DALCO ENGINEERING PRIVATE LTD.versusSHREE SATISH PRABHAKAR PADHYE AND ORS.

                      [2010] 4 S.C.R. 15


           DALCO ENGINEERING PRIVATE LTD.                          A
                               v.
    SHREE SATISH PRABHAKAR PADHYE AND ORS.
            (Civil Appeal No.1886 of 2007)

                      MARCH 31, 2010
                                                                   B
         [R.V. RAVEENDRAN, R.M. LODHA AND
                  C.K. PRASAD, JJ.]

      Persons with Disabilities (Equal Opportunities, Protection
 of Rights and Full Participation) Act, 1995 - ss.2(k) and 47 -    c
 Establishments, within the meaning of that expression in
 s.2(k) - Company incorporated under the Companies Act
 (other than a Government company) - Whether an
 "establishment" as defined in s.2(k) - Applicability of s. 47 -
 Requirement relating to non-discrimination of employees           D
 acquiring disability during course of service, as embodied in
 s.47 - To be complied with only by authorities falling within
 the definition of State (as defined in Article 12 of the
 Constitution), or even by private employers - Held: The
 definition of 'establishment' as in· s.2(k) includes only         E
 'Government Companies' as defined in s. 617 of the
 Companies Act which necessarily and impliedly excludes all
 other types of companies registered under the Companies
Act, 1956, from the definition of 'establishment' - S.47 applies
only to establishments specifically defined as 'establishment'     F
under s.2(k) -Benefit intended to be restricted to a particular
class of employees, i.e. employees of enumerated
establishments (which fall within scope of 'State' under Article
 12 of the Constitution) - Private employers, whether
individuals, partnerships, proprietary concerns or companies
(other than Government companies) are clearly excluded             G
from the 'establishments' to which s.47 will apply- Constitution
of India, 1950 - Article 12 - Companies Act, 1956 - s.617.
                        /
    Interpretation of Statutes - Socio-economic legislation -
                              15                                   H
    16      SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A Held: To be interpreted liberally - However, Courts cannot
  expand the application of a provision in a socio-economic
  legislation by judicial interpretation, to levels unintended by
  the legislature, or in a manner which militates against the
  provisions of the statute itself or against any constitutional
B limitations - Express limitations placed by socio-economic
  statute cannot be ignored, so as to include in its application,
  those who are clearly excluded by such statute itself

      Interpretation of Statutes - Marginal Note - Held:
  Though the marginal note may not control the meaning of the
C body of the section, it usually gives a safe indication of the
  purport of the section to the extent possible.

        Words and Phrases-'estab/ishment'- Meaning of, in the
    context of s.2(k) of the Persons with Disabilities (Equal
    Opportunities, Protection of Rights and Full Participation). Act,
0
    1995.
      In these appeals, dispute arose as to whether having
  regard to the definition of the word 'establishment' in
  section 2(k) of the Act, the requirement relating to non-
E discrimination of employees acquiring a disability during
  the course of service, embodied in Section 47, is to be
  complied with only by authorities falling within the
  definition of State (as defined in Article 12 of the
  Constitution), or even by private employers.
F     The questions which consequently arose for
  consideration before this Court were (i) whether a
  company incorporated under the Companies Act (other
  than a Government company as defined in section 617
  of the Companies Act, 1956) is an "establishment" as
G defined in section 2(k) of the Act and (ii) whether the
  respondent in C.A.No.1886 of 2007 and the first appellant
  in C.A No.1858 of 2007 are entitled to claim any relief with
  reference to section 47 of the Act.
H        Allowing C.A.No.1886 of 2007 and dismissing C.A
   DALCO ENGINEERING PRIVATE LTD. v. SATISH              17
             PRABHAKAR PADHYE
No.1858 of 2007, the Court                                     A
     HELD: 1.1. The term "establishment" employed in
Section 47 of the Persons with Disabilities (Equal
Opportunities, Protection of Rights and Full Participation)
Act, 1995 is defined in Section 2(k) of the said Act. The
                                                               8
definition of the word 'establishment' in section 2(k) is an
exhaustive definition, and the categories of employers
covered by it are: (i) a corporation established by or
under a Central, Provincial, or State Act; (ii) an authority
or a body owned or controlled or aided by the
Government; (iii) a local authority; (iv) a Government         C
company as defined in Section 617 of the Companies Act,
1956; and (v) Departments of a Government. [Para 6) [27-
E-G]
   . 1.2. The words "a Corporation establis.hed. by or         o
under a Central, Provincial or State Act" is a standard
term used in several enactments to denote a statutory
corporation established or brought into existence by or
under statute. The term is always used to denote certain
categories of authorities which are 'State' as contrasted      E
from non-statutory companies which do not fall under the
ambit of 'State'. [Para 8) [27-F-G; 28-D]
     1.3. A 'company' is not 'established' under the
Companies Act An incorporated company does not 'owe'
its existence to the Companies Act. An incorporated            F
company is formed by the act of any seven or more
persons (or two or more persons for a private company)
associated for any lawful purpose subscribing their
names to a Memorandum of Association and by
complying with the requirements of the Companies Act           G
in respect of registration. Therefore, a 'company' is
incorporated and registered under the Companies Act
and not established under the Companies Act. Per contra,
the Companies Act itself establishes the National
Company Law Tribunal and National Company Law                  H
    18      SUPREME COURT REPORTS                [2010] 4 S.C.R.


A Appellate Tribunal, and those two statutory authorities
  owe their existence to the Companies Act. [Para 10) [30-
  F-H; 31-A]
         1.4. Where the definition of 'establishment' uses the
    term 'a corporation established by or under an Act', the
8
    emphasis should be on the word 'established' in addition
    to the words 'by or under'. The word 'established' refers
    to coming into existence by virtue of an enactment. It
    does not refer to a company, which, when it comes into
    existence, is governed in accordance with the provisions
C of the Companies Act. When the words "by and under an
    Act" are preceded by the words "established", it is clear
    that the reference is to a corporation established, that it
    is brought into existence, by an Act or under an Act. In
    short, the term ,refers to a statutory corporation as
D contrasted from a non-statutory corporation incorporated
    or registered under the Companies Act. [Para 11) [31-B-
  . C; 31-G-H; 32-A]
         1.5. There is indication in the definition of
E   'establishment' itself, which clearly establishes that all
    companies incorporated under the Companies Act are
    not establishments. The enumeration of establishments
    in the definition of 'establishment' specifically includes "a
    Government Company as defined in Section 617 of the
F   Companies Act, 1956". This shows that the legislature,
    took pains to include in the definition of 'establishment'
    only one category of companies incorporated under the
    Companies Act, that is the 'Government Companies' as
    defined in Section 617 of the Companies Act. If, as
    contended by the employee, all Companies incorporated
G   under the Companies Act are to be considered as
    'establishments' for the purposes of Section 2(k), the
    definition would have simply and clearly stated that 'a
    company incorporated or registered under the
    Companies Act, 1956' which would have included a
H   Government company defined under Section 617 of the
    DALCO ENGINEERING PRIVATE LTD. v. SATISH                  19
             PRABHAKAR PADHYE
  Companies Act, 1956. The inclusion of only a specific A
  category of companies incorporated under the
  Companies Act, 1956 within the definition of
  'establishment' necessarily and impliedly excludes all
  other types of companies registered under the
  Companies Act, 1956, from the definition of B
  'establishment'. It is clear that the legislative intent was
  to apply section 47 of the Act only to such establishments ·
  as were specifically defined as 'establishment' under
  section 2(k) of the Act and not to other establishments.
  The legislative intent was to define 'establishment' so as c
  to be synonymous with the definition of 'State' under
  Article 12 of the Constitution of India. Private employers,
  whether individuals, partnerships, proprietary concerns
  or companies (other than Government companies) are
• clearly excluded from the 'establishm~nts' to which
                                                               0
  section 47 of the Act will apply. [Para 12] [32-B-G]
       1.6. There is yet another indication in section 47, that
  private employers are excluded. The caption/marginal
  note of section 47 describes the purport of the section
  as non-discrimination in Government employment. The               E
 word 'governmen_t' is used in the caption, broadly to refer
  to 'State' as defined in Article 12 of the Constitution. If the
  intention of the legislature was to prevent discrimination
 of persons with disabilities in any kind of employment,
 the marginal note would have simply described the                  F
 provision as 'non-discrimination in employment' and
 sub-section (1) of section 47 would have simply used the
 word 'any employer' instead of using the word
 'establishment' and then taking care to define the word
 'establishment'. The non-use of the words 'any employer',          G
 and 'any employment' and specific use of the words
 'Government employment' and 'establishment' (as
 defined), demonstrates the clear legislative intent to apply
 the provisions of Section 47 only to employment under
 the State and not to employment under others. While the            H
    20      SUPREME COURT REPORTS                [2010] 4 S.C.R.


A marginal note may not control the meaning of the body
  of the section, it usually gives a safe indication of the
  purport of the section to the extent possible. [Para 13]
  (32-G-H; 33-A-D]

          2. Though socio-economic legislations should be
8
     interpreted liberally, it is also true that Courts should
    adopt different yardsticks and measures for interpreting
    socio-economic statutes, as compared to penal statutes,
    and taxing statutes. But the courts cannot expand the
    application of a provision in a socio-economic legislation
C   by judicial interpretation, to levels unintended by the
    legislature, or in a manner which militates against the
    provisions of the statute itself or against any
    constitutional limitations. In this case, there is a clear
    indication in the statute, that the benefit is intended to be ,
D   restricted 'to a particular class of employees, that is·
    employees of enumerated establishments (which fall
    within the scope of 'State' under Article 12 of the
    Constitution). Express limitations placed by the socio-
    economic statute cannot be ignored, so as to include in
E   its application, those who are clearly excluded by such
    statute itself. The words "corporation established by or
    under a Central, Provincial or State Act" is a term used
    in several enactments, intended to convey a standard
    meaning. It is not a term which has any special
F   significance or meaning in the context of the Disabilities
    Act or any other socio-economic legislations. It is a term
    used in various enactments, to refer to statutory
    corporations as contrasted from non-statutory
    companies. Any interpretation of the said term, to include
G   private sector, will not only amount to overruling the clear
    enunciation in an earlier Supreme Court decision which
    has held the field for nearly three decades but more
    importantly lead to the erasure of the distinction
    maintained in the Constitution between statutory
H   corporations which are 'State' and non-statutory bodies
   DALCO ENGINEERING PRIVATE LTD. v.·SATISH               21
             PRABHAKAR PADHYE
  and corporations, for purposes of enforcement of              A
  fundamental rights. The interpretation put forth by the
 employee would make employees of all companies,
 public servants, amenable to punishment under the
  provisions of Indian Penal Code and Prevention of
 Corruption Act; and would also result in all non-statutory     B
  companies and private sector companies being included
. in the definition of 'State' thereby requiring them to
 comply with the requirements of non-discrimination,
 equality in employment, reservations etc. [Para 15) [37-
 A-H]                                                           C
    S. S. Dhanoa v. Municipal Corporation, Delhi and Ors.
1981 (3) sec 431, affirmed.
   · Executive Committee of Vaish Degree College v.
Lakshmi Narain, 1976 (2) SCC 58 - relied on.                    D
     Sukhdev Singh v. Bhagatram Sardar Singh
Raghuvanshi, 1975 (1) SCC 421; Reserve Bank of India v.
Peerless General Finance and Investment Co. Ltd. 1987 (1)
SCC 424: Workman of American Express International
Banking Corporation v. Management of American Express           E
International Banking Corporation 1985 (4) SCC 71 and
Kuna/ Singh v. Union of India - 2003 (4) SCC 524, referred
to.
    3. As the appellant in CA No. 1886/2007 and the third
                                                                F
respondent in CA No. 1858/2007, are not establishments,
within the meaning of that expression in Section 2(k) of
the Act, section 47 of the Act will not apply. In so far the
CA No. 1858 of 2007, there is an additional factor. Third
respondent therein was not the employer of any persons
with disability. Therefore, in that case, the entire question   G
is academic. In neither of the cases, any relief can be
granted under section 47 of the Act. However, this will not
come in the way of employee of any private company,
who has been terminated on the ground of disability,
seeking or enforcing any right available under any other        H
    22      SUPREME COURT REPORTS               [2010] 4 S.C.R.


A statute, in accordance with the law. [Paras 17 and 18) [39-
  A-B; 39-D]
                        Case Law Reference:
         1975 (1) sec 421        referred to       Para 3
B
         1981 (3) sec 43·1       affirmed          Para 3
         1976 (2) sec 58         relied on         Para 9
         1987 (1) sec 424        referred to       Para 14.1
c        1985 (4) sec 11         referred to       Para 14.2
         2003 (4) sec 524        referred to       Para 14.3
        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    1886 of 2007.
D
        From the Judgment & Order dated 23.12.2005 of the High
    Court of Judicature at Bombay in Writ Petition No.1117 of
    2002.

                               WITH
E
    C.A. No. 1858 of 2007.

        Ajay Majithia, Rajesh Kumar, Dr. Kailash Chand, Vinay
    Navare, Abha R. Sharma for the Appellant.

F       KV. Vishwanathan, Gaurav Mitra, Bina Madhavan, Antima
    Bazaz (for Lawyer's Knit & Co.), Ajay Bhargava, Vanita
    Bhargava, Abhijeet Swaroop, Kaitan & Co., Shankar Chillarge
    Asha Gopalan Nair for the Respondents.

         The Judgment of the Court was delivered by
G
         R.V. RAVEENDRAN, J.

    Facts in CA No.1886/2007 :
       1. The appellant is a private limited company incorporated
H   under the provisions of the Companies Act, 1956. The
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                      23
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
respondent - S.P. Padhye - (also referred to as 'the                   A
employee') was employed as a Telephone Operator by the
appellant for more than two decades. The respondent's service
was terminated by the appellant with effect from 31.12.2000 on
the ground that he had become deaf (85% reduction in ability
to hear). The respondent complained to the Disability                  B
Commissioner, Pune, in regard to such termination, alleging
that he was fit, able and normal when he joined service of the
appellant and as he acquired the hearing impairment during the
period of service, he should have been continued in employment
in some suitable post. The Disability Commissioner made an             c
order dated 12.10.2001 suggesting to the employer to
undertake a social responsibility, by re-employing the
respondent to discharge any other work.,The suggestion was
not accepted by the employer.

      2. According to the respondent, the Commissioner,                D
instead of making a mere suggestion, ought to have issued a
direction to the employer, in exercise of jurisdiction under
section 47 of the Persons with Disabilities (Equal Opportunities,
 Protection of Rights and Full Participation) Act, 1995 ('the Act',
for short). He therefore filed a writ petition seeking the following   E
reliefs (i) quashing of the order dated 12.10.2001; and (ii) a
direction to implement the provisions of the Disabilities Act by
directing the employer to reinstate him in service in a suitable
post, with retrospective effect from 1.1.2001, in the same pay-
scale and service benefits. The High Court allowed the said writ       F
petition by judgment dated 23.12.2005, and directed the
employer to reinstate the respondent and shift him to a suitable
post with the same pay-scale and service benefits and with full
back-wages. The High Court held that the respondent, though
a private limited company, was an "establishment" as defined           G
under section 2(k) of the Act and consequently section 47 of
the Act enjoined it not to dispense with the services of its
employee who acquired a disability.


                                                                       H
    24       SUPREME COURT REPORTS                     [2010] 4 S.C.R.


A Facts in CA No.185812007 :

          3. The first Appellant is a Public Trust (for short the 'Trust')
    working for the benefit of the physically and mentally challenged
    persons, took up a house-keeping contract from the third
B   respondent Company on 24.7.2000. The appellant employed
    several physically handicapped persons for executing the said
    contract. The third respondent terminated the appellant's
    contract on 18.7.2006. Feeling aggrieved, the appellant filed
    a complaint dated 22.7.2006 with the Disability Commissioner,
C   Pune followed by a writ petition in the High Court for quashing
    the notice terminating the contract. The appellant also sought
    a direction for rehabilitation of the persons with disabilities who
    were employed by it for executing the said house-keeping
    contract, under the provisions of the Act. A Division Bench of
    the Bombay High Court by judgment dated 19.9.2006
D   dismissed the writ petition holding that the third respond~nt was
    not an "establishment" within the meaning of section 2(k) of the
    Act and, consequently, the provisions of the Act did not apply
    and that the Disability Commissioner had no jurisdiction to issue
    any direction to the third respondent. It also held that the earlier
E   decision in S.P. Padhye (which is the subject matter of the first
    case) was per incuriam as it ignored two binding decisions of
    this court - the Constitution Bench decision in Sukhdev Singh
    v. Bhagatram Sardar Singh Raghuvanshi [1975 (1) SCC 421]
    and the decision in S.S. Dhanoa v. Municipal Corporation,
F   Delhi [1981 (3) SCC 431]. Feeling aggrieved, the appellants
    have filed this appeal.

    Questions for decision

      4. The employee relies on section 47 which provides that
G no establishment shall dispense with, or reduce in rank, an
  employee who acquires a disability during his service. Section
  47 of the Act is extracted below:-

         "47. Non-discrimination in Government employment.-
H        (1) No establishment shall dispense with, or reduce in rank,
                                                     ~

   DALCO ENGINEERING PRIVATE LTD. v. SATISH                 25
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
    an employee who acquires a disability during his service:      A

    Provided that, if an employee, after acquiring disability is
    not suitable for the post he was holding, could be shifted
    to some other post with the same pay scale and service
    benefits:
                                                                   B
    Provided further that if it is not possible to adjust the
    employee against any post, he may be kept on a
    supernumerary post until a suitable post is available or he
    attains the age of superannuation, whichever is earlier.
                                                                   c
    (2) No promotion shall be denied to a person merely on
    the ground of his disability:

    Provided that the appropriate Government may, having
    regard to the type of work carried on in any_establishment,
    by notification and subject to such conditions, if any, as D
    may be specified in such notification, exempt any
    establishment from the provisions of this section."

     The term "establishment" employed in section 47 is defined
in section 2(k) of the Act as follows :                            E

    "2. Definitions.-ln this Act, unless the context otherwise
    requires, -

                             xxxxx
                                                                   F
     (k)   "establishment" means a corporation established by
           or under a Central, Provincial or State Act, or an
           authority or a body owned or controlled or aided by
           the Government or a local authority or a Government
           company as defined in section 617 of the G
           Companies Act 1956 (1 of 1956) and includes
           Departments of a Government;"

    5. The question is, having regard to the definition of the
word 'establishment' of section 2(k) of the Act, whether the
                                                                   H
    26           SUPREME COURT REPORTS              [2010] 4 S.C.R.


A   requirement relating to non-discrimination of employees
    acquiring a disability during the course of service, embodied
    in Section 47, is to be complied with only by authorities falling
    within the definition of State (as defined in Article 12 of the
    Constitution), or even by private employers. This leads us to the
B   following two questions:-

          (i)     Whether a company incorporated under the
                  Companies Act (other than a Government company
                  as defined in section 617 of the Companies Act,
                  1956) is an "establishment" as defined in section
c                 2(k) of the Act ?

          (ii)    Whether the respondent in the first case and the
                  appellant in the second case are entitled to claim
                  any relief with reference to section 47 of the Act?
D
    Re: Question (i)

         6. Let us examine the meaning of the crucial word
    'establishment' used in sub-section (1) of section 47 of the Act.
    The definition of the word 'establishment' in section 2(k), when
E   analyzed, shows that it is an exhaustive definition, and covers
    the following categories of employers:

          (i)     a corporation established by or under a Central,
                  Provincial, or State Act;
F
          (ii)    an authority or a body owned or controlled or aided
                  by the Government;

          (iii)   a local authority;

G         (iv)    a Government company as defined in Section 617
                  of the Companies Act, 1956; and

          (v)     Departments of a Government.

         It is not in dispute that the employers in these two cases
H   are companies incorporated under the Companies Act, 1956
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                     27
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
which do not fall under categories (ii) to (v) specified in Section   A
2(k) of the Act.

       7. The employee contends that a company incorporated
· under the Companies Act is a Corporation falling under the first
  category enumerated in section 2(k), that is 'Corporation B
  established by or under a Central, Provincial or State Act', on
  the following reasoning : that a corporation refers to a company;
  that Companies Act is a Central Act; and that therefore a
  company incorporated and registered under the Companies
  Act is a Corporation established under a Central Act. He
  contends that the use of the words "by or under" is crucial. C
  According to him, 'a corporation established by an Act' would
  refer to a corporation brought into existence by an Act; and a
  'corporation established under an Act' would refer to a company
  incorporated under the Companies Act. On the other hand, the
  employer contends thaf the term 'Corporation established by D
 or under a Central, Provincial or State Act' refers to a statutory
  Corporation which is brought into existence by a statute, or
  under a statute and does not include a company which is
  registered under the Companies Act. It is submitted that
 Companies Act merely facilitates and lays down the procedure E
 for incorporation of a company which, when incorporated, will
 be governed by the provisions of the said Act and therefore, a
 company registered under the Companies Act, is not a
 corporation established under an Act.
                                                                      F
      8. The words "a Corporation established by or under a
Central, Provincial or State Act" is a standard term used in
several enactments to denote a statutory corporation
established or brought into existence by or under statute. For
example, it is used in sub-clause (b) of Clause Twelfth of G
Section 21 of the Indian Penal Code ('IPC' for short) and
Section 2(c)(iii) of the Prevention of Corruption Act, 1988 ('PC
Act' for
      I
         short). Both these statutes provide that a person in the
seryice of a 'Corporation established by or under a Central,
Provincial or State Act' is a public servant. The Prevention of
                                                                  H
    28      SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A   Damage to Public Property Act, 1984 defines 'public property'
    as meaning any property owned by, or in the possession of,
    or under the control of (i) the Central Government (ii) any state
    government; or (iii) any local authority; or (iv) any corporation
    established by, or under, a Central, Provincial or State Act;
s   or (v) any company as defined in Section 617 of the
    Companies Act, 1956; or (vi) any institution, concern or
    undertaking which the Central Government may, by notification
    in the Official Gazette, specify in that behalf provided that the
    Central Government shall not specify any institution, concern or
c   undertaking under that sub-clause unless such institution,
    concern or undertaking is financed wholly or substantially by
    funds provided directly or indirectly by the Central Government
    or by one or more State Governments, or partly by the Central
    Government and partly by one or more State Governments.
    Thus the term is always used to denote certain categories of
0
    authorities which are 'State' as contrasted from non-statutory
  . companies which do not fall under the ambit of 'State'.

        9. The meaning of the term came up for consideration in
    S. S. Dhanoa vs. Municipal Corporation, Delhi and Ors. -
E   1981 (3) sec 431 with reference to section 21 of IPC. This
    Court held:

         "Clause Twelfth does not use the words "body corporate",
         and the question is whether the expression "corporation"
F        contained therein, taken in collocation of the words
         "established by or under a Central, Provincial or State Act"
         would bring within its sweep a cooperative society.
         Indubitably, the Cooperative Store Limited is not a
         corporation established by a Central or State Act. The crux
         of the matter is whether the word 'under' occurring in
G
         Clause Twelfth of Section 21 of the Indian Penal Code
         makes a difference. Does 'the mere act of incorporation
         of a body or society under a Central or a State Act make
         it a corporation within the meaning of Clause Twelfth of
         Section 21. In our bpinion, the expression 'corporation'
H
DALCO ENGINEERING PRIVATE LTD. v. SATISH                  29
PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
 must, in the context, mean a corporation created by the        A
 Legislature and not a body or society brought into
 existence by an act of a group of individuals. A
 cooperative society is, therefore, not a corporation
 established by or under an Act of the Central or State
 Legislature.                                                   B

 A corporation is an artificial being created by law having
 a legal entity ~ntirely separate and distinct from the
 individuals who compose it with the capacity of continuous
 existence and succession, notwithstanding changes in its C
 membership ......... The term 'corporation' is, therefore,
 wide enough to include private corporations. But, in the
 context of Clause Twelfth of Section 21 of the Indian Penal
 Code, the expression 'corporation' must be given a narrow
 legal connotation.
                                                                D
Corporation, in its widest sense, may mean any
association of individuals entitled to act as an individual.
But lhat certainly is not the sense in which it is used here.
Corporation established by or under an Act of Legislature
can only mean a body corporate which owes its existence,        E
and not merely its corporate status, to the Act. For
example, a Municipality, a Zilla Parishad or a Gram
Panchayat owes its existence and status to an Act of
Legislature. On the other hand, an association of persons
constituting themselves into a Company under the                F
Companies Act or a Society under the Societies
Registration Act owes its existence not to the Act of
Legislature but to acts of parties though, it may owe its
status as a body corporate to an Act of Legislature.

There is a distinction between a corporation established G
by or under an Act and a body incorporated under an Act.
The distinction was brought out by this Court in Sukhdev
Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi
& Ors - (1975) 1 SCC 421. It was observed:
                                                                H
    30       SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A               A company incorporated under the Companies Act
                is not created by the Companies Act but comes
                into existence in accordance with the provisions of
                the Act.

         There is thus a well-marked distinction between a body
B
         created by a statute and a body which, after coming into
         existence, is governed in accordance with the provisions
         of a statute."

                                                (emphasis supplied)
c
        In Executive Committee of Vaish Degree College v.
    Lakshmi Narain - 1976 (2) SCC 58, this Court explained the
    position further:

         "In other ~ords the position seems to be that the institution
D
         concerned must owe its very existence to a statute which
         would be the fountainhead of its powers. The question in
         such case to be asked is, if there is no statute, would the
         institution have any legal existence. If the answer is in the
         negative, then undoubtedly it is a statutory body, but if the
E        institution has a separate existence of its own without any
         reference to the statute concerned but is merely governed
         by the statutory provisions it cannot be said to be a
         statutory body."

F                                               [emphasis supplied]

       10. A 'company' is not 'established' under the Companies
  Act. An incorporated company does not 'owe' its existence to
  the Companies Act. An incorporated company is formed by the
G act of any seven or more persons (or two or more persons for
  a private company) associated for any lawful purpose
  subscribing their names to a Memorandum of Association and
  by complying with the requirements of the Companies Act in
  respect of registration. Therefore, a 'company' is incorporated
  and registered under the Companies Act and not established
H under the Companies Act. Per contra, the Companies Act itself
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                   31
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
establishes the National Company Law Tribunal and National           A
Company Law Appellate Tribunal, and those two statutory
authorities owe their existence to the Companies Act.

       11. Where the definition of 'establishment' uses the term
 'a corporation established by or under an Act', the emphasis        B
 should be on the word 'establishe~f in addition to the words
 'by or under'. The word 'established' refers to coming into
 existence by virtue of an enactment. It does not refer to a
 company, which, when it comes into existence, is governed in
 accordance with the provisions of the Companies Act. But then,      C
 what is the difference between 'established by a central Act'
 and 'established under a central Act'? The difference is best
explained by some illustrations. A corporation is established
 by an Act, where the Act itself establishes the corporation. For
example, Section 3 of State Bank of India Act, 1955 provides
 that a Bank to be called· the State Bank of India shail be          D
constituted to carry on the business of banking. Section 3 of
 Life Insurance Corporation Act, 1956 provides that with effect
 from such date as the Central Government may by notification
 in the Official Gazette appoint, there shall be established a
corporation called the Life Insurance Corporation of India. State    E
Bank of India and Life Insurance Corporation of India are two
examples of corporations established by "a Central Act". We
may next refer to the State Financial Corporation Act, 1951
which provides for establishment of various Financial
Corporations under that Act. Section 3 of that Act relates to        F
establishment of State Financial Corporations and provides that
the State Government may, by notification in the Official Gazette
establish a Financial Corporation for the State under such name
as may be specified in the notification and such Financial
Corporation shall be a body corporate by the name notified.          G
Thus, a State Financial Corporation is established under a
central Act. Therefore, when the words "by and under an Act"
are preceded by the words "established", it is clear that the
reference is to a corporation established, that it is brought into
existence, by an Act or under an Act. In short, the term refers      H
    32      SUPREME COURT REPORTS                  [2010] 4 S.C.R.


A   to a statutory corporation as contrasted from a non-statutory
    corporation incorporated or registered under the Companies
    Act.

          12. There is indication in the definition of 'establishment'
   itself, which clearly establishes that all companies incorporated
B
   under the Companies Act are not establishments. The
  enumeration of establishments in the definition of
   'establishment' specifically includes "a Government Company
   as defined in Section 617 of the Companies Act, 1956". This
C shows that the legislature, took pains to include in the definition
  of 'establishment' only one category of companies incorporated
   under the Companies Act, that is the 'Government Companies'
  as defined in Section 617 of the Companies Act. If, as
  contended by the employee, all Companies incorporated under
  the Companies Act are to be considered as 'establishments'
D for the purposes of Section 2(k), the definition would have
  simply and clearly stated that 'a company incorporated or ,
  registered under the Companies Act, 1956' which would have '
  included a Government company defined under Section 617
  of the Companies Act, 1956. The inclusion of only a specific
E category of companies incorporated under the Companies Act,
  1956 within the definition of 'establishment' necessarily and
  impliedly excludes all other types of companies registered
  under the Companies Act, 1956, from the definition of
  'establishment'. It is clear that the legislative intent was to apply
F section    47 of the Act only to such establishments as were
  specifically defined as 'establishment' under section 2(k) of the
  Act and not to other establishments. The legislative intent was
  to define 'establishment' so as to be synonymous with the
  definition of 'State' under Article 12 of the Constitution of India.
G Private employers, whether individuals, partnerships,
  proprietary concerns or companies (other than Government
  companies) are clearly excluded from the 'establishments' to
  which section 47 of the Act will apply.

         13. There is yet another indication in section 47, that
H   private employers are excluded. The caption/ marginal note of
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                    33
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]

 section 47 describes the purport of the section as non-             A
 discrimination in Government employment. The word
 'government' is used in the caption, 9roadly to refer to 'State'
 as defined in Article 12 of the Constitution. If the intention of
the legislature was to prevent discrimination of persons with
 disabilities in any kind of employment, the marginal note would     B
 have simply described the provision as 'non-discrimination in
 employment' and sub-section (1) of section 47 would have
 simply used the word 'any employer' instead of using the word
 'establishment' and then taking care to define the word
 'establishment'. The non-use of the words 'any employer', and       c
 'any employment' and specific use of the words 'Government
 employment' and 'establishment' (as defined), demonstrates
the clear legislative intent to apply the provisions of Section 47
only to employment under the State and not to employment
.under others. While the marginal note may not cpntrol the           0
 meaning of the body of the section, it usually gives a safe
 indication of the purport of the section to the extent possible.
 Be that as it may.

      14. The learned counsel for the employee submitted that
the decision in Dhanoa was rendered with reference to a penal        E
statute; and that words or terms in such statutes are used in a
restrictive and strict sense. He contended that definition of
words and terms in a penal statute will not provide a safe guide
to interpret the same words employed in socio-economic
legislations. He further contended that the terms _used in a         F
socio-economic statute like Disabiiities Act, providing for full
participation and equality, for people with disabilities and to
remove any discrimination against them vis-a-vis non-disabled
persons, should be interpreted liberally. He submitted that any
interpretation of the term 'a corporation established by or under    G
a central, provincial or state Act' with reference to the Penal
Code should not therefore be imported for understanding the
meaning of that term when used in the Act. He referred to and
relied upon the Statement of Objects and Reasons of the Act
which states that India as a signatory to the Proclamation on        H
    34          SUPREME COURT REPORTS                (2010] 4 S.C.R.


A the Full Participation and Equality of the People with Disabilities
  in the Asian and Pacific Region, enacted the Statute to provide
  for the following :

         (i)     to spell out the responsibility of the State towards
8                the prevention of disabilities, protection of rights,
                 provision of medical care, education, training,
                 employment and rehabilitation of persons with
                 disabilities;

         (ii)    to create barrier free environment for persons with
C                disabilities;

         (iii)   to remove any discrimination against persons with
                 disabilities in the sharing of development benefits,
                 vis-a-vis non-disabled persons;
D
         (iv)    to counteract any situation of the abuse and the
                 exploitation of persons with disabilities;

         (v)     to lay down a strategy for comprehensive
                 development of programmes and services and
E                equalization of opportunities for persons with
                 disabilities; and

         (vi)    to make special provision of the integration of
                 persons with disabilities into the social
                 mainstream."
F
    He submitted that keeping the said objects in view, the term
    'establishment' should be extended to all corporations
    incorporated under the Companies Act 1956, irrespective of
    whether they are in the public sector or private sector.
G
        14.1. He also relied upon the following principle of
    contextual interpretation enunciated by this Court in Reserve
    Bank of India vs. Peerless General Finance and Investment
    co. Ltd., - 1987 (1) sec 424:
H
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                     35
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]

      "Interpretation must depend on the text and the context.        A
     They are the bases of interpretation. One may well say is
     the text is the texture, context is what gives the colour.
     Neither can be ignored. Both are important. The
     interpretation is best which makes the textual interpretation
     match the contextual. A statute is best interpreted when         B
     we know why it was enacted. With this knowledge, the
     statute must be read, first as a whole and then section by
     section, clause by clause, phrase by phrase and word by
     word. If a statute is looked at, in the context of its
     enactment, with the glasses of the statute-maker, provided       C
     by such context, its scheme, the sections, clauses, phrases
     and words may take colour and appear different than when
     the statute is looked at without the glasses provided by the
     context. With these glasses we must look at the Act as a
     whole and discov~r what each section, each clause, each
                                                                      0
     phrase and each word is meant and designed to say as
     to fit into the scheme of the entire Act. No part of a statute
     and no word of a statute can be construed in isolation.
     Statutes have to be construed so that every word has a
     place and everything is in its place."
       '
                                                                      E
     14.2. He next relied upon the principle that words in a social
welfare legislation should receive liberal and broad.
interpretation, stated by this Court in Workman of American
Express International Banking Corporation v. Management of
American Express International Banking Corporation - 1985 F
(4) sec 71 :

    "The principles of statutory construction are well settled.
    Words occurring in statutes of liberal import such as social
    welfare legislation and human rights legislation are not to       G
    be put in Procrustean beds or shrunk to Liliputian
    dimensions. In construing these legislations the imposture
    of literal construction must be avoided and the prodigality
    of its misapplication must be recognized and reduced.
    Judges ought to be more concerned with the 'colour', the
                                                                      H
    36       SUPREME COURT REPORTS                   [2010] 4 S.C.R.


A        'content' and the 'context' of such statutes (we have
         borrowed the words from Lord Wilberforce's opinion in
         Prenn v. Simmonds - 1971 (3) All ER 237). In the same
         opinion Lord Wilberforce pointed out that law is not to re
         left behind in some island of literal interpretation but is to
B        enquire beyond the language, unisolated from the matrix
         of facts in which they are set; the law is not to be
         interpreted purely on internal linguistic considerations. In
         one of the cases cited before us, that is, Surendra Kumar
         Verma v. Central Government Industrial Tribuna/-cum-
         Labour Court (1981) 1 SCR 789, we had occasion to say,
c
                Semantic luxuries are misplaced in the
                interpretation of "bread and butter" statutes.
                Welfare statutes must, of necessity, receive a
                broad interpretation. Where legislation is designed
D               to give relief against certain kinds of mischief, the
                Court is not to make inroads by making
                etymological excursions."

        14.3. He next relied upon the following observations -in
E   Kuna/ Singh v. Union of India - 2003 (4) SCC 524, wh~re this
    Court, referring to the very section under consideration,
    observed thus :

         "Section 47 contains a clear directive that the employer
         shall not dispense with or reduce in rank an employee who
F        acquires a disability during the service. In construing a
         provision of a social beneficial enactment that too dealing
         with disabled persons intended to give them equal
         opportunities, protection of rights and full participation, the
         view that advances the object of the Act and serves its
G        purpose must be preferred to the one which obstructs the
         object and paralyses the purpose of the Act. Language
         of section 47 is plain and certain casting statutory
         obligation on the employer to protect an employee
         acquiring disability during service."
H
   DALCO ENGINEERING PRIVATE LTD. v. SATISH                       37
   PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]

       15. We agree that the socio-economic legislations should          A
  be interpreted liberally. It is also true that Courts should adopt
 different yardsticks and measures for interpreting socio-
 economic statutes, as compared to penal statutes, and taxing
  statutes. But a caveat. The courts cannot obviously expand the
  application of a provision in a socio-economic legislation by          B
 judicial interpretation, to levels unintended by the legislature, or
 in a manner which militates against the provisions of the statute
 itself or against any constitutional limitations. In this case, there
 is a clear indication in the statute, that the benefit is intended
 to be restricted to a particular class of employees, that is            C
 employees of enumerated establishments (which fall within the
 scope of 'state' under Article 12). Express limitations placed
 by the socio-economic statute can not be ignored, so as to
 include in its application, those who are clearly excluded by
 such statute itself. We should not lose sight of the fact that the      D
 words "corporation established by or under a Central, Provincial
 or State Act" is a term used in several enactments, intended
 to convey a standard meaning. It is not a term which has. any
 special significance or meaning in the context of the Disabilities
Act or any other socio-economic legislations. It is a term used          E
in various enactments, to refer to statutory corporations as
contrasted from non-statutory companies. Any interpretation of
the said term, to include private sector, will not only amount to
overruling the clear enunciation in Dhanoa which has held the
field for nearly three decades, but more importantly lead to the
erasure of the distinction maintained in the .Constitution               F
between statutory corporations which are 'state' and non-
statutory bodies and corporations, for purposes of enforcement
of fundamental rights. The interpretation put forth by the
employee would make employees of all companies, public
servants, amenable to punishment under the provisions of                 G
Indian Penal Code and Prevention of Corruption Act; and would
also result in all non-statutory companies and private sector
companies being included in the definition of 'State' thereby
requiring them .to comply with the requirements of non-
discrimination, equality in employment, reservations etc.                H
    38      SUPREME COURT REPORTS                 [2010] 4 S.C.R.


A       16. The appellant next contended that the scheme of the
  Act, does not confine its applicability to government or statutory
  corporations. Reference is invited to some provisions of the Act
  to contend that obligations/duties/ responsibilities are fixed with
  reference to persons with disabilities, on establishments other
B than those falling under section 2(k) of the Act. It was submitted
  that section 39 casts an obligation on all educational
  institutions, to reserve not less than three percent of the seats
  for persons with disabilities. In fact, it is not so. Though, the
  marginal note of section 29 uses the words 'all educational
c institutions' with reference to reservation of seats for persons
  with disabilities, the section makes it clear that only government
  educational institutions and educational institutions receiving aid
  from the government shall reserve not less than three percent
  seats for persons with disabilities. It is well recognized that an
  aided private school would be included within the definition of
0
  'State' in regard to its acts and functions as an instrumentality
  of the State. Therefore, care is taken to apply the provisions of
  the Act to only educational institutions belonging to the
  government or receiving aid from the government and not to
E unaided private educational institutions. Further, section 39 of
  the Act, does not use the word 'establishment'. Reference is I
  next made to the section 44 which requires non-discrimination 1
  in transport. This section requires establishments in the \
  transport sector to take special measures (within the limits of
  their economic capacity) to permit easy access to persons with j
F disabilities. The employee contends that this would mean that     1




  all establishments whether statutory corporations falling under   1




  the definition of section 2(k) of the Act or non-statuary
  corporations, or even individuals operating in the transport
  sector should comply with section 44 of the Act We do not
G propose to consider whether Section 44 applies to non-
  statutory corporations in the transport sector, as that issue does
  not arise in this case. Further the use of the words "within the
  limits of their economic capacity" makes it virtually directory.
  Be that as it may.
H
  DALCO ENGINEERING PRIVATE LTD. v. SATISH                    39
  PRABHAKAR PADHYE [R.V. RAVEENDRAN, J.]
Re : Question (ii)                                                  A
     17. As the appellant in CA No. 1886/2007 and the third
respondent in CA No. 1858/2007, are not establishments,
within the meaning of that expression in Section 2(k) of the Act,
section 47 of the Act will not apply. In so far the CA No. 1858
                                                                    8
df 2007, there is an additional factor. Third respondent therein
was not the employer of any persons with disability. Therefore,
in that case, the entire question is academic. In neither of the
cases, any relief can be granted under section 47 of the Act.

     18. Therefore CA No. 1886 of 2007 is allowed and CA            C
No. 1858 of 2007 is dismissed resulting in the dismissal of the
respective writ petitions. This will not come in the way of
employee of any private company, who has been terminated
on the ground of disability, seeking or enforcing any right
available under any other statute, in accordance with the law.      D

8.8.B.                                   Appeals disposed of.