P.R. Rajagopalan vs Southern Structurals Ltd. and Others

Mishra, J.—W.P. No. 101116 of 1983 is directed against the order of T.S.E. case No. 44 of 1980 by the second respondent therein viz.

the Assistant Commissioner of Labour II, Madras, under which order he has held that no appeal is maintainable u/s 41(1) of the Tamil Nadu

Shops and Establishments Act against the order of termination of service passed by the management of Southern Structurals Ltd. the first

respondent therein W.P. No. 17376 of 1991 is directed against the order of termination passed by the said respondent as well as to quash the

service rules so far as clause 6(4) thereof is concerned.

Relevant facts as set out in the affidavit filed in support of the writ petitions are as follows : Petitioner was employed as a Stores Officer in the

service of the respondent-Southern Structurals Ltd., when according to him his service was unlawfully terminated by order dated 1.9.1980. He

had joined the service of the respondent in July, 1962 as cashier-cum-accounts Assistant and risen to the status of the Stores Officer by and by in

July, 1974. In March, 1975 he was transferred to Structural. Engineers and Technicians Industrial Co-operative Society Ltd. In July, 1977 he was

recalled to the stores at Pattabiram. In September. 1979 he was transferred to the Data Collection and Statistics section of the Industrial

Engineering Department, where he remained for a brief period of 13 days only after which he was recalled to the Accounts Department.

According to the petitioner he discovered during 1975 that the personal assistant to the then Managing Director of the company had in collusion

with a typist at the Head office been misappropriating the share capital of members. This led to the disciplinary action against some of the guilty

persons. The Managing Director did not take this kindly and subjected the petitioner to a space of transfers, following by a charge memo in

March, 1978, alleging that the petitioner was responsible for the missing of two plates from the stores. On petitioner''s explanation this charge was

not followed up. In December, 1979 a further memo emanated as if one forged round was missing from the storcs. The said charge was also not

followed up on petitioner''s explanation about the round having been consumed. In May, 1980 another charge memo came up that colour coding

of stock had not been carried out by the petitioner. The petitioner answered this charge also. However, the petitioner was transferred to

Ramagundam project in Andhra Pradesh on 22.8.1980 and asked to join duty on or before 27.8.1980. The petitioner represented to the General

Manager and sought time to report for duty and also represented on 28.8.1980 requesting for a month''s time as his wife had undergone a major

surgery from which she was yet to recover and to meet her medical expenses he was required to dispose of certain properties with respect to

which certain execution proceedings was pending in court. The petitioner was served with another office memo to join at Ramagundam before

10.9.1980. This order the petitioner received on 4.9.1980. However, before the petitioner could proceed he received another memo dated

1.9.1980 purported to be one month''s notice of termination of service on the ground that he had disobeyed the transfer order dated 22.8.1980.

The petitioner represented against the said termination. This termination order was withdrawn on 8.9.1980. The petitioner was also informed that

the second transfer order also stood cancelled.

While so according to the petitioner he was informed by letter dated 8.9.1980 that his representation against the transfer to Ramagundam was

rejected and this was followed by a letter dated 17,9.1980 containing a charge sheet for certain alleged omissions. Under this letter the petitioner

was called upon to explain the charge within 48 hours. The petitioner has stated,

While so by letter dated 17.9.1980 the respondent issued a charge sheet for alleged omission on my part and gave me 48 hours to explain why

disciplinary action should not be taken against me. The charges were vague and various office orders which I was unaware of were referred to.

The charges also related to acts in 1977 1978 and 1979. I sought substantiation of the same and requested for production of records. But by

order dated 3.10.1980 vide the month''s notice dated 1,9.1980 my services were terminated.

Petitioner filed an appeal u/s 41 of the Tamil Nadu Shops and Establishments Act, T.S.E. Case No. 44 of 1980. The said case was dismissed by

order dated 27.7.1983 on the sole ground that the respondent company was exempted under G.O. Ms. No. 545 being an establishment under the

Government of Tamil Nadu.

W.P. No. 10116 of 1983 was admitted to hearing. To avoid any technical objection that the order impugned in the said petition was one

passed in appeal u/s 41(1) of the Tamil Nadu Shops and Establishments Act and thus the termination order passed by the first respondent had not

been questioned in the said writ petition the petitioner as advised filed W.P. No. 17376 of 1.991. Both petitions have been heard together and are

being disposed of by a common order.

Learned Counsel for the petitioner conceded that in view of the order in G.O. Ms. No. 545, dated 10.2.1950 of the Government of Tamil

Nadu since the respondent company is a Government company the provisions of the Tamil Nadu Shops and Establishments Act are not applicable

and accordingly the appeal u/s 41(1) of the said Act was not competent. He has thus given up any challenge to the validity or correctness of the

order in T.S.E. case No. 44 of 1980. He has however contended that on the facts as aforementioned the order terminating the petitioner''s

services affiliated by malice in law is arbitrary and violative of Article 14 of the Constitution of India.

In the counter affidavit filed in W.M.P. No. 21051 of 1991 in W.P. No. 10116 of 1983 on behalf of the first respondent it is stated that the

petitioner''s services with the first respondent company was governed by the service rules of the first respondent company which were/are in the

nature of contract of service. It is further slated as follows:

The first respondent company transferred the petitioner vide its letter dated 22.8.1980 from its factory at Pattabiram to Ramagundam project

where the first respondent company was doing certain contract work. But the petitioner by his letter dated 28.8.1980 refused to obey the said

transfer order of the first respondent company and stated that he would not be in a position to go to Ramagunda site immediately due to certain

domestic problems and that he was willing to visit not only Ramagundam site but other sites also once in a while to organise the accounting billing

work, collections etc.

Since the first respondent company wanted to reorganise and restructure its accounts department by efficient persons and to weed out the

inefficient ones and since no other suitable work was available for the petitioner the first respondent company terminated the services of the

petitioner by giving one month''s notice vide its letter dated 1st September, 1980.

Though the first respondent company directed vide its letter dated 4.9.1980 to proceed to Ramagundam Super Thermal Power Project

Ramagundam site before 10th September, 1980 to organise and take care of the complete accounting side in view of the notice of termination

issued on 1.9.1980 the first respondent company cancelled the abovesaid order dated 4.9.1980 vide its office order dated 8.9.1980. The charge

sheet dated 17.9.1980 issued by the first respondent company to the petitioner was only to find out the truth in the alleged charges against the

petitioner. The fact that the termination notice preceded the said charge sheet clearly shows that the petitioner''s service were not terminated for

any misconduct.

As said above the petitioner''s service were terminated by the first respondent company only for reasonable cause. Against the said termination

order the petitioner preferred an appeal bearing No. 44 of 1980 before the Deputy Commissioner of Labour Madras u/s 41 of the Tamil Nadu

Shops and Establishments Act, The said appeal was dismissed by the second respondent as not maintainable in view of G.O.Ms. No. 545, dated

10.2.1950 which exempted all persons employed in any kind of work in factories and governed by the Factories Act, 1948 from all the provisions

of the said Act. Against the impugned order the petitioner preferred the above writ petition in the year 1983.

In another return filed in W.P. No. 17376 of 1991 it is staled that ""the respondent company refute the allegation that the petitioner''s service was

terminated in an arbitrary and whimsical manner. It is only for the reason of refusal by the petitioner to join duty at Ramagundam site his service

was terminated after giving one month notice for the same."" In this affidavit the first respondent has taken the stand that the Government of Tamil

Nadu was holding 92.4% of share holding in the equity capital of the respondent but holding share capital by the Government of Tamil Nadu does

not amount to having deep and pervasive control over the affairs of day to day management/administration of the respondent and only in the

capacity as shareholder the Government of Tamil Nadu is appointing Directors to the extent of its shareholding. It is further staled:

Further the Article of Association of the respondent company does not require any prior permission from the Government of Tamil Nadu for

running affairs of the company. In fact neither the memorandum of Association nor the Articles of Association of the respondent company provide

for any power or control or right in favour of the Government of Tamil Nadu to issue any direction or to regulate or interfere with the business or

affairs of the respondent company. Even the Directors nominated by the Government of Tamil Nadu are completely free from Governmental

control in discharge of their functions. The respondent company is doing business/manufacturing activity in relation to cranes and structural works

like any ordinary person would do and as such is not enjoying any monopoly status conferred by the Government or corporations like Air India or

Indian Airlines. While the Government of Tamil Nadu has control over the respondent company to the extent mentioned above it cannot constitute

deep and pervasive state control which is a prerequisite for the respondent company to be construed as a State agency or instrumentality. The

functions of respondent company are not of any public importance nor are they related to Government functions. Facts clearly indicate that the

respondent company is not an instrumentality or agency of the Government.

After taking the above stand in this counter affidavit it is further stated:

Even though the respondent company might fall under the definition of establishment under State Government as per Section 4(1)(c) of the Tamil

Nadu Shops and Establishments Act for reasons mentioned above the respondent company does not fall under the category of ''other authority''

under Article 12 of the Constitution of India. The respondent is advised to submit that all establishments which may fall under the category of

(''Establishment under State Government'' u/s 4(1)(c) of T.N.S.E. Act do not necessarily fall under the category of ''other authority'' under Article

12 of the Constitution of India. Either for the reason that the respondent company might fall under the category of establishment under State

Government or by reason of the averments made by the respondent in the counter statement before the authority under the T.N.S.E. Act, it is not

possible to state that respondent company is falling under the heading ''other authority'' under Article 12 of the Constitution of India.

The stand thus that the first respondent is neither an instrumentality nor an agency of the Government nor an authority under Article 12 of the

Constitution of India would appear to be in conflict with the previous statements that the respondents has been making in the sense that to oust the

jurisdiction of the appellate authority under the Tamil Nadu Shops and Establishments Act, it was maintained that the respondent company was a

Government company and to oust the jurisdiction of this Court it was suggested that even though there has been an overwhelming shareholding in

the hands of the State Government, the State Government has been appointing Directors and though only its nominees were managing the affairs of

the company the Government never had that deepand pervasive control upon the affairs of the company which would convert it into an agency or

instrumentality of the State Government. Keeping this controversy in mind the court on 13.2.1992 ordered as follows:

My attention has been drawn to a counter statement filed on behalf of the respondent company before the Deputy Commissioner of Labour in

which it is stated inter alia:

The respondent-company is a factory managed by the Government of Tamil Nadu and it is covered by the Factories Act, 1948 the Industrial

Disputes Act, 1947 and the Industrial Employment (Standing Orders) Act, 1946 and not by the Tamil Nadu Shops and Establishments Act, 1947.

The authorised capital of the respondent company is Rs. 350 lakhs and the paid up capital of the respondent company is Rs. 148.85 lakhs divided

into 62.60 lakhs equity shares of Rs. 2.25 each amounting to Rs. 140.85 lakhs and 2 lakhs 9.33% preference shares of Rs. 4 each amounting to

Rs. 8,00,000 and out of the 62.60 lakhs of equity shares the Government of Tamil Nadu owns 57.80 lakhs equity shares which amounts to 92.4%

of the total equity capital of the respondent company.

The Board of Directors of the respondent-company consists of eight directors out of which six directors are the nominees of the Government of

Tamil Nadu.

The appointment of any director on the Board of Directors of the respondent company has to be approved by the Government of Tamil Nadu.

The Government of Tamil Nadu has given counter guarantee to the extent of Rs. 535 lakhs in favour of the bankers of the respondent company in

respect of the guarantees and various other credit facilities provided by the bankers to the respondent company.

All the facts stated above will go to prove that the entire control and management of the respondent company is with the Government of Tamil

Nadu and hence even assuming without admitting that the respondent company is an establishment as defined under the Tamil Nadu Shops and

Establishments Act, 1947 it is an establishment under the Government of Tamil Nadu and so the respondent company is exempted from the

provisions of the said act according to Section 4(1)(c) of the said Act.

In an affidavit filed before this Court however in W.P. No. 17376 of 1991 an attempt is made to suggest that the entire control of the company is

not that the State Government and for the reasons of its shares and other factors as stated it cannot be said that it is under the control of the State

Government and it is a State under Article 12 of the Constitution of India.

The counter-affidavit in the writ petition has a definite talent of facts to accept writ jurisdiction of this Court for the reason that fundamental rights

of any person may not be enforced by a writ unless it is against a State under Article 12 of the Constitution of India. Before I make any order as to

whether there is an attempt to mislead the court by a statement in the counter affidavit before this Court and thus any action is warranted it is

necessary that all the records pertaining to the establishment and the control upon the affairs of the company by the State Government/any other

person are called for and examined by the court. It is also necessary to know who besides the State Government held the shares of this company

and whether those besides the Government holding the shares of the company are themselves a State under Article 12 of the Constitution or not.

There are many informations of this kind which are not disclosed in the counter affidavit filed before this Court. Thus it is hereby ordered that the

respondents shall produce before this Court all the relevant records showing how the company was created who controlled it and how it cannot be

stated to be a Government Company who besides the State Government arc members of the company (share holders) and who besides the

Government of the State excised any control with respect to the affairs of the company. All the relevant records pertaining to the above must be

produced before this Court at the next hearing, put up next week.

No records however as directed under the above order have been produced. A further affidavit has been filed on behalf of the first respondent

slating inter alia that the aforementioned stand was taken due to the fact that in C.V. Raman Vs. The Management of Bank of India and Another, ,

it was observed that there was a distinction between ""an establishment under the Government"" u/s 4(1)(c) of Tamil Nadu Shops and

Establishments Act and an ""authority"" under Article 12 of Constitution of India ""it was also observed that it cannot be gainsaid that the principle

applicable to the determination of an ''authority'' under Article 12 of Constitution of India can bodily be imported in deciding the meaning of

''establishment'' under the Government'' u/s 4(1)(c) of Tamil Nadu Shops and Establishments Act.

It is thereafter said,

Because of this I presumed that inspite of the averments made by the respondent before the authority 41(1) of the T.N.S.E. Act about the extent

of the control by the Government of Tamil Nadu over the respondent I may be able to convince this Hon''ble court that the respondent does not

fall within the definition of ''State'' under Article 12 of the Constitution of India by reason of the abovesaid distinction.

After saying so it is said:

I hereby unconditionally apologise without any reservation whatsoever for having made out the above submission that the respondent is not ""state

under Article 12 of the Constitution of India.

It is not understandable why if there were/are materials that could justify the stand of the respondent company that it was not a Slate under Article

12 of the Constitution of India it should abstain from producing relevant records and materials and instead decide to file the affidavit

aforementioned. The court at this stage can proceed with the presumption that the first respondent is an instrumentality/agency of the State of Tamil

Nadu.

In a Full Bench judgment of the Andhra Pradesh High Court in Sri Konaseema Co operative Central Bank Ltd. v. N. Seetharamma Raju AIR

1990 A.P. 171, a detailed study had been made with reference to various pronouncements of the Supreme Court as to how a court should

approach to determine whether a writ should issue to a certain authority or not. The Full Bench summarised the rule as follows:

From the above discussion the following propositions emerge:

(i) If a particular co-operative society can be characterised as a ''State'' within the meaning of Article 12 of the Constitution (applying the tests

evolved by the Supreme Court in that behalf) it would also bean ''authority'' within the meaning and for the purpose of Article 226 of the

Constitution. In such a situation an order passed by a Society against its Employee in violation of the bye-laws can be corrected by way of a writ

petition. This is not because the bye-laws have the force of law but on the ground that having framed the bye-laws prescribing the service

conditions of its employees the society must follow them in the interest of fairness. If it is left to the sweet will and pleasure of the society either to

follow or not to follow the bye-laws it would be inherently arbitrary and may very likely give rise to discriminatory treatment. A society which is

''state'' has to act in conformity with Article 14 and for that reason it will be made to follow the bye-laws.

(ii) Even if a society cannot be characterised as a ''state'' within a meaning of Article 12 even so a writ would lie against it to enforce a statutory

public duty which an employee is entitled to enforce against the society. In such a case it is unnecessary to go into the question whether the society

is being treated as a (''person'' or ''an authority'') within the meaning of Article 226 of the Constitution. What is material is the nature of the statutory

duty placed upon it and the court will enforce such statutory public duty.

(iii) The bye-laws made by a co-operative society registered under the A.P. Co-operative Societies Act do not have i he force of law. They are in

the nature of contract terms of contract between the society and its employees or between the society and its members as the case may be. Hence

where a society cannot be characterised as a ''state'' the service conditions of its employees governed by bye-laws cannot be enforced through a

writ petition. However in the matter of termination of service of the employees of a co-operative society Section 47 of the A.P. Shops and

Establishments Act provides a certain protection and since the said protection is based upon public policy it will be enforced in an appropriate case

by this Court under Article 226 of the Constitution. Ordinarily of course an employee has to follow the remedies provided by the A.P. Shops and

Establishments Act, but in appropriate case, this Court will interfere under Article 226 if the violation of a statutory public duly is established. It is

immaterial which act or rule casts such a statutory public duty.

(iv) Mandamus certiorari and prohibition are public law remedies. They are not available to enforce private law rights. Every act of a society which

may be a ''state'' within the meaning of Article 12 does not necessarily belong to public law field. A society which is a ''state'' may have its private

law rights just like a Government. A contractual obligation which is not statutory cannot be enforced by way of a writ petition under Article 226 of

the Constitution. Prior to entering into correct however Article 14 operates as explained by the Supreme Court in Erusian Equipment and

Chemicals Ltd. Vs. State of West Bengal and Another, and Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, .

In a series of judgments the Supreme Court has pointed out how the word ''authority'' in Article 226 of the Constitution of India is not

restricted to the same meaning as the words ''other authorities'' should receive in the definition of the ''State'' in Article 12 of the Constitution of

India. The former must receive a liberal meaning. The latter is relevant only for the purpose of enforcement of fundamental rights. The judicial

control over the fast expanding maze of bodies affecting the rights of the people should not be put into water tight compartment. It should remain

flexible to meet the requirements of various circumstances. This analysis is found in one of the latest judgments of the Supreme Court in Chander

Mohan Khanna Vs. The National Council of Educational Research and Training and other[OVERRULED], . The Supreme Court has said:

Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the

expression ""State"". A wide enlargement of the meaning must be tempered by a wise limitation. It must not be lost sight of that in the modern

concept of welfare state, independent institution corporation and agency are generally subject to State control. The State control does not render

such bodies as ""State"" under Article 12. The State control, however vast and pervasive is not determinative. The financial contribution by the State

is also not conclusive. The combination of State aid coupled with an unusual degree of control over the management and policies of the body and

rendering of an important public service being the obligatory functions of the State may largely point out that the body is ""state"". If the Government

operates behind a corporate veil, carrying out governmental activity and governmental functions of vital public importance there may be little

difficulty in identifying the body as ""State"" within the meaning of Article 12 of the Constitution.

In view of the above statement of law to which no exception can be taken it is clear that an ''authority'' for the purpose of Article .226 of the

Constitution of India need not be an authority under Article 12 of the Constitution of India and ''any other authority'' for the purpose of Article 12

of the Constitution of India may, in a given case be an instrumentality or agency of the Government of the State. His not the look of the body

concerned. It is its character that will decide whether it is an authority for the purpose of Article 226 of the Constitution of India or an authority for

the purpose of Article 12 of the Constitution of India and whether its name or look is different on account of the veil or cloth. The Court, in such

cases, shall pierce the veil and notice the true character of the person concerned to determine whether it is an ''authority'' for the purpose of Article

226 of the Constitution of India or/and authority for the purpose of Article 12 of the Constitution. An authority under Article 12 of the Constitution

of India shall always be an authority for the purpose of Article 226 of the Constitution of India.

On the facts that are available on the record it can safely be said that the petitioner has discharged the onus to prove that the respondent

company is a Government company which is just an agency or instrumentality of the Government of the State of Tamil Nadu and the State is in

complete control of all its affairs. If the respondent company wanted to show otherwise it had to discharge a heavy onus and show by cogent

material that notwithstanding the overwhelming share control and almost every Director of the company being a nominee of the State it retained its

independence as a company and has not been under the deep and pervasive control of the Government of the State of Tamil Nadu.

Coming to the facts there is almost no controversy or little controversy that there has been an enquiry of any kind conducted into the allegations

levelled against the petitioner. While on the one hand certain charges were levelled against the petitioner on the other hand the respondent company

decided to terminate his services on a ground which had ceased to be a ground for the reason of the order having been recalled and a further time

granted to the petitioner to join his duties at Ramagundam.

There are sufficient elements in the order of termination simpliciter to show that it had been contrived to avoid enquiry into the charges that had

been levelled against the petitioner. The impugned order terminating the petitioner''s service for the reason that it used the alleged disobedience of

the transfer order as the ground is stricken by arbitrariness and for the reason that instead of proceeding with the charges levelled against the

petitioner the respondent company decided to terminate the petitioner''s service on a ground non est, it is hit by malice in law. For these reasons,

there can be no hesitation in holding that the order of termination of the services of the ''petitioner issued by the first respondent is violative of

Articles 14 and 16(1) of the Constitution of India.

It is however stated that this Court should decline to interfere with the order of termination of the services of the petitioner because that order

has been challenged only in the second Writ petition that had been filed in the year 1991 after a long and inordinate delay. Taking this technical

view of the matter will mean ignoring the fact that the petitioner did question the validity of the order of termination of services under the Tamil

Nadu Shops and Establishments Act and when his appeal was rejected as not maintainable, moved this Court in W.P. No. 10116 of 1983. This

Court''s power to interfere with the arbitrary and ''without jurisdiction'' order of the kind impugned by the petitioner herein in W.P. No. 10116 of

1983 cannot he questioned. The Court must always see as to how any unconstitutional act can be avoided and how far the facts of the case

require moulding the relief. In the instant case, I am satisfied that the delay in filing W.P. No. 17376 of 1991 is excusable.

For the reasons aforesaid W.P. No. 17376 of 1991 is allowed. The impugned notice of termination dated 1.9.1980 culminating in the order of

termination dated 3.10.1980 of the respondent is quashed. W.P. No. 10116 of 1983 is allowed to the extent that it impugned the order of the first

respondent covered by W.P. No. 17376 of 1991. As a consequence the petitioner shall be deemed to be reinstated and in continuous service as if

there has been no termination of service at all. On the facts of this case there shall however be no order as to costs.