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Supreme Court of India
B.S. CHAUHAN & V. GOPALA GOWDA, JJ.
Balmer Lawrie & Co. Ltd. & Others
Versus
Partha Sarathi Sen Roy & Others
Civil Appeal Nos. 419-426 of 2004 With Civil Appeal No. 926 of 2013
Decided On : 20-02-2013
AIR 2005 SC 411; AIR 2007 SC 2885; (2002) 5 SCC 111; AIR 1967 SC 1857; AIR 1975 SC 1331; AIR 1979 SC 1628; AIR 1981 SC 487; AIR 2002 SC 609; AIR 2005 SC 2677; (2002 2 SCC 333 – Relied upon
(b) Constitution of India – Article 12 – State – Sovereign function – Not extended to welfare functions – While welfare functions are amenable to judicial review, sovereign functions like relating to defence of the country, the raising of armed forces, making peace or waging war, foreign affairs, the power to acquire and retain territory etc. – Not amenable to judicial review. (Para 11)
AIR 1994 SC 2663; AIR 1996 SC 2898; AIR 1978 SC 548; AIR 2000 SC 3116; (2005) 5 SCC 1; AIR 2006 SC 131; AIR 2009 SC 218 – Relied upon
© Words and Phrases – Pervasive control – Control is intended to regulate, and to hold in check, or to restrain from action – ‘Regulate’, means to control or to adjust by rule, or to subject to governing principles. (Para 13)
AIR 1974 SC 1863; AIR 2004 SC 3697; AIR 2005 SC 2677; AIR 2007 SC 750 – Relied upon
(d) Government instrumentality – Authority or Corporation – Pervasive control – Such Instrumentality – Subject to constitutional restrictions as applicable to the Government itself. (Para 16)
AIR 1985 SC 660; (2012) 6 SCC 613; AIR 2001 SC 3527; (1990) 3 SCC 280; AIR 1995 SC 1811 – Relied upon
(e) Constitution of India – Article 226 – Instrumentality – Amenability – Factors to be considered – Carrying business for benefit of public – Extent of share capital held by Government – Board of Directors if appointed by Government and if independent – Whether a monopoly concern. (Para 17)
(f) Labour laws – Termination of service on three months’ notice – Dispensing with enquiry – Standing order providing for hire and fire rule – Ultra vires Article 14. (Para 18)
AIR 1985 SC 251; (1985) 3 SCC 116 – Relied upon
(g) Indian Contract Act, 1872 – Section 23 r/w Article 14, Constitution of India – An unfair or unreasonable clause in a contract, entered into by parties not enjoying equal bargaining power – Hit by Section 23 – Also against public policy. (Para 19)
AIR 1986 SC 1571; AIR 1991 SC 101; LIC of India; AIR 2005 SC 2884; AIR 2008 SC 3182 – Relied upon
(h) Constitution of India – Article 226 – Cause of action – Subsequent happenings – Whether relevant – Factors – Bearing on the right of action, nature of the relief and its importance to create or destroy substantive rights. (Para 20)
(2003) 7 SCC 219 – Relied upon
(i) Constitution of India – Article 12 and 226 – Balmer Lawries & Co. Ltd. – Whether amenable to Article 226 – Factors considered – Formation of the company, its objectives, functions, management and control, financial aid received from Government, its functional and administrative control and extent of domination by the government – Cumulative effect of all the factors would render it as an authority amenable to the writ jurisdiction of the High Court. (Para 27)
(j) Labour Laws – Service conditions – Company being State under Article 12 of the Constitution of India – Rule providing termination by three months’ notice – Held ultra vires Article 14 of the Constitution. (Para 28)
Facts of the case:
The question raised in this case is whether Balmer Lawrie & Co. Ltd. A private limited Company is State within the meaning of Article 12 of the Constitution?
Finding of the Court:
Appellant Company is amenable to writ jurisdiction of the High Court.
Result : C.A. No. 419-426/2004 dismissed.
CIVIL APPEAL NO. 926 OF 2013 disposed of in terms of appeals no. 419-426/2004
Judgment :-
Dr. B.S. Chauhan, J.
1. These appeals have been preferred against the impugned judgments and orders of the High Court of Calcutta dated 30.1.2002 and 24.12.2002 in FMA No. 301/2001, CO. 2038/1993, WP. Nos. 778/1992, 2613, 2798 & 3169/2000, 1109/1998 and 1739/1996, by which the Calcutta High Court by a majority decision held that the Balmer Lawrie & Co. Ltd. – appellant, is a State within the purview of Article 12 of the Constitution of India, 1950 (hereinafter referred to as, the ‘Constitution’), and is thus, amenable to writ jurisdiction.
2. Facts and circumstances giving rise to these appeals are:
A. The appellant is a public limited company incorporated under the Indian Companies Act, 1956. The shares of the appellant company were originally held by Indo-Burma Petroleum Co. Ltd., Life Insurance Corporation, Unit Trust of India, General Insurance Corporation and its subsidiaries, Nationalised Banks and also by the public. Subsequently, in 2001 its majority equity shares, i.e. 61.8% of its shareholding, which was held by IBP Co. Ltd., was transferred to Balmer Lawrie Investments Ltd. (BLIL), a Govt. company in which 59% shares are held by the government.
B. The appellant company carries on business in diverse fields through various Strategic Business Units (SBUs). None of these SBUs have monopoly in any business. The said SBUs are involved in the manufacturing of packing materials, i.e. steel drums and LPG cylinders, grease and lubricants. They also provide air freight services, ocean freight services, and project cargo management. They operate under a broader segment classified as ‘Logistic Services’, providing space and scope for segregation, storage and aggregation of containerized cargo, i.e. an infrastructural service carried on outside the port premises for handling, loading/unloading and storage of containerized import, as well as export cargo. The appellant company also deals with leather chemicals and tea blending and packaging.
C. The respondents-employees joined the services of the company at different times. However, for the purpose of deciding this case it would be convenient to take up the facts presented by respondent, Partha Sarathi Sen Roy.
The said respondent joined the appellant – company in May 1975 as a Management Trainee, and was later on confirmed vide order dated 1.6.1976 as an officer in Grade-III, subject to the terms and conditions mentioned in the letter of confirmation w.e.f. 20.5.1976. He had previously worked in different branches of the company in Dubai, the United Arab Emirates etc. as an Accountant-cum- Administrative Officer. His services were terminated vide order dated 27.2.1981, in view of Clause 11(a) of the letter of appointment which provided that the company would have a right, which would be exercised at its sole discretion, to terminate the services of such employees by giving them three calendar months’ notice in writing, without assigning any reason for such decision. The respondent challenged the said termination order by filing writ petition (C.R. No. 1562 (W) of 1981) in the High Court of Calcutta, praying for the issuance of a writ of mandamus, directing that the said termination order be quashed.
D. The appellant company contested the said writ petition contending that it was not an authority within the meaning of Article 12 of the Constitution, and therefore was not amenable to writ jurisdiction. The terms and conditions of contractual rights and obligations could therefore, not be enforced through writ jurisdiction. The matter was decided by the learned Single Judge vide judgment and order dated 19.12.2000, holding that the appellant was neither a State, nor any other authority within the meaning of Article 12 of the Constitution, and thus the writ petition itself was not maintainable.
E. Aggrieved, the respondent filed an appeal (FMA. No. 301/2001), against the said judgment and order of the learned Single Judge. However, in the meantime, another writ petition No. 778/1
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