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Khetri Tamba Shramik Sangh Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 789 of 1976
Judge
Reported in1976WLN708
AppellantKhetri Tamba Shramik Sangh
RespondentUnion of India (Uoi) and ors.
DispositionPetition dismissed
Cases ReferredShamli v. Lakshmi Narain and Ors.
Excerpt:
.....and is not maintainable. - - their lordships held in the aforesaid case that inspite of the central government having contributed the entire share capital of the company and having enjoyed extensive powers of control, yet the company was not (sic) department of the state, as the powers enjoyed by the central government were derived from the company's memorandum of association and articles of association and the company did not perform any governmental functions. it was held in the aforesaid case that the company bad different position from the state and that the existence of share holders, of capital raided by the issuance of shares, the lack pf connection between the finances of the corporation and the consolidated fund of the, union, pointed to the independent existence of the..........617 of the afore said act, inasmuch as the entire share capital of 'he company is held by the central government. it is also not in dispute that on account of the central government owning the entire share capital of the company, the central government exercises certain powers of control over the management of the comp-any and has also appointed its officers as directors of the company. the auditor general of india has also the power to audit the accounts of the company as that of any other government company, on account of the provisions of section 619 of the companies act, but the question which arises for consideration in this case is as to whether the company has a statutory or public duty to perform and is amenable to the jurisdiction of this court under article 226 of the.....
Judgment:

D.P. Gupta, J.

1. By this writ petition, the petitioner seeks to challenge a notification dated March 27, 1976 issued by the Hindustan Copper Ltd. relating to payment of Dearness Allowance. Although the Union of India has been added as a party to the writ petition, but no relief has been claimed against the same and the only relief claimed in the writ petition pertains to the respondents Nos. 2 a ad 3, namely the Hindusthan Copper and its Chief Personnel Manager.

2. A preliminary objection has been raised by Mr. Bhargava on behalf of the respondents Nos. 2 & 3 that the Hindusthan Copper is a Company incorporated under the Companies Act, 1956 and that no writ of mandamus could be issued to the aforesaid Company or Its officers in a petition under Article 226 of the Constitution, as the said Company does not perform any public of statutory duty. Learned Counsel for the petitioner on the other hand, contested this submission and argued that the Hindustan Copper, although incorporated as a Company under the Companies Act, 1956, has been vested with some trappings of the sovereign power by virtue of the provisions of the Indian Copper Corporation (Acquisition of Undertaking) Act, 1972 (hereinafter referred to as 'the 1972 Act'). It has also been pointed out by learned Counsel for the petitioner that the Company is not an ordinary Company but it is a Government Company, the 6haies of which 3re 100% owned by the Government of India and that the Government of India also exercises considerable powers of control over the management of the Company and that the jurisdiction of the Auditor-Genera) of India has also been extended to the Company's Accounts by the provisions of Section 619 of the Companies Act.

3. It is not disputed that the Hindustan Copper Ltd. (hereinafter called as 'the Company'), is a Company incorporated under the Companies Act, 1956 and that it is a Government Company as defined in Section 617 of the afore said Act, inasmuch as the entire share capital of 'he Company is held by the Central Government. It is also not in dispute that on account of the Central Government owning the entire share capital of the company, the Central Government exercises certain powers of control over the management of the Comp-any and has also appointed its officers as Directors of the Company. The Auditor General of India has also the power to audit the accounts of the Company as that of any other Government Company, on account of the provisions of Section 619 of the Companies Act, but the question which arises for consideration in this case is as to whether the Company has a statutory or public duty to perform and is amenable to the jurisdiction of this Court under Article 226 of the Constitution.

4. So far as the provisions of the 1972 Act are concerned, it may be observed that the said Act makes provision for the acquisition of the under-taking of another Company, namely the Indian Copper Corporation Ltd., by the Central Government and for the handing over of the assets and properties of the Indian Copper Corporation Ltd., after its acquisition by the Central Government, to the Hindustan Copper Ltd. Merely because the properties, assets, liabilities and obligations of the Indian Copper Corporation Ltd were acquired by the Central Government by virtue of the provisions of the 1972 Act, and after such acquisition the Central Government parted with such rights, liabilities, obligations and properties and conferred them upon the Hindustan Capper Ltd, no change whatsoever was made so far as the constitution or the incorporation of the Company under the Companies Act, 1956 are concerned. Even after the properties, rights liabilities and obligations of the Indian Copper Corporation Ltd., after their being acquired and vested in the Central Government the Company maintains its character as a company incorporated under the Companies Act and the same would still be continued to be governed by the provisions of the Companies Act. Thus the submission of the learned Counsel for the petitioner that on account of the provisions of the 1972 Act the Company has been vested with trappings of sovereign power cannot be accepted.

5. Now coming to the other question canvassed before me, it may be observed that the Govt. Companies incorporated under the Companies Act, even though a major portion of the share capital of such companies or even she entire share capital of such companies or even the entire share capital thereof may be owned and possessed by the Central Government or State Governments or both, still remain companies governed by the provisions of the Companies Act and have no statutory or public duties to perform and as such they are not (sic) to the writ jurisdiction of the High Court under Article 226 of the Constitution The condition precedent to the issue of a writ of mandamus is that a person should have a legal right in the performance of a legal duty by one against whom it is sought. An order in the nature of mandamus is a command directed to a person or body or Tribunal requiring him or it to do a particular thing specified therein, which pertains to his office and is in the nature of a public duty. Thus the person, body or tribunal to whom a writ of mandamus or an order or direction in the nature of such a writ is issued, must have certain public or statutory duties to perform. If the writ of mandamus is claimed against a company incorporated under the Companies Act, then it in certainly misconceived and is not maintainable, because such a company is a non-statutory body and there is neither statutory nor public duty imposed upon it by any statute, the enforcement of which could be sought by a writ of mandamus.

6. In Praga Tools Corporation v. C.V. Imanual and Ors. : (1969)IILLJ479SC , their Lordships of the Supreme Court considered a similar question. Praga Tools Corporation was a company incorporated under the Indian Companies Act, 1913 and the Central Government and the Government of Andhra Pradesh had 88% shares between them. The Central Government held 56% shares and being the largest shareholder, it had the power to nominate the company's directors. It was held In the aforesaid case by their Lordships of the Supreme Court that the aforesaid Company nevertheless was a separate legal entity and was neither a Government Corporation nor an industry run by or under the authority of the Union Government, nor it was not a department of the Government. It was also held that the Company was registered under the Companies Act and was not set up under any statute and having no public duties and responsibilities to perform under a statute, it was not amenable to the writ jurisdiction of the High Court. It was further observed by their Lordships in the aforesaid case that the workmen of the Company should be left to have recourse to the ordinary remedy available to them under the Industrial Dispute Act, by raising an Industrial dispute.

7. A similar view was taken by the Supreme Court in Mazdoor Union v. State of Bihar and Ors. : (1969)IILLJ549SC . The Company involved in that case was Heavy Engineering Corporation, Ltd, Ranchi, which was incorporated under the Companies Act, 1956 and its entire share capital was contributed by the Central Government and all its shares were registered in the name of the President of India and certain officers of the Central Government. It was a Government Company within the meaning of Section 617 of the Companies Act and under the Memorandum of Association and (sic) of Association of the Company, large powers were conferred upon the Government, including powers to give directions in respect of the functions of the Company. It was held in the aforesaid case that in the absence of some statutory provision a commercial corporation, acting on its own behalf, even though it is controlled wholly or partially by a Government Department, will not ordinarily be presumed to be a servant of against of the State and merely because a Minister appointed the members or directors of the Corporation or had the power to call for information or give directions which were binding on the Directors of the company or had the power to supervise the conduct of the business of the company, did not render the same as an agent of the Government. Whether the Corporation is an agent of the Government or not is an inference which could be drawn from the performance of Governmental or commercial functions by the Corporation. Their Lordships held in the aforesaid case that inspite of the Central Government having contributed the entire share capital of the Company and having enjoyed extensive powers of control, yet the Company was not (sic) department of the State, as the powers enjoyed by the Central Government were derived from the Company's Memorandum of Association and Articles of Association and the Company did not perform any Governmental functions.

8. Io Dr. S.L. Agarwal v. The General Manager, Hindustan Steel Ltd : (1970)IILLJ499SC again the same view was reiterated by their Lordships of the Supreme Court & it was held that the Hindustan Steel Ltd., which was a company incorporated under the Companies Act was neither a department of the Government nor its employees were entitled to protection under Article 311 of the Constitution. It was held in the aforesaid case that the Company bad different position from the State and that the existence of share holders, of capital raided by the issuance of shares, the lack pf connection between the finances of the Corporation and the Consolidated Fund of the, Union, pointed to the independent existence of the Corporation.

9. The matter has been completely set at rest and a doubt, if any, has been fully dispelled by the decision of their Lordships of the Supreme Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. : (1975)ILLJ399SC . It was observed by heir Lordships in the aforesaid case.

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 to 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 ID 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.

(Emphasis added)

I may also refer to the decision of their Lordships of the Supreme Court in Sabhajit Tewary v. Union of India and Ors. : (1975)ILLJ374SC wherein their Lordships approved the earlier decisions in Praga Tools Corporation case : (1969)IILLJ479SC , Heavy Engineering Corporation case : (1970)IILLJ499SC and the Hindustan Steel Ltd. case : (1975)ILLJ399SC with the observation that:

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.

It would also be useful to refer in this context to a recent decision of their Lordships of the Supreme Court in Executive Committee of Vaish Degree College, Shamli v. Lakshmi Narain and Ors. AIR 1976 SC 888 in which the observations made in Sukhdev Singh's case : (1975)ILLJ399SC and which have been quoted by me above were reiterated and it was observed,-

There is a well marked distinction between a body which is created by the statute and a body which after having come into existence is governed in accordance with the provisions of the statute. la other words the position seems to be that the institution concerned must owe its very existence to a statute which would be the fountain head of its powers The question in such cases to be asked is, if there is no statute would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but it the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions it cannot be said to be a statutory body.

Applying the aforesaid principles to the facts of the present case, it is clear that Hindustan Copper Ltd. is a company incorporated under the Companies Act and although it may be governed by the provisions of the Companies Act, yet it cannot be said that the aforesaid Company was created by a statute. As the Company does not perform any public or statutory duties, a writ of mandamus or an order or direction in the nature of such a writ cannot be issued against the aforesaid company or its officer and, in these circumstances, the writ petition is misconcieved and is not maintainable.

10. The writ petition is consequently dismissed. The parties are left to bear their own costs.


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