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Gopala Pillai Vs. Kerala State Small Industries Corpn. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtKerala High Court
Decided On
Judge
Reported in(1978)IILLJ368Ker
AppellantGopala Pillai
RespondentKerala State Small Industries Corpn. Ltd. and ors.
Cases ReferredS.R.S. Mony v. Life Insurance Corporation of India
Excerpt:
- - , are all companies incorporated under the companies act and the employees of these companies do not enjoy the protection available to government servants as contemplated in article 311. the companies were held in those cases to have existence independent of the government and by the law relating to corporations. 663 if the observations are taken to apply to companies registered under the companies act as well......12 of the constitution. it was urged that there is really no distinction between what is termed a 'statutory corporation' which also is in a sense a company but created by a special statute, and a company registered under the companies act in this regard. counsel relied on the judgment of this court in s.r.s. mony v. life insurance corporation of india 1972-ii l.l.j 546 : (1972) k.l.t. 663 and our attention was particularly invited to a passage from the judgment in paragraph 21 thereof. this court after referring to the decision of the supreme court in electricity board, rajasthan v. mohan lal : (1968)illj257sc observed :of course, in that judgment, in considering whether the board came within the definition of 'state' the court took into account also the fact that the board had power to.....
Judgment:

Govindan Nair, C.J.

1. These appeals are respectively by the 1st petitioner in O.P. No. 3320 of 1973 and by petitioners 2 to 5 in the same original petition from the judgment dismissing the original petition. The question that arose for consideration was whether the appellants who were the employees of the Kerala State Small Scale Industries Corporation Ltd., hereinafter referred to as the Corporation, could sustain the writ petition, O.P. No. 3320 of 1973, on the ground that Articles 14 and 16 of the Constitution were violated. So the further question whether the Corporation is ' other authority' withing the meaning of that expression in Article 12 of the Constitution also arose. Justice Viswanatha Iyer held that the Corporation was not a State as defined in Article 12 of the Constitution and dismissed the petition. This finding also meant that the Corporation was not 'other authority' mentioned in Article 12 of the Constitution.

2. Counsel on behalf of the appellants contended before us that the objects and purposes for which the Corporation was registered as a company under the Companies Act were essentially the objects and purposes of the State. It was emphasised that all the shares in the company were held by the Government thus obtaining almost complete control over the management and affairs of the company. Reference was also made to the fact that the company was formed pursuant to a Government Order, G.O. Ms. 522/61/ID dated 16th July, 1961. Counsel submitted that the fact that the Corporation was formed pursuant to a Government order, and in the light of the other circumstances detailed, the Corporation was merely an agent of the State and was intended to carry out the objects and purposes of the State and that, therefore, in a broader sense, and according to counsel, in the real sense, the Corporation is ' other authority ' for the purpose of Article 12 of the Constitution. It was urged that there is really no distinction between what is termed a 'statutory Corporation' which also is in a sense a company but created by a special statute, and a company registered under the Companies Act in this regard. Counsel relied on the judgment of this Court in S.R.S. Mony v. Life Insurance Corporation of India 1972-II L.L.J 546 : (1972) K.L.T. 663 and our attention was particularly invited to a passage from the judgment in paragraph 21 thereof. This Court after referring to the decision of the Supreme Court in Electricity Board, Rajasthan v. Mohan Lal : (1968)ILLJ257SC observed :

Of course, in that judgment, in considering whether the Board came within the definition of 'State' the Court took into account also the fact that the Board had power to give directions, the non-compliance with which was a criminal offence. But I do not see that decision as an authority for the position that such a body would be brought within the difinition of 'State' only if it has powers of giving directions, the non-compliance with which would be punishable. The essential requisite, according to me is what is indicated in that judgment in the extract I have already cited earlier, namely, the conferment on the body created by a statute, of Governmental or quasi-Governmental functions. Once it is accepted that the functions performed by the Corporation are that which would ordinarily be the functions of a Government in a social welfare State, it would be quite in accordance with the spirit of Part III of the Constitution to term that body as 'State'.

We have to remember that the above observations were made with reference to the Life Insurance Corporation of India, a Corporation created by a statute. This Court has to proceed on the basis that between a corporation created or established by a statute and a company registered under the Companies Act, there is a real distinction in view of the pronouncement of the Supreme Court in Sabhajit Tewary v. Union of India and Ors. : (1975)ILLJ374SC , paragraph 5 wherein it is stated :

This Court has held in Praga Tools Corporation v. C.B. Immanual : (1969)IILLJ479SC , Heavy Engineering Mazdoor Union v. State of Bihar : (1969)IILLJ549SC and in S.L. Agarwal v. General Manager, Hindustan Steel Ltd. : (1970)IILLJ499SC , that the Praga Tools Corporation, Heavy Engineering Corporation Ltd. and Hindustan Steel Ltd., are all companies incorporated under the Companies Act and the employees of these companies do not enjoy the protection available to Government servants as contemplated in Article 311. The companies were held in those cases to have existence independent of the Government and by the Law relating to Corporations. These could not be held to be departments of the Government.

Paragraph 25 of the judgment in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. 1975-I L.L.J. 399 : A.I.R. 1975 S.C. 133, also indicates that a company registered under the Companies Act stand on a different footing from a corporation created by a statute. We shall extract paragraph 26.

25. The additional Solicitor General submitted that Regulations could not have the force of law because these regulations are similar to regulations framed by a company incorporated under the Companies Act, The fallacy lines in equating rules and regulations of a company with rules and regulations framed by a statutory body. A company makes rules and regulations in accordance with the provisions of the Companies Act. A statutory body on the other hand makes rules and regulations by and under the powers conferred by the statutes creating such bodies Regulations in Table A of the Companies Act are to be adopted by a company. Such adoption is a statutory requirement. A company cannot come into existence unless it is incorporated in accordance with the provisions of the Companies Act. A company cannot exercise powers unless the company follows the statutory provisions. The provision in the Registration Act requires registration of instruments. The provisions in the Stamp Act contain provisions for stamping of documents. The non-compliance with statutory provisions will render a document to be of no effect. The source of the power for making rules and regulations in the case of Corporation created by a statute is the statute itself. A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute.

It is clear from the above that a company (registered under the Companies Act cannot fee regarded as a State for the purpose of Article 12 of the Constitution.

3. We may add that there are observations of the Supreme Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. (supra) wherein the question Whether the bye-laws framed by a Corporation established by a statute amounted to law was decided, in paragraphs 25, 35 and 39 which appear to militate against the view that has been expressed by this Court in S.R.S. Mony v. Life Insurance Corporation of India, 1972 K.L.T. 663 if the observations are taken to apply to companies registered under the Companies Act as well. But as we have already pointed out, these observations were made in regard to a statutory corporation, the Life Insurance Corporation of India and we need not in this case examine the question whether those observations could be applied to a company registered under the Companies Act, or whether even in the case of statutory corporations, in the absence of bye-laws having the force of law, and an alleged breach of such laws, the matter is justiciable. These appeals have to be dismissed on the short ground that the Corporation which has been registered as a company under the Companies Act cannot be regarded as a State for the purpose of Article 12 of the Constitution.

4. We dismiss these writ appeals but direct the parties to bear their respective costs.


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