Central Govt Is Appropriate Authority For Industrial Disputes Involving Nationalized Companies Irrespective Of Contrary Notifications : Calcutta HC

The petitioner company was taken over by the Government of India by virtue of the Braithwaite & Company (India) Limited (Acquisition & Transfer of Undertaking) Act, 1976 (Nationalization Act). In terms of Section 12(1) of the Nationalization Act, all the workmen immediately before the appointed day of the company became the employees of the Central Government on or from the appointed day (1st April, 1975).

An industrial dispute was raised by the respondent Union regarding punishment imposed by the petitioner company. The petitioner contended that the Central Government is the “appropriate Government” for such reference, but the State Government issued an order of reference dated February 5, 2008 to the Second Industrial Tribunal for adjudication of the dispute.

An application was filed by the petitioner raising an objection regarding the maintainability of the reference on the ground of jurisdiction. However, the application was rejected by the Tribunal by order dated November 10, 2010. The Tribunal held that the Central Government's notification dated 05.05.2008 cancelled the earlier notification of 03.07.1998, but the acts done or proceedings initiated under the earlier notification remained valid because the new notification did not apply retrospectively. It was further held that the industrial dispute reference was made before 05.05.2008, therefore, it was considered properly made by the State Government. Further, the petitioner filed a review petition which was also rejected by the Tribunal through an order dated February 18, 2011.

Aggrieved by the same, the petitioner filed writ appeal for setting aside the orders dated 10.11.2010 and 18.02.2011 passed by the Second Industrial Tribunal.

It was submitted by the petitioner that as company was nationalized under the 1976 Act, therefore the workmen became employees of the Central Government. Further the appropriate Government under the Industrial Disputes Act was the Central Government. Further the petitioner relied upon the case of Steel Authority of India Ltd. v. National Union of Waterfront Workers wherein it was held that an industry is carried on under the authority of the Central Government by virtue of the nationalization. It was submitted by the petitioner that the Notification dated July 3, 1998, relied upon by the Tribunal, had been revoked by a subsequent Notification dated May 5, 2008. It was further contended that due to the judgment in Steel Authority of India Ltd., the 1998 Notification had become infructuous.

On the other hand it was contended by the respondent that the 2008 Notification had no retrospective effect and therefore, the earlier Notification governed the dispute as on the date of reference by the State Government. Therefore, the Tribunal had rightly held that the State Government was the appropriate Government in view of the existing Notification on the date of reference.

Findings and Observations of the Court

It was observed by the court that the petitioner company was nationalized under the Nationalization Act and was operating under Central Government authority, therefore it falls within the definition of appropriate government. The Section 2(a)(i) of the Industrial Disputes Act, 1947 was referred by the court which states that the “appropriate government” is the Central Government for industrial disputes concerning industries carried on by or under the authority of the Central Government, including companies where at least 51% of the share capital is held by the Central Government.

The case of Steel Authority of India Ltd. v. National Union Waterfront Workers was relied upon by the court wherein the Supreme Court held that if an industry is being run directly by the Central Government, then the Central Government will be the appropriate government for handling disputes. It was further held that just because a company is owned by the government does not automatically mean the Central Government is the appropriate government, it must also be shown that the company is carrying on the industry under the Central Government's authority. This authority can come either from a law or through some formal delegation of powers.

It was held by the court that even if the notification of 2008 revoking the notification of 1998 had not been passed, the petitioner's case would be governed by the Steel Authority of India Limited case and therefore, the Central Govt. was the appropriate authority. It was held by the court that the petitioner carried on the 'industry' under the authority of the Central Government as it was taken over by the Central Government by virtue of the Nationalization Act. Therefore, the right, title and interest of the company has been transferred to and vested in the Central Government by virtue of such acquisition.

It was further held by the court that as per Section 12(1) of the Nationalization Act, 'Workmen' within the definition of the Industrial Disputes Act, 1947 have become the employees of the Central Government. Thus the orders under challenge dated 10.11.2010 and 18.02.2011 passed by Second Industrial Tribunal, being not in accordance with law were set aside by the court.

With the aforesaid observations, the appeal was disposed of.

Case Name: M/s. Braithwaite & Co. Limited v. Second Industrial Tribunal & Ors.

Case No.: WPA 2477 of 2012

Counsel for the Petitioner: Ranajay De (Sr. Adv.), Basabjit Banerjee, Adityajit Abel Bose

Counsel for the State/Respondents: Bipin Ghosh