Praga Tools Corporation v. Shri C. A. Imanual & Ors.

Judgment

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 612 of 1966. Appeal by special leave from the judgment and order dated April 16, 1965 of the Andhra Pradesh High Court in Writ Appeal No. 37 of 1964. S. V. Gupte and R. Thiagarajan, for the appellant. Janardan Sharma, for respondents Nos. 1 and 3. The Judgment of the Court was delivered by Shelat, J. The Fraga Tools Corporation (hereinafter referred to as the Company) is a company incorpotated under the Indian Companies Act, 1913. At the material time however, the Union Government and the Government of Andhra Pradesh between them held 56% and 32% of its shares respectively and the balance of 12 % shares were hel~ by private individuals. Being the largest shareholder, the Umon Government had the power to nominate the company's directors. Even so, being registered under the Companies Act and governed by PRAGA TOOLS CORP. v. !MANUAL (Shelat, J.)

775 - the provisions of that Act, the company is a separate le,gal entity and cannot be said to be either a Government corporation or an indUJtry run by or under the authority of the Union Government. At the material time there were two rival workmen's u.mons in the company, the Praga Tools Employees Union and ·the Praga Tools Corporation Mazdoor Sabha (hereinafter referred to as the union and the sabha respectively). On July 1, 1961 n settlement was arrived at between the company and the said union under which the wnrkmen inter alia agreed to observe indUJtrial truce for a period of three years and not to resort to strikes, stoppage of work or go-slow tactics.

On December 1962 the company and the said union entered into a supplemen- !Ary settlement under which the company agreed not to retrench or lay-off any of the workmen during the said period of truce on an assurance from the said union of coope·ation and willingness of the workmen to carry out alternative tasks assigned to them even if they were in a slightly lower cadre without loss of emoluments. The said two settlements were arrived at and recorded in the presence of the Commissioner of Labour under ss. 2(p) and 18(1) of the Industrial Disputes Act, 1947 and were to be in force as aforesaid until July 1, 1964. On December 20, 1963, however, the company entered into an agreement with the said union to which the said sabha was not a party. The agreement recited that there were several disputes between the company and the union and that s0me of them were the subject-matter of concHiatioin proceedings and some were pending arbitration or adjudication.

Clause ( 1) provided that the said agreements dated July !, 1961 arid December 10, 1962 to the extent that they were inconsistent with this a 'reement would stand automatically repealed or modified by. this agreement. Clause ( 6) stated that there was an immediate, unavoidable need for reducing substantially the overhead expenditure of the company and for effecting economy and therefore notwithstanding the agreement dated December 10, 1962 "both the parties have preriared a list of the categories and persons who would be retrenched after car~ful consideration''. The said list was attached to the agreement as annexure VI. Clause (6) also provided that the agreement dated December 10, 1962 stood modified so as to allow the said retrenchment to take olacc immediately in accordance with law.

The clause further· nrovided that in order to mitigate the consequences of the pronosed retrenchment the company had evolved a scheme of voluntary retirement with terminal benefits suoerior to those provided under the Industrl•.1 Disnutes Act, but the r.cheme of Voluntary retirement would be available to the workmen only for a period of 10 days from the date ot the agreement. It further provided that the company ll\nd the said union had agreed that an attempt would be made to rehabilitate the retrenched persons by helping them to obtain alternative employment and the company had for that purpose contacted public sector and other industries and in particular the Heavy Engineering Corporation, Ranchi for absorption as far as possible of the retrenched personnel. The effect of this agreement was to enable the company, notwithstanding the two earlier settlements, to carry out retrenchment of 92 workmen mentioned in annexure VI thereto with effect from January I, 1964.

Respondent I and 40 other workmen thereupon filed a writ petition under Art. 226 in the High Court of Andhra Pradesh challenging the validity of the said agreement impleading therein the company, the said union and the Regional Assistant Commissioner as respondents. The petition claimed a writ of mandamm or an order in the nature of mandamus or any other order or direction restraining the respondents to implement or enforce the said agr~cmcnt. The writ pe•ition was in the first instance heard by u learned Sin:_!ie Judge of th~ High Court before whom the ·workmen raised the fo!lowin~ contentions : (I) that the said agreement dated December 20. was invalid as it was entered into by the unbn in collusion with the company and was in violation of the said two earlier settlements, (2) that there could be no industrial dispute within the m~an­ ing of s. 2(k) of the Act as the said two earlier settlements, not having been terminated under s.

19(2) were in force, that therefore there could not be a valid conciliation under s. 12 and accordingly the fact of the conciliation officer having signed the impugned agreement gave no binding force to it, (3) that the retrenchment of the 92 workmen was illel!al and void as it wa~ in hreach of s. 25 <Fl inasmuch as no notice thereof was ~iven to the anpropriate Government. and ( 4) that the comoany b~ing under the manaqement of the Union Government, the annropriate Government in regard to the disnute was the Central Government and nnt the State Gove"!lment •nd conseauent1v the imouqned ai?reemerit which was signed bv the cl)nciliation rffi~er appo:nted by the State Government was not vali•l anrl no ret' enchment could validly be effected under the force of such agreement.

The learned Single Judge ne·gatived these contentions holdinii that the comnanv wa~ neither an industry run by or unrler the authority of the Union Government nor under its management but being a comoanv re~istered under the Companies Act the annrooriate, Government was the State Government. He also held that there was no nroof of the said union having entered into the imoup.ned a!!reement in collusion with the companv. He further held that the union hy its letter dated April 5, 1963.

I PRAGA TOOLS CORP. v. !MANUAL (She/at, I.) had raised an industrial dispute and had thereby requested that the question of retrenchment should be settled between the parties, that the said dispute with t~e. c?nsent of the comp~~y and the union was brought for conc1hat1on before the conc1hation officer and that the impugned agreement, having been brought obout in the course of the said conciliation proceeding~, was binding o.n all workmen including the petitioners in the writ petition despite the fact that they were members of the sabha and not of the union. In this view the learned Single Judge held that it was not necessary for him to decide the preliminary objection raised by the company that no writ petition for a mandamus could lie against it. He dismissed the writ oetition on merits on the basis of the aforesaid findings given by him. 28 out of the said 41 workmen who had filed the writ petition filed a letters patent apoeal a~ainst the said judgment.

The Division Bench of the High Court which heard the appeal held : ( l) that since the dispute relating to the company's right to retrenchment was already sett1e1 under s. 18 (I ) by the said supp!ementary settlement of December I 0, 1952. no industrial dispute could be said to exist or arise until the said sett'ement was dulv terminated under s. 19(2), that therefore there could be no valid conciliation oroceedings in respect of the ouestioo of retrenchment and that the impu~ned all-cement permitting the com'>anv to retrench. though it bore the signoture of the conciliation officer, was not a valid agreement: (2) that so ]l)ng as the earlier settlements were not terminated th~v held the field, and (3) tha• the sai~ JP-tter dated Aoril 5. 1963 relied on bv the learn~<! Sin~Je J"dge as having rai•ed an in~usHal <lisputc rezardinll retrenchment did not in fact C011tain or raise anv such question.

The D;vision Bench held that the said Jetter raised onlv the ouestion o' revision of wage-structure and other demonds bnt n~t the ouestin., of retrenchment. The le't~r of Ju•v 29, 191i1 of the c~dia•ion oftkefl) the com,,anv relied on bv the cl)m'>•n" also ,.,.ferre-< to the, deman.J, containei in the sa;d Jetter of Anr;I 5, 1963. nomely, the revision. cf wage-structi1re. tle•rness allowance. nro!'l()tlon and ('lther m•tters. hut not the question of the commnv•, ri<?ht of retren~hment.

The o;visicm Bencb therefore held that there was nothing on reco-d to show •'111 retrenchment was t'1e subject-m"tter of anv c~udliation befo·1 the conciliation officer and therefore anv ~~P-ement conferrini on the comoanv the rfoht to retrench so '""" ·a, the said e~·lie1 s;•.tl•!Jlent• were not terrninMe~ was invalid ;,., snite of •h• con· c1li~t1on nffic~r havl,,.,'! ~iven his assent ti) •nd affi~e-l his •i<!M.,Jre on it. '!'he Jearne<l Tu<l~es. hl)wever. held that the comn•nv ~ing ff one re11istered uncler the Comnanies Act an.J nnt !revi'1~ •nv statu!orv ~~IV or function to nerforrn wa• not one again•t. whie.h a writ pet!tton for a m.an-famur or anv other writ coul<! lie. No such petition could also lie against the conciliation officer as on the facts of the case that officer did not have to implement the impugned agreement.

The Division Bench, however, held that though the writ petition was not mairitainable it could grant a declaration iiIJ. favour of three workmeq, namely, appellants 6, 16 and 25 before it, that the impugned agreement was ·illegal and void and dismissed the writ petition subject to the said declaration. The company challenges in this appeal by special leave the va1idity of this judgment making such a declaration . . Thus the only question which arises in this appeal is whether in the view that it took that the writ petition was not maintainable against the company the High Court could still grant the said declaration. In our view the High Court was correct in holding that the writ petition filed under Art. 226 claiming against the company mandamus or an order in the nature of mandamus was misconceived and noi maintainable.

The writ obvi~usly was claimed against the company and not against the conciliation officer in respect of any public or statutory duty imposed on him by the Act as it was not he but the company who sought to implement the impugned agreement. No doubt, Art. 226 provides that every High Court shall have power to issue to any person or authority orders :wd writs including writs in the nature of habeas corpus. mandamus etc., or any of them for the enforcement of any of the rights conforred by Part III of the Constitution and for any other purpose. But it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it. has a sufficient legal interest.

Thus, an application for mandamus will not lie for an order of restatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a comp~iny towards its workmen or to resolve any private dispute. (see Sohan Lal v. Union of India)('). Jin Regina v.olndustrial Court & Ors.(') mandamus was refused against the Industrial court though set up under the Industrial Courts Act, 1919 on the ground that the reference for arbitration made to it by a minister was not one under the Act but a private reference. "This CoUrt has never exercised a general power" said Bruce, J., in R. v. Lewisham Union(') "to enforce th.e perfomiance of their statutory duties by public bodies on the application of anybody who chooses to apply for a mandamus. It has always required that the applicant for a mandamus should have a legal and a specific right to enforce the perforrnnce of those duties".

Therefore, ~e ~ndition ~re7e­ de11t for the issue of mandamus is that there ts m one claunmg (1) [l957J s.c.R. 738. (2) [\965J 1Q.tl.377. (3) (\897] \ Q.ll. 498, 501. 0 PRAG· 'fOOLS CORP. v. !MANUAL (Shelat, /.) it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is, in form, a command directed to a person, corporation or an inferior trib~l requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is, however, not necessary that the person or the auth<;>- rity on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for im!ani;e, to an official of a society to compel him to carry out the terms of the statute unde~ or by which the socie•y is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings.

A mandamus would also lie against a company constituted by a statute for the purposes oi fulfilling public resp<ll!ISibilities. (cf. Halsbury's Laws of England, (3rd ed.) Vol. II, p. 52 and onwards). The company being a non-statutory body and one incorporated under the Companies Act there was neither a statutory nor a public duty imposed on it by a statute in respect of which enforcemeint could be sought by means of a mandamus, nor was there in its workmen any corresponding legal right for enforcement of any such statutory or public duty. The High Court, therefore, was right in holding that no writ petition for a mandamus or an order in the nature of mandamus could lie against the company. The grievance o.f the company, however, is that though the High Court held rightly that .no such petition was maintainable, it nevertheless granted a declaration in favour of three of the said workmen, a declaratiqn which it could not issue once it held that the said writ petition was misconceived.

The argument was that such a declaration, if at all, could only issue against public bodies or companies or corporations set up or controlled by statutes in respect of acts done by them contrary to or in breach of the provisions of such statutes. If a public authority purports to dismiss ain employee otherwise than in accordance with mandatory procedural requirements or on grounds other ~!II! those sanction~d by the stat~te the courts would have ill!1sd1ction to declare its act a nullity. Thus, where a Hospital Services' Board dismissed a clerk for reasons not authorised by the relevant ccmditions of service a declaration was granted to the applicant by the House of Lords. (Mc. Clelland v. Northern [re- /and General Health Services Boards)('). Even where the statutory power of dismissal is not made subject to express procedural requirements or limited to prescribed grounds courts have granted a declaration that it was invalidly exercised if the autho- 0 l [1957] I W.L.R. 594.

"780 SUPREME COURT :REPORTS [1969] 3 S.C.IL rity has failed to observe rules of natural justice or has acted capriciously or in bad faith or for impliedly unauthorised purposes. (see Ridge v. Baldwin(') and Short v. Poole Corpora- 1ion)(2). Declarations of invalidity have often been founded on successful assertions that a public duty has not been complied with. (see Attorney-General v. St. Ives R.D.C.) (3). It is, therefore, fairly clear that such a declaration can be issued against a person or an authority or a corporation where the impugned act is in violation of or contrary to a statute under which it is set up or governed or a public duty or responsibility imposed on such person, authority or body by such a statute. The High Court, however, relied on two decisions of this Court as justifyiing it to issue the said declaration. The two decisions are Bidi, Bidi Leaves' and Tobacco Merchants Ass0ciation v. The State of Bomba,v(') and A. B. Abdulkadir v. The State of Kera/a ( ").

But neither of these two decisions is a parallel case which could be relied on. In the first case, the declaration was granted not against a company, as i~ the present case, but against the State Govel1lUilent and the declaration was as regards the invalidity of certain clauses of a notification issued by the Government in pursuance of power under s. 5 of the Minimum Wages Act, 1948 on the ground that the said clauses were beyond the purview of that section. In the second case also, certai.n rules made under the Cochin Tobacco Act of (M.E.) and the Travancore Tobacco Regulation of 1087 (M.E.) were declared void ab initio. These cases were therefore not ~ases where writ petitions were held to be not maintainable as having been filed against a company and despite that fac~ a declaration of invalidity of an impual!].ed agreement having been granted.

In our view once the writ petition was held to be misconceived on the ground that it could not lie against a company . which was neither a statutory company nor one having public duties or responsibil,ities imposed on it by a statute, no relief by way of a declaration as to invalidity of an impugned agreement between it and its employees could be granted. The High Court in these circumstances ougl!t to have left the wo-kmen to resort to the remedy available to them under the !industrial Disputes Act by raising ·an industrial dispute thereunder. The ooly course left open to the High Court was therefore to dismiss it. No such declaration against a company re!!istered under the Companies Act and not set up under any statute or having any public duities and responsibilities to perform under such a statute could be issued in writ proceedings in respect of an agreement which was il-ntially of a private character between it and its workmen. The (I) [l%4] A.C. 40. (2) [1921] Ch. 66 at PP.

90 to 91. (3) (1961] I Q.B. 366. (4) (1962] Supp. 1 S.C.R. 381. (S) [\962] Supp. 2 S.C.R. 741. PRAGA TOOLS CORP. v. !MANUAL (She/at, J.) High Court, therefore, was in error in granting the said declaration. The result is that the appeal must ~ allowed and the said declaration set aside. ~ the circumstances of the case we make no order as to costs. B G.C. Appeal allowed.