AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 132
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....ationalised Banks and also by the public. Subsequently, in 2001 its majority equity shares, i.e. 61.8% of its shareholding, which was held by IBP Co. Ltd., was transferred to Balmer Lawrie Investments Ltd. (BLIL), a Govt. company in which 59% shares are held by the government. B. The appellant company carries on business in diverse fields through various Strategic Business Units (SBUs). None of these SBUs have monopoly in any business. The said SBUs are involved in the manufacturing of packing materials, i.e. steel drums and LPG cylinders, grease and lubricants. They also provide air freight services, ocean freight services, and project cargo management. They operate under a broader segment classified as 'Logistic Services', providing space and scope for segregation, storage and aggregation of containerized cargo, i.e. an infrastructural service carried on outside the port premises for handling, loading/unloading and storage of containerized import, as well as export cargo. The appellant company also deals with leather chemicals and tea blending and packaging. C. The respondents-employees joined the services of the company at different times. However, for the purpose of deciding ....
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....rder dated 24.12.2002, held the appellant to be a State within the meaning of Article 12 of the Constitution, and directed that the matter be placed before an appropriate bench for decision of the writ petitions on merits. Hence, these appeals. 3. Shri Sudhir Chandra, learned senior counsel appearing for the State, has submitted that the appellant company cannot be held to be a State within the meaning of Article 12 of the Constitution, or any other authority for that matter, as there is no deep and pervasive control exercised by the government over the company, though certain financial aid was given by it for specific purposes. The government however, does not have control over the day-to-day functioning of the company. Merely because the appellant company is a subsidiary of a government company, and is itself a government company, the same would not make the appellant company fall within the purview of the word 'State' as intended by Article 12 of the Constitution. Moreover, it does not carry out any public function which could render it as, 'any other authority', for the purposes of Article 226 of the Constitution. It also does not have any kind of monopoly over its business, ....
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...., the concerned company must be under the deep and pervasive control of the government. The dictionary meaning of 'pervasive' has been provided hereunder: "It means that which pervades/tends to pervade in such a way, so as to be, or become, prevalent or dominant." "Extensive or far reaching, spreading through every part of something." 7. In Virendra Kumar Srivastava v. U.P. Rajya Karmachari Kalyan Nigam and Anr. AIR 2005 SC 411, this court held, that in order to examine whether or not an authority is a State within the meaning of Article 12 of the Constitution, the court must carry out an in depth examination of who has administrative, financial and functional control of such a company/corporation, and then assess whether the State in such a case is only a regulatory authority, or if it has deep and pervasive control over such a company/corporation, whether such company is receiving full financial support from the government, and whether administrative control over it has been retained by the State and its authorities, and further, whether it is supervised, controlled and watched over by various departmental authorities of the State, even with respect to its day-to-day functioni....
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....on, or of the State, at the same time, such a company/corporation must not represent the "voice and hands" of the government. Therefore, this court in Pradeep Kumar Biswas (supra), held that financial support of the State, coupled with an unusual degree of control over the management and policies of a body, may lead to an inference that it is a State. Additionally, other factors such as, whether the company/corporation performs important public functions, whether such public function (s) are closely related to governmental function, and whether such function (s) are carried out for the benefit of the public, etc. are also considered. The court also considered the case of Ramana Dayaram Shetty v. International Airport Authority of India & Ors. AIR 1979 SC 1628, wherein it was held that a corporation can be said to be an instrumentality or agency of the government therein under certain conditions, and the same are summarised below : "(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (2) Where the financial assistance of th....
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.... observed:- "35. In conclusion, it should be noted that there can be no two views about the fact that the Constitution of this country is a living organism and it is the duty of Courts to interpret the same to fulfil the needs and aspirations of the people depending on the needs of the time. It is noticed earlier in this judgment that in Article 12 the term ;other authorities ; was introduced at the time of framing of the Constitution with a limited objective of granting judicial review of actions of such authorities which are created under the Statute and which discharge State functions. However, because of the need of the day this Court in Rajasthan State Electricity Board (supra) and Sukhdev Singh (supra) noticing the socio- economic policy of the country thought it fit to expand the definition of the term ;other authorities ; to include bodies other than statutory bodies. This development of law by judicial interpretation culminated in the judgment of the 7-Judge Bench in the case of Pradeep Kumar Biswas (supra). It is to be noted that in the meantime the socio-economic policy of the Government of India has changed [See Balco Employees' Union (Regd.) v. Union of India and Ors.....
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....s welfare activities aimed at the benefit of its subjects, and such activities can also be undertaken by private persons, corporates and companies. Thus, considering the wide ramifications, sovereign functions should be restricted to those functions, which are primarily inalienable, and which can be performed by the State alone. Such functions may include legislative functions, the administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon etc. Therefore, mere dealing in a subject by the State, or the monopoly of the State in a particular field, would not render an enterprise sovereign in nature. (Vide: Agricultural Produce Market Committee v. Ashok Harikuni & Anr. etc. AIR 2000 SC 3116; State of U.P. v. Jai Bir Singh, (2005) 5 SCC 1; Assam Small Scale Ind. Dev Corporation Ltd. & Ors. v. M/s. J.D. Pharmaceuticals & Anr., AIR 2006 SC 131; and M.D., H.S.I.D.C. & Ors. v. M/s. Hari Om Enterprises & Anr., AIR 2009 SC 218). 12. A public authority is a body which has public or statutory duties to perform, and which performs such duties and carries out its transactions for the benefit of the public, and not for ....
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.... so impregnated with governmental character, so as to become subject to the constitutional limitations that are placed upon State action. Therefore, the court must determine whether the aggregate of all relevant factors once considered, would compel a conclusion as regards the body being bestowed with State responsibilities. 13. When we discuss 'pervasive control', the term 'control' is taken to mean check, restraint or influence. Control is intended to regulate, and to hold in check, or to restrain from action. The word 'regulate', would mean to control or to adjust by rule, or to subject to governing principles. (Vide: State of Mysore v. Allum Karibasauppa & Ors., AIR 1974 SC 1863; U.P. Cooperative Cane Unions Federations v. West U.P. Sugar Mills Association & Ors. etc.etc., AIR 2004 SC 3697; M/s. Zee Telefilms Ltd., (supra); and Union of India (UOI) & Ors. v. Asian Food Industries, AIR 2007 SC 750). 14. In K. Ramanathan v. State of Tamil Nadu & Anr., AIR 1985 SC 660, this court held as under: "The power to regulate carries with it full power over the thing subject to regulation and in absence of restrictive words, the power must be regarded as plenary over the....
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....." (See also: M/s. Star Enterprises & Ors. v. City and Industrial Development Corpn. of Maharashtra Ltd. & Ors. (1990) 3 SCC 280; LIC of India & Anr. v. Consumer Education and Research Centre & Ors. AIR 1995 SC 1811; and Mysore Paper Mills Ltd. (supra). 17. In order to determine whether an authority is amenable to writ jurisdiction except in the case of habeas corpus or quo warranto, it must be examined, whether the company/corporation is an instrumentality or an agency of the State, and if the same carries on business for the benefit of the pubic; whether the entire share capital of the company is held by the government; whether its administration is in the hands of a Board of Directors appointed by the government; and even if the Board of Directors has been appointed by the government, whether it is completely free from governmental control in the discharge of its functions; whether the company enjoys monopoly status; and whether there exists within the company, deep and pervasive State control. The other factors that may be considered are whether the functions carried out by the company/corporation are closely related to governmental functions, or whether a dep....
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....ational clause in a contract, is also unjust, the same is amenable to judicial review. The Constitution provides for achieving social and economic justice. Article 14 of the Constitution guarantees to all persons, equality before the law and equal protection of the law. Thus, it is necessary to strike down an unfair and unreasonable contract, or an unfair or unreasonable clause in a contract, that has been entered into by parties who do not enjoy equal bargaining power, and are hence hit by Section 23 of the Contract Act, and where such a condition or provision becomes unconscionable, unfair, unreasonable and further, is against public policy. Where inequality of bargaining power is the result of great disparity between the economic strengths of the contracting parties, the aforesaid principle would automatically apply for the reason that, freedom of contract must be founded on the basis of equality of bargaining power between such contracting parties, and even though ad idem is assumed, applicability of standard form of contract is the rule. Consent or consensus ad idem as regards the weaker party may therefore, be entirely absent. Thus, the existence of equal bargaining power bet....
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...., under the statute itself, on the presence or absence of certain basic facts at the time the relief is to be ultimately granted, the court, even in appeal, can take note of such supervening facts with fundamental impact. This Court's judgment in Pasupuleti Venkateswarlu v. Motor & General Traders AIR 1975 SC 1409 read in its statutory setting, falls in this category. Where a cause of action is deficient but later events have made up the deficiency, the court may, in order to avoid multiplicity of litigation, permit amendment and continue the proceeding, provided no prejudice is caused to the other side. All these are done only in exceptional situations and just cannot be done if the statute, on which the legal proceeding is based, inhibits, by its scheme or otherwise, such change in the cause of action or relief. The primary concern of the court is to implement the justice of the legislation. Rights vested by virtue of a statute cannot be divested by this equitable doctrine (see V.P.R.V. Chockalingam Chetty v. Seethai Ache AIR 1927 PC 252)." 21. The above-mentioned appeals are required to be considered in light of the aforesaid settled legal propositions. However, at this sta....
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....ntrol over the appellant company. The appellant company started its business as a partnership firm in 1867 and subsequently, the same was converted into a private limited company in 1924, and then eventually, into a public limited company in 1936. Its past shareholding position has been reproduced as under: Category of shareholders %age of equity holding IBP Co. Ltd. 61.80% Financial Institutions & amp; Banks 21.69% Public 14.29% Employees 0.85% Foreign National 0.44% Corporate Bodies 0.86% U.P. State Government 0.02% Directors & their relatives 0.85% The present shareholding as per the Annual Report for 2005-06 has been as under: Category of shareholders %age of equity holding Balmer Lawrie Investment Ltd. 61.80% Mutual Fund & UTI 5.08% Financial Institutions & Banks 12.85% Foreign National 2.97% UP State Government 0.05% Private/Corporate Bodies 6.14% Indian Public 11.10% Directors & their relatives 0.01% 23. There is nothing on record to show that the Central Government provides any financial or budgetary support to the appellant company. The appellant company is a profitable company and meets its own working capital requirements, as well as its fixed capita....
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....nd upon such terms and conditions, as the President of India may from time to time decide are required. In view of the provisions of Section 617 of the Companies Act, 1956, a government company has been defined by way of an inclusive definition, as that which is a subsidiary of a government company. The appellant company has also been receiving grant-in-aid from the Oil Industry Development Board by way of a grant and not as a loan. Some products of the company are in fact monopoly products, whose procurement and distribution are within the direct control of the Ministry of Petroleum which is under the Central Government. All Matters of policy and also, the management issues of the appellant company, are governed by the Central Government. The Central Government has control over the appointment of Additional Directors, and Directors, and their remuneration etc. is also determined by Presidential directives, and the same is applicable to deciding the residential accommodation of the Managing Director, his conveyance, vigilance, issues regarding the welfare of weaker sections etc. The functioning of the appellant company is of great public importance. Majority of its shares are held ....
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....ant, would render it as an authority amenable to the writ jurisdiction of the High Court. 28. Clause 11(a) of the letter of appointment reads as under: "The Company shall have the right, at its sole discretion, to terminate your services by giving you three calendar months' notice in writing and without assigning any reason. The Company also reserves the right to pay you in lieu of notice, a sum by way of compensation equal to three months emoluments consisting of basic salary, dearness allowance, house rent assistance and bonus entitlements, if any, after declaration of bonus". Undoubtedly, the High Court has not dealt with the issue on merits with respect to the termination of the services of the respondents herein. However, considering the fact that such termination took place several decades ago, and litigation in respect of the same remained pending not only before the High Court, but also before this Court, it is desirable that the dispute come to quietus. Therefore, we have dealt with the case on merits. In keeping with this, we cannot approve the "hire and fire" policy adopted by the appellant company, and the terms and conditions incorporated in the Manual of Officers i....