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2008 Supreme(Bom) 1479

High Court of Judicature at Bombay
THE HONOURABLE MRS. JUSTICE NISHITA MHATRE
Hindustan Organic Chemicals Ltd.
Versus
Hindustan Organic Chemicals Ltd. Employees' Union
Writ Petition No.10751 of 2004
Decided on : 10-10-2008

Advocates appeared:
For the Petitioner:M.M. Verma for i/b Rajesh Gehani, Advocates. For the Respondent:Ms. N.D. Buch, Advocate.

Headnote:

INDUSTRIAL DISPUTES ACT, 1947 - APPROPRIATE GOVERNMENT - CENTRAL GOVERNMENT OR STATE GOVERNMENT - COMPANY REGISTERED UNDER COMPANIES ACT, 1956 - SHAREHOLDING BY CENTRAL GOVERNMENT - APPOINTMENT OF DIRECTORS BY PRESIDENT OF INDIA - MEMORANDUM AND ARTICLES OF ASSOCIATION - ARTICLES 91, 126 AND 128 - CONTROL AND FISCAL POLICIES BY MINISTRY OF FINANCE, GOVERNMENT OF INDIA - WHETHER CENTRAL GOVERNMENT IS APPROPRIATE GOVERNMENT - HELD, NO - APPROPRIATE GOVERNMENT IS STATE GOVERNMENT.

Fact of the Case:

Petitioner, a Public Limited Company registered under the Companies Act, 1956, contended that it was a Government of India enterprise, established by the Central Government. According to the Company, all its Directors were appointed by the President of India under Article 76 (1) of its Articles of Association. The Company contended that it was functioning under the authority of the Central Government and, therefore, it was the Central Government which was appropriate government in relation to its establishment. The Union raised an industrial dispute in respect of the general demands. As these demands were not acceded by the company, the union approached the machinery under the Industrial Disputes Act for obtaining a reference. The Union had approached the State machinery as it was of the opinion that the State Government was the appropriate government in relation to the company. A Reference was made by the State Government for adjudication of the dispute to the Industrial Tribunal. The Industrial Tribunal held that the appropriate government for the Company was the State Government and not the Central Government.

Finding of the Court:

The appropriate government in relation to the Company is the State Government and not the Central Government.

Issues: Whether the Central Government or the State Government is the appropriate government in relation to the Company.

Ratio Decidendi: 1. The definition of the appropriate government as defined u/s 2(a) of the ID Act includes industries carried on by or under the authority of the Central Government or by a railway company or by a controlled industry specified by the Central Government or by statutory corporations, which have been mentioned in the section. In relation to all other industrial establishments, the State Government is the appropriate government. 2. The Company is a purely commercial enterprise. The avowed objects for which the Company has been established as contained in Memorandum of Association indicate that it has been set up for commercial considerations. The objects are not altruistic nor has the Company been established for carrying out any sovereign functions of the Government of India. The Board of Directors of the Company is not accountable to the Government of India but to its shareholders. 3. The provisions contained in the Memorandum and Articles of Association of the Company with respect to interest out of capital dividend and reserve fund indicate that all decisions regarding these two items are to be taken by the Directors in consonance with the commercial considerations applicable to the Company. Therefore, this would indicate that the Company which is a Government Company has been set up as a commercial venture and is functioning as such and not under the authority of the Central Government.

Final Decision: Petition dismissed.

Judgment :

1. The question involved in the present petition is whether the Central Government is the appropriate government for the Petitioner or whether it falls within the jurisdiction of the State Government.

2. A few facts which are relevant for the determination of this issue are as follows:

The Petitioner is a Public Limited Company registered under the Companies Act, 1956. The Petitioner (for short, hereinafter referred to as the `Company') contends that it is a Government of India enterprise, established by the Central Government. According to the Company, all its Directors are appointed by the President of India under Article 76 (1) of its Articles of Association. The Company contends that it is functioning under the authority of the Central Government and, therefore, it is the Central Government which is appropriate government in relation to its establishment.

3. The Respondent Union (for short, hereinafter referred to as the `Union') raised an industrial dispute in respect of the general demands. As these demands were not acceded by the company, the union approached the machinery under the Industrial Disputes Act for obtaining a reference. The Union had approached the State machinery as it was of the opinion that the State Government was the appropriate government in relation to the company. A Reference was made by the State Government for adjudication of the dispute to the Industrial Tribunal, Thane being Reference (IT) No.12 of 1998. The Union filed its statement of claim justifying its demands. The company in its written statement raised a preliminary contention that the Reference was not maintainable as the dispute was referred by the State Government, which according to the Company was not the appropriate government in relation to it. The Company relied on two orders of a learned Single Judge of this Court in Writ Petition No.3611 of 1997 and 3037 of 1997. The learned Single Judge (Rebello, J.) in both the cases was prima facie of the opinion that the appropriate government would be the Central Government in relation to the Company.

4. The Industrial Tribunal first heard the parties on the preliminary issue regarding the appropriate government for the Company. The parties led evidence, both oral and documentary before the Tribunal. The Industrial Tribunal by award part I dated 12.10.2004 has held that the appropriate government for the Company was the State Government and not the Central Government. Aggrieved by this decision of the Tribunal, the Company has preferred the present writ petition.

5. Mr.Verma, the learned Counsel for the Company puts forth the following reasons to support his submission that the Central Government is the appropriate government in relation to the Company: (i) 58% of the shareholding is that of the Central Government;

(ii) the business is carried on under the authority of the Central Government; (iii) the Memorandum and Articles of Association more particularly Articles 91, 126 and 128 make it abundantly clear that the Company is a Government of India enterprise and that the entire financial control and fiscal policies of the Company are prescribed by the Ministry of Finance, Government of India. All policy decisions of the Company are taken by the Government of India and are routed through the Ministry of Chemicals for implementation by the company. The Directors of the Company are appointed by the President of India and are answerable only to the Government of India.

6. In support of the aforesaid contentions, Mr.Verma has relied on several documents, which were produced before the Tribunal. According to him they indicate that the Company is under the direct control of the Government of India. I shall discuss these documents, which are produced before me a little later. Mr.Verma further relies on the Memorandum and Articles of Association in support of his submissions. He buttresses his arguments by relying on the judgment of the Supreme Court in the case of Steel Authority of






















































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