Allowed

M/S. British India Corporation Ltd. v. State of U.P. and Others

Allahabad HC26 Oct 2021WRIC/41018/2007

Case brief

AI extract

What is this about?

The High Court allowed the writ petition, holding that the reference made by the State Government was beyond its jurisdiction. Quashing the impugned award and orders, the court ruled that the Central Government was the appropriate authority to make the reference.

What did the court decide?

The impugned order dated 20.06.2007, the award dated 09.11.2005, and the order dated 20.08.2007 were set aside as beyond jurisdiction.

M/S. British India Corporation Ltd. Vs State of… — Service and Employment | Allahabad HC (2021)

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Court No. - 6

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Case :- WRIT - C No. - 41018 of 2007

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Petitioner :- M/S. British India Corporation Ltd. Respondent :- State of U.P. and Others Counsel for Petitioner :- Anoop Trivedi,C.B. Gupta Counsel for Respondent :- C.S.C.,Narendra Mohan

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Hon'ble Ajay Bhanot,J.

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Heard Sri C.B.Gupta, learned counsel for the petitioner, learned Standing Counsel for the respondents No.1 to 4 and Sri Narendra Mohan, learned counsel and Sri Rajendra Prasad Maurya, learned counsel for the respondent No.6.

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Sri C.B.Gupta, learned counsel for the petitioner submits that the reference made by the State Government was beyond jurisdiction. The State Government/learned Labour Court has exceeded its jurisdiction by making Section 4-A of the U.P. Industrial Disputes Act, 1947 and the learned Labour Court erred in law by entertaining the aforesaid reference.

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It is undisputed that the M/s British India Corporation Ltd. is a company which is owned by the Government of India. The Government of India has a pervasive control over the aforesaid company. The issue of jurisdiction of the State Government to make a reference under the U.P. Industrial Disputes Act, 1947 in regard to employee/workmen

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in British India Corporation Ltd. Vs. Union of India , reported at ADJ-2011-1-238 . In British India Corporation Ltd.(supra) , this Court held as under:

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"14. It would be useful to notice the statement of objects and reasons of the Act which are quoted below:-

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"British India Corporation Limited, Kanpur, was registered as a Public Limited Company in 1920. The Corporation had two Woolen Mills directly owned and run by it, namely, Cawnpore Woollen Mills (CWM), Kanpur and New Egerton Woollen Mills (NEWM), Dhariwal. Together, these units employed about 8,000 persons and were engaged in the manufacture of pure woollen and blended goods. Besides, the Corporation also had substantial shares in various other companies, like the Elgin Mills Co. Ltd., Brushware Ltd., Cawnpore Textiles Ltd. Cawnpore Sugar Works Ltd., Champaran Sugar Co. Ltd. Saran Engineering Co. etc.

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The Issued and Subscribed Capital of the Corporation was Rs.4.06 crores consisting of 18,000 Cumulative Preference Shares (valued at Rs.81 lakhs) and 65,00,000 Ordinary Shares (valued at Rs.325 Lakhs). The President of India and Public Financial Institutions together held substantial shares in the Corporation. The other major shareholders belong tot he Bajoria family. The financial performance of the Corporation during the last two to three years had been becoming a matter of great concern. Losses were mounting and liquidity position was severally affected. The Corporation was on the verge of collapse, thus, affecting the production of goods so vital to the needs of general public, besides affecting the employment of a large number of persons directly on the one hand and adversely affecting the interests of the Government, public financial

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institutions and the State Bank of India, its bankers, on the other. The Central Government had repeatedly to issue guarantees totalling Rs.817 Lakhs to keep the Company going.

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The plant and machinery of the Corporation required to be modernized and renovated by the Corporation was not in a position to complete even the first phase of this important exercise. Further, substantial investments of public funds were called for. However, it was considered prudent for the Government and for the financial institutions to invest more funds in the Corporation only if the ownership vests wholly with the Government. It was, therefore, decided to acquire compulsorily all the shares of the Company which were in private hands. Accordingly, the British India Corporation (Acquisition of Shares) Ordinance, 1981 (No.5 of 1981) was promulgated by the President on 11th June, 1981.

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The Ordinance, apart from providing for acquisition and transfer of all privately held shares of the Company to the Central Government, provided for payment of an amount for such acquisition, management of the undertakings of the Corporation after acquiring its ownership, appointment of a Commissioner of Payments for the purpose of disbursing the amount payable to the shareholders of the Company who shares are so acquired and for other incidental and consequential matters."

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One of the reasons given was:- "Whereas acquisition by the Central Government of an effective control over the affairs of the Company is necessary to enable it to make the investments aforesaid."

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The Act was thus passed by the Parliament as;

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"An Act to provide for the acquisition of certain shares of the British India Corporation Limited with a view to securing the

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proper management of the affairs of the Company and the continuity and development of the production of goods which are vital to the needs of the country and for matters connected therewith or incidental thereto".

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It is obvious that under the authority of the Act, the Central Government took over the company to ensure "proper management of the affairs of the Company and the continuity and development of the production of goods" and for "an effective control over the affairs of the Company". Thus, there can be no doubt that the industry is being carried on by and under the authority of the Central Government, therefore, even according to the ratio of the Steel Authority of India case, the 'appropriate Government' in the case of the petitioner would be the Central Government. It would be irrelevant even if some shares were held by the State Bank of India and other statutory authorities because even in their cases the appropriate Government would be the Central Government and there is nothing on record to show that any of the statutory authorities are running the industry.

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Let us now consider the alternative argument.

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The notification under section 39 of the Industrial Disputes Act issued by the Central Government empowering the State authorities to refer the dispute even in the case of Central Government Company, would not be applicable in the present case. Firstly, the reference was made in July, 1996 when the said notification was not in existence. Secondly, under the notification, the State authorities could refer an industrial dispute under section 10 of the Industrial Disputes Act, 1947 to the Labour Court or Tribunal constituted by the Central Government, which is not the case in the present facts. A Learned Single Judge of this Court was examining this very issue in the case of National Textile Corporation Ltd. U.P.

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Kanpur and others Vs. State of U.P. and others [writ petition no.45538 of 2003] decided on 14.9.2004 and held that even while exercising the delegated power under section 39 of the Industrial Dispute Act, the reference could have been made in accordance with section 17-A thereof to the Central Authority and any reference under section 4-K of the U.P. Industrial Disputes Act would be void. Accordingly, even this argument of the learned counsel for the respondent cannot be accepted. 19. For the reasons above, this petition succeeds and is allowed and the impugned award dated 7.6.2001 is hereby quashed."

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Learned Standing Counsel and learned counsel for the respondent-workman could not dispute that this case is squarely covered by British India Corporation Ltd. (supra) . British India Corporation Ltd. (supra) shall govern the fate of this case.

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The order dated 20.06.2007 and the impugned award dated 09.11.2005 as well as the order dated 20.08.2007 are beyond jurisdiction and arbitrary and illegal.

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The impugned order dated 20.06.2007 passed by the respondent No.3 and the impugned award dated 09.11.2005 as well as the order dated 20.08.2007 passed by the respondent No.4 are liable to be set aside and are set aside.

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The writ petition is allowed.

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Order Date :- 26.10.2021 Ashish Tripathi

M/S. British India Corporation Ltd. v. State of U.P. and Others

Case brief

What is this about?

What did the court decide?

M/S. British India Corporation Ltd. v. State of U.P. and Others

Case brief

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