The Madras Electricity Board vs The Commissioner of Labour Madras-5 and others

Kailasam, J.—This writ appeal is preferred by the Madras State Electricity Board represented by its Secretary against the decision of

Rajagopalan, J. holding that the clerical staff of the Board, which is an industrial undertaking, is a commercial establishment as defined by the

Madras Establishment Act. The appellant, the Madras State Electricity Board, was constituted under the Electricity (Supply) Act, (Act LIV of

1948). The Madras Electricity Board was constituted with effect from 1st July 1957. On its constitution the Board took over the employees, who

were upto then in the employment of the Government of Madras in the Electricity Department. Many of them were clerks and typists appointed by

the Government on a temporary basis. According to the rules, their services were liable to be terminated without notice. After the clerks and

typists came under the Electricity Board, the Board recruited its own clerical staff and many of the clerks and typists, who were recruited on a

temporary basis by the Government, were ousted on giving a month''s notice. The discharged clerks and typists appealed to the Commissioner for

Workmen''s Compensation under S. 41 of the Madras Shops and Establishments Act. The Electricity Board applied to the Commissioner of

Labour for determination of the question whether the employees were governed by the provisions of the Madras Shops and Establishments Act. In

these proceedings the contention of the Electricity Board was that the provisions of the Madras Shops and Establishment Act were not applicable

to these employees. The Commissioner of Labour by his order dated 23rd December, 1959 held that the provisions of the Madras Shops and

Establishments Act applied to the discharged clerical employees. Against the said order a writ petition was preferred and the writ petition was

dismissed by Rajagopalan, J. and this appeal is preferred by the Electricity Board against that judgment.

The questions that arise for consideration in this appeal are whether the Madras State Electricity Board is a commercial establishment as defined

in the Madras Shops and Establishments Act and whether the Electricity Board is exempted from the operation of the Act by S. 4 of the Act. The

Madras Shops and Establishments Act (Act XXXVI of 1947) was enacted for the purpose of regulating the conditions of work in shops,

commercial establishments etc. The Act regulates among others the hours of work, spread over periods of work, holidays, employment of children

and young persons, health and safety, leave, wages etc., The word ""establishment"" is defined as meaning a shop, commercial establishment,

restaurant etc. The definition of "" commercial establishment"" so far as it is relevant to this case is an establishment which is a clerical department of

industrial undertaking. The term "" person employed "" is defined under S. 2 (12) of the Act, as, in the case of a factory or an industrial undertaking,

a member of the clerical staff employed in such factory or undertaking. The preamble to the Electricity (Supply) Act provider that the Act is for the

rationalisation of the production and supply of electricity and for taking measures conducive to electrical development. As the purpose of the Act is

production and distribution of electricity, it cannot seriously be contended that the Board is not an industrial undertaking. In The State of Bombay

and Others Vs. The Hospital Mazdoor Sabha and Others, , the Supreme Court in dealing with the Industrial Disputes Act deserved that there

would be no difficulty in holding that the State in carrying on an undertaking when it runs a group of Hospitals. Their Lordships observed that there

could be no doubt that if a Hospital was run by private citizens for profit it would be an undertaking, that the presence of profit motive was not

essential and that if a private citizen runs an Hospital without charging any fees from the patients treated it would nevertheless be an undertaking. In

their Lordships opinion the character of the activity decides the question and whether the hospital if run by the Government or by private person

does not make any difference. In this case if the production and distribution of electricity was undertaking by a private body, there can be no doubt

that it would be an industrial undertaking and the fact that the undertaking is by the State Government cannot make any difference.

The learned Counsel for the appellant contended that the clerks employed under the Board could not be said to constitute a clerical department

of an industrial undertaking. He submits that the Board has innumerable offices situated all over the State and the clerks so situated cannot be said

to form the clerical department of the industrial undertaking. In order to make a person come under the definition of S. 2, Cl. (3). all that is

necessary is that the person should be a member of clerical staff employed in the clerical department of the industrial undertaking. It does not

require that the whole department should be in the particular office and the section will be applicable to all the clerks employed by the Electricity

Board.

The next question that has to be considered is whether the Madras State Electricity Board is exempted under S. 4 of the Act. The two clauses

that are relied on by the learned Counsel for the appellant are (c) and (f) of S. 4. According to Cl. (c) of S. 4, nothing contained in the Act shall

apply to establishments under the central and State Governments, local authorities etc. The learned Counsel contends that the Electricity Board is

an establishment under the State Government. He also urges that it will also come under the definition ""local authority."" The question under what

circumstances an establishment can be said to be one under the Central or the State Government was considered in a recent decision of this Court

reported in Narayanaswami v. Krishnamurthi AIR 1958 Mad. 313. Their Lordships were considering the question whether the Life Insurance

Corporation of India was a department of the Government or a servant or an agent of the Government. Their Lordships observed that service

under the Life Insurance Corporation of India is not a service under the Government. The Life Insurance Corporation Act 1956 (Act XXXI of

1956) created the Life Insurance Corporation. The Electricity (Supply) Act created the Central Electricity authority and the State Electricity

Board. Under the Life Insurance Corporation Act, the Life Insurance Corporation is a body corporate having perpetual succession and a common

seal with power to acquire, hold and dispose of property and to sue and be sued in its own name. The members of the Corporation as well as the

Chairman shall be appointed by the Central Government. Under S. 28 after allocating 25 per cent of the surplus, available, the balance may be

utilised for such purpose and in such manner as the Central Government may determine. Under S. 21, it is provided that the Corporation shall be

guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing. Under the Electricity

(Supply) Act also it is provided that the Board shall be a body corporate by a name having perpetual succession and a common seal with power to

acquire and hold property both moveable and immoveable, and shall by the said name sue and be sued. The Central Electricity Authority shall be

constituted by the Central Government, and the State Government shall constitute the State Electricity Board. In the discharge of the functions the

Board shall be guided by such directions on the questions of policy as may be given to it by the State Government. Thus, it will be seen that the

provisions of the Life Insurance Corporation Act and the Electricity (Supply) Act are more or less identical. In dealing with the Life Insurance

Corporation Act, their Lordships in Narayanaswami v. Krishnamurthi AIR 1958 Mad. 343, after referring to the judgment of Devlin, J., in Bank

Voer Nandal v. Stafford (1952) 1 A.E.R. 314, and the judgment of Denning, L. J., in Tamlin v. Hannsford (1950) 1 K.B. 18, observed at page

355 as follows :

The Government created for themselves the sole ownership of that business, in other words, they excluded private enterprise from this field. For

these purposes legislation was essential. So far there could be no dispute, nor any doubt, that at that stage it was open to the Government to have

created a wing, so to speak, of the Ministry of Finance or the Ministry of Economics to carry on this insurance business. But this was not what was

done. The Government did not desire to assume the responsibility for the day-to-day administration.

For that purpose, Parliament created an autonomous Corporation, though sufficient power to control and guide its general policy was vested in the

Government. The object and purpose of the statute was the creation of a body autonomous in regard to its day-today administration and free from

ministerial control except as to broad lines of policy, and therefore outside plenary Parliamentary surveillance, save perhaps in regard to the

directions given by the responsible minister under S. 21.

It was this freedom that was sought to be achieved by the creation of a separate legal entity in the form of a statutory Corporation, There was not,

therefore, merely a difference in form between a department of the Government and this statutory Corporation but one in substance.

The necessary concomitant of the form, with this difference in substance, was to remove it, so to speak, from its character as a Government

department and to render it the same type of body as that with which Lord Denning had to deal in Tamlin''s case. It appears to us therefore that in

these circumstances, it would run counter to the very intentions of Parliament to hold that the newly created body was either a Government

department or a servant or agent of the Government.

We most respectfully agree with the above observations of their Lordships. The observations are applicable in full to the present case.

The term ""local authority"" is defined in the Madras General Clauses Act. (Act 1 of 1891). S. 3 (17) runs as follows:

Local authority'' shall mean a Municipal Committee, District Board, body of Port Commissioners or other authority legally entitled to, or entrusted

by the Government with, the control or management of a municipal or local fund.

The learned Counsel contended that the Electricity Board is an authority legally entitled to or entrusted by the Government with the control or

management of local fund. Without deciding the question whether the term ""local fund"" is applicable to the Electricity Board, we are of opinion that

the statute has created the Electricity Board as an independent corporation and there is no entrustment by the Government with the control or

management of any fund. This contention, therefore, fails.

The only question that remains to be considered is whether the Electricity Board comes under the exemption provided under S. 4 (1) (f). S. 4(1)

(f) exempts establishments which are in respect of matters dealt with in this Act governed by a separate law for the time being in force. The

contention of the learned Counsel for the appellant is that under S. 79 of the Madras Electricity Supply Act, the Board is empowered to make

regulations, and the Board has made transitory regulations for regulation of the duties of officers and servants of the Board and their salaries,

allowances and other conditions of service. The learned Counsel submitted that these regulations promulgated by the Board under S. 79 (c) of the

Electricity Act is a ""law"" within the meaning of S. 4 (1) of the Madras Shops Establishments Act, and as such, comes under the exemption

provided by the Act. S. 4 (1) (f) provides that the establishments which are in respect of matters dealt with in the Act or government by a separate

law for the time being in force, will be exempted. The matters that are dealt with under this Act are, as previously referred to, hours of work,

enjoyment of children, health and safety, holidays with wages etc., to all persons employed. To come under S. 4(1) (f) the separate law for the

time being must provide for the matters above referred to. The ""Separate Law"" should necessarily deal with the essential matters that are governed

by the Madras Shops and Establishments Act. The learned Counsel for the appellant contends that in view of the regulations promulgated by the

Board under S. 79-C of the Electricity Act which must be held to be ""a separate law"" within the meaning of S. 4 (1) (f) of the Shops and

Establishments Act the applicability of the Act as a whole is excluded. The preamble of the Shops and Establishments Act recites that it is an Act

to provide for the regulation of conditions of work in shops and commercial establishments. Amongst other matters, the Act regulates (i) the hours

of work and the spread over;(ii) holidays and leave; (ii) prohibition of employment of children and employment of young persons only during

prescribed hours; (iv) the health and safety of the persons employed, and (v) payment of wages and termination of services. We are not expressing

any opinion on the question whether the transitory provisions constitute "" separate law "" within the meaning of S. 4 (1) (f) of the Act. Instructions

by the Executive Authority cannot have the force of a statute unless such instructions are issued in exercise of a statutory power. S. 4 (1) (f) of the

Act can apply only where there is a separate law providing for matters dealt with under the Madras Shops and Establishments Act. The object of

this provision is only to avoid conflict of jurisdiction which may result by applying two parallel sets of law to the same establishment. It is not

necessary that the separate law, the existence of which would exclude the applicability of Madras Shops and Establishments Act under S. 4 (1) (f),

should be a law comprising within its scope all the details of the Madras Shops and Establishments Acts with precision and minuteness. Nor can it

be said that a separate law in relation to one or a few of the matters governed by the Madras Shops and Establishments Act will to that extent

exclude the operation of the Act. A separate law which can exclude the operation of the Act in accordance with the provisions of S. 4(1) (f) of the

Act is one which in substance and in effect must cover the same field as that covered by the Act. We are of opinion that the regulations framed

under S. 79-C of the Act even if it can be called a separate law, upon which however we express no opinion, are not such as to bring the

exclusion of the applicability of the Madras Shops and Establishments Act. We agree with Rajagopalan J. that there are no grounds for the issue of

a writ of certiorari as prayed for by the appellant. The appeal fails and is dismissed with costs. Counsel''s fee Rs. 150/-.