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South India Corporation (Travancore) Ltd. Vs. Chief Inspector of Factories and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1957)IILLJ501Ker
AppellantSouth India Corporation (Travancore) Ltd.
RespondentChief Inspector of Factories and ors.
Cases ReferredCommissioner of Police v. Gordhandas
Excerpt:
.....licence once granted. for, in my judgment, this is a case where the legislature has under the statute trusted the tribunal which it constitutes with a jurisdiction which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction on the finding that it does exist to proceed further. indeed i would like to go further and hold the power under the act and rules conferred on the chief inspector to grant a licence or its renewal or its transfer, depends not alone on whether there is a person factually in ultimate control but whether such person is fit and capable of discharging1 the various duties and responsibilities as regards the workers laid down by the beneficent legislation. referring to the statement of the commissioner that at the..........no. 175, originally issued to the owner under the indian factories act, 1948, by the respondent 1 chief inspector of factories. this licence was in due course renewed for the years 1954 and 1955. before the expiry of the licence the petitioner company applied for renewal for the year 1956, but in this they were opposed by the respondent 3 who had in the meanwhile sold the factory to the respondent 2, national nut company, on 15 december 1955 and wanted the assignee to get the transfer of the licence instead. in support of their claim for renewal the petitioner company put forth the plea that their lease had not been properly terminated by six months' notice under section 106 of the transfer of property act, that in fact they had been authorized by respondent 3 owner, to continue in.....
Judgment:
ORDER

N. Varadaraja Ayyangar, J.

1. This is a petition filed by the South India Corporation (Travancore), Ltd., under Article 226 of the Constitution in the matter, of the grant of a licence under the Factories Act.

2. The respondent 3 Sundareswaran was the owner of a cashewnut factory at Adichanalloor. The petitioner company took from him a lease of the factory commencing from 20 March 1953 and on such footing obtained transfer in their name of licence No. 175, originally issued to the owner under the Indian Factories Act, 1948, by the respondent 1 Chief Inspector of Factories. This licence was in due course renewed for the years 1954 and 1955. Before the expiry of the licence the petitioner company applied for renewal for the year 1956, But in this they were opposed by the respondent 3 who had in the meanwhile sold the factory to the respondent 2, National Nut Company, on 15 December 1955 and wanted the assignee to get the transfer of the licence instead. In support of their claim for renewal the petitioner company put forth the plea that their lease had not been properly terminated by six months' notice under Section 106 of the Transfer of Property Act, that in fact they had been authorized by respondent 3 owner, to continue in occupation for the next year (1956) also and that in any event, they being the 'occupier' of the factory in present ultimate control of its affairs within the meaning of the Factories Act and rules, were entitled to preference. The respondent 3 denied the alleged extension of lease for 1956 and claimed that the assignee was entitled to the possession and working of the factory from 1 January 1956 and the licence must be issued accordingly. The respondent 1, Chief Inspector, apparently thought that he could not deal with the respondent 3, albeit he was the owner unless with consent of the petitioner company who were in physical custody of the factory. So the petitioner approached Government for purpose of clarification and thereafter some correspondence ensued between the Government, Labour Commissioner and the respondent 1. Ultimately the respondent 1 found as a fact that the lease had expired by 31 December 1955 as stated by the respondent 3 and in the light of the views expressed by Government and the Labour Commissioner, passed Ex. A order dated 22 March 1956 sanctioning the issue of a new licence as from that day in favour of Sundareswaran the respondent 3 and also directing the return to the petitioner company of the licence so far held by them but renewed up to 21 March 1956. Hence this petition by the company praying for the issue of a writ of certiorari or other appropriate writ or order on ground mainly of want of jurisdiction.

3. Mr. V.K.K. Menon, learned Counsel for the petitioner, rested the question of jurisdiction on two considerations. Firstly that under the Factories Act and rules it was the 'occupier' who alone had the locus standi whether initially to apply for registration and licence or subsequently get the renewal of the licence. The owner or proprietor was nowhere in the picture. The Chief Inspector was not concerned with the dispute as to right to possession he had only to look to actual control, direct or indirect. The petitioner company was unquestionably the 'occupier' and licence-holder and could not Successfully be opposed in their application for renewal by any motion of the respondent 3 or his assignee the respondent 2 for transfer of the original licence or for fresh licence either. It was unnecessary in this view to consider or pass upon the petitioner's allegation as to extension by the owner of the lease arrangement for the year 1956. Secondly the respondent 1 Chief Inspector has not acted independently in exercise of his statutory discretion under the Act and rules in disposing of the matter. He had subjected himself to extraneous influence and was rather communicating through Ex. A, the direction of his higher officers, viz., the Labour Commissioner who constituted the appellate authority and the Government who were the final revisory authority under the Act. Exhibit A order could not in the circumstances be sustained.

4. Learned Counsel Mr. T.N. Subrahmanya Ayyar appearing for the respondents 2 and 3 and the learned Government Pleader representing the respondent 1 Chief Inspector raised a preliminary objection that Ex. A. was only in the nature of an administrative decision and was not therefore amenable to judicial review. On the merits they contended that the finding of fact in the order impugned that the lease in favour of the petitioner company did not subsist after the close of 1955, amounted to a conclusive determination for the purpose of the Act and rules, that the respondent 3, admitted owner as he was, was (?) to be deemed to be the 'occupier' and he was accordingly entitled to the issue of a new licence under Rule 5. They further contended that the respondent 1 had at no time abdicated his statutory functions in the consideration of the instant matter and that the violation was still his when he arrived at Ex. A decision even though he might have been helped therein to some extent by the views of his superior authorities.

5. In my judgment, the preliminary objection raised by the respondents' learned Counsel cannot stand. For the decision with which we are concerned is not merely administrative but quasi-judicial in its character. The test has been laid down in Province of Bombay v. Khusaldas 1950 S.C.R. 621 that a decision would be quasi-judicial only if the obligation to act judicially is laid down in the statute which has established the authority whose decision is in question, and the essential elements of a judicial approach are-

giving an opportunity to the party who is affected by an order to make a representation, making some kind of inquiry, hearing and weighing evidence, if any, and considering all the facts and circumstances bearing on the merits of the controversy, before any decision is made. Prescribed forms of procedure are not necessary to make an inquiry judicial, provided, in coming to the decision the above well-recognized principles of judicial approach are required to be followed.

So when an administrative authority exercises discretion after first applying some fixed standards, or only upon the existence of some objective fact or condition, e.g., when a licensing authority refuses or grants a licence after deciding whether an applicant is legally qualified to hold a licence, the administrative authority may be said to combine administrative and judicial functions, or shortly to exercise 'quasi-judicial' functions. [See Basu's Constitution, 3rd Edn., Vol. 2. p, 141.] I therefore overrule the preliminary objection and pass on to consider the merits of the petition.

6. It will be convenient at this stage to extract the relevant statutory provisions governing the matter. Section 2, Clause (n), of the Indian Factories Act, 1948, defines 'occupier' of a factory as meaning

the person who has ultimate control over the affairs of the factory, and where the said affairs are entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory.

Section 6, Clause (1), provides for the making of rules by the State-

(d) requiring the registration and licensing of factories or any class or description of factories, and prescribing the fees payable for such registration and licensing and for the renewal of licences, (a) requiring that no licence shall be granted or renewed unless the notice specified in Section 7 has been given.

and Section 7 provides that various information as to the details of the working and management of the factory be contained in the notice of occupation to be given by the occupier. The rules framed by the Travancore-Cochin Government under the Indian Factories Act are published at p. 333 of the Statutory Rules and Notifications for the year 1952. Rule 4 deals with application for registration and grant of licence and provides:

the occupier of every factory small submit to the Chief Inspector an application in the prescribed form 2 for the registration of the factory and grant of a licence. The application shall be accompanied by the notice of occupation in form 3, in duplicate, prescribed under Section 7.

There is a priviso to that rule with which we are not concerned. Rule 5 deals with the grant of licence as follows:

A licence for a factory shall be granted by the Chief Inspector in form 4 prescribed for the purpose and on payment of the fees Specified in appendix I. Every licence granted or renewed under this chapter shall remain in force upto 31 December of the year for which the licence is granted or renewed....

Rule 7 provides for the necessary renewal of licences. It says:

(1) A licence may be renewed by the Chief Inspector.

(2) Every application for the renewal of. a licence shall be accompanied by the notice of occupation in the prescribed form in duplicate and shall be made not less than 60 days before the date on which the licence expires, and, if the application is so made the premises shall be held to be duly licensed until such date as the Chief Inspector renews the licence.

(3) The same fee shall be charged for the renewal of a licence as for the grant thereof. Provided that if the application for renewal is not received within the time specified in Sub-rule (2) the licence shall be renewed only on payment of a fee 50 per cent in excess of the fee ordinarily payable for the licence.

Rule 8 provides for the transfer of (licence as follows:

(1) The holder of licence may at any time before the expiry of the licence, apply for permission to transfer his licence to another person:

(2) Such application shall be made to the Chief Inspector who shall, if he approves of the transfer, enter upon the licence, under his signature, and endorsement to the effect that the licence has been transferred to the person named.

Rule 12 then says that 'the notice of occupation shall be form 3.' It may also be noticed that form 2 prescribed under Rule 4 for the application for registration and grant or renewal of licence and similarly form 3 prescribed under Rule 12 regarding notice of occupation, have to be submitted over the signature of the 'occupier.' The 'manager,' as defined in Rule 2(1), viz., 'the person responsible to the occupier for the working of the factory for the purpose of the Act,' should also append his signature in form 3. There is in form 3 an entry 9 for detailing the full name and residential address of the proprietor of the factory in case of a private firm, of the directors in case of a public limited liability company, and of the shareholders in case of a private company. Finally reference may be made to Section 93 of the Act which provides for the liability of the owner of premises in certain circumstances 'in the stead of the occupier of the factory.'

7. The above provisions of the Act and rules make it perfectly clear that the owner of a factory has, by virtue of such status alone, no right to make an application for and get either the registration and licensing of a factory or the transfer or renewal of the licence once granted. If the owner came in at all it was only for incurring liability in the stead of the occupier in particular circumstance. It was the 'occupier' and he alone who took the paramount place. Such 'occupier' may be an owner or lessee or mere licensee. But the point was that he must have the right to occupy a property and dictate how it had to be managed. He might not actually occupy the building but he must have the control of its working. The Question therefore first arises as to whether the petitioner company was, as contended on their behalf, so unquestionably the 'occupier' of the factory that it was wrong on the part of the respondent 1 Chief Inspector to ignore them.

8. Learned Counsel for the petitioner company did not in this connexion, and in my opinion rightly, want to depend on the case as to oral extension of lease for 1956, for that remained only an allegation. However he laid much stress on the fact that the lease in favour of the petitioner company had not been terminated by the six months' notice required under Section 106 of the Transfer of Property Act and argued that it followed inevitably, that the lease survived and the petitioner company was the 'occupier' for 1956. But this argument forgets that it is left to the respondent 1 and him alone under the statute, to decide the fact as to whether the petitioner company continued as a lessee for the next year and so were in a position to exercise 'ultimate control' of the affairs of the factory as 'occupier.' On the facts as disclosed it was open to him to take and he accordingly took the view that the lease had in fact expired by 31 December 1955 and the ultimate control reverted to the admitted owner the respondent 3. If so, it is not for the Court to interpose its reasoning and find differently. For, in my judgment, this is a case where the legislature has under the statute trusted the tribunal which it constitutes with a jurisdiction which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction on the finding that it does exist to proceed further. Indeed I would like to go further and hold the power under the Act and rules conferred on the Chief Inspector to grant a licence or its renewal or its transfer, depends not alone on whether there is a person factually in ultimate control but whether such person is fit and capable of discharging1 the various duties and responsibilities as regards the workers laid down by the beneficent legislation. And if the Chief Inspector in such circumstances exercises his discretion and ascertains facts and takes a decision, then also the Court will not interfere with its review. On the whole therefore there is no substance in the first objection raised by learned Counsel.

9. Taking up the second objection raised by learned Counsel as to external influence having vitiated Ex. A order, it was argued on behalf of the petitioner company that the order even on its face disclosed the defect. The reference was to that portion of the order which recited that the first respondent was disposing of the 'matter in the light of the views expressed by the Government and the Labour Commissioner.' Reference was also to Commissioner of Police v. Gordhandas : [1952]1SCR135 , where it was held that an order of cancellation issued by the Commissioner of Police, Bombay, of a licence which he himself had granted to the appellant in the first instance for the erection of a cinema hall was invalid because it was not passed by him but was merely an intimation by him of an order passed by another authority, viz., the Government of Bombay. But it has to be remembered that the first respondent by himself first decided the question of fact as to expiry of the lease by the end of 1955 and then applied the law as announced in the Government communication. The order as issued in terms purported to be only his own. The question is whether the reliance by the first respondent in Ex. A order on the views of the higher authorities on the law bearing on the matter, is a fatal defect or for the matter of that, a defect at all. The case cited by learned Counsel itself gives the answer. Referring to the statement of the Commissioner that at the first stage he was fully satisfied that the petitioner's application should be refused but it was only at the instance of the Cinema Advisory Committee that he granted the said permission, Bose, J., who delivered the judgment on behalf of the Court, said:

This statement of the Commissioner did not affect the validity of his order. There is no suggestion that his will was overborne or that there was dishonesty or fraud in what he did. In the absence of that, he was entitled to take into consideration the advice thus tendered to him by a public body set up for this express purpose, and he was entitled in the bona fide exercise of his discretion to accept that advice and act upon it even though he would have acted differently if this important factor had not been present to his mind when he reached a decision.

Later on, dealing with the order of cancellation sought to be impugned, the learned Judge went on to say:

We do not mean to suggest that it would have been improper for him to take into consideration the views and wishes of Government provided he did not surrender his own Judgment and provided he made the order, but we hold on the material before us that the order of cancellation came from the Government and that the Commissioner acted only as a transmitting agent.

Learned Counsel commented upon the fact that even though the question was pointedly raised in the petitioner's affidavit, the respondent 1 Chief Inspector had not come forth with an animation that the order was in fact his own. But it seems to me that the facts of the case are clear and after all, as observed in the case already cited.

there cannot be any construction of the public order publicly made in exercise of statutory authority in the light of explanation subsequently given by the officer making the order of what he meant or of what was in his mind or what he intended to do. Public orders made by public authorities are meant to have public Effect and are intended to affect the actions and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.

It follows there is no point in the second objection either.

10. The petition therefore fails and I accordingly dismiss it with costs. Advocate's fee Rs. 200.


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