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2003 Supreme(Kar) 199
IN THE HIGH COURT OF KARNATAKA
Hon'ble Justice S.R. Nayak and Hon'ble Justice K. Ramanna, JJ.
Chitradurga District Mazdoor Sangh - Appellant
Vs.
Bhadra Sahakari Sakkare Karkhane Niyamita and others - Respondent
Writ Petition No. 13524 of 1999
Decided on : 25-02-2003
Advocate Appeared:
Mr. Jayakumar S. Patil
Mr. Somshekar, S.N. Murthy
A State or an authority can be directed to perform its public duty by way of a writ of mandamus under Article 226 of the Constitution of India.
Headnote:
WRIT PETITION - MAINTAINABILITY - SUGAR FACTORY - WHETHER A STATE OR AUTHORITY - ARTICLE 12 OF THE CONSTITUTION OF INDIA - ARTICLE 226 OF THE CONSTITUTION OF INDIA - PUBLIC DUTY - ARTICLE 14 OF THE CONSTITUTION OF INDIA - DOCTRINE OF PROMISSORY ESTOPPEL - SETTLEMENT - IMPLEMENTATION.
Fact of the Case:
The services of members of the petitioner-sangha, while serving as daily-wagers, seasonal and regular employees in the establishment of the first respondent-factory, were terminated by the management. The concerned workmen instituted industrial disputes before the Labour Court, Hubli, assailing the above action of the management. When those disputes were pending before the Labour Court, the management in response to several representations made by the union and its members negotiated with the office-bearers of the union for an amicable settlement of the industrial dispute and that has ultimately resulted in a settlement dated May 14, 1998, which is sought to be implemented in present writ proceedings. According to the union, in terms of the settlement, the management ought to have absorbed the services of 53 workmen named in the settlement. Opposing the writ petition, the management has filed statement of objections.
Finding of the Court:
The Court held that the first respondent-sugar factory is a "State" within the meaning of Article 12 of the Constitution and, therefore, the legality of its action can be tested in a writ proceeding under Article 226 of the Constitution. Alternatively, the first respondent-sugar factory is amenable to the writ jurisdiction of this Court under Article 226 of the Constitution. The Court also held that the management of the first respondent sugar factory ought not to have taken the technical plea that writ petition is not maintainable in order to defeat the legitimate rights of the workmen under the settlement. The Court further held that this is a fit case where the Court should apply the doctrine of promissory estoppel.
Issues: 1. Whether the sugar factory is a "State" or an "authority" within the meaning of Article 12 of the Constitution of India? 2. Whether the writ petition is maintainable under Article 226 of the Constitution of India? 3. Whether the management of the sugar factory is under a public duty to implement the settlement? 4. Whether the management of the sugar factory can be directed to implement the settlement by way of a writ of mandamus?
Ratio Decidendi: 1. The Court held that the first respondent-sugar factory is a "State" within the meaning of Article 12 of the Constitution and, therefore, the legality of its action can be tested in a writ proceeding under Article 226 of the Constitution. The Court relied on the following tests laid down by the Supreme Court in Ajay Hasia v. Khalid Mujib Sehravardi (AIR 1981 SC 487) to determine whether a legal entity can be regarded as a "State" or an "authority": (i) If the entire share capital of the corporation is held by Government it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (ii) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with Governmental character. (iii) It may also be a relevant factor whether the corporation enjoys monopoly status which is the State conferred or State protected. (iv) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (v) If the functions of the corporation is of public importance and closely related to Government functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government. (vi) Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government. The Court also held that the first respondent-sugar factory is amenable to the writ jurisdiction of this Court under Article 226 of the Constitution, as the term "authority" used in Article 226 must receive a liberal meaning unlike the term under Article 12. 2. The Court held that the writ petition is maintainable under Article 226 of the Constitution of India, as the first respondent-sugar factory is a "State" within the meaning of Article 12 of the Constitution and, therefore, the legality of its action can be tested in a writ proceeding under Article 226 of the Constitution. The Court also held that the first respondent-sugar factory is amenable to the writ jurisdiction of this Court under Article 226 of the Constitution, as the term "authority" used in Article 226 must receive a liberal meaning unlike the term under Article 12. 3. The Court held that the management of the sugar factory is under a public duty to implement the settlement, as the first respondent-sugar factory is a "State" within the meaning of Article 12 of the Constitution and, therefore, its action is subject to Article 14 of the Constitution. The Court also held that the management of the sugar factory has made a promise to the workmen under the settlement and the workmen have acted on the basis of that promise and altered their position to their peril. Therefore, the management cannot be permitted to approbate and reprobate in order to thwart legitimate rights of workmen flowing from the solemn promise made by the management. 4. The Court held that the management of the sugar factory can be directed to implement the settlement by way of a writ of mandamus, as the management of the sugar factory is under a public duty to implement the settlement and the management has made a promise to the workmen under the settlement and the workmen have acted on the basis of that promise and altered their position to their peril.
Final Decision: The Court allowed the writ petition with costs quantified at Rs.3,000 payable by the first respondent to the petitioner's counsel within two weeks. A writ of mandamus shall be issued to the management of the first respondent sugar factory to implement the settlement Annexure A dated May 14, 1998 and continue 51 workmen already reinstated into service and pay 40 per cent of back wages, if not already paid within a period of one month from today.
S.R. Nayak, J.—This writ petition is preferred by Chitradurga District Mazdoor Sangh, trade union represented by its president calling in question the inaction of the management of Bhadra Sahakari Sakkere Karkhane Niyamita represented by its managing director, first respondent in the writ petition, in implementing the settlement produced as annexure A, dated May 14, 1998, and for a consequent direction to the management to implement the aforementioned settlement.
2. The events leading to the filing of the writ petition be noted briefly as under:
The services of members of the petitioner-sangha, while serving as daily-wagers, seasonal and regular employees in the establishment of the first respondent-factory, were terminated by the management. The concerned workmen instituted industrial disputes before the Labour Court, Hubli, assailing the above action of the management. When those disputes were pending before the Labour Court, the management in response to several representations made by the union and its members negotiated with the office-bearers of the union for an amicable settlement of the industrial dispute and that has ultimately resulted in a settlement dated May 14, 1998, which is sought to be implemented in present writ proceedings. According to the union, in terms of the settlement, the management ought to have absorbed the services of 53 workmen named in the settlement. Opposing the writ petition, the management has filed statement of objections.
3. At the threshold, on behalf of the management, it is contended that the writ petition is not maintainable for the first respondent- sugar factory could not be regarded as a "State" within the meaning of Article 12 of Constitution nor an "authority" for the purpose of issuance of writs or orders under Article 226 of the Constitution. It is further contended by the management that the union, in terms of the settlement dated May 14, 1998, ought to have withdrawn the industrial dispute with regard to all workmen numbering 124 whereas the union has withdrawn dispute concerning only 53 workmen and since the union has failed to stand by its solemn promise, it is not entitled to seek mandamus at the hands of this Court to implement the terms of the settlement which are favourable to its members without performing reciprocal obligations.
4. Since the preliminary objection raised by management goes to the root of the matter, it is appropriate that the Court should deal with that question in the first instance. Article 12 reads thus:
'In this part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.'
5. The question as to under what circumstances private bodies like a company, or a corporation or a society could be considered to be "other authorities" within the meaning of that term occurring in Article 12 of the Constitution of India arose for decision before the Apex Court in Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, AIR 1981 SC 487 . A Constitution Bench of the Supreme Court, on an in-depth and comprehensive treatment of the question and on consideration of its earlier decision in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, AIR 1979 SC 1628 evolved certain tests for determining as to when a corporation or a company or a society can be said to be an "instrumentality or an agency of the State". Paragraph 9 of the said judgment reads Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, AIR 1981 SC 487 :
"9. Tests for determining as to when a Corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, AIR 1979 SC 1628 . These tests are not conclusive or clinching, b
