. The petition filed by the appellant in the Supreme Court for transfer of the three writ petitions, two before the Jharkhand High Court and the one before this Court to the Supreme Court was rejected on 22.3.2004. Thereafter, the writ petition out of which this appeal arises was taken up for hearing and dismissed by the learned Single Judge by the judgment and order under appeal dated 21.6.2004. 8. Thereafter, the writ petition out of which this appeal arises was taken up for hearing and dismissed by the learned Single Judge by the judgment and order under appeal dated 21.6.2004. 8. The issues raised before the writ court as well as some other issues relating to correctness of the judgment and order under appeal were raised in course of hearing of this appeal. On behalf of the appellant it was submitted that on page 12 of the judgment under appeal the learned Single Judge expressed his opinion at the outset that if TVNL is not covered u/s. 47 of the Act, petitioner shall be right in contending that the impugned orders are in breach of Art. 300A of the Constitution of India and also ultra vires of the provisions of the Companies Act. Thereafter Sec. 47 of the Act was quoted and the writ court proceeded to examine whether TVNL shall come within the ambit of Sec. 47 of the Act. For that purpose issues were framed as to whether it is an undertaking and if so whether its nature is commercial or industrial and whether this undertaking was of the State of Bihar prior to its re-organization. It was observed that in case all the above issues are answered in affirmative then the final issue would be as to where the undertaking is located? The learned senior counsel appearing for the appellant has submitted that for purpose of Art. 12 of the Constitution of India TVNL is an undertaking of the State of Bihar and its nature is commercial or industrial and these issues need not be gone into. His submission is that a catena of judgments of the Supreme Court clearly lay down the law that though an undertaking may be treated as State for the purpose of Art. 12 and Chapter III of the Constitution of India but such undertaking of a State cannot be treated as a department or property of the State for other purposes. His submission is that a catena of judgments of the Supreme Court clearly lay down the law that though an undertaking may be treated as State for the purpose of Art. 12 and Chapter III of the Constitution of India but such undertaking of a State cannot be treated as a department or property of the State for other purposes. His submission is that TVNL is admittedly an undertaking of the State of Bihar since prior to its re-organization but it is a company incorporated under the Companies Act and hence for other purposes it will not be proper and legal to deprive the company TVNL of its corporate character and its properties and this cannot be done by resorting to the principle of lifting of veil which is generally permitted to find out a person behind company in order to defeat evils like evasion of tax or fraud. On behalf of appellant it was further submitted that the issue as to where the TVNL is located has not been correctly decided by the learned Single Judge and many relevant judgments of the Supreme Court leave no manner of doubt that the company is located where its head and heart work which in the case of TVNL would mean Patna within the State of Bihar. The other submission is that Sec. 47 cannot have any application in relation to TVNL because it is included in Part-VI of the Act which begins with Sec. 41 which is specific in declaring that the provisions of this part shall apply in relation to apportionment of the assets and liabilities of the existing State of Bihar immediately before the appointed day. Learned counsel for the appellant highlighted that unless the company was totally stripped of its corporate character, the assets and liabilities of TVNL can never be treated as assets and liabilities of the existing State of Bihar and therefore Sec. 47 would have no application. His further argument is that Sec. 47 does not talk of passing of the corporate undertaking but only of commercial or industrial undertaking and that also only of their assets and liabilities. His further argument is that Sec. 47 does not talk of passing of the corporate undertaking but only of commercial or industrial undertaking and that also only of their assets and liabilities. Hence he submitted that in the case of a corporate undertaking the assets and liabilities can never be that of State of Bihar but shall always remain to be with the company and only the company or its shares may pass to one or the other State as per statutory provisions, if there be any such provisions in the Act. This submission was highlighted by referring to Sub-sec. (3) of Sec. 46 of the Act which provides as follows:- "The investments of the existing State of Bihar immediately before appointed day in any private, commercial or industrial undertaking, in so far as such investments have not been made or are deemed not to have been made from the Cash Balance Investment account, shall pass to the State in which the principal seat of business of the undertaking is located". 9. It was submitted that a company may have business at many places but the principal seat of business shall always be the place from-where the mind works and controls the working of the company. According to him on this test also the principal seat of business of TVNL must be held to be at Patna in Bihar. It was further submitted on behalf of the appellant that the term undertaking in Sec. 47 of the Act can mean only the TVNL and not Lalpania generating station because this term must be given same meaning throughout Sec. 47 and in any case Lalpania can only be an undertaking of TVNL and not of the existing State of Bihar. Another contention of the appellant is that certain companies in respect of whom Central Government has been give power to issue directions notwithstanding anything to the contrary contained in Companies Act or any other law are covered by Sec. 65 of the Act which occurs in part-VII and hence by implication it should be held that part (VI) which contains Sec. 47 of the Act is not applicable to a company such as TVNL. It was also contended that Sec. 60 of the Act under which Central Government has proceeded to decide entitlement of State of Jharkhand to TVNL does not give the Central Government such power of adjudication in respect of entitlement and therefore the impugned orders of the Central Government are without jurisdiction. 10. On the other hand learned counsel for the State of Jharkhand as well as learned counsel for the TVNL, Ranchi who adopted stand of the former have submitted that once TVNL is accepted as a State undertaking, the purpose of lifting the veil is complete and thereafter by virtue of provisions of Sec. 47 of the Act the assets and liabilities relating to such undertaking which is admittedly of the existing State of Bihar shall pass to the State in which the undertaking is located and therefore the only issue essential for deciding this appeal is to answer the question where TVNL is located. It was further submitted that there is no error in the reasonings of the learned Single Judge in holding that TVNL is located, for the purpose of Sec. 47 of the Act, where its sole generating plant is located i.e. at Lalpania in the State of Jharkhand. It was further submitted that there is no error in the reasonings of the learned Single Judge in holding that TVNL is located, for the purpose of Sec. 47 of the Act, where its sole generating plant is located i.e. at Lalpania in the State of Jharkhand. Although the detailed submissions on behalf of the parties on relevant issues shall be dealt separately, it may be indicated here that on behalf of the State of Jharkhand some technical objections were also seriously raised, such as- (i) State of Bihar has filed Suit No. 3 of 2004 in the Supreme Court and therefore the writ petition filed by its undertaking TVNL, Patna is not maintainable, (ii) TVNL, Patna as a company does not have any cause of action for filing the writ petition because its assets and liabilities remain the same and only its address has been changed from Patna to Ranchi, (iii) there is a finding at page 44 of the judgment under appeal that there is no deprivation of property in respect of the writ petitioner TVNL so as to attract natural justice, (iv) the shares of TVNL belong to the State of Bihar which has already filed a suit and therefore the company i.e. TVNL, Patna cannot make any grievance in this respect, (v) most of the reliefs are of a nature fit to be raised by the company before the Company Law Board and hence the writ petition deserves to be dismissed on this account, (vi) the Company Secretary of TVNL has not shown that he has been authorized to file the writ petition on behalf of the Company, (vii) in a contempt matter bearing MJC. No.1417 of 2002 the petitioner, TVNL suffered an order dated 26.2.20.03 passed by this Court in which it took the stand that its assets and liabilities have been taken over by the State of Jharkhand and hence it was unable to implement the order of the writ court in respect of its employees of TVNL at Lalpania. No.1417 of 2002 the petitioner, TVNL suffered an order dated 26.2.20.03 passed by this Court in which it took the stand that its assets and liabilities have been taken over by the State of Jharkhand and hence it was unable to implement the order of the writ court in respect of its employees of TVNL at Lalpania. Hence, TVNL cannot now take a stand that its assets and liabilities have not passed on to State of Jharkhand, (viii) the provisions of the Electricity Supply Act as existing till its repeal on 10.6.2003 made Government of Jharkhand as the competent Government and therefore the ownership of the TVNL, a generating company had to pass on to State of Jharkhand on ground of expediency and necessity. Lastly it was submitted that registered office of a company is only for communication and service of notice and a company can have a principal place of business different from its registered office and the issue as to where the principal place of business is located is an issue of fact which cannot be decided in a writ petition. It was specifically alleged that the writ petitioner has failed to produce evidence to show that board meetings took place at its registered office whereas admittedly the only business activity of the company is at Lalpania. Hence it has rightly been held that TVNL is located at Lalpania. 11. Learned senior counsel for the TVNL, Ranchi first adopted the arguments advanced on behalf of the State of Jharkhand and further submitted that Sec. 46(3) of the Act covers only the investments in any private, commercial or industrial undertaking and not the assets and liabilities of any undertaking of the existing State of Bihar which is exclusively covered by Sec. 47 and hence if Sec. 47 is found applicable then Sec. 46 is not attracted in the case of TVNL since it was undertaking of the State of Bihar. It was further submitted that by virtue of Sec. 47 the Court is empowered to investigate whether an undertaking is of Bihar Government or not and in the present case admittedly TVNL is such an undertaking and hence there is no need of applying the principles governing lifting of veil as understood generally in respect of rights and liabilities of a company. 12. 12. Learned counsel for the State of Bihar adopted all the submissions of learned counsel for the appellant to assail the judgment under appeal. He further submitted that Central Government was approached to intervene in the matter only as a constitutional authority but it assumed in itself a power of deciding entitlement which is not available to it u/s. 60 of the Act. He also referred to Sec. 63 of the Act which provides for continuance of arrangements in regard to generation and supply of electricity power and supply of water and in that context the Central Government has been vested with power to give some directions to the State Government or other authority concerned for the maintenance, so far practicable, of the previous arrangement. 13. Learned counsel for the appellant replied to the submissions on behalf of the contesting respondents mainly to highlight that according to judgments relied upon by him the principal seat of business or the location of TVNL must be at Patna i.e. in Bihar and that in law a juristic person always retains its identity for the purpose of owning its assets and liabilities although de facto it may be owned by shareholders or the State. 14. So far as the technical issues raised by learned counsel for the State of Jharkhand in respect of maintainability of the writ petition are concerned, the view of the writ court appears to be justified and it is not possible to hold that the writ petition is not maintainable. The pendency of a suit in the Supreme Court filed by the State of Bihar cannot debar the petitioner/appellant from filing a writ petition and more so when it is not impleaded as a party in that suit. The nature of reliefs prayed for in the writ petition are not such which could be effectively dealt with by the authorities under the Company Act. The authority of the Company Secretary to file the writ petition on behalf of the company is apparent and within his legal competence unless his very appointment as Company Secretary is directly challenged. That is not the case here. 15. The authority of the Company Secretary to file the writ petition on behalf of the company is apparent and within his legal competence unless his very appointment as Company Secretary is directly challenged. That is not the case here. 15. So far as cause of action is concerned, it is apparent that the very identity of the company has been subjected to material/substantial changes including its registered office, Board of Directors and its assets and liabilities are being treated as belonging to another entity, the erstwhile State of Bihar. In such circumstances, the plea that the company has no cause of action in the matter cannot be accepted. 16. The main two issues requiring decision in this case are (i) whether the assets and liabilities of a corporate undertaking like the appellant can be treated to be assets and liabilities of State of Bihar u/s. 41 of the Act so as to attract Sec. 47 of the Act leading to passing of the assets and liabilities of the appellant to the State where TVNL is located and (ii) whether the TVNL, an undertaking of the State of Bihar before its re-organization, is located or has its principal seat of business at Patna (Bihar) or at Lalpania (Jharkhand). If both the issues are answered against the appellant the appeal must fail and if any one of the issues is answered in favour of the appellant then the judgment and order under appeal cannot be sustained. 17. For the purpose of deciding the first issue noticed above, it will be necessary to keep in mind the gist of provisions in Part-VI of the Act. Section 41 which is the first Section in Part-VI has already been noticed. It makes part-VI applicable for apportionment of the assets and liabilities of the erstwhile State of Bihar. Section 42 is in respect of apportionment of land and goods. Section 43 is in respect of treasury and bank balances, Sec. 44 is in respect of arrears of taxes, Sec. 45 deals with right to recover loans and advances. Section 46 is in respect of investments and credits in certain funds. Its Sub-sec. (iii) is of special interest and the same has already been noticed. Section 47 is in respect of Assets and liabilities of State undertakings. Section 46 is in respect of investments and credits in certain funds. Its Sub-sec. (iii) is of special interest and the same has already been noticed. Section 47 is in respect of Assets and liabilities of State undertakings. Section 48 is in respect of Public Debt, Sec. 49 deals with floating debts, Sec. 50 deals with Refund of taxes collected in excess, Sec. 51 is in respect of Civil deposit or loan fund deposit, Sec. 52 deals with Provident fund, Sec. 53 with Pensions, Sec. 54 with Contracts, Sec. 55 with Liability in respect of actionable wrong, Sec. 56 with Liability as Guarantor, Sec. 57 with Items in suspense, Sec. 58 with Residuary provisions, Sec. 59 with Apportionment of assets and liabilities by agreement, Sec. 60 with Power of Central Government to order allocation or adjustment in certain cases and Sec. 61 with Certain expenditure to be charged on Consolidated Fund. Part-VII contains provisions as to certain corporations including provision as to certain companies which are included in the 9th Schedule to the Act and with continuance of facilities in certain State institutions. Section 91 provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law. 18. In order to come to a just, legal and proper conclusion on the relevant issues noticed above, it is imperative to examine the law relating to a juristic person like a company incorporated under the Companies Act for finding out whether provisions in part-VI of the Act must be so construed as to deprive the companies belonging to the State of Bihar of their juristic personality so as to make their assets and liabilities to be that of State of Bihar immediately before the appointed day. As noticed earlier, Sec. 65 which is in part-VII of the Act empowers the Central Government to issue directions in respect of certain companies even contrary to provisions of the Companies Act or in any other law but no such provision is to be found in Sec. 41 or 47 of the Act. Ordinarily, a company is entitled to hold its property as a juristic person and only as an exception the corporate veil is permitted to be removed for the sake of justice in certain special situation. Ordinarily, a company is entitled to hold its property as a juristic person and only as an exception the corporate veil is permitted to be removed for the sake of justice in certain special situation. It will be useful to deal with submissions on this issue as raised by learned counsel for the appellant and also by the learned counsel for the State of Jharkhand and also to consider the various judgments cited by the parties before coming to any definite conclusion. 19. On behalf of appellant it has been submitted that the law permits removal of corporate veil for limited purposes and in limited situations. Unless such purpose or situation is found to exist, the court cannot treat the juristic personality of a company to be non existent so as to accept the assets and liabilities of the company as that of another person such as share holders. For this purpose learned counsel for the appellant placed reliance on the following judgments:- (1) D.R.Gurushantappa V/s. A.K. Anwar, 1969 1 SCC 465. (2) Heavy Engineering Mazdoor Union V/s. State of Bihar & Ors., 1969 1 SCC 765 . (3) A. K. Bindal V/s. Union of India, 2003 5 SCC 163 . (4) Steel Authority of India Ltd. V/s. Natural Union Water Front Workers, 2001 7 SCC 1 . (5) U.P. SEB V/s. Sant Kabir Sahkari Katai Mills Ltd., 2005 7 SCC 576 . 20. In the case of D.R. Gurushantappa (supra) the respondent held an office of profit under a company whose entire shares were held by the Mysoore Government but for deciding the issue- whether the respondent held an office of profit under the Government, the Apex Court maintained the distinction between the Government and the Company owned by it and held that the respondent did not hold an office of profit under the Government. In the case of Heavy Engineering Mazdoor Union (supra) the issue was whether the Central Government or the State Government would be the "appropriate Government" for making a reference u/s. 10 of the Industrial Disputes Act, 1947 when the undertaking belonged to a company whose entire share capital was contributed by the Central Government. In paragraph-4 of that judgment the Court observed that it is the. company which carried on the undertaking and not the Central Government or any of its department and hence the industry was not carried on by the Central Government. In paragraph-4 of that judgment the Court observed that it is the. company which carried on the undertaking and not the Central Government or any of its department and hence the industry was not carried on by the Central Government. On the issue as to whether the undertaking was carried on under the authority of the Central Government, the Apex Court considered the matter in the light of ordinary meaning of the word authority and held that since an incorporated company has a separate existence and the law recognizes it as a juristic person separate and distinct from its members, as held in the celebrated judgment of Salomon V/s. Salomon & Company, 1897 0 AC 22, its rights and obligations are different from those of its shareholders. The company holds its properties and carries on its business not as agent of its shareholders. An infringement of its rights does not give cause of action to its shareholders. Relying upon various English judgments the Court concluded that the mere fact that the entire share capital is contributed by the Central Government and held by the President and some officers of the Central Government would make no difference and the company will not become an agent either of the President or the Central Government. A notice to the President of India or the officers of the Central Government holding shares would not be a notice to the company nor can a suit maintainable by the company can be sustained by the shareholders. 21. In the case of Steel Authority of India Ltd. (supra) while reiterating the principle laid down by catena of judgments that while discharging public functions and duties the Government Companies/Corporations/Societies which are instrumentalities or an agency of the Government must be subjected to the same limitations in the field of public law-constitutional or administrative law as the Government itself, in paragraph-37 the Apex Court clarified that this principle "does not lead to the inference that they become agents of the Centre/State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and / or State Acts or under private law". In paragraph-39 the Court further observed thus: "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 Art. 12 of the Constitution". 22. In the case of A.K. Bindal (supra) while dealing with employees of a sick Government Company the Apex Court denied their claim for revision of pay and that the Government should meet the additional expenditure on account of such revision. In that context, the Apex Court relied upon the judgment in the case of Heavy Engineering Mazdoor Union (supra) and held in paragraph-17 that the legal position is that identity of the Government company remains distinct from the Government and merely because the entire share holding is owned by a Government, it will not make the incorporated company as the Government. The employees of the Government company are not civil servants and are not entitled to protection of Art. 311 of the Constitution of India. 23. In the case of U.P.SEB (supra) the issue was whether the High Court was correct in treating a cooperative society as a public sector undertaking and the U.P. State Electricity Board as "State" for the purpose of resolution of dispute between them by a nominee of Chief Secretary to the State Government. In that context it was held that State Electricity Board is a public sector undertaking but not "State" in such a case and in paragraph-13 the Apex Court emphasizes that the Board may be "State" for the purpose of Art. 12 of the Constitution but for other purpose it is a public sector undertaking and not a State Government Department. 24. On the basis of aforesaid authorities learned counsel for the appellant has buttressed his submission that a Government company or even a company owned fully by a Government may be "State" but only for limited purpose as clearly indicated by the Constitution Bench of the Apex Court in the case of Steel Authority of India Ltd. (supra) and this is only with a view to subject them to the same limitations in the field of public law as a Government itself and not for the purpose of creating liabilities and obligations upon the concerned Government under various Central or State Acts or under Private Law. 25. 25. Learned counsel for the appellant has also raised submission that in a large number of cases the proposition has been well settled by the Supreme Court that even in a Company whose share capitals are entirely held by the Government, the Government owns only the share capital and not the properties or the assets and liabilities of the Company. For this purpose he placed reliance upon Western Coalfield Ltd V/s. Special Area Development Authority, AIR 1982 SC 697 . In that case the company in order to avoid tax on its property took the plea that it was owned fully by the Government of India and therefore the property was saved from such taxation on account of an agreement. In paragraph-20 of the judgment the Apex Court held that the Companies which are incorporated under the Companies Act, have a corporate personality of their own, distinct from that of the Government and their land and building are owned by the Companies, Government can only own the share capital. The Apex Court relied upon the judgment in the case of Rustom Cavasjee Cooper V/s. Union of India, AIR 1970 SC 564 in which also it was clearly held that the Company is a legal person and property of the Company is not a property of the shareholders. In respect of shareholders it had been held that a shareholder has merely an interest in the Company arising under its Articles of Association, measured by a sum of money for the purpose of liability, and by a share in the profit. Reliance was also placed upon judgment of the Supreme Court in the case of Hindustan Steel Works Construction Limited V/s. State of Kerala, 1997 5 SCC 171 in which also the principle that a Company may be an instrumentality or agency of the Government and therefore "State" within the meaning of Art. 12 of the Constitution but it cannot be held to be department or establishment of the Government, has been reiterated. The Court held that since there was no question of enforcing any fundamental right in that case and the purpose of the concerned Act was different, the legislature had not intended to exclude the Government Company or the statutory corporations from the purview of the concerned Act. The Court held that since there was no question of enforcing any fundamental right in that case and the purpose of the concerned Act was different, the legislature had not intended to exclude the Government Company or the statutory corporations from the purview of the concerned Act. Considering the purpose of the Act the Court further held that it would not be proper to give a wider meaning to the term "establishment of Government" so as to include even the agency and instrumentality of the Government by removing the corporate veil. 26. Following identical reasonings, in the case of Md. Hadi Raja V/s. State of bihar, 1998 5 SCC 91 , the Apex Court held that protection of Sec. 197 of Criminal Procedure Code is not available to employees of Government Companies or public undertakings even if such Companies or undertakings fell within the definition of "State" under Art. 12 of the Constitution of India. 27. In the case of M/s Howrah Trading Company Limited V/s. I.T. Commissioner, AIR 1959 SC 775 and in the case of Bacha.F. Guzdar V/s. Commissioner of I.T., Bombay, AIR 1955 SC 74 , in the context of Income Tax Act and the Companies Act it was held by the Supreme Court that the shareholder is only the owner of shares held by it and that a shareholder does not acquire any right in the assets of the company. 28. On the basis of aforesaid proposition of law learned counsel for the appellant has submitted that Sec. 47 of the Act, on its plain reading does not and cannot refer to a corporate undertaking because the assets and liabilities of a corporate undertaking will always go with the company whereas Sec. 47 does not talk of the commercial or industrial undertaking itself passing on to the State in which it is located but only provides for passing of the assets and liabilities relating to such undertaking. It was further contended that had the legislature intended to ignore the provisions of the Company Act with a view to take away the assets and liabilities of a company in a manner unauthorized by the company itself and contrary to the provisions and principles of Company Law, it would have added a non obstante clause like the one in Sec. 65 that such effect will take place- notwithstanding any thing to the contrary contained in the Companies Act, 1956, or in any other law. It was further submitted that by the impugned orders and decisions the State of Jharkhand has been allowed its claim that the undertaking TVNL shall itself pass to Jharkhand State u/s. 47 of the Act but such a view is not permitted by the wordings of Sec. 47 of the Act unless the first six words "the assets and liabilities relating to" are treated to be superfluous and redundant. Learned counsel for the appellant has submitted that such construction which renders a part of the statutory provision superfluous or otiose must be avoided and in fact there is no need to indulge in such interpretation when the literal and clear meaning of the statutory provision u/s. 47 is easily workable without doing any violence with the principles or provisions of the Companies Act if it is held that the undertaking in Sub-sec. (3) of Sec. 46 of the Act would include a corporate undertaking because investments in such undertaking will include shares and the word "undertaking" in Sec. 47 shall not include a corporate undertaking because the legislature did not intend to deprive a corporate undertaking of its assets and liabilities by allowing the undertaking and its shares to exist separately as per Articles of Association and Memorandum while allowing its assets and liabilities to pass on to one or the other State by denying its juristic personality and capability to hold property. 29. 29. In respect of the next issue as to where the Company, TVNL is located or has its principal seat of business, learned counsel for the appellant submitted that various judgments considered by the learned Single Judge on this issue would show that the judgment of the Apex Court in the case of Morgan Stanley Mutual Fund V/s. Kartick Das, 1994 4 SCC 225 and paragraph-83 from Halsburys Laws of England, fourth Edition, Volume-7 Page-55, support the contention of the appellant that so far as India is concerned, the residence of the company is where the registered office is located. He further relied upon a judgment of the Supreme Court in the case of Mayar (HK) Ltd. V/s. Owners & Parties Vessel M.V. Fortune Express, 2006 3 SCC 100 . In that case the phrase "principal seat of business" was being considered for deciding the jurisdiction of particular Court. In that context, the Court noticed the definition of this phrase as given in Advanced Law Lexicon, IIIrd Edition, 2005 by P.Ramanatha Aiyar at page 3717 which defined it as the place where governing power of the corporation is exercised, where those meet in council who have a right to control its affairs and prescribe what policy of the corporations shall be pursued and not where the labour is performed in executing the requirements of the corporation in transacting its business; the place of corporations Chief Executive Office, it is typically viewed as the "Nerve Centre"; the place designated as the principal place of business of the corporation in its certificate of incorporation. On that basis in paragraph-32 of the judgment the Supreme Court held thus: "From this, it appears that the principal place of business would be where the governing power of the corporation is exercised or the place of a corporations Chief Executive Office which is typically viewed as the Nerve Centre or the place designated as the principal place of business of the corporation in its incorporation under various statutes". 30. 30. On the basis of the aforesaid cited judgments it was submitted that on applying the three tests for deciding the principal place of business or the location of the company, in the present case it would be found that on the basis of undisputed averments, Patna in Bihar is the place where the governing power is exercised, where the Companies Chief Executive Office or the Nerve Center is located from where all important policy decisions are taken and which is designated as the registered office in its certificate of incorporation. On the basis of definition in the Advanced Law Lexicon it was submitted that principal place of business would not be Lalpania in the Jharkhand State where labour is performed in executing the requirements of the company in transacting its business. 31. Learned counsel for the appellant, in the aforesaid context, further submitted that the English judgments considered by the learned Single Judge, i.e, the case of De Beers Consolidated Mines Limited and Howe (Surveyor of Taxes) 1906 Appeal Cases 455 and other judgments were rendered in different context. For the purpose of taxing statutes and some other purposes a distinction was made in those cases between the registered office and the principal place of business which will mean a place where a company really keeps house and does business but those judgments cannot substract from the three tests laid down by the Supreme Court in the case of Mayar(HK) Limited (supra). It was further submitted that the views of the learned Single Judge that for the purpose of apportionment of the undertaking, its location will be the place where the main activity of the company i.e. generating plant is located is not based upon the provisions of the Act which do not define either the principal place of business or the location of a company/undertaking of the State of Bihar in any manner so as to detract from the normal meaning of such terms. 32. 32. On the issue of lifting the veil which has been found necessary by the learned Single Judge at page 25 of the judgment under appeal, on the ground that this case and the lis cannot be decided without lifting the corporate veil, it has been submitted by learned counsel for the appellant that in the present case there is no difficulty in holding that the company TVNL is an instrumentality or undertaking of the erstwhile State of Bihar for the purpose of Art. 12 of the Constitution of India but beyond that, for the purpose of deciding the private property rights of the company and its deprivation, no case has been made out for lifting the veil even as per case law discussed in the judgment under appeal. Following are further submissions on behalf of the appellant:- It is accepted that the corporate veil can be pierced when the corporate personality is found to be opposed to justice, convenience and interest of the revenue or workmen or against public interest or to prevent fraud etc as held in the case of Dalchand & Sons V/s. C.I.T., 1994 12 ITR(Lah) 458 and Juggilal Kamlapat V/s. CIT, AIR 1969 SC 932 and other judgments but none of the aforesaid situations or circumstances exist in the present case so as to require piercing of the corporate veil. This case does not involve any constitutional or administrative law and therefore the finding that TVNL is a State or an instrumentality of a State under Art. 12 of the Constitution of India cannot have any adverse effect upon the case of the appellant that as a company its properties are not of its shareholders i.e. the erstwhile State of Bihar. 33 On behalf of the appellant judgment of the Supreme Court in the case of Electricity Employment Union V/s. Union of India, 2007 7 SCC 339 was cited and relied upon to show that like in the Act, Part-VI of the Punjab Re-organization Act, 1966 dealt with apportionment of assets and liabilities of the erstwhile State of Punjab and Part-VII dealt with certain corporations. In Paragraph-11 of the judgment the Apex Court indicated that Part-VI of the Act was not applicable for apportionment of assets and liabilities of the existing Punjab State Electricity Board, as there is specific provision for the. same in Sec. 67 and "moreover the Board has a separate legal entity". In Paragraph-11 of the judgment the Apex Court indicated that Part-VI of the Act was not applicable for apportionment of assets and liabilities of the existing Punjab State Electricity Board, as there is specific provision for the. same in Sec. 67 and "moreover the Board has a separate legal entity". The underlining has been done on account of emphasis given by the learned counsel for the appellant on this part of the reasoning given by the Apex Court and on that basis it has been submitted that TVNL also has a separate legal entity and therefore Part-VI of the Act is not applicable for apportionment of assets and liabilities of the TVNL. 34. In reply to earlier noticed submissions and contentions of learned counsel for the appellant, learned senior counsel appearing for the State of Jharkhand raised some technical objections regarding cause of action etc which have been noticed earlier and further submitted that in view of the requirement of the statutes i.e. Sec. 47 of the Act the corporate veil of TVNL must be pierced because the words commercial or industrial of the existing State of Bihar in Sec. 47 do not require any reading down so as to exclude commercial or industrial undertaking having corporate character. According to him the assets and liabilities relating to TVNL shall pass to the State of Jharkhand u/s. 47 of the Act and its shares held by the State of Bihar in the name of Governor of Bihar and other officials shall pass to the State of Jharkhand u/s. 46(iii) of the Act. This submission looks attractive on its face but is really unsound because of apparent contradiction and difficulties in implementation. If the shares are to pass to one or the other State u/s. 46(iii) of the Act then as a shareholder that State, in case of a company fully owned by the erstwhile State of Bihar, would have control over the assets and liabilities of TVNL and if the veil is required to be lifted out of necessity, in that event the provision in Sec. 47 for passing of the assets and liabilities of TVNL would become meaningless and of no use. 35. 35. Learned counsel for the State of Jharkand next contended that in case of companies owned by Central or State Governments it is usual to admit or acknowledge the factum of such ownership and for them no lifting of veil is required. It is pointed out that TVNL was created by resolution of the erstwhile State of Bihar dated 10.9.1987 and that itself mentions that it is an undertaking of State of Bihar. In the case of Mysoore Paper Mills, 2002 2 SCC 167 at the end of paragraph-12 the Apex Court has observed, though in the context of Art. 12 of the Constitution, that the company was an instrumentality and agency of the State Government. Similar view was expressed in the case of BALCO Employees Union V/s. Union of India, 2002 2 SCC 333 . This case was also in the context of obligations under Art. 14 and 16 of the Constitution of India. It was further submitted that even if Sec. 47 leads to a conflict with provisions of the Companies Act, the same will be of no consequence in view of Sec. 91 of the Act which gives the Act overriding effect over other laws in case of inconsistency. However, the issue, as apparent from the discussions made earlier is not of any inconsistency between the Act and the principles or provisions of the Companies Act but whether Sec. 47 should be interpreted so as to make it inconsistent with the juristic personality of a company incorporated under the Companies Act or whether it should be given an interpretation which does not create such a conflict without obstructing the purpose of the Act. 36. So far as the concept of a company being owned by a Central or State Government is concerned, there is no dispute that a large number of statutes such as Banking Act of 1970, Central Vigilance Commission Act, 2003, Civil Procedure Code (Or. 39 R. 2), Factories Act etc contain the expressions- "company owned by Government". But this itself does not help in resolving the issues arising in this case as noted earlier. Some judgments were also cited to show that Government can and does at times create a corporate entity but this issue is also not in dispute. 39 R. 2), Factories Act etc contain the expressions- "company owned by Government". But this itself does not help in resolving the issues arising in this case as noted earlier. Some judgments were also cited to show that Government can and does at times create a corporate entity but this issue is also not in dispute. So far as need for piercing the veil is concerned, on behalf of the State of Jharkhand it was submitted that one of the accepted principles is that corporate veil can be lifted or pierced for public purpose and in the present case the distribution of assets and liabilities serves a public purpose and for that, if necessary the corporate veil can be lifted. No doubt, from the submissions made by the parties on this issue it is clear that if the statutes requires or if a large public interest requires, a corporate veil may be lifted by the Court. But as is apparent from the judgment of the Apex court cited on behalf of the appellant and discussed earlier, for purpose of Art. 12 of the Constitution of India the Courts have held the corporate veil to be of no consequence because the fundamental rights and constitutional obligations are too precious and valuable and cannot be permitted to be defeated by the State simply because it chooses to indulge in some activities through corporate entities. But the judgments also make it clear that such lifting of veil is not for all purposes and definitely not for the purpose of private rights and obligations of a corporate entity, though owned by the State. Under the Act the purpose of apportionment of shares of a corporate industrial or commercial undertaking can easily be achieved through the provisions in Sec. 46(iii) of the Act which allows investments which admittedly include shares to be passed On to one or the other State. Hence there appears no public interest to warrant lifting of the corporate veil of TVNL only to bring its assets and liabilities within the ambit of Sec. 47 of the Act. Hence, none of the two grounds urged on behalf of the State of Jharkhand to support lifting of veil for the purposes other than that of Art. 12 of the Constitution is found to have any merit. Hence, none of the two grounds urged on behalf of the State of Jharkhand to support lifting of veil for the purposes other than that of Art. 12 of the Constitution is found to have any merit. There is yet another aspect, lifting of veil may be done by a Court of competent jurisdiction for sake of justice but such power can not be available to any of the parties. In this case the State of Jharkhand can not claim the assets and liabilities of TVNL as that of erstwhile State of Bihar. Legislature has not given such power to any of the newly created States under the Act. The shares of a company belonging to erstwhile State of Bihar will pass to one or the other State but with Companays veil intact. 37. There appears no good reason to deviate from the general and well established principle of law that a juristic person has the right to hold property and the property of a company is not that of its shareholders. In case Sct. 46(iii) of the Act was not there, there could have been some occasion of resorting to interpret Sec. 47 with a view to achieve the purpose of the Act but that is not the situation here. A perusal of Sec. 41 of the Act also shows that Part-VI is to apply only in relation to assets and liabilities of the existing State of Bihar and not in respect of assets and liabilities of a juristic person like a company which has a separate legal identity. The shares of a company covered by the term investments as used in Sec. 46(iii) of the Act can be apportioned as assets and liabilities of the existing State of Bihar without violating property rights and juristic identity of such Company. Section 41 governs all the Sections in Part-VI and it does not contemplate the apportionment of assets and liabilities of any other person juristic or natural than that of the existing State of Bihar. No purpose would be served by ignoring the plain meaning of the words used in Sec. 41 read with Sec. 47 of the Act so as to include the assets and liabilities of another person within the ambit of Sec. 47 of the Act. No purpose would be served by ignoring the plain meaning of the words used in Sec. 41 read with Sec. 47 of the Act so as to include the assets and liabilities of another person within the ambit of Sec. 47 of the Act. Such plain reading of the term would not render any part of Sec. 47 meaningless or otiose nor will it violate rights of the appellant TVNL as an incorporated Company. 38. In view of the aforesaid discussions it has to be held that Sec. 47 of the Act will apply only to the assets and liabilities of such commercial or industrial undertaking of the existing State of Bihar over which it had clear and legally enforceable owner-ship and shall not apply in respect of assets and liabilities of a juristic person even if it happens to be a commercial or industrial undertaking of the existing State of Bihar. Hence, the assets and liabilities of TVNL, a company incorporated under the Companies Act will not pass to any of the successor States u/s. 47 of the Act. 39. For the simple reason that specific provision in Sec. 46(iii) of the Act will apply to investments of the erstwhile State of Bihar by way of shares in TVNL, those shares may pass to the State of Jharkhand if it is found that the principal seat of business of TVNL is located at Lalpania in the State of Jharkhand and not at Patna in Bihar. 40. Now to the issue of location of principal seat of business of TVNL: on behalf of the State of Jharkhand it was submitted that principal seat of business of the undertaking cannot mean the registered office or head office of the undertaking like the TVNL which is a company. According to him the principal seat of business of TVNL will be at Lalpania because the only generating plant of TVNL is located at that place. According to him the principal seat of business of TVNL will be at Lalpania because the only generating plant of TVNL is located at that place. He fairly submitted that in case the company was having business at several places then the aforesaid principle may not have easy application but his stand is that principal seat of business of a company as per observations in several judgments must be determined on the basis of evidence and in order to succeed in the writ petition, the petitioner was required to disclose such evidence but there is no evidence to hold that the "Nerve Centre" or the "head and heart" of the Company works from Patna. On this issue he has placed reliance upon the following judgments of the Apex Court:- 1. Subbayya Chettiar V/s. I.T. Commissioner, Madras, AIR 1951 SC 101 . 2. Macleod and Company Limited V/s. State of Orissa, 1984 1 SCC 434 . 3. New Horizons Limited. V/s. Union of India, 1995 1 SCC 478 . 4. Kapila Hingorani V/s. State of Bihar, 2003 6 SCC 1 and 5. State of U.P. V/s. Renusagar Power Company, 1988 4 SCC 59 . 41. In the case of Subbayya Chettiar (supra), in the context of Tax Laws and English Judgments the Supreme Court approved the principle that residence of a company would mean "where the central management and control actually abides". It was emphasized that as a general rule the question to be asked is wherefrom the person or group of persons controls or directs the business. It was further clarified that merely activity by the company in a place does not create residence and as a result a company may reside in one place and do a great deal of business in another. Some further instances were considered where the control was dual or the residence on that account was at more than one place. In the case of Macleod and Company Limited (supra) also in context of taxation matter the Supreme Court held that the place of actual management and control of the company is the place of residence. No doubt, it was also indicated that sometimes, the place of registration may only be the birth place and on evidence it may be found that the company does its real business from another place where the central management and control abides. 42. No doubt, it was also indicated that sometimes, the place of registration may only be the birth place and on evidence it may be found that the company does its real business from another place where the central management and control abides. 42. In the case of New Horizon Ltd. (supra) the issue was not the residence of a company but when court can see through the corporate veil to ascertain the true nature of a company. In paragraph-27 of this judgment the Supreme Court has explained in rather terse language that lifting of veil "is adopted when it is found that the principle of corporate personality is flagrantly opposed to justice, conveniences or the interest of revenue". An American jugement was also noticed and its wordings were quoted:- "When the notion of legal entity is used to defeat public conveniences, justify wrong, protect fraud or defend crime, the law will record the corporation as an association of person". 43. In case of Kapila Hingorani (supra) the issues were payment of wage arrears of employees of State owned corporations, Public undertakings and liabilities of State in respect of such wage arrears. On account of facts depicting that a large number of employees were starving, Art. 14, 19 and 21 were invoked for lifting the veil and it was held that the corporate veil can be pierced when the corporate personality is found to be opposed to justice, inconveniences and interest of the revenue or workmen or against public interest. 44. In the case of State of U.P. V. Renusagar Power Company (supra) the issue did not relate to residence of a company but like in the previous case, to the issue of lifting of veil. In this case the principle laid down in the case of LIC V/s. Escorts Ltd., 1986 1 SCC 264 that the corporate veil should be lifted where the associated companies are inextricably connected as to be, in reality part of one concern was reiterated. It was further observed that the horizon of doctrine of lifting of corporate veil is expanding but its aim is to do justice to all the parties. 45. It was further observed that the horizon of doctrine of lifting of corporate veil is expanding but its aim is to do justice to all the parties. 45. On considering the rival submissions and the materials on record it is found that on facts there is no dispute in respect of averments in the writ petition that the policy decision and business decisions relating to TVNL are taken from Patna which is also the registered office of the company. The aim of the company is to establish generating stations and do related work in the field of sale and supply of electricity. Presently the only generating station of the company is at Lalpania in the State of Jharkhand. The labour work for achieving the business aims of the company is being done there but the head or the Nerve Centre of the company is clearly situated at Patna. 46. Applying the legal principles and tests for finding out the principal place of business of the company, specially in the light of Supreme Court judgment in the case of Mayar (HK) Ltd. (supra) it is found that the principal seat of business of TVNL is at Patna and not at Lalpania where its work is situated. A legal issue of this nature requires careful determination capable of passing tests on the basis of several possible hypotheses. Only because in the present case the company has works at one place, it may be possible to argue that the principal seat of business is where the only generating station of the company is under construction or operation but a company can have several workplaces where large scale labour activities may go on and hence the real test must be to find out where the head or Nerve Centre of the company is located, i.e, from where the policy and important decisions are taken. On that test there appears to be only one possible answer which is in favour of the appellants case. In such view of law and facts, it is not possible to sustain the findings of the learned Single Judge on this issue. 47. In view of the aforesaid findings and discussions it is clear that shares of TVNL as an investment of the erstwhile State of Bihar shall remain with the State of Bihar because the principal seat of business of TVNL is located at Patna in Bihar. 48. 47. In view of the aforesaid findings and discussions it is clear that shares of TVNL as an investment of the erstwhile State of Bihar shall remain with the State of Bihar because the principal seat of business of TVNL is located at Patna in Bihar. 48. Although, it is not necessary but in view of arguments advanced, it is also deemed proper to decide the issue whether Sec. 60 of the Act vests the Central Government with the power to decide the issue of entitlement of State of Jharkhand or State of Bihar. On plain reading of the provisions in Sec. 60 of the Act it is found that the power is exercisable only where the entitlement is clear and thereafter on a reference the Central Government is called upon to decide whether it is just and equitable that the property or benefits should be transferred to, or shared with the other successor State, or that a contribution towards that liability should be made by the other successor State. In such a situation the Central Government may allocate the property or benefits or liability in such manner as the Central Government may determine after consultation with the two State Governments. The issue of entitlement to any property or benefits in such a situation has to be decided in accordance with Rule of law emanating from our Constitution which requires such disputes to be settled only by Courts having jurisdiction to decide such disputes. 49. As a result of the aforesaid discussions and findings it is found and held that the impugned orders/notifications by the Jharkhand State and the impugned orders of the Central Government are against law and cannot be sustained. Hence all those orders are quashed. It goes without saying that the authorities under the Companies Act will also take necessary required steps as per law. 50. Since on account of pendency of the present dispute, the period of three years for reference u/s. 60 of the Act is over, it is found necessary and just to extend that period by a further period of three months from the date of this judgment. Within this extended period of three months any of the successor State may make a reference to the Central Government in accordance with Sec. 60 of the Act. Within this extended period of three months any of the successor State may make a reference to the Central Government in accordance with Sec. 60 of the Act. If such reference is made the Central Government will be at liberty to pass appropriate orders in accordance with law, without being influenced by its earlier orders which have been found illegal and hence quashed. 51. Accordingly, the judgment under appeal is set aside. The writ petition and the appeal are allowed with directions and observations in preceding paragraphs. In the facts of the case, there shall be no order as to costs.