SOM PRAKASH REKHI V. UNION OF INDIA

 

CASE – SOM PRAKASH REKHI V. UNION OF INDIA

 

 

 

 

ABSTRACT

 

 

1.     The Constitution of India is the incomparable order. The Constitution guarantees specific majorfreedomstoeverysingleresidentofIndia.UnderthisArticle12isexaminedexhaustivelywhichcentersaroundtheterm'State'whichplainlyassistswithunderstandingwhatreallytheterm'State'incorporates.ItisbasictolearnwhichbodiesdropunderthemeaningofStatetoconcludewho bearstheweight.Thecreators of the Constitution have characterized the term 'State' from a more extensive perspective thanwhatisordinarilyperceived.Thechief,aswellastheadministrativeorgansoftheUnionandtheState,are rememberedfor the term 'State'. This task centers around the issue thatwhether the BharatPetroleumCorporationiscoveredunderthemeaningof'State'underArticle12oftheIndianConstitution. Different tests have been set down to comprehend which specialists would go under the'State'.

 

 

 

 

INTRODUCTION

 

 

2.     Article12oftheIndianConstitutionmerelyfocuseson theterm ‘State’usedinPartIIIof theConstitution.Itstatesthatthe term‘State’includes:

·       India’sGovernmentandParliament,i.e.theUnion’sExecutiveandLegislativebranches.

·       Eachstate’sgovernor andlegislature,i.e.,theExecutiveandLegislativebranchesofgovernment.

·       AlllocalandotherauthoritiesinIndia’sterritory.

·       Alllocalandotherauthoritiesunderthe controlofthe governmentofIndia.

 

 

3.     The meaning of "state" absolutely depends on the setting in which it is utilized. As indicated by JohnLocke, the target of the state is to advance the "benefit of everyone or the benefit of humankind." Thestate is a substance that exists to save life and maintaining the respect of its residents. Its will likelysafeguardasingular'snobilityandlifestylebymaintainingtheirprivileges.Peoplecan't haveprivilegesontheoffchancethatthestatecan'tsatisfyits commitments.

Otherauthorities

4.     Therehavebeendiscussionsandconsiderationontheterm'otherspecialists'characterizedunderArticle12 of the Indian Constitution. Beforehand, this expression was given a restricted implication, inferringthatpowercarryingoutlegislativeorsovereignroleswould just becoveredbydifferentspecialists.Aspertheliberaltranslation,asovereignorlegislativecapabilityisn'texpectedforapositiontofallunderthemeaningofthestate.Differentspecialists incorporatetheStateElectricityBoard,LIC,ONGC,andthe InternationalFinanceCorporation(IFC).

 

StatutoryProvisions

·       Trust Deed,1950

·       TheEmployeesProvidentFundandMiscellaneousProvisionsAct,1952

·       TheCompanies Act, 1956.

·       Payment ofGratuityAct,1972.

·       BurmahShell(AcquisitionofUndertakingsinIndia)Act,1976

 

LeadingCases

·       SukhdevSingh v.Bhagatram[1975]

·       R.D.Shettyv.NationalAirportAuthorityofIndia[1979]

·       AjayHasiav. KhalidMujib[1980]

 

 

FACTS:-

 

 

5.     ThepetitionerwasworkingasaclerkinBurmahShellOilStorageLtd.

6.     Under a voluntary retirement scheme in force in the company the petitioner retired voluntarily onreaching the age of 50 years after qualifying for pension and other benefits under the rules framed bythe company.

7.     The pension payable to him was regulated by the terms of a trust deed of 1950¹ under which a pensionfundwassetupandregulationsweremadeforitsadministration.

8.     ThepetitionerwasalsocoveredbyaschemeundertheEmploymentProvidentFundandMiscellaneousProvisionsAct,1952²andtogratuityunderthePaymentofGratuityAct,1972³.

9.     The annual pension to which he was entitled under the trust deed, without making the authorizeddeductionsasprovidedunderregulation16ofthetrustdeed,workedouttoasumofRs.165.99.Hewasalsopaid Rs86 assupplementaryretirementbenefit for13 monthsand then itwasstopped.

10.  Twodeductionsweremade,oneofwhichwasonaccountofemployee’sprovidentfundpaymentmadeto the pensioner and the other on account of payment of gratuity with the result the pension payable tohimbecameRs 40.05.

11.  The company also cut off the monthly payment of Rs.86 which was paid as supplementary retirementbenefit on the score that it was ex gratia (On favor), discretionary and liable to be stopped at any timebytheemployer.

12.  In the meantime, the company was statutorily taken over by force of the Burmah Shell (Acquisition ofUndertakingsinIndia)Act,1976⁴.Thereafterthecentralgovernmenttookstepstovesttheundertakingin the second respondent, the Bharat Petroleum, which then became the statutory successor of thepetitioner’s employer. His pensionary rights such as he had, therefore, became claimable from thesecondrespondent.

 

 

 

 

¹TrustDeed,1950

²TheEmployeesProvidentFundandMiscellaneous ProvisionsAct, 1952

³Payment ofGratuityAct,1972.

⁴Burmah Shell(AcquisitionofUndertakingsinIndia)Act,1976

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ISSUESRAISEDINTHECASE:-

 

 

Issue1:-IsBharatPetroleumCorporationLtd. (BPCL)StateunderArticle12?

 

 

Issue2:-IsWritPetitionmaintainableagainstBPCL?

 

 

 

 

Issue3:-Isthepetitionerentitledtothepaymentoffullpension?

ARGUMENTSADVANCEDBYTHECOUNSELS

 

 

PETITIONERS:

 

13.  Thepetitionerretiredvoluntarilyunderanextantvoluntaryretirementscheme.Thequantumofpensionwasregulatedbythatscheme.Thepetitionerwasalsoamemberofthestatutoryschemeframedwithinthe scope of the Employees Provident Fund and Miscellaneous Provisions Act, 1952⁵ and was entitledtoProvidentFundpaymentonretirement.Likewise,hewasentitledtopaymentundertheGratuityAct,1972.

 

14.  Thediscretionarypaymentbywayofretirementbenefits,namely,Rs.86/-permonthwasalsostopped,maybebecausethepetitionerlitigativewithdrewgratuityandprovidentfund.Thepitiablepositionwasthat the petitioner found himself with a miserable amount of Rs. 40.06 per month, a consequencedirectlyattributabletohisreceivingprovidentfundandgratuityamounts.Ofcourse,legalitycannotbetestedonthe size ofthe sumandthe courtmustexaminethemeritsde horsanysympathy.

 

15.  TheCounselcountersthatthere isa statutoryprohibitionagainstanydeduction fromthe pension iftheground is drawl of provident fund or gratuity amount. In view of the statutory taboo he contends, thatthe deduction is unauthorized even if the contract or trust may provide so. So the crucial question iswhetherthereisastatutorybanonanydiminutioninthepensionbecauseofprovidentfundandgratuitybenefitshavingbeenavailedof.ThePFActandtheGratuityAct⁶containcertainprotectiveprovisionswhose trueimportfallsforconstructionandisdecisive ofthepointindispute.

 

 

16.  LetusassumeforamomentthatRegulation16authorisesdeductionsandthatdiscretionarypayments,although enjoyed by the employees, is liable to be stopped. The question is whether Section 12 of thePF Act forbids any such reduction or deduction out of the benefits in the nature of old age pension onthe score of the payment of contribution to the provident fund. We may extract Section 12 here for,accordingtoCounselthelanguage speaksforitself.

 

 

 

 

⁵TheEmployees ProvidentFundandMiscellaneous ProvisionsAct,1952

6Payment ofGratuityAct,1972

·       "No employer in relation to an establishment to which any scheme or the insurance scheme appliesshall, by reason only of his liability for the payment of any contribution to the fund or the InsuranceFundoranychangesunderthisActorthescheme,reduce,whetherdirectlyorindirectly,thewagesofany employee to whom the scheme of the Insurance Scheme applies or the total quantum of benefits inthenatureofoldagepensiongratuityprovidentfundorlifeinsurancetowhichtheemployeeisentitledunderthetermsofhis employment, expressor implied."

 

 

17.  We take the view that this benignant provision must receive a benignant construction and, even if twointerpretationsarepermissible,thatwhichfurthersthebeneficialobjectshouldbepreferred. Fromthatperspective, the inference is reasonable that the total quantum of benefits in the nature of old agepension,gratuityorprovidentfund,shallnotbereducedbyreasononlyoftheliabilityoftheemployerforpaymentofcontributiontothe fund.

 

18.  The section prevails over the Trust Deed⁷. The provident fund accrues by statutory force and Section12overridesanyagreementauthorizingdeductionsarguescounsel.

 

 

 

 

RESPONDENTS:

 

19.  TheLd.Counselraisedapreliminaryobjectionthatnowrit willlieagainstthesecondrespondentsinceit is neither a government department nor a statutory corporation but just a company and so the Courtshould reject out of hand this proceeding under Article 32⁸. We do see the force of this contention,notwithstanding the observations in the Airport Authority case that the status of "State" will attach tothe Governmentcompanieslikethe secondrespondent.

 

20.  Ld, Counsel concedes that the recent trend of rulings of this Court has broadened the concept of"authoritiesunderthecontroloftheGovernmentofIndia".Forinstance,theAirportAuthoritycaseandthe UP. Warehousing Corporation case⁹ , His submission is that the core question which called fordecision in those cases did not demand pronouncement on the larger issue of what is "State" underArticle12and alsorancountertotheearlierrulingsbylarger BenchesTrueatourofthecase-lawruns

 

⁷TrustDeed,1950

⁸Article32 ofIndianConstitution,1950

⁹U.PStateWarehousing Corporation Vs.VijayNarayan1980 AIR840,1980SCR(2)773

zigzag,butguidedbyprincipleandjurisprudentialdiscernment,itispossibletoreachthesamedestinationtowhichthetworulings referredtoabove takeus.

 

21.  Counsel pressed to reconsider the latest decisions in view of their error when read in the perspectiveofpriorrulings byreferringtheissue toalargerBench.

 

22.  Counsel suggests that if incompatibility between the ratios stares us in the face we must clear theconfusionbytheprocess.

 

23.   Counsel contends that the very root of the claim to pension is the Trust Deed which is to be readintegrally.Regulation16 ispart andparceloftherightto pensionandcannotbedivorced fromreg.13.Indeed, theseregulationsaresointertwinedthatthe"authorizeddeductions"areaninextricablepartofthe right to pension. If this approach be correct and if there be no other legal prohibition in making thedeductions, the conclusion is convincing that the quantum of pension must sustain the authorizeddeductionimmediatelyprovidentfundandgratuityaredrawn.

24.  Counsel argues that no reduction of retiral benefit is affected because the entitlement to pension underreg.13isitselfconditionedbytheclausefordeductionandhasnoseparateamplitudedehorsthe

`authorizeddeduction'speltoutinreg.16.

JUDGEMENTOF THEBENCH

 

 

25.  A three-judge bench consisting of Justices V.R. Krishna Iyer, O. Chinnappa Reddy and R.S. Pathakheld that a government company (registered as a company under the Indian companies Act) BharatPetroleum is a State' within the enlarged meaning of Article 12¹⁰. The expression 'other authorities'isnotconfinedonlytostatutorycorporationsalonebutalsoanon-statutorybodylikegovernmentcompany,a registeredsociety,orbodieswhichhave somenexuswith the government.

 

26.  The emphasis is on functionality plus State control rather than on the statutory character of thecorporation. There is no reason to make exclusions on sophisticated grounds such as that the legalperson must be statutory corporation, must have power to make law, must be created by and not undera statute i.e. a corporation created by a statute versus a company or society created under the statute(e.g. FCI created by Food Corporation Act, 1964¹¹; a company registered under the Indian CompaniesAct¹²).

 

27.  Bench held BPL to be "a limb of Government, an agency of the State, a vicarious creature of statute",because of these characteristics, which he found from the provisions of the Act which created it andother circumstances viz. (i) it is not a mere company but much more than that, (ii) it has a statutoryflavors in its operations and functions, in its powers and duties and in its personality itself, ( iii) it is functionally and administratively under the thumb of the Government; and (iv) the Company hadstepped into the shoes of the executive power of the State and had unique protection, immunity andpowers.

 

28.  InconclusionKrishnalyer,J.heldthatthecaseofBharatPetroleumLimited(BPL)wasacloseparallelto Airport Authority case (Ramana Dayaram Shetty v. International Airport Authority of India, AIR1979. SC 1628¹³, excepting that the Airport Authority is created by a statute while Bharat PetroleumLimited (BPL) is recognized by and clothed with rights and duties by the statute & once the body isfound to be an instrumentality or agency of the Government, the further conclusion emerges that it is"the State"andissubjecttothe same constitutionallimitations asthe Government.

 

 

 

 

 

¹⁰Article12ofIndianConstitution,1950

¹¹FoodCorporationAct,1964

¹²IndianCompanies Act ,1956

¹³RamanaDayaramShettyv.InternationalAirportAuthorityofIndia,AIR1979.SC1628

RATIODECIDENDI

 

 

29.  As per the interpretation of Article 12¹⁴ by the apex court of the country, we can conclude that Article12 though inclusive is not exhaustive and Where constitutional fundamentals, vital to the survival ofhuman rights, are at stake functional realism, not facial cosmetics, must be the diagnostic tool. Law,constitutionallaw,seeksthesubstance,notmerelytheform.For,onemaylookliketheinnocentflowerbutbetheserpentunderit.

 

30.  ThiscontrivanceofcarryingonbusinessactivitiesbytheStatethroughstatutorycorporations,government companies and other bodies with legal personality, simplifies and facilitates transactionsand operations beyond the traditional and tardy processes of governmental...But to use the corporatemethodologyisnottoliberatetheStatefromitsbasicobligationtoobeyPartIIIOtherwise,acunning

pluralityofcorporationstakingoveralmosteveryStatebusiness  willcheatthepeopleofPartIIIrights

by theeasyplea:"Noadmissionforthebillofrights;noStatehere"  thenationwillbetoldthat'the

State has ceased to be, save for the nonnegotiable sovereign functions; and fundamental rights maysuffer eclipse only to be viewed in museum glass cases. Such a situation will be a treachery on thefoundingfathers.

 

31.  As far as India is concerned, the genesis of the emergence of corporations as instrumentalities or agenciesofGovernmentistobefoundintheGovernmentofIndiaResolutiononIndustrialPolicy,itwasinpursuanceofthepolicyenvisagedinthisandsubsequentresolutionsonIndustrialpolicythatcorporationswerecreatedbyGovernmentforsettingupandmanagementofpublicenterprisesandcarryingoutotherpublicfunctions.Ordinarily these functions could have been carried out by Government departmentally through its servicepersonnel but the instrumentality or agency of the corporation was resorted to in these cases having regardtothenatureof thetask tobeperformed.ThecorporationsactingasinstrumentalityoragencyofGovernmentwouldobviouslybesubjecttothesamelimitationsinthefieldofconstitutionalandadministrativelawasGovernmentitself,thoughin theeyeofthelaw,they wouldbedistinctandindependentlegalentities.

 

 

 

 

 

 

 

 

 

OBITERDICTUM

 

 

32.  The core fact behind the judgement is that the Central Government chooses to make over, for bettermanagement, its own property to its own offspring. A government company is a mini-incarnation oftheGovernmentitself, madeupofitsbloodandbonesandgivencorporateshapeandstatusfordefinedobjectivesandnotbeyond.Thedeviceistooobviousfordeception.Agovernmentcompanythough, isbut the alter ego of the Central Government and tearing of the juristic veil worn, would bring out thetrue character of the entity being "the State". Krishna lyer, J. held it to be immaterial whether thecorporationisformedbyastatuteorunderastatute,thetruetestisfunctional."Nothowthelegalpersonisbornbutwhyitiscreated."Hefurtherheldthatboththethingsareessential:(i)dischargingfunctionsordoingbusinessastheproxyoftheStatebywearingthecorporatemask,and(ii)anelementofabilityto affect legal relations by virtue of power vested in it by law. These tests, if answered in positive,wouldentailthecorporationbeinganinstrumentalityoragencyoftheState.

 

33.  It is immaterial for this purpose whether the corporation is created by a statute or under a statute. Thetestiswhether itisaninstrumentalityoragencyoftheGovernmentand notastohowitiscreated.Theinquiry has to be not as to how the juristic person is born but why it has been brought into existence.ThecorporationmaybeastatutorycorporationcreatedbyastatuteoritmaybeaGovernmentCompanyor a company formed under the Companies Act, 1956¹⁵ or it may be a society registered under theSocietiesRegistrationAct,1860¹⁶oranyothersimilarstatute.

 

34.  Whatever be its genetic origin, it would be an “authority” within the meaning of Article 12¹⁷ if it is aninstrumentalityoragencyoftheGovernment andthat wouldhavetobedecidedonaproperassessmentof the facts in the light of the relevant factors. The concept of instrumentality or agency of theGovernment is not limited to a corporation created by a statute but is equally applicable to a companyor society and in a given case it would have to be decided, on a consideration of the relevant factors,whetherthecompanyorsocietyisaninstrumentalityoragencyoftheGovernmentsoastocomewithinthe meaningoftheexpression“authority”inArticle12.

 

 

 

 

¹⁵CompaniesAct, 1956

¹⁶Societies Registration Act,1860

SIGNIFICANCE&CONCLUSIONOFTHECASE

 

 

35.  The Constitution of India not just gives an essential right to the residents yet additionally forces theobligation on the state to guarantee that the crucial freedoms are safeguarded. The court through itstranslations has extended the extent of the term State to incorporate various legal and non-legal bodiesunderits umbrella.

 

 

36.  TodaytheGovernmentinawelfareStateistheregulatoranddispenserofspecialservicesandproviderof a large number of benefits, including jobs, contracts, licenses, quotas, mineral rights, etc. TheGovernmentpoursforthwealth,money,benefits,services,contracts,quotasandlicenses.Thevaluablesdispensed by Government take many forms, but they all share one characteristic. They are steadilytaking the place of traditional forms of wealth. These valuables which derive from relationships toGovernmentare of many kinds. They comprise social security benefits, cash grants for politicalsufferersandthe wholeschemeofStateandlocalwelfare.

 

37.  The need to figure out what falls inside the importance of state is, to allot the party on whom theobligation to carry out such right is set. Not just that, the meaning of state under Article 12¹⁸ has a fewwords which might not have unmistakable implications, words like neighborhood specialists, controlof the public authority, different specialists, and so on and as found in the above segments, the courtshave, through the course of their decisions, portrayed the degree of the article by setting out a test andexaminingthesignificanceoftheterms.

 

38.  The word 'State under Article 12 has been deciphered by the courts according to the evolving times.ThroughdifferentcaseregulationstheirdecisionsgivenbyTheCourtandfurthermorethroughdifferentvariousperspectivesofvariousadjudicatorsingivingthosedecisionsordifferentregulationjournalistsin their books or regulation researchers or regulation understudies is how which has acquired moreextensive affecting the term 'other specialists' and there is a need now to at last characterize thissignificantterminsettingtoArticle12forexample "STATE".

 

 

 

 

 

 

 

39.  Corporate personality is a reality and not an illusion or fictitious construction of the law. It is a legalperson. Merely because a company or other legal person has functional and jural individuality forcertain purposes and in certain areas of law, it does not necessarily follow that for the effectiveenforcement of fundamental rights under the constitutional scheme, the Court should not scan the realcharacter of that entity. In the instant case section 7 gives a statutory recognition and a status above amere governmentcompany.

 

40.  The situation with the partnership or authority is safeguarded by the public authority and furthermorethe presence of control of the public authority clarifies that it goes under the term 'State' characterizedunder Article 12¹⁹ of the Indian Constitution of India. The Court proceeded to say that, similarly asgovernment working by means of its authorities is limited by Constitutional and public regulationrequirements, the public authority acting through an organization is limited by similar arrangement ofrules.Accordingly,theConstitutionandotherpublicregulationsforceimperativesorlimitationsontheBharatPetroleumLimited.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

 

 

 

 

 

CASESREFFERED:

 

1.     SukhdevSinghv.Bhagatram[1975]

2.     R.D.Shettyv.NationalAirportAuthorityofIndia[1979]

3.     AjayHasiav. KhalidMujib[1980]

4.     SomPrakashRekhiv.UnionofIndia[1981]

5.     U.PStateWarehousing CorporationVs.VijayNarayan[1980]

 

 

 

 

DATABASESREFERRED:

 

1.     SSCOnline

2.     Manupatra

3.     HeinOnline

 

 

 

WEBSITESREFERRED:

 

1.     https://indiankanoon.org/doc/1602162/

2.     https://www.lawctopus.com/academike/authorities-article-12-constitution/

3.     https://blog.ipleaders.in/analysis-of-the-airport-authorities-under-article-12-of-the-indian-constitution/