Hindustan Aeronautics Ltd. Vs. The
Workmen & Ors  INSC 155 (4 August 1975)
CITATION: 1975 AIR 1737 1976 SCR (1) 231 1975
SCC (4) 679
D 1988 SC1369 (13)
Industrial Disputes Act (14 of 1947) s.
2(a)(u)- 'Appropriate Government, Scope of-Direction by Tribunal to make
certain employees permanent- Propriety. '
The Government of West Bengal referred under
s. 10(1) of the Industrial Disputes Act, 1947, five issued for adjudication by
the Industrial Tribunal. The dispute was between the respondents-workmen
working at the Barkeeper branch of the appellant company's workshop. All the
shares of the appellant are owned by the Central (Government. and its
Memorandum and Articles of Association point out the vital role and control of
the Central Government in the matter et carrying on of the industry.
The Tribunal granted relief with respect to
In appeal to this Court, the competency of
the Government to make the reference was challenged on the ground that the
appropriate Government to make the reference was either the Central Government,
because the industry was under the authority of the Central Government, or the
State of Karnataka, since the works of the Barkeeper branch is under the Bangalore
Divisional office of the Company.
Rejecting the contention, but allowing the
appeal to this Court on merits,
HELD: l (a) the submission regarding the
competency of the Central Government is identical to the one made before this
Court and repelled by this Court in the case of Heavy Engineering Mazdoor Union
v. The State of Bihar  3 S.C.R. 995. [233C] (b) The fact that the
Government company in the Heavy Engineering Mazdoor Union ease was carrying on
an industry where Private Sector Undertakings were also operating, whereas, in
the instant case, the Government alone was entitled to carry on to the
exclusion of private operators.
would not make any difference. [234B] (c) The
definition of "appropriate Government" in s. 2(a)(1) of the Industrial
Disputes Act has been amended from time to time and certain statutory corporations
were incorporated in the definition to make the Central Government the
appropriate Government' in relation to the industry carried on by them. But no
public company, even if the shares were exclusively owned by the Government,
was brought within the definition. [234C] (2) Assuming that the Barkeeper
branch was under the control of the Bangalore Division of the Company, it was a
separate branch working as a separate unit. The workers were receiving their
pay at Barkeeper, were under the control of the officers of the Company
stationed there, their grievances were their own and the cause of action in
relation to the industrial dispute arose there. If there was any disturbance of
industrial peace at Barrackpore, the appropriate Government concerned in its
maintenance was the West Bengal Government, [234D-F] M/s. Lipton Limited and
another v. Their employees  2 Suppl. S.C.R. 150 distinguished.
(3) On the first issue relating to allowance
for the education l employees' children the Tribunal directed the appellant to
pay Rs. 12/- per month to each employees to meet the educational expenses of
his children. This direction is in elect a revision of the pay structure of the
Barrackpore employees and the Tribunal had no jurisdiction to change the ware
structure in the garb of allowing educational expenses, [235A-C] 232 (4) On the
issue regarding revision of lunch allowance, the award of the Tribunal was
unnecessary because all members of the staff were getting such lunch allowance.
[235E-F] (5) As regards the directions of the
Tribunal that certain canteen employees should be made permanent. it was not
justified because those workman were casual workmen appointed temporarily. The
workmen could be made permanent only against permanent vacancies and not otherwise,
and there was no direction by the Tribunal for the creation of any new post.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1330 of 1969 Appeal by special leave from the Award dated the 5th March,
1969 of that Fifth Industrial Tribunal. West Bengal, in Case No. 26 of 1967. V
S. Desai and R. B. Dater, for the appellant.
A. K. San and Sukumar Ghose, for respondent
no. 1. C The Judgment of the Court was delivered by UNTWALIA, J.-This is an
appeal by special leave filed by Hindustan Aeronautics Ltd. from the award
dated 8-3-1969 made by the Fifth Industrial Tribunal, West Bengal. The Governor
of West Bengal made the reference under section 10(1) of the Industrial
Disputes Act, 1947-hereinafter called the Act, for adjudication on the
following 5 issues:
"(1) Allowance for the education of
employees' children, (2) House Building loan;
(3) Free conveyance or conveyance allowance;
(4) Revision of Lunch allowance;
(5) Whether the following canteen employees
should be made permanent"-the names of 10 employees given.
The Tribunal granted no relief to the workmen
on issues 2 and 3, allowed their claim in part in respect of issues 1, 4 and S.
Feeling aggrieved by the said award the appellant which is a Government company
constituted under section 617 of the Companies Act, the shares of which are
entirely owned by the Central Government, has filed this appeal. The dispute
relates to about 1,000 workmen working at the Barrackpore (West Bengal) branch
of the Company's repairing workshop represented by the Hindustan Aeronautics
Workers' Union, Barrackpore.
The competency of the Government of West
Bengal to make the reference was challenged before the Tribunal as also here.
Mr. V. S. Desai, learned counsel for the appellant, submitted that the
appropriate government within the meaning of section 2(a) of the Act competent
to make the reference was the Central Government, or, if a State Government, it
was the Government of Karnataka where the Bangalore Divisional office of the
Company is situated and under which works the Barrackpore branch. Counsel
stressed the point that the Central 233 Government owned the entire bundle of
shares in the company.
It appoints and removes the Board of
Directors as well as the Chairman and the Managing Director. All matters of importance
are reserved for the decision of the President of India and ultimately executed
ill accordance with his directions. The memorandum and articles of association
of the company unmistakably point out the vital role and control of the Central
Government in the matter of carrying on of the industry owned by the appellant.
Hence, counsel submitted that the industrial dispute in question concerned an
industry which was carried on "under the authority of the Central
Government" within the meaning of section 2(a) (i) of the Act and the
Central Government was the only appropriate Government to make the reference
10. The submission so made was identical to
the one made before and repelled by this Court in the case of Heavy Engineering
Mazdoor Union v. The State of Bihar & ors.(1) wherein it has been said at
page 1,000) "It is true that besides the Central Government having
contributed the entire share capital, extensive powers are conferred on it,
including the power to give directions as to how the company should function,
the power to appoint directors` and even the power to determine the wages and
salaries payable by the company to its employees. But these powers are derived
from the company's memorandum of association and the articles of association
and not by reason of the company being the agent of the Central Government. The
question whether a corporation is an agent of the State must depend on the
facts of each case. Where a statute setting up a corporation so provides, such
a corporation can easily be identified as the agent of the State as in Graham v
Public Works commissioners-(1901) 2 K.B. 781 where - Phillimore, J. said that
the Crown does in certain cases establish with the consent of Parliament
certain officials or hodies who are to be treated as agents of the Crown even
though they have the power of contracting as principals. In the absence of a
statutory provision, however. a commercial corporation acting on its own
balefully even though it is controlled wholly or partially by a Government
department. will be ordinarily presumed not to be a servant or agent of the
State. The fact that a minister appoints the members or directors of a
corporation and he is entitled to call for information, to give directions
which are binding on the directors and to supervise over the conduct of the
business of the corporation does not render the corporation an agent of the
Government. (see the State Trading Corporation of India Ltd v. The Commercial
Visakhapatnam)-(1964) 4 S.C.R. 99 at 188 per
and Tamlin v. Hannaford-(1950)1 K.B. 18 at
25, 26. Such an inference that the corporation is the agent of the Government
may be drawn where it is performing in substance govern mental and not
(cf. London Country 234 Territorial and
Auxiliary Forces Association v. Michale)- (1948) 2 All. E.R. 432." Mr.
Desai made a futile and unsubstantial attempt to distinguish the case of Heavy
Engineering Mazdoor Union on the ground that was the case of a Government
company carrying on an industry where Private Sector. Undertakings were also
operating It was not an industry, as in the instant case, which the Government
alone was entitled to carry on to the exception of the private operators. The
distinction so made is of no consequence and does not affect the ratio of the
case in the least We may also add that by amendments in the definition of
appropriate Government" in section 2(a)(i) from time to time certain
statutory corporations were incorporated in the definition to make the Central
Government an appropriate Government in relation to the industry carried on by
them. But no public company even if the shares were exclusively owned by the
Government was attempted to be roped in the said definition.
The other leg of the argument to challenge
the competency of the West Bengal Government to make the reference is also
fruitless. It may be assumed that the Barrackpore branch was under the control
of the Bangalore division of the company. Yet it was a separate branch engaged
in an industry of repairs of air craft’s or the like at Barrackpore. For the
purpose of the Act and on the facts of this case the Barrackpore branch was an
industry carried on by the company as a separate unit. The workers were
receiving their pay packages at Barrackpore and were under the control of the
officers of the company stationed there.
If there was any disturbance of industrial
peace at Barrackpore where a considerable number of workmen were working the
appropriate government concerned in the maintenance of the industrial peace was
the West Bengal Government. The grievances of the workmen of Barrackpore were
their own and the cause of action in relation to the industrial dispute in
question arose there. The reference.
therefore, for adjudication of such a dispute
by the Governor of West Bengal was good and valid. The facts of the case of M/s
Lipton Limited and another v. Their employees(1) cited on behalf of the
appellant are clearly distinguishable. The ratio of that case was pressed into
service in vain on behalf of the appellant.
The first demand on behalf of the workmen as
respects the education allowance of the children was chiefly based upon the
educational facilities said to be available to the workmen of Bangalore. On
behalf of the management it was pointed out that certain educational facilities
were given to the employees living in the township of Bangalore out not in the
city of Bangalore. The workmen working at Barrackpore had also been provided
with certain educational facilities. We, however, do not propose to go into the
merits of the rival contentions. In our opinion the award directing the company
235 to pay Rs. 12/- per month to each employee to meet educational expenses of
their children irrespective of the number of children a particular workman may
have is beyond the scope of the issue referred for adjudication. The Tribunal
while discussing this issue felt constrained to think that strictly speaking
claim for allowance for the education of employees' children could not form a
subject matter of industry. dispute. Really it was a matter to be taken into
consideration at the time of fixing their wages.
In substance and in effect the directions
given by the Tribunal is by way of revision of the pay structure of the
Barrackpore employees. No such reference was either asked for or made. The
Tribunal, therefore, had no jurisdiction to change the wage structure in the
garb of allowing educational expenses for the employees' children. We may add
that on behalf of the appellant it was stated before us that the latest revised
wage structure has taken the matter of education of the employees' children
into consideration, while, Mr. A. K. San, appearing for the workmen, did not
accept it to be so. If necessary and advisable a proper industrial 1) dispute may
be raised in that regard in future but the award as it stands cannot be upheld.
Apropos issue no. 4 it was stated on behalf
of the appellant that all staff and not only the supervisory staff were getting
Rs. 1.50 as lunch allowance under circumstances similar to the ones under which
the employees belonging to the supervisory staff were getting Rs. 1.50 as lunch
allowance. The award of the tribunal, therefore, was unnecessary and
superfluous in that regard. If that be so, the award may be a surplus age as it
is conceded on behalf of the appellant that under the existing service
conditions every employee eligible to get a lunch allowance was getting at the
rate of Rs. 1.50 .
The 10 workmen sought to be made permanent
under issue no. 5 were casual workmen before 4-1-1967 within the meaning of clause (b) (d) of Standing order I headed "Classification of
workmen". They were appointed as temporary workmen within the meaning of
clause (b)(b) of Standing order I on and from 4-1-1967. The 'Tribunal's direction to make them permanent on and from 4.1.1968 treating them as
probationers appointed in permanent vacancies was not justified. The Tribunal
did not go into the question as to whether more permanent workmen were
necessary to be appointed in the canteen over and above the existing permanent
strength to justify the making of the of workmen as permanent in the canteen
where they II were working. No direction of creation of new posts was given.
O,. the evidence as adduced before tic Tribunal and on the basis of the 236
findings recorded by it, it is plain that the 10 workmen or ally of them could
be made permanent only against the permanent vacancies and not otherwise. On
behalf of the appellant it was stated before us that all of them have been made
permanent against such vacancies, while, on behalf of the workmen the assertion
was that none of them has been made permanent so far. The management has no
objection 13 in absorbing, the 10 workmen concerned in permanent vacancies as
and when they occur if any of the has not been already absorbed. The workmen
want nothing more than this.
In the result the appeal is allowed and
substantially the award of the Tribunal is set aside but subject to the
clarifications and observations made above. In the circumstances, there will be
no order as to costs.
V.P.S. Appeal allowed.