1. Heard learned counsel for the parties.
2. This petition is directed against a Labour Court award dated 7.6.2001 as published on 22.8.2001.
3. The respondent workman holding the post of a Clerk in the petitioner establishment raised a claim that he is entitled to the designation and pay scale of a Technical Supervisor since he was performing the work of that post. Upon a failure report of the Conciliation Officer, the State Government referred it as an industrial dispute under section 4-K of the U.P. Industrial Disputes Act, 1947 to the Labour Court, Kanpur which registered it as Adjudication Case No. 230 of 1996.
4. The case set up by the workman before the Labour Court was that he was holding the post of a clerk in the Carding and Spinning Department but on the retirement of the Technical Supervisor in April, 1994, he started discharging his functions since May, 1994 but without corresponding designation or pay scale. The petitioner contested the claim and alleged that the workman was engaged as a clerk in the Carding and Spinning Department on 13.5.1988 and was made permanent on 1.1.1992 and is still working as such and he was not working as a Technical Supervisor and he does not hold the qualification of the said post and in between the two posts, there was a post of non Technical Supervisor and he cannot leapfrog on the said post. It was further alleged that the Company has been declared sick under Sick Industrial Companies (Special Provisions) Act and majority of the workmen, including Technical Supervisors, have taken voluntary retirement under the Voluntary Retirement Scheme and the post thus stood abolished with their retirement. The parties thereafter led their respective evidence, both oral and documentary.
5. Before the parties led their oral evidence, the petitioner filed an application dated 26.2.1998 to amend its written statement with the allegation that since the petitioner was owned and controlled by the Central Government and was functioning under its authority, the appropriate Government was the Central Government and the reference by the State Government was bad and referred to the decision of the Apex Court and decision of the Central Labour Authorities. The workman filed his objection. The Labour Court vide order dated 9.2.1998 rejected the application on the ground of delay and that the decision of the Apex Court was not in respect to the petitioner. The petitioner thereafter filed additional written statement dated 11.8.1998 incorporating the same objection in its written statement and the workman filed its reply.
6. After the parties were heard, the Labour Court passed the impugned award that the workman though was neither appointed as Technical Supervisor, nor held the technical qualification, but as he was performing the same work as that of a Technical Supervisor, he was entitled to its wages and designation. In regard to the competence of the State Government to make the reference, it held against the petitioner.
7. It is urged on behalf of the petitioner that after promulgation of the British India Corporation Ltd. (Acquisition of Shares) Act 1981 (here-in-after referred to as the Act), the industry of the petitioner is being carried by and under the authority of the Central Government, thus in view of section 2 (a) (i) of the Industrial Dispute Act, 1947, the appropriate Government to make a reference is the Central Government and accordingly, the reference in the present case being made by the State Government, therefore the reference itself was incompetent and consequentially all the proceedings are vitiated. To the contrary, the respondent contends that at best the petitioner may be a ''State' within the meaning of Article 12 of the Constitution as it has deep and pervasive control, but the industry is not being run by or under the authority of the Central Government and its shares are also held by State Bank of India and other statutory authorities. In the alternative it is urged that in view of notification dated 3.7.1998 issued by the Central Government in exercise of power under section 39 of the Industrial Disputes Act, the irregularity stood cured and the award would be saved.
8. Before the court proceeds to examine the rival contention, it would be appropriate to notice the development of the law on the concept of "appropriate Government" in relation to an industrial dispute in a Government Company.
9. In Heavy Engineering Mazdoor Union Vs. State of Bihar [AIR 1970 SC 82] an industrial dispute was referred to the Tribunal by the Bihar Government in relation to Heavy Engineering Corporation Ltd., Ranchi, when it was challenged on the ground that being a Central Government Undertaking, it was the Central Government only which could pass the reference order. The Apex Court relying on common law interpretation held that the mere fact that the entire share capital was contributed by the Central Government or that all shares are held by the President would not make any difference because the company and the share holders being distinct identities, this fact would not make it an agent of either the President or the Central Government. This view was followed with minor aberrations in Hindustan Aeronautics Ltd. Vs. Workmen [(1975) 4 SCC 679]; Rashtriya Mill Mazdoor Sangh Vs. Model Mills [1984 Supp. SCC 443]; Worker Union Vs. Food Corporation of India [(1985) 2 SCC 294] etc. In all these cases the construction adopted was "with reference to its functional efficacy" (using the words of the Apex Court itself), then came the decision in Air India Statutory Corporation Vs. United Labour Union [(1997) 9 SCC 377]. In this case, the Central Government abolished contract labour system in certain perennial work being carried out by the Corporation under the Contract Labour (Regulation and Abolition) Act 1970. The foremost issue which came up before the court was the same, i.e. the concept of an industry being carried on by or under the authority of the Central Government vis-à-vis the Industrial Disputes Act. Considering the changing scenario in the liberalized free economy and the development of the law of Article 14 of the Constitution, it interpreted the word ''control' and inter alia, held that in the case of Central Government Companies the Central Government would be appropriate Government since they were State or its agent where there was deep and pervasive control of the Central Government. Conflicting decisions of two three judges led to a reference to a Constitutional Bench and a five judge bench rendered its decision in the case of Steel Authority of India Ltd. Vs. National Union Waterfront Workers [(2001) 7 SCC 1]. After considering all the decisions, it prospectively overruled the decision in Air India Statutory Corporation (Supra), partly criticized the decision in Heavy Engineering Mazdoor Union (Supra) and affirmed the decision in Food Corporation of India Workers Union (Supra) and held that the test to determine the authority of the Central Government is to find out whether it is being run by virtue of conferment of power or permission by the Central Government and not whether the undertaking is a ''State' within the meaning of Article 12 of the Constitution. It further held that where the authority is conferred by a statute under which it is created, no further inquiry is required but in other cases it would depend on the facts of each case.
10. The court may now consider the merits of the rival contention in the above background.
11. The British India Corporation was a private limited company engaged in the manufacture of pure and blended woollen fabrics. The substantial shares of the company were held by the Bajoria family and the President of India, State Bank of India, Life Insurance Corporation etc. were other share holders. It incurred heavy losses and even though the Central Government had to issue guarantees worth more than eight crores but yet it was on the verge of collapse, but as it was catering to the vital needs of the general public, it was thought prudent by the Central Government to pump in more finances and therefore the Parliament enacted the Act. By the said Act, it acquired all the shares in private hands and vested it in the Central Government. Accordingly, even the Directors etc. were also nominated by it and its control, management with the continuity and development of production of goods were secured by the Central Government.
12. The adjudication was still pending before the Labour Court when Air India Statutory Corporation case was decided on 6.12.1996. Based on this decision, the petitioner moved the application dated 26.2.1998 to amend the written statement to incorporate the objection in view of the said decision and disclosing that it was a fully owned and controlled Central Government company in view of the provisions of the Act. There was no substantial denial by the workmen but the Labour Court rejected the application vide order dated 9.2.1998 without considering the import of the aforesaid judgement of the Apex Court. However, again an additional written statement, incorporating the same objection was filed on 11.8.1998 but the Labour Court, again, without considering the import of the said judgement, has rejected it while delivering the award. In substance the law on the date when the award was rendered was that wherein a Government company incorporated under a statute, the Central Government had deep and pervasive control over its affairs, the appropriate Government would be the Central Government and reference by the State Government would be bad in law. It was neither denied before the Labour Court nor before this Court, rather, in the pleadings it is admitted that the Central Government had deep and pervasive control over the company and therefore, the reference under section 4-K of the U.P. Industrial Disputes Act was vitiated being beyond the jurisdiction of the State Government and the Labour Court erred in holding otherwise.
13. Though the reference has been held to be beyond the jurisdiction of the State Government in view of the decision in Air India Statutory Corporation case, but let us examine it on the touchstone of the ratio in Steel Authority of India Case.
14. It would be useful to notice the statement of objects and reasons of the Act which are quoted below:-
"British India Corporation Limited, Kanpur, was registered as a Public Limited Company in 1920. The Corporation had two Woolen Mills directly owned and run by it, namely, Cawnpore Woollen Mills (CWM), Kanpur and New Egerton Woollen Mills (NEWM), Dhariwal. Together, these units employed about 8,000 persons and were engaged in the manufacture of pure woollen and blended goods. Besides, the Corporation also had substantial shares in various other companies, like the Elgin Mills Co. Ltd., Brushware Ltd., Cawnpore Textiles Ltd. Cawnpore Sugar Works Ltd., Champaran Sugar Co. Ltd. Saran Engineering Co. etc. The Issued and Subscribed Capital of the Corporation was Rs.4.06 crores consisting of 18,000 Cumulative Preference Shares (valued at Rs.81 lakhs) and 65,00,000 Ordinary Shares (valued at Rs.325 Lakhs). The President of India and Public Financial Institutions together held substantial shares in the Corporation. The other major shareholders belong tot he Bajoria family. The financial performance of the Corporation during the last two to three years had been becoming a matter of great concern. Losses were mounting and liquidity position was severally affected. The Corporation was on the verge of collapse, thus, affecting the production of goods so vital to the needs of general public, besides affecting the employment of a large number of persons directly on the one hand and adversely affecting the interests of the Government, public financial institutions and the State Bank of India, its bankers, on the other. The Central Government had repeatedly to issue guarantees totalling Rs.817 Lakhs to keep the Company going.
The plant and machinery of the Corporation required to be modernized and renovated by the Corporation was not in a position to complete even the first phase of this important exercise. Further, substantial investments of public funds were called for. However, it was considered prudent for the Government and for the financial institutions to invest more funds in the Corporation only if the ownership vests wholly with the Government. It was, therefore, decided to acquire compulsorily all the shares of the Company which were in private hands. Accordingly, the British India Corporation (Acquisition of Shares) Ordinance, 1981 (No.5 of 1981) was promulgated by the President on 11th June, 1981.
The Ordinance, apart from providing for acquisition and transfer of all privately held shares of the Company to the Central Government, provided for payment of an amount for such acquisition, management of the undertakings of the Corporation after acquiring its ownership, appointment of a Commissioner of Payments for the purpose of disbursing the amount payable to the shareholders of the Company who shares are so acquired and for other incidental and consequential matters."
15. One of the reasons given was:- "Whereas acquisition by the Central Government of an effective control over the affairs of the Company is necessary to enable it to make the investments aforesaid."
The Act was thus passed by the Parliament as;
"An Act to provide for the acquisition of certain shares of the British India Corporation Limited with a view to securing the proper management of the affairs of the Company and the continuity and development of the production of goods which are vital to the needs of the country and for matters connected therewith or incidental thereto".
16. It is obvious that under the authority of the Act, the Central Government took over the company to ensure "proper management of the affairs of the Company and the continuity and development of the production of goods" and for "an effective control over the affairs of the Company". Thus, there can be no doubt that the industry is being carried on by and under the authority of the Central Government, therefore, even according to the ratio of the Steel Authority of India case, the 'appropriate Government' in the case of the petitioner would be the Central Government. It would be irrelevant even if some shares were held by the State Bank of India and other statutory authorities because even in their cases the appropriate Government would be the Central Government and there is nothing on record to show that any of the statutory authorities are running the industry.
17. Let us now consider the alternative argument.
18. The notification under section 39 of the Industrial Disputes Act issued by the Central Government empowering the State authorities to refer the dispute even in the case of Central Government Company, would not be applicable in the present case. Firstly, the reference was made in July, 1996 when the said notification was not in existence. Secondly, under the notification, the State authorities could refer an industrial dispute under section 10 of the Industrial Disputes Act, 1947 to the Labour Court or Tribunal constituted by the Central Government, which is not the case in the present facts. A Learned Single Judge of this Court was examining this very issue in the case of National Textile Corporation Ltd. U.P. Kanpur and others Vs. State of U.P. and others [writ petition no.45538 of 2003] decided on 14.9.2004 and held that even while exercising the delegated power under section 39 of the Industrial Dispute Act, the reference could have been made in accordance with section 17-A thereof to the Central Authority and any reference under section 4-K of the U.P. Industrial Disputes Act would be void. Accordingly, even this argument of the learned counsel for the respondent cannot be accepted.
19. For the reasons above, this petition succeeds and is allowed and the impugned award dated 7.6.2001 is hereby quashed.
20. In the circumstances of the case, no order as to cost.
Dt: 18.11.2010.
AU