Case Note & Summary
The dispute arose out of a reference made by the State Government of Bihar to the Industrial Tribunal regarding two issues: the number of festival holidays and whether the second Saturday of a month should be an off-day for the workmen of Heavy Engineering Corporation Ltd., Ranchi. The Corporation was a government company under Section 617 of the Companies Act, 1956, with its entire share capital held by the Central Government and its shares registered in the name of the President and certain officers. The company's memorandum and articles vested extensive control in the Central Government, including the power to direct its operations and determine wages. The workmen were represented by two unions, one of which—the Heavy Engineering Mazdoor Union—challenged the validity of the reference by filing a writ petition in the Patna High Court under Articles 226 and 227 of the Constitution. The union's main grounds were, first, that the appropriate government to make the reference under Section 10 of the Industrial Disputes Act, 1947 was the Central Government, not the State Government, because the company was an industry carried on 'under the authority of' the Central Government within the meaning of Section 2(a) of that Act; and second, that the very questions referred were already pending before the certifying authority under the Industrial Employment (Standing Orders) Act, 1946, and therefore could not be referred as industrial disputes. The High Court dismissed the writ petition, holding that the State Government was the appropriate government and that the pendency of the standing orders proceedings was no bar. The union then appealed to the Supreme Court under Article 133(1)(c). Before the Supreme Court, the union's counsel conceded that the company was not an industry carried on 'by' the Central Government, but argued that the extensive government ownership and control made it one carried on 'under the authority of' the Central Government. The Supreme Court examined the meaning of the phrase 'under the authority of' and held that it connotes a relationship of principal and agent. An incorporated company, however, is a separate juristic person with a distinct legal identity, and its business is not conducted as an agent of its shareholders, even if the government is the sole shareholder. The court noted that a government company fields as a commercial entity and its rights and obligations are distinct from those of the government. Therefore, the company could not be said to carry on its undertaking under the authority of the Central Government merely because of shareholding or the extensive control conferred by its articles. The State Government was thus the appropriate government, and its reference was valid. On the second issue, the court relied on two recent decisions to hold that the pendency of certification proceedings under the Standing Orders Act does not operate as a bar to a reference under Section 10 of the Industrial Disputes Act. The two statutes deal with different aspects, and there is no conflict. Consequently, the Supreme Court dismissed the appeal and upheld the judgment of the High Court, confirming the validity of the reference made by the State Government.
Headnote
A) Industrial Law - Appropriate Government - Determination of Industry Carried on Under Authority of Central Government - Industrial Disputes Act, 1947, Section 2(a) - The Heavy Engineering Corporation Ltd. was a government company with entire share capital held by the Central Government and subject to extensive control. The union argued it was an industry carried on under the authority of the Central Government, making the Central Government the appropriate government. The court held that an incorporated company has a separate legal existence; the fact that all shares are held by the government does not make the company an agent of the government or establish that it acts under its authority. The words 'under the authority of' require a principal-agent relationship, which was absent. Therefore, the State Government was the appropriate government, and its reference under Section 10 was valid. (Paras 998-1001) B) Industrial Law - Reference Under Section 10 - Pendency of Standing Orders Proceedings No Bar - Industrial Disputes Act, 1947, Section 10 and Industrial Employment (Standing Orders) Act, 1946 - The union contended that since the issues regarding holidays were pending before the certifying authority under the Standing Orders Act, they could not be referred as industrial disputes. The court, following earlier decisions, held that the pendency of such proceedings does not bar a reference under Section 10. The two Acts operate in different fields, and a reference remains competent. (Paras 1001 D-E)
Issue of Consideration
Whether the Heavy Engineering Corporation Ltd., a government company, is an industry carried on 'under the authority of the Central Government' within the meaning of Section 2(a) of the Industrial Disputes Act, 1947; and whether pending proceedings under the Industrial Employment (Standing Orders) Act, 1946 before the certifying authority bar a reference of the same issues under Section 10 of the Industrial Disputes Act, 1947.
Final Decision
The Supreme Court dismissed the appeal, holding: (1) The company was not an industry carried on under the authority of the Central Government; it was a separate legal entity, and the State Government was the appropriate government to make the reference. (2) The pendency of proceedings before the certifying authority did not bar the reference under Section 10 of the Industrial Disputes Act. The High Court's judgment was upheld.
Law Points
- Legal points not extracted
- An incorporated company has a separate legal personality distinct from its members
- the fact that all shares are held by the Central Government does not make the company an industry carried on under the authority of the Central Government under Section 2(a) of the Industrial Disputes Act
- 1947
- the words 'under the authority of' imply a principal-agent relationship
- pendency of proceedings under the Industrial Employment (Standing Orders) Act does not bar a reference under Section 10 of the Industrial Disputes Act.
