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M/S BHARAT ELECTRONICS LTD. GHAZIABAD versus STATE OF U.P. & OTHERS

High Court of Judicature at Allahabad

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M/S Bharat Electronics Ltd. Ghaziabad v. State Of U.P. & Others - WRIT - C No. 5992 of 2002 [2005] RD-AH 285 (31 January 2005)

 

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HIGH COURT OF JUDICATURE OF ALLAHABAD

Civil Misc. Writ Petition No. 5992 of 2002

M/s Bharat Electronics Limited

Vs

State of U.P. & others

Connected with

Civil Misc. Writ Petition No. 34069 of 2000

Bharat Electronics Theka Asthai Employees Union

Vs

M/s Bharat Electronics Limited

~~~~~~~

Hon'ble Rakesh Tiwari, J.

Heard counsel for the parties and perused the record.

Writ Petition No. 34069 of 2000 was filed praying for a writ of mandamus commanding the respondents to absorb the members of the petitioner-Union in service and treat them as permanent and regular employees. Writ Petition No. 5992 of 2002 has been filed challenging the validity and correctness of the order of suo moto reference dated 15.5.2001 issued by the State Government under Section 4-K of the Industrial Disputes Act, 1947 and is being taken as the leading case.

The order of reference is in regard to more than 100 contract workers who were engaged as Safai Karmcharis to work in the Bharat Electronics Ltd. by three contractors. The order of reference is assailed on the following grounds: -

1. Since there are more than 100 workmen involved in the controversy therefore the matter should have been referred to the Industrial Tribunal and not to the Labour Court.

2. The appropriate Government for the petitioner for making reference under Section 10 (1) (d) of the Industrial Disputes Act, 1943 (Central) is the Central Government and not the State Government which has referred the matter under Section 4-K of the U.P. Industrial Disputes Act, 1947.

3. The employees concerned are employees of the contractors. The dispute therefore pertains to abolition of contract labour under Section 10 of the Contract Labour and Regulation and Abolition Act, 1970 and is not an industrial dispute under the U.P. Industrial Disputes Act.

4. The petitioner is excluded by virtue of Section 2 (l) of the U.P. Industrial Disputes Act as it is a Department of Ministry of Defence and is controlled and managed by and under the authority of the Central Government.

Point No. 1

The counsel for the petitioner submits that a perusal of order of reference shows that the list of workmen in the Schedule appended to the reference contains the names of 140 workmen. From the list it is evident that there are more than 100 workmen and hence the reference should have been made to the Industrial Tribunal and not to the Labour Court. Section 4-A of the U.P. Industrial Disputes Act provides that the State Government may by notification constitute a Labour Court for adjudication of industrial dispute in respect of the matters specified in the First Schedule.

The First Schedule specifies the matter within the jurisdiction of the Labour Courts as under: -

1. ...............................................................

2. ...............................................................

3. Discharge or dismissal of workmen including reinstatement of, or grant of relief to, workmen wrongly dismissed;  

4. ...................................................................

5. ..................................................................

6. .................................................................."  

Similarly Section 4-B provides for constitution of industrial tribunal for adjudication of industrial disputes relating matters whether specified in the First Schedule or the Second Schedule.

The matters specified in the First Schedule have already been quoted above. The matters specified in the Second Schedule are as under: -

1. Wages, including the period and mode of payment.

2. .................................................................

3. .................................................................

4. ................................................................

5. ...................................................................

6. .......................................................................

7. ........................................................................

8. ...........................................................................

9. ........................................................................

10. Retrenchment of workmen and closure of establishment.

10A. ....................................................................

11. ....................................................................."

The counsel for the respondents submits that the object of the Industrial Disputes Act is to settle the dispute in-between the employer and employees working in the Industry. Therefore even if the reference has been made to the Labour Court in place of Industrial Tribunal the reference therefore cannot be challenged on the ground of such technicalities. Reliance has been placed by her on A.I.R. 1953 S.C. 53, The State of Madras Vs C. P. Sarathy and another.

Reliance has further been placed upon Item No. 3 of the First Schedule and it is contended that the case could have been decided by the Labour Court under the aforesaid matter falling under the jurisdiction of the Labour Courts.

It is evident from para 17 of State of Madras (supra) relied upon by the counsel for the petitioner that the observation of the apex court was in the context of settlements under the Act, and not in respect of jurisdiction of the Labour Court or Industrial Tribunal under Section 4-A and 4-B of the Act. Settlements have always been preferred by the courts under the Act than adjudication, but the question of jurisdiction of the courts is a different question and is to be determined as per  Section 4-A or 4-B read with the respective Schedule. It is not a question of mere technicality but of exercise of powers of adjudication with regard to matters specified in the First or the Second Schedule of the Act. Reliance on State of madras (supra) by the petitioner is therefore misplaced. The Statute provides such matters which are within the jurisdiction of the Labour Court and are within the jurisdiction of the industrial tribunal. The perusal of Item No. 10 of Second Schedule would make it evident that the case of the workmen regarding termination of retrenchment from service fall under the Second Schedule, i.e., within the jurisdiction of the industrial tribunal and not under the Item No. 3 as it is not with regard to the discharge or dismissal of the workmen or grant of relief to workmen wrongly dismissed. Further more Section 4-A and 4-B specifically provides that the matter has to be decided by the Labour Court or the Industrial Tribunal under whose jurisdiction the matter specified in the First Schedule or Second Schedule falls. From a combined reading of Section 4A and 4B it is clear that the Industrial Tribunal has wider jurisdiction as it can also decide the matters falling in First Schedule but the Labour Court does not have the jurisdiction of deciding any matter in the Second Schedule.

Point No. 2

The counsel for the petitioner has urged that the petitioner carries on the industry under the authority of the Central Government. It is a Defence Production Department. The Ministry of Defence has deep and pervasive control over its working. Attention of the Court has been drawn in this regard to the Memorandum of Association appended as Annexure 2 to the writ petition. From the Memorandum of Association it is evident that the authorized capital of the Company is Rs. 85 crores. 49,995 shares of the Company are held by the President of India as head of defence. Out of the remaining five shares, one each is held by the Secretary; Joint Secretary; Deputy Secretary; Under Secretary; and Additional Finance Adviser, Ministry of Defence, Government of India. The names of the subscribers and numbers of shares held by each one of them as per Memorandum of Association are as under: -

Name of the subscriber Address No. of shares

1. President of India

   signed by:

   

   (M.K.Vellodi) Ministry of Forty-nine

   Secretary Defence, thousand nine

   Ministry of Defence New Delhi hundred and

   New Delhi ninety-five

   For and on behalf of the

   President of India

2. (M.K.Vellodi) Ministry of One

   Secretary, Defence

   Ministryof Defence New Delhi

   New Delhi.

3. (N.N.Wanchoo) Ministry of

   Joint Secretary, Defence One

   Ministry of Defence, New Delhi

   New Delhi.

4. (Batuk Singh) Ministry of One

   Addl. Financial Finance

   Adviser, (Defence)

   Ministry of Finance New Delhi

   (Defence), New Delhi

5. (K.S.Raghupathi) Ministry of

   Deputy Secretary, Defence, One

   Ministry of Defence, New Delhi

   New Delhi

6. (D.P.McKenna) Ministry of

   Under Secretary, Defence One

   Ministry of Defence New Delhi.

   New Delhi.

In the Articles of Association ''President' is defined as President of India.

The relevant provisions showing that the share capital, deep and persuasive control of the Government and that it is a company run by the authority of Central Government are as under: -

"Company to be governed by these regulations

4........................................................

Capital

5. The authorized Capital of the company is Rupees Eighty-Five Crores divided into 8,50,00,000 ordinary shares of Rs. 10/- each.

Company's Shares not to be purchased.

6. No part of the funds of the company shall be employed in the purchase of or in loans upon the security of the company's shares.

Quorum

Right of President to appoint any person as his representative

47. (1) The President, so long as he is a shareholder of the Company, may, from time to time, appoint one or more persons (who need not be a member or members of the Company) to represent him at all or any meetings of the Company.

    (2) Any one of the persons appointed under sub-clause (1) of this Article who is personally present at the meeting shall be deemed to be a member entitled to vote and be present in person and shall be entitled to represent the President at all or any such meetings and to vote on his behalf whether on a show of hands or on poll.

    (3) The President may, from time to time, cancel any appointment made under sub-clause (1) of this Article and make fresh appointments.

    (4) The production at the meeting of an order of the President evidenced as provided in the Constitution of India shall be accepted by the Company as sufficient evidence of any such appointment or cancellation as aforesaid.

    (5) Any person appointed by the President under this Article may, if so authorised by such order, appoint a proxy, whether specially or generally.

Appointment of Directors

71. (a) Apart from the whole time directors appointed by the President under the preceding Article, the remaining directors shall be appointed by election by the holders of ordinary shares in General Meeting and the said directors shall be subject to retirement.

    (b) The president shall have the right to remove any director appointed by him under Article 71, at any time in his absolute discretion, provided that the Chairman shall be consulted before removing any such director.

72A. Notwithstanding anything contained elsewhere in these Articles, the President shall have power:

    (i) To receive and approve the Company's operating plans and Capital Budget, under procedures accepted from time to time by the Government.

    (ii) To receive and approve the Company's Revenue Budget in case there is an element of deficit which is proposed to be met by obtaining funds from the Central Government, under procedures accepted from time to time by the Government.

    (iii) To approve the agreements involving foreign collaboration to be entered into by the Company.

Appointment of Managing Director

74. (1) The President may from time to time appoint one or more of the Directors to the offices of the Chairman of the Board of Directors or Managing Director or Managing Directors of whole-time Directors of the company for such term and on such remuneration as he may think fit and may from time to time remove or dismiss him or them from the services and appoint another or others in his place or their places.

Chairman of Directors' Meeting

81. The President may nominate a Director as Chairman of the Directors' Meetings and determine the period for which he is to hold office. If no such Chairman is nominated, or if at any meeting the Chairman is not present within five minutes after the time for holding the same, the Directors present may choose one of their number to be Chairman of the meeting. The chairman shall have power to reserve for the decision of the President any matter which in his opinion should be so reserved.  

Rights of the President  

114. Notwithstanding anything contained in any of these Articles, the following powers shall be reserved by the President to be exercised at his discretions:

    (i) to give directions to the Company as to the exercise and performance of its functions in matters involving national security or substantial public interest and to ensure that the company gives effect to such directions.

    (ii) to call for such returns, accounts and other information with respect to property and activities of the Company as may be required from time to time.  

    The Directors shall duly comply with and give immediate effect to directives so issued.

Proviso to Article 114

    Provided that all directives issued by the President shall be in writing addressed to the Chairman. The Board shall, except where the President considers that the interest of the national security required otherwise, incorporate the contents of directives issued by the President in the Annual Report of the Company and also indicate its impact on the financial position of the Company."

The aforesaid clauses have been relied upon by the petitioner to establish deep and pervasive control of the Ministry of Defence and Central Government.

Reliance has also been placed in this regard on the Supplementary Affidavit filed by the petitioner on 12.4.2004 containing 8 documents. Attention of the Court has also been drawn to the Notification dated 3.7.1998 which has been issued in exercise of powers conferred by Section 39 of the Industrial Disputes Act, 1947. By the aforesaid notification the Central Government has directed that all the powers exercised by it under the rules made thereunder shall, in relation to all the Central Public Sector Undertakings and their subsidiaries, Corporations and autonomous bodies specified in schedule annexed to the notification be exercisable also by the State Government subject to the condition that the Central Government shall exercise all the powers exercisable by it under the Act and the rules made thereunder as and when it considers it necessary to do so. The Bharat Electronics Ltd. has been shown at Serial No. 11 of the aforesaid notification.  

Annexure RA 1 to the Rejoinder Affidavit has also been placed before the Court with regard to Allocation of Business by which the petitioner Bharat Electronics Ltd. has been placed under the control of Ministry of Defence. It is shown at Serial No. 3 as Department of Defence Production (Raksha Utpadan Vibhag) as under:-

"Government of India

(Allocation of Business) Rules, 1961

(As amended upto 12th January, 2004)

A. Department of Defence (Raksha Vibhag)

1. Defence of India and every part thereof including preparation for defence and all such acts as may be conducive in times of war to its prosecution and after its termination to effective demobilization.2.  The Armed Forces of the Union, namely, Army, Navy and Air Force. 3. Integrated Headquarters of the     Ministry of Defence comprising of Army Headquarters, Naval Headquarters, Air Headquarters and Defence Staff Headquarters.4. The Reserves of the Army, Navy and Air Force.5. The Territorial Army. 6. The National Cadet Corps.7. Works relating to Army, Navy and Air Force.8. Remounts, Veterinary and Farms Organization.9. Canteen Stores Department (India). 10. Civilian Services paid from Defence Estimates. 11. Hydrographic surveys and preparation of navigational charts.12. Formation of Cantonments, delimitation/excision of Cantonment areas, local self-government in such areas, the constitution and powers within such areas of Cantonment Boards and authorities and the regulation of house accommodation (including the control of rents) in such areas.13. Acquisition, requisitioning, custody and relinquishment of land and property for defence purposes. Eviction of unauthorized occupants from defence land and properly.14. Matters relating to ex-Servicemen including pensioners.15. Defence Accounts Department.16. Purchase of food stuffs for military requirements and their disposal excluding those entrusted to Department of Food and Public Distribution. 17. All matters relating to Coast Guard Organization, including-surveillance of maritime zones against oil spill;combating oil spills in various maritime zones, except in the waters of ports and within 500 metres of off-shore exploration and production platforms, coastal refineries and associated facilities such as Single Buoy Mooring (SBM), Crude Oil Terminal (COT) and pipelines;Central Coordinating Agency for Combating of Oil Pollution in the coastal and marine environment of various maritime zones;Implementation of National  Contingency Plan for oil spill disaster ; andUndertaking oil spill prevention and control, inspection of ships and offshore platforms in the country, except within the limits of ports as empowered by the Merchant Shipping Act, 1958 (44 of 1958). 18. Matters relating to divining and related activities in the country.19. Procurement exclusive to the Defence services. 20. Administration of-the Pension Regulations for the Army,1961 ( Parts I and II);the Pension Regulations for the Air Force, 1961 ( Parts I and II);the Navy (Pension) Regulations, 1964; andthe Entitlement Rules to Casualty Pensionary Awards to the Armed Forces Personnel, 1982. B. DEPARTMENT OF DEFENCE PRODUCTION (RAKSHA UTPADAN VIBHAG )1. Ordnance Factory Board and Ordnance Factories.2. Hindustan Aeronautics Limited.3. Bharat Electronics Limited.4. Mazagon Dock Limited. 5. Garden Reach Shipbuilders and Engineers Limited.6. Goa Shipyard Limited.7. Bharat Dynamics Limited.8. Mishra Dhatu Nigam Limited.9. Defence Quality Assurance Organizations including Directorate General Quality Assurance and Directorate General Aeronautical Quality Assurance.10. Standardization of defence equipment and stores including Directorate of Standardization.11. Bharat Earth Movers Limited.12. Development of the aeronautics industry and coordination among users other than those concerned with the Ministry of Civil Aviation and the Department of Space.13. Indigenisation, development and production of defence equipment and participation of the private sector in the manufacture of defence equipment.14. Defence exports and international Cooperation in defence production.

It is also evident from R.A. 1 issued by the Ministry of Defence D (B&C) that as per the amended Rules, the nomenclature of ''Department of Defence Production & Supplies' has been changed as ''Department of Defence Production'. Further the letter dated 6.1.2004, appended as Annexure R.A. 1 shows that Bharat Electronics Limited is a Department of Defence Production, under the Ministry of Defence.

"Doc. CD-8/2004

                                                                          RASHTRAPATI BHAVAN

                                                                                                  NEW DELHI

                                              Notification

                                                                                 

                                                                            Dated the 6th January, 2004

S.O.________(E).- In exercise of the powers conferred by clause (3) of article 77 of the Constitution, the President hereby makes the following rules further to amend the Government of India (Allocation of Business) Rules, 1961, namely:-

1. (1) These rules may be called the Government of India (Allocation of Business) (Two hundred and seventy - first Amendment) Rules, 2004.

(2) They shall come into force at once.

2. In the Government of India (Allocation of Business) Rules, 1961. -

(a) in rule 3, for sub-rule (1), the following sub-rule shall be substituted, namely:-  

"(1) The distribution of subjects among the departments shall be as specified in the Second Schedule to these rules and shall include all attached and subordinate offices or other organizations including Public Sector Undertakings concerned with its subjects and sub-rules (2), (3) and (4) of this rule."  

(b) for the First Schedule and the Second Schedule, the following Schedules shall be substituted, namely: -

"THE FIRST SCHEDULE

                                                       (Rule 2)

MINISTRIES, DEPAARTMENTGS, SECRETARIATES AND OFFICES

(MANTRALAYA, VIBHAG, SACHIVALAYA TATHA KARYALAYA)

XXX XXX XXX XXX XXX XXX

9. Ministry of Defence (Raksha Mantralaya)

(i) Department of Defence (Raksha Vibhag)

(ii) Department of Defence Production (Raksha Utpadan Vibhag)

(iii) Department of Defence Research and Development (Raksha Anusandhan aur Vikas Vibhag)

XXX XXX XXX XXX XXX XXX

.......................................................................................

                                      THE SECOND SCHEDULE

                                                  (Rule 3)

DISTRIBUTION OF SUBJECTS AMONG THE DEPARTMENTS (VIBHAG)  

XXX XXX XXX XXX XXX  

MINISTRY OF DEFENCE

(RAKSHA MANTRALAYA)

B. DEPARTMENT OF DEFENCE PRODUCTION

(RAKSHA UTPADAN VIBHAG)

1. Ordnance Factory Board and Ordnance Factories.

2. Hindustan Aeronautics Limited.

3. Bharat Electronics Limited.

4. Mazagon Dock Limited

5. Garden Reach Shipbuilders and Engineers Limited.

6. Goa Shipyard Limited.

7. Bharat Dynamics Limited.

8. Mishra Dhatu Nigam Limited.

9. Defence Quality Assurance Organizations including Directorate General Quality Assurance and Directorate General Aeronautical Quality Assurance.

10. Standardization of defence equipment and stores including Directorate of Standardization.

11. Bharat Earth Movers Limited.

12. ............................................................................................

13. ...........................................................................................

14. ............................................................................................"

It is submitted that from the aforesaid it is clear that the Bharat Electronics Ltd. is a department of defence under the Ministry of Defence whose shares are held by the President of India and the Ministry of Defence. Even the share capital has been provided by the Central Government.  It is under full control of the Government of India. The counsel for the petitioner has placed reliance upon (1) 1997 (76) F.L.R. 119 (S.C.), Air India Statutory Corporation Vs. United Labour Union and others; (2) 2001 (91) F.L.R.  182 (S.C.), Steel Authority of India Ltd. and others Vs National Union Water Front Workers and others; and (3) 2002 (95) F.L.R. 1178 (S.C.), Hindustan Aeronautics Ltd. and another Vs Hindustan Aero Canteen K. Sangh and others in support of his above contentions.  

The counsel for the respondents submits that the appropriate Government has been defined under Section 2 (a) of the Industrial Disputes Act (Central). It is further submitted that the petitioner-company is neither covered under the phrase "industry carried on by or under the authority" nor it is a controlled industry and therefore the appropriate Government with regard to the petitioner is the State Government and not the Central Government.

It is further submitted that there are two types of control, firstly, there is regulatory control where industry retains its identity, personality and status unchanged; secondly, there is supervisory control where the department of the Government is directly responsible for each wrong committed by the Company, and thirdly, the profit motive which is also relevant whether the profit of the industry goes to the Central Government, its share-holders or not.  

It is submitted that in the aforesaid back-ground, defence department of the Government is not directly responsible for any wrong committed by the Company as has been mentioned in the Memorandum of Articles itself.

It is evident from the record that the Government is exercising not only regulatory control, its status is also under the public sector undertaking and the department is Defence Production Department and the Central Government is directly responsible for its functioning. The contention of the counsel for the petitioner that the profit motive is relevant factor to shows that it is controlled by the Central Government or not has also no force. All the shares are held by the Government and all its profit therefore goes to the Central Government as its share-holders as above are not private persons. The actual control over the petitioner-company is of the Central Government which is not only regulatory but is also supervisory. Therefore, I hold that Bharat Electronics Corporation carries on its activities under the control and supervision of the Government of India and is an industry of Government of India; hence the Central Government is appropriate authority for the corporation.  

Point No. 3

The counsel for the petitioner submits that the matter relates to prohibition of contract labour but one pertaining to abolition of contract labour covered by Section 10 of the Contract Labour and Regulation and Abolition Act, 1970. The counsel for the petitioner has relied upon (1) 1997 (76) F.L.R. 838 Allahabad, Hari Shanker Sharma and others Vs M/s Artificial Limbs Manufacturing Corporation of India and others; (2) 1997 ALL.L.J. 872, M/s Indian Explosives Ltd. and etc. Vs State of U.P. and others; and (3) 2001 (91) F.L.R. 1138, U.P. State Electricity Board, Lucknow and another Vs Presiding Officer, Industrial Tribunal IV, U.P., Agra and another.

The counsel for the respondents submits that since the matter has already been referred by the State Government to the Labour Court it may be decided by the said court and there is no need to move the Government for abolition of the contract labour in the petitioner's establishment under Section 10 of the Contract Labour and Regulation and Abolition Act, 1970.

The employees were working as sweepers. Whether these employees should be absorbed and treated as regular and permanent employees of the principal employer or not is an incidental question to the main controversy, which has to be decided by a competent court. The employees were temporary contract workers. The petitioner is defence establishment and manufactures radar for use of the army of the country. The working of the establishment is of very sensitive nature in view of the defence policy of the country. Any person cannot be directed to be regularized in the service of such a defence establishment which has its own rules, regulations and procedure for recruitment of the employees. It is for the appropriate Government to refer the matter to the competent court for adjudication of the dispute or for abolition of the contract labour under the provisions of the Contract Labour (Regulation and Abolition) Act. This Court cannot step into the shoes of the Labour Court and adjudicate upon the matter under Article 226 of the Constitution.

For the reasons stated above the reference made by the State Government in this case was incompetent and without authority of law. The order of reference is quashed. The Writ Petition No. 5992 of 2002 is allowed and the connected Writ Petition No. 34069 of 2000 stands dismissed. No order as to costs.

Dated:

Rpk/


Copyright

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