REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.6394 OF 2010 (ARISING OUT OF SPECIAL LEAVE PETITION (Civil) NO. 7230 of 2009)

Tata Memorial Hospital Workers Union                            …Appellant

            Versus

Tata Memorial Centre and Another                            …Respondents

J U D G M E N T

Gokhale J.

1.     Leave granted.

2.     This appeal is directed against the judgment and order of a Division  

Bench of the Bombay High Court dated 10.2.2009 in Appeal No.133 of 2002 arising  

out of Writ Petition No. 2148 of 2001, whereby the Division Bench has held that for  

the first respondent establishment,  the Central  Government was the ‘appropriate  

government’  for  the purposes  of  application  of  Section 2(3)  of  the Maharashtra  

Recognition of Trade Unions and Prevention of Unfair Labour Practices Act 1971  

(hereinafter referred to as the M.R.T.U. and P.U.L.P. Act) read with Section 2(a) of  

the  Industrial  Disputes  Act  1947 (hereinafter  referred to  as  the  I.D.  Act).   The  

Division  Bench  has  held  that  the  State  Government  was  not  the  ‘appropriate

government’  for  this  purpose.   Consequently  the  Applications  concerned  in  the  

present matter filed under the MRTU and PULP Act, namely the Application of the  

second respondent for cancellation of the status of the applicant as the recognized  

union under respondent No. 1, and Application for substitution of second respondent  

in  place  of  the  appellant,  as  the  recognized  union,  were  held  to  be  non-

maintainable.  The appellant is aggrieved by the finding that the State Government  

is  not  the  appropriate  government  and  that  the  MRTU  and  PULP  Act  has  no  

application to the first respondent establishment.  It will result into automatic denial  

of its status as the recognized union under the MRTU and PULP Act and also into  

denial of the remedies available to the appellant and to the employees, of the first  

respondent, (against unfair labour practices, if any) and hence this appeal by special  

leave.  The right of the appellant to represent the employees of the first respondent  

(numbering over 1300) is thus, at stake.

3. The appellant is a Trade Union, registered under the Trade Unions Act  

1926 and the employees of the first respondent are its members.   It is already  

registered under  Chapter  III  of  the above  referred MRTU and PULP Act  as  the  

recognized union for the employees under the first respondent by an order passed  

way back on 2.12.1985 by the Industrial Court, Mumbai.  Respondent No.2 ‘Tata  

Memorial Hospital Kamgar Sanghatana’ (i.e. workers association) is another trade  

union functioning under the first respondent. By filing Application MRTU No. 15 of  

1994 before the Industrial Court, Mumbai, the respondent No. 2 sought cancellation  

of the recognition of the appellant union under Section 13 of the MRTU and PULP  

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Act.   Thereafter  by  filing  another  Application  MRTU No.16  of  1994,  the  second  

respondent sought its own recognition in place of the appellant union under Section  

14 of the MRTU and PULP Act.  Both these Applications Nos. 15 and 16 of 1994  

were heard together.  Oral  and documentary evidence was led by parties.   The  

report of the Investigating officer appointed for the verification of the membership  

of  the  two  trade  unions  was  considered.   The  first  respondent  in  its  written  

statement  raised an objection  to  the maintainability  of  these  proceedings  under  

MRTU and PULP Act by submitting that the ‘appropriate government’ for the first  

respondent was the Central Government and not the State Government, and hence,  

the proceedings under the MRTU and PULP, were not maintainable.  

4. The Application (MRTU) 15 of 1994 had been filed on the footing that  

the registration of the appellant as a trade union itself had been cancelled by the  

Registrar of Trade Unions under the Trade Union Act, 1926.  The appellant pointed  

out to the Industrial Court that the order of cancellation was misconceived and had  

in  fact  been stayed by the Bombay High Court  by its  order  passed in  the Writ  

Petition No. 452 of 1994.  Thereupon, the second respondent conceded this position  

and filed a pursis (memo) that Application (MRTU) No. 15 of 1994 be allowed to be  

withdrawn.  The Industrial Court disposed of the two proceedings by its common  

judgment and order dated 29.6.2001.  In that order it  recorded that Application  

MRTU No. 15 of 1994 was being disposed of for want of prosecution.  As far as the  

Application No. 16 of 1994 is concerned, the Industrial Court accepted the report of  

the Investigating Officer whereunder he had held that during the relevant period for  

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consideration of the Application under section 14 of the MRTU & PULP Act, the valid  

membership of the appellant union was more than that of the second respondent  

union. While deciding so, it examined the material on record, considered the rival  

submissions and held that the ‘appropriate government’ for the first respondent was  

the State Government.  Therefore, although the two Applications were held to be  

maintainable under the MRTU and PULP Act, the Application No. 16 of 1994 was  

dismissed on merits.  

5. The first respondent filed Writ Petition No. 2148 of 2001 to challenge  

this judgment and order.  The petition came to be dismissed by a Single Judge of  

the High Court by holding that the first respondent is an autonomous body and  

though the Central Government was funding the first respondent partially, it had  

only  a  partial  control  thereof.   The  Single  Judge  accepted  the  findings  of  the  

Industrial Court on the issue of appropriate government to be just, legal and proper  

and, therefore, dismissed the Writ Petition, by his order dated 29.10.2001.  This was  

on consideration of the judgment of this court in Steel Authority of India & Ors.  

vs. National Union Waterfront Workers & Ors. (2001) 7 SCC 1 (which had  

been rendered in the meanwhile on 30.8.2001). This order of the Single Judge has  

come to be reversed by the impugned judgment and order passed by the Division  

Bench.   The  Division  Bench  has  held  that  the  Governing  Council  of  the  first  

respondent was managing the institution as a delegate of the Central Government.  

This was also on basis of its consideration of the judgment in Steel Authority of  

India & Ors. (supra). The Division Bench held that the Central Government was the  

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appropriate  government  for  the  first  respondent  and  allowed  the  appeal.  

Consequently, it set aside the orders passed by the Single Judge as well as by the  

Industrial Court.

6. Being aggrieved by this judgment and order of the Division Bench the  

present appeal by special leave has been filed. The appeal raises the question as to  

whether the Division Bench correctly applied the law laid down by this Court in Steel  

Authority of India (Supra) to the facts of the present case.   Though the second  

respondent has been described as a proforma respondent, notices were issued to  

both the respondents and the affidavit of service with proof has been filed by the  

appellant with respect to both of them. The petition has been opposed by the first  

respondent by filing an exhaustive counter and the appellant has filed a rejoinder  

thereto.  Mr. Colin Gonsalves, learned Senior Counsel has addressed us on behalf of  

the appellant, whereas Mr. Soli J.Sorabjee, learned Senior Counsel, has defended  

the order of  the Division Bench.   Both the parties  have submitted their  written  

submissions and we have considered the same also.   

7. Necessary Relevant Facts

Before  dealing  with  the  rival  submissions  on  the  issue  before  the  

Court, viz. as to whether in the facts of the present case the central government or  

the state government is the ‘appropriate government,’ it will be desirable to refer to  

the necessary relevant facts.  The trustees of a public charitable trust known as Sir  

Dorabji Tata Trust, established sometime in the year 1940, a hospital in Mumbai,  

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named as the Tata Memorial Hospital for the Treatment and Cure of Cancer and  

Allied Diseases.  The hospital was then being maintained out of the funds of the  

trust  and also from the grant  made available  from time to time by the Central  

Government and by the then Government of Bombay.   

8. The  Government  of  India  was  desirous  of  establishing  an  Indian  

Cancer Research Centre for Post-Graduate Teaching and Research in Cancer and the  

same was established in collaboration with the trustees of Sir Dorabji Tata Trust by  

an agreement dated 7.10.1953.  The Government of India gave the initial grant for  

that Centre for setting up of a laboratory on a portion of the land belonging to the  

trust and also undertook to provide recurring expenditure in respect of salaries of  

the staff and contingencies of the management of the said Center.   

9.  The  trustees  of  Sir  Dorabji  Tata  Trust  subsequently  decided  to  

dedicate the hospital to the Nation with all its assets, including its funds and the  

plots of land.  They requested the Government of India to takeover its control and  

management with effect from 4.2.1957.  Accordingly, an agreement was entered  

into  between the  trustees  and  the  Central  Government  on  4.2.1957  and  under  

clause (1) thereof, the government agreed to takeover control and management of  

the hospital and to manage it at its own expenses from 1.4.1957.  Under clause (2)  

of the agreement, the management of the hospital was to rest in the hands of the  

Governing Board consisting of seven members of the Board.  Three of them were to  

be nominated by the Government of India and three by Sir Dorabji Tata Trust.  The  

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Superintendent  of  the Hospital  was  to  be the ex-officio  seventh member of  the  

Governing Board and its Secretary. Clause (3) of this agreement provided as follows:

“The Trustees of  Sir  Dorabji  Tata  Trust  shall  convey,  assign,  transfer  and  deliver  to  the  Government  of  India  the  immoveable  properties  and  moveable  properties  and  assets  of  the  hospital  including the Cancer Infirmary Fund and the assets of  the Indian  Cancer Research Centre and the three plots refereed to above” (i.e.  plots 107, 108 & 109 of Scheme  No.60, Naigaum Estate,Mumbai).  

10. The Trustees accordingly, filed a suit being suit No. 568 of 1957 in the  

Bombay  City  Civil  Court  for  framing  a  Scheme  and  for  giving  effect  to  and  

incorporating the said agreement dated 4.2.1957.  The City Civil  Court passed a  

decree on 22.3.1957 and sanctioned the scheme as annexed to the schedule.  The  

relevant  part  of  the  court’s  order  recorded  that  the properties  to  be  conveyed,  

transferred  or  assigned  by  the  trustees  to  the  government  being  immovable  

properties described in schedule ‘B’ thereto are hereby vested in the government.  

The administrative  control  of  the Tata  Memorial  Hospital  and the Indian Cancer  

Research Centre was thereafter transferred to the Government of India.   It  first  

came under the Ministry of Health and thereafter under the Department of Atomic  

Energy with effect from 1.2.1962.

11. The Tata Memorial Centre has come to be specifically mentioned in the  

rules for allocation of business of Government of India framed under Article 77 of  

the Constitution of India.  The President of India in exercise of his powers under  

Article 77, has framed by order dated 14.1.1961, the Rules for allocation of business  

of the Government of India.  Rule 2 thereof deals with the allocation of business and  

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it states that the business of the government shall be transacted in the Ministries,  

Departments and Secretariats, as specified in the first schedule to these rules (all of  

which are referred to as the departments).   Item 22 of the first schedule to the said  

rules, deals with the Department of Atomic Energy and item 10 of the annexure to  

the schedule concerning Department of Atomic Energy reads as followed:

“10.   All matters relating the Tata Memorial Centre, Bombay.”

12. Subsequently,  an  agreement  was  entered  into  between  the  

Government of India and the trustees of Sir Dorabji Tata Trust on 6.1.1966, and the  

two institutions viz. Tata Memorial Hospital and Indian Cancer Research Centre were  

amalgamated into an institution thereafter known as the Tata Memorial Centre i.e.  

respondent No.1 herein.  The Tata Memorial Centre was registered   as a Society  

under the Societies Registration Act 1860 and also as a Public  Trust,  under the  

Bombay Public Trust Act 1950.  Under the rules and Regulations of this Society, the  

administration and management of the Centre vests in a Governing Council under  

Rule 3 thereof, and this council is the executive body of the Centre.  The council is  

constituted under Rule 4 thereof.  Rule 3 and 4 (i) of these Rules and Regulations  

read as follows:

3. Administration  and  Management  :  Subject  to  these  Rules  and  such  rules  as  may  hereafter  be  made  from  time  to  time,  the  administration and management of the Centre shall vest in the Council,  which shall be the executive body of the Centre.

4. Constitution of the Council:

    (i) The Council shall consist of:

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(a) Four members appointed by the Government of India;

(b) Three  members  appointed  by  the  Trustees  of  the  Sir  Dorabji Tata Trust;

(c) The Director of the Centre (ex-officio)

The Director, TMH and the Director, CRI will be permanent Invitees to  the  meetings  of  the  Council.   PROVIDED  that,  to  represent  other  interests, not more than two additional members may be co-opted by  the  Council,  for  such  periods  as  the  Council  may  decide  with  the  concurrence of the Government of India and the Trustees of the Sir  Dorabji Tata Trust.

13. The  question  for  our  consideration  is  whether  the  first  respondent  

functions under the authority of the Central Government as its delegate as held by  

the Division Bench or is functioning as an independent entity.  This will enable us to  

decide  as  to  whether  the  Central  Government  or  the  State  Government  is  the  

“appropriate government” for the first respondent.  We have also to keep in mind  

that we have to decide this issue in the context of determination of an application  

for recognition of a trade union.

Statutory Framework

14. As stated earlier, the two Applications filed before the Industrial Court,  

Mumbai  which  had  led  to  the  present  Special  Leave  Petition  were  filed  under  

Sections 13 & 14 of the MRTU and PULP Act 1971. These Sections 13 & 14 appear in  

Chapter-III  of  the  MRTU  &  PULP  Act  which  Chapter  deals  with  Recognition  of  

unions.  Section 13 deals with Cancellation of recognition and suspension of rights of  

a  recognized  union  on the  conditions  stipulated  therein.   Section  14 deals  with  

Recognition of other union in place of a union already registered as a recognized  

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union and conditions therefor.  As the preamble of this Act lays down, one of the  

objectives of this Act is to provide for the recognition of trade unions for facilitating  

collective bargaining for certain undertakings, to state their rights and obligations;  

and to confer certain powers on unrecognized unions. The other objective of this Act  

is  to  prevent  unfair  practices  with  which,  we are  not  directly  concerned  in  the  

present matter.   

15. Since the question raised in the matter is whether the two applications  

filed under Sections 13 and 14 of MRTU and PULP Act were maintainable or not, the  

same will  depend upon as to whether the State Government is  the ‘appropriate  

government’  for  the  first  respondent.   Section 2  of  the  MRTU and PULP Act is  

relevant in this behalf.   It deals with the extent, commencement and application of  

the Act.  We are concerned with sub-Section (3) thereof which reads as follows:  

“(1) …………………………………………

(2) ………………………………………….

(3)  Except  as  otherwise  hereinafter  provided,  this  Act  shall  apply, to the industries to which the Bombay Industrial Relations Act,  1946, Bom. XI of 1947, for the time being applies, and also to any  industry as defined in clause (j) of section 2 of the Industrial Disputes  Act, 1947, XIV of 1947, and the State Government in relation to any  industrial  dispute  concerning  such  industry  is  the  appropriate  Government under that Act;

Provided that the State Government may by notification in the  Official  Gazette, direct that the provisions of this Act shall  cease to  apply to any such industry from such date as may be specified in the  notification; and from that date, the provisions of this Act shall cease  to  apply to  that  industry and,  thereupon,  section 7 of  the Bombay  

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General Clauses Act, 1904, Bom. 1 of 1904, shall apply to such cessor,  as  if  this  Act  has  been  repealed  in  relation  to  such  industry  by  a  Maharashtra Act.”

16. It is not disputed that the first respondent is an ‘industry’ within the  

concept of industry as defined in Section 2(j) of the Industrial Disputes Act 1947.  

The  respondent  No.  1  is  admittedly  not  covered  under  the  Bombay  Industrial  

Relations Act 1946.  The question is whether in relation to any industrial dispute  

concerning  the  first  respondent,  the  State  Government  is  the  ‘appropriate  

government’ under the Industrial Disputes Act 1947.

17. It,  therefore,  becomes  necessary  to  look  into  the  definition  of  

‘appropriate government’  under the Industrial  Disputes Act 1947.  Under Section  

2(a) of the Industrial Disputes Act 1947 ‘appropriate government’ means;

(i) in  relation  to  any  industrial  dispute  concerning  an  industry  carried on by or under the authority of the Central Government,  (or  concerning,  industries  specifically  mentioned  in  this  sub- section starting from a  railway company upto a major port),  the Central Government; and

(ii) in  relation  to  any  other  industrial  dispute,   the  State  Government.

Thus,  it  is  clear that  under the Industrial  Disputes Act,  the Central  

Government is the ‘appropriate government’  in relation to the industrial  disputes  

concerning the  industries specified under Section 2 (a) (i) and for the industries  

carried on by or under the authority of the Central Government.  Excluding these  

two categories of industries in relation to any other industrial dispute, it is the State  

Government which is the ‘appropriate government’.   

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18. Entry 22 in list III  - Concurrent List to the Seventh Schedule to the  

Constitution of India relates to ‘Trade Unions; Industrial and Labour disputes’. Entry  

23  thereunder  is  ‘social  security  and  social  insurance;  employment  and  

unemployment’. Entry 24 is ‘welfare of labour including conditions of work, provident  

fund, employer’s liability, workmen’s compensation, invalidity and old age pensions  

and maternity benefits’.  Subject to the provisions contained in sub-clauses (1) and  

(2) in Article 246, the Legislature of a State can also make laws on these subjects,  

and this is how the MRTU and PULP Act 1971 makes provisions for recognition of  

trade unions for collective bargaining, and for prevention of unfair labour practices.  

It  is  also  in  the  fitness  of  things  that  the  Industrial  Disputes  Act  which  is  the  

principal  Central  Act  for  investigation  and settlement  of  Industrial  Disputes  lays  

down that  for  the industrial  disputes  concerning the specified industries and for  

those carried on by or under the authority of the Central Government, the Central  

Government  will  be  the  ‘appropriate  government’,  but  in  relation  to  any  other  

industrial dispute the State Government will be the ‘appropriate government’.  It,  

therefore, becomes necessary to examine the phrase ‘any industry carried on by or  

under the authority’ of Central Government on this background while applying it to a  

particular industry and in the instant case, to the first respondent.

19. Explanation  of  the  concept  of  appropriate  government  by  the  Judiciary:--

The appeal raises the question as to whether the Division Bench has correctly  

applied the law laid down in Steel Authority of India (supra).  The Steel Authority of  

India judgment however once again reiterates the law laid down way back in Heavy  

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Engineering Mazdoor Union vs. The State of Bihar (1969) 3 SCR, 1995,  

though with a little divergence.  It therefore becomes necessary to examine as to  

how the concept of appropriate government has been explained by the judiciary in  

the leading decisions.  That will enable us to find out as to what are the tests in this  

behalf which have evolved over the years.  In Heavy Engineering case, the State of  

Bihar had referred an industrial dispute between the Heavy Engineering Corporation  

Ltd., a company wholly owned by the Central Government and its workmen for its  

adjudication by the Industrial Tribunal.  The appellant mazdoor union challenged the  

reference contending that the ‘appropriate government’ to refer the dispute was the  

Central Government and not the State Government.  The High Court rejected the  

contention, and hence the matter was carried to this Court.  This Court noted that  

the Heavy Engineering Corporation is a Government company within the meaning of  

Section 617 of the Companies Act, since its entire share capital was contributed by  

the Central Government and its shares were registered in the name of the President  

of India and officers of the Central Government.  The memorandum of association  

and the articles of association of the company conferred large powers on the Central  

Government including the power to give directions as regards the functioning of the  

company.  The  wages  and  salaries  of  the  employees  were  also  determined  in  

accordance with these directions.  The Directors of the company were appointed by  

the President of India.  The Company was described in its standing orders as a  

Government Undertaking.    

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20. It was accepted by the corporation that it could not be said to be an  

‘industry’ carried on by the Central Government.  The limited issue was whether it  

could be regarded as an ‘industry’,  carried on  under the authority of the Central  

Government.   The  question  was  as  to  how  to  construe  the  phrase  ‘under  the  

authority of Central Government’.

This court held;

….There being nothing in s.  2  (a)  to  the contrary,  the word  ‘authority’ must be construed according to its ordinary meaning and therefore  must mean a legal power given by one person to another to do an act.  A  person is said to be authorized or to have an authority when he is in such a  position that  he can act in a certain manner without incurring liability,  to  which he would be exposed but for the authority, or, so as to produce the  same effect as if the person granting the authority had for himself done the  act.  For instance, if A authorizes B to sell certain goods for and on his behalf  and B does so, incurs no liability for so doing in respect of such goods and  confers good title on the purchaser.   There clearly arises in such a case the  relationship of a principal and an agent.  The words “under the authority of”  means pursuant to the authority, such as where an agent or a servant acts  under  or  pursuant  to  the  authority  of  his  principal  or  master.  Can  the  respondent-company,  therefore,  be  said  to  be  carrying  on  its  business  pursuant to the authority of the Central Government?  That obviously cannot  be  said  of  a  company  incorporated  under  the  Companies  Act  whose  constitution,  powers  and  functions  are  provided  for  and  regulated  by  its  memorandum of  association  and  the  articles  of  association.”  (underlining  supplied)

21. This  Court  noted  that  an  incorporated  company  has  a  separate  

existence and the law recognizes it as a juristic person, separate and distinct from  

its members.   Its rights and obligations are different from those of its shareholders.  

Action taken against it does not directly affect its shareholders.  The company so  

incorporated derives its powers and functions from and by virtue its memorandum  

of association and its articles of association.  The mere fact that the entire share  

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capital of the company was contributed by the Central Government and the fact that  

all  its  shares  are  held  by  the  President  and  certain  officers  of  the  Central  

Government does not make any difference.  The court noted that a notice to the  

President of India and the officers of the Central Government, who hold between  

them all the shares of the company would not be a notice to the company nor can a  

suit maintainable by and in the name of the company be sustained by or in the  

name of the President and the said officers.

22. The  Court  noted  that  the  extensive  powers  are  conferred  on  the  

Central Government including the power to give directions as to how the company  

should function, the power to appoint its Director and even the power to determine  

the wages and salaries payable by the company to its employees but these powers  

were  derived  by  the  company’s  memorandum of  association  and the articles  of  

association  and  not  by  reason  of  the  company  being  an  agent  of  the  Central  

Government.  The court thereafter observed as follows:

….. The question whether a corporation is an agent of the State  must  depend  on  the  facts  of  each  case.   Where  a  statute  setting  up  a  corporation so provides, such a corporation can easily be identified as the agent  of the state as in Graham vs. Public Works Commissioners ( [1901] 2 K.B.  781) where Phillimore, J. said that the Crown does in certain cases establish with  the consent of Parliament certain officials or bodies who are to be treated as  agents  of  the  Crown  even  though  they  have  the  power  of  contracting  as  principals.   In  the  absence  of  a  statutory  provision,  however,  a  commercial  corporation  acting  on  its  own  behalf,  even  though  it  is  controlled  wholly  or  partially by a Government department, will be ordinarily presumed not to be a  servant or agent of the State.   The fact that a minister appoints the members or  directors  of  a  corporation  and  he  is  entitled  to  call  for  information,  to  give  directions which are binding on the directors and to supervise over the conduct  of the business of the corporation does not render the corporation an agent of  the Government. (see  The State Trading Corporation of India Ltd v. The  

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Commercial  Tax  Officer,  Visakhapatnam [1964]  4  SCR  99  at  188,  and  Tamlin v. Hannaford [1950] 1 K.B. 18 at 25, 26.  Such an interference that the  corporation is the agent of the Government may be drawn where it is performing  in substance governmental  and non commercial  functions.  (cf London County  Territorial  and Auxiliary forces Association v. Nichlos) [1948] 2 All  E.R.  432.  (underlining supplied)                 

23. Then the Court  looked into the definition  of  ‘employer’  as  given in  

Section 2 (g) of the Industrial Disputes Act.  As this section provides, an employer  

under clause (g) means, an employer in relation to an ‘industry’ carried on by or  

under  the authority  of  any department  of  the  Central  Government  or  the  State  

Government, the Authority prescribed in that behalf, or where no such authority is  

prescribed, the head of the Department.  No such authority was prescribed in regard  

to the business carried on by the respondent company.  The Court observed that the  

definition  of  the  ‘employer’  under  the  Industrial  Disputes  Act  on  the  contrary  

suggests that an industry carried on by or under the authority of the Government  

means either the industry carried on directly by a department of the Government  

such as the posts and telegraphs or railway, or one carried on by such department  

through the instrumentality of an agent.  All these facts led this Court to hold that  

the Heavy Engineering Corporation could not be said to be an ‘industry’ carried on  

under the authority of the Central Government.

24. We have referred to the Judgment in Heavy Engineering Mazdoor  

Union  (Supra)  extensively  for  the reason that  it  has  been followed consistently  

including the last relevant judgment of the Constitution Bench in Steel Authority of  

India  Ltd.  (Supra),  though  with  a  slight  divergence.   The  next  judgment  of  

significance after Heavy Engineering Mazdoor Sangh, is  Hindustan Aeronautics  

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Ltd. vs.  Workmen  reported in  (1975) 4 SCC 679.  In that matter a bench of  

three  judges  was  concerned  with  the  dispute  between the  management  of  the  

Barrackpore branch of the appellant Government Company situated in West Bengal  

and its employees.  The appellant had challenged the Award of the Fifth Industrial  

Tribunal,  West Bengal and one of the challenges was to the competence of the  

Government of West Bengal to make the reference of the industrial dispute.  It was  

contended  that  the  Barrackpore  branch  was  under  the  direct  control  of  the  

Bangalore  Division  of  the  Company  and  since  it  was  a  Government  Company  

constituted under section 617 of the Companies Act,  (the shares of  which were  

entirely owned by the Central Government), the reference ought to have been made  

either by the Central Government or by the Government of Karnataka.  This Court  

negatived the contention.  It  noted that the Barrackpore Branch was a separate  

branch  and  for  the  purposes  of  this  Act  it  was  an  industry  carried  on  by  the  

Company as a separate unit.  This court followed the dicta in Heavy Engineering  

Mazdoor Union (supra) and observed in para 4 as follows:

“The  workers  were  receiving  their  pay  packages  at  Barrackpore and were under the control of the officers of the company  stationed there.  If there was any disturbance of industrial peace at  Barrackpore where a considerable number of workmen were working  the  appropriate  government  concerned  in  the  maintenance  of  the  industrial peace was the West Bengal Government. The grievances of  the workmen of Barrackpore were their own and the cause of action in  relation  to  the  industrial  dispute  in  question  arose  there.   The  reference,  therefore,  for  adjudication  of  such  a  dispute  by  the  Governor of West Bengal was good and valid. (underlining supplied)

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25. In  Rashtriya  Mill  Mazdoor  Sangh,  Nagpur vs.  Model  Mills,  

reported in 1984 (Supp) SCC 443, a reference (though under the Bombay Industrial  

Relations Act, 1946)  of the demands of the employees for payment of bonus was  

challenged  on  the  ground  that  an  authorized  controller  under  the  Industries  

(Development  and  Regulation)  Act,  1951  had  been  appointed  in  respect  of  the  

industrial undertaking and since the undertaking was being run by an authorized  

controller  under  the  authority  of  a  department  of  the  Central  Government,  the  

reference under the  Bombay Industrial Relations Act, 1946 was not competent.   A  

bench of three judges of this Court once again referred to the interpretation of the  

expression ‘under the authority of’ rendered in Heavy Engineering Mazdoor Union’s  

case.    The  Court  noted  that  in  reaching  its  conclusion  in  Heavy  Engineering  

Mazdoor Union’s case (supra) this Court had approved the view of Calcutta High  

Court  in  Carlsbad Mineral  Water Mfg. vs.  P.K.  Sarkar AIR 1952 Calcutta  

Page 6 wherein a Division Bench that Court, had held that business which is carried  

on by or under the authority of the Central Government must be a Government  

business.  The High Court had further held that in any industry to be carried on  

under the authority of the Central Government it must be an industry belonging to  

the Central Government, that is to say, its own undertaking.  The Court held in para  

17;

”The fact that the authorized controller is appointed  by the Central Government and that he has to work subject to the  directions of the Central Government does not render the industrial  undertaking an agent  of  the Central  Government and therefore,  

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could not be said to be an establishment engaged in an industry  carried on by or under the authority of the Central Government.”

26. The Judgment in  Rashtriya Mill Mazdoor Sangh (supra) was followed  

by  the  Judgment  in  Food  Corporation  of  India  Workers Union vs.  Food  

Corporation of India reported in  (1985) 2 SCC  294.  Therein, the Court was  

concerned with the Writ Petition filed by the employees seeking the regularization of  

their services under the Contract Labour (Regulation and Abolition) Act 1970 (for  

short  the CLRA Act).   In that  matter,  inspite  of  the fact that  FCI is  a specified  

industry  under  Section  2(a)  (i)  of  the  Industrial  Disputes  Act  1947,  this  Court  

referred to the definition of ‘appropriate government’ under the CLRA Act 1970.  It  

referred  to  judgments  in  Heavy  Engineering  Mazdoor  Union  and  Rashtriya  Mill  

Mazdoor Sangh (supra) with approval, and held that for the regional offices and  

warehouses which were situated in various states, the State Governments were the  

‘appropriate Governments’ and not the Central Government.

27. The scheme of the CLRA Act 1970 came up for consideration before a  

bench of three Judges in  Air India Statutory Corporation vs.  United Labour  

Union (1997) 9 SCC 377.   The Court was concerned with the question as to  

whether the Central  Government was the competent appropriate government for  

the purposes of the notification which it had issued under that Act to abolish the  

Contract Labour system in the establishment of the appellant.  The court held that  

the  Central  Government  was  the  appropriate  government.    The  definition  of  

‘appropriate government’ under Section 2 (1) (a) of that Act was examined by this  

Court and which reads as follows:

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“[(a) “appropriate Government” means,-

(i) in  relation  to  an  establishment  in  respect  of  which  the  appropriate Government under the Industrial  Disputes Act,  1947 (14 of 1947), is the Central Government, the Central  Government.

(ii) in relation to any other establishment, the Government of  the State in which that other establishment is situated;]

A bench of three Judges, therefore, examined the efficacy of the judgments starting  

from  Heavy  Engineering  Mazdoor  Union  case  (supra).    After  examining  the  

principles  arising  out  of  some  of  the  leading  judgments  on  Article  12  of  the  

Constitution of India, such as those in the case of R.D. Shetty vs. International  

Airport  Authority  of  India (1979)  3 SCC 489 and  Ajay  Hasia vs.  Khalid  

Muzib Sehravardi (1981) 1 SCC 722 (a Constitution  Bench Judgment),   the  

Court  held  that  corporations  and  companies  controlled  and  held  by  the  State  

Governments will be institutions of those states within the meaning of Article 12 of  

the  Constitution.   A  Priori,  in  relation  to  corporations  and  companies  held  and  

controlled  by  the  Central  Government,  the  ‘appropriate  government’  will  be  the  

Central Government.   In paragraph 28 the court observed : ---

’28. From this perspective and on deeper consideration,  we are  of  the  considered  view  that  the  two  Judge  bench  in  Heavy  Engineering  Mazdoor  Union  case  narrowly  interpreted   the  words  ‘appropriate government’  on the common law principles which no  longer bear any relevance when it is tested on the anvil of Article 14.’  ……….

28. The question concerning interpretation of the concept of ‘appropriate  

government’ in Section 2 (1) (a) of the CLRA Act 1970 and in Section 2 (a) of the  

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Industrial Disputes Act, 1947 was subsequently referred to a Constitution Bench in  

Steel  Authority  of  India  Ltd. vs.  National  Union  Waterfront  Workers,  

reported in [(2001) 7 SCC 1].   The Constitution Bench examined the relevant  

provisions and the judgments including those in the cases of R.D. Shetty and Ajay  

Hasia (supra).  The question decided by Constitution Bench of this Court in Ajay  

Hasia was with respect to Jammu & Kashmir Regional Engineering College, Srinagar,  

which  was  registered  as  a  society  under  the  Jammu & Kashmir  Registration  of  

Societies Act 1898 and wherein it was held to be a State within the meaning of  

Article 12 of the Constitution.

29. In para 37 of the judgment in Steel Authority of India Ltd. (supra), this  

court  held  that  merely  because  the  government  companies,  corporations  and  

societies are instrumentalities or agencies of the Government, they do not become  

agents of the Central or the State Government for all purposes.  The Court held as  

follows:   

“37. We wish to clear the air that the principle, while discharging  public  functions  and  duties  the  government  companies/corporations/societies which are instrumentalities or agencies  of the Government must be subjected to the same limitations in the field  of  public  law  —  constitutional  or  administrative  law  —  as  the  Government  itself,  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.”

30.          In para 38, this Court thereafter held as follows:    

“ 38.  From the above discussion, it follows that the fact of being  an instrumentality of a Central/State Government or being “State” within  the meaning of Article 12 of the Constitution cannot be determinative of  

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the  question  as  to  whether  an  industry  carried  on  by  a  company/corporation or an instrumentality of the Government is by or  under the authority of the Central Government for the purpose of or  within the meaning of the definition of “appropriate Government” in the  CLRA Act. ………………………………………….

Further, the definition of “establishment” in the CLRA Act takes in its fold  purely private undertakings which cannot be brought within the meaning  of Article 12 of the Constitution. In such a case, how is “appropriate  Government”  determined  for  the  purposes  of  the  CLRA  Act  or  the  Industrial Disputes Act? In our view, the test which is determinative is:  whether  the  industry  carried  on  by  the  establishment  in  question  is  under the authority of the Central Government. Obviously, there cannot  be one test for one part of the definition of “establishment” and another  test for another part. Thus, it is clear that the  criterion is whether an  undertaking/instrumentality  of  the  Government  is  carrying  on  an  industry under the authority of the Central Government and not whether  the undertaking is an instrumentality or agency of the Government for  purposes  of  Article  12  of  the  Constitution, be  it  of  the  Central  Government or the State Government. (underlining supplied)

31. In para 39, this Court further held as follows:  

“39.  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  or  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 carry on 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.”

32. In the next para 40 the Constitution Bench states that it shall refer to  

the cases of this court on this point and thereafter examines in paragraphs 41 to 44  

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the  earlier  referred  judgments  in  Heavy  Engineering  Mazdoor  Union,  Hindustan  

Aeronautics, Rashtirya Mill Mazdoor Sangh and Food Corporation of India (supra).

33. In paragraph 41 of the judgment, the Constitution Bench examined the  

Judgment  in  Heavy  Engineering  Mazdoor  Union  case.   In  Heavy  Engineering  

Mazdoor Union the court had observed that an inference that the corporation was  

the agent of the Government might be drawn where it was performing in substance  

governmental and not commercial functions.  The Constitution Bench disagreed with  

the  distinction  thus  made  between  the  Governmental  activity  and  commercial  

function of Government Companies.  Barring this limited disagreement, however at  

the end of para 41 the Constitution Bench observed that it is evident that the court  

correctly  posed  the  question  whether  the  State  Government  or  the  Central  

Government was the ‘appropriate government’ and rightly answered it.

34. In paragraph 42, the Constitution Bench examined the judgment of  

Hindustan Aeronautics Ltd. (supra). The Constitution Bench noted that the judgment  

in Heavy Engineering Mazdoor Union case was followed in Hindustan Aeronautics  

and it had taken note of the factor that if there was any disturbance of industrial  

peace in Barrackpore, the ‘appropriate government’ concerned for the maintenance  

of internal peace was the West Bengal Government.  The court observed that the  

factors which weighed with the Court could not be said to be irrelevant.  

35. In para 43 the Constitution Bench examined the judgment in Rashtriya  

Mill  Mazdoor  Sangh  (supra)  wherein  although  an  authorized  controller  was  

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appointed to replace the management of the respondent Model Mill, the Rashtriya  

Mill Mazdoor Sangh judgment had held that the undertaking could not be held to be  

carried on under the authority of the Central Government.  The Constitution Bench  

quoted the observations from the judgment with approval.

36. In para 44 the Constitution Bench referred to the FCI case (supra).  It  

noted that  the  FCI  judgment  had followed the judgments  in  Heavy Engineering  

Mazdoor Union and Rashtriya Mazdoor Mill  Sangh (supra) to hold that the State  

Government was the ‘appropriate government’ pertaining to the regional offices and  

warehouses of the FCI under the CLRA Act.  At the end of this para the Constitution  

Bench concluded “we find no illegality either in the approach or in the conclusion  

arrived at by the court in these cases.” (underlining supplied)

37. In paragraphs 45 and 46, thereafter once again the Constitution Bench  

turned to the judgment in Air India case and in para 46 it concluded as follows:

“    We have held above that in the case of a Central  Government  company/undertaking,  an  instrumentality  of  the  Government, carrying on an industry, the criteria to determine whether  the  Central  Government  is  the  appropriate  Government  within  the  meaning of the CLRA Act, is that the industry must be carried on by or  under  the  authority  of  the  Central  Government  and  not  that  the  company/undertaking is an instrumentality or an agency of the Central  Government for purposes of Article 12 of the Constitution;  such an  authority  may be conferred either  by a statute  or  by virtue of  the  relationship of principal and agent or delegation of power and this fact  has to be ascertained on the facts and in the circumstances of each  case. In view of this conclusion, with due respect,  we are unable to  agree with the view expressed by the learned Judges on interpretation  of  the  expression  “appropriate  Government”  in    Air  India  case  .”  (underlining supplied)

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Submissions on behalf of the Appellant

38. On this background the submission on behalf of the appellant was that  

way back since 1966 when the Tata Memorial Centre (T.M.C.) was constituted into a  

separate  society  and  a  public  trust,   it  has  all  throughout  functioned  as  an  

independent entity and it could not be considered to be a delegate of the Central  

Government.  It was submitted that at the inception the Tata Memorial Hospital was  

set up out of the funds of Sir Dorabji Tata Trust and not of the Central Government.  

The Government of India established the Indian Cancer Research Centre, but that  

was also under an agreement dated 7.10.1953 and in collaboration with the trustees  

of the Sir Dorabji Tata Trust.  The Government of India did give the initial grant and  

undertook to provide recurring expenses in respect of the staff and contingencies of  

the management but the centre was established on the land belonging to the Sir  

Dorabji Tata Trust.  Later on, the Central Government did take over the Hospital  

after the Trust decided to dedicate it to the nation.  However, at all material times,  

part of the expenses of the Hospital have been met from the funds generated by the  

Hospital.  After the formation of Respondent No. 1 as a registered society in 1966  

also,  the internal  sources generate 1/3rd,  (i.e approximately  25 crores out of 75  

crores) of the funds which are utilized for running the Hospital.  Thus, the following  

factors approved by the Industrial Court and the learned Single Judge were pressed  

into service on behalf of the appellants,

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i) In its inception the entire share capital and assets of T.M.C. were  

not solely owned or contributed by the Government of India in view  

of the donation by Dorabji Trust;  

ii) T.M.C is not wholly run by the funds of Government of India.  Its  

internal  sources  are  generating  1/3rd fund  which  is  utilized  for  

running the hospital.

iii) Its governing Council has the direct control over the activities of  

T.M.C.   The  T.M.C  is  functioning  under  its  own  byelaws  which  

suggest that the deep and intensive control  is by the Governing  

Council.

iv) The T.M.C. employees are not the Government servants;

39. It was pointed out on behalf of the appellants that Mr. Muthuswamy  

the Chief Administrative officer of the first respondent had admitted in his evidence  

that  there  was  no  interference  from the  Central  Government  in  the  day-to-day  

activities of the first respondent and they were looked after by the Directors of the  

T.M.C. itself. The labour categories of the employees were employed either by the  

Directors or by the Officers of the council.  He admitted that as far as functioning  

and administration was concerned, the first respondent was an autonomous body.  

As laid down in the leading decisions on this issue from time to time, including the  

one in Steel Authority of India (supra) whether the industry is carried on by or under  

the authority of the Central Government is to be decided on the facts of each case.  

In view of the facts which have come on record as above, it was submitted that the  

judgment of the Industrial Court could not have been faulted and since it was on the  

2

basis of the facts and circumstances placed on record, it was rightly left undisturbed  

by the learned Single Judge.

40. The  judgment  of  the  Division  Bench  was  assailed  also  for  laying  

emphasis on recital No. 6 of the agreement dated 6.1.1966 between the trustees of  

Sir Dorabji Tata Trust and Government of India and not the subsequent clauses of  

that agreement.  It was pointed out that in recital No. 9 of that agreement, it was  

proposed  to  amalgamate  the  two  institutions  and  to  entrust  the  control  and  

management to the newly created body under the agreement.  It was emphasized  

that as per clause 4 of the agreement all subsequent acquisitions shall vests in the  

holding trustees and clause 5 provides that the Centre shall  be under the direct  

management and control of the Council to be created.   

41. It was submitted that the appellant trade union had been recognized  

way-back in the year 1985 under the MRTU and PULP Act and several proceedings  

had been initiated by both the parties under this Act.  The first respondent had thus  

in a way accepted that the said act does apply to it and now it cannot be permitted  

to contend to the contrary.  It was, therefore, submitted that the Division Bench had  

erred  in  ignoring  that  once  the  society  was  formed  and  all  the  activities  were  

transferred to the society, it could no longer be considered as a delegate of the  

Central Government and that the Division Bench seriously erred in its understanding  

of the law laid down by this Court.

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Submissions on behalf of the first respondent

42. As against the submissions on behalf of the appellant, it was submitted  

on behalf of the first respondent that after the Hospital was dedicated to the nation,  

at  all  material  times  the  first  respondent  functioned  under  the  authority  of  the  

Central Government. The Tata Memorial Hospital set up by Sir Dorabji Tata Trust  

was  dedicated  to  the  nation  and  the  control  thereof  was  taken  over  by  the  

Government of India with effect from 1.4.1957 by virtue of the agreement between  

the two dated 4.2.1957.  After the decree was passed by the City Civil Court on  

27.3.1957 and the scheme was approved, all the properties of the Hospital came to  

be vested in the Government of India.  The Tata Memorial Centre finds a specific  

place in the rules of allocation of business framed by the President of India and it is  

stated to  be under  the Department of  Atomic Energy.   In the treatment  of  the  

disease of cancer radiation and Isotopes produced by the Bhaba Atomic Research  

Centre are required to be used and they are made available by the Department of  

Atomic Energy.  Although the society is created to run the administration of the first  

respondent, under clause 4  of the agreement dated 6.1.1966, the properties of the  

Tata Memorial Hospital and Research Centre which were vested in the Government  

by decree dated 22.3.1957 continue to be vested in the Government of India.  It is  

therefore, submitted that the Division Bench was correct in the view taken by it that  

the first respondent society continued to function as the delegate of the Central  

Government.

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43. The first respondent and the Division Bench emphasized the recital No.  

6 of the agreement dated 6.1.1966 and the relevant portion of the Decree and the  

scheme;  

The recital No. 6 reads as follows:-

“6.  AND WHEREAS the Trustees of the Sir Dorabji Tata  Trust being desirous of dedicating this Hospital to the Nation with all  its assets including the Cancer Infirmary Fund and the Three plots  Nos. 107, 108 and 109 of scheme No. 60, Naigaum Estate, requested  the  Government of India to take over the control and management  of  the  said  Hospital  with  effect  from  the  First  day  of  April  One  Thousand Nine Hundred and Fifty Seven and the Manage the same  at their own expense as from the said date onwards upon the terms  and conditions set forth in the Agreement made on the Fourth Day of  February One Thousand Nine Hundred and Fifty Seven (hereinafter  called the Hospital Agreement).”

44. The part of the decree emphasized is as follows:-

AND THIS COURT DOTH FURTHER ORDER that the properties  to  be conveyed,  transferred and assigned by the Trustees  to  the  Government  of  India  being  the  immovable  properties  particularly  described in Schedule B hereto and they are hereby vested in the  Government of India”

The relevant part of the scheme reads thus:-

“The Trustees of Sir Dorabji Tata Trust shall hand over  to the Government of India and the Government of India shall take  over the control and management of the Tata Memorial Hospital and  shall manage the same at their own expenses as and from 1st April  1957.”

45. Tests  emerging  for  determining  whether  the  industry  is  carried on under the authority of the Central  Government or the State  Government

Having seen the statutory framework it is clear that when it comes to  

an industry governed under the Industrial Disputes Act 1947, to be covered under  

2

the  MRTU  and  PULP  Act,  the  State  Government  has  to  be  the  ‘appropriate  

government’   in  relation to  any industrial  dispute  concerning  such industry.   As  

provided in Section 2 (3) of the MRTU and PULP Act, we have to fall back on the  

definitions of ‘industry’ and ‘appropriate government’ under the Industrial Disputes  

Act 1947.  As per the scheme of Section 2 (a) of the Industrial Disputes Act, for the  

industrial disputes concerning the industries specified in sub-section (i), and for the  

industries which are carried on by or under the authority of the Central Government,  

the Central Government is the appropriate government.  Section 2 (a) (ii) provides  

that  ‘in  relation  to  any  other  industrial  dispute’  the  State  Government  is  the  

‘appropriate government’.  Therefore in an industrial disputes concerning industries,  

other  than  specified  industries  it  becomes  necessary  to  examine  whether  the  

industry is carried on by or under the authority of the Central Government.  When it  

does not fall under either of the two categories, the State Government will be the  

appropriate government.   

46. It is also material to note that this exercise is to be done basically in  

the context of an industrial  dispute to find out as to whether in relation to any  

industrial dispute concerning that industry, Central Government is the ‘appropriate  

government’  or  the  State  Government  is  the  ‘appropriate  government’.   Oxford  

dictionary defines word ‘concerning’ as ‘involving’ or ‘about’.  The word ‘concerning’,  

according  to  Webster’s  Dictionary  means  ‘relating  to’,  ‘regarding’  or  ‘respecting’  

proximate, intimate and real connection with the establishment.  It is to be noted  

that the Industrial Dispute Act is an act for investigation and settlement of industrial  

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disputes and the MRTP and PULP Act 1971 is for recognition of trade unions for  

facilitating  collective  bargaining  for  certain  undertakings  with  which  we  are  

concerned  in  the  present  matter,  and  for  prevention  of  certain  unfair  practices  

amongst  other  objectives.   This  being  the  position  it  is  to  be  noted  that  the  

examination of the issue as to which government is the ‘appropriate government’ is  

to be carried out in this context.   

47. As  far  as  an  industry  ‘carried  on  by  the  Central  Government’  is  

concerned, there need not be much controversy inasmuch as it would mean the  

industries  such  as  the  Railways  or  Post  and  Telegraph,  which  are  carried  on  

departmentally  by  the  Central  Government  itself.    The  difficulty  arises  while  

deciding the industry which is carried on, not by but ‘under the authority of the  

Central Government’.   Now, as has been noted above, in the Constitution Bench  

Judgment in Steel Authority of India Limited (supra), the approach of the different  

Benches  in  four  earlier  judgments  has  been  specifically  approved  and  the  view  

expressed in Air India (supra)  has been disagreed with.  The phrase ‘under the  

authority’ has been interpreted in Heavy Engineering (Supra), to mean ‘pursuant to  

the authority’ such as where an agent or servant acts under authority of his principal  

or  master.  That  obviously  cannot  be said of  a  company incorporated under  the  

Companies Act, as laid down in Heavy Engineering Mazdoor Union case (supra).  

However, where a statute setting up a corporation so provides specifically, it can  

easily be identified as an agent of the State.  The Judgment in Heavy Engineering  

Mazdoor Sangh observed that the inference that a corporation was an agent of the  

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Government  might  also  be  drawn  where  it  was  performing  in  substance  

governmental  and  non  commercial  function.   The  Constitution  Bench  in  Steel  

Authority  case (supra)  has disagreed with this  view in para 41 of  its  judgment.  

Hence, even a corporation which is carrying on commercial activities can also be an  

agent of the state in a given situation. Heavy Engineering Judgment is otherwise  

completely approved wherein, it is made clear that the fact that the members or  

directors of corporation and he is entitled to call for information, to give directions  

regarding functioning which are binding on the directors and to supervise over the  

conduct of the business of the corporation does not render the corporation an agent  

of  the  Government.   The  fact  that  entire  capital  is  contributed  by  the  Central  

Government and wages and salaries are determined by it, was also held to be not  

relevant.

48. In Hindustan Aeronautics the fact that the industrial dispute had arisen  

in  West  Bengal  and  that  the  ‘appropriate  government’  in  the  instant  case  for  

maintaining  industrial  peace  was  West  Bengal  was  held  to  be  relevant  for  the  

Governor of West Bengal to refer the dispute for adjudication.  In Rashtriya Mill  

Mazdoor case the fact that the authorized controller was appointed by the Central  

Government to supervise the undertaking was, held as not making any difference.  

The fact that he was to work under the directions of the Central Government was  

held not to render the industrial undertaking an agent of the Central Government.  

49. In Food Corporation of India (supra), inspite of the fact that FCI is a  

specified industry under Section 2 (i) (a) of the ID Act 1947, this Court considered  

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the  definition  of  ‘appropriate  government’  in  CLRA  Act  1970,  and  the  State  

Governments were held to be the ‘appropriate governments’ for the regional offices  

and the warehouses situated in various states wherein the demand for regularization  

of the services under the CLRA Act had arisen.   

50. The propositions in Steel Authority are to be seen on this background  

viz. that merely because the government companies / corporations and societies are  

discharging public functions and duties that does not by itself make them agents of  

the Central or the State Government.  The industry or undertaking has to be carried  

under the authority of the Central Government or the State Government.   That  

authority  may be conferred either  by a statute  or  by virtue of  a relationship  of  

principle and agent, or delegation of power.  When it comes to conferring power by  

statute, there is not much difficulty.  However, where it is not so, and whether the  

undertaking is functioning under authority it is a question of fact.  It is to be decided  

on the facts and circumstances of each case.  

51.    Application of these tests to the facts of the present case.  

As far as the facts of the present case are concerned, as can be seen from  

the  submissions  of  the  parties,  the  determination of  the  question  as  to  which  

Government is the appropriate Government for the first respondent – establishment,  

will depend upon two issues –  

(1) How is the property of the first respondent vested?   and  

(2) Whether the control and management of the Hospital and the Research  

Centre is independently with the first respondent?

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52.     How is the property of the first respondent vested.  

As  can  be  seen  from  the  facts,  which  have  come  on  record,  the  Tata  

Memorial Hospital was set up by Sir Dorabji Tata Trust. It was being maintained out  

of the funds of the Trust itself as well as from the grants made over by the Central  

Government  as  well  as  by  the  State  Government.  The  Indian  Cancer  Research  

Centre was set up by the joint collaboration of Sir Dorabji Tata Trust and the Central  

Government by an agreement dated 07.10.1953. The initial grant for the Center was  

given by the Central Government and it was meeting the expenses of the Centre  

though it was set up on the land belonging to the Trust. In 1957 Sir Dorabji Tata  

Trust decided to dedicate to the nation the property on which the Tata Memorial  

Centre stands. An agreement was entered in that year between the trustees and the  

Central  Government.  The  control  and  the  management  of  the  hospital  was  

transferred to the Central Government and a vesting order was passed in the same  

year to that effect by the City Civil Court in appropriate proceedings. In the year  

1966,  the  Central  Government  and  the  Dorabji  Tata  Trust  entered  into  an  

agreement  by  virtue  of  which  Tata  Memorial  Hospital  and  the  Indian  Cancer  

Research Centre were amalgamated and the first respondent society was created  

and  the  administration  and  the  management  of  the  Centre  was  vested  in  the  

Governing Council of the said Society. The first respondent – Centre was registered  

as a Society under the Societies Registration Act, 1860 as well as under the Bombay  

Public Trust Act, 1950.  

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53. The  first  respondent  heavily  relied  upon the test  of  vesting  of  the  

property  as  the  main  criterion  for  ascertaining  as  to  who  controls  the  first  

respondent for the purpose of deciding as to which Government is the Appropriate  

Government.  It was emphasized that under the agreement of 1957, the Dorabji  

Tata Trust handed over the property to the Central Government and that vesting  

had been continued in the agreement of 1966 also. It is, however, to be noted that  

as per this very agreement, the future acquisitions were to vest in the Governing  

Council  of  the  Society.  Rule  –  26  of  the  Rules  and  Regulations  of  the  first  

respondent – Society provides that all properties and funds of the Centre (except  

the immovable properties as specified) vest in the council:  

“26. Properties and Funds vested in the Council: Except the  existing  immovable  properties  of  the  Centre  and such  immovable  properties as may be vested in the Holding Trustees, all the other  properties  of  the  Centre  shall  vest  in   the  Council  and  more  particularly the following:  

(a) recurring and non-recurring grants made by Government; (b) other  grants,  donations  and  gifts  (periodical  or  otherwise),  

other than those intended to form the corpus of the property  and funds of the Centre or held for the benefit of the Centre  by the Holding Trustees.;

(c) the income derived from the immovable properties and the  income  of  the  funds  vested  in  the  Holding  Trustees  and  income of the funds vested in the  

Council and also fees, subscription and other annual receipts; and  (d)   all plant and machinery, equipment and instruments (whether  medical, surgical, laboratory, workshop or of any other kind), books  and journals,  furniture, furnishings and fixtures belonging to the  Centre.”   

54.  However, even when it comes to the immovable properties, Section –  

5 of the Societies Registration Act provides for deemed vesting of the properties  

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belonging to a society into the Governing Body of such society.  Section – 5 of the  

Societies Registration Act reads as follows:  

“5.Property of society how vested –     The property, movable or immovable, belonging to a society  

registered under this Act, if not vested in trustees, shall be deemed to  be vested, for the time being, in the governing body of such society,  and in  all  proceedings,  civil  and criminal,  may be described as the  property of the governing body of such society by their proper title.”  

55.  In this behalf, we must keep in mind, the raison d'etre of the above  

referred to Section – 5 that once a trust is established and a society is registered for  

the administration of the trust, the statute contemplates that the society should be  

fully autonomous and that the lack of actual transfer of property of the trust should  

not prevent the governing body in its administration. Law recognizes that it would  

be proper to regard that as done which ought to have been done. The deeming  

provision creates a fictional vesting in favour of the Governing Council and not in  

favour of the Society or the Trust. This is also for the reason that society is not a  

body corporate which has also been held by this Court in the Board of Trustees,  

Ayurvedic  and  Unani  Tibia  College,  Delhi  Vs.  The  State  of  Delhi  and  

Another [AIR 1962 SC 458] and reiterated in  Illachi Devi (D) by L.Rs. and  

Others Vs. Jain Society, Protection of Orphans India and Others [AIR 2003  

SC 3397]. Since the society cannot hold the property in its name, vesting of the  

property in the trustees is likely to hinder the administration of the trust property,  

particularly,  where  the  trustees  themselves  or  their  legal  representatives  claim  

adversely to the trust. It is for this reason that the law vests the property belonging  

to the society in its Governing Body.  

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56. The phrase ‘property belonging to a person’ has two general meanings  

(1) ownership, (2) the absolute right of user (per Martin B in Att. Gen. vs. Oxford  

&  C.  Railway  Co.  31  L.J.  (1862)  218  at  227)  ‘Belonging’  connotes  either  

ownership or absolute right of user ( Wills J in The Governors of St. Thomas’, St.  

Bartholomew’s, and Bridewell  Hospital vs. Hudgell (1901) 1 KB 381.  The  

Centre has an absolute right of user over its immovable properties which it has been  

exclusively exercising all  throughout.   Section 5 of  the Societies Registration Act  

clearly declares that the property belonging to the society, meaning under its user, if  

not vested in the trustees shall be deemed to be vested in the Governing Council of  

the society.   In the present case,  it  is  nobody’s  case that  the property remains  

vested in the Trustees of the Dorabji Tata Trust. It has been canvassed on behalf of  

the  first  respondent  that  the  property  is  vested  in  the  Central  Government.  

However,  the  Central  Government  has  never  claimed  any  title  to  the  property  

adverse to the first respondent – Tata Memorial Centre. It is true that the property  

dedicated to the Tata Memorial Centre has not been transferred to the Society by  

the Central Government. But the fact is that it is the Governing Council of the first  

respondent which has been administering and controlling the day to day affairs of  

Tata  Memorial  Centre  and its  property  funds,  employment  of  its  staff  and their  

conditions of service. Hence, in view of the above referred to factual as well as legal  

scenario the first issue will have to be decided that the property dedicated to the  

first respondent will be deemed to be vested in the Governing Council of the first  

respondent – Society.    

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57. Whether the Control and Management of the Hospital and the  Research Centre is independently with the first respondent.  

As far as the control and management are concerned, it is clear from  

the facts referred to above that the Central Government has the power to appoint  

four nominees on the Governing Council of the first respondent. We have already  

seen, as held in Heavy Engineering Mazdoor Union Case (Supra), mere power to  

appoint the Directors does not warrant a conclusion that the particular undertaking  

is a Central Government Undertaking. The question is whether the undertaking is  

functioning as the agent of the Central Government. In the instant case, the society  

was  created  to  entrust  the  control  and  management  of  the  Hospital  and  the  

Research  Centre  to  the  Society.  Recital  No.9  of  the  agreement  of  the  1966  

specifically states as follows:  

“9) AND WHEREAS the Government of India and the Trustees  of the Sir Dorabji Tata Trust are now desirous of amalgamating the  two  institutions  and  entrusting  their  control  and  management  to  a  society.”   

58. Consequently,  Rule – 3 of  the Society,  which has been referred to  

earlier, also lays down that the administration and the management vests in the  

Governing Council. It is also to be noted that as per Rules and Regulation Nos.3 and  

4  which  have  been  quoted  earlier,  the  administration  and  management  of  the  

Centre is vested in the Council which is declared to be an executive body of the  

center. As per the foreword to the bye-laws of the Tata Memorial Centre -

“the final decision on the extent of applicability of these rules to  all  Tata  Memorial  Centre  employees  rests  with  the  Tata  Memorial  Governing Council.  Its  decision  on the interpretation  of  these rules  adopted for Tata Memorial Centre employees will be final”.  

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Thus, as per the Rules and Regulations, the entire administration and management  

of Tata Memorial Centre is with the Governing Council.  

59. It  has  clearly  come  in  the  evidence  of  Mr.Muthusamy,  the  Chief  

Administrative Officer of the first respondent that there was no interference of the  

Central  Government  in  the  day  to  day  activities  of  the  first  respondent.  The  

decisions were taken by the directors of the first respondent itself. As can be seen  

from  the  bye-laws  of  the  first  respondent,  the  appointments  and  the  service  

conditions were modelled on the pattern of Department of Atomic Energy, but the  

pay,  allowances  and  pension,  etc.  are  on  the  pattern  of  the  Mumbai  Municipal  

Corporation, and which are fixed by the decisions of the Governing Council of the  

first respondent.  The material and the evidence as referred to above clearly show  

that  the  entrustment  of  the  management  and  control  of  the  Hospital  and  the  

Research  Centre  to  the  Society  was  complete  and  it  has  been  so  functioning  

thereafter.  

60.  Besides,  as  observed  in  Heavy  Engineering  Mazdoor  Union  Case  

(supra), if we look to the definition of ‘employer’ under the Industrial Disputes Act,  

in  a  case  where  an  industry  is  carried  on  by  or  under  the  authority  of  the  

Government, the employer is defined as the authority prescribed in this behalf or  

Head of the Department. In the instant case, no such authority has been prescribed,  

nor  any  head  of  the  department  notified  by  the  Central  Government.  On  the  

contrary,  right  from  the  time  the  society  was  created,  its  administration  and  

management  is  completely  under  its  Governing  Council  and  it  is  functioning  

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independently.  No  contrary  evidence  has  been  produced.  The  evidence  of  Mr.  

Muthusamy, the Chief Administrative Officer of the Tata Memorial Centre establishes  

the independent functioning of the first respondent under its Governing Council.  It  

is  the Governing Council  which has been exercising the executive powers of the  

employer.  

61. It was then submitted that mentioning of the Tata Memorial Centre in  

the Rules  for  Allocation of  Business  of  Government  of  India  is  a  pointer  to  the  

control  of  the  Central  Government.  Insofar  as  the  Rules  of  business  of  the  

Government  of  India  are  concerned,  they  are  for  the  purpose  of  allocation  of  

business  between  various  departments  of  Government  of  India  whenever  the  

Government of India has to take a decision. As rightly held by a Division Bench of  

Bombay  High  Court  in  their  own  case  in  Tata  Memorial  Centre  Vs.  Sanjay  

Verma reported in 1997 (75) Indian Factories and Labour Reports Page –4  

mere allocation of business under any department would not in any manner decide  

the issue as raised in the present case as to whether a particular industry is under  

the control of the Central Government. The business rules cannot be conclusive to  

show that any institution  or  organization listed under  the allocation of  business,  

would be part of any department of the Government of India.  Besides, as noted in  

Heavy Engineering Mazdoor Union (supra) even if a Minister appoints the directors,  

gives directions,  calls  information or supervises business,  that will  not  make the  

industry an agent of the Government.

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62. Hence  we  have  to  conclude  that  even  on  the  test  of  control  and  

management of  the Hospital  and the Centre, they are functioning independently  

under the 1st respondent Society.  They cannot be said to be ‘under the control’, of  

the Central Government.  In the circumstances the State Government shall have to  

be held as the appropriate government for the 1st respondent for the purpose of I.D.  

Act consequently the MRTU & PULP Act.   

63. It  is  material  to  note  that  until  the  present  litigation,  neither  the  

Central Government nor the Dorabji Tata Trust or even the Governing Council of the  

first respondent ever disputed the application of the MRTU and PULP Act to the first  

respondent establishment. Prior to the Applications leading to the present appeal,  

the respondent – 1 has also filed Complaints under the MRTU and PULP Act. Neither  

the appellant nor the second respondent – rival union ever disputed the application  

of the Act. In fact, the first respondent has in a way, by its own conduct acquiesced  

into the application of the Act, and the appellant – Union has been recognized under  

the Act right from 1985.  

64. In view of all  these factors,  it  is  not possible for us to sustain the  

judgment of the Division Bench of the Bombay High Court. The Division Bench has  

clearly erred in its consideration of the judgment in the Steel Authority of India  

Case. The first respondent cannot be held to be functioning under the authority of  

the  Central  Government.  The  State  Government  is  therefore  the  appropriate  

Government for the respondent No. 1 for the purposes of ID Act and MRTU and  

PULP Act.  The two Applications filed by respondent No. 2 will have to be held as  

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maintainable under MRTU and PULP Act.  The order of the Industrial Court holding  

them to be maintainable but dismissing them on merits is held to be correct.  In the  

circumstances, the appeal is allowed.  The order passed by the Division Bench of the  

Bombay High Court is set aside and the order passed by the Industrial  Court as  

confirmed by the learned Single Judge, is restored.  The Appeal No. 133/2002 filed  

by the 1st Respondent in the High Court shall stand dismissed.

66. Parties will bear their own costs.  

-------------  

          ……………………………..J.  

        (Altamas Kabir)

………………………………J. (Cyriac Joseph)

          ……………………………..J.           (H.L. Gokhale)

New Delhi

Dated :  August 9, 2010

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