Madon, J. -
(1.) These Appeals by Special Leave granted by this Court raise two questions of considerable importance to Government companies and their employees including their officers. These questions are:(1) Whether a Government, company as defined in S. 617 of the Companies Act, 1956, is "the State" within the meaning of Art. 12 of the Constitution
(2) Whether an unconscionable term in a contract of employment is void under S. 23 of the Indian Contract Act, 1872, as being opposed to public policy and, when such a term is contained in contract of employment entered into with a Government company, is also void as infringing Art. 14 of the Constitution in case a Government company is "the State" under Art. 12 of the Constitution
(2.) Although the record of these Appeals is voluminous, the salient facts lie within a narrow compass. The First Appellant in both these Appeals, namely, the Central Inland Water Transport Corporation Limited (hereinafter referred to in short as "the Corporation"), was incorporated on February 22, 1967. The majority of the shares of the Corporation were at all times and still are held by the Union of India which is the Second Respondent in these Appeals, and the remaining shares were and are held by the State of West Bengal and the State of Assam. Section 617 of the, Companies Act, 1956 (Act No. I of 1956) provides as follows:
"617. Definition of 'Government Company'.-
For the purposes of this Act Government Company means any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a Government company as thus defined."
As all the shares of the Corporation are held by different Governments, namely, the Government of India and the Governments of West Bengal and Assam, the Corporation is not only a Government company as defined by the said S. 617 but is a company wholly owned by the Central Government and two State Governments.
(3.) Clause III(A) of the Memorandum of Association of the Corporation lists the main objects of the Corporation and clause III(B) of the Memorandum of Association lists the objects incidental or ancillary to the main objects. It is' unnecessary to reproduce all these objects for according to the Petitions filed by the Corporation for obtaining Special Leave in these Appeals, it is currently engaged in carrying out the following activities, namely,
(i) maintaining and running river service with ancillary function of maintenance and operation of river-site jetty and terminal;
(ii) constructing vessels of various sizes and descriptions;
(iii) repairing vessels of various sizes and descriptions; and
(iv) undertaking general engineering activities.;