Shareholders Cannot Be Impleaded As Party In Adjudication Of Disputes Between Employers & Workmen: Kerala High Court

The Kerala High Court has made it clear that the shareholder of a company cannot be made an independent party in a dispute between the company and its workmen.The observation was made in connection with a dispute between Rubber Wood India Pvt Ltd and its workmen, whereby the Rubber Board, being a shareholder of the company, was arrayed as a party Respondent by the workmen.The Court held that the company, established under Central legislation namely Rubber Act, 1947, is an instrumentality of the Central Government, and accordingly the dispute falls under Section 10(2A)(1)(d) of the Industrial Disputes Act, 1947. It added that since the Rubber Board was only a shareholder in the said company, it could not be impleaded as a party in adjudication of a dispute between the workmen and their employers in relation to management of the Company. "It is settled law that the Government is not denuded from running a company holding majority of the shareholder. But the shareholder independently cannot be made a party for adjudication of the lis", it was observed.Justice Amit Rawal, while disposing the two writ petitions that were filed on common questions of fact and law, further observed that where an Interim Resolution Professional has been appointed, if proceedings before the Tribunal were not midway, the workmen could file their claims before the former who then, ought to adjudicate their claims strictly as per the Regulations. As per the factual matrix, when a dispute arose between the employers in relation to the management of Rubber Wood India Pvt Ltd, and their workmen, the same was referred for adjudication to the Central Government Industrial Tribunal - cum - Labour Court. It was this order issued by the Central Government that came to be contested in the instant writ petitions, on the ground of questioning the jurisdiction exercised by the Central Tribunal. As per the first writ petition that had been filed on behalf of the Rubber Board, it was averred by the Counsels for the Petitioner, Advocates Abraham Joseph Markos, V. Abraham Markos, Isaac Thomas, P.G. Chandappillai Abraham, Vipin Anto H.M., Alexander Joseph Markos, Sharad Joseph Kodanthara, and Zainab Zebaibrahim, that even in case of a Government Company, if it has been established under the provisions of the Companies Act, and if controlled and managed by the Central Government, the shareholder cannot be impleaded as a party in a dispute between the employer and employee as there was no relationship of employer and employee.With respect to the same, it was found by the Court that the Rubber Board in this case was only a shareholder, and a shareholder could not be made a party for adjudication of the lis. Accordingly, the notice that had been issued was only against the Company and not the shareholder, according to the Court, and the question as to whether whether the share holder could be impleaded as a respondent in a claim preferred by workmen through union, was answered in the negative.By virtue of the second writ petition, it was assailed by the Counsels for the petitioner, Advocates Mathews K. Uthuppachan, Terry V. James, and Sharan Shahier, that the Central Tribunal does not have the jurisdiction to entertain and try disputes referred by the appropriate Government, since Rubber Wood India Private Limited is a company established under the Companies Act and is not controlled and run or managed by the Central Government. It was contended that 'Appropriate Government' in respect of a State Public Sector Undertaking (PSU) would be the State, and hence it was only the Labour Court that would have the jurisdiction to adjudicate the matter, and the same ought to have been referred to it. However, with respect to the Rubber Wood Company, it was contended that no authority had been prescribed for the State or Central government, and the entire activities of the Company were carried out by itself. The Court, while dealing with the petitions, had to deal with the primary question as to whether Rubber Wood India Pvt Ltd, which had been established under the Companies Act, and 70% of whose shareholding was held by the Rubber Board established under the Rubber Act, 1947 which falls under the aegis of Ministry of Commerce and Industry, Government of India, could be said to be controlled and managed by the Central Government or not. On a perusal of the provisions of Section 2(a)(i) & (ii) and 2 (g) of the Industrial Disputes Act, 1947, and relying upon the ratios of various decisions such as Heavy Engineering Mazdoor Union v. State of Bihar & Ors, AIR India Statutory Corporation & Ors v. United Labour Union & Ors.,and Steel Authority of India Limited Vs. National Union Water front Workers and others; it was found by the Court that Rubberwood India Private Limited is an instrumentality of the Central Government, that has been established under the Rubber Act, 1947 (Central Act). The Court categorically laid down that Section 4 of the Memorandum...

Shareholders Cannot Be Impleaded As Party In Adjudication Of Disputes Between Employers & Workmen: Kerala High Court

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