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Union of India (Uoi) Vs. S.R. Doiphode - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application Nos. 1189 of 1968 and 2011, 2012 of 1970
Judge
Reported in(1974)76BOMLR334
AppellantUnion of India (Uoi)
RespondentS.R. Doiphode
DispositionAppeal dismissed
Excerpt:
payment of bonus act (21 of 1965), sections 32 (iv), 22--whether canteen stores department [india) an establishment engaged in any industry carried on by or under authority of any department of central government-applicability of section 32(iv).;the canteen stores department (india) is an establishment engaged in an industry carried on by or under the authority of the defence department of the central government and as such, it is excluded from the operation of section 32(iv) of the payment of bonus act, 1965.;the question, as to whether a particular establishment is an establishment engaged in any industry carried on by or under the authority of the central government within the meaning of section 32(iv) of the act, must necessarily depend on the history of the establishment, the facts.....vaidya, j.1. the short question which arises in the above three petitions under article 227 of the constitution of india, is whether the canteen stores department is an establishment engaged in any industry carried on by or under the authority of any department of the central government within the meaning of section 32(iv) of the payment of bonus act, 1965.2. special civil application no. 1189 of 1968 is directed against an order passed in favour of respondent no. 1 by the ii additional authority under the payment of wages act, bombay, on february 26, 1968, wherein the authority held that the canteen stores department is not a government undertaking and as such the payment of bonus act was applicable, and awarded the minimum bonus of 4 per cent, of the salary earned by the employee,.....
Judgment:

Vaidya, J.

1. The short question which arises in the above three petitions under Article 227 of the Constitution of India, is whether the Canteen Stores Department is an establishment engaged in any industry carried on by or under the authority of any department of the Central Government within the meaning of Section 32(iv) of the Payment of Bonus Act, 1965.

2. Special Civil Application No. 1189 of 1968 is directed against an order passed in favour of respondent No. 1 by the II Additional Authority under the Payment of Wages Act, Bombay, on February 26, 1968, wherein the Authority held that the Canteen Stores Department is not a Government undertaking and as such the Payment of Bonus Act was applicable, and awarded the minimum bonus of 4 per cent, of the salary earned by the employee, respondent No. 2 during the accounting year 1965-66. The order is challenged in the said Special Civil Application by the Union of India, which was not a party to the proceedings before the Payment of Wages Authority and the Deputy Manager of the Canteen Stores Department, who is petitioner No. 2, firstly, on the ground that even if the Payment of Bonus Act applies, the Payment of Wages Authority had no jurisdiction in the matter in view of the decision of this Court in D.P. Kelkar v. Ambadas Keshav (1970) 73 BomLR 260 wherein it was held that the Payment of Wages Authority will have no jurisdiction in a case where complicated questions of law arise and it is required to interpret the provisions of a new enactment like the Payment of Bonus Act, 1965. In view of the provisions of Section 22 of the Payment of Bonus Act, it was also urged that the employee could not demand bonus under the Payment of Bonus Act, as the Canteen Stores Department is an establishment engaged in canteen services which is an industry carried on by or under the authority of the Defence Department of the Government of India and as such the employees of that establishment are exempted from the provisions of the Payment of Bonus Act under Section 32(iv).

3. In Special Civil Applications Nos. 2011 and 2012 of 1970, the Union of India, petitioner No. 1 and Major General (Retd.) S.N. Antia, the Chairman of the Board of Administration, Canteen Stores Department (India), petitioner No. 2 in each of the petitions, challenged the validity of the orders passed by the Labour Court, Bombay, under Section 33C(2) of the Industrial Disputes Act, 1947, on the ground that the Labour Court granted bonus on the erroneous footing that the Payment of Bonus Act applied to the Canteen Stores Department (India).

4. Section 22 of the Payment of Bonus Act, 1965, runs as follows :

Where any dispute arises between an employer and his employees with respect to the bonus payable under this Act or with respect to the application of this Act to an establishment in public sector, then, such dispute shall be deemed to be an industrial dispute within the meaning of the Industrial Disputes Act, 1947, or of any corresponding law relating to investigation and settlement of industrial disputes in force in a State and the provisions of that Act or, as the case may be, such law, shall, gave as otherwise expressly provided, apply accordingly.

In Special Civil Application No. 1189 of 1968, arising from respondent No. 2's application No. 1779 of 1967, which was heard along with another application by another employee K.A. Harinarayanan, being No. 1778 of 1967, the principal contention raised on behalf of the Canteen Stores Department (India) was that it was an establishment engaged in an industry carried on by or under the authority of the Central Government and as such it was excluded from the operation of the Payment of Bonus Act, under Sub-section (iv) of Section 32 of the said Act. Unfortunately, an issue was framed by the learned Authority as to whether the Canteen Stores Department (India) is 'a Government undertaking', although the words 'Government undertaking' are not to be found in Section 32(iv), or anywhere else in the Payment of Bonus Act, 1965, He also framed an issue as to whether the Payment of Bonus Act was applicable.

5. In D.P. Kelkar v. Ambadas Keshav, referred to above, Kotval C.J. and Palekar, J. (as he then was) held (p. 270):..The words of Section 22 which we have quoted refer to 'any dispute with respect to the bonus payable' and it seems to us that the language employed does not limit itself directly to the quantum of the bonus payable under the Act only. When the section says 'with respect to the bonus' it means necessarily disputes in connection with the bonus or connected with the bonus payable under the Act. That would be the normal connotation of the words 'with respect to' and it seems to us that when the employer raises an issue such as has been raised in the present ease, that the establishment itself has been exempted and therefore no bonus is payable, it is a dispute with respect to the bonus payable under the Act.

The next contention on behalf of the employees was that it must be a dispute under the Act but what the employers were claiming in the present case was that they were not governed by the Act at all and it could hardly be said therefore that it was a dispute regarding the bonus payable under the Act. The claim made on behalf of the employers that they were not bound to pay the workers was not on the ground that they were not governed by the provisions of the Act. On the contrary, the claim of the employers also is that they are actually governed by the Act but the Act itself in terms exempts them by virtue of the provisions of Section 32(iv) which says:

32. Nothing in this Act shall apply to--...

(iv) 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;'

It is not exclusion from the provisions of the Act which has been canvassed on behalf of the employers but merely exemption as stated in the Act itself under this clause of Section 32. Therefore, the dispute which the employers have raised in the present case will be a dispute under this Act and not 'de hors' the Act. It seems to us therefore that the provisions of Section 22 would squarely apply to the dispute raised in the present case. That it is a dispute there can be no doubt, and indeed that has not been challenged in the present case. If so, it seems to us that for both the reasons which we have stated above that dispute would be beyond the jurisdiction of the Payment of Wages Authority. The first reason is that normally it is not a question which under the Payment of Wages Act itself ought to be decided by the Payment of Wages Authority because it raises a complicated question of law and secondly that in any event Section 22 indicates a forum where such a dispute ought to be tried and therefore by implication ousts the jurisdiction of the Authority under the Payment of Wages Act.

We are bound by the decision in D, P. Kelkar v. Ambadas Keshav.

6. In view of the said decision, it is patent that the Payment of Wages Authority illegally exercised the jurisdiction in the matter in proceeding to decide the question as to whether the Payment of Bonus Act applied to the employees.

7. Besides the question which is common to all the three petitions and which is decided by the Payment of Wages Authority in favour of the employees was wrongly decided by the Authority. The question as to whether a particular establishment is an establishment engaged in any industry carried on by or under the authority of the Central Government within the meaning of Section 32(iv), must necessarily depend on the history of the establishment, the facts relating to its working, the rules or by-laws governing its organisation and functioning and the law, if any, that governed the establishment. The Payment of Wages Authority wrongly attributed to itself the power to deal with the question as to whether it was a Government establishment forgetting that those words are not to be found in Section 32(iv) or in any other provision of law. The Authority ought to have considered as to whether it was 'an establishment engaged in any industry carried on by or under the authority of any department of the Central Government'.

8. It seems that the Authority was somewhat misled by the issue framed by it relating to the 'Government undertaking' and some of the arguments made before it on the basis of certain questions and answers on the floor of the House of Parliament. There can be no doubt that the establishment is engaged in an industry inasmuch as it is concerned with the Canteen services and is described as the Canteen Stores Department (India). There is no clear plea taken by the petitioners in these petitions or by petitioner No. 2 in Special Civil Application No. 1189 of 1968, before the Authority; but the petitioners have placed before this Court and also before the Authority, the history and facts relating to the organisation and working of the Canteen Stores. The employees also have filed affidavits in this Court and pleaded before the Authority, certain facts relating to the establishment and particularly the statements made by Ministers of Defence. It will be, therefore, necessary to refer briefly to the pleadings with regard to the question before us and before the Payment of Wages Authority.

9. In Special Civil Application No. 1189 of 1968, the Deputy Manager, who has filed the affidavit in support of the petition, has stated that originally the Canteen Stores was a private company known as Canteen Contractors Syndicate Ltd., but with effect from July 1942, in consequence of the sanction of the Governor General-in-Council, the Canteen Stores (India) was incorporated as a Government undertaking and comprised of Canteen Services Board of Control, Canteen Section as part of QMG's Branch, Army Head Quarters and Canteen Stores Department with duties and functions specified in the Notification. The said Notification which is annexed to Special Civil Application No. 2011 of 1970 as exh. 'A' is published in gazette of India dated July 30, 1942. It states that the Governor General-in-Council was pleased to announce the creation from July 1, 1942, of the Canteen Services (India), consisting of a Board of Control, which was composed of (1) Quartermaster General in India as Chairman; (2) Adjutant General in India; (3) The Secretary of Defence Department; (4) Financial Adviser, Military Finance; (5) R.A.F. Representative and (6) Director of Canteens (Secretary). The Quartermaster-General was to define and control general policy with regard to the Canteen Services (India); the Adjutant General in India was to determine the basis for calculation of the amounts of working and reserve stocks to be held; the Secretary, Defence Department was to define the nature and scale of canteen facilities to be provided; the Financial Adviser, Military Finance was to accord financial sanction to grants required by the Canteen Services (India) for the purchase of stores and stipulate the amount that may be spent by the Canteen Stores Department without previous reference to the Board of Control; the R.A.F, Representative was to control general expenditure, disposal of profits, and, the financial policy of the Canteen Stores Department; and the Director of Canteen (Secretary) was to appoint auditors to the Canteen Stores Department for the purpose of acting as Government agents when taking over the Canteen Contractors Syndicate and handing it back; also for the periodical audit of the working of the Canteen Stores Department. By the said Notification, a Canteen Directorate was established in the General Headquarters, India, for execution of policy laid down by the Board of Control, to deal with, all correspondence with lower formations in India and formations overseas on Canteen matters, including fixing of prices of Indian troop requirements sold by N.A.A.F.I. and generally to control the establishment and administration of Canteen service throughout India. There can be, therefore, no doubt that under this Notification the Canteen Services (India) was an establishment run by the Defence Department through its Officer the Quarter-master General in India and Adjutant General in India, Secretary, Defence Department with the assistance of Financial Adviser, Military Finance and others mentioned above.

10. This fact is admitted in the affidavit of respondent No. 2 in Special Civil Application No. 1189 of 1968. This position continued till 1950. It seems that in 1950, after independence of India, the Government of India decided to continue the Canteen Services which comprised of : (a) Canteen Services (India), Board of Control, (b) Canteen Section as part of Quarter Master General's Branch, Army Headquartars, and (c) Canteen Stores Department (India), and a letter was written by the Ministry of Defence to the Chief of Army Staff and Commander-in-Chief, Indian Army, on October 27, 1950, specifying the duties of the Canteen Stores Department (India) as follows :

Canteen Stores Department (India)

The Department will be administered by a Board of Administration which will consist of :-

1. A Chairman, who will also be the Manager of the Canteen Stores Department (India).

2. A Representative to be appointed by the Ministry of Finance (Defence).

3. A Representative to be appointed by the Quartermaster General.

Duties :

The Board will be responsible to the Board of Control through the Chief Canteens Officer, Army Headquarters and the Quartermaster for the following :--

(a) For the efficient working and management of the affairs and business of the Canteen Stores Department (India) and will carry out such orders of the Board of Control and/or Government as may be issued through the Chief Canteens Officer.

(b) For framing periodical demands for stores on the basis sanctioned by the Board of Control for approval of the Quartermaster General.

(e) For the purchase through the Ministry of Industry & Supply, Ministry of Food or from suppliers direct, as may be suitable, of all canteen stores including, beer, liquor and cigarettes required for the Canteen Services (India).

(d) For the engagement, training, posting, punishment dismissal and general control of civilian staff approved for the Canteen Stores Department (India). In the case of those drawing over Rs. 250/- p.m. however, their dismissal shall be subject to confirmation by the Board of Control.

(e) For the proper maintenance of accounts relating to the Canteen Stores Department (India) and the submission of monthly statements of accounts to the Quartermaster General through the Chief Canteens Officer.

(f) For the investment in Government securities including Treasury Bills or in call deposits with Scheduled Banks of the Canteen Stores Department (India) Surplus funds as they accrue and sell the investments when necessary or to obtain loans from the banks against those securities as may be necessary for transacting the business of the Canteen Stores Department (India) and commensurate with the value of securities.

Powers :

The Board of Administration will exercise the following powers. The powers can be exercised by the Chairman of the Board on behalf of the Board to the extent specified at their discretion.

(a) Purchase of local stores ...Rs. 50,000/- (This is the limit upto which power can be exercised to purchase any one article or any number of similar articles purchased at one time.)

(b) Write off of losses of public money and stores due to causes other than theft, fraud or neglect-Rs. 5,000/-.

(c) Write off of losses of public money and stores due to theft, fraud or neglect-Rs. 1,000/-.

(d) Contingent expenditure and temporary establishment and labour in excess of fixed scales, provided that no post may be sanctioned on a pay exceeding Rs. 250/- per mensem or for a period exceeding one year-Rs. 5,000/-.

(e) Operate upon Bank or other Account opened in the name of the Canteen Stores Department (India).

(f) Make and give receipts, releases and other discharges for money payable to the Department and for the claims and demand of the Department.

(g) Enter into, carry out, modify or cancel contracts and arrangements in relation to moveable or immoveable property and action on the claims or any other rights or interests in which the Department may be concerned.

(h) Adjust, settle or submit to arbitration any accounts, claims or demands connected with the business of the Department.

(i) Conduct and manage all business and affairs in which the Canteen Stores Department (India) may be engaged and to do everything necessary or expedient in the management of such business.

(j) Include in, delete from or change in time or scale in the basic scales in the light of actual off take and experience subject to report to the Quartermaster General.

By that letter, the Government also laid down the rules and conditions for Canteen Services (India), Board of Control, Canteen Section as part of Quartermaster General's Branch, Army Headquarters and Canteen Stores Department (India).

11. But it is not necessary to quote all those rules as we are concerned here only with the Canteen Stores Department (India), the Canteen Stores Department being responsible to the Board of Control through the Chief Canteens Officer, Army Head Quarters and the Quartermaster General, as laid down in the above rules. It is necessary, however, to consider the composition and functions of the Board of Control, constituted by the Ministry of Defence on October 27,1950, which runs as follows :

Canteen Services (India) Board of Control Constitution :

1 Quartermaster General (Chairman),

2 Adjutant General,

3 Rep. Ministry of Defence, Government of India,

4 Rep. Ministry of Finance (Defence),

5 Rep. Naval Headquarters.

6. Rep. Air Headquarters.

7. Chief Canteens Officer (Secretary).

Duties :

1. To advise Government on general policy with regard to the Canteen Services (India).

2. To determine the basis for calculation of the amounts of working and Reserve Stocks to be held.

3. To advise Government on the nature and scale of canteen facilities to be provided.

4. To accord financial sanction to grants required by the Canteen Services (India) for the purchase of stores and stipulate the amount that may be spent by the Canteen Stores Department (India) without previous reference to the Board of Control.

5. To control general expenditure and the financial policy of the Canteen Stores Department (India) and to advise Government on the disposal of profits.

6. To appoint auditors to the Canteen Stores Department for the periodical audit of the working of the Canteen Stores Department (India).

Relying on these Notifications and letters, it was contended before the Payment of Wages Authority and it is contended before us by the petitioners that the Canteen Stores Department is an establishment which is carried on by or under the authority of the Central Government.

12. On behalf of the employees it is stated that after the liquidation of the Canteen Contractors Syndicate Ltd. by the President of India, the Canteen Stores Department (India) was started initially with the funds borrowed from the Government of India, but these funds were returned with interest to the Government of India. It is stated in the affidavit of respondent No. 2, Kakade, as follows, relying on the annual report of the Canteen Stores Department (India) for the year ending March 1962 :

The Department commenced functioning from 1st January 1948 with an initial capital of Rs. 24 lakhs allotted to it out of the first instalment of the terminal profits of the late Canteen Stores Department (still under liquidation), A further sum of Rs. 24 lakhs was added to its capital from the same source, about a year later. In 1948-49, a cash loan of Rs. 52 lakhs was given to the Canteen Stores Department (India) by the Government of India, which was paid back after two years with interst. The department now has a reserve fund of Rs. 148.60 lakhs besides the capital.

It is also stated that Public Accounts Committee of Parliament in its seventeenth report in 1955-56 and in its report in 1957 observed :

The Committee agreed with the suggestions made by the Comptroller and Auditor General that a Canteen Stores Department (India) fund outside the consolidated fund of India, but within the Public Accounts of India, may be created with the approval of Parliament.

It is argued that the Canteen Stores Department (India) is, therefore, a separate entity working under the control and direction and authority of the Board of Control and administered by the Board of Administration, the decisions of the Board of Control being supremo and binding in all the matters.

13. It is urged that the entire capital investment of the Canteen Stores Department (India) belonged to the said establishment and did not form part of the Government money or Government fund; that the Board of Control does not take any direction nor does it work under the authority nor is controlled by any department of the Government of India; and that the Minister of Defence and other persona ex-officio on the Board of Control wore there merely as members of the Board of Control and not in the capacity as the Government Officers. The affidavit also refers to the statement made by the then Deputy Defence Minister, Shri Surjit Singh Majithia, who was asked, whether it was a fact that orders had been issued to implement pay scales and other recommendations of the Pay Commission in respect of employees working in the Canteen Stores Department? and he answered that the Pay Commission's recommendations did not apply ipso facto to the employees of the Canteen Stores Department as they are not employees of the Central Government.

14. Reference is also made to the statements made by the then Defence Minister Shri V.K. Krishna Menon, in 1961, who stated in answer to a question in the Parliament, that the Pay Commission's recommendations did not apply directly to the employees of the Canteen Stores Department (India) as they are not Central Government servants. Reliance was also placed on the statement of Shri Y.B. Chavan, the then Defence Minister on the floor of Lok Sabha, as follows :

The employees of the Cas (I) are paid out of its own funds and not from the Defence Services Estimates and as such they are not treated as Government servants. After a series of meetings held with the Employees Union Representatives, it was mutually agreed in October 1955, that the terms and conditions of service of these employees, where circumstances are similar, be equated with comparable categories of Defence Civilians employed in Ordnance Depot of the Army. This equation was also recommended in September 1964 by the Ad Hoc Committee set up to consider the demands of the Union; this recommendation was accepted by the Board of Control in December 1964.

Reference is also made to the pointed statement made by Shri Surjit Singh Majithia, Deputy Defence Minister on September 28, 1954. The question was whether the Canteen Stores Department (India) was a Government Undertaking. His reply was :

No Public funds are invested in the Canteen Stores Department. It functions as an autonomous commercial organisation with funds of its own.

15. Mr. Singhvi, the learned Counsel appearing for the employees, has strenuously urged that having regard to these statements of the Defence Ministers, it can never be said that the Canteen Stores Department (India) is an establishment engaged in any industry carried on by or under the authority of any department of the Central Government. Quoting the words of Shri Majithia, he stated that it is merely a commercial organisation and the Canteen Stores Department was a separate, entity and was working under the Board of Control which was not treated as a part of the Department of the Government of India, In this connection, he also relied on the judgment of this Court in Siri Chand Suri v. Union of India (1972) O.C.J. Miscellaneous Petition No. 600 of 1967, decided by K.K. Desai J., on July 25, 1972 (Unrep.) where an employee of the Canteen Stores Department (India), challenged the validity and propriety of the order of compulsory retirement passed against him purporting to have been made under articles. 449 and 459 of the Civil Service Regulation of the Government of India. It was contended on behalf of the Union of India and the Canteen Stores Department (India) in that case, that the Canteen Stores Department (India) was not a department of the Union of India; nor was it a business activity of the Union of India and hence the employee did not hold any post under the Union of India and/or the Government. Mr. Singhvi argued that the Officers of the Canteen Stores Department (India) were in the habit of denying the status of the Government servants to the employees of the Canteen Stores Department whenever it suited them and at the same time treat them as Government servants whenever it was decided by them. He urged that this sort of uncertainty about the Government servant or servants working in the Canteen Services all over India, was highly prejudicial to the employees and harmful to the efficiency and security of the servants. There is some force in the comment made by Mr. Singhvi. However, none of the statements of the Ministers referred to above or the plea made before this Court on the aforesaid Siri Chand Suri v. Union of India were concerned with the question as. to whether the Canteen Stores Department (India) was an establishment exempted under Section 32(iv) of the Payment of Bonus Act, 1965.

16. That question must be decided not in accordance with the opinion expressed by the Ministers and/or pleas taken by the Officers of the Canteen Stores Department in some proceedings but on a correct and proper interpretation of the words which we find in Section 32 in the facts and circumstances established in the case.

17. Having regard to the aforesaid rules which governed the establishment, in our opinion, there can be no doubt whatsoever that the establishment of the Canteen Stores Department (India) must be regarded as an establishment exempted under Section 32(iv). The fact that it has got independent financial resources or the fact that its accounts are not scrutinised by the Public Accounts Committee for the purpose of including the same in the Public Fund accounts of the Government of India only affect the working of the establishment. These facts do not determine the nature of the establishment as an establishment not controlled by Government. If the Government of India decides to stop the working of the establishment, the establishment will come to an end in no time. It was carried on by the Quartermaster General till 1951. Thereafter the Board of Control was reconstituted with the Defence Minister as its Chairman. The Members were the Defence Secretary, the Financial Adviser, Ministry of Finance (Defence), the Quartermaster General, a representative of Naval Headquarters and a representative of Air Headquarters, as per the order of the Ministry of Defence dated January 9, 1951. It clearly shows that it is an establishment run or carried on 'by or under the authority' of the Ministry of Defence of the Government of India.

18. It is urged by Mr. Singhvi that the petitioners are not in a position to make it clear as to whether it is by the department or under the department. Having regard to the rules, the difficulty of the petitioners can be appreciated. It cannot be said that everything is carried on by the department, because the funds are managed independently by the establishment and the services are also regulated independently. At the same time, the fact that the Defence Minister is Chairman of the Board of Control which comprises of the Defence Secretary, the Financial Adviser, Ministry of Finance (Defence), the Quartermaster General, a representative of Naval Headquarters and a representative of Air Headquarters, clearly shows that the establishment is controlled by the Government itself. It may be that in most of the matters, the Board of Administration is autonomous and there is no reason for the Board of Control to interfere to the extent to which it would or could in an establishment under the direct control of the department. In any event, it is an establishment by or under the Government of India and hence it must be held that it must be exempted under the provisions of the Payment of Bonus Act.

19. Mr. Singhvi argued that this will be contrary to the ratio laid down by the Supreme Court in H.E.M. Union v. State of Bihar : (1969)IILLJ549SC and Shri Ambica Mills v. T.L. Assocn : (1973)ILLJ102SC . These cases, however, are easily distinguishable. In the H.E.M. Union's case, the industry was carried on by a corporation incorporated under the Companies Act and not directly by the Central Government or any of its departments. The Supreme Court, with respect, referred to the well known cases like Salomon v. Salomon and Salomon & Co. v. Salomon [1897] A.C. 22 and the principles governing what is known as 'juris persona' and held (p. 86) :.The company and the share-holders being, as aforesaid, distinct entities the fact that the President of India and certain officers hold all its shares does not make the company an agent either of the President or the Central Government.

We are not dealing with such a company in the present case.

20. In Shri Ambica Mills' case the question was whether a particular subsidy granted to the Company by Joint Plant Committee constituted by Central Government in exercise of its power under Clause (17) of the Iron and Steel (Control) Order 1956, was a subsidy within the meaning of Item 6 (g) of Schedule II, which was liable to be deducted in calculating the gross profit under the Payment of Bonus Act. Having regard to the facts relating to the constitution and functioning of the Joint Plant Committee, the Supreme Court held that the Joint Plant Committee was neither a Government body nor 'any body corporate established by or under any law for the time being in force.' The Supreme Court was not called upon to consider whether the Joint Plant Committee was an establishment within the meaning of Section 32(iv).

21. Mr. Singhvi, however, relied on the following observations of the Supreme Court in Shri Ambica Mills' case (p. 1087) :.A Corporation is defined in Section 2(11) as any body corporate established by or under any Central, Provincial or State Act but does not include a company or a Co operative society. Now it will be noticed that the definition of the term 'corporation' takes in bodies corporate established by law as well as bodies corporate established under any law. It cannot, therefore, be said that when item 6 (g) in the Second Schedule uses the words 'body corporate established by any law' it was not conscious of the distinction between a body corporate established by law and a body corporate established under any law.

Mr. Singhvi submitted that the associations of Ministers and Officers to the department by themselves cannot make the Canteen Stores Department (India) a body of the Defence Department or a body working under the control of the department. This proposition cannot be disputed. The question, however, which is to be decided by us is whether the establishment is carried on by or under the authority of any department of the Central Government. That will depend on the facts and not merely the association of the Government Officers or non-association of the Government Officers. The question before the Supreme Court in Shri Ambica Mills' case was entirely different. In our judgment, it has no reference to the question which we have to decide in this case as to whether the establishment of the Canteen Stores Department (India) is an establishment carried on by or under the authority of the Central Government. We do not find anything in the said case to support the contention of the employees that the establishment is not carried on by or under the authority of any department of the Central Government.

22. Reliance was also placed on a decision of the Division Bench of the Kerala High Court in Indian Naval Canteen Control Board v. I.T. [1965] II L.L.J. 366 where the question before the Court was whether the Indian Naval Canteen Service, an establishment run by the Indian Naval Canteen Control Board, at the naval base on Willingdon Island, was an industry carried on by or under the authority of the Central Government within the meaning of Section 2(a) of the Industrial Disputes Act, 1947, but the Court itself has observed at page 368 that the question is a question of fact depending on the circumstances of each case. The decision was based on the constitution of the Indian Naval Canteen Service, produced before the Court, which inter alia provided that: 'All property and rights of the organisation shall be vested in the Indian Naval Canteen Control Board constituted as follows and held by it on trust for the objects of the organisation.' Having regard to this clause, the Division Bench of the Kerala High Court came to the conclusion that it was not a service which was carried on by or under the authority of the Central Government observing as follows (p. 367) ;.The expression 'carried on by or under the authority of the Central Government,' as we understand it, involves a direct nexus with the industry through servants or agents, a nexus which cannot co-exist with the concept of a trust which gives the trustee the title to the trust property and which precludes a termination, as in the case of an agency, on the death or at the will of either party.

The Court also referred to a decision of the Single Judge of this Court in Abdul Rehaman v. Mrs. E. Paul (1961) 65 Bom.LR. 20. That was a case relating to an employee of the Mazgaon Dock Limited, a public limited company, registered under the Indian Companies Act. On the facts of that case, KK. Desai J. (as he then was) held that :

Industries which are carried on for their own purposes by incorporated commercial corporations which are governed by their own constitutions, as authorised by the Indian Companies Act, 1918, cannot be described as carried on under the authority of the Central Government even though the Central Government controls these corporations.

23. In our opinion, these cases would be of no assistance in deciding the question before us under the Payment of Bonus Act, because under Section 32(iv) the words used are not 'Central Government' but 'department of the Central Government.' 'Central Government' is defined in General Clauses Act, 1897, as in 'relation to anything done or to be done after the commencement of the Constitution, mean the President;' and to include certain other things mentioned in Section 3(8)(b) of the General Clauses Act, 1897. We are not concerned with the inclusive definition. It is enough to say that a department of the Central Government is something different from the Central Government, and in the present case, having regard to the constitution and working of the Canteen Stores Departmant, there can be no doubt that the establishment in question is carried on by or under the authority of the defence department of the Central Government.

24. It is true that in reality there may not be any palpable difference between the Central Government and any department of the Central Government, because the Central Government functions through departments and under its rules of business a department functions on behalf of the Central Government, but the department of the Central Government cannot be identified with the Central Government in all cases, because the Central Government comprises various departments and one department cannot be identified with all the departments together. In moat cases, the words 'Central Government' would, however, mean the department of the Government, because the Central Government has to act through one or the other of its departments. This distinction has been discussed in D.P. Kelkar v. Ambadas Keshav and it is observed (p. 277) :.So long as therefore the control of the Central Government is clearly shown, it is the control of a department of the Central Government, In this case the Department is the Ministry of Commerce and Industry as indicated in the heading of the two notifications concerned.

25. In the facts of the present case, however, it is clear that it is the Ministry of Defence which is, through its Board of Control, carrying on the establishment of Canteen Stores Department. From time to time the composition of the Board of Control has been changed, but the essential rules and the functioning of the establishment have not changed. The mere fact that the income and expenditure of the establishment are not placed before the Parliament and/or not form part of the Consolidated funds of the Public Accounts of the Government of India, may only show that the establishment is not a Government undertaking or a Government body but it can be held to be ' an establishment carried on by or under the authority' of the department of Ministry of Defence.

26. There can be no doubt that if the Board of Control, after the fresh Notification, consisting of the Defence Minister, the Defence Secretary, the Financial Adviser, Ministry of Finance, the Quartermaster General, a representative of Naval Headquarters and a representative of Air Headquarters, decides to stop the functioning, the establishment may come to an end. It is not an establishment required to be run under any law. It is not an establishment in respect of which any special statute has been passed to govern its existence or continuance of the organisation. In these circumstances, if the Canteen Stores Department (India) is not an establishment carried on by or under the authority of the Ministry of Defence, it is difficuilt to imagine what such an establishment, as contemplated by the Legislature, would be within the meaning of Section 32(iv).

27. It must be noted that overruling the contention on behalf of the Union of India and the Officers of the Canteen Stores Department (India), K.K. Desai J. (as he then was), held in his judgment in Siri Chand Suri v. Union of India, after considering the history of the whole department and the relevant rules regarding the organisation that the Union of India can be described as the owner of the undertaking being the Canteen Stores Department (India) observing as follows :.That party is admittedly Canteen Stores Department (India). The question is what is the meaning of that name and/or which is the legal entity who is the owner of that name. The three constituents of the Services, namely, the Board of Control, the Board of Administration and the Accounts Stores Department (India) jointly and/or separately are in fact not the owners of the undertaking or the business thereof and accordingly of the assets mentioned in the Balance-sheet. The case of the petitioner that the legal entity that is the owner of the undertaking must be the Union of India appears to be correct. The facts that accounts of the undertaking are separately audited and the allegation that the accounts are not considered part of public accounts do not make any difference to the above finding. It is true that having regard to its constitution it was within the powers of the authorities prescribed to make all transactions for and on behalf of the Canteen Services (India). This can be illustrated by referring to the items of debts under the heading 'Funds and liabilities' in the Balance-sheet. The debt due to the Allahabad Bank is shown at Rs. 57,00,000/- and odd. The debt due to the other Banks on overdraft is shown as Rs. 21,00,000/- and odd. For these debts due to these Banks, the authorities prescribed can never be personally liable. The ultimate debtor in respect of these liabilities would be the owner of the Undertaking and the business of the Canteen Services (India). The business docs not belong to the authorities prescribed under the letter dated October 27, 1930. Apparently, the ultimate owner of all the assets and the debtor in respect of all the liabilities must be the Union of India, though the properties may stand in the name of the Canteen Services (India) and the transactions may be effected in that name.

He also considered the Constitution of the Canteen Stores Department (India) and the relations between the Board of Administration and the Board of Control thereunder and held that the Civil Service Regulation which was applied by the Board of Control to its employees, was binding on the establishment.

28. As stated above, the question as to whether in fact and in law a particular establishment is carried on by or under the authority of any department must depend on the constitution, rules, history and the working of the institution and law, if any, made applicable thereto. There is no law, in the present case, made by the Parliament which incorporates the Canteen Stores Department (India). It is governed by orders issued by the President and the Ministry of Defence from time to time. It is the creature of those orders. It functions subject to the control and supervision of the Ministry of Defence. In these circumstances, we must hold that the establishment falls within the ambit of the exemption under Section 32(iv) of the Payment of Bonus Act and the orders passed by the Authorities in the above three petitions are without jurisdiction.

29. Before parting with the case, however, it is necessary to notice a preliminary objection which was raised by Mr. Singhvi that the petitions were liable to be dismissed because the petitioners have approached this Court only in respect of the three orders. He has pointed out that these employees and all other employees, who had approached the Payment of Wages Authority or the Industrial Court, have been paid the bonus as per the orders. He has also drawn our attention to the undisputed fact that for the subsequent years the establishment has been paying 8- 33 per cent of the salary of the employees as bonus. Mr. Cooper, who appeared for the petitioners, fairly stated that the above petitions were filed as test cases to get adjudication as to whether the Payment of Bonus Act applies to the employees or not and not with a view to recover whatever has been paid to the employees, or to establish that no bonus was liable to be paid to the employees. He stated that for the subsequent years, though not governed by that Act, the establishment has paid 8.33 per cent of the salary not as bonus but as an ex-gratia payment. We are not concerned here with the subsequent years. So far as the amounts which are paid in pursuance of the orders are concerned, notwithstanding our above decision, we hope and we are assured that no attempts will be made to recover the amounts from the employees.

30. In the circumstances, the impugned orders passed in all the three cases are quashed and set aside, subject to what is stated horeinabove. Rule made absolute. No order as to costs.


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