Holding

The Central Government, not the State Government, is the appropriate Government under section 2(a) of the Industrial Disputes Act for the dispute involving the Regional Provident Fund Organisation.

Summary

The Karnataka Government referred a dispute between the Regional Provident Fund Organisation (established under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952) and its employees to an Industrial Tribunal under section 10 of the Industrial Disputes Act, 1947. The management challenged the reference, arguing that the activity of the Fund was not an industry and that the State Government was not the "appropriate Government" under section 2(a) of the Act, contending that only the Central Government could be so designated. The High Court rejected the management's objections and upheld the reference, but the Single Judge quashed it on the ground that the State was not the appropriate Government. On appeal, the Supreme Court examined the meaning of "authority" in section 2(a) and held that the Provident Fund bodies function as agents of the Central Government, which therefore is the appropriate Government for the dispute. Consequently, the Court set aside the High Court’s order, restored the Single Judge’s decision, and quashed the State Government’s reference. The appeal was allowed.

Issues considered

Whether the State Government can be treated as the 'appropriate Government' under section 2(a) of the Industrial Disputes Act, 1947 for a dispute concerning the Regional Provident Fund Organisation.
Whether the activity carried on under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 constitutes an industry carried on 'under the authority of' the Central Government.
Interpretation of the term 'authority' in section 2(a) of the Industrial Disputes Act.

Legislation cited

Employees' Provident Funds and Miscellaneous Provisions Act, 1952s. 5A, s. 5B, s. SB
Industrial Disputes Act, 1947s. 10, s. 2(a)

Subjects

Industrial Disputes Actappropriate GovernmentauthorityProvident Funds Actpublic corporationcentral governmentstate governmentsection 2(a)section 10statutory interpretation

Judgment

816
A
REGIONAL PROVIDENT FUND '~oMMISSIONER
' I
KARNATAKA
v.
B WORKMEN REPRESENTED BY THE GENERAL .,
I

SECRETARY, KARNATAKA PROVIDENT FUND
EMPLOYEES UNION & ANR.

September 26, 1984
'
C (0. CeiNNAPPA REDDY, A.P. SEN AND E.S. VBNKATARAMIAH, JI.]

Industrial Disp14tes Act, 1947-Section 2 (a)-Appropriate Government-
Whether Government of a State can be treated as the •appropriate Government'
under section 2 (a) in relation to an industrial dispute concerning office of
Rezional Provident Fund organisation e31ablished by the Central Governn1ent
for that State utider the Employees' Provident Fu1tds and Afi.rcellaneous provi- t
D sions Aet, 1952. •
Words and Phrau1-•Authorfty'-Ord/nary m«1ning of.

Words and Phrasas-'Undar tha authority of' -Meaning of.

E The Government of Karnataka State made a reference under section 10
of the Industrial Disputes Act, 1947 (hereinafter referred to as 'the Act')
referring certain dispute between the Regional Provident Fund Oraanisaticn
established by the Central Government for that State under the Employees'
Provident Fund & Miscellaneous Provisions Act, 1952 and its employee& to the
Industrial Tribunal. The Regional Provident Fund Organisation raised two
preliminary objections viz. that the activity carried on by the manaaement
F was not an industry and that the State Government was not the appropriate
Government under the Act in relation to the dispute between it and its
en1ployees. The Tribunal neaatived both the contentions. 1~he manae;ement
filed a writ petition under Article 226 of the Constitution before the High
Court. The only contention urged by the management v..as that the State
Government beine not the appropriate Government under the Act is for as
the dispute was concerned, it could not refer the dispute under section 10 or
E
the Act. A sinale Judae accepted the contention. In B.ppeal filed by the
workrr.en, a Division Bench of the Hi~h Court held that the State Govern· ..
ment was the appropriata Government for purposes of the dispute in question.
Hence this appeal by lhe man~gernent by special leave against the judgment
of the Division Bench. Tbe rnanag{ment contended that the industry in
question fe11 under section 2 (a) (i) of the Acl as it was an industry carried on
under the authority of the Central Government and hence the Central
Government alone could act as the appropriate Government in relation to th~
dispute con~erned.
PF. COMMR. v. K.P.F.E. UNION 817

A
Allowing the Appeal,
,. HELD : In order to decide whether the Central Government is the
appropriate Government under the Act or not in this case it has got to be
determined whether the activity carried on under the Provident Funds Act is
being carried on by or under the authority of the Central Government as B
provided in section 2 (a) of the Act. The word authority in section 2 (a) of
1 the Act must be construed according to its ordinary meaning and therefore
must mean a l<!gal power given by one person to another to do an act. The
words •under the authority of' means pursuant to the authority, such as
whether the agent or the servant act under or pursuant to the authority of
of his principal or master. [821F-H) I
c
Heavy Engineering Mazdoor Union v. The The State of Bihar & Ors.,
, [1969) 3 S.C.R 995, Graham v. Public Works Commissioner, [1901] 2 KB 781
i and Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi & Anr.,
[1975) 3 S.C.R. 619, referred to.

In the instant case, the activity carried on by the Central Board or the
State Boards under the Provident Funds Act is one traceable to Article 43 of D
the Constitution which requires the State to endeavour to secure by suitable
tegislation or economic ·-organisation or in any other way to all workers,
agricultural or industrial or otherwise, work, a living wage, conditions of
work ensuring a decent standard of life and full enjoyment of leisure and
cultural opportunities. It is a part of the programme of every welfare State
• which our countrY is. Institutions engaged in matters of such high public
E
interest or performing such high public functions by vfrtue of their very
nature performed governmental functions. They are truly the agents of the
Government and they function under the authority of the Government as
provide<l in the statute because the Central Government could have for the
purpose of introducing the scheme of compulsory contribution to the provi-
dent fund. set 'up an organisation or a department in the absence oftlie
Corporate bodies envisaged in the Provident Funds Act. [823C-FJ
F
The provisions of section 5B (2) of the Provident Funds Act which
reads: "A State Board shall exercise such powers and perform such duties as
the Central Government may assign to it from time to to time" clearly
envisage that the State Board is ail agent of the Central Government. In the
absence of the State Board, the Regional Con1mittee constitute under Para-
graph4 oft he Schen1e is required to function under the control of the Central
,i;, Board. The Reaional Provident Fund Con1missioner who is appointed by
the Central Government is also under the control of the Central Board and
the Central Government. [824B-C]

Having regard to the various of the Provident Funds Act and the
nature of the business carried on by the Central Board, the State Board, the
Regional Committee and the Regional Provident Fund Commissioner, this
~ourt i~ of the view that the Division Bench of the High Court was not right
1n holding that the State Government was the appropriate Government under
H
818 SUPREME COURT REPORTS [ 1985] l S.C.R.
A section 2 (aJ of the Act in the matter of industrial disputes arising .between
the management and the workmen of the Regional Provident Fund orga.
nisation. [854D-E] ,
CIVIi. APPELLATE JURISDICTION : Civil Appeal No. 3796
of 1984.
B
Appeal by Special leave from the Judgment and Order dated
the 24th & 21th of September, 1982 of the Karnataka High
Court in W.P. No. 1089 of 1981.
'
V.C. Mahajan, R.N. Foddar & N.S. Das Behi, :for the
C Appellant.

A.K. Goel for the Respondent.

The Judgment of the Court was delivered by

D VENKATARAMIAH, J. The question for consideration in this
.
appeal by Special Leave is whether the Government of a State can
be treated as the 'appropriate Government' under section 2(a) of
the Industrial Disputes Act, 1947 (hereinafter referred to as 'the
Act') in relation to any industraial dispute concerning the office of

E
the Regional Provident Fund organisation established by the 'I
Central Govornment for that State under the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred
to as 'the Provident Funds Act').

The facts of the case are these : The Government of
Karnataka made a reference under section 10 of the Act referring
F
a certain dispute between the Regional Provident Fund organisation
established under the Provident Funds Act for the State of
Karnataka and its employees to the Additional Indu,trial Tribunal,
Bangalore and the said reference came to be registered as A.I.D. 3
of 1979 on the file of the Tribunal. Before the Tribunal the
Regional Provident Fund organisation raised among other pleas
G two preliminary objections to the reference viz. that the activity
carried on by the management was not an industry and that the
State Government was not the appropriate Government under the
Act in relation to the dispute between it and its employees. The Tri-
bunal took up for consideration the two issues arising out of the
above two objections first and after hearing the management and
the workmen negatived both the contentions of the. management.
-· ,
ll
,,
-- - / /
I'. P. COMMR ••: K.P.P.ll. UNION (Venkataramiah, J.) - / ; 819

I'
It held that the business carried on- by the 1{egional ·provident A
Fund Organisation was an industry and that the State Government
. was the appropriate Gov~rnm<nt under the Act. .. ;
' ''.~ . . ~:: ~ ·- .

• Aggrieved by the above f.~ngs of the Tribunal the manage-
ment filed a writ petition under Article 226 of the Constitution
before the High Court of Karnataka questioning the correctness of B
the said findings. Before the learned Single Judge who heard the
writ petition the management did not, however, press its case as
regards the finding that the Provident Fund organisation was an
industry. The only conte~tion urged by it was that the State
Government being not the appropriate Government under the Act
I "C
in so far as the dispute was concerned it could not refer the dispute
under section 10 of the Act. The learned Single Judge accepting
the said contention of the management quashed the refernce. _
Aggrieved by the decision of the learned Single Judge, the workmen
fild an appeal before the Division Bench of the High Court. The
Division Bench reversed the decision of the learned Single Judge D
and held that the State Government was the appropriate Govern·
ment for purposes of the dispute in question. The management
has filed this appeal after ohl.._\,,_:,,g the leave of this Court under
Article 136 of the Constitution against the judgment of the Division
Bench. ·
Under section 10 the Act, where the appropriate Government E
is of opinion that any industrial dispute exists or apprehended, it
may at any time by order in writing refer the dispute or any matter
appearing to be connected with, or relevant to, the dispute, whether
• it relates to any matter specified in the Second Schedule.or the
Third Schedule to the Act, to a Tribunal for adjudication. Section F
2(a) of the Act defines the expression 'appropriate Government' as
l•r . · in relation to any industrial dispute concerning any industry carried
on by or under the authority of the Central Government or by ·the
,.__ industries specified in clause (i) of section 2(a) of the Act, the
I Ceotral Government and in relation to any other industrial dispute,
the State Government. It may be stated here that the· organisation G
under the Provident Funds Act was not one of the industries
specified _in section 2(a)(i) of the Act when the reference was made
in this case. The contention of the management is that the industry
1
in question falls under section 2(a)(i) of the Act as it is an industry
carried on under the authority of the Central Government and
hence the Central Government alone can act as the appropriate
Government in relation to a dispute concerning it.
820 SUPREME COURT REPORTS [1985] l s.C.R

Entry 24 of the Concurrent List in the Seventh Schedule to
the Constitution specifically refers to the subject 'employees'
provident funds'. The Central Government could have, if it in ten·
ded to do so, started a provident funds scheme for the benefit of the
workers in exercise of its executive power. Before any such action
was taken the subject of legislation for instituting compulsoriy
B
contributory funds in industrial undertakings was discussed several
times at tripartite meetings in which representatives of the Central
and State Governments and of employers and workers took part.
Ultimately it was decided that the Central Government should
initiate appropriate legislation in Parliament for the said purpose.
c Accordingly an ordinance was issued in 1951 incorporating the
decisions arrived at such meetings. Later on in 19 52 the Provident
Funds Act came to be passed replacing the ordianance. The
Provident Funds Act contemplates the administration of the
Scheme framed under section 5, the Family Pensior:i Scheme framed
under section 6A and the Employees' Deposit-linked Insurance
Schem;; under section 6C(l) of that Act. The Provident Funds Act
applies to the whole of India except the State of Jammu and
Kashmir. Under section 5A of the Provident Funds Act the
Central Board of Trustees (hereinafter called 'the Central Board') is
constituted by the Central Government to administ<:r, subject to the
provisions of section 6A and section 6C, the fund vested in it in
such manner as may be specified in the Scheme and to perform
E such other functions as it may be required to perform by or under
the provisions of the Scheme, the Family Pension Scheme and the
Insurance Scheme. Under section SB of the Provident Funds Act
the Central Government may, after consultation with the Govern-
. men! of any State, by notification in the Official Gazette, constitute
for that State a Board of Trustees which is for purpose of brevity
F referred to as the State Board in such manner as may be provided
for in the Scheme. The crucial provision in sect.ion SB which, if
we may say so with respect, has missed the attention of the Division
Bench of the High Court is sub-section (2) thereof. It says that a
State Board shall exercise such powers and perform such duties as
the Central Government may assign to it from time to time. Under
G Paragraph 4 of the Scheme framed under the Provident Funds Act,
it is provided that until such time as a State Board is constituted
for a State the Central Government may set up a Regional
Committee for the State which will function under the Central
Board. There are three funds which are created by the Provident
Funds Act. They are-(i) The Fund i.e. the Provident Fund,
H
!>. F. COMMR v. K.P.F.E. UNION (Venkataramiah, J.) 82i

established under the Scheme, (ii) the Family Pension Fund esta- A
blished under the Family Pension Scheme and (iii) the Insurance
Fund established under the Insurance Scheme. They are not con-
fined to ans particular State or Region. Each of them is a fund
into which the amount collected under the respective Schemes is
credited irrespective of the State or the Region where they are
collected. Under Paragraph 54 of the Scheme all expenses relating
to the adminisration of the fund including those incurred on
Regional Committees have to be met from the Fund. For purposes
of the administration of the Provident Funds Act, the appropriate
Government in relation to·an establishmeut belonging to or under
the control of the Central Government or in relation to an esta- c
blishment connected wi.th a railway company, a major port, a mine
or an oil field or a controlled industry or in relation to an establish-
ment having department or branches in more than one State is the
Central Government and in ~elation to any other establishment, the
State Government under section 2(a) of the Provident Funds Act.
We are not concerned with this definition in this case as the
question to be decided arises under the Act. The Provident Funds
Act and the Scheme clearly show that the Central Government has
the final voice in many matters including appointments to various
offices referred to therein. 'It is not necessary to refer to then in
detail here.
E
What has got to be determined in this case is whether the
·activity carried on under the Provident Funds Act is being carried
on by or under the authority of the Central Government as provi-
ded in section 2(a) of the Act or not in order to decide whether the
Central Government is the appropriate authority under the Act or
F
not. Section 2(a) of the Act came up for consideration by this
Court in Heavy Engineering Mazaoor Union v. State of Bihar &
Ors.lil The Court observed in that case that there being nothing to
the contrary, the word 'authority' in section 2(a) of the Act must be
construed according to its ordinary meaning and therefore must
mean a legal power given by one person to another to do an act.
The words 'nnder the authority of' were construed by this Court G
in that case as meaning pursuant to the authority, such as where an
/7
agent or a servant acts under or pursuant to the authority of his
principal or master. Applying this test, the Court held that a
manufacturing industry carried on by a .company registered under

11> [196913 s.c.R. 995
H
•

821 SUPREME COURT REPORTS (1985] I S.C.R.
A
the authority of the Central Government even though the entire
capital of the company had been contributed by the Central
Government and under Articles of Association of the company the
Central Government could exercise control over the affairs of the
company. The Court. howover, proceeded to observe that the
B question whether a corporation is an agent of the State would
depend upon the facts of each case. It referred to the decision in
Graham v. Public Works Commissioner!'\ and said that where a
statute setting up a Corporation so provided, such a Corporation
could be easily identified as the agent of the State and that it was
possible for the Crown with the consent of Parliament to appoint
c or establish certain officials or bodies who were to be treated as
agents of the Crown even though they had the power of contracting
as principals. Merely because the officials of Government or
certain bodies constituted by the Government for purposes of

D
administration are given the garb of a statutory corporation they
donot cease to be what they truly are. I.
At this stage it is appropriate to refer to certain observations
made by Mathew, J. in Sukhdev Singh & Ors. v. Bhagatram Sardar
J
Singh Raghuvanshi & AnrJ'l on the true characteristics of public
corporations established under a statute. _ The learned Judge
observed at page 646 thus :

·'A public corporation is a legal entity established
normally by Parliament and always under legal authority,
usually in the form of a special stutute, charged with
the duty of carrying out specified governmental functions
F in the national interest, those functions being confined
to a comparatively restricted field, and subjected to
control by the executive, while the corporation remains
juristically an independent entity not directly responsible
to parliament. A public corporation is not generally
a multi-purpose authority but a functional organisation
created for a specific purpose. It has generally no shares
G or shareholders. Its responsibility generally is to Govern-
ment. Its administration is in the hands of a Board •
appointed by the competent Minister. The employees of '
public corporation are. not civil servants. It .is in fact,

(ll [1901] 2 KB 781.
(2) [1975] 3 S.C.R. 619.
•

P.F. COMMR v. K.P.F.E. UNION (Venkataramiah, J.) 823

likely that in due course a special type of training for A
specialized form of public service will be developed and
the status of the personnel of public corporation may
more and more closely approximate to that of civil service
without forming part of it. In so far as public corpora
tions fulfil public tasks on behalf government, they are B
public authorities and as such subject to control by
government.''

In the instant case, it is to be noted that the activity carried
on by the Central Board or the State Boards under the Provident
Funds Act is not similar to the activity carried on by any private c
trade or manufacturing business like the one involved in the case
~ of the Heavy Engineering Corporation's case (supra). The activity
~~is one traceable to Article 43 of the Constitution which requires
l ·, the State to endeavour to secure by suitable legislation or economic
.. organisation or in any other way to all workers, agricultural or
industrial or otherwise, work, a living wage, conditions of work D
ensuring a decent standard of life and full enjoyment of leisure
and social and cultural opporiunities. It is a part of the pro-
gramme of every welfare State which our country is. Institutions
engaged in matters of such high pubHc interest or performing such
high public functions as observed by Mathew .T. in Sukhdev Singh's
E
case (supra) by virtue of their very nature performed govermental
functions. They are truly the agents of the Government and
they function under the authority of the Government as provided
in the statute because the Central Governme1ot could have, for
the purpose of introducing the scheme of compulsory contribution
to the provident funn, set up an organisation or a department in l·
absence of the corporate bodies evisaged in the Provident Funds
Act. The Division Bench of the High Court was in error in
observating that an examination of the organisation showed "that
the activities of the Provident Fund" organisation are not govern-
mental in character as they are essentially part of the activities
of various industries to which the Provident Funds Act applies.'
We have no doubt that the· business of the Provident Funds
G
organisation is governmental in character and does not pertain to
industry to which the Provident Funds Act applies. The manage·
ment and workmen of industries to which the Provident Funds
Act ''applies contribute to the funds established under that Act.
The business of the statutory bodies functioning under that Act
is not the business of industries whose managements~and workmen
824 SUPREME COURT REPORTS (1985] 1 S.C.R.
A make contributions to the saicl funds. In aclclition to the above
feature, the ptovisions of section 5!1 (2) of the Provident Funds
Act which reads : "A Stat~ Board shall exercise such powers
and perform such duties as the Central Governm~nt may assign
to it from time to time" clearly envisage that th" SLlte Board is
B an agent of the Central Government. In the ab3ence of the
State Board, the Regional Committee constituted under· Paragraph
4 of the Scheme is required to function under the control of the
Central Board. The Regional Provident Fund Commissioner who
is appointed by the Central Governmet i3 also under the control of
the Central Board '1nd the Central Government.
c
Having regard to the various provisions of the Provisions
Funds Act and the nature of the business carried on by the Cent· ·!
Board, the State Board, the Regional Committee and the Regic . , .,,l>':Jil
Provident Fund Commissioner, we are of the view that th.: ~1
Division Bench of the High Court was not right in holding that ... ·' i,
D the State Government was the appropriate Govt. under section •.$
2(a) of the Act in the matter of industrial disputes arising between ''~
the management and the workmen of the Regional.Provident Fund ·.·.,
organisation. It has to be mentioned here that even the learned
counsel for the workmen fairly stated that the Central Goverhment
was appropriate Government under the Act in so far as the disput\'c ,.I'
E
in question is concerned. He, however, submitted that the Central !)
Government may now . be directed to refer the dispute pending '
1
before the Tribunal at Bangalore to an lndqstrial Tribunal quickly -
as the case has been pending for nearly 5 years. We have no doubt
that the Central Government will immediately comider the above
F question and take appropriate action.

Jn the result the order of the Division Bench of the High
Court is set aside and the order of the learned Single Judge is
restored. The reference made by the State Government is
quashed. The appeal is accordingly allowed.

No costs.

G Jl.S.1(. Appeal allowed.