SAIL Judgement
SAIL Judgement
Section 1 -
(4) - It applies --
(a) to every establishment in which twenty or more workmen are employed or were
employed on any day of the preceding twelve months as contract labour;
(b) to every contractor who employs or who employed on any day of the preceding
twelve months twenty or more workmen :
Provided that the appropriate Government may, after giving not less than two months
notice of its intention so to do, by notification in the Official Gazette, apply the
provisions of this Act to any establishment or contractor employing such number of
workmen less than twenty as may be specified in the notification.
(i) if it was performed for more than one hundred and twenty days in the preceding
twelve months, or
(ii) if it is of a seasonal character and is performed for more than sixty days in a year.
A perusal of this section brings out that CLRA Act applies to every establishment and
every contractor of the specified description. However, the establishments in which
work only of an intermittent or casual nature is performed are excluded from the
purview of the Act.
We shall also refer to definitions of relevant terms in sub- section (1) of Section 2
which contains interpretation clauses. Clause (a) defines the expression appropriate
Government thus :
2(1) In this Act, unless the context otherwise requires --
(ii) in relation to any other establishment, the Government of the State in which that
other establishment is situated.
(ii) any establishment of any railway, Cantonment Board, major port, mine or oil-
field, or
A plain reading of the unamended definition shows that the Central Government will
be the appropriate Government if the establishment in question answers the
description given in sub- clauses (i) to (iii). And in relation to any other establishment,
the Government of the State, in which the establishment in question is situated, will be
the appropriate Government. So far as sub- clauses (ii) and (iii) are concerned, they
present no difficulty. The discussion has centred round sub-clause (i). It may be seen
that sub-clause (i) has two limbs. The first limb takes in an establishment pertaining to
any industry carried on by or under the authority of the Central Government and the
second limb embraces such controlled industries as may be specified in that behalf by
the Central Government.
Before embarking upon the discussion on the first limb, it will be apt to advert to the
amended definition of appropriate Government which bears the same meaning as
given in clause
An analysis of this provision shows that the Central Government will be the
appropriate Government in relation to an industrial dispute concerning :
(1) any industry carried on by or under the authority of the Central Government, or by
a railway company; or (2) any such controlled industry as may be specified in this
behalf by the Central Government; or (3) the enumerated industries (which form part
of the definition quoted above and need not be reproduced here).
What is evident is that the phrase any industry carried on by or under the authority of
the Central Government is a common factor in both the unamended as well as the
amended definition.
It is a well-settled proposition of law that the function of the Court is to interpret the
Statute to ascertain the intent of the legislature-Parliament. Where the language of the
Statute is clear and explicit the Court must give effect to it because in that case words
of the Statute unequivocally speak the intention of the legislature. This rule of literal
interpretation has to be adhered to and a provision in the Statute has to be understood
in its ordinary natural sense unless the Court finds that the provision sought to be
interpreted is vague or obscurely worded in which event the other principles of
interpretation may be called in aid. A plain reading of the said phrase, under
interpretation, shows that it is lucid and clear. There is no obscurity, no ambiguity and
no abstruseness. Therefore the words used therein must be construed in their natural
ordinary meaning as commonly understood.
We are afraid we cannot accept the contention that in construing that expression or for
that matter any of the provisions of the CLRA Act, the principle of literal
interpretation has to be discarded as it represents common law approach applicable
only to private law field and has no relevance when tested on the anvil of Article 14,
and instead the principle of public law interpretation should be adopted. To accept that
contention, in our view, would amount to abandoning a straight route and oft treaded
road in an attempt to create a pathway in a wilderness which can only lead astray. We
have not come across any principles of public law interpretation as opposed to private
law interpretation for interpreting a statute either in any authoritative treatise on
interpretation of statutes or in pronouncement of any Court nor is any authority of this
Court or any other Court brought to our notice. We may, however, mention that there
does exist a distinction between public law and private law. This has been succinctly
brought out by the Rt. Hon. Sir Harry Woolf (as he then was, now Lord Woolf) in The
Second Harry Street Lecture delivered in the University of Manchester on February
19, 1986. The learned Law Lord stated :
I regard public law as being the system which enforces the proper performance by
public bodies of the duties which they owe to the public. I regard private law as being
the system which protects the private rights of private individuals or the private rights
of public bodies. The critical distinction arises out of the fact that it is the public as a
whole, or in the case of local government the public in the locality, who are the
beneficiaries of what is protected by public law and it is the individuals or bodies
entitled to the rights who are the beneficiaries of the protection provided by private
law.
The divide between the public law and the private law is material in regard to the
remedies which could be availed when enforcing the rights, public or private, but not
in regard to interpretation of the Statutes. We are not beset with the procedural
mandate as in the R.S.C. Order 53 of 1977 of England which was the subject matter of
consideration by the House of Lords in OReilly Vs. Mackman . In that case the
appellant sought declaration by ordinary action that the order passed by the Prisons
Board of visitors awarding penalty against him was void and of no effect. The House
of Lords, dismissing the appeal filed against the judgment of the Court of Appeal, held
that where a public law issue arises, the proceedings should be brought by judicial
review under R.S.C. Order 53 and not by private law action which would be abuse of
the process of court. Now, going back to the definition of the said expression, it
combines three alternatives, viz., (a) any industry carried on by the Central
Government; (b) any industry carried on under the authority of the Central
Government; and (c) any industry carried on by a railway company. Alternatives (a)
and (c) indicate cases of any industry carried on directly by the Central Government or
a railway company. They are too clear to admit of any polemic. In regard to
alternative (b), surely, an industry being carried on under the authority of the Central
Government cannot be equated with any industry carried on by the Central
Government itself. This leaves us to construe the words under the authority of the
Central Government. The key word in them is authority.
The relevant meaning of the word authority in the Concise Oxford Dictionary is
delegated power. In Blacks Law Dictionary the meanings of the word authority are:
permission; right to exercise powers -- often synonymous with power. The power
delegated by a principal to his agent. The lawful delegation of power by one person to
another. Power of agent to affect legal relations of principal by acts done in
accordance with principals manifestations of consent to agent. In Corpus Juris
Secundum (at p.1290) the following are the meanings of the term authority: in its
broad general sense, the word has been defined as meaning control over; power;
jurisdiction; power to act, whether original or delegated. The word is frequently used
to express derivative power; and in this sense, the word may be used as meaning
instructions, permission, power delegated by one person to another, the result of the
manifestations by the former to the latter of the formers consent that the latter shall act
for him, authority in this sense --- in the laws of at least one state, it has been similarly
used as designating or meaning an agency for the purpose of carrying out a state duty
or function; some one to whom by law a power has been given. In Words and Phrases
we find various shades of meaning of the word authority at pp.603, 606, 612 and 613:
Authority, as the word is used throughout the Restatement, is the power of one person
to affect the legal relations of another by acts done in accordance with the others
manifestations of consent to him; an agency of one or more participating
governmental units created by statute for specific purpose of having delegated to it
certain functions governmental in character; the lawful delegation of power by one
person to another; power of agent to affect legal relations of principal by acts done in
accordance with principals manifestations of consent to him.
From the above discussion, it follows that the phrase any industry carried on under the
authority of the Central Government implies an industry which is carried on by virtue
of, pursuant to, conferment of, grant of, or delegation of power or permission by the
Central Government to a Central Government Company or other Govt.
company/undertaking. To put it differently, if there is lack of conferment of power or
permission by the Central Government to a government company or undertaking, it
would disable such a company/undertaking to carry on the industry in question.
In interpreting the said phrase, support is sought to be drawn by the learned counsel
for the contract labour from the cases laying down the principles as to under what
circumstances a Government company or undertaking will fall within the meaning of
State or other authorities in Article 12 of the Constitution. We shall preface our
discussion of those cases by indicating that for purposes of enforcement of
fundamental rights guaranteed in Part III of the Constitution the question whether a
Government Company or undertaking is State within the meaning of Article 12 is
germane. It is important to notice that in these cases the pertinent question is
appropriateness of the Government - which is the appropriate Government within the
meaning of CLRA Act;
whether, the Central or the State Government, is the appropriate Government in regard
to the industry carried on by the Central/State Government Company or any
undertaking and not whether such Central/State Government company or undertaking
come within the meaning of Article 12. The word State is defined in Article 12 which
is quoted in the footnote. In Sukhdev Singh & Ors. vs. Bhagatram Sardar Singh
Raghuvanshi & Anr. , this Court, in the context whether service Regulations framed
by statutory corporations have the force of law, by majority, held that the statutory
corporations, like ONGC, IFFCO, LIC established under different statutes fell under
other authorities and were, therefore, State within the meaning of that term in Article
12 of the Constitution. The Court took into consideration the following factors, (a)
they were owned, managed and could also be dissolved by the Central Government;
(b) they were completely under the control of the Central Government and (c) they
were performing public or statutory duties for the benefit of the public and not for
private profit; and concluded that they were in effect acting as the agencies of the
Central Government and the service Regulations made by them had the force of law,
which would be enforced by the Court by declaring that the dismissal of an employee
of the corporation in violation of the Regulations, was void.
In Ramanna Dayaram Shetty vs. The International Airport of India & Ors. , a three-
Judge Bench of this Court laid down that Corporations created by the Government for
setting up and management of public enterprises and carrying out public functions, act
as instrumentalities of the Government; they would be subject to the same limitations
in the field of constitutional and administrative laws as Government itself, though in
the eye of law they would be distinct and independent legal entities. There, this Court
was enforcing the mandate of Article 14 of the Constitution against the respondent - a
Central Govt. Corporation. Managing Director, U.P.Warehousing Corporation & Anr.
Vs. Vinay Narayan Vajpayee dealt with a case of dismissal of the respondent-
employee of the appellant-Corporation in violation of the principles of natural justice.
There also the Court held the Corporation to be an instrumentality of the State and
extended protection of Articles 14 and 16 of the Constitution to the employee taking
the view that when the Government is bound to observe the equality clause in the
matter of employment the corporations set up and owned by the Government are
equally bound by the same discipline.
In Ajay Hasia etc. Vs. Khalid Mujib Sehravardi & Ors. etc. , the question decided by a
Constitution Bench of this Court was: whether Jammu & Kashmir Regional
Engineering College, Srinagar, registered as a society under the Jammu & Kashmir
Registration of Societies Act, 1898, was State within the meaning of Article 12 of the
Constitution so as to be amenable to writ jurisdiction of the High Court. Having
examined the Memorandum of Association and the Rules of the Society, the Court
decided that the control of the State and the Central Government was deep and
pervasive and the society was a mere projection of the State and the Central
Government and it was, therefore, an instrumentality or agency of the State and
Central Government and as such an authority-state within the meaning of Article 12.
The principle laid down in the aforementioned cases that if the government acting
through its officers was subject to certain constitutional limitations, a fortiorari the
government acting through the instrumentality or agency of a corporation should
equally be subject to the same limitations, was approved by the Constitution Bench
and it was pointed out that otherwise it would lead to considerable erosion of the
efficiency of the Fundamental Rights, for in that event the government would be
enabled to override the Fundamental Rights by adopting the stratagem of carrying out
its function through the instrumentality or agency of a corporation while retaining
control over it. That principle has been consistently followed and reiterated in all
subsequent cases -
- See Delhi Transport Corpn. Vs. D.T.C. Mazdoor Congress & Ors. , Som Prakash
Rekhi Vs. Union of India & Anr. , Manmohan Singh Jaitla etc. Vs. Commr., Union
Territory of Chandigarh & Ors. etc. , P.K. Ramachandra Iyer & Ors. etc. Vs. Union of
India & Ors. etc. , A.L. Kalra Vs. Project and Equipment Corpn. Of India Ltd. ,
Central Inland Water Transport Corpn. Ltd. & Anr. etc. Vs. Brojo Nath Ganguly &
Anr. etc. , C.V. Raman Vs. Management of Bank of India & Anr. etc. , Lucknow
Development Authority Vs. M.K. Gupta , M/s Star Enterprises and Ors. Vs. City and
Industrial Development Corpn. of Maharashtra Ltd. & Ors. , LIC of India & Anr. Vs.
Consumer Education & Research Centre & Ors. and G.B. Mahajan & Ors. Vs. Jalgaon
Municipal Council & Ors. . We do not propose to burden this judgment by adding to
the list and referring to each case separately.
We wish to clear the air that the principle, while discharging public functions and
duties the Govt. Companies/Corporations/Societies which are instrumentalities or
agencies of the Government must be subjected to the same limitations in the field of
public law -- constitutional or administrative law -- as the Government itself, does not
lead to the inference that they become agents of the Centre/State Government for all
purposes so as to bind such Government for all their acts, liabilities and obligations
under various Central and/or State Acts or under private law.
From the above discussion, it follows that the fact of being instrumentality of a
Central/State Govt. or being State within the meaning of Article 12 of the Constitution
cannot be determinative of the question as to whether an industry carried on by a
Company/Corporation or an instrumentality of the Govt. is by or under the authority
of the Central Government for the purpose of or within the meaning of the definition
of appropriate Government in the CLRA Act. Take the case of a State Government
corporation/company/undertaking set up and owned by the State Government which is
an instrumentality or agency of the State Government and is engaged in carrying on an
industry, can it be assumed that the industry is carried on under the authority of the
Central Government, and in relation to any industrial dispute concerning the industry
can it be said that the appropriate Government is the Central Government? We think
the answer must be in the negative. In the above example if, as a fact, any industry is
carried on by the State Government undertaking under the authority of the Central
Government, then in relation to any industrial dispute concerning that industry, the
appropriate Government will be the Central Government. This is so not because it is
agency or instrumentality of the Central Government but because the industry is
carried on by the State Govt. Company/Corporation/Undertaking under the authority
of the Central Government. In our view, the same reasoning applies to a Central
Government undertaking as well. Further, the definition of establishment in CLRA
Act takes in its fold purely private undertakings which cannot be brought within the
meaning of Article 12 of the Constitution. In such a case how is appropriate
Government determined for the purposes of CLRA Act or Industrial Disputes Act? In
our view, the test which is determinative is: whether the industry carried on by the
establishment in question is under the authority of the Central Govt? Obviously, there
cannot be one test for one part of definition of establishment and another test for
another part. Thus, it is clear that the criterion is whether an
undertaking/instrumentality of Government is carrying on an industry under the
authority of the Central Government and not whether the undertaking is
instrumentality or agency of the Government for purposes of Article 12 of the
Constitution, be it of Central Government or State Government.
There cannot be any dispute that all the Central Government companies with which
we are dealing here are not and cannot be equated to Central Government though they
may be State within the meaning of Article 12 of the Constitution. We have held
above that being the instrumentality or agency of the Central Government would not
by itself amount to having the authority of the Central Government to carry on that
particular industry. Therefore, it will be incorrect to say that in relation to any
establishment of a Central Government Company/undertaking, the appropriate
Government will be the Central Government. To hold that the Central Government is
the appropriate Government in relation to an establishment, the court must be satisfied
that the particular industry in question is carried on by or under the authority of the
Central Government. If this aspect is kept in mind it would be clear that the Central
Government will be the appropriate Government under the CLRA Act and the I.D.Act
provided the industry in question is carried on by a Central Government company/an
undertaking under the authority of the Central Government. Such an authority may be
conferred, either by a Statute or by virtue of relationship of principal and agent or
delegation of power. Where the authority, to carry on any industry for or on behalf of
the Central Government, is conferred on the Government company/any undertaking
by the Statute under which it is created, no further question arises. But, if it is not so,
the question that arises is whether there is any conferment of authority on the
Government company/ any undertaking by the Central Government to carry on the
industry in question. This is a question of fact and has to be ascertained on the facts
and in the circumstances of each case. We shall refer to the cases of this Court on this
point. In Heavy Engineering Mazdoor Union vs. State of Bihar & Ors. the said
expression (appropriate Government) came up for consideration. The Heavy
Engineering Corporation is a Central Government company. The President of India
appoints Directors of the company and the Central Government gives directions as
regards the functioning of the company. When disputes arose between the workmen
and the management of the company, the Government of Bihar referred the disputes to
the Industrial Tribunal for adjudication. The union of the workmen raised an objection
that the appropriate Government in that case was the Central Government, therefore,
reference of the disputes to the Industrial Tribunal for adjudication by the State
Government was incompetent. A two-Judge Bench of this Court elaborately dealt with
the question of appropriate Government and concluded that the mere fact that the
entire share capital was contributed by the Central Government and the fact that all its
shares were held by the President of India and certain officers of the Central
Government, would not make any difference. It was held that in the absence of a
statutory provision, a commercial corporation acting on its own behalf even though it
was controlled, wholly or partially, by a Government Department would be ordinarily
presumed not to be a servant or agent of the State. It was, however, clarified that an
inference that the corporation was the agent of the Government might be drawn where
it was performing in substance Governmental and not commercial functions. It must
be mentioned here that in the light of the judgments of this Court, referred to above, it
is difficult to agree with the distinction between a governmental activity and
commercial function of government companies set up and owned by government,
insofar as their function in the realm of public law are concerned. However, the
contention that the decision in that case is based on concession of the counsel for the
appellant is misconceived. This Court summed up the submission in para 4 thus :
The undertaking, therefore, is not one carried on directly by the Central Government
or by any one of its departments as in the case of posts and telegraphs or the railways.
It was, therefore, rightly conceded both in the High Court as also before us that it is
not an industry carried on by the Central Government. That being the position, the
question then is, is the undertaking carried on under the authority of the Central
Government?
It is evident that the concession was with regard to the fact that it was not an industry
carried on by the Central Government and not in regard to was the undertaking carried
on under the authority of the Central Government? Indeed that was the question
decided by the Court on contest and it was held that the undertaking was not carried
on by the Central Government company under the authority of the Central
Government and that the appropriate Government in that case was the State
Government and not the Central Government. From the above discussion, it is evident
that the Court correctly posed the question- whether the State Govt. or the Central
Govt. was the appropriate Government and rightly answered it.
In M/s. Hindustan Aeronautics Ltd. Vs. The Workmen & Ors. , this Court was called
upon to decide the question as to whether the expression appropriate Government, as
defined in Section 2(a)(i) of the Industrial Disputes Act, was the State Government or
the Central Government. In that case dispute arose between the management of the
Barrackpore branch (West Bengal) of the appellant and its employees. The Governor
of West Bengal referred the dispute to Industrial Tribunal under Section 10 of the I.D.
Act. The competence of the State Government to make the reference was called in
question. A three-Judge Bench of this Court, relying on the decision in Heavy
Engineerings case (supra), held that the reference was valid. The Court took note of
the factors, viz; if there is 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; that Barrackpore industry was a separate unit; the cause of action in
relation to the industrial dispute arose at Barrackpore. Having regard to the definitions
of the terms appropriate Government and establishment, in Section 2 of CLRA Act, it
cannot be said that the factors which weighed with the Court were irrelevant. It was
also pointed out therein that from time to time certain statutory corporations were
included in the definition but no public company of which the shares were exclusively
owned by the Government, was roped in the definition. What we have expressed
above about Heavy Engineerings case (supra) will, equally apply here. The
aforementioned phrase an industry carried on by or under the authority of the Central
Government again fell for consideration of a three-Judge Bench of this Court in
Rashtriya Mill Mazdoor Sangh, Nagpur vs. Model Mills, Nagpur & Anr. . The case
arose in the context of Section 32(iv) of the Payment of Bonus Act, 1965, which
provides that nothing in that Act shall apply to employees employed by an
establishment engaged in any industry carried on by or under the authority of any
department of the Central Government or a State Government or a local authority.
Under Section 18-A of the Industries (Development and Regulation) Act, 1951, the
Central Government appointed an authorised Controller to replace the management of
the respondent - Model Mills. That was done to give effect to the directives issued by
the Central Government under Section 16 of the said Act. On behalf of the respondent
it was contended that substitution of the management by the Controller appointed
under Section 18-A of the Industries (Development & Regulation) Act would
tantamount to the industry being run under the authority of the department of the
Central Government. Negativing the contention it was held :
Food Corporation of India, Bombays case (supra) is the only case which arose directly
under the CLRA Act. The Food Corporation of India (FCI) engaged, inter alia, the
contract labour for handling of foodgrains. Complaining that their case for
departmentalisation was not being considered either by the Central Government or by
the State Government, nor were they extended the benefits conferred by the CLRA
Act, a representative action was initiated in this Court by filing a writ petition under
Article 32 of the Constitution seeking a writ of mandamus against the Central/State
Government to abolish contract labour and to extend them the benefits under that Act.
The FCI resisted the claim for abolition of contract labour on the ground that the
operations of loading/unloading foodgrains were seasonal, sporadic and varied from
region to region. However, it pleaded that the State Government and not the Central
Government was the appropriate Government under the CLRA Act. In view of the
unamended definition of the expression appropriate Government under CLRA Act,
which was in force on the relevant date, it was pointed out that the FCI was not
included in the definition by name as it was done under the Industrial Disputes Act.
Following the judgment of this Court in Heavy Engineerings case (supra) and
referring to the decision of this Court in Rashtriya Mill Mazdoor Sanghs case (supra),
the Court took the view that the same principle would govern the interpretation of the
expression appropriate Government in the CLRA Act and held that the State
Government was the appropriate Government pertaining to the regional offices and
warehouses which were situate in various States. We find no illegality either in the
approach or in the conclusion arrived at by the Court in these cases.
It was in that background of the case law that the Air Indias case (supra) came to be
decided by a three-Judge Bench of this Court. The Air India Corporation engaged
contract labour for sweeping, cleaning, dusting and watching of the buildings owned
and occupied by it. The Central Government having consulted the Central Advisory
Board constituted under Section 3(1) of the CLRA Act issued notification under
Section 10(1) of the Act prohibiting employment of contract labour on and from
9.12.1976 for sweeping, cleaning, dusting and watching of the buildings owned or
occupied by the establishment in respect of which the appropriate Government under
the said Act is the Central Government. However, the Regional Labour
Commissioner, Bombay opined that the State Government was the appropriate
Government under the CLRA Act. The respondent-Union filed writ petition in the
High Court at Bombay seeking a writ of mandamus to the appellant to enforce the said
notification prohibiting employment of contract labour and for a direction to absorb all
the contract labour doing sweeping, cleaning, dusting and watching of the buildings
owned or occupied by the Air India with effect from the respective dates of their
joining as contract labour with all consequential rights/benefits. A learned Single
Judge of the High Court allowed the writ petition on November 16, 1989 and directed
that all the contract labour should be regularised as employees of the appellant from
the date of filing of the writ petition. On appeal, the Division Bench, by order dated
April 3, 1992, confirmed the judgment of the learned Single Judge and dismissed the
appeal.
On further appeal to this Court, it was held that the word control was required to be
interpreted in the changing commercial scenario broadly in keeping with the
constitutional goals and perspectives; the interpretation must be based on some
rational and relevant principles and that the public law interpretation is the basic tool
of interpretation in that behalf relegating common law principles to purely private law
field. In that view of the matter, it concluded that the two-Judge Bench decision in
Heavy Engineerings case narrowly interpreted the expression appropriate Government
on the common law principles which would no longer bear any relevance when it was
tested on the anvil of Article 14. It noted that in Hindustan Aeronautics Ltd., Rashtriya
Mill Mazdoor Sangh and Food Corporation of India, the ratio of Heavy Engineering
formed the foundation but in Hindustan Aeronautics Ltd. there was no independent
consideration except repetition and approval of the ratio of Heavy Engineering case
which was based on concession; in Food Corporation of India, the Court proceeded on
the premise that warehouses of the corporation were situate within the jurisdiction of
the different State Governments and that led to conclude that the appropriate
Government would be the State Government. Thus, distinguishing the aforementioned
decisions, it was held therein (Air Indias case) that from the inception of the CLRA
Act the appropriate Government was the Central Government. We have held above
that in the case of a Central Government company/undertaking, an instrumentality of
the Government, carrying on an industry, the criteria to determine whether the Central
Government is the appropriate Government within the meaning of the CLRA Act, is
that the industry must be carried on by or under the authority of the Central
Government and not that the company/undertaking is an instrumentality or an agency
of the Central Government for purposes of Article 12 of the Constitution; such an
authority may be conferred either by a statute or by virtue of relationship of principal
and agent or delegation of power and this fact has to be ascertained on the facts and in
the circumstances of each case. In view of this conclusion, with due respect, we are
unable to agree with the view expressed by the learned Judges on interpretation of the
expression appropriate Government in Air Indias case (supra). Point No.1 is answered
accordingly.