Full Judgment Text
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PETITIONER:
REGIONAL PROVIDENT FUND COMMISSIONER, KARNATAKA
Vs.
RESPONDENT:
WORKMEN REPRESENTED BY THE GENERAL SECRETARY, KARNATAKAPROVI
DATE OF JUDGMENT26/09/1984
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
REDDY, O. CHINNAPPA (J)
SEN, A.P. (J)
CITATION:
1984 AIR 1897 1985 SCR (1) 816
1984 SCC Supl. 418 1984 SCALE (2)422
CITATOR INFO :
D 1988 SC1369 (13)
ACT:
Industrial Disputes Act, 1947-Section 2 (a) Appropriate
Government-Whether Government of a State can be treated as
the ’appropriate Government’ under section 2 (a) in relation
to an industrial dispute concerning office of Regional
Provident Fund organisation established by the Central
Government for that State under the Employees’ Provident
Funds and Miscellaneous provisions Act, 1952.
Words and Phrases-’Authority’-Ordinary meaning of.
Words and Phrases-’Under the authority of ’-Meaning of.
HEADNOTE:
The Government of Karnataka State made a reference
under section 10 of the Industrial Disputes Act, 1947
(hereinafter referred to as ’the Act’) referring Certain
dispute between the Regional Provident Fund Organisation
established by the Central Government for that State under
the Employees’ Provident Fund & Miscellaneous Provisions
Act, 1952 and its employees to the Industrial Tribunal. The
Regional Provident Fund Organisation raised two preliminary
objections viz. that the activity carried on by the
management was not an industry and that the State Government
was not the appropriate Government under the Act in relation
to the dispute between it and its employees. The Tribunal
negatived both the contentions. The management filed a writ
petition under Article 226 of the Constitution before the
High Court. The only contention urged by the management was
that the State Government being not the appropriate
Government under the Act is for as the dispute was
concerned, it could not refer the dispute under section 10
of the Act. A single Judge accepted the contention. In
appeal filed by the workmen. a Division Bench of the High
Court held that the State Government was the appropriate
Government for purposes of the dispute in question. Hence
this appeal by the management by special leave against the
judgment of the Division Bench. The management contended
that the industry in question fell under section 2 (a) (i)
of the Act as it was an industry carried on under the
authority of the Central Government and hence the Central
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Government alone could act as the appropriate Government in
relation to the dispute concerned.
817
Allowing the Appeal,
^
HELD: In order to decide whether the Central Government
is the appropriate Government under the Act or not in this
case it has got to be determined whether the activity
carried on under the Provident Funds Act is being carried on
by or under the authority of the Central Government as
provided in section 2 (a) of the Act. The word authority in
section 2(a) of the Act must be construed according to its
ordinary meaning and therefore must mean a legal power given
by one person to another to do an act. The words ’under the
authority of’ means pursuant to the authority, such as
whether the agent or the servant act under or pursuant to
the authority of his principal or master.[821F-H]
Heavy Engineering Mazdoor Union v. The State of Bihar &
Ors., [1969] 3 S.C.R 995, Graham v. Public Works
Commissioner, [1901] 2 KB 781 and Sukhdev Singh & Ors. v.
Bhagatram Sardar Singh Raghuvanshi & Anr., [1975] 3 S.C.R.
619, referred to.
In the instant case, the activity carried on by the
Central Board or the State Boards under the Provident Funds
Act is one traceable to Article 43 of the constitution which
requires the State to endeavour to secure by suitable
legislation or economic organisation or in any other way to
all workers, agricultural or industrial or otherwise, work,
a living wage, conditions of work ensuring a decent standard
of life and full enjoyment of leisure and cultural
opportunities. It is a part of the programme of every
welfare State which our country is. Institutions engaged in
matters of such high public interest or performing such high
public functions by virtue of their very nature performed
governmental functions. They are truly the agents of the
Government and they function under the authority of the
Government as provided in the statute because the Central
Government could have for the purpose of introducing the
scheme of compulsory contribution to the Provident fund set
up an organisation or a department in the absence of the
corporate bodies envisaged in the Provident Funds Act.
[823C-F]
The provisions of section 5B (2) of the Provident Funds
Act which reads: "A State Board shall exercise such powers
and perform such duties as the Central Government may assign
to it from time to time" clearly envisage that the State
Board is an agent of the Central Government. In the absence
of the State Board, the Regional Committee constitute under
Paragraph 4 of the Scheme is required to function under the
control of the Central Board. The Regional Provident Fund
Commissioner who is appointed by the Central Government is
also under the control of the Central Board and the Central
Government. [824B-C]
Having regard to the various of the Provident Funds Act
and the nature of the business carried on by the Central
Board, the State Board, the Regional Committee and the
Regional Provident Fund Commissioner, this Court is of the
view that the Division Bench of the High Court was not right
in holding that the State Government was the appropriate
Government under
818
section 2 (a) of the Act in the matter of industrial
disputes arising between the management and the workmen of
the Regional Provident Fund organisation. [854D-E]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3796 of
1984.
Appeal by Special leave from the Judgment and Order
dated the 24th & 27th of September, 1982 of the Karnataka
High Court in W.P. No. 1089 of 1981.
V.C. Mahajan, R.N. Foddar & N.S. Das Behi, for the
Appellant.
A.K. Goel for the Respondent.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. The question for consideration in
this appeal by Special Leave is whether the Government of a
State can be treated as the ’appropriate Government’ under
section 2(a) of the Industrial Disputes Act, 1947
(hereinafter referred to as ’the Act’) in relation to any
industrial dispute concerning the office of the Regional
Provident Fund organisation established by the Central
Government for that State under the Employees’ Provident
Funds and Miscellaneous Provisions Act, 1952 (hereinafter
referred to as ’the Provident Funds Act’).
The facts of the case are these: The Government of
Karnataka made a reference under section 10 of the Act
referring a certain dispute between the Regional Provident
Fund organisation established under the Provident Funds Act
for the State of Karnataka and its employees to the
Additional Industrial Tribunal, Bangalore and the said
reference came to be registered as A.I.D. 3 of 1979 on the
file of the Tribunal. Before the Tribunal the Regional
Provident Fund organisation raised among other pleas two
preliminary objections to the reference viz. that the
activity carried on by the management was not an industry
and that the State Government was not the appropriate
Government under the Act in relation to the dispute between
it and its employees. The Tribunal took up for consideration
the two issues arising out of the above two objections first
and after hearing the management and the workmen negatived
both the contentions of the management.
819
It held that the business carried on by the Regional
Provident Fund Organisation was an industry and that the
State Government was the appropriate Government under the
Act.
Aggrieved by the above findings of the Tribunal the
management filed a writ petition under Article 226 of the
Constitution before the High Court of Karnataka questioning
the correctness of the said findings. Before the learned
Single Judge who heard the writ petition the management did
not, however, press its case as regards the finding that the
Provident Fund organisation was an industry. The only
contention urged by it was that the State Government being
not the appropriate Government under the Act in so far as
the dispute was concerned it could not refer the dispute
under section 10 of the Act. The learned Single Judge
accepting the said contention of the management quashed the
reference. Aggrieved by the decision of the learned Single
Judge, the workmen filed an appeal before the Division Bench
of the High Court. The Division Bench reversed the decision
of the learned Single Judge and held that the State
Government was the appropriate Government for purposes of
the dispute in question. The management has filed this
appeal after observing the leave of this Court under Article
136 of the Constitution against the judgment of the Division
Bench.
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Under section 10 the Act, where the appropriate
Government is of opinion that any industrial dispute exists
or apprehended, it may at any time by order in writing refer
the dispute or any matter appearing to be connected with, or
relevant to, the dispute, whether it relates to any matter
specified in the Second Schedule or the Third Schedule to
the Act, to Tribunal for adjudication. Section 2(a) of the
Act defines the expression ’appropriate Government’ as in
relation to any industrial dispute concerning any industry
carried on by or under the authority of the Central
Government or by the industries specified in clause (i) of
section 2(a) of the Act, the Central Government and in
relation to any other industrial dispute, the State
Government. It may be stated here that the organisation
under the Provident Funds Act was not one of the industries
specified in section 2(a)(i) of the Act when the reference
was made in this case. The contention of the management is
that the industry in question falls under section 2(a)(i) of
the Act as it is an industry carried on under the authority
of the Central Government and hence the Central Government
alone can act as the appropriate Government in relation to a
dispute concerning it.
820
Entry 24 of the concurrent List in the Seventh Schedule
to the Constitution specifically refers to the subject
’employees’ provident funds’. The Central Government could
have, if it intended to do so, started a provident funds
scheme for the benefit of the workers in exercise of its
executive power. Before any such action was taken the
subject of legislation for instituting compulsorily
contributory funds in industrial undertakings was discussed
several times at tripartite meetings in which
representatives of the Central and State Governments and of
employers and workers took part. Ultimately it was decided
that the Central Government should initiate appropriate
legislation in Parliament for the said purpose. Accordingly
an ordinance was issued in 1951 incorporating the decisions
arrived at such meetings. Later on in 1952 the Provident
Funds Act came to be passed replacing the ordinance. The
Provident Funds Act contemplates the administration of the
Scheme framed under section 5, the Family Pension Scheme
framed under section 6A and the Employees’ Deposit-linked
Insurance Scheme, under section 6C(1) of that Act. The
Provident Funds Act applies to the whole of India except the
State of Jammu and Kashmir. Under section 5A of the
Provident Funds Act the Central Board of Trustees
(hereinafter called ’the Central Board’) is constituted by
the Central Government to administer, subject to the
provisions of section 6A and section 6C, the fund vested in
it in such manner as may be specified in the Scheme and to
perform such other functions as it may be required to
perform by or under the provisions of the Scheme, the Family
Pension Scheme and the Insurance Scheme. Under section 5B of
the Provident Funds Act the Central Government may, after
consultation with the Government of any State, by
notification in the Official Gazette, constitute for that
State a Board of Trustees which is for purpose of brevity
referred to as the State Board in such manner as may be
provided for in the Scheme. The crucial provision in section
5B which, if we may say so with respect, has missed the
attention of the Division Bench of the High Court is sub-
section (2) thereof. It says that a State Board shall
exercise such powers and perform such duties as the Central
Government may assign to it from time to time. Under
Paragraph 4 of the Scheme framed under the Provident Funds
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Act, it is provided that until such time as a State Board is
constituted for a State the Central Government may set up a
Regional Committee for the State which will function under
the Central Board. There are three funds which are created
by the Provident Funds Act. They are-(i) The Fund i.e. the
Provident Fund
821
established under the Scheme, (ii) the Family Pension Fund
established under the Family Pension Scheme and (iii) the
Insurance Fund established under the Insurance Scheme. They
are not confined to ans particular State or Region. Each of
them is a fund into which the amount collected under the
respective Schemes is credited irrespective of the State or
the Region where they are collected. Under Paragraph 54 of
the Scheme all expenses relating to the administration of
the fund including those incurred on Regional Committees
have to be met from the Fund. For purposes of the
administration of the provident Funds Act, the appropriate
Government in relation to an establishment belonging to or
under the control of the Central Government or in relation
to an establishment connected with a railway company, a
major port, a mine or an oil field or a controlled industry
or in relation to an establishment having department or
branches in more than one State is the Central Government
and in relation to any other establishment, the State
Government under section 2(a) of the Provident Funds Act. We
are not concerned with this definition in this case as the
question to be decided arises under the Act. The Provident
Funds Act and the Scheme clearly show that the Central
Government has the final voice in many matters including
appointments to various offices referred to therein. It is
not necessary to refer to then in detail here.
What has got to be determined in this case is whether
the activity carried on under the Provident Funds Act is
being carried on by or under the authority of the Central
Government as provided in section 2(a) of the Act or not in
order to decide whether the Central Government is the
appropriate authority under the Act or not. Section 2(a) of
the Act came up for consideration by this Court in Heavy
Engineering Mazdoor Union v. State of Bihar & Ors.(’) The
Court observed in that case that there being nothing to the
contrary, the word ’authority’ in section 2(a) of the Act
must be construed according to its ordinary meaning and
therefore must mean a legal power given by one person to
another to do an act. The words ’under the authority of’
were construed by this Court in that case as meaning
pursuant to the authority, such as where an agent or a
servant acts under or pursuant to the authority of his
principal or master. Applying this test, the Court held that
a manufacturing industry carried on by a company registered
under
822
the authority of the Central Government even though the
entire capital of the company had been contributed by the
Central Government and under Articles of Association of the
company the Central Government could exercise control over
the affairs of the company. The Court, however, proceeded to
observe that the question whether a corporation is an agent
of the State would depend upon the facts of each case. It
referred to the decision in Graham v. Public Works
Commissioner(1) and said that where a statute setting up a
Corporation so provided, such a Corporation could be easily
identified as the agent of the State and that it was
possible for the Crown with the consent of Parliament to
appoint or establish certain officials or bodies who were to
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be treated as agents of the Crown even though they had the
power of contracting as principals. Merely because the
officials of Government or certain bodies constituted by the
Government for purposes of administration are given the garb
of a statutory corporation they do not cease to be what they
truly are.
At this stage it is appropriate to refer to certain
observations made by Mathew, J. in Sukhdev Singh & Ors. v.
Bhagatram Sardar Singh Raghuvanshi & Anr.(2) on the true
characteristics of public corporations established under a
statute. The learned Judge observed at page 646 thus:
"A public corporation is a legal entity
established normally by Parliament and always under
legal authority, usually in the form of a special
statute, charged with the duty of carrying out
specified governmental functions in the national
interest, those functions being confined to a
comparatively restricted field, and subjected to
control by the executive, while the corporation remains
juristically an independent entity not directly
responsible to parliament. A public corporation is not
generally a multi-purpose authority but a functional
organisation created for a specific purpose. It has
generally no shares or shareholders. Its responsibility
generally is to Government. Its administration is in
the hands of a Board appointed by the competent
Minister. The employees of public corporation are not
civil servants. It is in fact,
823
likely that in due course a special type of training
for specialized form of public service will be
developed and the status of the personnel of public
corporation may more and more closely approximate to
that of civil service without forming part of it. In so
far as public corporations fulfil public tasks on
behalf government, they are public authorities and as
such subject to control by government."
In the instant case, it is to be noted that the
activity carried on by the Central Board or the State Boards
under the Provident Funds Act is not similar to the activity
carried on by any private trade or manufacturing business
like the one involved in the case of the Heavy Engineering
Corporation’s case (supra). The activity is one traceable to
Article 43 of the Constitution which requires the State to
endeavour to secure by suitable legislation or economic
organisation or in any other way to all workers,
agricultural or industrial or otherwise, work, a living
wage, conditions of work ensuring a decent standard of life
and full enjoyment of leisure and social and cultural
opportunities. It is a part of the programme of every
welfare State which our country is. Institutions engaged in
matters of such high public interest or performing such high
public functions as observed by Mathew J. in Sukhdev Singh’s
case (supra) by virtue of their very nature performed
governmental functions. They are truly the agents of the
Government and they function under the authority of the
Government as provided in the statute because the Central
Government could have, for the purpose of introducing the
scheme of compulsory contribution to the provident fund, set
up an organisation or a department in absence of the
corporate bodies evisaged in the Provident Funds Act. The
Division Bench of the High Court was in error in observating
that an examination of the organisation showed "that the
activities of the Provident Fund" organisation are not
governmental in character as they are essentially part of
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the activities of various industries to which the Provident
Funds Act applies.’ We have no doubt that the business of
the Provident Funds organisation is governmental in
character and does not pertain to industry to which the
Provident Funds Act applies. The management and workmen of
industries to which the Provident Funds Act applies
contribute to the funds established under that Act. The
business of the statutory bodies functioning under that Act
is not the business of industries whose managements and
workmen
824
make contributions to the said funds. In addition to the
above feature, the provisions of section 5B (2) of the
Provident Funds Act which reads: "A State Board shall
exercise such powers and perform such duties as the Central
Government may assign to it from time to time" clearly
envisage that the State Board is an agent of the Central
Government. In the absence of the State Board, the Regional
Committee constituted under Paragraph 4 of the Scheme is
required to function under the control of the Central Board.
The Regional Provident Fund Commissioner who is appointed by
the Central Government is also under the control of the
Central Board and the Central Government.
Having regard to the various provisions of the
Provisions Funds Act and the nature of the business carried
on by the Central Board, the State Board, the Regional
Committee and the Regional Provident Fund Commissioner, we
are of the view that the Division Bench of the High Court
was not right in holding that the State Government was the
appropriate Govt. under section 2(a) of the Act in the
matter of industrial disputes arising between the management
and the workmen of the Regional Provident Fund organisation.
It has to be mentioned here that even the learned counsel
for the workmen fairly stated that the Central Government
was appropriate Government under the Act in so far as the
dispute in question is concerned He, however, submitted that
the Central Government may now be directed to refer the
dispute pending before the Tribunal at Bangalore to an
Industrial Tribunal quickly as the case has been pending for
nearly 5 years. We have no doubt that the Central Government
will immediately consider the above question and take
appropriate action.
In the result the order of the Division Bench of the
High Court is set aside and the order of the learned Single
Judge is restored. The reference made by the State
Government is quashed. The appeal is accordingly allowed.
No costs.
H.S.K. Appeal allowed.
825