2003 (10) TMI 662 - SC - Indian Laws

Supreme Court Overturns High Court, Directs Parties to Resolve Under Industrial Disputes Act, 1947; Mill Not a 'State.

The SC allowed the appeals, overturning the HC's judgments, and dismissed the writ applications, directing the parties to pursue adjudication under the ... Uttar Pradesh Co-operative Sugar Factories Federation Limited (‘the Federation’) - Whether the Mill is considered a 'State' under Article 12 of the Constitution - High Court's writ jurisdiction - HELD THAT:- Before this Court, it was stated on behalf of the contesting respondents in the counter affidavit that the Government of Uttar Pradesh held 50% shares in the Mill which was not denied on behalf of the Mill. Therefore, even if it is taken to be admitted due to non traverse, the share of the State Government would be only 50% and not entire. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. It has no where been stated that the State used to meet any expenditure of the Mill much less almost the entire one, but, as a matter of fact, it operates on the basis of self generated finances. There is nothing to show that the Mill enjoys monopoly status in the matter of production of sugar. A perusal of Bye-Laws of the Mill would show that its membership is open to cane growers, other societies, Gram Sabha, State Government, etc. and under Bye-Law 52, a committee of management consisting of 15 members is constituted, out of whom, 5 members are required to be elected by the representatives of individual members, 3 out of co-operative society and other institutions and 2 representatives of financial institutions besides 5 members who are required to be nominated by the State Government which shall be inclusive of the Chairman and Administrator. Thus, the ratio of the nominees of State Government in the committee is only 1/3rd and the management of the committee is dominated by 2/3rd non-government members. The role of the Federation, which is the apex body and whose ex-officio Chairman-cum-Managing Director is Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members. The letter sent by Managing Director of the Federation on 22nd November, 1999 was merely by way of an advice and was in the nature of a suggestion to the Mill in view of its deteriorating financial condition. From the said letter, which is in the advisory capacity, it cannot be inferred that the State had any deep and pervasive control over the Mill. Thus, we find none of the indicia exists in the case of Mill, as such the same being neither instrumentality nor agency of government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of the Constitution. In the result, the appeals are allowed, the impugned judgments rendered by the High Court are set aside and writ applications dismissed relegating the parties to raise an industrial dispute for adjudication by courts constituted under the provisions of Industrial Disputes Act, 1947. Thus, the parties are directed to bear their own costs. Issues Involved:1. Whether the Mill is considered a 'State' under Article 12 of the Constitution.2. Whether the High Court's writ jurisdiction was applicable.3. Whether disputed questions of fact could be resolved in writ jurisdiction.Summary:1. Whether the Mill is considered a 'State' under Article 12 of the Constitution:The Supreme Court examined whether the Mill, a co-operative society, could be classified as a 'State' under Article 12 of the Constitution. The Court referred to established tests from previous cases such as Ajay Hasia and others v. Khalid Mujib Sehravardi and Ors., and Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and others. These tests include factors like government shareholding, financial assistance, monopoly status, and deep and pervasive State control. The Court found that the Mill did not meet these criteria: the State Government held only 50% shares, the Mill operated on self-generated finances, and there was no deep and pervasive State control. Consequently, the Mill was not considered an instrumentality or agency of the government and thus not a 'State' under Article 12.2. Whether the High Court's writ jurisdiction was applicable:The Court addressed whether the High Court could entertain writ applications against the Mill. It was argued that even if the Mill was not a 'State,' a writ could be issued under Article 226 against any person or authority performing a public duty. However, the Court cited precedents like Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Samarak Trust and others v. V.R. Rudani and others, which held that writ jurisdiction under Article 226 could only be invoked if the entity performed a public function or duty. Since the Mill was engaged in the manufacture and sale of sugar, which did not involve any public function, the Court concluded that the High Court's writ jurisdiction was not applicable.3. Whether disputed questions of fact could be resolved in writ jurisdiction:The Court noted that there were disputed questions of fact, such as whether the contesting respondents had worked for more than 240 days and whether they were permanent or seasonal workers. These issues could not be resolved in writ jurisdiction and were more appropriately addressed by courts constituted under the Industrial Disputes Act, 1947. Therefore, the High Court was not justified in entertaining the writ applications.Conclusion:The Supreme Court allowed the appeals, set aside the High Court's judgments, and dismissed the writ applications, directing the parties to raise an industrial dispute for adjudication under the Industrial Disputes Act, 1947. Each party was directed to bear its own costs.