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Judgment
I.S. Tiwana, J.—In these two petitions C.W. Ps Nos. 447 of 1980 and 2286 of 1981--the learned Counsel are agreed that the decision in the former would govern the merits of the latter one also.
The short but significant question required to be answered in this petition is as to whether in the given facts and circumstances of the case, the State Government was the appropriate Government in terms of Section 2(a) of the Industrial Disputes Act, 1947 (for short, I.D. Act) to make the respective references u/s 10 of the Act to the Industrial Tribunal, Punjab ? The Tribunal,--vide two different but similar awards has answered this question in the negative. The answer to the question posed essentially depends on the constitution, history and the working of the establishment and the rules governing the same which are noted as follows.
Amritsar Sugar Mills a limited Company, started producing sugar in its factory established at Chhehrata, District Amritsar. In the year 1938, it stopped the production of sugar and started producing Vanaspati Oil under the name and style of ''Amritsar Oil Works, Amritsar''. The management of this concern is now Respondent No. 4. Vanaspati is undisputably a scheduled industry as per Item No. 28 of Schedule I to the Industries (Development and Regulation) Act, 1951 (hereinafter referred to as the Act). The Company has another unit at Muzaffar Nagar in Uttar Pradesh and. is producing sugar there.
On September 12, 1974, the Central Government in exercise of its powers u/s 18AA(i) of the Act, notified the taking over of the management of this industry by a Board constituted,--vide paragraph 2 of this notification. Notification is Annexure P.I to the petition. The Board commenced the working of the factory with effect from January 19, 1975.
Some time later the workmen of the factory through their Union known as ''Amritsar Sugar Mills Mazdpor Union'' raised certain industrial disputes which on failure of the reconciliation proceedings were referred by the State Government to the Tribunal for disposal. Respondent No. 4 contested the claim of the workers and as already indicated, the Tribunal has opined about the incompetence of the reference made to it with the conclusion that the factory in question was being run under the authority of the Central Government and the State Government could not legally make the references. Similarly the claim of the workers under the Bonus Act, 1965, was also dismissed by the Tribunal in the light of its above noted conclusion. In order to appreciate the contentions raised on either side it is necessary to notice the contents of the notification, Annexure P.1, and the relevant provisions of law in detail which are reproduced hereunder:
MINISTRY OF INDUSTRIAL DEVELOPMENT ORDER .
New Delhi, the 13th September, 1974 S.O. 542(E)/18AA/1DRA/ 74--Whereas the Central Government is satisfied from the documentary evidence in its possession:
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Now, therefore, in exercise of the powers conferred by Sub-section (1) of Section 18AA of the Industries (Development and Regulation) Act, 1951 (65 of 1951), the Central Government hereby authorises the body of persons referred to in Paragraph 2 of this order as the Board of Management to take over the management, of the said industries undertaking in so far as it relates to the said factory subject to the following terms and conditions, namely:
(i) The Board shall comply with all directions issued from time to time by the Central Government.
(ii) The Board shall hold office for a period of five years from the date of publication of this order in the Official Gazette.
(iii) The Central Government may terminate the appointment of the Board or of any of the persons comprising the Board earlier, if it considers it necessary to do so.
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This order shall have effect for a period of five years commencing from the date of, its publication in the Official Gazette.
It is the undisputed position that the Board was continuing to manage the" affairs of the factory at the relevant time, i.e. when the references were made by the State Government. The relevant provisions of the I.D. Act are:
Section 2(a): ''appropriate Government'' means,-
(i) In relation to any Industrial Dispute concerning any industry carried on by or under the authority of the Central Government * * *
or concerning any such controlled industry as may. be specified in this behalf by the Central Government ...the Central Government, and
(ii) in relation to any other Industrial Dispute, the State Government;
2(ee) ''controlled industry'' means any industry the control of which by the Union has been declared by any Central Act to be expedient in the public interest.
(g) ''employer'' means:
(i) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department;
(ii) in relation to an industry carried on by. or on behalf of a local authority, the Chief executive of that authority.
Section 32 of the Bonus Act reads as follows:
Nothing in this Act shall apply to:
(iv) Employees employed by an establishment engaged in any industry carried on by or under the authority of any department of the Central Government or a State Government or a local authority.
The submission of Mrs. Bindra, learned Counsel for the Petitioners now is that by virtue of notification Annexure P.1, the Central Government had only taken over the management of the industry and on that account, though the Central Government became the employer of the workers yet it cannot be held that the - industry as such had been taken over by the Central Government. According to her, a clear distinction between an industry being taken over and the management of an industry being taken over has to be drawn in order to answer the above noted question. Thus she maintains that the State Government was fully competent to make the references in question in exercise of its powers u/s 10 of the Industrial Disputes Act. As against this, the contention of the learned Counsel for Respondent No. 4 is that not only the industry in question was a controlled industry in view of the provisions of Section 2 of the Act, read with Section 2(a) and, 2(ee) of the I.D. Act, but keeping in view the contents of the notification Annexure P.1 and its consequences as detailed in Section 18-B of the Act, it cannot by any stretch of imagination be said that the industry in question was not being carried on under the authority and control of the Central Government.
It is not a matter of dispute between the parties in the light of the observations of their Lordships of the Supreme Court in The Bombay Union of Journalists and Others Vs. The ''Hindu'', Bombay and Another, and Ruston & Hornsby (I) Ltd. v. T.B. Kadam AIR 1975 S.C. 2025 that the date relevant to judge the competency or validity of a reference is the date on which the reference u/s 10 of the I.D. Act is made. It is again the conceded position that on the dates the respective references were made by the State Government to the Tribunal, the Board constituted by the Central Government was carrying on the working of the industry. In the light of this admitted position all that remains to be seen now is the factual and legal effect of Annexure P.1 in the light of the provisions of law referred to hereafter.
It is abundantly clear from the relevant contents of the notification Annexure P.1 already reproduced above that:
(i) The entire management of the factory was taken over and vested in the Board;
(ii) The Board was bound to comply with the directions issued to it by the Central Government from time to time; and
(iii) The Central Government was competent to terminate the appointment of any person comprising the Board.
The consequences which automatically follow with the taking over of the management of an industrial undertaking are enumerated in Section 18-B of the Act and some of these are:
(i) all persons in charge of the management, including persons holding office as managers or directors of the industrial undertaking immediately before the issue of the notified order, shall be deemed to have vacated their offices as such;
(ii) any contract of management between the industrial undertaking and any managing agent or any director thereof holding office as such immediately before the issue of the notified order shall be deemed to have terminated;
(iii) the managing agent, if any, appointed u/s 18A shall be deemed to have been duly appointed as the managing agent in pursuance of the Indian Companies Act, 1913;
(iv) the person or body of persons authorised u/s 18A to take over the management shall take all such steps as may be necessary to take into his or their custody or control all the property, effects and actionable claims to which the industrial undertaking is or appears to be entitled, and all the property and effects of the industrial undertaking shall be deemed to be in the custody of the person or, as the case may be, the body of persons as from the date of the notified order; and
(v) the person, if any, authorised u/s 18A to take over the management of an industrial undertaking which is a company shall be for all purposes the directors of the industrial undertaking duly constituted under the Indian Companies Act, 1913 and shall alone be entitled to exercise all the powers of the directors of the industrial undertaking, whether such powers are derived from the said Act or from the memorandum or articles of association of the industrial undertaking or from any other source.
(vi) the person or body of persons authorised u/s 18-A shall, notwithstanding anything contained in the memorandum or articles of association, of the industrial undertaking, exercise his or their functions in accordance with such directions as may be given by the Central Government so, however, that he or they shall not have any power to give any other person any directions under this section inconsistent with the provisions of any Act or instrument determining the functions of the authority carrying on the undertaking except in so far as may be specifically provided by the notified order.
It is patent that for all intents and purposes the industry in question-came under the control of the Central Government with the issuance of notification Annexure P.1 and was being carried on by or under its authority at the time when the references in question were made to the Tribunal. The very heading of the Chapter III-A of the Act in which Sections 18-A and 18AA occur, is a clear indication in this regard. It reads ''Direct Management or Control of Industrial Undertakings''. This chapter was apparently introduced to provide for ''management'', and ''control'' by or ''under'' the Central Government. A question similar to the one in hand has exhaustively been considered by a Division Bench of the Bombay High Court in D.P. Kelkar Vs. Ambadas Keshav Bajaj and Others, in the context of Clause (iv) of Section 32 of the Bonus Act and after a detailed analysis of the various provisions of the Act, the learned Judges recorded a similar conclusion to the effect that the establishments in question were carried on directly under the authority of a department of the Central Government. I respectfully adopt the-reasoning stated in this judgment. Mrs. Bindra, learned Counsel for the Petitioners is not in a position to refer to any judgment which has considered the effect or the consequences brought about by a similar notification in the light of the provisions of the Act referred; to above. She, however, seeks support for her argument from certain observations made in Heavy Engineering Mazdoor Union v. State of Bihar and Ors. 1969 (2) L.L.J. 549 (S.C.) and National Textile Corporation v. The Industrial Tribunal and Ors. 1979 Lab. I.C. 1024. In both these cases the effect and legal consequences which flow from the provisions of the Act were not under consideration. Former was a case where the question arose with reference to a public limited company of which the entire share capital belonged to the Central Government and all? its shares were registered in the name of the President of India. An industrial dispute having arisen between the company and the Union representing its workers, was referred to the Industrial Tribunal by the Government of the State of Bihar and the reference was challenged on the ground that the appropriate Government who-made the reference u/s 10 of the Industrial Disputes Act was the Central Government and not the State Government. The question that cropped up for consideration was whether the Heavy Engineering Corporation Ltd. was an industry carried on by or under the authority of the Central Government ? The Supreme Court pointed out that the company and its shareholders were continuing to function as a company and they constituted distinct entities. They held that the mere fact that the entire share capital of the company was contributed by the Central Government and the fact that all its shares were held by the President 6f India and certain officers of the Central Government, made no difference and that the industry was not being carried on by or under the authority of the Central Government. The facts and circumstances here, as pointed out above, are entirely different. This judgment has also been considered and distinguished by their Lordships of the Bombay High Court in D. P. Kelkar''s case (supra).
The second judgment relied upon by Mrs. Bindra was a case where the company had entered into an agreement with the Governor General in Council acting through the Chief Commercial Manager of the East India Railway Administration by which- they secured the catering rights of providing mineral, water on the East India Railway System. By the agreement they acquired a right to sell their mineral water on the stations of the East India Railway and the trains running on the that railway- and under the contract the Government had a right to fix the maximum price and to control to some extent the working of the company. The argument raised toy the management was that they were carrying on an Industry by the authority of the Central Government on the ground that they had entered into a contract with the Central Government to provide amenities for the railway passengers which the railways would normally be called upon to provide and that to some extent their activities were controlled by the Central Government. This case is thus clearly distinguishable from the present case and I see no analogy whatsoever between the manufacturing and selling mineral-water on a railway system under a contract with the Government and to run an undertaking or industry by the Government through a legally constituted Board. Mrs. Bindra, as already pointed out, is not in a position to refer to any other judgment which directly deals with the provisions of the Act.
Further I am also of the opinion that even independently of notification Annexure P.1 the industry in question being a controlled industry it was the Central Government who could make any valid reference in the instant case. No doubt there is a real distinction between exercising certain functions of control and the taking over of the management as a whole of an undertaking on an orders u/s 18-AA of the Act, but a reading of Section 2 of the Act along with Section 2(a) and 2(ee) of the Industrial Disputes Act, makes it abundantly clear that the undertaking in question came within the definition of ''controlled industry'' for purpose of the I. D. Act. Section 2 of the Act declares that it is expedient in public interest that the Union (Union Government) should take under its control the industries specified in Schedule I. It has been pointed out already that the industry in question is mentioned at No. 28 of Schedule 1 to the Act.
In the light of the discussion above I see no infirmity in the conclusion of the Tribunal that in the instant case it was the Central Government which was the appropriate Government to make the references in question. Thus, for the reasons recorded above, these petitions fail and are dismissed but with no order as to costs.