Bengaluru Metro falls under Centre; State cannot regulate conduct of its employees: Karnataka High Court

The Karnataka High Court recently held that the State government has no authority to regulate the service conditions of employees of the Bengaluru Metro Rail Corporation Limited (BMRCL), ruling that the Central government alone is the “appropriate government” under the Industrial Disputes Act, 1947. [Bengaluru Metro Rail Corporation Limited v. Government of Karnataka]

Justice Anant Ramanath Hegde delivered the judgment while deciding six connected writ petitions filed by both the BMRCL Employees’ Union and the BMRCL itself, concluding that the metro functions under the authority of the Central government, not the State.

The Court struck down the BMRCL Employees (Conduct, Discipline and Appeal) Rules, 2014 and quashed two State government notifications which had declared BMRCL services as public utility and essential services under the Industrial Disputes Act, 1947 and the Karnataka Essential Services Maintenance Act, 2013.

“To sum up, the Court is of the view that the Central Government is the “Appropriate Government” for two reasons:

(i) the Central Government has pervasive control over the BMRCL;

(ii) BMRCL is a “Railway company” as defined under Section 2(o) of Act, 1947 read with Section 3(5) of Act, 1890,” Justice Hegde held.

The dispute originated when the BMRCL Employees Union challenged the State government's authority to regulate metro employees' service conditions. The Union first challenged the BMRCL Employees (Conduct, Discipline and Appeal) Rules, 2014, contending that these rules could not have been approved by State government authorities since the Central government was the "appropriate government" under the Industrial Disputes Act, 1947. The Union sought a writ of mandamus to restrain the State from granting exemption under Section 14 of the Industrial Employment Standing Orders Act, 1946.

The Union filed a second petition, challenging the State government's notification dated July 7, 2017, issued under Section 3 of the Karnataka Essential Services Maintenance Act, 2013, which prohibited strikes by BMRCL employees. The Union argued that since the metro rail is a Central subject under the Union List of the Constitution and is governed by Central legislation - the Metro Railways (Construction of Works) Act, 1978 and the Metro Railways (Operation and Maintenance) Act, 2002 - the State government had no jurisdiction to declare BMRCL services as essential services.

In a third petition, the Union assailed the notification dated November 18, 2019 declaring BMRCL as a "public utility service."

The High Court framed three core questions:

1. Which is the “appropriate government” for BMRCL in relation to industrial disputes?

2. Whether the State could declare BMRCL services as public utility or essential services?

3. Whether BMRCL could be treated as a “railway company” under Section 2(o) of the Industrial Disputes Act, 1947?

Justice Hegde conducted an extensive analysis of the Metro Railways (Construction of Works) Act, 1978 and the Metro Railways (Operation and Maintenance) Act, 2002. The judgment detailed that under these Acts, the Centre appoints the General Manager, constitutes advisory boards, appoints safety commissioners and controls the opening and closure of metro operations. The Court noted that "no metro railway can be opened for public carriage of passengers without the previous sanction of the Central Government."

The judgment emphasised that the Memorandum of Understanding dated December 24, 2010 requires Central approval for critical appointments. Justice Hegde noted that the MOU "prohibits the Government of Karnataka from transferring the Managing Director of the Company, the State Government nominee, without prior consent of Ministry of Urban Development, Government of India."

The Court determined that BMRCL constitutes a "railway company" as defined under Section 2(o) of the Industrial Disputes Act, 1947, which incorporates the definition from Section 3(5) of the Indian Railways Act, 1890. Despite the 1890 Act being repealed, Justice Hegde held that the incorporated definition continues to exist independently in the 1947 Act.

The judgment analysed the 1890 Act's definition, which includes "any persons, whether incorporated or not, who are owners or lessees of a railway or parties to an agreement for working a railway."

"It is evident that BMRCL is party to the agreement where it agreed to build, operate and maintain the Metro railway in Bengaluru. BMRCL is a party to the agreement for working a railway. Thus, BMRCL is a “Railway company” as defined in Section 2(o) of the Act, 1947."

The Court struck down both State notifications for lack of jurisdiction. Justice Hegde held that the Karnataka Essential Services Maintenance Act, 2013, read with the Motor Vehicles Act, 1988, excludes railway transport from its scope. Regarding the public utility service notification, the Court noted that the First Schedule to the Industrial Disputes Act specifically excludes railway from transport services.

It also dismissed BMRCL's petitions challenging Central government orders, including the reference to the Central Government Industrial Tribunal and orders declaring 12 union office bearers as protected workmen. Justice Hegde held that these orders were validly passed by the competent authority.

BMRCL Employees’ Union and others were represented by Senior Advocate PS Rajagopal with Advocates Ashwini Rajagopal and Jayanth Dev Kumar.

BMRCL was represented by Advocate Santosh Narayan.

State of Karnataka was represented by Additional Advocate General Santosh Gogi with Advocate Manjunath B.

Union of India and central labour authorities were represented by Advocate MN Kumar.

[Read Judgment]