Case: Hindustan Steelworks Constrn Vs. State Of Kerala

Welfare Funds Act which has been enacted to protect the interest of the labourers.Such beneficial object under the Act should not be allowed to be frustrated by expanding the meaning of instrumentality or agency of the Central Government. Mr. Nariman has further submitted that even if on account of any ambiguity two interpretations are possible, the one which will go to the benefit of labourers must be accepted so that the purpose of the Act is not frustrated. Mr. Nariman has also submitted that the appellant is a public undertaking. Referring to Clause (C) of Section2 of the Welfare Funds Act, Mr. Nariman has submitted that the expression "Construction Work" undertaken by the Government of India or any of its establishments or institutions is very significant. Mr. Nariman has also submitted that clause (e) of Section2 of the Welfare Funds Act defines "Contractor" and according to the definition under clause (e) of Section 2, contractor means any person registered as a contractor for carrying out construction work for consideration for a government company for any State Corporation or Society made by the Government of Kerala and includes Kerala State Government Corporation. Mr. Nariman has submitted that the legislature has intended to include government company as a contractor in Clause (e) and if the legislature had intended to exclude government company or public undertaking for the purpose of Section 2(e), there would have been specific exclusion of such government company but such exclusion has deliberately not been made in clause 2(e). Therefore, the appellant company cannot claim exemption from the purview of the Welfare Funds Act. 18. Mr. Sreekumar, learned counsel appearing for Respondent No. 3, namely, the Construction Workers Welfare Board, has also disputed the contentions made by Mr. Gupta. Mr. Kumar has submitted that the appellant is a government company and claims that being a government company it should get exemption from the enforcement of the Welfare Funds Act. Mr. Kumar has submitted that the government company has been defined under Section617 of the Companies Act. The Government company means any company is which not less that fifty-one per cent of paid-up share capital is held by the Central Government or by any State Government or partly by the State Government or Governments and includes a company which is a subsidiary of the Government Company. Hence, only with 51% of paid up share capital belonging to the Central Government or to the State Government or to both, a company will be held to be a government company even though such company cannot be held to be fully owned by the Government. By the definition of Government company under the Companies Act, the Government company need not necessarily be company fully owned by the Government and by that process an instrumentality of the Government. Hence, claim of exclusion from the purview of the Act simply on account of being a government company cannot be accepted. Mr. Kumar has also supported the contentions made by Mr. Nariman that the appellant company having undertaken the contractual work as a commercial venture should not be permitted to claim exemption from the purview of the Welfare Funds Act against the interest of the poor labourers for whose benefit the said Act has been enacted. He has, therefore, submitted that no interference is called for by this Court and the appeal should be dismissed. 19. After giving our careful consideration to the facts of the case and the respective contentions made by the learned counsel for the parties, it appears to us that the appellant company cannot be held to be a department of the Government. There may be deep and pervasive control of the Government over the appellant company and the appellant company, on such account may be an instrumentality or agency of the Central Government and as such a State within the meaning of Article 12 of the Constitution. Even though the appellant company is an agency or instrumentality of the Central Government, it cannot be held to be a department or establishment of the Government in all cases. Such instrumentality or agency has been held to be a third arm of the Government in Ajay Hasias case (supra) but it should not be lost sight of that it was only in the context of enforcement of fundamental rights against the action of the Government and its instrumentalities or agencies it was held that such agencies were the third arm of the Government and they cannot avoid Constitutional obligation. There is no question of enforcing any fundamental right in the instant case. On the contrary, the question of protecting the welfare of the employees vis-a-vis the instrumentality or agency of the Central Government under the Welfare Funds Act is to be kept in mind for the purpose of deciding the rival contentions of the parties.If Section2(c) and (e) of the Welfare Funds Act are taken into consideration, it will be quite apparent that the legislature has not intended to exclude the Government company or the statutory Corporations from the purview of the Welfare Funds Act. The decision in C. V. Ramans case (supra), in our view, is not an authority for the proposition that an instrumentality or agency of the Government is essentially a Government department for all purposes and such instrumentality or agency will enjoy the same privilege and protection which any Government or its establishment or department enjoys in relation to a statue. The establishment of a Government only connotes in its plain meaning, an establishment directly run by the Government and not through the agency or instrumentality of the Government. The Welfare Funds Act is essentially an Act to protect the interest of and Welfare of the labourers. Unless expressly the instrumentality or agency of the Government is kept outside the purview of the said Act, it would not be proper to interpret the said Act in a wide amplitude by removing the corporate veil so as to exclude such instrumentality or agency from the purview of the said Act.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]19. After giving our careful consideration to the facts of the case and the respective contentions made by the learned counsel for the parties, it appears to us that the appellant company cannot be held to be a department of the Government. There may be deep and pervasive control of the Government over the appellant company and the appellant company, on such account may be an instrumentality or agency of the Central Government and as such a State within the meaning of Article 12 of the Constitution. Even though the appellant company is an agency or instrumentality of the Central Government, it cannot be held to be a department or establishment of the Government in all cases. Such instrumentality or agency has been held to be a third arm of the Government in Ajay Hasias case (supra) but it should not be lost sight of that it was only in the context of enforcement of fundamental rights against the action of the Government and its instrumentalities or agencies it was held that such agencies were the third arm of the Government and they cannot avoid Constitutional obligation. There is no question of enforcing any fundamental right in the instant case. On the contrary, the question of protecting the welfare of the employees vis-a-vis the instrumentality or agency of the Central Government under the Welfare Funds Act is to be kept in mind for the purpose of deciding the rival contentions of the parties.If Section2(c) and (e) of the Welfare Funds Act are taken into consideration, it will be quite apparent that the legislature has not intended to exclude the Government company or the statutory Corporations from the purview of the Welfare Funds Act. The decision in C. V. Ramans case (supra), in our view, is not an authority for the proposition that an instrumentality or agency of the Government is essentially a Government department for all purposes and such instrumentality or agency will enjoy the same privilege and protection which any Government or its establishment or department enjoys in relation to a statue. The establishment of a Government only connotes in its plain meaning, an establishment directly run by the Government and not through the agency or instrumentality of the Government. The Welfare Funds Act is essentially an Act to protect the interest of and Welfare of the labourers. Unless expressly the instrumentality or agency of the Government is kept outside the purview of the said Act, it would not be proper to interpret the said Act in a wide amplitude by removing the corporate veil so as to exclude such instrumentality or agency from the purview of the said Act.