Civil Appeal Nos
4291 4292 of 1984 etc
From the Judgment and Order dated 1841984 of the Madras High Court in WA Nos
561 and 562 of 1983
KN Bhatt VC Mahajan Ms R Vegai Mr NGR Prasad CS Vaidyanathan Ravinder Bhatt KV Mohan SR Setia Raj Birbal Ambrish Kumar RP Kapoor Vijay Kumar Verma GN Rao K Ram Kumar MA Firoz PK Pillai CV Subba Rao M Satyanarain Rao and G Narasihamalu for the appearing parties
The Judgment of the Court was delivered by OJHA J
These appeals raise an identical question and are as such being decided by a common judgment
Before coming to the question involved in these appeals it would be necessary to give in brief the facts of each of these cases to indicate the circumstances in which the said question arises
Civil Appeal Nos
4291 4292 of 1984 have been preferred against the judgment dated 18th April 1984 of the Madras High Court in Writ Appeal Nos
561 and 562 of 1983
CV Raman the appellant in these two appeals was an employee in the Bank of India which is a Nationalised Bank
He was dismissed from service in pursuance of disciplinary action for certain charges framed against him
Aggrieved he preferred an appeal under Section 412 of the Tamil Nadu Shops and Establishments Act 1947 hereinafter referred to as the Tamil Nadu Shops Act
A preliminary objection was raised on behalf of the Bank of India to the effect that the Tamil 668 Nadu Shops Act was not applicable to the Bank in view of the provisions contained in Section 41c thereof which exempted inter alia an establishment under the Central Government from the purview of that Act
The Appellate Authority however took the view that it was a case where the preliminary objection may be decided along with the appeal
The Bank of India thereupon filed two writ petitions in the High Court being Writ Petition Nos
2013 and 2014 of 1979
The prayer contained in Writ Petition No 2013 of 1979 was for the issue of a writ of mandamus directing the Appellate Authority to dispose of the preliminary objection before taking up the appeal for hearing on merits
In Writ Petition No 2014 of 1979 on the other hand a prayer was made for the issue of a writ of prohibition directing the Appellate Authority not to proceed with the appeal
Both these writ petitions were allowed by a learned Single Judge of the Madras High Court accepting the plea raised by the Bank of India that it was an establishment under the Central Government and consequently the provisions of the Tamil Nadu Shops Act were not applicable to it in view of the exemption contained in this behalf in Section 41c
The two writ appeals referred to above were filed by the appellant against the decision in the aforesaid writ petitions which however were dismissed by a Division Bench of the High Court by the judgment which is under appeal in these two civil appeals
By the same judgment a Division Bench of the High Court also dismissed Writ Petition No 1550 of 1981
The petitioners of the said writ petition who were employees of the State Bank of India made an application under Section 51 of the Tamil Nadu Shops Act before the Commissioner of Labour with a request to hold that all the provisions of that Act would apply to them as persons employed in the State Bank of India
A preliminary objection was raised on behalf of the State Bank of India that it was an establishment under the Central Government within the meaning of Section 41c of the Tamil Nadu Shops Act and consequently the provisions of that Act were not applicable to it
The Commissioner of Labour however rejected the plea of the State Bank of India and held that the provisions of the Act were applicable to it
It is this order of the Commissioner of Labour which was sought to be quashed by a writ of certiorari in Writ Petition No 1550 of 1981
On the view that the State Bank of India was also an establishment under the Central Government the writ petition was allowed
Civil Appeal No 4329 of 1984 has been preferred against the said judgment by the State Bank s Staff Union whereas Civil Appeal No 4735 of 1984 has been preferred by the employees concerned
Civil Appeal No 1120 of 1976 has been preferred against the 669 judgment of the Andhra Pradesh High Court dated 3rd February 1976 in Writ Appeal No 268 of 1975 upholding the order of a learned Single Judge dated 14th November 1974 in Writ Petition No 5973 of 1973
section Rama Moorthy who is Respondent No 3 in this appeal was an employee of the appellant Syndicate Bank which is a Nationalised Bank
His services were terminated and an appeal was preferred by Respondent No 3 before the Labour Officer under the Andhra Pradesh Shops and Establishment Act 1966 hereinafter referred to as the Andhra Pradesh Shops Act
The Labour officer allowed the said appeal which was confirmed in a second appeal by the Labour Court
Aggrieved by these orders the appellant Bank filed writ petition No 5973 or 1973 for quashing of these orders
One of the pleas raised in the writ petition by the appellant was that it being an establishment under the Central Government within the meaning of Section 641b of the Andhra Pradesh Shops Act the provisions of that Act including the provisions of appeal were not applicable to it in view of the exemption contained in this behalf and consequently the orders passed in the appeals by the Labour officer and the Labour Court were without jurisdiction
This plea however did not find favour with the learned Single Judge who decided the writ petition and the writ petition was consequently dismissed
The Writ Appeal No 268 of 1975 preferred by the appellant Bank against that judgment was dismissed by a Division Bench of the High Court by the judgment which is the subject matter of this civil appeal
Civil Appeal No 1042 of 1979 has been preferred against the judgment of the Andhra Pradesh High Court dated 24th January 1979 in Writ Petition No 86 of 1979
N Satyanarayan Murthy who is Respondent No 3 in this appeal was an employee of the appellant Syndicate Bank which is a Nationalised bank and was dismissed after being found guilty of certain changes in disciplinary proceedings initiated against him
He preferred an appeal which was allowed
The Bank preferred a second appeal before the Labour Court which was dismissed
Thereafter the appellant Bank filed the aforesaid Writ Petition No 86 of 1979 before the High Court and urged that it being an establishment under the Central Government within the meaning of Section 641b of the Andhra Pradesh Shops Act the provisions of that Act were not applicable to it in view of the exemption contained in this behalf
Relying on the judgment in Writ Appeal No 268 of 1975 which is the subject matter of Civil Appeal No 1120 of 1976 this writ petition was dismissed by the judgment which is under appeal in this civil appeal
670 Civil Appeal No 837 of 1984 has been preferred against the judgment dated 841981 of the Kerala High Court in a writ petition being original Petition No 1419 of 1978
PA Stalin Respondent No 1 in this appeal who was an employee of the Bank of India a Nationalised Bank preferred an appeal under Section 18 of the Kerala Shops and Commercial Establishments Act 1960 hereinafter referred to as the Kerala Shops Act against an order passed by the Bank discharging him from service after conducting a domestic inquiry
A preliminary objection was raised by the appellant Bank with regard to the maintainability of the appeal on the ground that it being an establishment under the Central Government within the meaning of Section 31c of that Act the provisions thereof including Section 18 under which the appeal had been preferred were not applicable to it
This objection was however overruled by the Appellate Authority and original Petition No 1419 of 1978 was filed by the Bank in the High Court challenging the order of the Appellate Authority
The High Court did not agree with the contention of the appellant Bank and dismissed the original Petition aforesaid by its judgment dated 841981 and it is this judgment which is under appeal as seen above in this civil appeal
The common question which arises for consideration in all these appeals is as to whether the Nationalised Banks and the State Bank of India are establishments under the Central Government within the meaning of the Acts referred to above and consequently the provisions of the said Acts are not applicable to these Banks in view of the exemption contained in this behalf therein
In view of the definition of the term establishment read with that of commercial establishment contained in the Acts referred to above it has not been disputed even by the learned counsel for the various banks that a bank is an establishment
Consequently unless exempted the provisions of the said Acts shall apply to the State Bank of India and the nationalised banks also
Tamil Nadu Shops Act which is of the year 1947 and which really seems to be the precursor and foundation of the Kerala Shops Act and the Andhra Pradesh Shops Act which are of the years 1960 and 1966 respectively contains exemptions in Section 4
Sub section 1 of Section 4 starts with the words Nothing contained in this Act shall apply to 
Thereafter it contains clauses a to f which describe the persons and establishments who are exempted from the operation of the Act
Clauses c and f read as hereunder 671 c establishments under the Central and State Governments local authorities the Reserve Bank of India a railway administration operating any railway as defined in clause 20 of Article 366 of the Constitution and cantonment authorities f establishments which not being factories within the meaning of the  are in respect of matters dealt with in this Act governed by a separate law for the time being in force in the State
 What has to be considered is as to whether the State Bank of India and the nationalised banks can be said to be establishments under the Central Government as contemplated by clause c aforesaid
What does the word under in the said clause mean in the context in which it appears That is the crucial question which arises for consideration in these cases
The said word under  not having been defined in the concerned Acts recourse may be had to its dictionary meanings
Some of them are as follows In or into a condition of subjugation regulation or subordination  Webster s Third New International Subordinate or lower rank or position
In senses denoting subordination or subjugation with abstract or other subject denoting the authority or control direction case examination restraint etc In or into a position or state of subjugation or submission Shorter oxford English Dictionary Subordinate subjected to The Compact Edition of the oxford Dictionary Subject to the authority rule control of subject to the supervision instruction or influence of The Grolier International Dictionary In a position of inferiority or subordination to subject to the rule government direction guidance instruction or influence of as he is under my care I served under his father  672 In a state of liability obligation Lower in authority position power etc subordinate held in control or restraint used predicatively Webster s Dictionary of the English Language Encyclopaedia The term sometimes used in its literal sense of below in position  but more frequently in its secondary meaning of inferior  or subordinate Boviar s Law Dictionary Inferior subordinate of lower rank or position 10 Denoting subordination to or control by a person or persons having or exercising recognising authority or command with abstract or other subs
denoting authority or control with or without specification of the person or persons exercising it The Compact Edition of the oxford English Dictionary Under has the same significance as by virtue of  by or through the authority of In Venkataramiya s Law Lixicon The word under may be used in statute in its literal sense as indicating condition of inferiority or subservience or as meaning subject to or in conformity with denoting curtailment or restriction of but nevertheless agreement or congruity with something else to which it is made applicable
Alsop vs pierce  802 and Phrases Permanent Edition We may now advert to the composition and constitution of the State Bank of India and the nationalised banks
The preamble of the hereinafter referred to as Act No 23 of 1955 reads as under Whereas for the extension of banking facilities on a large scale more particularly in the rural and semi urban areas and for diverse other public purposes it is expedient to constitute a State Bank for India and to transfer to it the 673 undertaking of the Imperial Bank of India and to provide for other matters connected therewith or incidental thereto Section 3 provides that a bank to be called the State Bank of India shall be constituted to carry on the business of a banking and other business in accordance with the provisions of the Act and for the purpose of taking over the undertaking of the Imperial Bank
It further provides that the Reserve Bank together with such other persons as may from time to time become shareholders in the State Bank in accordance with the provisions of this Act shall so long as they are shareholders in the State Bank constitute a body corporate with perpetual succession and a common seal under the name of the State Bank of India and shall sue and be sued in that name
It shall have power to acquire and hold property whether movable or immovable for the purposes for which it is constituted to dispose of the same
According to Section 4 the authorised capital of the State bank is to be twenty crores of rupees divided into twenty lakhs of fully paid up shares of one hundred rupees each
The Central Government however has been given the power to increase or reduce the authorised capital as it thinks fit so however that the shares in all the cases shall be fully paid up shares of one hundred rupees each
Likewise the Central Government under Section 52 has been given the power from time to time to increase issued capital in the manner stated therein
Sub section 3 contemplates that no increase in the issued capital beyond twelve crores and fifty lakhs of rupees shall be made without the previous sanction of Central Government
Section 6 contemplates that all shares in the capital of the Imperial Bank shall be transferred to and shall vest in the Reserve Bank free of all trusts liabilities and encumbrances and the undertaking of the Imperial Bank shall be transferred to and shall vest in the State bank subject to the other conditions laid down therein
Under sub section 2 of Section 7 the power to determine as to whether persons mentioned therein have observed the conditions contemplated by the said sub section has been given to the Central Government and its decision has been made final
Sub section 3 of Section 7 contemplates that the appointment promotion or increment contemplated by the said sub section as have been confirmed by the Central Government shall have effect or be payable or claimable
Likewise the continued grant of the pension allowance or other benefit as the case may be has been made subject to the direction of the Central Government in this behalf
Section 8 contemplates that for the persons who immediately before the appointed day were the trustees of the funds mentioned therein there shall be substituted as trustees such persons 674 as the Central Government may by general or special order specify
Sub section 1 of Section 16 contemplates that the Central office of the State Bank shall be at Bombay
The Central Government however has been conferred with the power to provide otherwise by Notification in the official Gazette
Sub section 5 of Section 16 provides that notwithstanding anything contained in sub section 4 the State Bank shall establish not less than four hundred branches in addition to the branches referred to in sub section 3 within five years of the appointed day or such extended period as the Central Government may specify in this behalf and the places where such additional branches are to be established shall be determined in accordance with any such programme as may be drawn up by the Central Government from time to time in consultation with the Reserve bank and the State Bank
Even though in view of Section 17 the general superintendence and direction of the affairs and business of the State Bank have been entrusted to the Central Board Section 18 contemplates that in the discharge of its functions the State Bank shall be guided by such directions in matters of policy involving public interest as the Central Government may in consultation with the Governor of the Reserve Bank and the Chairman of the State Bank give to it and that if any question arises whether the direction relates to a matter of policy involving public interest the decision of the Central Government thereon is to be final
Section 19 deals with the composition of the Central Board
Clauses a b c ca cb and e of sub section 1 sub sections 1A 2 and 3A indicate that the Central Government has been given extensive power in the matter of composition of the Central Board
Section 45 provides that no provision of law relating to the winding up of companies shall apply to the State Bank and the State Bank shall not be placed in liquidation save by order of the Central Government and in such manner as it may direct
This Section therefore entitles the Central Government even to liquidate the State Bank
Section 49 confers power on the Central Government in consultation with the Reserve Bank to make rules to provide for all matters mentioned therein
The power given under section 50 to the Central Board to make regulations has been made subject to the previous sanction of the Central Government
These provisions indicate that the Central Government has a deep and pervasive control over the State Bank of India
Almost similar is the position with regard to the nationalised banks also
The hereinafter referred to as Act No 5 of 1970 was enacted to provide for acquisition and transfer of the undertakings 675 of certain banking companies having regard to their size resources coverage and organisation in order to control the heights of the economy and to meet progressively and serve better the needs of development of the economy in conformity with national policy and objectives and for matters connected therewith or incidental thereto
Clauses d and f of Section 2 of this Act define corresponding new banks and existing banks
First Schedule to the Act in column 1 enumerates the names of the existing banks whereas in column 2 the names of the corresponding new banks
Sections 3 and 4 indicate that the corresponding new banks which are constituted on the commencement of this Act have taken over the undertakings of the concerned existing banks
Section 6 contemplates that every existing bank shall be given by the Central Government such compensation in respect of transfer under Section 4 to the corresponding new banks of the undertakings of the existing banks as is specified against each such bank in the Second Schedule
Section 7 provides that the Head officer of each corresponding new bank shall be at such place as the Central Government may by Notification in the official Gazette specify in this behalf
The general superintendence direction and management of the affairs and business of a corresponding new bank are to vest in a Board of Directors and it is the Central Journeymen which in consultation with the Reserve Bank has been given the power under sub section 3 to constitute the first Board of Directors consisting of not more than seven persons to be appointed by the Central Journeymen
The proviso to the said sub section authorises the Central Government if it is of opinion that it is necessary in the interests of the corresponding new bank so to do to remove a person from the membership of the first Board of Directors and appoint any other person
in his place
The proviso to sub section 5 to Section 7 contemplates that the Central Journeymen may if the Chairman of an existing bank declines to become or to continue the function as a Custodian of the corresponding new bank or it is of opinion that it is necessary in the interests of the corresponding new bank so to do appoint any other person as the Custodian of a corresponding new bank and the Custodian so appointed shall receive such emoluments as the Central Journeymen may specify in this behalf
According to sub section 6 thereof the Custodian is to hold office during the pleasure of the Central Journeymen
Section 8 on the other hand contemplates that every corresponding new bank shall in the discharge of its functions be guided by such directions in regard to matters of policy involving public interest as the Central Government may after consultation with the Governor of the Reserve Bank give
Sub section 1 of Section 9 of this Act confers power on the Central Journeymen to make a scheme for carry 676 ing out the provisions of this Act after consultation with the Reserve Bank
Sub section 2 of Section 9 provides that in particular and without prejudice to the generality of the power contained in sub section 1 of the scheme may provide for the capital structure of the corresponding new bank the constitution of the Board of Directors by whatever name called of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient the reconstitution of any corresponding new bank into two or more corporations the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution the transfer of the whole or any part of the undertaking of a corresponding new bank to any other banking institution or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank and such incidental consequential and supplemental matters as may be necessary to carry out the provisions of this Act
Sub section 4 entitles the Central Government in consultation with the Reserve Bank to make a scheme to amend or vary any scheme made under sub section 1
Sub section 5 inter alia contemplates that the scheme so prepared by the Central Government shall be binding on the corresponding new banks or corporation or banking institutions and also on all other persons mentioned therein
Section 10 deals with closure of accounts and disposal of profits
Sub section 2 thereof contemplates that the remuneration payable to every auditor of a corresponding new bank shall be such as the Reserve Bank may fix in consultation with the Central Government
Under subsection 4 every auditor of a corresponding new bank has to make a report to the Central Government upon the annual balance sheet and accounts and such report shall contain what is provided for in clauses a to e
Sub section 7 contemplates that after making provision for monies specified therein a corresponding new bank shall transfer the balance of profits to the Central Government
Sub section 7A makes it obligatory on every corresponding new bank to furnish to the Central Government the annual balance sheet the profit and loss account and the auditor s report and a report by its Board of Directors on the working and activities of the bank during the period covered by the accounts
In view of sub section 8 the Central Government shall cause every auditor s report and report on the working and activities of each corresponding new bank to be laid before each House of Parliament
Sub section 9 without prejudice to the provisions contained earlier authorises the Central Government at any time to appoint such number of auditors as it thinks fit to examine and report on the accounts of a corresponding new bank
Sub section 3 of Section 12 677 contemplates that for the persons who immediately before the commencement of this Act were the trustees for any pension provident gratuity or other life fund constituted for the officers or other employees of an existing bank there shall be substituted as trustees such persons as the Central Government may by general or special order specify
Section 18 of this Act is in pari materia with Section 45 of the 
It provides that no provision of law relating to winding up of corporations shall apply to a corresponding new bank and no corresponding new bank shall be placed in liquidation save by order of the Central Government and in such manner as it may direct
A nationalised bank also can therefore like the State Bank of India be liquidated by the Central Government
Under Section 19 the power of the Board of Directors of a corresponding new bank to make regulations is subject to obtaining the previous sanction of the Central Government
A conspectus of the provisions of Act No 23 of 1955 and Act No 5 of 1970 read with the meanings of the term under referred to above leaves no manner of doubt that the State Bank of India and the nationalised banks are clearly establishments under the Central Government For the employees of these banks it was urged by their learned counsel that these banks are autonomous corporations having distinct juristic entity with a corporate structure of their own and cannot as such be treated to be owned by the Central Government
According to learned counsel the word under used in the expression under the Central Government connotes complete control in the sense of being owned by the Central Government
We find it difficult to agree with this submission
We shall shortly deal with the legal position with regard to an autonomous corporation having distinct juristic entity with a corporate structure
Suffice it to say at this place that to uphold the submission of learned counsel for the employees the word under will have to be substituted by the word of in the relevant subsection
It is obvious that the word under cannot be taken to have the same meaning as word of which may bring in the notion of ownership
Had that been the intention of the Legislature we find no cogent reason as to why the word of was not used in place of the word under in the relevant sub section
Indeed the concept of under can be relevant only when there are two entities one of which may be under the other
A department of the Government strictly speaking is a part of the Government and can only loosely be termed as under the Government
Consequently the mere fact that the State 678 Bank of India and the nationalised banks are different entities as corporate bodies for certain purposes cannot by itself be a circumstance from which it may be deduced that they cannot be establishments under the Central Government
Some of the cases on which reliance was placed by the High Court of Madras in taking the view that these banks were establishments under the Central Government had been rendered with reference to Article 12 of the Constitution
It was urged by learned counsel for the employees that since Article 12 of the Constitution defining the term State so as to include authorities under the control of the Government of India occurs in Part III of the Constitution dealing with fundamental rights the decisions in the cases dealing with Article 12 could not be made the basis for the decision that the State Bank of India and the nationalised banks were establishments under the Central Government within the meaning of the Acts referred to above with regard to shops and commercial establishments
Even though that be so it cannot be gainsaid that the salient principles which have been laid down in those cases with regard to the authorities having a corporate structure and exercising autonomy in certain spheres will certainly be useful for determining as to whether the State Bank of India and the nationalised banks are establishments under the Central Government
Ajay Hasia etc
vs Khalid Mujib Sehravardi  Ors
 1981 2 SCR Page 79 is a decision of a Constitution Bench of this Court
The question which came up for consideration in that case was whether Jammu and Kashmir Regional Engineering College Srinagar registered as a society under the Jammu and Kashmir Registration of Societies Act 1898 was a State under Article 12 of the Constitution and as such amenable to writ jurisdiction
It was held But as the tasks of the Government multiplied with the advent of the welfare State it began to be increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often specialised and highly technical in character and which called for flexibility of approach and quick decision making
The inadequacy of the civil service to deal with these new problems came to be realised and it became necessary to forge a new instrumentality or administrative device for handling these new problems
It was in these circumstances and with a view to supplying this administrative need that the corporation came into being as the third arm of the Government and over the years it has been increasingly utilised by the Government for setting up and running public enterprises 679 and carrying out other public functions
Today with increasing assumption by the government of commercial ventures and economic projects the corporation has become an effective legal contrivance in the hands of the Government for carrying out its activities for it is found that this legal facility of corporate instrument provides considerable flexibility and elasticity and facilitates proper and efficient management with professional skills and on business principles and it is blissfully free from departmental rigidity slow motion procedure and hierarchy of officers
The government in many of its commercial ventures and public enterprises is resorting to more and more frequently to this resourceful legal contrivance of a corporation because it has many practical advantages and at the same time does not involve the slightest diminution in its ownership and control of the undertaking
In such cases the true owner is the State the real operator is the State and the effective controllorate is the State and accountability for its actions to the community and to Parliament is of the State
It is undoubtedly true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount off autonomy which is necessary as well as useful from the point of view of effective business management but behind the formal ownership which is cast in the corporate mould the reality is very much the deeply pervasive presence of the Government
It is really the Government which acts through the instrumentality or agency of the corporation and the juristic veil of corporate personality worn for the purpose of convenience of management and administration cannot be allowed to obliberate the true nature of the reality behind which is the Government Emphasis supplied If the criteria laid down above is applied to the facts of the instant cases it is obvious that even though the State Bank of India and the nationalised banks may not be owned as such by the Central Government and its employees may not be the employees of the Central Government they certainly will fall within the purview of the expression under the Central Government in view of the existence of deep and pervasive control of the Central Government over these banks
680 Learned counsel for the employees placed reliance on the decision of this Court in Heavy Engineering Mazdoor Union vs The State of Bihar  Ors 1969 3 SCR Page 995 where at page 998 it was held that the words under the authority of mean pursuant to the authority such as where an agent or a servant acts under or pursuant to the authority of his principal or master and that the same obviously cannot be said of a company incorporated under the Companies Act whose constitution powers and functions are provided for and regulated by its memorandum of association and the articles of association and which has a separate existence recognised as a juristic person
In our opinion that decision is clearly distinguishable
The question which came up for consideration in that case was whether an industry carried on by a company incorporated under the Companies Act was an industry carried on under the authority of the Central Government so that the Central Government may be the appropriate Government for making a reference under the 
In the instant cases we are not concerned with the question as to whether the various banks referred to above are carried on under the authority of the Central Government
The question as seen above which falls in these cases for consideration is whether in view of the existence of deep and pervasive control of the Central Government over these banks they are establishments under the Central Government for purposes of the Acts aforesaid dealing with Shops and Commercial Establishments
Reliance was also placed by learned counsel on Hindustan Aeronautics Ltd vs The Workmen and Ors
  where again in the context of the the same view was taken relying on the earlier decision in the case of Heavy Engineering Mazdoor Union supra
In this connection it may be noticed that even in the case of Heavy Engineering Mazdoor Union supra it was observed that the question whether a corporation is an agent of the State would depend upon the facts of each case
After referring to the decision in Graham vs Public Works Commissioner it was observed that where a State setting up a corporation so provided such a corporation could be easily identified as the agent of the State
This distinction was noticed in a subsequent decision of this Court in Regional Provident Fund Commissioner Karnataka vs Workmen represented by the General Secretary Karnataka 1984 II LLJ Page 503 Provident Fund Employees  Union and Another
Reliance was then placed by learned counsel for the employees on the following observations in the case of Western Coalfields Ltd vs Special Area Development Authority Korba and Anr 1982 2 SCR Page 1 681 The third contention of the Attorney General flows from the provisions of article 2851 of the Constitution which says that the property of the Union shall save in so far as Parliament may by law otherwise provide be exempt from all taxes imposed by a State or by any authority within a State
Section 127A2 of the Madhya Pradesh Municipalities Act and Section 136 of the Madhya Pradesh Municipal Corporation Act also provide that the property tax shall not be leviable inter alia on buildings and lands owned by or vesting in the Union Government
Relying on these provisions it is contended by the Attorney General that since the appellant companies are wholly owned by the Government of India the lands and buildings owned by the companies cannot be subjected to property tax
The short answer to this contention is that even though the entire share capital of the appellant companies has been subscribed by the Government of India it cannot be predicated that the companies themselves are owned by the Government of India
The companies which are incorporated under the Companies Act have a corporate personality of their own distinct from that of the Government of India
The lands and buildings are vested in and owned by the companies the Government of India only owns the share capital
 In our opinion this decision too is hardly of any assistance inasmuch as in the instant cases the Banks are not asserting that they are owned by the Central Government
The other case on which the learned counsel for the employees relied on is Rashtriya Mill Mazdoor Sangh Nagpur vs The Modal Mills Nagpur and another 1985 1 SCR Page 751
That case again is distinguishable
The question which came up for consideration in that case was with regard to the consequence that ensued on the issue of a notified order appointing authorised Controller under Section 18A of the Industries Development  Regulation Act 1951
It was pointed out that the consequence of such a notified order being issued is to divert the management from the present managers and to vest it in the authorised Controller
It could not be said that on the issue of such an order the industrial undertaking is engaged in the industry carried on under the authority of the department of the Central Government inasmuch as the expression under the authority of any department of the Central Government in ordinary parlance means that the department is directly responsible for the management of the industrial undertaking
It was further pointed out that the power to regulate the management or control the management is entirely 682 distinguishable from the power to run the industry under the authority of the department of the Central Government
As seen above no such question arises in the instant cases while determining the point as to whether the banks referred to above are establishments under the Central Government
Union of India and others vs N Hargopal and others 1987 1 LLJ Page 545 on which reliance was next placed was a case where the question arose as to whether establishments in public sector were covered by the provisions of the Employment Exchange Compulsory Notification of Vacancies Act 1959
In the context of certain executive instructions issued by the Government of India it was held that while the Government was at perfect liberty to issue instructions to its own departments and organisations provided the instructions do not contravene any constitutional provision or any statute these instructions cannot bind other bodies which are created by statute and which function under the authority of a statute
This decision also obviously is of no assistance in deciding the point which has been raised in the instant cases
Learned counsel for the employees also referred to the decision of this Court in Thote Bhaskara Rao vs The AP Public Service Commission and others Judgment Today 1987 4 SCC Page 464 where it was held that employees in Hindustan Shipyard which was a Government owned undertaking could not be equated with the employees of the Government
Since in the instant cases the employees of the State Bank of India or the nationalised banks are not asked to be treated as employees of the Central Government this decision too is of no assistance
As pointed out by this Court in Bihari Lal Dobray vs Roshan Lal Dobray  the true test of determination of the question whether a statutory corporation is independent of the Government depends upon the degree of control
In this view of the matter we are of opinion that no exception can be taken to the view of the Madras High Court in its judgments which are the subject matter of Civil Appeal Nos 4291 4292 of 1984 4735 of 1984 and 4329 of 1984
As regards the judgment of the Full Bench of the Kerala High Court which is the subject matteer of Civil Appeal No 837 of 1984 and the judgments of the Andhra Pradesh High Court which are the subject matter of Civil Appeal Nos
1042 of 1979 and 1120 of 1976 it may be pointed out that what has weighed with the learned Judges who decided these cases is 1 that the decisions dealing with the term other authorities within the meaning of Article 12 of the Constitution were not of much assistance 683 2 that the Central Government exercises control over the nationalised banks only to a limited extent and that there was nothing to enable such banks to identify with the Central Government particularly when as a legal person these banks have got a right to hold and acquire property and have almost full freedom in the matter of day to dayadministration 3 Even though in the relevant clause containing exemption the Reserve Bank of India had been mentioned there was no such mention with regard to nationalised banks
As regards the first reason referred to above we have already pointed out that even if the decisions dealing with Article 12 of the Constitution are not made the foundation for deciding the point in issue the principles enumerated therein referred to above particularly with regard to deep and pervasive control are relevant for deciding the point in issue
As regards the second reason referred to above suffice it to point out that for holding that the State Bank of India and the nationalised banks are establishments under the Central Government which have a corporate structure and have freedom in the matter of day to day administration it is not necessary that these banks should be owned by the Central Government or be under its absolute control in the sense of a department of the Government
With regard to the last reason namely the circumstance that even though Reserve Bank of India is mentioned specifically in the relevant clause containing exemption neither State Bank of India nor the nationalised banks are so mentioned it may be pointed out that the Reserve Bank of India was established as Shareholders  Bank under Act 2 of 1934
As seen above the Kerala Shops Act and the Andhra Pradesh Shops Act which are of the years 1960 and 1966 respectively were modelled almost on the pattern of the Tamil Nadu Shops Act which is of the year 1947
When Section 41c of this Act referred to the Reserve bank of India in 1947 it obviously referred to it as Shareholders  Bank
The Reserve Bank Transfer to Public Ownership Act Act 82 of 1948 came into force on 1st January 1949 and it was thereafter that the shares in the capital of the Reserve Bank came to belong to the Central Government
In this background no undue emphasis can be placed on the circumstance that the State Bank of India or the nationalised banks did not find mention in the provision containing exemption even though Reserve Bank of India was specifically mentioned therein
For the reasons stated above the aforesaid decisions of the Kerala High Court and the Andhra Pradesh High Court deserve to be set aside
684 On the view which we have taken namely that the State Bank of India and the nationalised banks are establishments under the Central Government we do not find it necessary to consider the question as to whether these banks are establishments which not being factories within the meaning of the are in respect of matters dealt with in the Tamil Nadu Shops Act governed by a separate law far the time being in force in the State so as to be entitled to claim exemption under clause f of sub section 1 of Section 4 of the said Act or of the corresponding provisions in the Kerala Shops Act and the Andhra Pradesh Shops Act
In the result Civil Appeal Nos
4291 4292 of 1984 4329 of 1984 and 4735 of 1984 are dismissed
Civil Appeal No 1120 of 1976 is allowed and the judgment of the Division Bench of the High Court dated 3rd February 1976 in Writ Appeal No 268 of 1975 as also the judgment of the learned Single Judge dated 14th November 1974 in Writ Petition No 5973 of 1973 as well as the orders of the Labour Officer in the appeal filed by Respondent No 3 and of the Second Appellate Authority in the second appeal filed by the appellant bank under the provisions of the Andhra Pradesh Shops Act are set aside
Civil Appeal No 1042 of 1979 is also allowed and the judgment of the Andhra Pradesh High Court dated 24th January 1979 in Writ Petition No 86 of 1979 as also orders passed by the first and second appellate authorities in the apeals preferred by Respondent No 3 and the bank respectively under the Andhra Pradesh Shops Act are set aside
Civil Appeal No 837 of 1984 is also allowed and the judgment of Kerala High Court in Writ Petition No 1419 of 1978 is set aside
The preliminary objection raised on behalf of the bank before the Appellate Authority in the appeal filed by Respondent No 1 under Section 18 of the Kerala Shops Act to the effect that the said appeal was not maintainable is upheld
With the result that if the said appeal is still pending it shall be disposed of as not maintainable and in case it has been decided the said decision shall be treated as without jurisdiction
The various employees whose appeals preferred under the Kerala Shops Act or the Andhra Pradesh Shops Act preferred to above have been hold to be not maintainable and the orders passed therein have been set aside shall be at liberty to take recourse to such other remedies as may be available to them in law
In the circumstances of the case however there shall be no order as to costs in any of these appeals
SL Civil Appeal Nos
4291 42924329  473584 dismissed and CA Nos
112076 104279  83784 allowed


Summary:
By availing of its powers under sub section
2 of section 49 of the Gujarat Sales Tax Act 1969 to exempt in the public interest any specified class of sales from payment of the whole or any part of the tax payable under the Act the Government of Gujarat issued two notifications prescribing a lower rate of tax for goods manufactured within the State as compared to similar goods imported from outside the State
The petitioners who are manufacturing electronic goods including television sets etc in factories located outside the State challenged the validity of these notifications as violative of article 301 of the Constitution
The State Government contended that the rate of tax was reduced in order to provide as incentive for encouraging local manufacturing units and sought to draw support for its action from clauses b and c of article 39
Allowing the Petition and quashing the notifications aforesaid  HELD article 301 declares that subject to the provisions of Part XIII trade commerce and intercourse throughout the territory of India shall be free
Clause 1 of article 303 prohibits the legislature of a State from making any law giving or authorising the giving of any preference to one State or another or making or authorising the making of any discrimination between one State and another
The terms of the prohibition are subject to article 304
Clause a of article 304 provides that the legislature of a State may by law impose on goods imported from other States any tax to which similar goods manufactured or produced in that State are subject so however as not to discriminate between goods so imported and goods so manufactured or produced
It is apparent that while a State Legislature may enact a law 769 imposing a tax on goods imported from other States as is levied on similar goods manufactured in that State the imposition must not be such as to discriminate between goods so imported and goods so manufactured
We do not think any support can be derived from the two clauses of article 39 to justify the reduction in the rate of tax in the case of goods manufactured locally
Clause a of article 304 is clear in meaning
An exception to the mandate declared in article 301 and the prohibition contained in cl
1 of article 303 can be sustained on the basis of cl
a of article 304 only if the conditions contained in the latter provision are satisfied
770H771A B772F G Firm ATB Mehtab Majid  Co vs State of Madras  Anr 1963 Suppl
2 SCR 435 Atiabari Tea Co Ltd vs The State of Assam and Ors
   The Automobile Transport Rajasthan Ltd vs The State of Rajasthan  Ors 1963 1 SCR 491 and H Anraj etc
vs Government of Tamil Nadu etc  relied on
ii The next question is whether for the purpose of ensuring the same rate of tax between the petitioners and the local manufacturers the levy of the higher rate of tax suffered by the petitioners should be quashed and they be held entitled to the levy of the lower rate applied to the local manufacturers or should the higher rate imposed on the petitioners be maintained and the notifications imposing the lower rate on local manufacturers be quashed
The grievance of the petitioners has arisen only because the local manufacturers have been favoured by a lower rate of tax
The rate levied on the petitioners is the rate prescribed under section 7 of the Act
That is the rate applied generally
It represents the normal standard of levy
The lower rate applied to local manufacturers has been applied by invoking sub section
2 of section 49 of the Act
It represents a departure from or exception to the general norm
In cases such as this the Court should when granting relief choose the alternative which would give effect to the statutory intention
And therefore in this case what is called for is the quashing of the impugned notifications reserving a lower rate of tax for local manufacturers
772H 773A E