Back
High Court Of Delhi
P.B.GHAYALOD - Appellant
Versus
MARUTI UDYOG LIMITED - Respondent
Civil 3102 of 1990
Decided On : 09/11/1991
CONSTITUTIONAL LAW - ARTICLE 12 - INSTRUMENTALITY OF STATE - MARUTI UDYOG LTD. - NOT AN INSTRUMENTALITY OF STATE - WRIT PETITION NOT MAINTAINABLE.
Fact of the Case:
Petitioner, a former employee of Maruti Udyog Ltd. (MUL), challenged the termination of his services, arguing that MUL was an instrumentality of the State and thus subject to Article 12 of the Constitution. MUL contended that it was a private limited company and not an instrumentality of the State.
Finding of the Court:
The court held that MUL was not an instrumentality of the State, considering factors such as the shareholding pattern, financial assistance, monopoly status, control over management, and the nature of its functions. The court also noted that the petitioner's termination was based on a contractual term that allowed for termination with notice or payment in lieu thereof, and that this term was not void or against public policy.
Issues: 1. Whether Maruti Udyog Ltd. (MUL) is an instrumentality of the State within the meaning of Article 12 of the Constitution of India? 2. Whether the termination of the petitioner's services was arbitrary, discriminatory, and violative of the principles of natural justice?
Ratio Decidendi: 1. To determine whether a corporation is an instrumentality of the State, the court considered the following factors: - Shareholding pattern: MUL had substantial shareholding by Suzuki Motor Company, a foreign company. - Financial assistance: MUL received financial assistance from various sources, including foreign banks and leasing companies, not just the Government of India. - Monopoly status: MUL did not enjoy a monopoly status in the automobile industry. - Control over management: MUL's management was not exclusively controlled by the Government of India; Suzuki Motor Company had significant influence. - Nature of functions: MUL's functions, while important, were not exclusively governmental in nature. 2. The court held that the termination of the petitioner's services was not arbitrary or discriminatory, as it was based on a contractual term that allowed for termination with notice or payment in lieu thereof. The court also found that the petitioner was not denied the principles of natural justice, as he was given an opportunity to respond to the termination notice.
Final Decision: The court dismissed the writ petition, holding that MUL was not an instrumentality of the State and that the termination of the petitioner's services was not illegal or violative of his constitutional rights.
( 1 ) THE petitioner through the present writ petition wants this court to quash the termination order dated 14-9-1990 whereby his services were terminated by the respondents.
( 2 ) THE submissions of the petitioner are that Maruti Udyog Ltd. , Respondent No. 1 (hereinafter referred to as respondent) is a Government company as defined in Section 617 of the Companies Act, 1956. It was incorporated on 24th November, 1981 and became a "deemed public company" under section 43-A (i) of the Companies Act, 1956 w. e. f. 24th January, 1983. The Joint Venture agreement and the license agreement were signed with Suzuki Motor Company on 2-10-1982. The equity participation in between Government of India (hereinafter referred to as respondent No. 2 for the sake of brevity) and the Suzuki Motor Company is in the ratio of 60 : 40. Respondent No. 1 is completely under the control of respondent No. 2 under the Ministry of Industry which is managed by a Chairman, under the superintendence and control of Board of Directors who are appointed by the Central Government and are removeable by it. It is this veil behind which the Central Government operates through the instrumentality of the respondent No. 1 The activities which are being carried on by the respondent No. 1 of manufacture of the motor vehicles are of vital national importance. In the above circumstances, respondent No. 1 is a State being an authority within the territory of India and under the control of the Government of India within the meaning of Article 12 of the Constitution of India.
( 3 ) THE petitioner further submits that he is a B. E. (Mechanical ). He has specialised in automobile engineering. The petitioner was selected for the post of General Manager (Marketing and sales) on 7-5-1985. The petitioner was a permanent employee of respondent No. 1. One of the conditions of the appointment of the petitioner, i. e. , condition No. 6, was that the service of the petitioner would be terminable by a three months notice without assigning any reason. The services of the petitioner were terminated under the said term. i. e. , term No. 6, without any rhyme or reason through a letter No. GUGN/p-RS/pp-1249666, dated 14-9-1990. The said termination order is void and illegal in asmuch as it is in contravention of the provisions of the Article 14 of the Constitution of India, clause No. 6 in the letter of appointment is opposed to public policy. As such it is void under section 23 of the Indian Contract Act. The aforesaid termination order is arbitrary, discriminatory, violative of the principle of natural justice of audi alteram partem inasmuch as it not only Infringes Article 14 but also Article 19 (1) (2) and 21 of the Constitution of India. It has thus been prayed that the impugned order of termination of the services of the petitioner dated 14-9-90 be set aside and quashed. The petitioner be reinstated as the General Manager of the respondent No. 1. The petitioner be also granted full back wages from 15th December, 1990 onwards till his reinstatement.
( 4 ) THE respondents put in appearance and contested inter alia on the following grounds : that the respondent No. 1 is a private limited company incorporated under the Companies Act, 1956 and continues to be so despite its being deemed public limited company under section 43-A of the Companies Act, 1956. It is a Joint Venture company of the Government of India and Suzuki Motor Company, Japan. There was a joint venture agreement dated 2nd October, i982 in between the abovesaid company and Suzuki Motor Corporation. Suzuki Motor Company under the said Agreement has subscribed 40 per cent of the Share Capital of the respondent No. 1. Further-more, as per the said joint venture agreement all major policy decisions with respect to the management and operation of the respondent No. 1 are to be made in consultation with and with the concurrence of Suzuki Co. , respondent No. 1 has also entered into an agreement with Consoration of B
AI
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
