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Jialal Kapoor Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectService
CourtRajasthan High Court
Decided On
Case NumberD.B. Civil Special Appeal No. 248 of 1974
Judge
Reported in1977WLN61
AppellantJialal Kapoor
RespondentUnion of India (Uoi) and ors.
Cases ReferredKheri v. Ram Sanehi
Excerpt:
.....not hold a civil post and writ does not lie.;the hindustan zinc limited was not constituted by the metal corporation of india acquisition of undertaking) act, 1966, but on the contrary, it was a company incorporated under the provisions of the companies act. it is, therefore, clear that the order of termination could not be set aside by this court in exercise of its jurisdiction under article 226 of the constitution.;the expression 'metal corporation' is defined by section 2(c) to mean the metal corporation of india limited, a company within the meaning of the companies act, 1956 having its registered office at calcutta i.e. a private company. the appellant does not acquire the status of a person holding a civil post under the state.;the appellant has, therefore, not acquired any..........was not assailed before us.3. it was, however, urged that after the nationalisation of the metal corporation by the metal corporation (nationalisation and miscellaneous provisions) act, 1976, the petitioner acquired statutory status and was entitled to a declaration of being in employment when his removal from service was wrongful. our attention was drawn to sections 4, 14 and 24(3) of the metal corporation (nationalisation and miscellaneous provisions) act, 1976 and reliance was placed on the decisions of their lordships in sukhdev, singh v. bhagatram air 1975 sc 1381. the contention is, in our opinion without any force. the appointment of the appellant on 9-1-1967 and the termination of his service on 7-9-1974, was by the board of directors of the government company in virtue.....
Judgment:

A.P. Sen, J.

1. This special appeal is directed against the judgment of D.P. Gupta J., dated 10-5-1974 raising a question as to whether the appellant whose services as Chief Mining Engineering in Zavar Mines, Udaipur were terminated by the Board of Directors of the Hindustan Zinc Limited, a Government company incorporated under the provisions of the Companies Act, 1956, was entitled to a writ, direction or order under Article 226 of the Constitution. That depends on whether the Hindusthan Zinc Limited (which will hereinafter be referred to as the Government company') was a statutory body. The learned Single Judge dismissed the writ petition in limine holding that the Government company was neither a statutory body, nor was a public duty imposed on it by a Statute in respect of which enforcement could be sought by means of a writ of mandamus, nor was there, in its employees, any corresponding right for the enforcement of any such statutory or public duty and, therefore, no petition for the issue of a writ of mandamus could lie against the Government Company.

2. It has now been well established by a series of decisions of the Supreme Court that a company incorporated under the provisions of the Companies Act, 1956 is a non statutory body. In reaching the conclusion that the appellant was not entitled to enforce the contract obligations against the Government company, the learned Single Judge relied. upon the decision of their Lordships in Praga Tools Corporation v. C.V. Imanual and Ors. (1) and observed:

However, the fact remains that the power to appoint, officers & to remove them vests under Article 72 of the Articles, of Association of the Company, in the Board of Directors of the Company which acts under the provisions of the Companies Act, 1956, The Company, being a limited liability company, registered under the Companies Act is necessarily a separate, legal entity and it cannot be said either to be a Government Corporation or any Industry run by the Union Government. The Company being a non-statutory body and one in corporated under the Companies Act, there was neither a statutory nor a public duty imposed upon it by any statute, in respect of which enforcement could be, sought by means of a mandamus nor the petitioners had any corresponding legal right which he could enforce by means of a writ petition before this Court under Article 226 of the Constitution. In Praga Tools Corporation v. C.V. Imanual and Ors. : (1969)IILLJ479SC , a similar question was raised before the Supreme Court wherein the following observations were made by their Lordships in respect of the powers of this Court to issue an order in the nature of mandamus:

Therefore, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is in form, a command directed to a person corporation or an inferior tribunal requiring him or them to do a particular thing therein specified which appertains' to his or their office and is in the nature of a public duty. It is, however, not necessary that the, person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statute un error by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings.

The aforesaid observations were made by their Lordships of the Supreme Court in a writ petition filed by certain workmen challenging the order of a Company registered under the Indian Companies Act, 1913 and the same principles will no doubt govern the case before me As the Hindustan Zinc Limited is a company registered under the Companies Act and has not been set up under any statute and has no public duties and responsibilities to perform under a statute, it is not possible for this Court to issue a new writ or direction in the nature of mandamus to the Company in respect of an agreement which was essentially of a private character between the Company and the petitioner, who was its employee, In my view, therefore, the writ petition is not maintainable.

The correctness of the decision of the learned Single Judge laving down that a Government company was non-statutory body and, 'therefore it was not amenable to the writ jurisdiction, of the High Court under Article 226 of the Constitution was not assailed before us.

3. It was, however, urged that after the nationalisation of the Metal Corporation by the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976, the petitioner acquired statutory status and was entitled to a declaration of being in employment when his removal from service was wrongful. Our attention was drawn to Sections 4, 14 and 24(3) of the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976 and reliance was placed on the decisions of their Lordships in Sukhdev, Singh v. Bhagatram AIR 1975 SC 1381. The contention is, in our opinion without any force. The appointment of the appellant on 9-1-1967 and the termination of his service on 7-9-1974, was by the Board of Directors of the Government company in virtue of the authority which vests in them under Article 72 of the Articles of Association of the Company. The relationship between the appellant and the Government company was purely contractual and the Government company being a non-statutory body, no writ petition was maintainable for enforcement, of am contractual lights. The enactment of the Metal Corporation (Nationalisation and Miscellaneous Provisions( Act, 1976 does not bring about am substantial change in the status of the appellant Section 14 of the Act is not attracted to the case of the appellant at all.

4. To appreciate the point in controversy, a few facts may be stated The Metal Corporation of India (which will hereinafter be referred to at 'the Corporation) was a Limited Company incorporated under Section 617 of the Companies Act, having for its objects, inter alia the development of zinc and lead mines at Zavar in the State of Rajasthan. The Government of India was satisfied that it was necessary to acquire the said Corporation in public interest and on 22-10-1965, the President of India promulgated the Metal Corporation of India (Acquisition of Undertaking) Ordinance, 1965 providing for the acquisition of the Corporation by the Central Government. Pursuant to the said Ordinance, on or about 23-10-1965, the Central Government took over the possession, control and administration of the said Corporation The Parliament enacted the Metal Corporation of India (Acquisition of Undertaking) Act, 1965 to replace the Ordinance and it received the assent of the President of India on 12-12-1965. On 9-1-1967, the Board of Directors appointed the appellant to be the Chief Mining Engineer in the Zavar Mines in exercise of the powers which vest in them under Article 72 of the Articles of Association of the Company. His performance having proved to be unsatisfactory, the Board terminated the services of the appellant on 7-2-1974. In the meanwhile, on 3-9-1966, their Lordship of the Supreme in Union of India v. The. Corporation of India Ltd. and Ors. : [1967]1SCR255 struck down the Metal Corporation of India (Acquisition of Undertaking) Act, 1965 on the ground that the principles laid down in Clause (b) of para II of the Schedule to the Act namely, (i) compensation equated to the cost price in the case of unused machinery in good condition, and (it) written down value as under stood in the Income-tax Law is the value of used machinery, are irrelevant to the fixation of the value of the said machinery as on the date of acquisition and, therefore, the impugned Act had not provided for payment of compensation' within the meaning of Article 31(2) of the Constitution and was thus void. Thereafter, the President of India promulgated the Metal Corporation of India (Acquisition of Undertaking) Ordinance, 1966. The Ordinance was replaced by the Metal Corporation of India (Acquisition of Undertaking) Act, 1966 which came into force w.e.f. 2-8-1966. On 11-12-1972 the appellant was transferred as the Chief of Planning & Development (Mines), Udaipur. Eventually, his services were terminated by the Board of Directors on 7-2-1974.

5. The Metal Corporation of India (Acquisition of Undertaking) Act, 1966 provides, inter alia, by Section 10 for payment of compensation to the company for the acquisition of the undertaking, and the compensation was to be determined in accordance with the principles specified in the Schedule. Section 11 provides for the constitution of a Tribunal for the purpose of determining the amount of compensation payable. Section 12 provides for the formation of a Government Company for the management of the Undertaking, and for the vesting of its properties, assets and liabilities, Section 12 of the Act reads as follows:

12. For the efficient management and administration of the undertaking of the company vested in the Central Government by virtue of this Act, that Government may form a Government Company in accordance with the provisions of the Companies Act, 1956 and on the formation of such company, the undertaking together with all its properties, assets, liabilities and obligations specified in sub-Section (1) of Section 4 and such other properties, assets, liabilities and obligations as may, after the commencement of this Act, be acquired or incurred for the purposes of the undertaking, shall, by virtue of this Act, stand transferred to, and vest in, that Government company.

In accordance therewith, a Government company viz. Hindustan Zinc Ltd. was incorporated on 9-l-1966 Under Section 617 of the Companies Act, 1956. The Govt. company was not created under any Statute and thus was not a statutory authority. The learned Single Judge was, therefore, right in holding that no writ of mandamus could be issued by this Court.

5. There is a distinction between a corporation created by a Statute and a company incorporated under the Companies Act The Hindustan Zinc Limited was not created by the Companies Act, but it came into existence in accordance with the provisions of the Act. Their Lordships of the Supreme Court in Sukhdev Singh v. Bhagat Ram (supra) have brought out the distinction thus:

The fallacy lies 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 tinder the powers conferred by the Statutes creating such bodies. Regulation 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.

Here, a distinction must, therefore, be made between an institution which is not created by or under any statute but is governed by certain statutory provisions. That by itself is not sufficient to clothe the institution with a statutory character (See, Executive Committee of Vaish Degree College, Shamli and Ors. v. Lakshmi Narain and Ors. AIR 1976 SC. 888

6. On a plain reading of Section 12 of the Act, it is quite clear that the Hindustan Zinc Limited was not constituted by the Metal Corporation of India (Acquisition of Undertaking) Act, 1966 but on the contrary, it was a company incorporated under the provisions of the Companies Act. It is, therefore, clear that the order of termination could not be set aside by this Court in exercise of its jurisdiction under Article 226 of the Constitution. Nor has the Court any jurisdiction to give a declaration sought for about the appellant continuing to hold the office of Chief of Planning and Development (Mines). The Government company not being a public authority invested with statutory powers, no writ petition is maintainable for the enforcement of the right to relief arising out of the alleged breach of contract. The decision of their Lordships in D.F.O. Forest, Kheri v. Ram Sanehi : AIR1973SC205 is, therefore, distinguishable on facts.

7. The nationalisation of the undertaking by the Metal Corporation (Nationalisation, and Miscellaneous Provisions) Act, 1976 does not alter the true legal position vis-a-vis the appellant, despite Section 4 and 14(1) thereof Section 4 of the Act enacts:

4(1). On the commencement of this Act, the Metal Corporation of India (Acquisition of Undertaking) Act, 1966, shall stand repealed, and on such repeal, the undertaking of the Metal Corporation, which had been transferred to, and vested in, the Central Government by virtue of the provisions of Section 3 of the Act so repealed, and the undertaking of the Metal Corporation together with all its properties assessee, liabilities and obligations specified in sub-Section (1) of Section 4 of that Act & such other properties, assets, liabilities and obligations, acquired or incurred for the purposes of its undertaking, after 22nd day of October, !965, which stood, by virtue of the provisions of Section 12 of the said Act, transferred to, and vested in, the Government company formed in pursuance of the provisions of Section 12 of the Act aforesaid shall, by virtue of the provisions of the provisions of this Act, be deemed to have been retransferred to, and revested in, the Metal Corporation, and immediately thereafter, the management of the undertaking of the Metal Corporation shall be deemed to have been transferred to, and vested in, the Central Government.

Section 14(1) of the Act leads as follows:

14(1). Every officer or other employee of the Metal Corporation (except a director or any managerial personnel specified in Section 197A of the Companies Act, 1956, or any other person entitled to manage the whole or a substantial part of the business of the Metal Corporation under a. special agreement) in the employment of the Metal Corporation immediately before the commencement of this Act shall in so far as such employee is employed in connection with the affairs of the undertaking of the Metal Corporation, become, as from such commence merit, an officer or other employee, as the case may, be, of the Central Government or the Government company and shall hold office by the same tenure and at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension, gratuity and other matters as he would have held under the Metal Corporation if this Act had not been enacted and shall continue to do so until his employment under the Central Government or the Government company is duly terminated or until his remuneration, terms and conditions are duly altered by the Central Government or the Government company:

Provided that if the alteration, so made is not acceptable to any such officer or other employee, his employment shall be terminated by the Central Government or the Government company on payment of an amount equivalent to-

(a) three months' remuneration, in the case of permanent employees, and

(b) one month's remuneration, in the case of other employees;

Provided further that nothing in this section shall apply to any officer or other employee who has within thirty days next following the commencement of this Act, by notice in writing to the Central Government o the Government company, as the case may be, intimated his intention of not becoming an officer or other employee of the Central Government or the Government company.

The effect of Section 4 of the Act is that the undertaking of the Metal Corporation together with its all properties, assets, and liabilities and obligations acquired or incurred for purposes of its undertaking which stood by virtue of the provisions of Section 12 of the repealed Act, shall, by virtue of the provisions of this Act, be deemed to have been 'retransferred to and revested in the Metal Corporation and immediately thereafter i.e. 22-10-1965, the management of the undertaking shall be deemed to have been transferred to and vested in the Central Government. The nationalisation of the undertaking, therefore, does not take into account the formation of the Govt. company at all Section 14(1) of the Act is also of no avail to the appellant. It speaks of Every officer or other employee' of the Metal Corporation, in the employment of the Metal Corporation immediately before the commencement of the Act in so far as such employee was employed in connection with the affairs of the undertaking of the Metal Corporation should become an officer or other employee as the case made, of the Central Government or the Government company. They hold office by the same tenure & at the same remuneration & upon the same terms and conditions and with the same rights and privileges as they would have held under the Metal Corporation, if the Act had not been enacted, and shall continue to do so until their employment under the Central Government or the Government company was duly terminated. The words 'Commencement of the Act' is defined by Section 2(b) to mean 22-10-1965. The expression 'Metal Corporation' is defined by Section 2(c) to mean the Metal. Corporation of India Limited, a company within the meaning of the Companies Act, 1956 having its registered office at Calcutta i.e. a private company. The appellant does not acquire the status of a person-holding a civil post under the State. Emphasis in Section 14(1) is laid on the words immediately before' the commencement of this Act Thus the protection that is conferred by Section 14(1) is on officers and other employees of the Metal Corporation of India Limited, who were in its employment immediately before the commencement of this Act i.e. prior to 22-10-l965. The appellant, who was an employee of the Government company viz. Hindustan Zinc Limited does not acquire the status of civil servant. Further more, under the second part of Section 14(1), the rights of the appellant, if any, remain as before i.e. partly contractual as an employee of the Government company. Since the employment of the appellant had been terminated by the Government company on 7-2-1974, Section 14(1) of the Act was not fastened to the contract of employment Section 14(1) of the Act is. there fine, in applicable, inasmuch as the appellant was never an employee of the Metal Corporation of India Limited As already stated, the expression Metal Corporation' therein refers to the old company, the undertaking of which was nationalised.

8. The repeal of the Metal Corporation of India (Acquisition of Undertaking Act, 1966 by Section 4 of the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976 does not give rise to a new cause of action to the appellant against the Union of India. The writ petition was filed on 22-4-1974. The learned Single Judge dismissed the writ petition on 19-5-1974. The special appeal was filed on 1-7-1974. During the pendency of the appeal, the Metal Corporation (Nationalisation and Miscellaneous Provisions) Act, 1976 came into force on 2-8-1976, Sub-section (4) of Section 7 of the Act provides:

7(4). Subject to the other provisions contained in this Act, any proceeding or cause of action pending or existing immediately before the appointed day by or against the Metal Corporation or the Central Government or the Government company referred to in Section 12 of the Metal Corporation of India (Acquisition of Undertaking) Act, 1966, in relation to the undertaking of the Metal Corporation may, as from that day, be continued and enforced by or against the Central Government or the Government company, referred to in section o, as it might have been enforced by or against the Metal Corporation the Central Government or the Government company, as the case may be, if this Act had not been enacted, and shall cease to be enforceable by or against the Metal Corporation, its surety or guarantor.

The writ petition was filed before the appointed day i.e. prior to 2-8 1976. The appeal, which was pending on that day, has by virtue of Section 7(4) to be continued against the Government company. That conclusion is reinforced by the provisions of Section 24(2) which reads:

24(2). On the commencement of this Act:

(a) every suit, appeal or other proceeding of whatever nature in relation to the affairs or business of the undertaking of the Metal Corporation instituted before such commencement, and pending on such commencement shall not abate, be discontinued or be, in any way, prejudicially affected by reason of anything contained in this Act, but the suit appeal or other proceeding may be continued, prosecuted and enforce by or against the Metal Corporation and not against the Central Government or the Government company.

(b) every suit, appeal or other proceeding of whatever nature instituted after such commencement but before the appointed day, in relation to the affairs or business of the undertaking of the Metal Corporation, and pending on the appointed day, shall not abate, be discontinued or, in any way, be prejudicially affected by reason of any thing contained in this Act, but such suit, appeal, or other proceeding may be continued, prosecuted and enforced by or against the Central Government or the Government company.

9. The appellant has, therefore, not acquired any statutory status under the Metal Corporation (Nationalisation and Miscellaneous Provisions Act, 1976 and his cause of action, if any, is against the Government Company viz, the Hindustan Zinc Limited, which is a non-statutory body against which no writ can lie.

10. The result, therefore, is that the special appeal fails and is dismissed. There shall be no order as to costs.


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