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
JUDGMENT
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
2
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
5
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
7
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
8it 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
1union 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
1General 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’.
1
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
1Engineering 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.
1
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
1capital 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
1Commercial 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
1Ltd. 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)
125. 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,
1could 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:
2
“[(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
2Industrial 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
2the 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
2the 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
2appointed 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)
2Submissions 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,
2i) 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
2basis 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.
2
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.
2
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
GovernmentHaving 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
3the 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
3disputes 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
3Government 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
3the 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?
3
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.
3
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 theCouncil 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
3
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.
3
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.
3
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”.
3
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
4
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.
4
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
4
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