SOM PRAKASH REKHI versus UNION OF INDIA & ANR.

Citation: [1981] 2 S.C.R. 111 · Decided: 13-11-1980 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Case Allowed

Cited by 8 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

t. 
' 
111 
SOM PRAKASH REKHI 
A 
v. 
UNION OF INDIA & ANR. 
November 13, 1980 
[V. R. KRISHNA IYER, R. S. PATHAK AND 0. Cl!INNAPPA REDDY, JJ.] 
B 
Constitution of India-Burm.ah Shell (Acquisition of Und.ertakings· in India) 
Act, 1976-Cpmpany acquired by the Government and vested in a statutory 
corporation-Corporation if State-Test for determining whether a body is State 
within the 1n(!a11fng of article 12. 
Und~r a voluntary retirement scheme in force iri the company the petitioner, 
a clerk Ill Burmah Shell Oil Storage Ltd., retired voluntarily after qualifying for 
pension. The pension payable to him was regulated by the terms of a tmst deed 
of 1950 under which a pension fund was set up and regulations were made for 
its administration. 
The petitioner was also covered by a scheme 
under the 
Employees Provident Fund and Miscellaneous Provisions Act, 
1952 and to 
gratuity under the Payment of Gratuity Act, 1972. 
The annual pension to which he was entitled under the trnst deed, without 
making !he authorised deductions as provided under regulation 16 of the trnst 
deed, worked out t6 a sum of Rs. 165.99 per mensem. He was also paid 
supplementary retirement benefit of Rs. 1!6 /- per month for a period o£ 13 months 
after his retirement which was stopped thereafter. 
The employer informed the petitioner that from out of his pension of 
Rs. 165.99 two deductions were made, one of which was on account of employees 
provident fund payment made to the pensioner and the other on account of 
payment of gratuity with the result the pension payable to him was shown as 
Rs. 40.05. The company also cut off the monthly payment of Rs. 86/- Mlich 
was paid as supplementary retirement benefit on the score that it was ex gratia, 
discretionary and liable to be stopped at any time by the employer. 
In the meantime the company was statutorily taken over by force of the 
Burmah Shell (Acquisition of Undertakings in India) Act, 19"/6. Thereafter 
\the Central Go~ernment took steps to vest the 
undertaking in 
the second 
respondent, the Bharat Petroleum, which then became the statutory successor of 
the petitioner's employer. 
His pensionary rights 
such as he 
had, therefore, 
became claimable from the second respondent. 
A ?reliminary objection was raised on behalf of the COfPoration that no writ 
~ould lie against the second respondent since it is neither a government depart-
ment nor a statutory corporation but just a company._ 
HELD : By the Court : 
The petitioner is entitled to the payment of full pension. 
c 
D 
E 
F 
G 
(per majority Krishna Iyer and Chinnappa Reddy, JJ Pathak, J dissenting). 
H 
I. The Bharat Petroleum is State within the meaning of Article 12 of the 
Constitution and a writ will lie against it under Article 32. [128A] 
----
A 
B 
c 
D 
E 
F 
G 
H 
112 
SUPREME COURT REPORTS 
[1981] 2 S.C.R. 
(a) The settkd position in law is that any authority under the control of 
Government of India comes within the definition of State. On the appointed 
day the right title and interest in Burmah Shell did vest in the Central Government 
and by virtue of section 3 the Central Government was the transferee of the 
und~rtaking. While the formal ownership was cast in the corporate mould, the 
reality reaches do\vn to State control. The core fact is that the Central Govern-
ment, through section 7 chose to make over its own property to its own offspring. 
Therefore, the Burmah Shell though a government company is but the alter ego 
of the Central Government and must, therefore, be treated as definitionally caught 
in the net of State since a juristic veil worn for certain legal purposes cannot 
obliterate the true character of the entity for purposes of constitutional law. 
[121A; G; 124 D-E] 
(b) Corporate personality is a reality and not an iJlusion or fictitious cons-
truction of the law. It is a legal person. Mer'ely because a company or other legal 
person has functional and jural individuality for certain purposes and in certain 
areas of law, it does not necessarily follow that for the effective enforcement 
of fundamental rights under the constitutional scheme, the Court should 
not 
scan the real character of that entity. In the instant case section 7 gives a 
statutory recognition and a status above a mere government company. If the 
entity is no more than a company under the Company I.aw or society under 
the law relating to registered societies or cooperative societies one cannot call 
it an authority. [124F

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