2013(6) ALL MR 280
IN THE HIGH COURT OF JUDICATURE AT BOMBAY

S.J. VAZIFDAR AND R.Y. GANOO, JJ.

The Oriental Insurance Company Limited Vs. Collector & District Election Officer, Suburban Mumbai & Anr.

Writ Petition No. 2086 of 2012

19th June, 2013

Petitioner Counsel: Mr. Arvind G. Kothari
Respondent Counsel: Mr. D.A. Nalawade,Mr. Parag Vyas

(A) Representation of the People Act (1950), Ss.13B, 29 - Election duty - Employees of petitioner Government Company summoned for it - Term 'employ' signifies contract for employment voluntarily entered into by person with Electoral Registration Officer - Element of compulsion is not contemplated in Ss.13B(2) - Reliance placed on S.13B by respondent to support action is not sustainable. (Para 10)

(B) Representation of the People Act (1950), Ss.13B, 29 - Local authority - Petitioner is not authority of like nature as Municipal Committee, District Board or Body or Port Commissioners - Essential and major functions and characteristics of local authority are not performed and cannot be attributed to petitioner - Petitioner does not fulfill criterion as per AIR 1981 SC 951 - Petitioner is not local authority.

AIR 1981 SC 951 Rel. on. [Para 15]

Cases Cited:
Valjibhai Muljibhai Soneji & Anr. Vs. The State of Bombay & Ors., AIR 1963 SC 1890 [Para 13]
Union of India & Ors. Vs. R.C. Jain & Ors., AIR 1981 SC 951 [Para 14,15]
Northern Zone Insurance Employees Association Vs. Election Commission of India, RLR 1989(1) 762 [Para 17]


JUDGMENT

JUDGMENT :- Rule. Rule is made returnable forthwith and the Writ Petition is heard finally.

2. The petitioner is a Government company which was initially registered under the provisions of the Indian Companies Act, 1913. Respondent No.2 is the Union of India.

3. The petitioner seeks an order quashing and setting aside an order dated 22nd February, 2012, by which the respondents summoned the petitioner's employees for election duties. The question that arises for consideration is whether the respondents are entitled to requisition the services of the petitioner's employees under the provisions of The Representation of the People Act, 1950 (hereinafter referred to as "the said Act").

4. The respondents contend that they are entitled to do so in view of the following provisions of the said Act :-

"13B. Electoral registration officers. - (1) The electoral roll for each parliamentary constituency in the State of Jammu and Kashmir or in a Union territory not having a Legislative Assembly shall be prepared and revised by an electoral registration officer who shall be such officer of Government or of a local authority as the Election Commission may, in consultation with the Government of the State in which the constituency is situated, designate or nominate in this behalf.

(2) An electoral registration officer may, subject to any prescribed restrictions, employ such persons as he thinks fit for the preparation and revision of the electoral roll for the constituency.

........

29. Staff of local authorities to be made available.-

Every local authority in a State shall, when so requested by the chief electoral officer of the State, make available to any electoral registration officer such staff as may be necessary for the performance of any duties in connection with the preparation and revision of electoral rolls."

5. The petitioner was incorporated on 12th September, 1947, under the Indian Companies Act, 1913, under the name "The Oriental Fire & General Insurance Company Limited". The change of the petitioner's name to its present name was permitted by the Registrar of Companies on 1st May, 1984.

By section 4 of the General Insurance Business (Nationalization) Act, 1972 (hereinafter referred to as "the Nationalization Act"), all the shares in the capital of every Indian Insurance company, including the petitioner, stood transferred to and vested in the Central Government free of all trusts, liabilities and encumbrances. Section 9 required the Central Government to form a Government company in accordance with the provisions of the Companies Act to be known as The General Insurance Corporation of India for the purpose of superintending, controlling and carrying on the business of general insurance. Section 10 provided that the shares which stood transferred to and vested in the Central Government by virtue of section 4 shall immediately, after such vesting stand transferred to and vested in the Corporation and every Indian Insurance company shall forthwith give effect to such transfer of shares and rectify its register of members by including therein the Corporation as the holder of such shares. Thus, as on date, the petitioner is a Government of India undertaking / company.

We will refer to the petitioner's Memorandum of Association and Articles of Association after narrating the facts.

6. It is not necessary for us to refer to the facts in any detail. The petitioner has, for instance, set out how in the past, it had complied with similar orders requisitioning the services of its employees under the said Act. The petitioner has also referred to the enormous difficulties faced by its various offices / branches on account of its employees being requisitioned. It appears there were a series of discussions between the petitioner and the respondents in this regard.

7. By the impugned order dated 22nd February, 2012, addressed to the petitioner, the Electoral Registration Officer stated that as per the directions of the Election Commission of India, they were required to appoint one officer for each polling centre on permanent basis for election related work. The Electoral Registration Officer appointed officials of the petitioner at the polling centres mentioned therein. The order acquired the services of the petitioner's officials and appointed them at the said polling centres as per the election related work and as per section 32 of the said Act. The respondents contended that the reference to section 32 was a typographical error and should be read as section 13B(2)]. The honorarium payable to the officers was stated therein.

8. The petitioner contended that the respondents do not have the power to acquire the services of its officials under the provisions of the said Act. The respondents, on the other hand, contended that they are entitled to do so in view of sections 13B(2) and 29 of the said Act.

9. The respondent's contention based on section 13B(2) is not well founded.

Firstly, it is a moot point whether sub-section (2) applies in general or only in respect of parliamentary constituencies in the State of Jammu & Kashmir or in the Union Territories not having a Legislative Assembly. We will, however, presume for the purpose of this judgment that sub-section (2) of section 13B applies in respect of all parliamentary constituencies. It would make no difference.

10. Sub-section (2) only entitles the electoral registration officer to "employ" persons for the purposes stated therein. It does not entitle the Electoral Registration Officer to requisition the services of any person. The expression "such persons" includes any person who is legally entitled to be employed. The term "employ" connotes a voluntary act on the part of the electoral registration officer and such persons. The term "employ" signifies a contract of or for employment voluntarily entered into by a person with the Electoral Registration Officer. An element of compulsion is not contemplated in section 13B(2). The reliance upon section 13B(2) in support of the impugned action / order is, therefore, not well founded.

11. This brings us to the question which arises under section 29 of the said Act. The question that falls for consideration in this regard is whether the petitioner is a "local authority" within the meaning of those words in section 29. The expression "local authority" is not defined in the Act. Section 3(31) of The General Clauses Act, 1897, however, defines the term "local authority" as under :-

"3. Definitions.- In this Act, and in all Central Acts and Regulations made after the commencement of this Act, unless there is anything repugnant in the subject or context,-

........

(31) "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."

12. After reserving the judgment, we noticed certain judgments which entirely support the petitioner. As these judgments were not cited during the hearing, we granted the respondents an opportunity of dealing with the same before pronouncing our judgment.

13. In Valjibhai Muljibhai Soneji & Anr. v. The State of Bombay & Ors. AIR 1963 SC 1890, a Constitution Bench of the Supreme Court dealt with the expression "local authority" in section 6 of the Land Acquisition Act. The question there was whether the State Trading Corporation was a company or a local authority. The Supreme Court held as under :-

"11. The expression "local authority" is not defined in the Land Acquisition Act but is defined in S. 3(31) of General Clauses Act, 1897, 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 definition given in the General Clauses Act, 1897, govern all Central Acts and Regulations made after the commencement of the Act. No doubt, this Act was enacted later in point of time than the Land Acquisition Act; but this Act was a consolidating and amending Act and a definition given therein of the expression "local authority" is the same as that contained in the earlier Acts of 1868 and 1887. The definition given in S. 3(31) will therefore, hold good for construing the expression "local authority" occurring in the Land Acquisition Act. We have already quoted the definition.

12. It will be clear from the definition that unless it is shown that the State Transport Corporation is an 'authority' and is legally entitled to or entrusted by the Government with control or management of a local fund it cannot be regarded a local authority. No material has been placed before us from which it could be deduced that the funds of the Corporation can be regarded as local funds. It was no doubt submitted by the learned Attorney General that the Corporation was furnished with funds by the Government for commencing for its business; but even if that were so, it is difficult to appreciate how that would make the funds of the Corporation local funds."

14. A Bench of three learned Judges in Union of India & Ors. v. R.C. Jain & Ors. AIR 1981 SC 951 followed the above judgment. The question in that case was whether the Delhi Development Authority was a local authority within the meaning of those words in the Payment of Bonus Act, 1965. It was noted that the expression "local authority" was not defined in the Payment of Bonus Act and that one must, therefore, turn to the General Clauses Act to ascertain the meaning thereof. The Supreme Court held :

"1. .....The expression "Local Authority" is not defined in the Payment of Bonus Act. One must, therefore, turn to the General Clauses Act to ascertain the meaning of the expression. Section 3(31) defines Local Authority 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."

'Local Fund' is again not defined in the General Clauses Act. Though the expression appears to have received treatment in the Fundamental Rules and the Treasury Code, we refrain from borrowing the meaning attributed to the expression in those rules as it is not a sound rule of interpretation to seek the meaning of words used in an Act, in the definition clause of other statutes. The definition of an expression in one Act must not be imported into another. "It would be a new terror in the constitution of Acts of Parliament if we were required to limit a word to an unnatural sense because in some Act which is not incorporated or referred to such an interpretation is given to it for the purposes of that Act alone" (per Loreburn L.C. In Mahesh & Co. v. Chislett. 1910 AC 220). For the same reason we refrain from borrowing upon the definition of 'Local Authority' in enactments such as the Cattle Trespass Act, 1871 etc., as the High Court has done.

2. Let us, therefore, concentrate and confine our attention and enquiry to the definition of 'Local Authority' in Section 3(31) of the General Clauses Act. A proper and careful scrutiny of the language of Section 3(31) suggests that an authority, in order to be a local Authority, must be of like nature and character as a Municipal Committee, District Board or Body of Port Commissioners, possessing, therefore, many if not all, of the distinctive attributes and characteristics of a Municipal Committee, District Board or Body of Port Commissioners, but possessing one essential feature, namely, that it is legally entitled to or entrusted by the Government with, the control and management of a municipal or local fund. What then are the distinctive attributes and characteristics, all or many of which a Municipal Committee, District Board or Body of Port Commissioners shares with any other local authority ? First, the authorities must have separate legal existence as Corporate bodies. They must not be mere Governmental agencies but must be legally independent entities. Next, they must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. Next, they must enjoy a certain degree of autonomy, with freedom to decide for themselves questions of policy affecting the area administered by them. The autonomy may not be complete and the degree of the dependence may vary considerably but, an appreciable measure of autonomy there must be. Next, they must be entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies, such as those connected with providing amenities to the inhabitants of the locality, like health and eduction services, water and sewerage, town planning and development, roads, markets, transportation, social welfare services etc. etc. Broadly we may say that they may be entrusted with the performance of civic duties and functions which would otherwise be Governmental duties and functions. Finally, they must have the power to raise funds for the furtherance of their activities and the fulfilment of their projects by levying taxes, rates, charges or fees. This may be in addition to moneys provided by Government or obtained by borrowing or otherwise. What is essential is that control or management of the fund must vest in the authority.

3. In Municipal Corporation of Delhi v. Birla Cotton Spinning & Weaving Mills, Delhi (1968) 3 SCR 251 at p. 288 : (AIR 1968 SC 1232), Hidayatullah, J., described some of attributes of local bodies in this manner :

"Local bodies are subordinate branches of Government activity. They are democratic institutions managed by the representatives of the people. They function for public purposes and take away a part of the Government affairs in local areas. They are political sub-divisions and agencies which exercise a part of State functions. As they are intended to carry on local self-government the power of taxation is a necessary adjunct to their other powers. They function under the supervision of the Government." [emphasis supplied]

Applying the above tests, the Supreme Court came to the conclusion that the Delhi Development Authority was a local authority within the meaning of the Payment of Bonus Act.

15. It is necessary, therefore, to examine whether the petitioner falls within the ambit of the expression "local authority" in section 29 of the said Act. We are of the view that it does not. The petitioner is not an authority of like nature or character as a Municipal Committee, District Board or Body or Port Commissioners and does not possess many of the distinctive attributes and characteristics of a Municipal Committee, District Board of Body or Port of Commissioners. The petitioner does not fulfill any of the criteria enumerated by the Supreme Court in Union of India v. R.C. Jain for determining whether an entity is a "local authority". The following aspects militate against the petitioner being a local authority.

16(a) Firstly, the petitioner does not possess what the Supreme Court held was "the one essential feature of a local authority", in that it is neither legally entitled to nor entrusted by the Government with the control and management of a Municipal or local fund.

(b) The petitioner also does not function in a defined area. Article 4 of its Articles of Association permits the petitioner to carry on its business from the Union territory of Delhi and also at such other place or places either within India or beyond India in any country as the Directors may deem advisable.

(c) The petitioner indeed has a separate legal existence and has an appreciable degree of autonomy by virtue of the provisions of the Companies Act, 1956. The Government may well be entitled to constitute the Board of Directors by virtue of Article 105 of the Memorandum of Articles of the petitioner, but once appointed, the Articles permit the Directors to function independently. This is clear, for instance, from Articles 133, 134 and 135. Article 133, which confers upon the petitioner Directors several of the usual powers that Directors of companies are conferred with. But mere autonomy and freedom to decide question of policy is not the only test and the matter does not end there. The autonomy must be to decide questions of policy "affecting the area administered" and not affecting the functioning and administration of the entity i.e. the petitioner in this case.

(d) Neither the petitioner nor it's Directors or officers are directly or indirectly elected by the inhabitants of any particular area. The Directors of the company are appointed in accordance with Articles 105 and 105A of the Articles of Association viz. by the Central Government. Their terms and conditions are also fixed from time to time by the Central Government.

(e) Clause 3 of the Memorandum of Association indicates that the main object of the petitioner is to carry on all kinds of insurance business, save and except certain kinds of insurance businesses. The petitioner is not entrusted by the Statute with any Governmental functions and duties as are usually entrusted to Municipal bodies. For instance, the petitioner is not required to provide amenities to the inhabitants of a locality like health and education services, water and sewerage, town planning and development, roads, markets etc. In other words, the petitioner is not entrusted with the performance of any physical duties and functions which would otherwise be Governmental duties and functions.

(f) The petitioner does not raise funds by levying taxes, rates, charges or fees. It raises capital in the manner in which a company registered under the Companies Act, 1956, is entitled to and in accordance with the Articles of Association. The question, therefore, of the petitioner controlling such a fund does not arise.

17. A Division Bench of the Rajasthan High Court in Northern Zone Insurance Employees Association v. Election Commission of India RLR 1989(1) 762 considered the ambit of the phrase "local authority" in section 159 of the Representation of The People Act, 1951 as it stood prior to its amendment. Section 159 was amended with effect from 28th August, 1956 but was given retrospective effect. We are not concerned with the amended section. Section 159, as it stood prior to its amendment, reads as under :-

"159. Staff of every local authority to be made available for election work - Every local authority in a State shall, when so requested by a Regional Commissioner appointed under clause (4) of Article 324 or the Chief Electoral Officer of the State, make available to any returning officer such staff as may be necessary for the performance of any duties in connection with an election."

The question was whether the Life Insurance Corporation could be regarded as a "local authority" for the purpose of section 159. The Division Bench noted that the expression "local authority" had not been defined in the 1951 Act and, therefore, referred to section 3(31) of the General Clauses Act, 1897. After referring to the above judgments of the Supreme Court, the Division Bench held as under :-

"14. The question is whether keeping in view the distinctive attributes and and characteristics which are shared by a Municipal Committee District Board or Body of Port Commissioners with any other local authority, as specified by the Supreme Court in its aforesaid judgment in Union of India Vs. R.C. Jain (supra), the Life Insurance Corporation can be regarded as a local authority. It is no doubt true that the Life Insurance Corpn. is a separate legal entity established by Parliament under the provisions of Life Insurance Corporation Act 1956 and legally it is independent from the Central Government. But it cannot be said that it functions in a defined area and must ordinarily / or is wholly or partly, directly or indirectly elected by the inhabitants of the area. It also cannot be said that it has been entrusted by Statute with such Governmental functions and duties as are usually entrusted to municipal bodies such as those connected with providing amenities to the inhabitants of the locality, like health and education services, water and sewerage, town planning development, roads, markets, transportation, social welfare services etc. The Life Insurance Corporation has not been entrusted with performance of civic duties and functions which would otherwise be governmental duties or functions. The Life Insurance Corporation is also not entrusted with the power to raise funds for the furtherance of its activity and the fulfilment of their projects by levying taxes, rates, charges, or fees. A perusal of the provisions contained in the Life Insurance Corporation Act, 1956, shows that under Section 6 of the said Act the function of the Life Insurance Corporation is to carry on life insurance business whether in or outside India and the Life Insurance Corporation is required to so exercise its power under the said Act as to secure that life insurance business is developed to the best advantage of the community. This shows that the Life Insurance Corporation has been established for the purpose of carrying on life insurance business. As regards the funds of the Corporation, we find that in Section 24 of the Act it is prescribed that Life Insurance Corporation shall have its own funds and all receipts of the Corporation shall be carried thereto and all payments of the Corporation shall be made therefrom. Taking into consideration the provisions of the Life Insurance Corporation Act, 1956, we are unable to hold that the Life Insurance Corporation falls within the ambit of expression local "local authority" as the said expression is defined in Section 3(31) of the General Clauses Act. In this connection reference may be made to the decision of a Division Bench of the Madhya Pradesh High Court in (5) Daudayal Onkarlal Vs. Gulabchand Shankerlal and others (AIR 1962 M.P. 47). In that case the question as to whether the Life Insurance Corporation is a local authority came up for consideration and the Madhya Pradesh High Court has held that the Life Insurance Corporation could not be regarded as a local authority. In that case it has observed as under :-

"Life Insurance Corporation has no hand in what may be called Municipal Administration of any locality. Prior to the coming into force of the Life Insurance Corporation Act of 1956 the work of the life insurance has a private commercial venture and it was in the hands of several commercial bodies such as Insurance Companies both India and foreign. The Parliament with a view to nationalise this business made law and set up a statutory corporation under it which would take up the entire life insurance business to itself and thereafter to run it on commercial basis ensuring to the general public going in for it safety for their investment, and certainty about its availability at appropriate time.

The Life Insurance Corporation may have its branches and agents throughout the country. It may have with it certain Government funds, but all that has nothing to do with administering a locality with the aid of funds derived by some kind of taxation. In that sense neither the State Bank of India with its numerous branches throughout India nor Life Insurance Corporation can be called local authority. The criterion is not whether it has statutory power to make rules, byelaws and regulations and whether it has same fund of its own which it can manage and control but it is whether there is delegation to it of some of the functions and powers of Government with reference to a locality. It should be miniature Government for a limited purpose and area. Viewed in that light the Life Insurance Corporation cannot be called a Local Authority."

15. The learned counsel for the respondents have however, urged that Life Insurance Corporation is an authority under the control of the Government of India and that it is, therefore, a local authority for the purpose of Section 159 of the Representation of People Act, 1951, and in this connection it has been urged that Section 159 does not make any distinction between a local authority and any other authority under the control of the Government. We are unable to agree with the said submission. It is no doubt true that for the purpose of Article 12 of the Constitution the Life Insurance Corporation has been held to be an authority under the control of the Government of India but under Article 12 itself a distinction has been made between a local authority and other authorities. In the decision of the Supreme Court in Sukh Dev Singh Vs. Bhagat Ram (supra), on which reliance has been placed by the learned counsel for the respondents, the Life Insurance Corporation has been held to be an authority under the control of the Government of India and it has not been held to be a local authority. In Section 159 of the Representation of People Act, 1951 the expression "local authority" has been used and in our opinion the said expression cannot be construed to mean an authority other than a local authority. In that view of the matter no direction could be given with regard to the staff employed with the Life Insurance Corporation under Section 159 of the Representation of the People Act, 1951."

We are in respectful agreement with the judgment of the Rajasthan High Court. The ratio of the judgment applies to the etitioner in the case before us. That the Life Insurance Corporation was established under the provisions of the Life Insurance Corporation Act, 1956, would make no difference. The essential aspects, for the purpose of this judgment, of the Life Insurance Corporation are similar to those of the petitioner.

It is seen, therefore, that the essential and major functions and characteristics of a local authority are not performed and cannot be attributed to the petitioner. The petitioner, therefore, does not fall within the ambit of the expression "local authority" in section 29.

18. It is pertinent to note that section 159 of the 1951 Act, after its amendment with effect from 28th August, 1956, read as under :-

"159. Staff of certain authorities to be made available for election work.- (1) The authorities specified in sub-section (2) shall, when so requested by a Regional Commissioner appointed under clause (4) of article 324 or the Chief Electoral Officer of the State, make available to any returning officer such staff as may be necessary for the performance of any duties in connection with an election.

(2) The following shall be the authorities for the purposes of sub-section (1), namely:-

(i) every local authority;

(ii) every university established or incorporated by or under a Central, Provincial or State Act;

(iii) A Government company as defined in section 647 of the Companies Act, 1956 (1 of 1956)'

(iv) any other institution, concern or undertaking which is established by or under a Central, Provincial or State Act or which is controlled, or financed wholly or substantially by funds provided, directly or indirectly, by the Central Government or a State Government."

It is a moot point whether the petitioner would fall within the definition of a 'Government Company' in section 617 of the Companies Act. What is important, however, is that section 159 draws a clear distinction between a 'local authority' and a 'Government Company'. A similar amendment was, however, not introduced in the 1950 Act with which we are concerned. The ambit of the expression "local authority" in the 1950 Act, therefore, remains unchanged.

19. In the circumstances, Rule is made absolute in terms of prayer (a) There shall, however, be no order as to costs.

Ordered accordingly.