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Brahmos Aerospace, Thiruvananthapuram Limited, represented by its Managing Director, Rear Admiral (Retd) Julius Zacharias v/s The General Secretary & Others


Company & Directors' Information:- BRAHMOS AEROSPACE PRIVATE LIMITED [Active] CIN = U74899DL1995PTC074334

Company & Directors' Information:- BRAHMOS AEROSPACE THIRUVANANTHAPURAM LIMITED [Active] CIN = U29299KL1989PLC005405

Company & Directors' Information:- N-AEROSPACE INDIA PRIVATE LIMITED [Active] CIN = U63033OR2016PTC020079

Company & Directors' Information:- D AEROSPACE PRIVATE LTD [Active] CIN = U74899DL1979PTC010128

    WP(C) No. 28200 of 2013 (Y)

    Decided On, 07 February 2017

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE A. MUHAMED MUSTAQUE

    For the Petitioner: M. Gopikrishnan Nambiar, P. Gopinath, P. Benny Thomas, K. John Mathai, Advocates. For the Respondents: R1 & R2, Renjith Thampan, Sr. Advocate, P.R. Reena, Advocate, R4 - R5, N. Nagaresh, Assistant Solicitor General, R3, Government Pleader.



Judgment Text

1. The petitioner is a public limited company and an Indo-Russian joint venture with 50.50% shares held by Defence Research and Development Organization (DRDO) under the Union Ministry and 49.50% shares held by NPO Mashinostroyenia (NPOM) counter part of DRDO under the Russian Government. In this writ petition, the petitioner questions an award passed by the Industrial Tribunal, Kollam, in an industrial dispute referred by the Government of Kerala. The dispute referred is as follows:

'(i) ‘Whether the amendment to the promotion policy of Brahmose Aerospace Thiruvananthapuram Limited by the Management and the consequent denial of promotions to the workmen is justifiable or not’?

(ii) If not what relief the workmen are entitled to?'

2. The Industrial Tribunal answered the reference holding that the promotion policy of the management and the consequential denial of promotion to the workmen involved, are unjustifiable. Assailing this award, the petitioner has approached this Court.

3. Heard Shri J.P.Cama, learned Senior Counsel appearing for the petitioner and Shri Ranjith Thampan, learned Senior Counsel appearing for respondents 1 & 2.

4. The elaborate arguments raised on the side of the petitioner can be summarised as follows:

5. The learned Senior Counsel referring to the definition of 'appropriate Government' under Section 2(a) of the Industrial Disputes Act, 1947, argued that the 'appropriate Government' is the Central Government and not the State Government. The argument of the learned Senior Counsel on this ground are twofold; one, referring to the share capital held by the Central Government (50.50%) and the other, based on the premise that the industry is run by the Central Government. According to the learned Senior Counsel, the share capital, even though, is referred as 50.50%, it has to be rounded off as 51% in the light of the following decisions:

(2011) 8 SCC 108 :Orissa Public Service Commission and another v. Rupashree Chowdhary and another

(2005) 2 SCC 10 :State of UP and another vs.Pawan Kumar Tiwari and others

(2008) 1 SCC 233 :Bhudev Sharma vs. District Judge, Bulandshahr and another

(1997) 4 SCC 560 :State of Orissa and another v. Damodar Nayak and another

6. In support of the second argument that the industry is run by the Central Government, the learned Senior Counsel referred to the Articles of Association of the Company, particularly, referring to the interpretation of 'Indian Partner' as referred in clauses therein. He also emphasised on the decision making of the petitioner-company, contending that any resolution relating to the decisive function of the company shall only be with the prior approval of the Russian-Indian partners. The learned Senior Counsel also referred to various documents produced before this Court to contend that the industry is run by the Central Government. The learned Senior Counsel relied on the following judgments to buttress his arguments:

(1997) 4 SCC 257 :Physical Research Laboratory v. K.G.Sharma

(2001) 7 SCC 1 : Steel Authority of India Ltd. and others v. National Union Waterfront Workers and Others

(1969) 1 SCC 765 :Heavy Engineering Mazdoor Union v. State of Bihar and Others

(2016) 6 SCC 224 :Nashik Workers Union v. Hindustan Aeronautics Limited

(1975) 4 SCC 679 :Hindustan Aeronautics Ltd. vs. Workmen

(2007) 15 SCC 51 :Hindustan Aeronautics Limited and Another vs. Hindustan Aeronautical Canteen Kamgar Sangh and others

7. In regard to the merits of the decision, the learned Senior Counsel would contend that the promotion policy referred in the impugned award based on the settlement signed on 24.10.1997 has no legal sanctity and it cannot be treated as a settlement in terms of Section 18 of the ID Act. According to the learned Senior Counsel, that was only an ad hoc arrangement in the company and the subsequent promotion policy based on the settlement dated 24.12.2007 supercedes all prior promotion policies of the company.

8. Per contra, the learned Senior Counsel, Shri Ranjith Thampan, after referring to the Articles of Association with reference to the share pattern, argued that the statutory provision fixing parameters for determination of 'appropriate Government' cannot be re-written by rounding off the share capital. According to him, the determinant factors to define 'appropriate Government' are referable to the Statute and the parties cannot be allowed to change it for the purpose of industrial dispute by rounding off the share capital. The learned Senior Counsel submits that the documents produced by the parties and the evidence adduced clearly establish that the petitioner-company is identifiable as a distinct entity more engrossed in commercial appropriation of the activities and different from a sovereign function carried out by the State. Therefore, the industry run by the petitioner-company cannot be treated as industry run by the Central Government merely because the Central Government happened to be a constituent of such entity. He also emphasised that the Russian Government is also having a stake in the petitioner-company and therefore, it cannot be argued that the industry is run by the Central Government. The learned Senior Counsel, referring to the Government approval of the settlement dated 24.10.1997 submitted that without varying the above settlement, no promotion policy can be implemented in the company. Thus, it is submitted that the award need not be interfered with by this Court.

9. In the light of the submissions as above, the following points are to be considered in the writ petition:

i. Whether the State Government is an appropriate Government or not, to refer the dispute for adjudication.

ii. Whether the settlement dated 24.10.1997 is a settlement in terms of Section 18 of the ID Act and if so, whether it has any binding force on the Management.

10. Point No.1:

The Industrial Disputes Act 1947 provides exhaustive definition of 'appropriate Government'. It has undergone several amendments after the original enactment. The legislative object of defining 'appropriate Government' for reference of industrial dispute is to delineate the role of Union or State as the case may be, in settling the industrial dispute in a peaceful manner. That is the reason, while referring to certain public sector undertakings and other activities undertaken by certain entities, having national impact, the Legislature intended that the 'appropriate Government' for any industrial dispute in respect of such undertakings, shall be the Central Government. It is, thus, a company having 51% of paid up share capital is also included at par with such undertakings, whose activities are having national character, for the purpose of referring a dispute by the Central Government. The legislature has made it clear that only such a company, which is having 51% of paid up share capital, would alone come within the fold of the Central Government as the 'appropriate Government' for the purpose of any industrial dispute. The rounding off the share capital accepted as pragmatical norms in service matters cannot have an application in the context of statutory stipulation for treating an industry based on share capital for the purpose of determination of appropriate Government in terms of the Industrial Disputes Act. If the court ventures to round off share capital, that would militate against the statutory provisions and would amount to re-writing the Statutes. The fixation of the share capital in the scheme of the Companies Act is purely as a result of the conscious decision taken by the members, who have subscribed to the share capital. Therefore, it will remain the same, unless the parties consciously change the ratio of the share capital in an appropriate manner. The practical application of the rounding off, as propounded in various judgments relied on by the learned Senior Counsel for the petitioner, is more in the nature of an exercise of mathematical formulation of fractional marks to a reality to give effect to the object of such an exercise, especially when the beneficiary has no role in determining the requisite percentage to have the benefit of stipulation. When parties enter into a fixed share capital consciously, knowing well about the requirement in terms of 'appropriate Government' under Section 2(a)(i) of the ID Act, that action cannot be rewritten based on exigencies and needs. Therefore, this argument is liable to be repelled. The judgments relied on by the learned Senior Counsel have no relevance, in the facts and circumstances of this case.

11. The second argument of the learned Senior Counsel is with reference to the fact that the industry is run by the Central Government. This question, in fact, is a pure question of fact. Going by the impugned award, much of the arguments raised on the side of the petitioner were based on the share capital held by the Central Government. Before this Court, volumes of documents have been pressed into service to address the point that the industry is run by the Central Government. If the industry is run by the Central Government, certainly, the appropriate Government is the Central Government. The Hon'ble Supreme Court in Steel Authority of India Ltd. and others v. National Union Waterfront Workers and others [(2001) 7 SCC 1] has elaborately considered this aspect. Though, it was in the context of Contract Labour (Regulation and Abolition) Act, 1970, ('CLRA Act' for short) it was held that in order to determine whether the Central Government is 'appropriate Government' within the meaning of CLRA Act, that industry must be carried on by or under the authority of the Central Government and not that the company/undertaking is an instrumentality or an agency of the Central Government for the purpose of Article 12 of the Constitution. In this context, the industry run by the Central Government is the point which arises for consideration. The petitioner, Brahmos Aerospace Thiruvananthapuram Ltd., is a wholly owned subsidiary of Brahmos Aerospace Private Limited (BAPL). BAPL is constituted as a joint venture of India and Russia Governments, through their respective Departments of Defence for the purpose of carrying on the business of production and manufacturing aerospace products including sales of missiles and related items. BAPL, in fact, acquired the Kerala State industrial undertaking, the Kerala Hi-tech Industries Ltd., based on an agreement. The case put forward by the learned Senior Counsel for the petitioner is that the DRDO (Department of Central Government) runs this industry, for the purpose of running the business the company was formed, and it makes no difference as far as the undertaking is concerned to make the undertaking outside the purview and control of the Central Government. In other words, the argument is that BAPL is a company run by the Central Government in like manner, Railway and Postal Departments run by the Central Government. It is to be noted that the petitioners have no case that the undertaking is run as an undertaking under the Authority of the Central Government. An industry run by the Central Government will have to be examined from different angles such as - what does the Articles of Association provide for and in what manner the company is structured to carry out its objectives; who takes decision as to the affairs of the company; accountability of the business; factors to show that actually it is run by the Central Government through its extended arm created by way of incorporation etc. In other words, running of the company must be shown by the Central Government itself. In Physical Research Laboratory v. K.G.Sharma [(1997) 4 SCC 257], the Hon'ble Supreme Court has also taken into account the dominant function of the industry to determine whether it is an industry or not. The Apex Court held that Physical Research Laboratory is engaged in the research of space science and therefore, the activities of the above laboratory will not come within the ambit of industry. In modern days, the Government is also involved in running commercial ventures. There is nothing standing in the way of the modern Government to explore into commercial activities. Therefore, what is important is whether it be a sovereign function or commercial activities, for the purpose of determining the 'appropriate Government', whether the industry is run by the Central Government by an extended arm of constituting an entity by incorporation or otherwise. Composition of a separate entity itself will not divest the characteristics of an industry not run by the Central Government. In such a situation, the court has to see whether the dominant function carried out by the industry is an extended function of the Central Government or not. It is also to be remembered that the mere creation of the undertaking by the Central Government will not itself make the industry as run by the Central Government. In any normal industry, how an industry is run and in what manner it is run, are the criteria to be applied to find whether this industry is run by the Central Government or not. In Steel Authority’s case [(2001) 7 SCC 1] it was held as follows:

'It was, however, clarified that an inference that the corporation was the agent of the Government might be drawn where it was performing in substance governmental and not commercial functions. It must be mentioned here that in the light of the judgments of this Court, referred to above, it is difficult to agree with the distinction between a governmental activity and commercial function of government companies set up and owned by the Government, insofar as their function in the realm of public law is concerned.'

12. In Heavy Engineering Mazdoor Union’s case [1969 1 SCC 765], question arose before the Hon'ble Supreme Court whether the Central Government is appropriate Government or not in respect of a heavy engineering. The Heavy Engineering Corporation was a ‘Government Company’ of which the entire share capital is contributed by the Central Government and all its shares have been registered in the name of the President of India. In the above case, it was held that Heavy Engineering Corporation was not carried on directly by the Central Government or by any of its Departments. It was also noted that the power of the Central Government to appoint Directors and to determine wages and salaries payable to the employees are referable to the Company’ Memorandum and Articles of Association. In such circumstances, the Apex Court held that the 'appropriate Government' to make reference was the State Government and not the Central Government.

13. In Hindustan Aeronautics’ case [(1975) 4 SCC 679], an argument was raised on behalf of the management company that the Articles of Association of the company point out vital role of the Central Government. However, the Apex Court rejected these arguments in the light of the decision in Heavy Engineering Mazdoor Union’s case (supra). In a recent judgment of the Hon'ble Supreme Court in Nashik Workers Union’s case [(2016) 6 SCC 224] the principles laid down in Heavy Engineering Mazdoor Union’s case (supra) are reiterated.

14. In the case in hand, there is no argument for the petitioner that BAPL to be treated for the purpose of reference is an industry under the Central Government. On the other hand, the only argument is that the BAPL is run by the Central Government and its Department. Therefore, in this matter, it requires an examination whether it is run by the Central Government or DRDO. I am of the view that the matter requires consideration at the hands of the Industrial Tribunal as the Industrial Tribunal had no occasion to consider this aspect. It is to be noted that this Court exercising the power of judicial review cannot examine a dispute which requires consideration at the first instance by the primary authority. In the light of the larger contention raised by the petitioner before the Industrial Tribunal that Central Government is the 'appropriate Government', this Court is of the view that the contention now put forward is not a surprise contention raised for the first time and can be relegated to the Industrial Tribunal for reconsideration.

15. While answering the dispute regarding 'appropriate Government', the Industrial Tribunal noted that the State Government had given exemption to the management from the purview of Kerala Recognition of Trade Union Act, 2010. I am of the view that any such exemption given by the State Government in relation to a trade union activity is of no consequence for determining the dispute regarding 'appropriate Government'.

16. Point No.ii:

The Industrial Tribunal noted a settlement arrived at between the Management and the Union as early as on 18.7.1997, this was marked as Ext.W14 before the court below. It is also noted that the manner in which promotion is to be given is mentioned in the above settlement. The Industrial Tribunal found that the settlement arrived at between the Management and the Union on 22/12/2007 is not a settlement as referable in terms of Section 2(p) of the ID Act. It was also found that the settlement referred by the Management was not in proper form. The Management's contention that the promotion policy was implemented with the consent of the welfare committee of the workmen was also repelled. In this case, it is strenuously argued by the learned Senior Counsel for the petitioner that the settlement referred by the Union dated 24.10.1997 is not a settlement at all. It is also submitted that Governmental nod for settlement cannot be termed as an approval for settlement. Ext.W14 is the settlement alleged to have been arrived at between the management and the union on 24.10.1997. This settlement appears to have been arrived on promotion policy otherwise than in the course of conciliation of proceedings. In terms of Section 19 of the ID Act, if no date is agreed upon, the settlement will be effective from the date on which Memorandum of Settlement is signed by the parties to the dispute. Rule 59 of the Kerala Industrial Disputes Rules, 1957 also signifies the mandate of signing by the parties. The settlement appears to have been arrived at between the Management and the Union, prior to the BAPL coming into the picture. BAPL came as successor only after the year 2007. Therefore, it was the bounden duty on the part of the Union to prove the settlement arrived at between the predecessor of the Management and the Union. Ext.W14 does not disclose signing of the settlement by the parties. The approval as referred in the impugned award is, in fact, not an approval as referable to any industrial legislation but on the other hand, Kerala Hi-tech Industries Ltd., being a State Government undertaking at that time, certainly, State Government approval is required for any decision. The Government order dated 18.7.1997 only indicates that the Government only approved the promotion policy proposed before the Government in principle. Therefore, in the absence of any evidence to show that there was a settlement, the Tribunal is erred in finding that there was a settlement. In the absence of any bind

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ing settlement, any nature of understanding between the Management and the Union, will govern them. It may be true that the promotion policy dated 18.7.1997 was followed in the undertaking, but that does not necessarily mean that it was based on a binding settlement under the ID Act. I am of the view that the entire dispute regarding the promotion policy will have to be reconsidered by the Industrial Tribunal after giving opportunity to adduce evidence to both the parties. 17. The Management has a claim that all the trade unions at the time of taking over the undertaking have entered into the settlement dated 24.12.2007. It is required to be clarified whether any other Union existed in the undertaking at the time of settlement dated 24.12.2007. The character and nature of the settlement have also to be gone into afresh. It is to be noted that many employees have been promoted based on the promotion policy of the management dated 24.10.1997. They were not made parties to the proceedings. It is also not clear as to the number of employees whose interest are espoused by the first and second respondents/unions. These aspects also require reconsideration. 18. In the light of the discussions as above, the impugned order is set aside. The matter is remitted back to the Industrial Tribunal to determine following aspects: i. Whether BAPL is carried on by the Central Government or its departments; ii. Whether there is a binding settlement between the Management and the Union as agreed on 24.10.1997, if so, whether the Memorandum of Settlement between the Management and Trade Union dated 24.12.2007 superceded the earlier settlement; iii. Whether the non-joinder of affected parties would have an impact upon the outcome of the adjudication of the industrial disputes; The parties shall appear before the Industrial Tribunal on 1.3.2017. The Industrial Tribunal shall give utmost importance for expeditious disposal of the case. Parties are free to raise additional pleadings and at liberty to adduce fresh evidence. The writ petition is disposed of as above. No costs.
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