Central Inland Water Transport Corporation

In the case of Central Inland Water Transport Corporation (Corporation)case (supra), the facts include that one Brojonath Ganguly was an employee (Deputy Chief Accounts Officer) in a company namely, the ‘Rivers Stream Navigation Company Limited’. The said Company was taken over by the ‘Corporation’ in accordance with a scheme of arrangement. Mr Brojonath, among others, was appointed by the Corporation after taking over the company in accordance with terms and conditions of the letter of appointment. The issue which cropped up and came for consideration before the Apex Court was whether termination of service of a permanent employee (Brojonath and others) in accordance with Rule 9 of the Service & Disciplinary Rules of the Corporation (unconscionable term), was legally sustainable. The plea to challenge the order of termination within 48 hours of the show cause notice, in spite of refutal of the charges, inter alia included that the Corporation being State might have not breached its duty of acting in accordance with the provisions of Part III & Part IV of the constitution. The Supreme Court held- “113 We would like to observe here that as the definition of “the State” in Article 12 is for the purposes of both Part III and Part IV of the Constitution, State actions, including actions of the instrumentalities and agencies of the State, must not only be in conformity with the Fundamental Rights guaranteed Page 26 of 31 by Part III but must also be in accordance with the Directive Principles of State Policy prescribed by Part IV. Clause (a) of Article 39 provides that the State shall, in particular, direct its policy towards “securing that the citizens, men and women, equally have the right to adequate means of livelihood.” Article 41 requires the State, within the limits of its economic capacity and development, to “make effective provision for securing the right to work”. An adequate means of livelihood cannot be secured to the citizens by taking away without any reason the means of livelihood. The mode of making “effective provision for securing the right to work” cannot be by giving employment to a person and then without any reason throwing him out of employment. The action of an instrumentality or agency of the State, if it frames a service rule such as Clause (a) of Rule 9 or a rule analogous thereto would, therefore, not only be violative of Article 14 but would also be contrary to the Directive Principles of State Policy contained in Clause (a) of Article 39 and in Article 41.” 5.7 The Central Inland Water Transport Corporation is not only a Government company as defined under section 617 of the Companies Act 1956, but is wholly owned by the three Governments- Central Government and the Governments of West Bengal and Assam jointly. It is financed entirely by these three Governments and is completely under the control of the Central Government, and is managed by the Chairman and Board of Directors appointed by the Central Government and removable by it. In every respect it is thus a veil behind which the Central Government operates through the instrumentality of a Government company. The activities carried on by the Corporation are of vital national importance. There can thus be no doubt that the corporation is a Government undertaking in the public sector.