http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 7  

PETITIONER: REGIONAL PROVIDENT FUND COMMISSIONER, KARNATAKA

       Vs.

RESPONDENT: WORKMEN REPRESENTED BY THE GENERAL SECRETARY, KARNATAKAPROVI

DATE OF JUDGMENT26/09/1984

BENCH: VENKATARAMIAH, E.S. (J) BENCH: VENKATARAMIAH, E.S. (J) REDDY, O. CHINNAPPA (J) SEN, A.P. (J)

CITATION:  1984 AIR 1897            1985 SCR  (1) 816  1984 SCC  Supl.  418     1984 SCALE  (2)422  CITATOR INFO :  D          1988 SC1369  (13)

ACT:      Industrial Disputes Act, 1947-Section 2 (a) Appropriate Government-Whether Government  of a  State can be treated as the ’appropriate Government’ under section 2 (a) in relation to an  industrial  dispute  concerning  office  of  Regional Provident  Fund  organisation  established  by  the  Central Government for  that State  under the  Employees’  Provident Funds and Miscellaneous provisions Act, 1952.      Words and Phrases-’Authority’-Ordinary meaning of.      Words and Phrases-’Under the authority of ’-Meaning of.

HEADNOTE:      The Government  of Karnataka  State  made  a  reference under section  10  of  the  Industrial  Disputes  Act,  1947 (hereinafter referred  to as  ’the Act’)  referring  Certain dispute between  the Regional  Provident  Fund  Organisation established by  the Central  Government for that State under the Employees’  Provident Fund  &  Miscellaneous  Provisions Act, 1952  and its employees to the Industrial Tribunal. The Regional Provident  Fund Organisation raised two preliminary objections  viz.   that  the  activity  carried  on  by  the management was not an industry and that the State Government was not the appropriate Government under the Act in relation to the  dispute between  it and  its employees. The Tribunal negatived both  the contentions. The management filed a writ petition under  Article 226  of the  Constitution before the High Court.  The only contention urged by the management was that  the   State  Government   being  not  the  appropriate Government  under   the  Act  is  for  as  the  dispute  was concerned, it  could not  refer the dispute under section 10 of the  Act. A  single Judge  accepted  the  contention.  In appeal filed  by the  workmen. a  Division Bench of the High Court held  that the  State Government  was the  appropriate Government for  purposes of  the dispute  in question. Hence this appeal  by the  management by special leave against the judgment of  the Division  Bench. The  management  contended that the  industry in  question fell under section 2 (a) (i) of the  Act as  it was  an industry  carried  on  under  the authority of  the Central  Government and  hence the Central

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 7  

Government alone  could act as the appropriate Government in relation to the dispute concerned. 817      Allowing the Appeal, ^      HELD: In order to decide whether the Central Government is the  appropriate Government  under the Act or not in this case it  has got  to  be  determined  whether  the  activity carried on under the Provident Funds Act is being carried on by or  under the  authority of  the  Central  Government  as provided in  section 2 (a) of the Act. The word authority in section 2(a)  of the  Act 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. The words ’under the authority of’  means pursuant  to  the  authority,  such  as whether the  agent or  the servant  act under or pursuant to the authority of  his principal or master.[821F-H]      Heavy Engineering Mazdoor Union v. The State of Bihar & Ors.,  [1969]   3  S.C.R   995,  Graham   v.  Public   Works Commissioner, [1901]  2 KB  781 and  Sukhdev Singh & Ors. v. Bhagatram Sardar  Singh Raghuvanshi  & Anr., [1975] 3 S.C.R. 619, referred to.      In the  instant case,  the activity  carried on  by the Central Board  or the State Boards under the Provident Funds Act is one traceable to Article 43 of the constitution which requires the  State  to  endeavour  to  secure  by  suitable legislation or  economic organisation or in any other way to all workers,  agricultural or industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of  life   and  full   enjoyment  of  leisure  and  cultural opportunities. It  is a  part  of  the  programme  of  every welfare State  which our country is. Institutions engaged in matters of such high public interest or performing such high public functions  by virtue  of their  very nature performed governmental functions.  They are  truly the  agents of  the Government and  they function  under the  authority  of  the Government as  provided in  the statute  because the Central Government could  have for  the purpose  of introducing  the scheme of  compulsory contribution to the Provident fund set up an  organisation or  a department  in the  absence of the corporate bodies  envisaged  in  the  Provident  Funds  Act. [823C-F]      The provisions of section 5B (2) of the Provident Funds Act which  reads: "A  State Board shall exercise such powers and perform such duties as the Central Government may assign to it  from time  to time"  clearly envisage  that the State Board is  an agent of the Central Government. In the absence of the  State Board, the Regional Committee constitute under Paragraph 4  of the Scheme is required to function under the control of  the Central  Board. The  Regional Provident Fund Commissioner who  is appointed  by the Central Government is also under  the control of the Central Board and the Central Government. [824B-C]      Having regard to the various of the Provident Funds Act and the  nature of  the business  carried on  by the Central Board, the  State Board,  the  Regional  Committee  and  the Regional Provident  Fund Commissioner,  this Court is of the view that the Division Bench of the High Court was not right in holding  that the  State Government  was the  appropriate Government under 818 section 2  (a) of  the  Act  in  the  matter  of  industrial disputes arising  between the  management and the workmen of the Regional Provident Fund organisation. [854D-E]

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 7  

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 3796 of 1984.      Appeal by  Special leave  from the  Judgment and  Order dated the  24th &  27th of  September, 1982 of the Karnataka High Court in W.P. No. 1089 of 1981.      V.C. Mahajan,  R.N. Foddar  & N.S.  Das Behi,  for  the Appellant.      A.K. Goel for the Respondent.      The Judgment of the Court was delivered by      VENKATARAMIAH, J.  The question  for  consideration  in this appeal  by Special Leave is whether the Government of a State can  be treated  as the ’appropriate Government’ under section  2(a)   of  the   Industrial  Disputes   Act,   1947 (hereinafter referred  to as  ’the Act’)  in relation to any industrial dispute  concerning the  office of  the  Regional Provident  Fund  organisation  established  by  the  Central Government for  that State  under the  Employees’  Provident Funds and  Miscellaneous Provisions  Act, 1952  (hereinafter referred to as ’the Provident Funds Act’).      The facts  of the  case are  these: The  Government  of Karnataka made  a reference  under section  10  of  the  Act referring a  certain dispute  between the Regional Provident Fund organisation  established under the Provident Funds Act for  the  State  of  Karnataka  and  its  employees  to  the Additional  Industrial  Tribunal,  Bangalore  and  the  said reference came  to be  registered as A.I.D. 3 of 1979 on the file of  the Tribunal.  Before  the  Tribunal  the  Regional Provident Fund  organisation raised  among other  pleas  two preliminary  objections  to  the  reference  viz.  that  the activity carried  on by  the management  was not an industry and that  the  State  Government  was  not  the  appropriate Government under  the Act in relation to the dispute between it and its employees. The Tribunal took up for consideration the two issues arising out of the above two objections first and after  hearing the  management and the workmen negatived both the contentions of the management. 819 It held  that  the  business  carried  on  by  the  Regional Provident Fund  Organisation was  an industry  and that  the State Government  was the  appropriate Government  under the Act.      Aggrieved by  the above  findings of  the Tribunal  the management filed  a writ  petition under  Article 226 of the Constitution before  the High Court of Karnataka questioning the correctness  of the  said findings.  Before the  learned Single Judge  who heard the writ petition the management did not, however, press its case as regards the finding that the Provident  Fund  organisation  was  an  industry.  The  only contention urged  by it  was that the State Government being not the  appropriate Government  under the  Act in so far as the dispute  was concerned  it could  not refer  the dispute under section  10 of  the  Act.  The  learned  Single  Judge accepting the  said contention of the management quashed the reference. Aggrieved  by the  decision of the learned Single Judge, the workmen filed an appeal before the Division Bench of the  High Court. The Division Bench reversed the decision of  the  learned  Single  Judge  and  held  that  the  State Government was  the appropriate  Government for  purposes of the dispute  in question.  The  management  has  filed  this appeal after observing the leave of this Court under Article 136 of the Constitution against the judgment of the Division Bench.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 7  

    Under  section   10  the  Act,  where  the  appropriate Government is  of opinion that any industrial dispute exists or apprehended, it may at any time by order in writing refer the dispute or any matter appearing to be connected with, or relevant to,  the dispute,  whether it relates to any matter specified in  the Second  Schedule or  the Third Schedule to the Act,  to Tribunal  for adjudication. Section 2(a) of the Act defines  the expression  ’appropriate Government’  as in relation to  any industrial  dispute concerning any industry carried  on  by  or  under  the  authority  of  the  Central Government or  by the  industries specified in clause (i) of section 2(a)  of the  Act, the  Central  Government  and  in relation  to   any  other   industrial  dispute,  the  State Government. It  may be  stated here  that  the  organisation under the  Provident Funds Act was not one of the industries specified in  section 2(a)(i)  of the Act when the reference was made  in this  case. The contention of the management is that the industry in question falls under section 2(a)(i) of the Act  as it is an industry carried on under the authority of the  Central Government  and hence the Central Government alone can act as the appropriate Government in relation to a dispute concerning it. 820      Entry 24 of the concurrent List in the Seventh Schedule to the  Constitution  specifically  refers  to  the  subject ’employees’ provident  funds’. The  Central Government could have, if  it intended  to do  so, started  a provident funds scheme for  the benefit  of the  workers in  exercise of its executive power.  Before  any  such  action  was  taken  the subject  of   legislation   for   instituting   compulsorily contributory funds  in industrial undertakings was discussed several   times    at   tripartite    meetings   in    which representatives of  the Central and State Governments and of employers and  workers took  part. Ultimately it was decided that the  Central  Government  should  initiate  appropriate legislation in  Parliament for the said purpose. Accordingly an ordinance  was issued in 1951 incorporating the decisions arrived at  such meetings.  Later on  in 1952  the Provident Funds Act  came to  be passed  replacing the  ordinance. The Provident Funds  Act contemplates  the administration of the Scheme framed  under section  5, the  Family Pension  Scheme framed under  section 6A  and the  Employees’ Deposit-linked Insurance Scheme,  under section  6C(1)  of  that  Act.  The Provident Funds Act applies to the whole of India except the State  of  Jammu  and  Kashmir.  Under  section  5A  of  the Provident  Funds   Act  the   Central  Board   of   Trustees (hereinafter called  ’the Central  Board’) is constituted by the  Central   Government  to  administer,  subject  to  the provisions of  section 6A and section 6C, the fund vested in it in  such manner  as may be specified in the Scheme and to perform such  other functions  as  it  may  be  required  to perform by or under the provisions of the Scheme, the Family Pension Scheme and the Insurance Scheme. Under section 5B of the Provident  Funds Act  the Central  Government may, after consultation  with   the  Government   of  any   State,   by notification in  the Official  Gazette, constitute  for that State a  Board of  Trustees which  is for purpose of brevity referred to  as the  State Board  in such  manner as  may be provided for in the Scheme. The crucial provision in section 5B which,  if we  may say  so with  respect, has  missed the attention of  the Division  Bench of  the High Court is sub- section (2)  thereof. It  says  that  a  State  Board  shall exercise such  powers and perform such duties as the Central Government may  assign  to  it  from  time  to  time.  Under Paragraph 4  of the  Scheme framed under the Provident Funds

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 7  

Act, it is provided that until such time as a State Board is constituted for  a State the Central Government may set up a Regional Committee  for the  State which will function under the Central  Board. There  are three funds which are created by the  Provident Funds  Act. They are-(i) The Fund i.e. the Provident Fund 821 established under  the Scheme,  (ii) the Family Pension Fund established under  the Family  Pension Scheme  and (iii) the Insurance Fund  established under the Insurance Scheme. They are not  confined to ans particular State or Region. Each of them is  a fund  into which  the amount  collected under the respective Schemes  is credited irrespective of the State or the Region  where they  are collected. Under Paragraph 54 of the Scheme  all expenses  relating to  the administration of the fund  including those  incurred on  Regional  Committees have  to   be  met  from  the  Fund.  For  purposes  of  the administration of  the provident  Funds Act, the appropriate Government in  relation to  an establishment belonging to or under the  control of  the Central Government or in relation to an  establishment connected  with a  railway  company,  a major port,  a mine or an oil field or a controlled industry or in  relation to  an establishment  having  department  or branches in  more than  one State  is the Central Government and in  relation  to  any  other  establishment,  the  State Government under section 2(a) of the Provident Funds Act. We are not  concerned with  this definition in this case as the question to  be decided  arises under the Act. The Provident Funds Act  and the  Scheme clearly  show  that  the  Central Government has  the final  voice in  many matters  including appointments to  various offices  referred to therein. It is not necessary to refer to then in detail here.      What has  got to  be determined in this case is whether the activity  carried on  under the  Provident Funds  Act is being carried  on by  or under  the authority of the Central Government as  provided in section 2(a) of the Act or not in order to  decide  whether  the  Central  Government  is  the appropriate authority  under the Act or not. Section 2(a) of the Act  came up  for consideration  by this  Court in Heavy Engineering Mazdoor  Union v.  State of  Bihar & Ors.(’) The Court observed  in that case that there being nothing to the contrary, the  word ’authority’  in section  2(a) of the Act 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. The  words ’under  the authority of’ were construed  by  this  Court  in  that  case  as  meaning pursuant to  the authority,  such as  where an  agent  or  a servant acts  under or  pursuant to  the  authority  of  his principal or master. Applying this test, the Court held that a manufacturing  industry carried on by a company registered under 822 the authority  of the  Central Government  even  though  the entire capital  of the  company had  been contributed by the Central Government  and under Articles of Association of the company the  Central Government  could exercise control over the affairs of the company. The Court, however, proceeded to observe that  the question whether a corporation is an agent of the  State would  depend upon  the facts of each case. It referred  to   the  decision   in  Graham  v.  Public  Works Commissioner(1) and  said that  where a statute setting up a Corporation so  provided, such a Corporation could be easily identified as  the agent  of  the  State  and  that  it  was possible for  the Crown  with the  consent of  Parliament to appoint or establish certain officials or bodies who were to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 7  

be treated  as agents  of the Crown even though they had the power of  contracting  as  principals.  Merely  because  the officials of Government or certain bodies constituted by the Government for purposes of administration are given the garb of a statutory corporation they do not cease to be what they truly are.      At this  stage it  is appropriate  to refer  to certain observations made  by Mathew,  J. in Sukhdev Singh & Ors. v. Bhagatram Sardar  Singh Raghuvanshi  & Anr.(2)  on the  true characteristics of  public corporations  established under a statute. The learned Judge observed at page 646 thus:           "A  public   corporation   is   a   legal   entity      established normally  by Parliament  and  always  under      legal authority,  usually in  the  form  of  a  special      statute,  charged   with  the   duty  of  carrying  out      specified  governmental   functions  in   the  national      interest,  those   functions  being   confined   to   a      comparatively  restricted   field,  and   subjected  to      control by the executive, while the corporation remains      juristically  an   independent  entity   not   directly      responsible to  parliament. A public corporation is not      generally a  multi-purpose authority  but a  functional      organisation created  for a  specific purpose.  It  has      generally no shares or shareholders. Its responsibility      generally is  to Government.  Its administration  is in      the  hands  of  a  Board  appointed  by  the  competent      Minister. The  employees of  public corporation are not      civil servants. It is in fact, 823      likely that  in due  course a  special type of training      for  specialized   form  of   public  service  will  be      developed and  the status  of the  personnel of  public      corporation may  more and  more closely  approximate to      that of civil service without forming part of it. In so      far as  public  corporations  fulfil  public  tasks  on      behalf government,  they are  public authorities and as      such subject to control by government."      In the  instant case,  it  is  to  be  noted  that  the activity carried on by the Central Board or the State Boards under the Provident Funds Act is not similar to the activity carried on  by any  private trade  or manufacturing business like the  one involved  in the case of the Heavy Engineering Corporation’s case (supra). The activity is one traceable to Article 43  of the  Constitution which requires the State to endeavour to  secure by  suitable  legislation  or  economic organisation  or   in  any   other  way   to  all   workers, agricultural or  industrial or  otherwise,  work,  a  living wage, conditions  of work ensuring a decent standard of life and full  enjoyment  of  leisure  and  social  and  cultural opportunities. It  is a  part  of  the  programme  of  every welfare State  which our country is. Institutions engaged in matters of such high public interest or performing such high public functions as observed by Mathew J. in Sukhdev Singh’s case (supra)  by  virtue  of  their  very  nature  performed governmental functions.  They are  truly the  agents of  the Government and  they function  under the  authority  of  the Government as  provided in  the statute  because the Central Government could  have, for  the purpose  of introducing the scheme of compulsory contribution to the provident fund, set up an  organisation  or  a  department  in  absence  of  the corporate bodies  evisaged in  the Provident  Funds Act. The Division Bench of the High Court was in error in observating that an  examination of  the organisation  showed "that  the activities of  the  Provident  Fund"  organisation  are  not governmental in  character as  they are  essentially part of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 7  

the activities  of various industries to which the Provident Funds Act  applies.’ We  have no  doubt that the business of the  Provident   Funds  organisation   is  governmental   in character and  does not  pertain to  industry to  which  the Provident Funds  Act applies.  The management and workmen of industries  to   which  the   Provident  Funds  Act  applies contribute to  the funds  established under  that  Act.  The business of  the statutory bodies functioning under that Act is not  the business  of industries  whose  managements  and workmen 824 make contributions  to the  said funds.  In addition  to the above feature,  the provisions  of section  5B  (2)  of  the Provident Funds  Act  which  reads:  "A  State  Board  shall exercise such  powers and perform such duties as the Central Government may  assign to  it from  time  to  time"  clearly envisage that  the State  Board is  an agent  of the Central Government. In  the absence of the State Board, the Regional Committee constituted  under Paragraph  4 of  the Scheme  is required to function under the control of the Central Board. The Regional Provident Fund Commissioner who is appointed by the Central  Government is  also under  the control  of  the Central Board and the Central Government.      Having  regard   to  the   various  provisions  of  the Provisions Funds  Act and the nature of the business carried on by  the Central  Board, the  State  Board,  the  Regional Committee and  the Regional  Provident Fund Commissioner, we are of  the view  that the  Division Bench of the High Court was not  right in  holding that the State Government was the appropriate Govt.  under section  2(a) of  the  Act  in  the matter of industrial disputes arising between the management and the workmen of the Regional Provident Fund organisation. It has  to be  mentioned here  that even the learned counsel for the  workmen fairly  stated that  the Central Government was appropriate  Government under  the Act  in so far as the dispute in question is concerned He, however, submitted that the Central  Government may  now be  directed to  refer  the dispute pending  before the  Tribunal  at  Bangalore  to  an Industrial Tribunal quickly as the case has been pending for nearly 5 years. We have no doubt that the Central Government will  immediately  consider  the  above  question  and  take appropriate action.      In the  result the  order of  the Division Bench of the High Court  is set aside and the order of the learned Single Judge  is   restored.  The   reference  made  by  the  State Government is quashed. The appeal is accordingly allowed.      No costs. H.S.K.    Appeal allowed. 825