Central Inland Water Transport Cor. Case

"🚢 **A Landmark in Employment Law: Brojo Nath Ganguly Case** ⚖️

The Central Inland Water Transport Corporation Limited vs. Brojo Nath Ganguly reshaped employment contract law in India. It highlighted the doctrine of *unconscionability* and emphasized protecting employees from unfair terms in service agreements.

A pivotal case showcasing how justice can balance corporate authority with individual rights.

1. The Central Inland Water Transport Corporation Limited Vs . Brojo Nath Ganguly By Sunil Sahoo Khordha Law College 4th Year

2. The Central Inland Water Transport Corporation Limited Vs. Brojo Nath Ganguly . ( Civil appeal no. 4412 and 4413 of 1985) 1986 AIR 1571 , 1986 SCR(2) 278 Court Supreme Court of India   Name of the case Central Inland Water Transport Corporation Ltd V.   Brojo Nath Ganguly   Civil appeal no. 4412 and 4413 of 1985   Appellant Central Inland Water Transport Corporation Ltd and Ors   Respondent Brojo Nath Ganguly and Ors   Citation 1986 AIR 1571 , 1986 SCR(2) 278   Bench/judges Justice D.P.Madan   Justice A.P.Sen  

3. The Central Inland Water Transport Corporation Limited Vs. Brojo Nath Ganguly . ( Civil appeal no. 4412 and 4413 of 1985) 1986 AIR 1571 , 1986 SCR(2) 278 Involved Acts The Constitution of India, 1950;   The Indian Companies Act, 1956;   The Indian Contract Act, 1872;   Service , Discipline and Appeal Rules, 1979.   Important sections Article 12, 14, 38 and 39 from the Constitution of India, 1950;   Section 16, 19A and 23 of the Indian Contract Act, 1872;   Section 617 of the Indian Companies Act, 1956;   Rule 9(1) from the Central Inland Water Transport   Corporation Limited-   Appeal Rules 1979.   Decided on 06.04.1986

4. Case Summary In the case of Central Inland Water Transport Corporation Ltd v. Brojo Nath Ganguly ,The appellant was the Central Inland Water Transport Corporation Ltd and Ors and the respondent was Brojo Nath Ganguly and Ors . The company mentioned by appellant was a company that was owned by two governments namely the State Government of West Bengal and by the Government of India. The appellants company in the case has been defined in the India Companies Act, 1956 under Section 617. The Central Inland Water Transport Corporation ltd was incorporated on February 22, 1967. It was owned by the Government of India and the State Governments of West Bengal and Assam. It was a Government company of Section 617 of the Companies Act, 1956 which is a subsidiary of a Government company. There’s a company “Rivers Steam Navigation Company Limited” was developing very much in the same business comprising the maintenance and flowing of river service as the company it has been undertaking and it was ordered to be wind up by an order on May 5, 1967 delivered by the Calcutta High Court and it dissolved payment to all the investors .

5. By the High Court the arrangement scheme was approved and entered into the dissolved corporation and the company liabilities and the assets of the said company were handed over by the company. Brojo Nath Ganguly was the first respondent in Civil Appeal was at the date when the said scheme of arrangement became operative, working in the mentioned company and the Corporation took over his services and he was selected on September 8, 1967 as a Deputy Chief Accounts Officer. A confidential letter regarding accusations made against him for showing negligence or careless attitude in maintaining the Provident Fund accounts was sent to him by the General Manager (Finance Department) on February 16, 1983 to reply within 24 hours to the accusation of negligence . Brojo Nath Ganguly had given a clear reply to the show cause notice. Thereafter by a letter from the date of February 26, 1983 was signed by the Chairman cum Managing Director of the Corporation, under clause ( i ) of rule 9 the notice or the Service Rules was given to Ganguly terminating his services with the mentioned Corporation with instant effect .

6. Going to the brief study of facts in this case; The Central Inland Water Transport Corporation was incorporated by the Union Government. The corporation was under complete dominance of the Central Government of India and also it holds all of its shares. Brojo Nath Ganguly the respondent of the case used to work for a company which later came to liquefy as per the orders of the court and thus was given an authority in the appellants corporation under the particular terms and conditions. Brojo Nath Ganguly joined as the Deputy Chief Accountant Officer in the corporation and later he was appointed as the Deputy Financial Adviser and Chief Accounts Officer through his hard work and determination. A suit was filed by the respondent in High Court of Calcutta by that Rule 9( i ) is arbitrary and unprincipled because of which the decision was in respondent’s favour by the Hon’ble . This leads the plaintiff to file a suit against that in the apex court of the country i.e. the special leave grant by the Supreme Court of India. .

7. Anyways here also the court’s decision was against the petitioner and the special leave grant was cancelled by the Supreme Court. The court held under the Indian Contract Act, 1872 section 23 Rule 9 ( i ) to be void. In the present case, plaintiffs had much less bargaining power as compared to that of Corporation, as they did not have any meaningful choice while supposing to the terms and conditions given of their permission the corporations. If they would have refused to accept the said rule, it would have led to their authorized service and exposed them to the harassment and the consequent anxiety and uncertainty of discovering alternative employment actions.   The judgment given in the case Central Inland Water Transport Corporation Ltd V Brojo Nath Ganguly was rejecting the appeal and the Supreme Court held that the term “state” had a stand basis so the state covers the government and parliament of India. The operations and the functions of the company are crucially played a national importance. There were no raised disputes as the company was a public sector entity of the government. Thus the Court relied upon the judgment of Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi , clarifies that the State operates by its instrumentalities, being an abstract body.

8. Accordingly , “for Article 12, the Court must necessarily lift the corporate veil in order to establish if the face of the instrumentality or agency is present behind that envelope. When there exists an agency of the State which the garb of a Government Company has presumed. Thus it ceases to be an agency. To determine the subject matter the judgment was marked as ” In this instance, the company was found to fall under the defined notion . By the second issue the court replied that the Court assessed that it is unable to compare employees with commodities soled an offer or they are bought and sold, or it is a contract of employment equivalent to a transaction involving those enterprises. Thus in accordance with Article 23 of Indian Contract Act 1872 , Rule 9(1) the conditions were unfair , arbitrary and contrary to public policy.c

9. Issues raised : Does Article 12 of the Indian Constitution holds its jurisdiction over the corporation that comes under the definition of state Was the clause ( i ) of Rule 9 of The Central Inland Water Transport Corporation Limited- Appeal Rules , service and discipline 1979 is arbitrary and unconscionable ? Can the power granted under rule 9( i ) be declared void in violation of Article 14 of the Constitution ? Is an unconscionable term can be held to be void/ voidable under Indian Contract Act (ICA ) ?

10. Contention : The appellant’s contention was that any government company incorporated under the Company Act . It has a different form than any statutory corporation incorporated through a statute. The distinction of operations was between the both by illustrations. On the contrary, the arguments of respondents was that a broad interpretation term of a state as it referred to Article 12 and also applies to governmental corporations v companies . A state has its authority to operate any of its agencies, through any other Government Department , Government Company, State Corporation or any other activity it including commercial layouts also . In response to the contract employment it was argued that his contracts are distinctive from the other contracts. The term unreasonable inserted by the other private employer as can not be found in the eyes of law. Such as the term may In accordance with the Constitution, ruled unconstitutional with Article 14.

11. Rationale : The court held that Central Inland Water Transport Corporation Limited is not just a regular company as defined under Section 617 of the Companies Act of 1956 but completely taken over by three governments at a time namely the Central Government, the Government of West Bengal and Government of Assam . A statutory corporation is generally established in order to create a monopoly in the State. I respect a particular activity. However a Government company is not established for this purpose so the Corporation does not have the monopoly of inland water transport but is only a trading company and it was already shown by the objects clause in its Memorandum of Association; and The barging had kept forward was based on unethical terms as it contradicted the justified reasons and it seems to have taken place under unfair edge over others.

12. And the state under Section 39 should favour the policy of safeguarding its citizens and providing equal pay for equal work for both sex i.e. both females and male are equally decreasing the means of production to the common detrimental and concentration of wealth and the 9th rule of clause 1 of the Central Inland Water Transport Corp Limited . Service and Discipline and Appeal Rules, 1979 held upon the corporation the power to end the service of a permanent employee by giving him three months’ notice in writing or to pay him the same three months’ basic v pay and that was permissible. The Rule 9(1) of clause in a contract of employment interferes with the unfavorable to the public interest and the large sections of the public and it may lead to generating a lack of confidence in the heads of those who encounter it and also it is against the welfare of the public.

13. Defects of law : The Court relied upon the judgment of Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi and clarified that the State operates by its instrumentalities. Accordingly, for Article 12, the Court must necessarily lift the corporate veil in order to establish if the face of the agency or instrumentality is present behind that veil. If there is any existence of an agency of the State which was about to be presumed the garb of a Government Company, it thereby ceases to be an agency”. This judgement was marked as a test to determine the subject matter. In this instance, the company was found to fall under the defined notion. In answer to the second issue, the dispute between the company and the employees was seen as distinct from the other contracts entered into throughout the course of their commercial activity. The Court assessed that it is unable to compare employees with commodities offered for sale or which are bought and sold, nor is a contract of employment equivalent to a transaction involving enterprises.

14. Inference : Therefore , in accordance with Article 23 of the Indian Contract Act 1872, Rule 9 ( i ) of the Rules of Service, Discipline and Appeal was deemed void and declared ultra-vires pursuant to Article 14 of the Constitution. The conditions were unfair, arbitrary and contrary to public policy. The terms“The State” which are used in the Constitution of Indian in Part III or IV does not merely conclude it as Union of India but also includes all organizations that are dominated and controlled by the government. The Expression “The State” was used in Part III or IV of The Indian Constitution it doesn’t just incorporate the Union of India yet incorporates additionally– that work under the profound and inescapable control of the government bodies.

15. As it was propounded by the word unjustifiable methods it was meant to be wrong or nonsensical. On the off chance that an agreement is inappropriate at the time the agreement is made, the Court may decline to uphold the agreement. There would be an unreasonable deal in this way, be one which is conflicting to what exactly is justifiable or unjustifiable and correct or sensible and Statement ( i ) of Rule 9 is against the public arrangement and it is void under segment 23 of the Indian Contract Act as it presents outright and self-assertive force upon the enterprise. It doesn’t state who in the interest of the Corporation is to utilize that power. There are no rules set down to demonstrate in what conditions the force given by rule 9( i ) is to be practiced by the Corporation. There were three conditions which the court regarded as the key ingredients which showed that the Corporation was a body of the government itself under the public sector as defined in the Constitution of India under Article 12.

16. Conclusion : The appeal was dismissed by Justice D.P. Madon the Supreme Court judge and the judgment was given against the defendants stating that rule 9( i ) is said to be invalid, arbitrary, and unconscionable and opposes public policy under Section 23 of Indian Contract Act, 1872. This case played a crucial role in the interpretation of the term ‘state’ under Article 12. The corporation was also ordered to pay the expenses of appeal by the court. The decision provided was descriptive but was in favour of the respondent. Also to accept the choice given was thankful and expressive that helped in broadening the idea of Article 12.

17. References : M.C. Mehta vs Kamal Nath case V . Sadasivan and 36 Others vs Binny Limited   Indian Kanoon, (15th April 2010 ), Central Inland Water Transport Corporation Ltd. v.   Brojo Nath Ganguly   Ranjit Samantaray , (5th June 2009),Central Inland Water Transport Corporation Ltd. & Ors V. Brojo Nath Ganguly & Ors Nishka Singh, (12th Jul 2020), Central Inland Water Transport Corporation Ltd. & Ors V. Brojo Nath Ganguly AIR 1986 SC 1571