judgement:
Civil Appeal No. 1724 of 1982.
From the Judgment and order dated the 15th March, 1982 of the Gauhati High Court (Agartala Bench) in E.P. No. 2 of 1980.
G.L. Sanghi, S K. Nandy and section Parekh, for the Appellant.
R.K. Garg and S.C. Birla for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal arises out of the judgment and an order of the Gauhati High Court in an election petition.
The petitioner appellant was a voter in the West Tripura Parliamentary Constituency from No. 7 Ramnagar Assembly Segment.
He contested the mid term Lok Sabha election held in 1980 from the West Tripura Parliamentary Constituency as a nominee of congress (1).
There were six candidates including the petitioner contesting the said election.
The respondent No. 1 was a C.P.I.(M) candidate.
8th December, 1979 was the date of filing of the nominations.
Nominations were scrutinised on 11th December, 1979 and the withdrawal date was 13th December, 1979.
On 6th January, 1980 the polling was held and the result of the election was declared on 8th January, 1980.
The main contest was between the petitioner/appellant and the respondent No. 1, Ajoy Biswas.
The respondent No. I had secured 198335 votes as against the appellant who had secured 1,42,990 votes.
The respondent No. 1 was declared elected.
The only point on which the election petition by the appellant/ petitioner was pressed before the High Court and the only point urged before us in this appeal, is whether the respondent No. 1 was disqualified for being elected as a member or the House of People as he held an office of profit under the Government of Tripura within the meaning of Article 102(t)(a) of the Constitution.
On the relevant date, respondent No. 1 was the Accountant in charge of the Agartala 53 Municipality.
Therefore, the question involved in this appeal, is, A whether an Accountant in charge of the Agartala Municipality holds all office of profit within the meaning of Article 102(1)(a) of the Constitution In order to determine this question, it will be necessary to refer to certain facts.
Respondent No. 1 was employed in Agartala Municipality and held the post carrying the scale of pay of Rs. 80 180 per month.
The Commissioners of the Agartala Municipality ware superseded by an order of the State Government under Section 553 of the Bengal Municipal Act, 1932 as extended to the State of Tripura in 1975.
The effect of Section 554 of the said Act is that during the period of supersession the powers and duties of the Commissioners and Chairman shall be exercised and performed by the Administrator appointed by the State Government under that section.
The respondent No. 1 who was under suspension at the time of supersession was dismissed from service in the disciplinary proceedings against him by the Administrator of the Agartala, Municipality on 20th December, 1975.
The State Government thereafter had confirmed the order of dismissal.
When the Left Front Government came in power in the State of Tripura, the respondent No. was reinstated to the post of Accountant in charge of Agartala Municipality on 6th May, 1978 with immediate effect by the Administrator.
So at the relevant time he was an Assistant Accountant and was Accountant in charge under the Agartala Municipality drawing a monthly salary of Rs. 200.
It is necessary to briefly note some of the relevant provisions of the said Act in view of the contentions urged in this appeal.
Proviso (ii) to Section 66(2) of the said Municipal Act provides that no appointment carrying a monthly salary of more than two hundred rupees or a salary rising by periodical increments to more than two hundred rupees shall be created without the sanction of the State Government, and every nomination to, and dismissal from, any such nomination shall be subject to confirmation by the State Government.
It appears that the Deputy Secretary to the Government of Tripura by his letter dated 6th May 1978 had conveyed to the Administrator, Agartala Municipality, decision of the Government for cancellation of the order of confirmation of the dismissal communicated to him on l9th December, 1975.
As a result, the cancellation order ceased to be effective and respondent No. I was reinstated and it was further provided that the period between the date of dismissal all the date of reinstatement would he treated as period spent on duty for all purposes.
54 The Act further provides that there shall be established for each Municipality a body of Commissioners consisting of such members or Commissioners not being more than twenty nor less than six as the State Government may specify in the notification constituting the municipality.
Such Commissioners shall be a body corporate by the name of the Municipal Commissioners of the place by reference to which the Municipality is known, having perpetual succession and a common seal, and by that name shall sue and be sued.
The Municipality consists of the elected Commissioners.
A Chairman is elected by the Commissioners from amongst the Commissioners within 30 days from the date of publication of the result of the general election of the Commissioners in the Municipality failing which the State Government has the power to appoint one of the Commissioners to be Chairman.
A Vice Chairman is also to be elected from amongst themselves.
The Chairman is empowered within certain limitations to transact the business connected with the Act and exercise all the powers vested in the Commissioners under the Act, except as otherwise provided.
The Commissioners are to hold office for four years commencing from the date of the first meeting of the newly formed body of Commissioners after a general election of Commissioners in the Municipality at which a quorum is present.
An elected Chairman or Vice Chairman may at any time be removed from his office by a resolution of the Commissioners as laid down in section 61(2) or (3) of the said Act.
The Act also empowered the State Government to remove an elected Commissioner on certain grounds set out in section 62 of the said Act.
In view of the contentions raised in this appeal, it would be relevant to refer and set out section 66 of the said Act which is as follows: "66. APPOINTMENT OF SUBORDINATE OFFICERS.
(1) The Commissioners at a meeting may, subject to the provisions of this Act and the rules made thereunder from time to time, determine what officers and what servants of the Commissioners are necessary for the municipality and may fix the salaries and allowances to be paid and granted to such officers and servants.
(2) Subject to the scale of establishment approved by the Commissioners under sub section (1), the Chairman shall have power to appoint such persons as he may think fit, and 55 from time to time to remove such persons and appoint A others in their places: Provided as follows: (i) a person shall not be appointed to an office carrying a monthly salary of more than fifty rupees or a salary rising by periodical Increments to more than fifty rupees without the sanction of the Commissioners at a meeting, and an officer or servant whose post carries a monthly salary of more than twenty rupees shall not be dismissed without such sanction; (ii) no appointment carrying a monthly salary of more than two hundred rupees or a salary rising by periodical increments to more than two hundred rupees shall be created without the sanction of the State Government, and every nomination to, and dismissal from, any such appointment shall be subject to confirmation by the State Government.
" (iii) no person holding an office carrying a monthly salary of one hundred rupees or more shall be dismissed unless such dismissal is sanctioned by a resolution of the Commissioners passed at a special meeting called for the purpose and, except with the consent of the State Government unless such resolution has been supported by the votes of not less than two thirds of the total number of Commissioners holding office for the time being.
(3) Notwithstanding anything contained in sub section (2), the creation of and nomination to or suspension, removal or dismissal from, the post of Executive officer shall, irrespective of the salary assigned to the post, be subject to confirmation by the State Government.
" The Act further provides that besides the officers and the servants mentioned above, all or any of the officers mentioned in section 67 may be appointed by the Commissioners.
In certain circumstances, the Act provides, that the State Government may have an Executive officer for such period as may be specified in the Notification.
Section 93 provides that as soon as may be after the first 56 day of April in every year not later than such date as may be fixed by the State Government, the Commissioners shall submit to the State Government a report on the administration of the Municipality during the preceding year in such form and with such details as the State Government may direct, and a copy of the report shall also be submitted by the Commissioners to the District Magistrate.
The Commissioners of a Municipality may acquire and hold property within or without the limits of the Municipality, and all property within the Municipality of the nature specified in section 95, other than property maintained by the Central Government or any other local Authority, are vested in and belong to the Commissioners, and are under their direct management and control.
By Section 102 of the said Act, the Commissioners are empowered to purchase, take on lease or otherwise acquire any land for the purposes of the said Act, and may sell, lease, exchange or otherwise dispose of any land not required for such purposes.
They are also empowered to enter into and perform any contract necessary for the purpose of the Act.
A fund called the Municipal fund is constituted for each Municipality and all sums received by or on behalf of the Commissioners under the said Act or otherwise, and the balance, if any, standing at the credit of the Municipal fund of the Municipality at the commencement of the said Act, are credited to the said fund.
The purposes to which the Municipal Fund is applicable are enumerated in section 108 of the Act.
If any work is estimated to cost above ten thousand rupees, the State Government may require the plans and estimates of such works to be submitted for its approval, or for the approval of any servant of the Government before such work, in such form as it might prescribe.
There are provisions for imposing taxes, tolls and fees under section 123 of the said Act and to make assessment of the rate on the annual value of the holdings under section 128 of the said Act.
Powers are conferred to impose taxes.
There are other provisions for raising fund for the Municipality by way of charging fee for registration etc.
The Act empowers raising of funds for the Municipality for carrying out the purposes of the said Act.
In this connection it may be relevant to refer to clause (31) of section 3 of the , and in view of the provisions of the Act it was held by the High Court that Agartala Municipality is a 'Local authority ' within the meaning of that expression as defined in clause (31) of section 3 of the .
We are of the opinion that the High Court was right.
57 In view of the facts narrated before, it was found by the High A Court and in our opinion rightly that the respondent No. I was at the relevant time holding an office of profit under a local municipality.
Section 66 which we have set out here in before indicates that the appointment of persons to the category of post held by respondent No. 1 was to be made by the Commissioners of Municipality, but the appointment was subject to the confirmation by the State Government.
The High Court held and we are of the opinion rightly that the respondent No. 1 was an officer of the Commissioners.
Section 63 of the said Act provides that such officers and servants of the Commissioners shall be subordinates to the Executive officer appointed by the Commissioners.
The respondent No. I was appointed by Commissioners, though sanction of the Government was obtained.
He could be removed by the Commissioners again subject to the sanction of the Government.
He was paid out of the municipal funds which the Municipality was and is competent to raise.
From the analysis of the provisions of the Act it is clear that though the Government exercises certain amount of control and supervision, the respondent No. I was not an employee of the Government nor was he required to perform governmental functions for the Government.
Municipalities are separately mentioned in contradistinction of the State Government as it will be clear from reference to Item S in List II of the VII Schedule of the Constitution.
Therefore, a local authority as such is a separate and distinct entity.
This will become further clear from Article 58(2) of the Constitution.
The question involved in this appeal is whether respondent No. 1 held an office of profit under sub clause (a) of Clause (1) of Article 102 of the Constitution.
Sub clause (a) of Article 102 (1) provides as follows: "article 102 Disqualification for membership. (1) A person shall be disqualified for being chosen as, and for being, a member of either House of Parliament (a) If he holds any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holder;" In contra distinction, clause (2) of Article 58 which mentions disqualifications for election as President provides as follows : 58 "58 Disqualifications for elections President: (1). . (2) A person shall not be eligible for election as President if he holds any office of profit under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments.
" In fact a person who is holding an office of profit either under the Government of India or the Government of any State or under any local or other authority subject to the control of any of the said Governments is disqualified from becoming the President but if a person holds an office of profit under the Government of India or the Government of any State he only is disqualified from being a member of Parliament.
A holder of the office of profit under any local or other authority subject to the control of the State or Central Government is as such not disqualified from becoming a Member of Parliament.
Keeping in view these provisions, it is necessary consider the question whether the respondent No. 1 was holding an office of profit under the State Government.
In the case of D. R. Gurushantappa vs Abdul Khuddus Anwar & Ors.
,(l) this Court had to consider whether a candidate employed in a company owned by the Government was disqualified under Article 102(1) (a) and 191 (l)(a) of the Constitution and in this connection considered the relevant provisions of Articles 102(1) (a) and 191(1) (a) of the Constitution.
After discussing the case of Gurugobinda Basu vs Sankari Prasad Ghosal & ors.(a) and the decision in the case of Maulana Abdul Shakur vs Rikhab Chand,(3) this Court come to the conclusion that the mere fact that the Government had control over the Managing Director and other Directors as well as the power of issuing directions relating to the working of the company could not lead to the inference that every employee of the company was under the control of the Government.
The true principle behind this provision in Article 102 (1) (a) is that there should not be any conflict between the duties and the interest of an elected member.
Government controls various activities (1) ; (2) ; (3) 59 in various spheres and in various measures.
But to judge whether A employees of any authority or local authorities under the control of Government become Government employees or not or holders of office of profit under the Government the measure and nature of control exercised by the Government over the employee must be judged in the light of the facts and circumstances in each case so as to avoid any possible conflict between his personal interests and duties and of the Government.
This position was further examined in the case of Surya Kant Royv.lmamul Hai khan.(1) There under Bihar and Orissa Mining Settlement Act, 1920, a Board called the Mines Board of Health may be established to provide for the control and sanitation of any area within which the persons employed in a mine reside and for the prevention therein of the out break and spread of epidemic diseases.
After analysing the facts of that case, this Court held that the mere fact that the candidate was appointed Chairman of the Board by State Government would not make him a person holding an office of profit under the State Government.
There the Supreme Court referred to the decision in the case of Shivamurthy Swami vs Agadi Sanganna Andanappaa.(2) This Court in Surya Kant Roy vs Imamul Hai Khan (supra) observed at page 911 as follows: "Here again it is to be pointed out that the Government does not pay the remuneration nor does the holder perform his functions for the Government.
To hold otherwise would be to hold that local bodies like Municipal Councils per form their functions for the Government though in one sense the functions they perform are governmental functions.
" in the case of D.R. Gurushantappa vs Abdul Khuddus Anwar & Ors.
(supra) mentioned here in before, at page 434 this Court observed as follows: "Thus, in the case of election as President or Vice President, the disqualification arises even if the candidate is holding an office of profit under a local or any other authority under the control of the Central Government or the State Government, whereas, in the case of a candidate for election as a Member of any of the Legislatures, no such disqualification is laid down by the Constitution if the office of profit is held under a local or any other authority under (1) ; (2) 60 the control of the Governments and not directly under any of the Governments.
This clearly indicates that in the case of eligibility for election as a member of a Legislature, the holding of an office of profit under a corporate body like a local authority does not bring about disqualification even if that local authority be under the control of the Government.
The mere control of the Government over the authority having the power to appoint, dismiss, or control the working of the officer employed by such authority does not disqualify that officer from being candidate for election as a member of the Legislature in the manner in which such disqualification comes into existence for being elected as the President or the Vice President.
The Company, in the present case, no doubt did come under the control of the Government and respondent No. I was holding an office of profit under the Company; but, in view of the distinction indicated above, it is clear that the disqualification laid down under article 191 (1) (a) of the Constitution was not intended to apply to the holder of such an office of profit.
" This view was again reiterated by this Court in the case of Madhuker G.E. Panakakar vs Jaswant Chabbildas Rajani & Ors.(1) where this Court observed as follows: "The core question that comes to the fore from the survey of the panorama of case law is as to when we can designate a person gainfully engaged in some work having a nexus with Government as the holder of an 'office of profit ' under Government in the setting of disqualification , for candidature for municipal or like elections.
The holding of an office denotes an office and connotes its holder and this duality implies the existence of the office as an independent continuity and an incumbent there of for the once.
Certain aspects appear to be elementary.
For holding an office of profit under Government one need not be in the service of Government and there need be no relationship of master and servant (Gurugobinda supra).
Similarly, we have to look at the substance, not the form.
Thirdly, all the several factors stressed by this Court as determinative of the holding of an 'office ' under Government, need not be con (1) ; at 851 61 jointly present, the critical circumstances, not the total factors, prove decisive.
A practical view not pedantic basket of tests, should guide in arriving at a sensible conclusion.
" In a recent decision of this Court in the case of Biharilal Dobray vs Roshan Lal Dobray,1 this Court was concerned with the question whether an office profit was held directly under the Government in the facts of that case.
There was an assistant teacher of a Basic Primary School run by U.P. Board of Basic Education under U.P. Basic Education Act, and it was held that it was an office of profit under the State Government within the meaning of Article 191 (1) (a) of the Constitution and therefore he was disqualified from election.
There the respondent was originally employed as an assistant teacher in a Basic Primary School which was being run and managed by the Zila Parishad.
On coming into force of the U.P. Basic Education Act, 1972, he became an employee of the Board of Basic Education under Section 9 (1) of the Act.
While holding the post of an assistant teacher as such he filed his nomination for his election to the State Legislative Assembly.
But the Returning officer rejected his nomination paper on the ground that he was holding an office of profit under the State Government and hence he was disqualified under Article 191 (1) (a) for being elected as an MLA.
Article 191 (1) (a) is in terms pari materia with Article 102 (1) (a) of the Constitution regarding the election to the State Assembly.
The respondent herein filed an election petition and the High Court allowed the same declaring that the election of the appellant by rejecting the nomination of the respondent was void.
The appellant therefore preferred the appeal to this Court.
This Court allowed the appeal and it was held that the respondent was holding an office of profit under the State Government.
As we have mentioned before, the object of enacting provisions like Article 102 (1) (a) and Article 191(1) (a) is that a person who is elected to Parliament or a Legislature should be free to carry on his duties fearlessly without being subjected to any kind of governmental pressure.
The term ' office of profit under the Government" used in clause (a) of Article 1O2(1) is an expression of wider import than a post in connection with the union or of any State which is dealt with in part XIV of the Constitution.
The measure of control by the Government over a local authority should be judged in order to eliminate the possibility of conflict between duty and interest and to (1) [19841 I S.C.C. 155 62 maintain the purity of the elected bodies.
After reviewing various cases, and the provisions of the various sections of the U.P. Basic Education Act, 1972 especially in view of section 13 of the Act, this Court held in the last mentioned case that the measure of control was such that U.P. Education Board was an authority which was not truly independent of the Government and every employee of the Board was in fact holding an office of profit under the State Government.
The statement of objects and Reasons of the U.P. Basic Education Act, 1972 and sections 4, 6, 7, 13 and 19 all of which have been set out in extenso in that decision make that conclusion irresistible.
For determination of the question whether a person holds an office of profit under the Government each case must be measured and judged in the light of the relevant provisions of the Act.
Having regard to the provisions of the Bengal Municipal Act, 1932 as extended to Tripura, the provisions of which have been set out herein before, we are of the opinion that the State Government does not exercise any control over officers like respondent No. 1 and that he continues to be an employee of the Muncipality though his appointment is subject to the confirmation by the Government.
Just by reason of this condition an employee of a local authority does not cease to be an employee of the Muncipality.
Local authority as such or any other authority does not cease to become independent entity separate from Government.
Whether in a particular case it is so or not must depend upon the facts and circumstances of the relevant provisions.
To make in all cases employees of local authorities subject to the control of Government and to treat them as holders of office of profit under the Government would be to obliterate the specific differentiation made under Article 58(2) and Article 102 (1) (a) of the Constitution and to extend disqualification under Article 58 (2) to one under Article 102 (1) (a) to an extent not warranted by the language of the Article.
Having noted the relevant provisions, we are of the opinion that the respondent No. 1 was not at the relevant time a holder of office of profit under the Government.
Some amount of control is recognised oven in a local authority which is taken account of under Article 58.
The High Court held that respondent No. I did not hold office of profit under the Government of Tripura on the date of filing of the nomination on an analysis of relevant provisions of the Act which we 63 have set out hereinbefore.
We are in agreement with this view of the.
High Court.
In the premises, respondent No. 1 was not disqualified from filing his nomination.
The appeal, therefore, fails and is accordingly dismissed with costs.

summary:
Respondent No. 1 was employed in the Agartala Municipality and held the post of an Assistant Accountant.
The Commissioners of this Municipality were superseded by an order of the State Government under Section 553 of the Bengal Municipal Act, 1932 as extended to the State of Tripura in 1975.
Respondent No, 1 who was under suspension at the time of supersession was dismissed from service in the disciplinary proceedings against him by the Administrator of the Municipality on 20th December, 1975.
The State Government confirmed the order of dismissal.
Respondent No. 1 was however reinstated to the post of Accountant in charge on 6th May, 1978 with immediate effect by the Administrator.
Respondent No. I contested the mid term Lok Sabha election held in 1980 from the West Tripura Parliamentary Constituency, and was declared elected on 8th January, 1980.
The appellant who was a voter filed an Election Petition in the High Court contending that respondent No. 1 was disqualified for being elected as a member of the House of People as he held an office of profit under the Government of Tripura within the meaning of Article 102(1)(a) of the Constitution.
The High Court dismissed the petition holding that Respondent No. 1 held an office of profit under the Government of Tripura.
51 In the appeal to this Court on the question: whether respondent No. 1 A held an office of profit under sub clause (a) of Clause (1) of Article 102 of the Constitution.
Dismissing the Appeal.
^ HELD: 1.
Whether in a particular case a person holds an office of profit under the government or not must depend upon the facts and circumstances of the relevant provisions.
To make in all cases employees of local authorities subject to the control of Government, holders of office of profit under the Government would be to obliterate the specific differentiation made under Article 58(2) of the Constitution and to extend disqualification under Article 102 (1)(a) to an extent not warranted by the language of the Article.
162 E F] In the instant case, having regard to the provisions of the Bengal Municipal Act, 1932 as extended to Tripura, the Government does not control officers like respondent No. I and he continues to be an employee of the Municipality though his appointment is subject to the confirmation by the Government.
He does not cease to be an employee of the Municipality.
Local authority as such or any other authority does not cease to become independent entity separate from Government.
[62 D C] 2.
Respondent No. I was not at the relevant time a holder of office of profit under the Government.
Some amount of control is recognised even in a local authority which is taken account of under Article 58.
The High Court rightly held that respondent No. 1 did not hold office of profit under the Government of Tripura on the date of filing of the nomination on an analysis of relevant provisions of the Act.
[62 G H] 3.
The object of enacting provisions like Article 102(1)(a) and Article 191(1)(a) is that a person who is elected to a Legislature or Parliament should be free to carry on his duties fearlessly without being subjected to any kind of government pressure.
The term "office of profit under the Government" used in clause (a) is an expression of wider import than a post held under the Government which is dealt with in Part XIV of the Constitution.
The measure of control by the Government over a local authority should be judged in order to eliminate the possibility of a conflict between duty and interest and to maintain the purity of the elected bodies.
[61 G H] 4.
It will be clear from reference to Item S in List II of VII Schedule of the Constitution that Municipality are separately mentioned in contra distinction of the State government.
Therefore, a local authority as such is separate and distinct.
This becomes further clear from Article 58(2) of the Constitution.
[57 D] 5.
A person who is holding an office of profit either under the Government of India or the Government of the State or any other local or other authority subject to the control the said Governments is disqualified from becoming a President but if a person holds an office of profit under the Government of India or the Government of any State, he only is disqualified from going a member of Parliament.
A holder of the office of profit under any 52 authority or local authority subject to the control of the State or Central Government is as such not disqualified from becoming a Member of Parliament.
[58 C D] D. R. Gurushantappa vs Abdul Khuddus Anwar & Ors. , Gurugobinda Basu vs Sankari Prasad Ghosal & ors.
; Maulana Abdul Shakur vs Rikhab Chand [1958] S.C.R. 387, Surya Kant Roy vs Immamul Hai Khan [19751 3 S.C.R., 909, and Madhuker G.E. Pankakar vs Jaswant Chobildas Rajni & Ors.
[1975]3 S.C.R. p. 832 at page 851, referred to.
Biharilal Dobray vs Roshan Lal Dodray [1984]1 S.C.C. 551, explained.


judgement:
Civil Appeal Nos.
6092 & 6093 of 1983 Appeals by Special leave from the Judgment and order dated the 4th February, 1983 of the Bombay High Court in W.P. No. 173 of 1983 M.K Ramamurthi and Urmila Sirur for the Appellant.
Gobind Das, P.H. Parekh and Indu Malhotra for the Respondent The Judgment of the Court was delivered by DESAI, J.
General Labour Union (Red Flag) Bombay filed two complaints, one against M/s. Delta Wires Pvt. Ltd. and second against M/s. Delta Spokes Manufacturing Company, two sisters concerns ( 'employers ' for short) under Sec.
28 read with Items l(a), l(b), 2, 4(a), 4(f) and 6 of Schedule II of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 ( 'Act ' for short).
Broadly stated the complaints were that the employers were guilty of imposing and continuing a lock out and had thus committed unfair labour practice.
The employers contended that they had finally and irrevocably closed the industrial undertaking and were not guilty of any unfair labour practice.
The complaints were filed in the Industrial Court, Maharashtra, Bombay.
The learned Judge framed an issue whether the employers had committed an unfair labour practice by imposing and continuing a lock out as provided in Item 6 of Schedule II of the Act.
After hearing the parties, the learned Judge answered the issue in negative and dismissed the complaints.
The appellant Union filed two special civil applications in Bombay High Court under article 226 of the Constitution questioning the correctness of the decision of the Industrial Court.
Both the applications were dismissed in limine.
The Union thereupon filed these two appeals by special leave.
66 At the hearing of the appeals, Mr. Govind Dass, learned counsel for the employers stated that the employers have re opened the industrial units and there is partial resumption of manufacturing process.
He further stated that the employers are willing to take back all the old workmen and in order to satisfy the court about the bonafides of the employers he pointed out that nearly 16 old workmen, who responded to the advertisement in a local newspaper, have already been re employed.
Mr. Govind Dass stated that the employer will put on record an unconditional undertaking as affidavit in these appeals that no new workman will be recruited in afore mentioned two industrial undertakings who had not been in previous employment with them without giving first preference to the workmen who were in employment of the two concerns on April 8, 1980 when they were closed down.
Mr. M. K. Ramamurthy learned counsel for the appellant union, on the other hand, contended that the industrial undertakings of the employers had never been closed or at any rate have resumed working in full and that the old workmen are not being re employcd and new hands arc being recruited.
We record the unequivocal undertaking given on behalf of the employers by the learned counsel Shri Govind Dass that all the old workmen who were in service of the employers at the time of the alleged closure, that is upto and inclusive of April 8, 1980, will be re inducted in service as resumption of work is gradually expanding and that till all the old workmen are re inducted in service no new hand will be recruited.
An undertaking to that effect by Dr. P. D. Meghani s/o Dharam Chand Meghani has been placed on record and is treated as an integral part of this judgment.
In order to be assured that the undertaking is carried out in letter and spirit we direct the Industrial Court Maharashtra Bombay to depute its senior ministerial officer to visit the industrial undertakings of the employers and to satisfy itself that the old workmen are being re inducted in service and that as resumption of production is gradually expanded, the old workmen will be re inducted in service.
There will be a continuous watch by the ministerial officer to be appointed by the Industrial Court till all the old workmen who are willing to be re inducted in service are taken back in service.
In fact this undertaking should have concluded the matter.
But there is a statement of law made by the Industrial Court while rejecting the complaints filed by the appellant union which does not command to us and to avoid any such error being repeated in future, we, with a view to set right the matter proceed to examine the same in this judgment.
67 The complaints of the union were that the employers were guilty of imposing and continuing a lock out which under the law was illegal.
On the other hand, the submission on behalf of the employers was that there was a closure of the industrial undertaking and it was not a case of lock out.
In such a situation there the parties are at variance whether the employers have imposed a lockout or have closed the establishment it is necessary to find out what was the intention of the employer at the time when it resorts to lock out or claims to have closed down the industrial undertaking.
It is to be determined with accuracy whether the closing down of the industrial activity was a consequence of imposing lock out or the owner employer had decided to close down the industrial activity.
Lock out is generally an employer 's response to some direct action taken by the workmen.
Closure may be on account of various reasons which may have necessitated closing down of the industrial undertaking.
In this case the issue was whether the employer had imposed a lock out or has closed down the business.
In examining this aspect, the Industrial Court observed as under: D "It is not necessary to refer to each and every decision pointed out by Mr. Bhatt on the point of lock out and closure, since now it is well established that in case of a lockout there is only closure of the place of business where as in case of a closure there is a closure of the business itself permanent and irrevocable.
Whether the closure is brought about malafide and whether it could have been avoided are matters irrelevant and what is to be seen is whether in fact and in effect there is a closure or not.
" We fail to appreciate both the approach and the reasons in support of the approach.
Lock out has been defined in Sec.
2(L) of the Industrial Disputes Act, 1974 ( 'lD Act ' for short) to mean the closing of a place of business, or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him.
In lockout the employer refuses to continue.
to employ the workmen employed by him even though the business activity was not closed down.
The essence of lock out is the refusal of the employer to continue to employ workman.
There is no intention to close the industrial activity.
Even if the suspension of work is ordered it would constitute lock out.
On the other hand closure implies closing of industrial activity as a 68 consequence of which workmen are rendered jobless.
22(2) of the ID Act prohibits an employer in a public utility service from locking out any of his workmen without giving notice as provided therein.
23 prohibits an employer from declaring a lock out in any of the eventualities mentioned therein.
Lockout in contravention of Sec.
23 is declared illegal.
Section 26 of the ID Act provides that any of the practices listed in Schedule 11, III and IV would be an unfair labour practice.
Imposing and continuing a lock out deemed to be illegal under the Act is an unfair labour practice.
While examining whether the employer has imposed a lock out or has closed the industrial establishment, it is not necessary to approach the matter from this angle that the closure has to be irrevocable, final and permanent and that lockout is necessarily temporary or for a period.
The employer may close down industrial activity bonafide on such eventualities as suffering continuous loss, no possibility of revival of business or inability for various other reasons to continue the industrial activity.
There may be a closure for any of these reasons though these reasons are not exhaustive but are merely illustrative.
To say that the closure must always be permanent and irrevocable is to ignore the causes which may have necessitated closure.
Change of circumstances may encourage an employer to revive the industrial activity which was really intended to be closed.
Therefore the true test is that when it is claimed that the employer has resorted to closure of industrial activity, the industrial court in order to determine whether the employer is guilty of unfair labour practice must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bonafide and for reasons beyond the control of the employer.
The duration of the closure may be a significant fact to determine the intention and bonafides of the employer at the time of closure but is not decisive of the matter.
To accept the view taken by the Industrial Court would lead to a startling result in that an employer who has resorted to closure, bonafide wants to re open, revive and re start the industrial activity he can not do so on the pain that the closure would be adjudged a device or pretence.
Therefore the correct approach ought to be that when it is claimed that the employer is not guilty of imposing a lockout but has closed the industrial activity, the Industrial Court before which the action of the employer is questioned must keeping in view all the relevant circumstances at the time of closure decide and determine whether the closure was a bonafide one or was a device or a pretence to determine 69 the services of the workmen.
Answer to this question would permit A the Industrial Court to come to the conclusion one way or the other.
Having clarified the position in law, we dispose of the appeals in terms of the undertaking of Dr. P.D. Meghani as recorded in this judgment.
Both the appeals are disposed of accordingly.

dataset_name: IN-Abs

summary:
The appellant trade union filed two complaints against the employees.
The complaints were that the employers were guilty of imposing and continuing a lock out and had thus committed unfair labour practice.
The employers contended that they had finally and irrevocably closed the industrial under taking and were not guilty of any unfair labour practice.
The Industrial Cc.
Court dismissed the complaints.
The union 's appeals were dismissed by the High Court.
Hence these appeals by special leave.
Disposing of the appeals, ^ HELD .
Lock out has been defined in Sec.
2(L) of the to mean the closing of a place of business, or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him.
In lock out the employer refuses to continue to employ the workmen employed by him even though the business activity was not closed down nor intended to be closed down.
The essence of lock out is the refusal of the employer to continue to employ workmen.
There is no intention to close the industrial activity.
Even if the suspension of work is ordered it would constitute lock out.
On the other hand closure implies closing of industrial activity as a consequence of which workmen are rendered jobless.[67 G H; 68 Al The true test to find out whether the employer has imposed a lock out or has closed the industrial establishment, is that when it is claimed that the employer has resorted to closure of industrial activity, the Industrial Court in order to determine whether the employer is guilty of unfair labour practice must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bonafide and for reasons beyond the control of the employer.
The duration of the closure may be a significant fact to determine the intention and bonafides of the employer at the time of the closure but is not decisive of the matter.
When it is claimed that the employer is not guilty of imposing a lock out but has closed the industrial activity, the Industrial Court before which the action of the employer 65 is questioned must keeping in view all the relevant circumstances at the time of A closure decide and determine whether the closure was a bonafide one or was a device or a pretence to determine the services of the workmen.
Answer to this question would permit the Industrial Court to come to the conclusion one way or the other.
[68 F H; 69A]


judgement:
ce Act 1948 covers all factories or establishment with 20 or more employees and the benefit is intended to be given to institutions with more than that number.
Because the legislation is beneficial it should also apply to factories or establishments with less than 20 employees is not the contention on behalf of the appellant.
If that be not so, in finding out whether a partner would be an employee a liberal construction is not warranted.
[127H, 128A] & CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3500 of 1984.
Appeal by Special leave from the Judgment and order dated the 3rd August, 1981 of the Kerala High Court in M.F.A. No. 442 of 1979.
M.K. Banerjee, Addl.
General, Girish Chandra and R.N. Poddar for the Appellant.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The short point which arises for determination in this appeal by special leave is as to whether a partner of a firm is an "employee ' within the meaning of Section 2(9) of the (hereinafter called 'the Act ').
Respondent Ramanuja Match Industries which is a firm is engaged in manufacturing of matches within the Trichur area of Kerala State and the question as to whether it is covered under the provisions of the Act fell for consideration.
The Inspector found that there were 18 regular employees and three of the partners who worked regularly for wages were to be put together.
Thus the number of 20 employees as required by the Act was satisfied and the respondent did incur liability for contribution The respondent challenged its liability before the Employees Insurance Court at Calicut by contending that partners were not employees and when the three partners were excluded, the total number of employees did not exceed the statutory minimum.
The 122 Insurance Court found in favour of the respondent and an appeal under the Act was carried to the High Court by the appellant and a Division Bench of that Court following its earlier decision in Regional Director of E.S.I. Corporation vs M/s. Oosmanja Tile Works, Alwaye,(l) held that partners were not employees.
It is against this decision that the present appeal has been carried.
There is no dispute that under the Act, liability to pay contribution arises only when 20 or more persons are employed for wages.
It is also not disputed that in the case of the respondent unless the three partners are included, the basic number of 20 is not reached and no liability under the Act accrues.
The term 'employee ' has been defined in section 2(9) of the Act to mean "any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies and "one of the alternative in clauses (i), (ii) or (iii).
'Wages ' has been defined in sub section
(22) of that section to mean "all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. " It is thus clear that in order that some one may be an employee within the meaning of the Act, he has to be employed for wages.
The concept of wages would bring in the contract of employment.
The Shorter oxford English Dictionary gives the meaning of 'employ ' to be "to use the services of for some special business; to have or maintain in one 's service".
In common parlance the concept of employee would take with it the correlation of the employer.
The term 'employer ' had not been defined in the Act but in the absence of an employer who would provide the employment, there would indeed be no employee.
In fact, that concept is clear in the scheme of the Industrial Disputes Act of 1947 and the definition of the term 'employer ' in section 2(g) of that Act makes the position clear.
It is appropriate that at this stage we refer to the position of a partner qua the firm.
Section 4 of the Partnership Act, 1932 defines 'partnership ' and one of the essential requisites of a partner ship is that there must be mutual agency between the partners.
(1) I.L.R. 1975 (2) Kerala 207.
123 Full Bench of the Patna High Court in Seth Hira Lal & Anr.
vs A Sheikh Jamaluddin and Anr.,(1) rightly emphasised upon the position that an important element in the definition of partnership is that it must be carried on by all or any one of the partners acting for all.
Section 18 of the Partnership Act statutorily declares every partner to be an agent of the firm for the purposes of the business of the firm and Section 19 states that an act of a partner which is done to carry on, in the usual way, business of the kind carried on by the firm, binds the firm.
A partnership firm is not a legal entity.
This Court in Champaran Cane Concern vs State of Bihar and Anr.
,(2) pointed out that in a partnership each partner acts an agent of the other.
The position of a partner qua the firm is thus not that of a master and a servant or employee which concept involves an element of subordination but that of equality.
The partnership business belongs to the partners and each one of them is an owner thereof.
In common parlance the status of a partner qua the firm is thus different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee.
Learned counsel for the appellant strongly relied on a case of the Rajasthan High Court in Regional Director of E.S.I. Corporation, Jaipur vs P.C. Kasliwal and Anr.
,(3) The learned Single Judge has taken the view that a partner can be employed by the firm and if he draws emoluments within the prescribed limits for the work of the factory, he would be an employee under section 2(9) of the Act.
In the same decision it has also been held that a sleeping partner drawing a monthly allowance merely because he is a partner would not come within the ambit of the Act as an employee and contribution in respect of such partner would not be payable.
As against this view there is a Division Bench decision of the Kerala High Court in Regional Director of E.S.I. Corporation vs M/s. Oosmanja Tile Works, alwaye (supra), where it has been held that a managing partner of a firm is not an employee if merely he receives salary or other remuneration.
Strong reliance has been placed by (1) [1946] 224 Indian Cases 106.
(1) ; (2) [1981] Labour & Industrial Cases 671. 124 the Kerala High Court on the position that such managing partner is not an employee who is working under a contract of service.
In fact, in the present case support has been drawn from this decision of the High Court as a precedent and following the ratio of that decision, the High Court has decided against the appellant.
The Rajasthan High Court has obviously not been alive to the definition of the term 'employee ' in section 2(9) of the Act though the definition has been extracted in extenso.
The status of a partner qua the firm with reference to the provisions of the Partnership Act the concept of "employer" and "employee" and the importance of the definition of "wages" have also been lost sight of in adjudicating whether a partner is an employee.
We are, therefore, not inclined to accept the view of the Rajasthan High Court.
On the other hand, the view taken by the Kerala High Court seems to be the correct one and fits in with the position of a partner qua his firm and the jurisprudential approach to the matter.
The respondent did not choose to appear in this Court to support the order of the High Court.
We have, however, come across several judicial opinions of American and English Courts taking the view that a person cannot be the employee of the firm of which he is a partner.
In Words and Phrases Permanent Edition Vols.
14 and 14A (1974 reprint), several such decisions of the American State Courts have been referred to in support of the view that a partner cannot be an employee of his firm and we propose to refer to some of the more apt ones.
In Dube vs Robinson(1) it has been held that in a partnership each partner is an agent of the others as well as a principal; but he is not in hire as an employee and that he may perform labour even with the employees of the partnership and of the same kind as they perform does not make him an employee of the other partners or of the partnership, and hence such partner cannot be counted to constitute one of the workmen ' necessary for application of the Employers ' Liability and Workman 's Compensation Act to the partnership business.
In United States Fidelity & Guarantee Company vs Neal(2) it has been held that a partner not an employee of the partnership within the Compensation Act though at the time of the injury he was performing special services under contract with his partner, (1) (2) 125 separate and independent from the articles of partnership, and is A being paid compensation therefore in addition to his shale in profits.
Again, in Le Clear vs Smith,(1) it was held that a partner, though he received a salary in addition to his share of the profits, was an employer and an not employee entitled to compensation under the Workman 's Compensation Law, where the insurer did not insure the employers.
In Berger Fidelity Union Casualty Co., vs Texas,(2) it has been held that a member of an employer firm cannot be an employee thereof.
In Wearer vs Weinberger,(3) it was held that "employee" is a person who renders service to another, usually for wages, salary or other financial consideration, and who, in performance of such service, is entirely subject to the direction and control of the other, such other being the employer.
Crooks vs Glena Falls Indemnity Co.
,(4) is an authority for the view that an employee is one who is subject to the absolute control and direction of the employer in regard to any act, labour or work to be done in course and scope of his employment.
In Morici Corporation vs U.S.D.C. California.
,(5) the Court held that the test to determine whether one person is another 's employee, is whether or not he is subject to control of the other person.
In Burker vs Friedman,(6) it was held that partners cannot be regarded as employees rather than as employers who own and manage operation of business, and, hence, cannot be included as employees.
Wright vs Deareter(7) took the view that partners were not employees for purposes of requirement that compensation law be complied with when there are three or more employees.
Though we have not come across any decision of the U.S. Supreme Court on the point, these authorities under various legislations are clearly indicative of the principle that a partner who belongs to the class of employer cannot rank as employee because he also works for wages for the partnership.
Undoubtedly the term employee is the co relative of employer.
(1) (2) 293 S.W. 235.
(3) 392 F. Suppl.
(4) 203.
(5) 500 F. Suppl.
(6) (7) 126 We may usefully refer here to an English decision.
The Court of Appeal in Ellis vs Joseph Ellis & Co.,(1) was called upon to decide whether a partner of a firm could be its employee.
The short facts relevant for our purpose available in the judgment of Collins M.R. are: "The deceased appears to have been a skilled workman and, by agreement with his partners, he worked at the mine, sometimes on the surface and sometimes under ground, for wages; and, while working underground, he met with an accident which occasioned his death.
His representative thereupon claimed compensation under the Workman 's Compensation Act, 1897, on behalf of her self and his children.
The question is whether, having regard to his position as one of the partners, he can be regarded as a workman in the employ of the partnership, and the partners as his employers within the meaning of the Act.
When one looks at the provisions of the Act, they do not appear to be applicable to a case like the present.
The supposition that the deceased man was employed, within the meaning of that term as used in the Act (not very different from the definition here), would appear to involve that he, as one of the partners, must be looked upon as occupying the position of being one of his own employers.
It seems to me that, when one comes to analyse an arrangement of this kind, namely, one by which a partner himself works, and receives sums which are called wages, it really does not create the relation of employers adjusting the amount that must be taken to have been contributed to the partnership assets by a partner who has made what is really a contribution in kind, and does not affect his relation to the other partners which is that of co adventurer and not employee".
Lord Justice Mathew pithily but with emphasis added: "The argument on behalf of the applicant in this appeal appears to involve a legal impossibility, namely, that the same person can occupy the position of being both master and servant, employer and employed." (1) 127 Lord Justice Cozens Hardy also spoke in the same strain: "All that our decision in this case amounts to, I think, is that the Act only applies where there is on one side an employer, and on the other side a workman, who are different persons.
" This is in complete accord with our view.
F.C. Bock and F.F. Manix in their book, the Australian Income Tax Law and Practice (1960 Edn., Vol. 3, page 3092) have said: "The decision of the High Court in Rose vs Federal Commissioner of Taxation(l) established that there is nothing in the relevant income tax legislation to warrant treating a partnership as a distinct legal entity.
A partner cannot therefore, also be an employee of the partnership, for a man cannot be his own employer . . " It is thus clear that in the United States, Great Britain and Australia, a partner is not treated as an employee of his firm merely because he receives a wage or remuneration for work done for the firm.
This view is in complete accord with the jurisprudential approach.
In the absence of any statutory mandate, we do not think there is any scope for accepting the view of the Rajasthan High Court.
Counsel for the appellant emphasised on the feature that the statute is a beneficial one and the Court should not interpret a provision occurring therein in such a way that the benefit would be withheld from employees.
We do not doubt that beneficial legislations should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.
The Act covers all factories or establishment with 20 or more employees and the benefit is intended to be given to institutions with more than that number.
It is not the (1) ; 128 contention of counsel that because the legislation is beneficial it should also apply to factories or establishments with less than 20 employees.
If that be not so, in finding out whether a partner would be an employee a liberal construction is not warranted.
A person who would not answer the definition cannot be taken into account for the purpose of fixing the statutory minimum.
We are therefore, not inclined to accept the contention of counsel that on the basis of the statute being beneficial, a partner should also count as an employee.
Once we hold that the three partners were not employees, on the admitted fact the total number of employees would be less than 20, the Act would not be applicable to the establishment in question.
There is no merit in the appeal and the same is, therefore, to be dismissed.
At the hearing the respondent was not represented; we, therefore, make no direction for costs.
N. V. K. Appeal dismissed.

summary:
The Respondent firm was engaged in the manufacturing of matches.
The Inspector of the Employees State Insurance Corporation who inspected the firm found that there were 18 regular employees and three of the partners worked regularly for wages.
As the number of employees were over 20 he held that the Respondent firm incurred liability for contribution under the .
The Respondent challenged its liability before the Employees Insurance Court by contending that partners were not employees and that when the three partners were excluded, the total number of employees did not exceed the statutory minimum.
The Insurance Court found in favour of the respondent.
The Employees State Insurance Corporation appealed to.
The High Court, which held following its earlier decision in Regional Director of E.S.I. Corporation vs Mls.
Oosmalua Tiite Works, Alwayes I.L.R. 1975(2) Kerala 201 that partners were not employees.
In the appeal to this Court on the question whether a partner of a firm is an "employee 'l within the meaning of section 2(9) of the , H 120 Dismissinhe Appeal, ^ HELD: 1.
The three partners were not employees.
On this admitted fact the total number of employees would be less than 20.
The would not therefore be applicable to the respondent establishment.
[128C] 2.
The term 'employee ' has been defined in section 2(9) of the to mean any person employed for wages in or in connection with the work of a factory or establishment to which the Act applies. ".
Wages") has been defined in sub section (22) of that section to mean all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled. ".
In order that some one may be an employee within the meaning of the Act, he has to be employed for wages.
The concept of wages would bring in the contract of employment, and the concept of employee would take with it the correlation of the employer.
The term 'employer ' has not been defined in the Act.
In the absence of an employer who would provide the employment, there would be no employee.
(122D F) 3.
A partnership firm is not a legal entity.
In a partnership each partner acts as an agent of the other.
The position of a partner qua the firm is thus not that a master and a servant or employer and employee which concept involves an element of subordination but that of equality.
The partnership business belongs to the partners and each one of them is an owner thereof.
In common parlance the status of a partner qua the firm is thus different from employees working under the firm, it may be that a partner is being paid some remuneration for any special attention which he devotes but that would not involve any change of status and bring him within the definition of employee.
Seth Hira Lal & Anr vs
Sheikh Jammaluddin and anr.
[1946] 224 Indian Cases 1O6 & Regional Director of E.S. 1.
Corporation vs M/s. Osmanja Tile Works, Alwaye, I.L.R. 1975 (2) Kerala 207 approved.
Regional Director of E.S.I. Corporation, Jaipur vs P.C. Kasliwal and Anr.
(1931) Labour & Industrial Cases 671 reversed 4.
In the United States, Great Britain and Australia, a partner is not treated as an employee of his firm merely because he receives a wage or remuneration for work done for the firm, which is in complete accord with the jurisprudential approach.
[127D E] Dube vs Robinson 92 N 312.
United States Fidelity Smith & Berger vs Fldility Union Casualty Co, Tayes, 293 S.W. 235 & Weaver vs Wcinberger 392 F. Suppl.
721 Crooks vs Glena Falls Indemnity Co, 203 & Morfci Corporation vs US.D.C. California, 500 F. Suppl.
714 & Burker vs Friedman, ; & Wright vs Deareter Ellies vs Joseph & Co. & Rose vs Federal Commissioner of Taxation ; A referred to.
Beneficial legislation should have liberal construction with a view to implementing the legislative intent but where such beneficial legislation has a scheme of its own there is no warrant for the Court to travel beyond the scheme and extend the scope of the statute on the pretext of extending the statutory benefit to those who are not covered by the scheme.
[127F G]


judgement:
Civil Appeal No. 4720 of 1984.
Appeal by Special leave from the Judgment and order dated the 24th November, 1983 of the Punjab and Haryana HIGH Court in C.W.P. No. 4839 of 1983.
V.M. Tarkande and A.K. Goel, for the Appellant.
Ashwani Kumar and A.K. Panda for the Respondents.
The Judgment of the Court was delivered by CHANDRACHUD, C.J.
The appellants 22 in number, who hold a three year Diploma in Electrical Engineering Course from the State Board of Technical Education, Punjab, were appointed as apprentices in August 1981.
The Principal, Technical Training Institute, Punjab State Electricity Board, Patiala, who is respondent 3 herein, issued the requisite certificates to the appellants on successful completion by them of one year 's apprenticeship.
After obtaining those certificates the appellants registered their names with the Employment Exchanges in Punjab.
The Ministry of Labour and Rehabilitation, Department of Labour (D.G.E.T.), Government of India, New Delhi, issued instructions to various offices including the Punjab State Electricity Board.
Patiala, respondent 2 herein, asking that necessary action should be taken to ensure that the trained apprentices are absorbed in industries upto a minimum of 50 per cent of direct recruitment vacancies.
These instructions were notified on March 23, 1983.
On July 27, 1983, respondent 2 advertised 50 posts of Junior Engineers II (Electrical) in its establishment, for which the appellant had successfully completed a one year apprenticeship.
The appellants filed a writ petition (No. 4839 of 1983) in the High Court of Punjab and Haryana, challenging the issuance of the advertisement on the ground that, under their respective letters of appointment, they were entitled to be appointed to 50 percent of the posts which were advertised by respondent 2.
That writ petition was dismissed by the High Court on the ground that the letters of appointment issued to the appellants did not contain any assu 155 rance or undertaking that they will be absorbed in the service of the Punjab State Electricity Board; that 47 per cent of the vacancies were already reserved for Scheduled Castes, Scheduled Tribes, backward classes, ex service men, etc.; and that, if another 50 per cent of the posts were to be reserved for apprenticeship trainees, almost 100 per cent posts shall have been put in the reserved category which would be contrary to law.
This appeal by special leave is directed against the judgment of the high court.
Section 22(1) of the , 52 of 1961, provides that it shall not be obligatory on the part of the employer to offer any employment to any apprentice who has completed the period of his apprenticeship training in his establishment nor shall it be obligatory on the part of the apprentice to accept an employment under the employer.
This provision is, however, subject to the non obstante clause in sub section (2) of section 22 which reads as follows: "Notwithstanding anything in sub section (1), where there is a condition in a contract of apprenticeship that the apprentice shall, after the successful completion of the apprenticeship training, serve the employer, the employer shall, on such completion, be bound to offer suitable employment to the apprentice, and the apprentice shall be bound to serve the employer in that capacity for such period and on such remuneration as may be specified in the contract".
(The proviso to this sub section is not relevant for our purpose) .
This sub section leaves no doubt that, despite the provision contained in sub section (1), the employer is under an obligation to offer suitable employment to the apprentice if the contract of apprenticeship contains a condition that the apprentice shall serve the employer after the successful completion of the training.
Indeed, when such an offer is made, the apprentice on his part is bound to serve the employer in the capacity in which he was working as an apprentice.
The question which, therefore, arises for consideration is whether there is a condition in the contract of apprenticeship of the appellants that they shall serve the employer after the successful 156 completion of their apprenticeship training.
In this behalf, Para graph 2 of the letters of appointment under which the appellants were appointed as apprentices is important.
It reads thus: "It should be clearly understood that you shall be on stipendary training for a period of one year and on successful completion of this training, you shall be absorbed in the department if there are vacancies, without any commitment subject to the stipulation that during the waiting period after one year s apprenticeship, you will not be paid any remuneration".
It is urged on behalf of the respondents that, this particular term in the contract of apprenticeship cannot be construed as a condition that the apprentices shall, after the successful completion of their apprenticeship training, serve the employer.
We find it difficult to accept this submission.
Paragraph 2 of the letters of appointment is intended to convey the meaning that there is an obligation on the apprentices to serve the employer after the successful completion of the training.
This condition is not happily expressed but, in matters such as the one before us, one must take a broad and commonsense view of the terms of employment.
It is not pro per in such cases to indulge in a hair splitting approach and find an escape for defeating the rights of employees.
When paragraph 2 says that the apprentice "shall be absorbed in the department", the only reasonable interpretation to put upon that expression is that it creates reciprocal rights and obligation of the parties to the contract of apprenticeship, namely, the employee and the employer "You shall be absorbed" is a double edged term of the contract.
It binds the employer to offer employment to the apprentice (if there is a vacancy) and, equally, it binds the apprentice to accept the offer.
Indeed, that is why, instead of advancing the argument which was made before us, the stand taken by the State of Punjab in the High Court was that the Executive Engineer, who sent the letters of appointment, had no authority to incorporate the particular condition in those letters.
That contention is wholly without substance and in any event, remains unsubstantiated.
It is quite difficult to accept that a senior officer in the position of an Executive would incorporate a specific term in the contract of apprenticeship without being authorised to do so.
That is also why yet another defence was taken by the State of 157 Punjab to the contention of the appellants.
That defence was that the words "without any commitment" which occurs in paragraph 2 of the letters of appointment, show that there is no obligation on the part of the employer to employ the apprentices after their period of training is over.
There is no substance in that contention also because, in the context in which the expression "without any commitment" occurs, it only means that the obligation of the employer to offer employment to the apprentice and the corresponding obligation of the apprentice to serve the employer arises only if and when there is a vacancy in which the apprentice can be appointed.
This is made clear by the clause, "you shall be absorbed in the department if there are vacancies ', which precedes the expression "without any commitment".
This is plain commonsense because, if there is no vacancy in which an apprentice can be appointed, there can be no obligation to appoint him and there can, evidently, be no obligation upon the apprentice to serve the employer.
These reciprocal rights and obligations, namely, to serve and offer employment, arise on the occurrence of a vacancy in which an apprentice can be appointed.
We are also of the opinion that, apart from the implications arising out of Section 22(2) of the , paragraph 2 of the letters of appointment creates a binding obligation upon the employer to absorb the apprentices in the department on the successful completion of the training period, provided there is a vacancy in which the apprentices can be appointed.
It would be contrary both to the letter and spirit of paragraph 2 of the letters of appointment to hold, that, even if there is a vacancy in which an apprentice can be appointed after the successful completion of his training, the employer is free not to appoint the apprentice and fill that vacancy by appointing an outsider.
Such a reading of the assurance contained in paragraph 2 will also frustrate the very object of the provision made by the legislature in Section 22 (2) of the Act The object of that provision is to guarantee, to the extent of the existence of vacancies, that the apprentices will not be rendered jobless after they complete their training.
No other point was argued before us on behalf of the respondents.
We would, however, like to indicate that there is no substance in the contention taken by the respondents before the High Court that offering employment to the appellants to the extent of 50 percent of the posts will violate the law, as laid down by this Court, in regard to reservation of posts.
The appellants are entitled 158 to be appointed in the available vacancies not because of any reservation of posts in their favour but because of the provisions of Section 22(2) of the and the contractual obligations arising under paragraph 2 of the letters of appointment.
For these reasons, we allow the appeal and set aside the judgment of the High Court.
A writ shall issue directing the respondents to absorb the appellants as "Junior Engineers II(Electrical) in the 22 vacancies which will form a part of the fifty vacancies which are advertised by respondent 2, The Punjab State Electricity Board, Patiala.
The appellants will get their costs here and in the High Court, which we quantify at rupees five thousand in all.

summary:
In accordance with the provisions of the and in terms of Para 2 of the contract of apprenticeship the appellants completed a one year apprenticeship under respondent No. 2, Punjab State Electricity Board.
Contrary to the Instructions, noticed on March 23rd, 1983 and issued by of the Ministry of Labour and Rehabilitation, Department of Labour (D.G.E.T ) Government of India to all officers asking them to take necessary action to ensure that the trained apprentices are absorbed in industries upto a minimum of 50 per cent of direct recruitment vacancies, the Board advertised on July 27, 1983 50 posts of Junior Engineers II (Electrical) in its establishment for which the appellants had successfully completed a one year apprenticeship under it.
The appellants, therefore, filed a writ petition in the High Court of Punjab and Haryana, challenging the issuance of the advertisement on the ground that under their respective letters of appointment, they were entitled to be appointed to 50 per cent of posts which were advertised by respondent No 2.
The writ petition was dismissed by the High Court on the ground that the letters of appointment issued to the appellant did not contain any assurance or undertaking that they will be absorbed in the service of the Punjab State Electricity Board; that 47 per cent of the vacancies were already reserved for Scheduled Castes, Scheduled Tribes, backward classes, ex servicemen, etc, and that, if another 50 per cent of the posts were to be reserved for apprenticeship trainees, almost 100 per cent posts shall have been put in the reserved category which would be contrary to law.
Hence the appeal by special leave Allowing the appeal, the Court, ^ HELD. 1.
The object of Section 22(2) of the Apprentice Act 1961 is to guarantee to the extent of the existence of vacancies that the apprentices will not be rendered jobless after they complete their training.
153 2.1.
Sub section (2) of section 22 leaves no doubt that, despite the A provision contained in sub section (1), the employer is under an obligation to offer suitable employment to the apprentice if the contract of apprentice.
ship contains a condition that the apprentice shall serve the employer after the successful completion of the training.
Indeed, when such an offer is made the apprentice on his part is bound to serve the employer in the capacity in which he was working as an apprentice.
In a contract of apprenticeship, if a condition is not happily expressed the Court must take a broad and commonsense view of the terms of the employment.
It in not proper in such cases to indulge in a hair splitting approach and find an escape for defeating the rights of employees.
[155 F G] 2.2.
Paragraph 2 of the letters of appointment is intended to convey the meaning that there is an obligation on the apprentices to serve the employer after the successful completion of the training.
When paragraph 2 says that the apprentice "shall be absorbed in the department" the only reasonable interpretation to put upon that expression is that it creates reciprocal rights and obligations on the parties to the contract of apprenticeship, namely, the employee and the employer.
"You shall be absorbed" is a double edged term of the contract.
It binds the employer to offer employment to the apprentice (if there is a vacancy) and, equally, it binds the apprentice to accept the offer.
In the context in which the expression "without any commitment" occurs, it only means that the obligation of the employer to offer employment to the apprentice and the corresponding obligation of the apprentice to serve the employer arises only if and when there is a vacancy in which the apprentice can be appointed.
Paragraph 2 of the letters of appointment creates a binding obligation upon the employer to absorb the apprentices in the department on the successful completion of the training period, provided there is a vacancy in which the apprentices can be appointed.
It would be contrary both to the letter and spirit of paragraph 2 of the letters of appointment to hold that even if there is a vacancy in which an apprentice can be appointed after the successful completion of his training, the employer is free not to appoint the apprentice and fill that vacancy by appointing an outsider Such a reading of the assurance contained in paragraph 2 will also frustrate the very object of the provision made by the legislature in section 22(2) of the apprentice Act.
[157 B; E F] 3.
The contention that the Executive Engineer, who sent the letters of appointment, had no authority to incorporate the particular condition in those letters cannot be accepted in as much as a senior officer in the position of an Executive Engineer would not incorporate a specific term in the contract of apprenticeship without being authorised to do so.
[156 G H] 4.
In the instant case, offering employment to the appellants to the extent of 50 per cent of the posts will not violate the law, as laid down by this Court, in regard to reservation of posts.
The appellants are entitled to be appointed in the available vacancies not because of any reservation of posts in their favour but because of the provisions of section 22(2) of the 154 Apprertices Act and the contractual obligations arising under paragraph 2 of the letters of appointment.
[157 H; 158 A]


judgement:
Civil Appeal No. 4512 of 1984 Appeal by Special leave from the Judgment and order dated 211 the 27th October, 1980 of the Bombay High Court in S.C.A. NO.
1021 of 1973.
M.S. Gujral, R.N. Poddar and Dalveer Bhandari for the appellant.
U.R. Lalit, N.M. Ghatate and S.V. Deshpande for the Respondent.
The Judgment of the Court was delivered by SEN, J.
This appeal by special leave directed against the judgment and order of a Division Bench of the Bombay High Court at Nagpur dated October 27, 1980 raises a questions to whether a staff car of the Technical Advisor to the North Chirimiri Collieries owned by respondent No. 1, the United Collieries Limited, which was nationalized under sub s.(l) of s.3 of the Coal Mines (Nationalization) Act, 1973 w.e.f.
May 1, 1973, was or was not covered by the definition of the term 'mine ' in s.2(h)(xii) and therefore stood transferred to, and became vested in, the Central Government free from all encumbrances.
It is common ground that the Ambassador car No. MHX 3771 was purchased by Messrs Karamchand Thapar & Bros. (Coal Sales) Ltd., Delhi in the year 1966 and was transferred to respondent No. 1, United Collieries Limited, the owners in relation to the North Chirmiri Collieries, and it was therefore the owner of the said vehicle.
On and from the appointed day i.e. May 1, 1973, the right, title, and interest of the owners in relation to the coal mines specified in the Schedule stood transferred to, and became vested absolutely in, the Central Government free from all encumbrances, under sub s.(1) of s.3 of the Act.
It is also not in dispute that the vehicle had been placed at the disposal of one D.D. Diddi, the Technical Advisor to the North Chirimiri Collieries to be used as his staff car.
Immediately after the nationalization of the coal mines, the Deputy Custodian General, Coal Mines Authority Limited, Nagpur addressed a letter dated May 9, 1973 to the aforesaid D. D. Diddi requiring him to hand over the staff car to the Custodian.
In his reply dated May 25, 1973, he asserted that although the said car belonged to respondent No. 1 and had been allotted to him for use as a staff car, it was not used exclusively for the North Chirimiri Collieries but used by him for looking after the multifarious activities of the Thapar Group of Industries which 212 was a composite concern with businesses other than coal mining.
It is not necessary for us to refer to the long correspondence that A ensued between the parties.
Eventually, the Managing Director, Western Division, Coal Mines Authority Ltd., Nagpur addressed letters dated August 9, 1973 both to respondent No. 1 and the erstwhile Technical Advisor stating that on coming into force of the Act the right, title and interest of the North Chirimiri Collieries vested in the Central Government under sub s.(1) of s.3 of the Act and therefore the car which was an asset belonging to the mine vested in the Central Government It further stated that if they failed to hand over possession of the car, they would he liable to prosecution under the Act.
Thereupon respondent No. 1, United Collieries Limited, the owners of the coal mine, and the aforesaid D.D. Diddi, the erstwhile Technical Advisor of the North Chirimiri Collieries.
filed a petition under article 226 of the Constitution before the Nagpur Bench of the High Court.
The High Court held that the question as to whether the staff car should be treated as belonging to the owner of a mine as part of the mine itself raised disputed questions of fact relating to its user which would have to be determined on the basis of evidence.
In taking that view, the High Court purported to rely upon the decision of this Court in New Satgram Engineering Works & Anr.
vs Union of India & Ors.(l) and left the parties to have their rights adjudicated in a civil suit.
It accordingly discharged the rule directing respondent No. I to establish its claim by filing a civil suit with a direction that in the event of such a suit being filed, the Civil Court will consider the making of an appropriate order for the grant of interim relief on condition of furnishing of adequate P security keeping in view that the Coal Mines Authority had been deprived of the staff car for all these years.
We are afraid, the judgment of the High Court cannot be sustained.
It failed to appreciate that in dealing with the question whether or not staff car was covered by the definition of 'mine ' in s.2(h)(xii) the nature of its user was immaterial.
Undoubtedly, the staff car belonged to respondent No. 1, the United Collieries Ltd., the owners in relation to the mine, and it being the staff car of the Technical Advisor of the North Chirimiri Collieries, was an asset belonging to the mine.
The High Court should therefore have (1) ; 213 answered the question in favour of the appellants and dismissed the writ petition on merits.
Instead it misdirected itself into thinking A that the matter was covered by the decision of this Court in New Satgram Engineering works ' case, supra, where it was observed that where there is a dispute as to whether a particular property vests in the Central Government or not under sub s.(l) of s.3 of the Act, the dispute undoubtedly is a civil dispute and must therefore be resolved by a suit.
These observations of the Court in New Satgram Engineering Work.s ' case were made in the context of s.2(h)(xi).
In the Act, 'mine ' in s.2(h) is defined, except what is immaterial, in the following terms: "2.
Definitions In this Act, unless the context otherwise requires, (h) 'mine ' means any excavation where any operation for the purpose of searching for the obtaining minerals has been or is being carried on.
and includes (vi) all lands, buildings, works, adits, levels, planes, machinery and equipments, instruments, stores, vehicles railways, tramways and siding in, or adjacent to a mine and used for the purposes of the mine, (xi) all lands and buildings other than those referred to in sub clause (x), wherever situated, if solely used for the location of the management, sale or liaison offices, or for the residence of officers and staff, of the mine; (xii) all other fixed assets, movable and immovable, belonging to the owner of a mine, wherever situated, and current assets, belonging to a mine, whether within its premises or outside.
" It will be seen that there is difference in the language used in s.2(h)(xi) and (xii).
Sub cl.
(xi) uses the words 'if solely used ' in relation to lands and buildings for the location of the management sale or liaison offices, or for the residence of officers and staff, or the mine, while sub cl.(xii) uses the words 'belonging to the owner of a mine, wherever situated '.
The difference in language between the two expression 'if solely used ' and 'belonging to the owner of a mine ' is obvious.
In New Satgram Engineering Works ' case, this 214 Court observed that it was therefore possible to contend that lands A and buildings appurtenant to a coal mine, if not exclusively used for the purposes of the colliery business, would not come within the definition of 'mine ' in s.2(h) i.e. it would depend upon the nature of user, and that the crucial date is the date of vesting.
It then went on to say that the distinction though apparent may not be real in the facts and circumstances of a particular case.
The workshop or a building constructed initially for the purposes of a coal mine cannot by itself being diverted to other purposes cease to belong to a mine.
What is of essence is whether the workshop or building originally formed a part and parcel of a coal mine.
The Court laid down that the subsequent user may not be very material.
The High Court was clearly in error in directing the parties to have the matter settled by a civil suit.
Parliament by an enlarged definition of 'mine ' in s.2(h) of the Act has indicated the nature of the properties that vest and the question whether a particular asset is taken within the sweep of s.2(h) depends on whether it answer the description given therein.
The staff car in question was undoubtedly a fixed asset of the North Chirimiri Collieries and it, belonging to respondent No. 1 the United Collieries Ltd., the owners in relation to the said mine, being the staff car of the Technical Advisor, was 'fixed asset ' belonging to the mine.
lt is righly not suggested that the staff car was not a fixed asset. 'Fixed assets ' in general comprise those asset which are held for the purpose of conducting a business, in contradistinction to those assets which the proprietor holds for the purpose of converting into cash, and they include real estate, building, machinery etc.
; Words & Phrases, Permanent Edition, Vol. 17, p. 161; Blacks Law Dictionary, 5th edn., p.573; Stroud 's Judicial Dictionary, 4th edn., Vol.1, p.201.
The staff car therefore fell within the definition of 'mine ' as contained in s.2(h)(xii) and vested in the Central Government under sub section
(1) of s.3 Coal Mines (Nationalization) Act, 1973.
Merely because the Technical Advisor was putting the staff car to his personal use or for multifarious activities of the Thapar Group of industries would not alter the true legal position since the subsequent user for a different purpose was not really germane.
For these reasons, the appeal must therefore succeed and is allowed, with costs.
The judgment and order passed by the High Court dated October 27, 1980 relegating the parties to a civil suit is set aside and the writ petition filed by the respondents is dismissed.
S.R. Appeal allowed.

summary:
An Ambassador car No. MHX 3771 was purchased by M/s. Karamchand Thapar & Bros. (Coal Sales) Ltd, Delhi in the year 1966 and was transferred to respondent No. I United Collieries Ltd., the owners in relation to the North Chirimiri Collieries, and it was, therefore, the owner of the said vehicle.
On and from the appointed day i.e. May 1, 1973, the right, title and interest of the owners in relation to the coal mines specified in the schedule stood transferred to and became vested in the Central Government free from all encumbrances, under sub section (1) of section 3 of the .
Immediately after the nationalisation of the coal mines, the Deputy Custodian General, Coal Mines Authority Limited, Nagpur addressed a letter dated May 9, 1973 to the Technical Advisor to the North Chirimiri Collieries using the said staff car to hand over if to the custodian.
Since the car was not handed over on the plea that it was not used by the Technical Advisor exclusively for the North Chirimiri Collieries but used by him for looking after the multifarious activities of the Thapar Group of industries which was a composite concern With the businesses other than coal mining, and therefore although the car belonged to respondent No. 1, the owners of the North Chirimiri Collieries, it was not a staff car 'belonging to the mine '.
The Managing Director, Western Division, Coal Mines '.
Authority by an order dated August 9, 1983 directed the respondents to hand over possession of the car failing which they would be liable to prosecution under the Act.
Thereupon, respondent No. 1 and the Technical Advisor assailed his order by a petition under article 226 of the Constitution before the Nagpur Bench of the Bombay High Court.
The High Court purporting to rely on the decision of this Court in New Satgram Engineering Works & Anr.
vs Union of India ; held that the question as to whether the staff car should be treated as belonging to the owner of a mine as part of the 210 mine itself raised disputed questions of fact relating to its user which would A have to be determined on the basis of evidence.
lt accordingly discharged the rule and left the parties to have their rights adjudicated in a civil suit.
Feeding aggrieved.
Union of India preferred the appeal by special leave as the question involved affected a large number of cases.
Allowing the appeal, the Court ^ HELD: Parliament by an enlarged definition of 'mine ' in section 2(h) of the Act has indicated the nature of the properties that vest and the question whether a particular asset is taken within the sweep of section 2(h) depends on whether it answers the description given therein.
The staff car in question was undoubtedly a fixed asset of the North Chirimiri Collieries Ltd., the owners in relation to the said mine, being the staff car of the Technical Advisor, was a fixed asset ' belonging to the mine. 'Fixed assets ' in general comprise house assets Which are held for the purpose of conducting a business, in contradistinction to those assets which proprietor they include real estate, building, machinery etc.
The staff car, therefore, fell within the definition of 'mine ' as contained in section 2(h)(xii) and vested in the Central Government under subsection (1) of section 3 of the .
Merely because the Technical Advisor was putting the staff car to his personal use or for multifarious activities of the Thapar Group of Industries would not alter the true legal position since the subsequent user for a different purpose was not really germane.
[214D G] There is a difference in the language used in section 2(h)(xi) and (xii) Sub clause (xi) uses the words if solely used ' in relation to lands and buildings for the location of the management, sale or liaison offices, or for the residence of officers and staff, of the mine, while sub clause (xii) uses the words belonging to the owner of mine, wherever situated '.
The difference in language between the two expressions 'if solely used ' and 'belonging to the owner of a mine ' is obvious.
The observations of this Court in New Satgram Engineering Works case that "where there is a dispute as to whether a particular property vest in the Central Government or not under sub s.(i) or section 3 of the Act, the dispute undoubtedly is a civil dispute and must therefore be resolved by a suit" where made in the context of section 2(h)(xi) of the Act.
In that case it was observed that was therefore possible to contend that lands and buildings appurtenant to a coal mine, if not exclusively used for the purpose of the colliery business, would not come within the definition of mine ' in section 2(h) i.e it would depend upon the nature of user, and that the crucial date is the date of vesting.
The present case is clearly covered by section 2(h)(xii) and not by section 2(h)(xi).
[213G H; 214A B ; 213A B] New Satgram Works & Anr.
vs Union of India ; distinguished