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PETITIONER: HINDUSTAN AERONAUTICS LTD.

       Vs.

RESPONDENT: THE WORKMEN AND ORS.

DATE OF JUDGMENT04/08/1975

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. ALAGIRISWAMI, A. GOSWAMI, P.K.

CITATION:  1975 AIR 1737            1976 SCR  (1) 231  1975 SCC  (4) 679  CITATOR INFO :  D          1988 SC1369  (13)

ACT:      Industrial  Disputes  Act  (14  of  1947)  s.  2(a)(u)- ’Appropriate Government, Scope  of-Direction  by Tribunal to make certain employees permanent- Propriety. ’

HEADNOTE:      The Government  of West  Bengal referred under s. 10(1) of the  Industrial  Disputes  Act,  1947,  five  issued  for adjudication by  the Industrial  Tribunal. The  dispute  was between the  respondents-workmen working  at  the  Barkeeper branch of  the appellant  company’s workshop. All the shares of the  appellant are  owned by the Central (Government. and its Memorandum  and Articles  of Association  point out  the vital role  and control  of the  Central Government  in  the matter et carrying on of the industry.      The Tribunal  granted  relief  with  respect  to  three issues.      In  appeal   to  this  Court,  the  competency  of  the Government to  make the  reference  was  challenged  on  the ground that the appropriate Government to make the reference was either  the Central Government, because the industry was under the  authority of the Central Government, or the State of Karnataka,  since the  works of  the Barkeeper  branch is under the Banglore Divisional office of the Company.      Rejecting the  contention, but  allowing the  appeal to this Court on merits, ^      HELD: l  (a) the submission regarding the competency of the Central  Government is  identical to the one made before this Court  and repelled  by this Court in the case of Heavy Engineering Mazdoor  Union v.  The Sate  of Bihar  [1969]  3 S.C.R. 995. [233C]      (b) The  fact that  the Government company in the Heavy Engineering Mazdoor  Union ease  was carrying on an industry where  Private  Sector  Undertakings  were  also  operating, whereas, in  the instant  case,  the  Government  alone  was entitled to  carry on to the exclusion of private operators. would not make any difference. [234B]      (c) The  definition of  "appropriate Government"  in s.

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2(a)(1) of the Industrial Disputes Act his been amended from time  to   time  and  certain  statutory  corporations  were incorporated  in   the  definition   to  make   the  Central Government    the appropriate Government’ in relation to the industry carried  on by them. But no public company, even if the shares  were exclusively  owned by  the Government,  was brought within the definition. [234C]      (2) Assuming that the Barkeeper branch was under the control of the Bangalore Division of the Company, it was a separate branch working as a separate unit. The workers were receiving their pay at Barkeeper, were under the control of the officers of the Company stationed there, their grievances were their own and the cause of action in relation to the industrial dispute arose there. If there was any disturbance of industrial peace at Barrackpore, the appropriate Government concerned in its maintenance was the West Bengal Government,  [234D-F]      M/s. Lipton  Limited and  another  v.  Their  employees [1959] 2 Suppl. S.C.R. 150  distinguished.      (3)   On the  first issue relating to allowance for the education l  employees’ children  the Tribunal  directed the appellant to  pay Rs.  12/- per  month to  each employees to meet  the   educational  expenses   of  his  children.  This direction is in elect a revision of the pay structure of the Barrackpore employees  and the  Tribunal had no jurisdiction to change  the  ware  structure  in  the  garb  of  allowing educational expenses, [235A-C] 232      (4) On the issue regarding revision of lunch allowance, the award  of  the  Tribunal  was  unnecessary  because  all members of  the staff  were getting   such  lunch allowance. [235E-F]      (5) As  regards the  directions of  the  Tribunal  that certain canteen  employees should  be made permanent. it was not justified  because those  workman  were  casual  workmen appointed temporarily.  The workmen  could be made permanent only against  permanent vacancies  and  not  otherwise,  and there was  no direction  by the Tribunal for the creation of any new post. [235-H]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1330 of 1969      Appeal by  special leave  from the  Award dated the 5th March, 1969  of that Fifth Industrial Tribunal. West Bengal, in Case No. 26 of 1967.      V S. Desai and R. B. Dater, for the appellant.      A. K. San and Sukumar Ghose, for respondent no. 1. C      The Judgment of the Court was delivered by      UNTWALIA, J.-This  is an  appeal by special leave filed by Hindustan  Aeronautics Ltd. from the award dated 8-3-1969 made by  the Fifth  Industrial Tribunal,  West  Bengal.  The Governor of  West Bengal  made the  reference under  section 10(1)  of  the  Industrial  Disputes  Act,  1947-hereinafter called the Act, for adjudication on the following 5 issues:           "(1) Allowance  for the  education  of  employees’                children,           (2)  House Building loan;           (3)  Free conveyance or conveyance allowance;           (4)  Revision of Lunch allowance;           (5)  Whether  the   following  canteen   employees                should be  made permanent"-the  names  of  10                employees given.

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    The Tribunal granted no relief to the workmen on issues 2 and 3, allowed their claim in part in respect of issues 1, 4 and  S. Feeling  aggrieved by the said award the appellant which is  a Government company constituted under section 617 of the Companies Act, the shares of which are entirely owned by the  Central  Government,  has  filed  this  appeal.  The dispute relates  to  about  1,000  workmen  working  at  the Barrackpore (West  Bengal) branch of the Company’s repairing workshop represented  by the  Hindustan Aeronautics Workers’ Union, Barrackpore.      The competency of the Government of West Bengal to make the reference  was challenged  before the  Tribunal as  also here. Mr.  V. S.  Desai, learned  counsel for the appellant, submitted that the appropriate government within the meaning of section  2(a) of  the Act competent to make the reference was the  Central Government,  or, if  a State Government, it was  the   Government  of   Karnataka  where  the  Bangalore Divisional office of the Company is situated and under which works the  Barrackpore branch.  Counsel stressed  the  point that the Central 233 Government owned the entire bundle of shares in the company. It appoints  and removes  the Board  of Directors as well as the Chairman  and the  Managing  Director.  All  matters  of importance are reserved for the decision of the President of India  and  ultimately  executed  ill  accordance  with  his directions. The  memorandum and  articles of  association of the company  unmistakably  point  out  the  vital  role  and control of  the Central Government in the matter of carrying on of  the industry  owned by  the appellant. Hence, counsel submitted that  the industrial dispute in question concerned an industry which was carried on "under the authority of the Central Government"  within the  meaning of section 2(a) (i) of  the   Act  and  the  Central  Government  was  the  only appropriate Government  to make  the reference under section 10. The  submission so  made was  identical to  the one made before   and repelled  by this  Court in  the case  of Heavy Engineering Mazdoor  Union v.  The State  of Bihar & ors.(1) wherein it has been said at page 1,000)      "It is  true that besides the Central Government having      contributed the  entire share capital, extensive powers      are conferred  on  it,  including  the  power  to  give      directions as  to how  the company should function, the      power  to  appoint  directors‘and  even  the  power  to      determine the wages and salaries payable by the company      to its employees. But these powers are derived from the      company’s memorandum of association and the articles of      association and  not by reason of the company being the      agent of the Central Government. 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 v      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  hodies 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   balefully  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

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    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    Commercial   Tax    officer.      Visakhapatnam)-(1964) 4  S.C.R. 99  at 188  per Shah J.      and Tamlin v. Hannaford-(1950)1 K.B. 18 at 25, 26. Such      an inference  that the  corporation is the agent of the      Government   may be  drawn where  it is  performing  in      substance govern  mental and  not commercial functions.      (cf. London Country 234      Territorial  and   Auxiliary  Forces   Association   v.      Michale)-  (1948) 2 All. E.R. 432."      Mr. Desai  made a  futile and  unsubstantial attempt to distinguish the   case of Heavy Engineering Mazdoor Union on the ground  that  was  the  case  of  a  Government  company carrying on  an industry  where Private Sector. Undertakings were also  operating It  was not  an  industry,  as  in  the instant case,  which the  Government alone  was entitled  to carry on  to the  exception of  the private  operators.  The distinction so made is of no consequence and does not affect the ratio  of the  case in the least We may also add that by amendments   in the definition of appropriate Government" in section  2(a)(i)   from  time   to  time  certain  statutory corporations were incorporated in the definition to make the Central Government an appropriate  Government in relation to the industry  carried on by them. But no public company even if the  shares were  exclusively owned by the Government was attempted to be roped in the said definition.      The  other   leg  of  the  argument  to  challenge  the competency  of  the  West  Bengal  Government  to  make  the reference is  also fruitless.  It may  be assumed  that  the Barrackpore branch  was under  the control  of the Bangalore division of  the company.  Yet  it  was  a  separate  branch engaged in  an industry of repairs of air crafts or the like at Barrackpore.  For the purpose of the Act and on the facts of this  case the Barrackpore branch was an industry carried on by  the company  as a  separate unit.  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. The facts of the case of M/s Lipton Limited and another v. Their employees(1) cited   on    behalf   of    the   appellant   are   clearly distinguishable. The  ratio of  that case  was pressed  into service in vain on behalf of the appellant.      The first  demand on  behalf of the workmen as respects the education  allowance of  the children  was chiefly based upon the  educational facilities said to be available to the workmen of  Bangalore. On  behalf of  the management  it was pointed out  that certain  educational facilities were given to the employees living in the township of Bangalore out not in  the   city  of     Bangalore.  The  workmen  working  at Barrackpore had  also been provided with certain educational facilities. We,  however, do  not propose  to  go  into  the merits of  the rival  contentions. In  our opinion the award

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directing the company 235 to  pay  Rs.  12/-  per  month  to  each  employee  to  meet educational expenses  of their  children irrespective of the number of  children a  particular workman may have is beyond the scope  of  the  issue  referred  for  adjudication.  The Tribunal while  discussing this  issue felt  constrained  to think that  strictly speaking  claim for  allowance for  the education of  employees’ children  could not  form a subject matter of  industry. dispute.  Really it  was a matter to be taken into  consideration at the time of fixing their wages. In substance  and in  effect the  directions  given  by  the Tribunal is  by way  of revision of the pay structure of the Barrackpore employees.  No such  reference was  either asked for or made. The Tribunal, therefore, had no jurisdiction to change  the   wage  structure   in  the   garb  of  allowing educational expenses for the employees’ children. We may add that on behalf of the appellant it was stated before us that the latest  revised wage  structure has  taken the matter of education of  the employees’  children  into  consideration, while, Mr.  A. K.  San, appearing  for the  workmen, did not accept it  to be  so. If  necessary and  advisable a  proper industrial 1) dispute may be raised in that regard in future but the award as it stands cannot be upheld.      Apropos issue  no. 4  it was  stated on  behalf of  the appellant that  all staff and not only the supervisory staff were getting Rs. 1.50 as lunch allowance under circumstances similar to  the ones  under which the employees belonging to the  supervisory  staff  were  getting  Rs.  1.50  as  lunch allowance.  The   award  of  the  tribunal,  therefore,  was unnecessary and  superfluous in  that regard. If that be so, the award may be a surplusage as it is conceded on behalf of the appellant  that under  the existing  service  conditions every employee eligible to get a lunch allowance was getting at the rate of Rs. 1.50 .      The 10  workmen sought to be made permanent under issue no. 5 were casual workmen before 4-1-1967 within the meaning of clause (b) (d) of Standing order I headed "Classification of workmen". They were appointed as temporary workmen within the meaning of clause (b)(b) of Standing order I on and from 4-1-1967. The  ’Tribunal’s direction  to make them permanent on and from 4.1.1968 treating them as probationers appointed in permanent  vacancies was  not justified. The Tribunal did not go  into the  question  as  to  whether  more  permanent workmen were  necessary to  be appointed in the canteen over and above  the existing  permanent strength  to justify  the making of  the of  workmen as permanent in the canteen where they II  were working. No direction of creation of new posts was given.  O,. the  evidence as adduced before tic Tribunal and on the basis of the 236 findings recorded  by it, it is plain that the 10 workmen or ally of   them  could be  made permanent  only   against the permanent vacancies  and not  otherwise. On  behalf  of  the appellant it was stated before us that all of them have been made permanent  against such  vacancies, while, on behalf of the workmen  the assertion  was that  none of  them has been made permanent so far. The management has no objection 13 in absorbing, the  10 workmen  concerned in permanent vacancies as and  when they  occur if  any of the has not been already absorbed. The workmen want nothing more than this.      In the  result the  appeal is allowed and substantially the award  of the  Tribunal is  set aside but subject to the clarifications  and   observations  made   above.   In   the circumstances, there will be no order as to costs.

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V.P.S.                                       Appeal allowed. 237