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PETITIONER: SHRI AKLU RAM MAHTO

       Vs.

RESPONDENT: SHRI RAJENDRA MAHTO

DATE OF JUDGMENT:       01/04/1999

BENCH: Sujata V.Manohar, K.Venkataswami,

JUDGMENT:

Mrs.  Sujata V.  Manohar, J.

     These  appeals  have been filed under Section 116A  of the Representation of the People Act, 1951.  In January 1995 the  Election Commission of India issued a notification  for election,  inter  alia, to the Legislative Assembly  of  the State  of Bihar.  The last date for filing nomination papers for  Bokaro Assembly Constituency No.279 was 23.1.1995.  The appellant and the respondents in the two appeals filed their nomination  papers  from the Bokaro  Assembly  Constituency. Scrutiny  of nomination papers took place on 24.1.1995.  The nominations  of  the  respondents in the  two  appeals  were rejected  on the ground that the respondents Rajendra  Mahto and  Ashok  Kumar Srivastava were Managing agents of  Bokaro Steel  Plant belonging to the Steel Authority of India  Ltd. Hence  they  were  disqualified  under  Section  10  of  the Representation of the People Act, 1951.

     At  the  election, the appellant was elected from  the Bokaro  Assembly  Constituency.  The two  respondents  filed separate  election petitions challenging the election of the appellant  on  the ground that their nomination papers  were improperly  rejected.   They have succeeded in the  election petitions  before  the High Court.  The High Court  has  set aside  the election of the appellant on the ground that  the nomination  papers  of  the  two  respondents  were  wrongly rejected.   The appellant has filed the present appeals from the  decision  of  the  High   Court  in  the  two  election petitions.

     The respondent-Rajendra Mahto (in Civil Appeal No.7538 of 1997) was working as a Khalashi in the Bokaro Steel Plant of  the Steel Authority of India Ltd.  at the material time. This   is  a  Level-III  post  in  the  said   plant.    The respondent-Ashok  Kumar Srivastava ( in Civil Appeal No.7644 of  1997) was working as a Meter Reader in the Bokaro  Steel Plant  of  the Steel Authority of India Ltd.  This is  Level VII  post.  The Steel Authority of India Ltd.  is a  company in  which  the  entire share holding is held  by  the  Union Government.   Section 10 of the Representation of the People Act, 1951 provides as follows:-

     "Disqualification   for   office    under   Government company.- A person shall be disqualified if, and for so long

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as,  he  is  a managing agent, manager or secretary  of  any company  or corporation (other than a co-operative  society) in  the capital of which the appropriate Government has  not less than twenty-five per cent share."

     The  Returning  Officer   for  279-Bokaro  Legislative Assembly  Constituency in his order has held the  nomination papers  filed  by Rajendra Mahto and Ashok Kumar  Srivastava invalid on the ground that the two respondents are employees of  the Bokaro Steel Plant and they are the managing  agents of  the  Bokaro  Steel Plant.  Hence they  are  disqualified under Section 10 of the Representation of Peoples Act, 1951.

     The  order of the Returning Officer is, on the face of it,  unsustainable.  Rajendra Mahto who was at the post of a Khalashi  which  is  at  level L-III  in  the  gradation  of workers,  is  holding  a non- executive post.   Ashok  Kumar Srivastava  who was working as a Meter Reader was working at level  L-VII.   Both  these posts are  non-executive  posts. Section  10 disqualifies only the Managing Agent,  Secretary or  Manager  of  any company, in the capital  of  which  the appropriate  Government has not less than 25% share holding. Obviously,  neither of them is either Secretary or  Manager. A Managing Agent is a person who has been entrusted with the management  of  the whole or substantially the whole of  the affairs of a company.  Managing agencies have been abolished with  effect  from  3rd  of April, 1970  by  reason  of  the Companies  Act  being  amended  by Act XVII  of  1969.   The Companies  Act  contains  the   following  definition  of  a Managing  Agent  under Section 2(25) of the  Companies  Act, 1956:-

     "2(25)- "Managing agent" means any individual, firm or body  corporate entitled, subject to the provisions of  this Act,  to  the management of the whole, or substantially  the whole, of the affairs of a company by virtue of an agreement with  the company, or by virtue of its memorandum or article of  association,  and includes any individual, firm or  body corporate  occupying  the position of a managing  agent,  by whatever name called;

     Explanation  I  -  For  the   purposes  of  this  Act, references  to  "managing  agent"   shall  be  construed  as references  to any individual, firm, or body corporate  who, or  which,  was,  at any time before the 3rd day  of  April, 1970, the managing agent of any company;

     Explanation  II  -  For the removal of doubts,  it  is hereby  declared that notwithstanding anything contained  in section  6  of  the Companies (Amendment)  Act,  1969,  this clause  shall  remain,  and shall be deemed always  to  have remained, in force."

     Quite clearly, neither of the respondents is in-charge of  the  affairs  of  Bokaro   Steel  Plant  and  cannot  be considered as Managing Agent of the Bokaro Steel Plant.  The rejection  of  the nomination papers of the two  respondents was, therefore, wholly erroneous.

     The  appellant,  however,  contended in  the  election petition  that  even if Section 10 of the Representation  of the People Act, 1951 may not be attracted, the provisions of Article  191  of the Constitution are applicable to the  two

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respondents  and  hence their nomination paper  was  rightly rejected.   Under  Article  191(1)(a)  it  is  provided   as follows:-

     "Article  191 - (1) A person shall be disqualified for being  chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State -

     (a)  If  he  holds  any office  of  profit  under  the Government of India or the government of any State specified in  the First Schedule, other than an office declared by the Legislature  of  the  State  by law not  to  disqualify  its holders."

     Can  either  of the two respondents be  considered  as holding  any office of profit under the Government of India? In  the  case of Gurugobinda Basu v.  Sankari Prasad  Ghosal and  Ors.   (1964  (4) SCR 311) the  Court  after  examining earlier  authorities enumerated various factors which  enter into  the  determination  of the question whether  a  person holds an office of profit under the Government.  He holds an office  of profit under the Government if the Government is: (1) the appointing authority;  (2) the authority vested with power to terminate the appointment;  (3) the authority which determines  the remuneration;  (4) the source from which the remuneration is paid and (5) the authority vested with power to  control  the  manner in which the duties of  office  are discharged.   All  factors  need not  be  present.   Whether stress  will be laid on one factor or the other will  depend on  the facts of each case.  But where several elements  are present  in a given case then the officer in question  holds the  office  under the authority so empowered.   This  Court pointed out that the Constitution itself makes a distinction between  "the  holder  of  an office  of  profit  under  the Government"  and "the holder of a post or service under  the Government"  (See  Articles 309 and 314).  The  Constitution has also made a distinction between "the holder of an office of profit under the Government" and "the holder of an office of  profit  under a local or other authority subject to  the control of the Government" (See Article 58(2) and 66(4).  In Gurugobinda  Basu’s  case  (Supra),   the  appellant  was  a chartered  accountant.   He  was  a partner  of  a  firm  of auditors.   This  firm  acted as auditors of  two  companies amongst  others.   One of the companies was wholly owned  by the  Union of India and the second company was wholly  owned by  the  West Bengal Government.  The Court was required  to consider  whether the chartered accountant could be said  to hold  an  office  of profit under the Government.   In  this context  this Court said that an office of profit under  the Government need not imply that the person holding the office should  be in the service of the Government.  There need not be any relationship of master and servant.  However, in that case the chartered accountant was appointed as an auditor of the  two  companies  by  the  Central  Government;   he  was removable  by  the Central Government;  the Comptroller  and Auditor General of India exercised full control over him and his  remuneration  was  fixed  by  the  Central   Government although  it  was paid by the companies concerned.  In  this situation  the  Court said that he was holding an office  of profit under the Government.

     The same test was reiterated by this Court in the case of  D.R.   Gurushanthappa v.  Abdul Khuddus Anwar  and  Ors. (AIR  1969  SC  744).  The tests spelt  out  in  Gurugobinda Basu’s  case  (Supra) were relied upon in this  case.   This

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Court  further  said  that  an   indirect  control  by   the Government  of the company in which the office of profit was held was not contemplated under Article 191.  In the case of Gurushanthappa   (Supra)   a   Government  undertaking   was transferred  to  a company registered under  Companies  Act. The  shares of the company were held by the Government.  The candidate  was  working as a Superintendent in the  company. The  power  to  appoint and dismiss an employee  working  as Superintendent did not vest in the Government.  The power to control and give directions as to the manner in which duties of  office were to be performed by that workman also did not vest  in  the Government.  Even the power to  determine  the question  of  remuneration  payable to the workman  was  not vested  in  the  Government.  In  these  circumstances,  the indirect  control exerciseable by the Government because  of its  power  to  appoint  Directors   and  to  give   general directions  to  the  company  could not  make  the  post  of Superintendent, Safety Engineering Department of the company an office of profit under the Government.

     The   Court   dealt  with   Article  191(a)   of   the Constitution  along with Section 10 of the Representation of the  People  Act, 1951.  It said that  the  disqualification laid down under Article 191(1)(a) of the Constitution is not intended  to apply to the holder of an office of profit of a company  under the control of the Government.  It is Section 10  of  the Representation of People Act, 1951, which  deals with  the holding of an office of profit in a company in the capital  of  which  the  Government has not  less  than  25% shares.   Otherwise  this section will be redundant.   Also, Parliament  when  passing  the  Act   did  not  consider  it necessary  to  disqualify every person holding an office  of profit   under  a  Government   Company.   It  limited   the disqualification  to persons holding the office of  Managing Agent,  Manager or Secretary of such a company.   Therefore, the fact that the entire share capital in a company is owned by  the  Government  does  not  obliterate  the  distinction between Article 191(1)(a) of the Constitution and Section 10 of the Representation of the People Act, 1951.

     However,  in  the  later case of Biharilal  Dobray  v. Roshan  Lal  Dobray  (1984 (1) SCC 551) (at page  569)  this Court  said  that  even though the incorporation of  a  body corporate  may suggest that the statute intended it to be  a statutory  corporation independent of the Government, it  is not  conclusive  on  the question whether it  is  really  so independent.   Sometimes  the  form may be that  of  a  body corporate  independent of the Government.  But in  substance it  may be just the alter ego of the Government itself.  The true test of determination of the said question depends upon the degree of control the Government has over it, the extent of  control exercised by several other bodies or  committees over  it and their composition, the degree of its dependence on  Government  for its financial needs and  its  functional aspect,   namely,  whether  the   body  is  discharging  any important  governmental function or just some function which is  merely optional for the Government.  In Biharilal Dobray a  teacher who was employed by the Board of Basic  Education under  the U.P.  Basic Education Act, 1972 was considered as holding  an  office of profit under the State on the  ground that  the U.P.  Basic Education Act discharged an  important responsibility   of  the  Government   to  provide   primary education  in  the  State.   The   Act  enabled  the   State Government  to take over all basic schools which were  being run  by the local bodies in the State and to manage them  as

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provided  under the Act;  as also to administer all  matters pertaining  to  the  entire  basic education  in  the  State through the Board.  The teachers and other employees were to be  appointed in accordance with Rules by officers who  were themselves  appointed  by the Government.  The  disciplinary proceedings  in respect of the employees were subject to the final   decision   of  the   State  Government.   In   these circumstances,  the post of a teacher under the U.P.   Basic Education Act was an office of profit under the Government.

     In  the  case  of Satrucharla  Chandrasekhar  Raju  v. Vyricherla  Pradeep Kumar Dev and Anr.  (1992 (4) SCC  404), however,  the  post  of  a teacher of a school  run  by  the Integrated  Tribal  Development  Agency (ITDA) which  was  a registered  society, was held not to be an office of  profit under  the  Government.   The Government by  its  order  had directed  that all the educational institutions in the  ITDA shall  be brought under the unified control of the education department.   The Government accorded sanction for  creation of posts and funds for meeting the expenditure.  The project officer  of  the  ITDA who was also the  District  Collector alone  appointed teachers and had the power to remove  them. The  Court said that the degree and extent of control of the Government  had  to be examined on the facts of  each  case. Although Government had some control over the ITDA, it was a registered society having its own constitution.  The project officer  and not the Government had the power to appoint and remove  teachers.   The  whole  scheme was set  up  for  the welfare  of  tribals  and  it  was  entrusted  to  ITDA,  an authority  by  itself,  subject  to   the  control  of   the Government  in  certain respects just like any  other  local authority.   Therefore, taking a practical view it could not be  said  that the teacher was holding an office  of  profit under the Government.

     We  need  not  examine  more  authorities,  since  the principles  for applying Article 191(1)(a) appear to be well settled.

     The  appellant, however, relied upon State of  Gujarat and Anr.  etc.  v.  Raman Lal Keshav Lal Soni and Ors.  etc. (1983  (2)  SCC 33) which was a decision of  a  Constitution Bench  of this Court.  This decision was not concerned  with Article  191(1)(a).   This Court, however, was  required  to decide  whether ex-municipal employees who were allotted  to the Panchayat Service of the State Government had the status of  Government servants.  The Court examined the  provisions of  the  Gujarat  Panchayats  Act, 1961 and  held  that  the panchayat  service  constituted  under Section  203  of  the Gujarat  Panchayats Act is a civil service of the State  and the members of the service are Government servants.  We fail to  see how this judgment can be applied to the facts of the present case.

     The  Bokaro  Steel Plant is under the  management  and control  of  the  Steel Authority of India Ltd.  This  is  a company  incorporated under the Companies Act.  Undoubtedly, its  shares  are  owned  by  the  Central  Government.   The Chairman  and  the Board of Directors are appointed  by  the President of India.  However, the appointment and removal of workers  in  Bokaro Steel Plant is under the control of  the Steel  Authority  of India Ltd.  Their remuneration is  also determined  by  the  Steel  Authority  of  India  Ltd.   The functions  discharged  by the Steel Authority of India  Ltd. or  by  the  Bokaro  Steel Plant  cannot  be  considered  as

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essential  functions of the Government.  Amongst the objects of  the  Steel  Authority  of India Ltd.   set  out  in  the Memorandum  of  Association  are  to carry on  in  India  or elsewhere   the   trade  or   business   of   manufacturing, prospecting, raising, operating, buying, selling, importing, exporting, purchasing or otherwise dealing in iron and steel of  all  qualities,  grades and types.  These  objects  also include  rendering  consultancy  services   to  promote  and organise an integrated and efficient development of iron and steel   industry   and   to  act  as   an   agent   of   the Government/public  sector  financial   institutions  in  the manner  set  out in the Objects clause.  In this  context  a worker  holding the post of a Khalashi or a Meter Reader  is not  subject to the control of the Central Government nor is the  power  of his appointment or removal exercised  by  the Central  Government.  Control over his work is exercised not by  the Government, but by the Steel Authority of India Ltd. The  respondents cannot, therefore, be considered as holding an office of profit under the Central Government.

     The  High Court, therefore, was right in holding  that the  nomination  papers of the two respondents were  wrongly rejected  and  hence  the  election  of  the  appellant  was required   to  be  set  aside   under  Section  100  of  the Representation of the People Act, 1951.  In the premises the appeals are dismissed with costs.