# i S.C.R. 973 NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS LIMITED

- **Citation:** [2016] 1 S.C.R. 973
- **Court:** Supreme Court of India
- **Decided:** 2016-02-26
- **Case number:** Civil Appeal Nos. 9332-9333 of2010
- **Bench:** Dipak Misra, Prafulla C. Pant
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i-s-c-r-973-nashik-workers-union-v-hindustan-aeronautics-limited-30962
- **Pages:** 21

## Headnote

Industrial Disputes Act, 1947 - s. 2(a) - Appropriate
government - Complaint under the 1971 Act by the appellantWorkers Union against the respondent-Company (Hindustan
Aeronautics Limited) for reinstatement of the trainees with continuity
of services and back wages - Appropriate government to refer the
said dispute - Division Bench of the High Court held that the
appropriate government for the purpose of the 1947 Act is the
Central Government in relation to the Company, thus, the complaints
filed by the Union against the company were not maintainable -
Held: Appropriate Government in relation to the respondent
Company is the State Government - Matter remitted to the High
Court for fresh adjudication on merits - Maharashtra Recognition
of Trade Unions and Prevention of Unfair Labour Practices Act.
1971.
Allowing the appeals, the Court
HELD: 1.1 **HAL 2 has not taken note of earlier decision
in *HAL 1. It has been clearly held in HAL 1 that re2ard bein2
had to the dictionary clause of the ID Act for the purpose of
Hindustan Aeronautics Limited, it is the State Government which
has to make the reference. In HAL 2 the Court has referred to
decision in ***SAIL's case and opined that it is undisputed that
Hindustan Aeronautics Limited is an undertaking of the Central
Government and it is the Central Government which exercises
full control over the same and, therefore, the appropriate
Government is the Central Government. This analysis runs
counter to HAL 1 and as well the ratio of the decision in SAIL 's
case. On the contrary there is no discussion either on the facts
or the law. It has been opined that the facts are "undisputed". In
HAL 1, the three-Judge Bench had referred to the decision in
Heavy Engineering Mazdoor Union. As has been held in Tata
973
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SUPREME COURT REPORTS
[2016] I S.C.R.
Memorial Hospital Workers Union case, the authority in Heavy
En1:ineerin1: Mazdoor" Union has been approved in SAIL with some
divergence. The authority in SA/L's case, as the conclusion would
show, covers two situations-the unamended provision and the
amended provision. It does not disturb the principles stated in
HAL 1. Thus, two aspects, first, the HAL 2 does not take note of
HAL 1 and second, it proceeds on the basis of undisputed facts
which are not stated. It is to be noted that there is nothing in the
order in HAL 2 to suggest that Hindustan Aeronautics Limited is
an agent of the Central Government. As HAL 2 did not notice
HAL 1 which was approved in SA/L's case, it cannot be considered
as a binding precedent. Therefore, HAL 1 still holds good and
lays down the correct law and is binding as its foundation flows
from Heavy Engineering Mazdoor U11io11 which was approved in
SAIL with some divergence. The divergence really does not affect
the approval. HAL 2 cannot be regarded as a binding precedent.
Thus, it is clear that the Division Bench of the High Court did
not apply the ratio in SAIL 's case correctly and, thus, the entire
anlaysis has to be held to be fallacious. [Para 26][992-A-H)
1.2 It is perceptible that the High Court has not adverted
to the merits of the case and dismissed L.P.A. of 2002 on the
ground that it did not survive aJter dismissal of L.P.A. of 2006.
As the order passed in L.P.A. of 2006 is set aside and opined
that the "appropriate Government" in relation to the respondent
company is the State Government, the matter is remitted to the
High Court for fresh adjudication on merits. The impugned order
is set aside [Para 27, 28)(993-A-C-)
*Hindustan Aeronautics Limited v. Workmen and others
(HAL I) (1975) 4 sec 679: 1976 (1) SCR 231 -
affirmed.
**Hindustan Aeronautics Limited and Another v.
Hindustan Aeronautical Canteen Kamgar Sangh &
Others (HAL 2) (2007) 15 SCC 51 - Not a binding
precedent.
***Steel Authority of India and others v. National Union
Waterfront Workers and others (2001) 7 SCC 1:2001
(2) Suppl. SCR 343; Heavy Engineering Mazdoor
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS

## Text

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[2016) i S.C.R. 973
NASHIK WORKERS UNION
v.
HINDUSTAN AERONAUTICS LIMITED
(Civil Appeal Nos. 9332-9333 of2010)
FEBRUARY 26, 2016
[DIPAK MISRA AND PRAFULLA C. PANT, JJ.]
Industrial Disputes Act, 1947 - s. 2(a) - Appropriate
government - Complaint under the 1971 Act by the appellantWorkers Union against the respondent-Company (Hindustan
Aeronautics Limited) for reinstatement of the trainees with continuity
of services and back wages - Appropriate government to refer the
said dispute - Division Bench of the High Court held that the
appropriate government for the purpose of the 1947 Act is the
Central Government in relation to the Company, thus, the complaints
filed by the Union against the company were not maintainable -
Held: Appropriate Government in relation to the respondent
Company is the State Government - Matter remitted to the High
Court for fresh adjudication on merits - Maharashtra Recognition
of Trade Unions and Prevention of Unfair Labour Practices Act.
1971.
Allowing the appeals, the Court
HELD: 1.1 **HAL 2 has not taken note of earlier decision
in *HAL 1. It has been clearly held in HAL 1 that re2ard bein2
had to the dictionary clause of the ID Act for the purpose of
Hindustan Aeronautics Limited, it is the State Government which
has to make the reference. In HAL 2 the Court has referred to
decision in ***SAIL's case and opined that it is undisputed that
Hindustan Aeronautics Limited is an undertaking of the Central
Government and it is the Central Government which exercises
full control over the same and, therefore, the appropriate
Government is the Central Government. This analysis runs
counter to HAL 1 and as well the ratio of the decision in SAIL 's
case. On the contrary there is no discussion either on the facts
or the law. It has been opined that the facts are "undisputed". In
HAL 1, the three-Judge Bench had referred to the decision in
Heavy Engineering Mazdoor Union. As has been held in Tata
973
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Memorial Hospital Workers Union case, the authority in Heavy
En1:ineerin1: Mazdoor" Union has been approved in SAIL with some
divergence. The authority in SA/L's case, as the conclusion would
show, covers two situations-the unamended provision and the
amended provision. It does not disturb the principles stated in
HAL 1. Thus, two aspects, first, the HAL 2 does not take note of
HAL 1 and second, it proceeds on the basis of undisputed facts
which are not stated. It is to be noted that there is nothing in the
order in HAL 2 to suggest that Hindustan Aeronautics Limited is
an agent of the Central Government. As HAL 2 did not notice
HAL 1 which was approved in SA/L's case, it cannot be considered
as a binding precedent. Therefore, HAL 1 still holds good and
lays down the correct law and is binding as its foundation flows
from Heavy Engineering Mazdoor U11io11 which was approved in
SAIL with some divergence. The divergence really does not affect
the approval. HAL 2 cannot be regarded as a binding precedent.
Thus, it is clear that the Division Bench of the High Court did
not apply the ratio in SAIL 's case correctly and, thus, the entire
anlaysis has to be held to be fallacious. [Para 26][992-A-H)
1.2 It is perceptible that the High Court has not adverted
to the merits of the case and dismissed L.P.A. of 2002 on the
ground that it did not survive aJter dismissal of L.P.A. of 2006.
As the order passed in L.P.A. of 2006 is set aside and opined
that the "appropriate Government" in relation to the respondent
company is the State Government, the matter is remitted to the
High Court for fresh adjudication on merits. The impugned order
is set aside [Para 27, 28)(993-A-C-)
*Hindustan Aeronautics Limited v. Workmen and others
(HAL I) (1975) 4 sec 679: 1976 (1) SCR 231 -
affirmed.
**Hindustan Aeronautics Limited and Another v.
Hindustan Aeronautical Canteen Kamgar Sangh &
Others (HAL 2) (2007) 15 SCC 51 - Not a binding
precedent.
***Steel Authority of India and others v. National Union
Waterfront Workers and others (2001) 7 SCC 1:2001
(2) Suppl. SCR 343; Heavy Engineering Mazdoor
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED
Union v. The State of Bihar & ors (1969) 1 SCC 765:
1970 (1) SCR 995; Food Corpn. of India v. Transport
& Dock Workers Union (1999) 7 SCC 59; Ramana
Dayaram Shelly v. International Airport of India &
others (1979) 3 SCC 489:1979 (3) SCR 1014;
Managing Director, UP Warehousing Corpn. v. Vijay
Narayan Vajpayee (1980) 3 SCC 459:1980 (2) SCR
773; Rashtriya Mill Mazdoor Sangh v. Model Mills 1984
Supp. SCC 443: 1985 SCR 751; Food C01pn. of India
Workers' Union v. Food Corpn .. of India & others (1985)
2 SCC 294: 1985 (3) SCR 150; Air India Statutory
Corpn. & others v. United Labour Union and others
(1997) 9 SCC 377:1996 (9) Suppl. SCR 579; Tata
Memorial Hospital Workers Union v. Tata Memorial
Centre and another (2010) 8 SCC 480:2010 (9)
SCR 723 - referred to.
Case Law Reference
2001 (2) Suppl. SCR 343
Referred to.
Paras
1970 (1) SCR 995
Referred to.
Para8
(1999) 1 sec 59
Referred to.
Para 11
1979 (3) SCR 1014
Referred to.
Para 14
1980 (2) SCR 773
Referred to.
Para 14
1985 SCR 751
Referred to.
Para 17
1985 (3) SCR 150
Referred to.
Para 17
1996 (9) Suppl. SCR 579
Referred to.
Para 17
2010 (9) SCR 723
Referred to.
Para 22
1976 (1) SCR 231
Affirmed.
Para 26
{2901i 1s sec s1
Not a binding precedent.
Para 26
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 93329333 of2010
From the Judgment and Order dated 25.06.2009 of the Division
Bench of the Bombay High Court in LPA No. 144 of2002 and LPA No.
84 of2006 in Writ Petition No. 3562of1997
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Colin Gonsalves, Kamlesh Kumar Mishra, Jyoti Mendiratta for
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the Appellant.
S. Guru Krishna Kumar, Dhananjay Baijal, N. Sai Vinod, Nikhil
Nayyar for the Respondent.
The Judgment of the Court was delivered by
DIPAK MISRA, J. I .The present appeals are directed against
the judgment and order dated 25.06.2009 passed by the High Court of
Judicature at Bombay in Letters Patent Appeal No. 84 of2006 whereby
the Division Bench has invalidated the order of the learned single Judge
rendered in Writ Petition No. 3562of1997 expressing the view that the
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State Government is the appropriate Government in relation to the
respondent-Company for the purpose of the Maharashtra Recognition .
of Trade Unions and Prevention of Unfair Labour Practices Act, 1971
(for short, "the 1971 Act'').
2. The facts which are essential to be stated for adjudication of
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these appeals are that the appellant, Nashik Workers Union, filed a
complaint under the 1971 Act being Complaint (ULP) No. 35 of 1990
for reinstatement of the trainees with continuity of services and back
wages. During the pendency of the first complaint, as further employees
were relieved, another complaint being Complaint (ULP) No. 36of1990
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was filed. With the passage of time, two other complaints forming the
subject matter of Complaint (ULP) Nos. 44of1990 and 45of1990 also
came to be registered before the Presiding Officer-Judge, Labour Court,
Nasik. The Labour Court appreciated the material brought on record,
declared that the employer had engaged in unfair labour practices in
terminating the services of the employees and, accordingly, directed for
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reinstatement of the employees with continuity of service and full back
wages from the date of termination till reinstatement. The said order
was to be complied with within one month from the date of the order,
that is, 08.08.1994.
3. The aforesaid order passed by the Labour Court came to be
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assailed in Revision Application (ULP) Nos. 140 of 1994 and 28-30 of
1995 before the Industrial Court. The Industrial Court, Maharashtra at
Thane affirmed the order passed by the Labour Court and dismissed the
revision applications vide order dated 81' July, 1997.
4. The orders passed by the Labour Court and Industrial Court
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were assailed in Writ Petition No. 3562of1997 wherein a contention
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.]
was raised that the "appropriate Government" in respect of the dispute
was the Central Government and not the State Government and, therefore,
the I 971 Act would not apply and consequently, the complaints filed by
the workers' union deserved to be dismissed. The learned single Judge
appreciating the materials brought on record allowed the Writ Petition
and directed the employer to make an offer to some trainees as and
when regular vacancies arise for consideration and in the event they
fulfill the required qualification then io consider them for regular job.
5. The aforesaid order was challenged by the employer by
preferring an intra-court appeal. Though the learned single Judge had
set aside the orders passed by the Labour Court as Well as of the Industrial
Court, yet he had not accepted the contention of the employer that in
relation to it the appropriate Government is the Central Government
and, therefore, complaint under the I 971 Act was not maintainable. It
was contended by the appellant before the Division Bench that the Central
Government is the appropriate Government in relation to the employer
company and not the State Government and to bolster the said submission
reliance was placed on Steel Authority of India and others v. Nationul
Union Wate~front Workers und others' and also on Hindustan
Aeronautics Limited & another v. Hindustan Aeronautical Canteen
Kamgar Sangh & others', (HAL 2). That apart, inspiration was also
drawn from the order passed in Civil Appeal No. 5655 of 2008 dated
04.12.2008.
6. The Division Bench relying on the aforesaid decisions opined
that the appropriate Government for the purpose of the Industrial Disputes
Act, 1947 (for short, "the ID Act") is the Central Government which is
the appropriate Government in relation to the company and, accordingly,
the complaints filed by the Union against the company were not
maintainable. Being of this view, it allowed Appeal No. 84 of2006 and
set aside the finding recorded by the learned single Judge. Be it noted,
as the High Court arrived at the said conclusion in Appeal No. 84 of
2006, it opined that the other appeal being Appeal No. 144 of2002 did
not merit any consideration. The aforesaid order is the subject matter of
scrutiny in these appeals.
1 (2001) 1sec1
2 (2007) 15 sec 51
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7. We have heard Mr. Colin Gonsalves, learned senior counsel
for the appellant and Mr. S. Guru Krishna Kumar, learned senior counsel
for the respondent.
8. At the very outset, we think it pertinent to state that as the
Division Bench has not dwelt on the merits of the case and only decided
the appeal on the ground of maintainability of the complaints, we shall
confine our address to the said facet only. The issue of appropriate
Government in relation to the respondent-company has a history which
compels us to travel in a time machine. Four decades back, Hindustm1
Aeronautics Limited v. Workmen and other~·', (HAL 1), as the facts
would reveal, the Government of West Bengal had made a reference
under Section I 0( I) of the ID Act for adjudication of certain issues
between the employees and the employer. The tribunal had granted partial
relief to the workmen. Feeling grieved by the said award, the employer
had preferred an appeal by special leave before this Court. The
competence of the Government of West Bengal to make the reference
which was challenged before the tribunal was also assailed before this
Court. It was contended that as the Central Government owns the entire
bundle of shares in the company and appoints and removes the Board of
Directors as well as the Chairman and the Managing Director and further
all matters of importance are reserved for the decision of the President
of India and ultimately executed in accordance with his directions, it is
unmistakably clear that that the company is in control of the Central
Government in the matter of carrying on the industry owned by the
company. In that backdrop it was urged that industrial dispute in question
concerned an industry which was carried on "under the authority of the
Central Government" within the meaning of Section 2(a)(i) of the ID
Act and hence, the Central Government was the only appropriate
Government to make the reference under Section I 0 of the said Act.
The three-Judge Bench took note of the fact that an identical submission
was advanced in Heavy Engineering Mazdoor Union v. Tfte St"te of
Bilwr & ors' which was repelled by this Court. Be it noted, the threeJudge Bench in HAL I reproduced a passage from He"vy Engineering
Mazdoor Union (supra) which is to the following effect:-
'(l975)4SCC679
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' (1969) 1sec765
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DJPAK MISRA, J.]
"It is true that besides the Central Government having contributed
the entire share capital, extensive powers are conferred on it,
including the power to give directions as to how the company
should function, the power to appoint directors and even the power
to determine the wages and salaries payable by the company to
its employees. But these powers are derived from the company's
memorandum of association and the articles of association and
not by reason of the company being the agent of the Central
Government. The question whether a corporation is an agent of
the State must depend on the facts of each case. Where a statute
setting up a corporation so provides, such a corporation can easily
be identified as the agent of the State as in Graham v. Public
Works Commissioners' where Phillimore, J. said that the Crown
does in certain cases establish with the consent of Parliament
certain officials or bodies who are to be treated as agents of the
Crown even though they have the power of contracting as
principals. In the absence of statutory provision, however, a
commercial corporation acting on its own behalf, even though it is
controlled wholly or partially by a government department, will be
ordinarily presumed not to be a servant or agent of the State. The
fact that a minister appoints the members or directors of a
corporation and he is entitled to call for information, to give directions
which are binding on the directors and to supervise over the conduct
of the business of the corporation does not render the corporation
an agent of the Government, (see State Trading Corporation
of India Ltd. v. Commercial Tax Officer, Visakhapa111am' and
Tamlin v. Hannaford-). Such an inference that the corporation
is the agent of the Government may be drawn where it is
performing in substance governmental and not commercial
functions. (cf. Lo11do11 Counly Terri/orial and Auxiliaiy Forces
Association v. Nichols·')."
9. An effort was made to distinguish the said judgment on the
ground that the case of He(/vy Engineering M(/zdoor Union (supra)
'(1901)2KB781 :70LJKB860:17TLR540
'(1964)4SCR99.188:AIR 1963SC 1811 PerShah.J.
' ( 1950) I KB 18, 25. 26
' ( 1948) 2 All ER 432
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was such a case where the Government company was carrying on an
industry where private sector undertakings were also operatin·g and,
therefore, it was not an industry which the Government alone was entitled
to carry on to the exclusion of the private operators. The Court opined
that the distinction so made was of no consequence and did not affect
the ratio of the earlier decision. The Court further proceeded to state
that though Section 2(a)(i) of the ID Act has been amended from time to
time to incorporate certain statutory corporations to make the Central
Government an appropriate Government in relation to the industry carried
on by them, but no public company even ifthe shares were exclusively
owned by the Government was attempted to be roped in the said
definitions. Be it noted that the other I imb of argument to challenge the
competence of the West Bengal Government was that the dispute arose
at Barrackpore branch which was under the control of the Bangalore
division of the company. The said submission was not accepted. We
are really not concerned with the second aspect of the case. As is
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demonstrable, the three-Judge Bench ruled that in relation to Hindustan
Aeronautics Limited, the State Government is the appropriate
Government.
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10. From the aforesaid analysis made by the Court in the said
case, as we notice the Court has been guided by the principles stated in
Heavy Engineering Mazdoor Union (supra) and the provision
contained in Section 2(a)(i) of the ID Act which though had incorporated
certain definitions to make the Central Government the "appropriate
Government" in relation to the industry carried on by them, but no public
company even ifthe shares were exclusively owned by the Government
was attempted to be brought within the ambit and sweep of that said
definitions.
11. In the instant case, it is perceivable that the Division Bench
has dislodged the finding of the learned single Judge on the basis of the
decision of the Constitution Bench in SA/L's case. One of the reasons
the matter was placed before the Constitution Bench was that a twoJudge Bench in Food Corpn. of India v. Transport & Dock Workers
Union' had noticed the conflict of opinion between different Benches
including two three-Judge Benches of the Court on the interpretation of
the expression "appropriate Government'" in Section 2(1 )(a) of the
'(1999) 1sec59
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.]
Contract Labour (Regulation and Abolition)Act, 1970 (for short, ''.CLRA
Act") and in Section 2(a) of the ID Act. The larger Bench had posed
three issues for determination and one of them was - "what is the true
and correct import of the expression "appropriate Government" as defined
in clause (a) of sub-section (1) of Section 2 of the CLRAAct?" Adverting
to the said point, the learned Solicitor General had conceded that the
State Government is the appropriate Government in respect of the
establishment of the Central Government companies in question. The
counter stand was that in view of the amended definition of the
"appropriate Government" in the CLRAAct with effect from 28.01.1986,
the Central Government would be the "appropriate Government''. It was
contended by the Food Corporation of India that the "appropriate
. Government" before and after the notification issued by the Central
Government on 28.01.1986, was the Central Government.
12.The Constitution Bench referred to sub-section (I) of Section
2 of CLRA Act, which reads as follows:-
"2. (1) In this Act, unless the context otherwise requires,-
(a) 'appropriate Government' means-
(i) in relation to an establishment in respect of which the
appropriate Government under the Industrial Disputes Act, 194 7
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(14of1947), is the Central Government, the Central Government;
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(ii) in relation to any other establishment, the Government
of the State in which that other establishment is situate;"
The Court also took note of the unamended definition of
"appropriate Government" contained in Section 2( 1 )(a). The said
unamended provision reads as under:-
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"2. (1 )(a) 'appropriate Government' means-
(1) in relation to-
(i) any establishment pertaining to any industry carried
on by or under the authority of the Central Government, or pertaining
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to any such controlled industry as may be specified in this behalf
by the Central Government, or
(ii) any establishment of any railway, cantonment board,
major port, mine or oilfield, or
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(iii) any establishment of a banking or insurance company, the
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Central Government,
(2) in relation to any other establishment, the Government of the
State in which that other establishment is situated:"
thus:-
13. Referring to the unamended provision, it has been observed
"A plain reading of the unamended definition shows that the Central
Government will be the appropriate Government if the
establishment in question answers the description given in subclauses (i) to (iii). And in relation to any other establishment, the
Government of the State, in which the establishment in question is
situated, will be the appropriate Government. So faras sub-clauses
(ii) and (iii) are concerned, they present no difficulty. The
discussion has centred round sub-clause (i). It may be seen that
sub-clause (i) has two limbs. The first limb takes in an
establishment pe1taining to any i11du.111:v carried 011 by or under
the authority of the Central Government and the second limb
embraces such controlled industries as may be specified in that
behalf by the Central Government."
14. After so stating, the Court referred to the authorities in
Rama11a Dayaram Sltetty v. /11/ernatio11al Airport of India &
others'° and M"11"gi11g Director, U.P. Wareltousi11g Corp11. v. Vtjay
Narayan V"jp"yee" and many others and opined thus:-
"37. We wish to clear the air that the principle, while discharging
public functions and duties the government companies/
corporations/societies which are instrumentalities or agencies of
the Government must be subjected to the same limitations in the
field of public law -
constitutional or administrative law -- as
the Government itself, does not lead to the inference that they
become agents of the Centre/State Government for all purposes
so as to bind such Government for all their acts, liabilities and
obligations under various Central and/or State Acts or under private
law.
'' (197913 sec 489
" tl980l 3 sec 459
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.)
38. From the above discussion, it follows thatthe fact of being an
instrumentality of a Central/State Government or being "State"
within the meaning of Article 12 of the Constitution cannot be
determinative of the question as to whether an industry carried on
by a company/corporation or an instrumentality of the Government
is by or under the authority of the Central Government for the
purpose of or within the meaning of the definition of"appropriate
Government" in the CLRA Act. Take the case of a State
Government corporation/company/undertaking set up and owned
by the State Government which is an instrumentality or agency of
the State Government and is engaged in carrying on an industry,
can it be assumed that the industry is carried on under the authority
of the Central Government, and in relation to any industrial dispute
concerning the industry, can it be said that the appropriate
Government is the Central Government? We think the answer
must be in the negative .... "
Andagain:-
"There cannot be any dispute that all the Central Government
companies with which we are dealing here are not and cannot be
equated to the Central Government though they may be "State"
within the meaning of Article 12 of the Constitution. We have
held above that being the instrumentality or agency of the Central
Government would not by itself amount to having the authority of
the Central Government to carry on that particular industry.
Therefore, it will be incorrect to say that in relation to any
establishment of a Central Government company/undertaking, the
appropriate Government will be the Central Government. To hold
that the Central Government is "the appropriate Government" in
relation to an establishment. the court must be satisfied that the
particular industry in question is carried on by or under the authority
of the Central Government. If this aspect is kept in mind it would
be clear that the Central Government will be the "appropriate
Government" under the CLRA Act and the ID Act provided the
industry in question is carried on by a Central Government
company/an undertaking under the authoritv of the Central
Government. Such an authority may be conferred, either by a
statute or by virtue of the relationship of principal and agent or
delegation of power. Where the authority, to carry on any industry
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for or on behalf of the Central Government, is conferred on the
government company/any undertaking by the statute under which
it is created, no further question arises. But, if it is not so, the
question that arises is whether there is any conferment of authority
on the government company/any undertaking by the Central
Government to carry on the industry in question. This is a question
of fact and has to be ascertained on the facts and in the
circumstances of each case."
(Emphasis supplied]
15. After so stating, the Court adverted to the amended definition
of"appropriate Government" which bears the same meaning as given in
clause (a) of Section 2 of the ID Act. After referring to the decision in
the amended provision, it was noted that it is evident that the phrase
"any industry carried on by or under the authority of the Central
Government" is a common factor in both the unamended as well as the.
amended definition. While adverting to the various aspects, the larger
Bench referred to the decision in Heavy E11gineeri11g Mazdoor Union
(supra) and in that context, after appreciating the reasons in the said
decision, it has observed thus:-
" ... A two-Judge Bench of this Court elaborately dealt with the
question of appropriate Government and concluded that the mere
fact that the entire share capital was contributed by the Central
Government and the fact that all its shares were held by the
President oflndia and certain officers of the Central Government,
would not make any difference. It was held that in the absence of
a statutory provision, a commercial corporation acting on its own
behalf, even though it was controlled, wholly or partially, by a
government department would be ordinarily presumed not to be a
servant or agent of the State. It was, however, clarified that an
inference that the corporation was the agent of the Government
might be drawn where it was performing in substance governmental
and not commercial functions. It must be mentioned here that in
the light of the judgments of this Court, referred to above, it is
difficult to agree with the distinction between a governmental
activity and commercial function of government companies set
up and owned by the Government, insofar as their function in the
realm of public law is concerned .... "
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.]
16. After referring to the said decision, the Court adverted to the
decision in HAL 1 and opined thus:-
" ... Having regard to the definitions of the terms "appropriate
Government" and "establishment" in Section 2 of the CLRAAct,
it cannot be said that the factors which weighed with the Court
were irrelevant. It was also pointed out therein that from time to
time certain statutory corporations were included in the definition
but no public company of which the shares were exclusively owned
by the Government, was roped in the definition. What we have
expressed above about Hemy Engg. Case (supra) will equally
apply here."
17. Be it noted, the Court referred to the authorities in Rashtriya
Mill Mazdoor Sangh v. Model Mills" and Food Corpn. of India
Workers' Union v. Food Corpn. of India & others" and proceeded
to state what has been stated in Air lndia Stmutory Corpn. & others v.
United Labour Union and others", that is, from the inception of the
CLRA Act, the "appropriate Government" was the Central Government
and thereafter, opined that:-
. "We have held above that in the case of a Central Government
company/undertaking, an instrumentality of the Government,
carrying on an industry, the criteria to determine whether the
Central Government is the appropriate Government within the
meaning of the CLRAAct, is that the industry must be carried on
by or under the authority of the Central Government and not that
the company/undertaking is an instrumentality or an agency of
the Central Government for purposes of Article 12 of the
Constitution; such an authority may be conferred either by a statute
or by virtue of the relationship of principal and agent or delegation
of power and this fact has to be ascertained on the facts and in
the circumstances of each case. In view of this conclusion, with
due respect, we are unable to agree with the view expressed by
the learned Judges on interpretation of the expression "appropriate
Government" in Air India case (supra}. Point (i) is answered
accordingly."
12 .I.984 Supp. sec 443
" < 1985) 2 sec 294
" < 1997) 9 sec 377
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18. While summing up the conclusions in respect of the aforesaid
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facet, it has been ruled as follows:-
"( I )(a) Before 28-1-1986, the determination of the question
whether the Central Government or the State Government is the
appropriate Government in relation to an establishment, will
depend, in view of the definition of the expression "appropriate
Government" as stood in the CLRAAct, on the answer to a further
question, is the industry under consideration carried on by or under
the authority of the Central Government or does it pertain to any
specified controlled industry, or the establishment of any railway,
cantonment board, major port, mine or oilfield or the establishment
of banking or insurance company? If the answer is in the
affirmative, the Central Government will be the appropriate
Government; otherwise in relation to any other establishment the
Government of the State in which the establishment was situated,
would be the appropriate Government;
(b) After the said date in view of the new definition of that
expression, the answer to the question referred to above, has to
be found in clause (a) ofSection 2 of the Industrial Disputes Act;
if (i) the Central Government company/undertaking concerned or
any undertaking concerned is included therein eo nomine, or (ii)
any industry is carried on (a) by or under the authority of the
Central Government, or (b) by a railway company; or (c) by a
specified controlled industry, then the Central Government will be
the appropriate Government; otherwise in relation to any other
establishment, the Government of the State in which that other
establishment is situated, will be the appropriate Government."
19. Relying on the aforesaid deliberations, it is submitted by Mr.
Gonsalves, learned senior counsel for the appellant that as far as the
respondent company is concerned, factually it is not carried on by the
Central Government nor it is authorized on behalf of the Central
Government to run the industry and the said reasoning, has neither been
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over-turned nor altered by the Constitution bench. On the contrary, it is
urged by Mr. Gonsalves that the view expressed in HAL 1 (supra) has
been affirmed by the Constitution Bench. It is propounded by him that
the amended provision does not change the nature and character of
Hindustan Aeronautics Limited as the definition does not take within its
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ambit and sweep such a corporation.
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.]
20. Learned counsel for the respondent has drawn inspiration from
tl)e authority in HAL 2 (supra). In the said case it has been held thus:-
'The question that arises for consideration in this case is, whether
the High Court was justified in holding that the State Government
is the "appropriate Government" under the provisions of the
relevant Act. The Constitution Bench recently has considered the
relevant provisions of the Contract Labour Regulation Act in SAIL
v. National Union Waterfront Workers (supra) and has come to
the conclusion that the "appropriate government" will be the
government which exercises control and authority over the
organisation concerned. It is undisputed that Hindustan Aeronautics
Ltd. is an undertaking of the Central Government and it is the
Central Government which exercises full control over the same.
Issuance oflicence by the State Government is no criteria to come
to a conclusion that the State Government would be the
"appropriate government". The impugned judgment of the High
Court therefore is, on the face of it, erroneous in view of the
Constitution Bench decision of this Court referred to earlier. We,
therefore, set aside the impugned judgment of the High Court and
hold that the Central Government is the "appropriate
governn1ent"."
21. As we find, the aforesaid decision arrives at the conclusion
that Hindustan Aeronautics Limited is an undertaking of the Central
Government and it is the Central Government which exercises ful I control
over the same and, therefore, the Central Government would be the
"appropriate government". The stand of the respondent company is
that it carries on sovereign functions under the permission of the Central
Government and certain crucial aspects were not considered in HAL 1
(supra) and the analysis made in HAL 2 (supra) is the correct and legally
justified. Relying heavily on the decision in SA/L's case, it is put forth
that the respondent company carries its operation under the authority of
the Central Government due to specific conferment of power and
permission granted by the Central Government to it and, therefore, it is
to be deemed that the permission had been granted by the Central
Government to the respondent company. Elucidating further that the
respondent company is under the control of the Central Government,
reference has been made to Section 2 of the Industries (Development
and Regulation) Act, 1951 which declares that regard being had to
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expediency of control by the Union, it is expedient in the public interest
that the Union should take under its control the industries specified in the
First Schedule. Learned senior counsel for the respondent has drawn
our attention to Entry 7(1) of the First Schedule which deals with' Aircraft'
and Entry 3 7 which deals with ·Defence Industries - Arms and
Ammunition' and, on that basis submits that the respondent company
being the exclusive manufacturer it has to be treated as one under the
control of the Central Government. Learned senior counsel for the
respondent had urged that in HAL I (supra), the Court did not consider
the fact that the respondent company carried on by virtue of, and pursuant
to, conferment of, grant of, or delegation of power or permission by the
Central Government, and, therefore, the said decision does not state the
correct proposition of law. It is argued that the Division Bench of the
High Court has correctly applied the test stipulated in SAIL (supra) and
hence, it is absolutely impeccable.
Highlighting the said facet, it is
contended that decision in HAL I (supra) is per incuriam.
22. Our attention has also been drawn to Tata Memorial Hospital
Workers Union v. Tata Memorial Centre anti another" by the learned
counsel for the appellant. In the said case, it has been held that for the
first respondent-establishment therein the Central Government was the
appropriate Government for the purposes application of Section 2(3) of
the 1971 Act. After adverting to the necessary and relevant provisions
of 1971 Act, the three-Judge Bench referred to Section 2(1) of ID Act
and observed that from the definition it is clear that under the ID Act the
Central Government is the "appropriate Government" in relation to the
industrial disputes concerning the industries specified under Section 2(aXi)
and for the industries carried on by or under the authority of the Central
Government. Excluding these two categories of industries in relation to
any other industrial dispute, it is the State Government which is the
"appropriate Government". The Court adverted to the phrase "any
industry carried on by or under the authority" of the Central Government.
The Court posed the question-whether the Division Bench of the High
Court has correctly applied the law laid down in SAIL's case. The Court
noticed that judgment in SAIL 's case has reiterated the law laid down
in Heavy Engineering Mazdoor l!1tio1t (supra) though with a little
divergence and thought it appropriate to examine as to how the concept
of "appropriate Government" has been explained by the Courts in the
" (2010) s sec 480
NASHIK WORKERS UNION v. HINDUSTAN AERONAUTICS
LIMITED [DIPAK MISRA, J.)
later leading decisions. The Court analysed the principles stated in f/e(lvy
En;;:illeerin;;: M(lzdoor Union (supra) at length and HAL 1 (supra). It
also referred to the authority in R(ls/itriya Mill M(lzdoor S(lnf(h (supra)
and various authorities, including the one in Air India Statutory Corpn.
(supra). The Court thereafter referred to paragraphs 37 to 41, 43, 45
and 46 of SA/L's C(ISe and noted the submissions of the learned counsel
for the parties and came to hold thus:-
"57. Having seen the statutory framework it is clear that when it
comes to an industry governed under the Industrial Disputes Act,
194 7, to be covered under the MRTU Act, the State Government
has to be the "appropriate Government" in relation to any industrial
dispute concerning such industry. As provided in Section 2(3) of
the MRti.J Act, we have to fall back on the definitions of"industry"
and "appropriate Government" under the Industrial Disputes Act,
194 7. As perthe scheme of Section 2(a) of the Industrial Disputes
Act, for the industrial disputes concerning the industries specified
in su.b-section (i), and for the industries which are carried on by
or under the authority of the Central Government, the Central
Government is the appropriate Government. Section 2(a)(ii)
provides that "in relation to any other industrial dispute" the State
Government is the "appropriate Government". Therefore in an
industrial disputes concerning industries, other than specified
industries it becomes necessary to examine whether the industry
is carried on by or under the authority of the Central Government.
When it does not fall under either of the two categories, the State
Government will be the appropriate Government.
x
x
x
x
x
59. As far as an industry "carried on by the Central Government"
is concerned, there need not be much controversy inasmuch as it
would mean the industries such as the Railways or the Posts and
Telegraphs, which are carried on departmentally by the Central
Government itself. The difficulty arises while deciding the industry
which is carried on, not by but "under the authority of the Central
Government". Now, as has been noted above, in the Constitution
Bench judgment in SAIL (supra), the approach of the different
Benches in the four eatlier judgments has been specifically
approved and the view expressed in Air Indi(I (supra) has been
disagreed with. The phrase "under the authority" has been
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interpreted in Hemy Engg. (supra) to mean ··pursuant to the
authority" such as where an agent or servant acts under authority
of his principal or master. That obviously cannot be said of a
company incorporated under the Companies Act, as laid down in
Heavy Engg. Mazdoor Union case (supra). However, where a
statute setting up a corporation so provides specifically, it can
easily be identified as an agent of the State.
60. The judgment in Heavy E11gg. Mazdoor Union (supra)
observed that the inference that a corporation was an agent of
the Government might also be drawn where it was performing in
substance governmental and non-commercial functions. The
Constitution Bench in SAIL case (supra) has disagreed with this
view in para 41 of its judgment. Hence, even a corporation which
is carrying on commercial activities can also be an agent of the
State in a given situation. Heavy Engg.