Tekraj
Vasandi Alias K.L. Basandhi Vs. Union of India & Ors [1987] INSC 372 (10
December 1987)
MISRA
RANGNATH MISRA RANGNATH RANGNATHAN, S.
CITATION:
1988 AIR 469 1988 SCR (2) 260 1988 SCC (1) 236 JT 1987 (4) 621 1987 SCALE
(2)1278
CITATOR
INFO :
F
1992 SC 76 (3,6)
ACT:
Service
matter-Dismissal from service as a result of disciplinary action-Institute of
Constitutional and Parliamentary Studies-Whether 'State' within the meaning of
Article 12 of the Constitution.
HEADNOTE:
%
The appellant, an employee of the Institute of Constitutional and Parliamentary
Studies (I.C.P.S., for short), was dismissed from service by order dated
November 17, 1982, as a result of disciplinary action. He challenged the
dismissal order by a writ petition before the High Court. The question whether
the I.C.P.S. was a 'State' within the meaning of Article 12 of the Constitution
arose for consideration as a major issue in the matter before the High Court. A
Single Judge of the High Court dismissed the petition, holding that the
employer was neither an agency nor an instrumentality of the government and did
not constitute 'State' as above said, and, therefore, was not subject to the
writ jurisdiction of the High Court. The appeal against that judgment of the
Single Judge was dismissed by the Division Bench of the High Court. Aggrieved
by the decision of the High Court, the appellant moved this Court by special
leave.
Disposing
of the appeal, the Court, ^
HELD:
In the course of hearing, Dr. Anand Prakash, counsel for the I.C.P.S.,
respondent No. 2, stated that whether the Institute be 'State' or not within
the meaning of Article 12 of the Constitution, the employer was prepared to
give a fresh opportunity to the appellant to meet the charges against him. With
that concession, the order of dismissal, etc. passed against the appellant
should have been set aside and the matter should have gone before the enquiry
officer, but Dr. Anand Prakash as also counsel for the Union of India invited
the Court to decide the issue as to whether the I.C.P.S. constituted 'State'
within the constitutional meaning of the term. [263H; 264A-C] The main question
for consideration then was whether I.C.P.S. was a 'State'. I.C.P.S. could
become 'State' only if it was found to be an authority within the territory of
India or under the control of the Government of India.
[264D,G]
261 I.C.P.S. is a registered society. The emergence of a new generation within
less than two decades of independence gave rise to a feeling that the people's
representatives in the Legislatures required the acquisition of the appropriate
democratic bias and spirit. I.C.P.S. was born as a voluntary organisation to
fulfill this requirement. The Speaker of the Lok Sabha was its first President.
Three Ministers, a former Chief Justice of India and a former Attorney General
joined as its Vice-Presidents. Some of the public officers were associated in
its Administrative set-up. Services of some employees of Parliament were lent
to it. While Article 12 refers to Parliament as such, a few members of
Parliament cannot be considered as Parliament so as to constitute that body as
referred to in Article 12. The Speaker and the Ministers who joined as
Vice-Presidents of the Society were there in their personal capacities and not
as Ministers, etc. There were many people in the category of Vice- President,
Executive Chairman, Treasurer and members, who were not a part of the
Government, and some of them did not belong to Parliament. [281A-F] The objects
of the Society were not governmental business. Many of the objects of the
Society were not confined to the two Houses of Parliament and were intended to
have an impact on Society at large. [281G-H] The Memorandum of the Society
permitted acceptance of gifts, donations and subscriptions. No material was
placed before the Court for the stand that the Society was not entitled to
receive contributions from any indigenous source without government sanction.
Since government money has been coming, the usual conditions attached to
government grants have been applied and enforced. If the Society's affairs were
really intended to be carried on as a part of the Lok Sabha or Parliament as
such, the manner of functioning would have been different. The accounts of the
Society are subject to audit as the affairs of the Societies receiving
government grants are. Government imposes conditions and restrictions when
grants are made, and the Society is also subject to the same, and the mere fact
that such restrictions are made is not a determinative aspect.[281H; 282 A-D] There
are registered societies which have been treated as 'State', but in the case of
each of them, either governmental business had been undertaken by the Society
or what was expected to be the public obligation of the 'State' had been
undertaken to be performed as a part of the Society's function. [282H; 283A]
262 Having given anxious consideration to the facts of the case, the Court is
not in a position to hold that I.C.P.S. is either an agency or an
instrumentality of the State so as to come within the purview of other
authorities"in Article 12 of the Constitution. I.C.P.S. is a case of its
type- typical in many ways and normal tests may, perhaps, not properly apply to
test its character. Even if some institution becomes 'State' within the meaning
of Article 12, its employees do not become holders of Civil posts so as to
become entitled to the cover of Article 311 of the Constitution. They would,
however, be entitled to the benefits of Part III of the Constitution. It is
unnecessary to examine the appellant's case, keeping Articles 14 and 16 of the
Constitution in view, as, on the concession of counsel for I.C.P.S., the
proceedings would have to re-open.
[283C-E]
In the result, the appellant would be entitled to the following reliefs.
The
order of dismissal set aside and the proceedings restored to the stage of
enquiry. [283F] The appellant shall be deemed to have been restored to service
and he would become entitled to normal relief available in such a situation. He
should be deemed to be in service and his suspension would not continue. His
suspension, which had merged into dismissal is vacated. It shall, however, be
open to the employer to make any direction as is deemed appropriate in that
behalf in future.
[283F-G]
The appellant becomes entitled to salary for the past period subject to his
satisfying the authorities that he had not earned any income during that
period. [283H] The appellant shall be given a reasonable opportunity by the
enquiring officer to meet the charges and the enquiry shall be completed within
four months. [283H; 284A] The enquiry officer shall allow inspection to the
appellant of all records relevant to the enquiry. [284B] Rajasthan State
Electricity Board, Jaipur v. Mohan Lal and Ors., [1967] 3 SCR 377; Smt. Ujjam
Bai v. State of Uttar Pradesh, [1963] l SCR 778; Sabhajit Tewary v. Union of
India
Sardar
Singh Raghuvanshi & Anr., [1975] 3 SCR 619; Ramana Dayaram Shetty v. The
263 International Airport Authority of India & Ors., [1979] 3 SCR 1014;
Managing Director, Uttar Pradesh Warehousing Corporation & Anr. v. Vinay
Narayan Vajpayee, [1980] 2 SCR 773; Ajay Hasia, etc. v. Khalid Mujib Sehravardi
& Ors. etc., [1981] 2 SCR 79; Som Prakash Rekhi v Union of India and Anr.,
[1981] 2 SCR 111; B.S.Minhas v. Indian Statistical Institute & Ors., [1984]
1 SCR 395 and P. K Ramachandra Iyer and Ors. v. Union of India and Ors., [1984]
2 SCR 200.
&
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 495 of 1984.
From
the Judgment and order dated 1.11.1983 of the Delhi High Court in L.P.A. No.
160 of 1983.
P.
P. Rao and A. Mariaputham for the Appellant.
Dr.
Anand Prakash, D.N. Dwivedi, Mrs. Anil Katiyar, C.V. Subba Rao, Vineet Kumar
and Deepak K. Thakur for the Respondents.
The
Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal by
special leave calls in question the judgment of a Division Bench of the Delhi
High Court in a Letters Patent Appeal upholding the decision of a learned
Single Judge rejecting the writ petition of the appellant. The appellant was an
employee of the Institute of Constitutional and Parliamentary Studies
(hereafter referred to as ICPS for short) and in a disciplinary action he was
dismissed from service by order dated 17th November, 1982.
When
he assailed the order in a writ petition before the High Court, the question
whether lCPS was 'State' within the meaning of Article 12 of the Constitution
came for consideration as the major issue arising in the matter. The learned
Single Judge dismissed the writ petition by holding that the employer was
neither an agency nor an instrumentality of the Government and did not
constitute 'State' within the meaning of Article 12 and, therefore, was not
subject to the writ jurisdiction of the High Court. The appeal against the
judgment of the learned Single Judge was dismissed on 1st November, 1983.
In
course of hearing of the appeal Dr. Anand Prakash appearing for ICPS fairly
stated that whether the Institute be 'State' or not within the meaning of
Article 12 of the Constitution, the employer 264 was prepared to give a fresh
opportunity to the appellant to meet the charges so as to dispel from his mind
the feeling that he has not been given reasonable opportunity to defend
himself. Ordinarily, with that concession the impugned order entailing the
dismissal of the employee and the judicial determination against the appellant
should have been set aside and the matter should have gone before the enquiry
officer for affording reasonable opportunity to the appellant of being heard
against the charges. Dr. Anand Prakash, however, invited us to enter into the
merits of the issue as to whether ICPS constitutes 'State' within the
constitutional meaning of the term The Union of India which appears before us
through counsel also wanted that the question should be decided. Thereupon we suggested
to the appellant who was till then appearing in person to get represented
through counsel so that the matter could be appropriately argued on his behalf
also. He has been rendered suitable assistance by the Supreme Court Legal Aid
Committee and Mr. P.P.Rao, Senior Counsel has appeared on his behalf.
The
main question for consideration now, therefore, is whether ICPS is 'State'. For
appropriate consideration of this question it is necessary to look into the
constitution of the body, the purpose for which it has been created, the manner
of its functioning including the mode of its funding and the broad features
which have been found by this Court in several decisions to be relevant in the
matter of determining a dispute of this type. Article 12 of the Constitution
provides an inclusive definition of the term 'State' by saying:
"In
this part, unless the context otherwise requires, 'the State' includes the
Government and Parliament of India and the Government and the State Legislature
of each of the States and all local or other authorities within the territory
of India or under the control of the Government of India." obviously ICPS
can become 'State' only if it is found to be an authority within the territory
of India or under the control of the Government of India.
ICPS,
respondent No.2, is a society registered under the Societies Registration Act,
21 of 1860, and was registered on 9th March, 1965. As would appear from its
Memorandum of Association, the foundation members were 19 in number-13 being members
besides a President and five Vice- Presidents. The first President of the
Society was the then Speaker of the Lok Sabha. The five Vice- Presidents were
the then Minister of Railways, Minister of Law and Social Security Minister of
Communication and Parliamentary Affairs, a former (Chief Justice of India and a
former Attorney General of India. Dr. L.N. Singhvi, then a member of the Lok
Sabha, was its Executive Chairman. The Public Trustee in the Department of
Company Affairs and Insurance in the Ministry of Finance was the Director and a
member of the Lok Sabha was the Society's Treasurer. The then Minister of
Cultural Affairs in the Ministry of Education along with three members of the
Lok Sabha, a Senior Advocate of the Supreme Court, a member of the Rajya Sabha,
the then Vice-Chancellor of Rajasthan University. the respective Secretaries of
the Lok Sabha and the Rajya Sabha Secretariat and the Secretary in the Ministry
of Law were its Members. The registered office of the Society was initially
located within the Parliament House but was later on shifted to the Vithalbhai
Patel House, Rafi Marg, New Delhi . The objects of the Society inter alia were:
(
I) to promote and provide for constitutional and Parliamentary studies with
special reference to comparative studies in constitutional systems of various
countries and working of the Indian Constitution and parliamentary and
governmental institutions in their various aspects;
(2)
to undertake study of courses and fundamental research relating to developments
in constitutional law, conventions and practices, parliamentary procedure,
legislative drafting, trends in judicial interpretation and allied matters;
(3)
to organise inter alia training programmes in constitutional problems and
matters of current parliamentary importance;
(4)
to set up a legislative research and reference service for the benefit of all
interested members of the Union Parliament and State Legislature irrespective
of their party affiliations;
(5)
to undertake and provide for the publication of a journal and of research
papers and of books and brochures with a view to disseminate democratic values
and to foster broad based civic education and awareness, and in particular, to
pro. mote study of constitutional and parliamentary affairs;
266
(6) to establish and maintain libraries and information services to facilitate
the study of constitutional and parliamentary subjects and spread information
in regard thereto;
(7)
to invite as and when feasible, scholars who may or may not be members of the
Society, to take advantage of the facilities offered by the Society and to
benefit the Society by their knowledge and experience; and (8) to institute
appropriate fellowships, offer prizes and arrange scholarships and stipends in
furtherance of the objects of the society.
The
Memorandum permitted the Society to accept gifts, donations and subscriptions
of cash and securities and of any property either movable or immovable. The
rule classifies the members under heads like Founder Members, Life Members,
Honorary Members, ordinary Members, Corporate Members and Associate Members.
ordinary membership, according to the Rules, would extend to Members of Parliament
or of any State Legislature or those who have been or are members of the
Judiciary or advocates of the Supreme Court or the High Courts or persons
employed in public service or persons engaged in teaching of study of social
sciences particularly of Political Science, Law or subjects related thereto. In
the category of Honorary Members were the President, the Vice-President and the
Prime Minister of India. Though the Memorandum permitted receipt of gifts and
donations from outside, it is not disputed that the main source of income of
the society has been the annual Central Government grant.
We
think it appropriate at this stage to turn attention to judicial precedents to
find out as to what should be the test to be applied for determining when on
institution like respondent No.2 would be treated as 'other authorities' under
Article 12 of the Constitution. The first in point of time is the Constitution
Bench judgment in the case of Rajasthan State Electricity Board, Jaipur v.
Mohan Lal & Ors., [1967] 3 SCR 377 Bhargava, J. who delivered the main
judgment observed:
"the
meaning of the word 'authority' given in Webster's Third New International
Dictionary, which can be applicable, is a "public administrative agency or
corporation having quasi- governmental powers and authorised to 267 administer
a revenue-producing public enterprise." This dictionary meaning of the
word 'authority' is clearly wide enough to include all bodies created by a
statute on which powers are conferred to carry out governmental or quasi-governmental
functions. The expression "other authorities" is wide enough to
include within it every authority created by a statute and functioning within
the territory of India, or under the control of the Government of India; and we
do not see any reason to narrow down this meaning in the context in which the
words 'other authorities' are used in Article l 7 of the Constitution In Smt.
Ujjam Bai v. State of Uttar Pradesh, [1963] 1 SCR 77 Ayyangar, J. had observed:
"Again
Article 12 winds up the list of authorities falling within the definition by
referring to 'other authorities' within the territory of India which cannot
obviously be read as ejusoem generis with either the Government and the
Legislatures or local authorities. The words are of wide amplitude and capable
of comprehending every authority created under a statute and functioning within
the territory of India or under the control of the Government of India.
Shah,
J., as he then was, added a note to the leading Judgment of Baraga and observed:
"I
am unable, however, to agree that every constitutional or statutory authority
on whom powers are conferred by law is 'other authority' within the meaning of
Article 12. The expression 'authority' in its etymological sense means a body
invested with power to command or give an ultimate decision, or enforce
obedience, or having a legal right to command and be obeyed.
............
In determining what the expression 'other authority' in Article 12 connotes,
regard must be had not only to the sweep of fundamental rights over the power
of the authority, but also to the restrictions which may be imposed upon the
exercise of certain fundamental rights (e.g., those declared by Article 19) by
the authority. Fundamental rights within their allotted fields trans- 268 cend
the legislative and executive power of the sovereign authority. But some of the
important fundamental rights are liable to be circumscribed by the imposition
of reason able restrictions by the State. The true content of the expression
'other authority' in Article 12 must be deter mined in the light of this dual
phase of fundamental rights. In considering whether a statutory or
constitutional body is an authority within the meaning of Article 12, it would
he necessary to bear in mind not only whether against the authority fundamental
rights in terms absolute are intended to be anforced, but also whether it was
intended by the Constitution makers that the authority was invested with the
sovereign power to impose restrictions on very important and basic fundamental
freedoms.
In
my judgment, authorities, constitutional or statutory invested with power by
law but not sharing the sovereign power do not fall within the expression
'State' as defined in Article 12. Those authorities which are invested with
sovereign power, i.e., power to make rules or regulations and to administer or
enforce them to the detriment of citizens and others fall within the definition
of 'State' in Article 12, and constitutional or statutory bodies which do not
share that sovereign power of the State are not, in my judgment, 'State' within
the meaning of Article 12 of the Constitution.
Two
cases, the First of Sabhajit Tewary v. Union of India & Ors., [1975] 3 SCR
616 and the other of Sukhdev Singh & Ors v. Bhagatram Sardar Singh
Raghuvanshi & Anr., l 1975] 3 SCR 6 19 were disposed of by the same
Constitution Bench on February 21, 1975. In both these cases, the true meaning
of Article 12 of the Constitution fell for consideration.
Sabhajit
Tewary's case was one where the status of the Council of Scientific and
Industrial Research was examined.
This
Court took note of the fact that the Council was a society registered under the
Societies Registration Act.
Under
Rule 3, the Prime Minister of India was the ex-officio President of the Society
and under Rule 30 the governing body consisted of persons appointed by the
Government of India representing the administrative ministry under which the
Council of Scientific and Industrial Research is included and the Ministry of
Finance. The Court also took note of the manner in which the affairs of the
Society including funding were conducted. Ray, CJ.,in the brief judgment that
the 269 Court delivered in the case observed: A "Extracting the features
as aforesaid, it was contented that these would indicate that the Council of
Scientific and industrial Research was really an agency of the Government. This
contention is unsound. The society does not have a statutory character like the
oil and Natural Gas Commission, or the Life Insurance Corporation or Industrial
Finance Corporation. It is a society incorporated in accordance with the
provisions of the Societies Registration Act. The fact that the Prime Minister
is the President or that the Government appoints nominees to the governing body
or that the Government may terminate the membership will not establish anything
more than the fact that the Government takes special care that the promotion,
guidance and cooperation of scientific and industrial research, the institution
and functioning of specific researches, establishment or development and
assistance to special institutions or departments of the existing institutions
for scientific study of problems affecting particular industry in a trade, the
utilisation of the result of the researches conducted under the auspices of the
Council towards the development of industries in the country are carried out in
a responsible manner.
This
Court has held in Praga Tools Corporation v. C.A. Imanual & Ors., [1969] 3
SCR 773; Heavy Engineering Mazdoor Union v. The State of Bihar & Ors.,
[1969] 3 SCR 995 and in S.L.
Aggarwal
v. General Manager, Hindustan Steel Ltd., [1970] 3 SCR 363 that the Praga Tools
Corporation, Heavy Engineering Mazdoor Union and Hindustan Steel Ltd. are all
companies incorporated under the Companies Act and the employees of these
companies Act and the employees of these companies do not enjoy the protection
available to Government servants as contemplated in Article 311. The companies
were held in these cases lo have independent existence of the Government and by
the law related to corporations. These could not be hold to be departments of
the Government." The ratio of this decision has been fully relied upon by
the High Court in dismissing the claim of the appellant.
270
In Sukhdev Singh's case (supra) the leading judgment was delivered also by Ray,
CJ. Two questions fell for consideration-( l) whether an order of. removal from
service contrary to Regulations would enable the employee to a declaration
against the statutory corporation of continuance in service or would it end up
in claim for damages only and (2) whether the employee of a statutory
corporation is entitled to claim protection of Articles 14 and 16 against the
Corporation. The Court, therefore, straight went into the question as to
whether statutory corporations were authorities within the meaning of Article
12. As a fact, three corporations being the oil and Natural Gas Commission, the
Life Insurance Corporation and the Industrial Finance Corporation were before
the Court and each one of them had been set up under a special statute. At page
641 of the Reports, the learned Chief Justice pointed out:
"In
the background of the provisions of the three Acts under consideration, the
question arises as to whether these Corporations can be described to be
authorities within the meaning of Article 12 of the Constitution. " At
page 642 of the Reports the conclusion was reached to the effect that
"these statutory bodies are 'authorities' within the meaning of Article 12
of the Constitution." We are really concerned with what Mathew J., added
to the judgment He observed:
"The
test propounded by the majority is satisfied so far as the oil and Natural Gas
Commission is concerned as section 25 of the oil and Natural Gas Commission Act
provides for issuing, binding direction to third parties not to prevent the
employees of the Commission from entering upon their property if the Commission
so directs. In other words, as section 25 authorises the Commission to issue
binding directions to third parties not to prevent the employees of the
Commission from entering into their land and as disobedience of such directions
is punishable under the relevant provision of the Indian penal Code since those
employees are deemed to be pubic servants under section 21 of the Indian Penal
Code by virtue of section 27 of the Act, the Commission is an 'authority'
within the meaning of the expression 'other authorities' in Article 12 271
Though this would be sufficient to make the commission a 'State' according to the
decision of this Court in the Rajasthan Electricity Board case (supra), there
is a larger question which has a direct bearing so far as the other two
corporations are concerned, viz., whether, despite the fact that there are no
provisions for issuing binding directions to third parties the disobedience of
which would entail penal consequences, the corporations set up under statutes
to carry on business of public importance of which is fundamental to the life
of the people can be considered as 'State' within the meaning of Article
12." Mathew, J. referred to the precedents and other authorities from
England, France and United States and at page 654 of the Reports stated:
"The
ultimate question which is relevant for our purpose is whether such a
corporation is an agency or instrumentality of the government for carrying on a
business for the benefit of the public. In other words, the question is, for
whose benefit was the corporation carrying on the business? When it is seen
from the provisions of that Act that on liquidation of the corporation, its
assets should be divided among the shareholders, namely, the Central and State
governments and others, if any, the implication is clear that the benefit of
the accumulated income would go to the Central and State Governments.
Nobody
will deny that an agent has a legal personality different from that of the
principal.
The
fact that the agent is subject to the direction of the principal does not mean
that he has no legal personality of his own .............
The
crux of the matter is that public corporation is a new type of institution
which has sprung from the new social and economic functions of government and
that it therefore does not neatly fit into old legal categories. Instead of
forcing it into them, the later should be adapted to the needs of changing
times and conditions.
I
do not think there is any basis for the apprehension expressed that by holding
that these public corporations are 'State' within the meaning of Article 12,
the employees of these corporations would become government servants. I also
wish to make it clear that I express no opinion on 272 the question whether
private corporations or other like organisations, though they exercise power
over their employees which might violate their fundamental rights, would be
'State' within the meaning of Article 12." Then comes the case of Ramana
Dayaram Shetty v. The International Airport Authority of India & Ors.,
[1979] 3 SCR 1014. The question before the Court was whether the International
Airport Authority of India was 'State' within the meaning of Article 12 so as
to be subjected to enforcement of fundamental rights against it. Examining this
aspect, Bhagwati, J., as he then was spoke for the three- Judge Bench thus:
"Now
it is obvious that the government which represents the executive authority of
the State , may act through the instrumentality or agency of natural persons or
it may employ the instrumentality or agency of judicial persons to carry out
its functions. In the early days, when the Government had limited functions it
could operate effectively through natural persons constituting its civil
service and they were found adequate to discharge governmental functions, which
were of traditional vintage. But as the tasks of the government multiplied with
the advent of the welfare State, it began lo be increasingly felt that the
frame work of civil service was not sufficient to handle the new tasks which
were often of specialised and highly technical character. The inadequacy of the
civil service to deal with these new problems came to be realised and it became
necessary to force a new instrumentality or administrative device for handling
these new problems. It was in these circumstances and with a view to supplying
this administrative need that the public corporation came into being as the
third arm of the Government. As early as 1819 the Supreme Court of the United
States in Mac Cullough v . Maryland, (4 Wheat 315) held that the Congress has
power to charter corporations as incidental to or in aid of governmental
functions and , as pointed out by Mathew J., in Sukhdev v. Bhagat Ram, (supra)
such federal corporations would ex-hypothesi be agencies of the Government. In
Great Britain too, the policy of public administration through separate
corporations was gradually evovled and the conduct of basic industries through giant
corporations has now become a permanent feature 273 of public life. So far as
India is concerned, the genesis of the emergence of corporations as
instrumentalities or agencies of Government is to be found in the Government of
India Resolution on Industrial Policy dated with April, 1948 where it was
stated inter alia that 'management of state enterprises will as a rule be
through the medium of public corporation under the statutory control of the
Central Government who will assume such powers as may be necessary to ensure
this.' It was in pursuance of the policy envisaged in this and subsequent
resolutions on Industrial policy that corporations were created by Government
for setting up and management of public enterprises and carrying out other
public functions.
Ordinarily,
these functions could have been carried out by Government departmentally
through service personnel, but the instrumentality or agency of the
corporations was resorted to in these cases having regard to the nature of the
task to be performed. The corporations acting as instrumentality or agency of
Government would obviously be subject to the same limitations in the field of
constitutional and administrative law as Government itself, though in the eye
of the law, they would be distinct and independent legal entities. If the
Government acting through its officers is subject to certain constitutional and
public law limitations, it must follow a fortiori that Government acting
through the instrumentality or agency of corporations should equally be subject
to the same limitations. But the question is how to determine whether a
corporation is acting as instrumentality or agency of Government.
It
is a question not entirely free from difficulty." It was again pointed out
in the same case that:
"A
corporation may be created in one of two ways. It may be either established by
statute or incorporated under a Law such as the Companies Act, 1956 or the
Societies Registration Act, 1860.
Where
a corporation is wholly controlled by Government not only in its policy making
but also in carrying out the functions entrusted to it by the law establishing
it or by the Charter of its incorporation, there can be no doubt that it would
be an instrumentality or agency of Government ..." 274 The Court further
stated:
"But
the public nature of the function, if impregnated with governmental character
or 'tied or entwined with government' or fortified by some other additional
factor may render the corporation an instrumentality or agency of Government.
Specifically,
if a department of Government is transferred to a corporation, it would be a
strong factor supportive of this inference.
It
will thus be seen that there are several factors which may have to be
considered in determining whether a corporation is an agency or instrumentality
of Government. We have referred to some of these factors and they may be
summarised as under: whether there is any financial assistance given by the
State, and if so, what is the magnitude of such assistance whether there is any
other form of assistance, given by the State, and if so whether it is of the
usual kind or it is extraordinary, whether there is any control of the
management and policies of the corporation by the State and what is the nature
and extent of such control, whether the corporation enjoys State confer red or
State protected monopoly status and whether the functions carried out by the
corporation are public functions closely related to governmental functions This
particularisation of relevant factors is however not exhaustive and by its very
nature it cannot be, because with increasing assumption of new tasks growing
complexities of management and administration and the necessity of continuing
adjustment in relations between the corporations and Government calling for flexibility,
adapt ability and innovative skills, it is not possible to make an exhaustive
enumeration of the tests which would invariably and in all cases provide an
unfailing answer to the question whether a corporation is governmental
instrumentality or agency.
At
page 1052 of the Reports the Court proceeded to consider whether International
Airport Authority of India could be said to be an 'authority' falling within
the meaning of 'State' in Article 12. The constitution of the body, the manner
of filling it up? Government's power of control in the matter of appointment of
members and termination of membership were utilised as tests for examining
whether 275 the Airport authority was 'State'. After referring to the special A
aspects, the Court observed:
"It
will be seen from these provisions that there are certain features of the
respondent which are eloquent and throw considerable light on the true nature
of the first respondent. In the first place, the Chairman and Members of the
first respondent are all persons nominated by the Central Government and the
Central Government has also the power to terminate their appointment as also to
review them in certain specified circumstances. The Central Government is also
vested with the power to take away the management of any airport from the first
respondent and to entrust it to any other person or authority and for certain
specified reasons, the Central Government can also supersede the first
respondent. The Central Government has also power to give directions in writing
from time to time on questions of policy and these directions are declared
binding on the first respondent." Reference was made to the case of
Sabhajit Tewary (supra).
Bhagwati,
J. referring thereto stated :- "This decision does not lay down any principle
or test for the purpose of determining when a corporation can be said to be an
authority.
If
at all, any test can be gleaned from the decision, it is whether the
corporation is really an agency of the Government." and ultimately it was
held that the Authority was 'State' under Article 12.
This
case clearly approves the treatment of the matter by Mathew, J. in Sukhdev
Singh's case (supra). The two-Judge Bench in the case of Managing Director,
Uttar Pradesh Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee,
[1980] 2 SCR 773 was cited but we do not consider it necessary to refer to the
same. On the other hand reference to the two later decisions of this Court may
be more useful.
Those
are Ajay Hasia etc. v. Khalid Mujib Sehravardi & Ors. etc., [1981] 2 SCR 79
of a Constitution Beocll and the other is Som Prakash Rekhi v. Union of India
& Anr., [1981] 2 SCR 111 being a three-Judge Bench decision. It is
pertinent to indicate that both the judgments were delivered on November 13,
1980.
276
In Ajay Hasia's case an Engineering College was also a Society registered under
the Jammu & Kashmir Registration of Societies Act, l898, and the question
that fell for consideration was whether it was an authority within the meaning
of Article 12. The Court found that the Memorandum of Association of the
Society in clause (3) set out the objects for which the Society was
incorporated and they included among other things establishment of the college
with a view to providing instructions and research in such branches of
engineering and technology as the college may think fit and for the advancement
of learning and knowledge in such branches. Reference was made to the
Memorandum of Association, the objects and the powers of the State Government
to make appointments and to the fact that the State government with the
approval of the Central Government had the power to take such action and to
issue such directions as are necessary in respect of all matters relating to
the functioning of the college as noticed in the review of the activities. the
Court also took note of the fact that the founding members of the society were
enumerated in clause (9) of the memorandum and they were the Chairmen to be
appointed by the State Government with the approval of the Central Government,
two representatives of the State Government, one representative of the Central
Government, two representatives of the All India Council for Technical
Education to be nominated by the Northern Regional Committee, one
representative of the University of Jammu & Kashmir, one nonofficial
representative of each of the Punjab, Rajasthan, UttarPradesh and Jammu &
Kashmir States and to be appointed by the respective Governments in
consultation with the Central Government and the principal who shall also be the
ex-officio Secretary. The rules of the Society were referred to with a view to
finding out the details of functioning. Sabhajit Tewary's case was referred to
and distinguished and the tests laid down in the International Airport
Authority's case (supra) were approved. Ultimately the Court summarised the
position as under:
"
The tests for determining as to when a corporation can be said to be an
instrumentality or agency of Government may now be culled out from the judgment
in the International Airport Authority's case. These tests ate not conclusive
or clinching, but they are merely indicative indicia which have to be used with
care and caution because while stressing the necessity of a wide meaning to be
placed on the expression 'other authorities'. it must be realised that it
should not stretched so far as to bring in 277 every autonomous body which has
some nexus with the Government within the sweep of the expression.
A
wide enlargement of the meaning must be tempered by a wise limitation. We may
summarise the relevant tests gathered from the decision in the International
Airport Authority's case as follows:
(1)
"one thing is clear that if the entire share capital of the corporation is
held by Government it would go a long way towards indicating that the
corporation is an instrumentality or agency of (Government (2) "Where the
financial assistance of the State is so much as to meet almost entire
expenditure of the corporation, it would afford some indication of the
corporation being inpregnated with governmental character. " (3) "It
may also be a relevant factor whether the corporation enjoys monopoly status
which is State conferred or State protected." (4) "Existence of deep
and pervasive State control may afford an indication that the corporation is a State
agency or instrumentality." (5) "If the functions of the corporation
are of public importance and closely related to governmental functions, it
would be a relevant factor in classifying the corporation as an instrumentality
or agency of Government.
(6)
"Specifically, if a department of Government is transferred to a
corporation, it would be a strong factor supportive of this inference of the
corporation being an instrumentality or agency of Government." The Court
thereafter proceeded to say:
"We
may point out that it is immaterial for this purpose whether the corporation is
created by a statute or under a statute. The test is whether it is an
instrumentality 278 or agency of the Government and not as to how it is
created. The inquiry has to be not as to how the juristic person is born but
why it has been brought into existence. The corporation may be a statutory
corporation created by a statute or it may be a Government Company or a company
formed under the Companies Act, 1956 or it may be a society registered under
the Societies Registration Act, 1860 or any other similar statute. Whatever be
its genetical origin, it would be an 'authority' within the meaning of Article
12 if it is an instrumentality or agency of the Government and that would have
to be decided on a proper assessment of the facts in the light of the relevant
factors. The concept of instrumentality or agency of the Government is not
limited to a corporation created by a statute but is equally applicable to a
company or society and in a given case it would have to be decided, on a
consideration of the relevant factors, whether the company or society is an
instrumentality or agency of the Government so as to come within the meaning of
the expression 'authority' in Article 12." At pages 99 and 100 of the
Reports, the Constitution Bench referred to the facts of the particular case
and came to hold that the society was an instrumentality or agency of the
State. In Som Prakash Rekhi's case (supra) at page 137 of the Reports, Krishna
Iyer, J. referred to the five tests and concluded by saying that:
"The
finale is reached when the cumulative effect of all the relevant factors above
set out is assessed and once the body is found to be an instrument or agency of
Government, the further conclusion emerges that it is 'State' and is subject to
the same constitutional limitations as Government At page 138 the criticism
against the conclusions reached in the c, Airport Authority's case was taken
note of and the learned Judge observed:
"There
is no doubt that Bhagwati, J. broadened the scope of State under Article 12 and
according to Shri G.B. Pai the observations spill over beyond the requirements
of the case and must be dismissed as obiter." 279 Pathak, J., as he then
was, added a brief note to the judgment by A saying:
"I
must confess to some hesitation in accepting the proposition that the Bharat
Petroleum Corporation Limited is a 'State' within the meaning of Article 12 of
the Constitution. But in view of the direction taken by the law in this Court since
Ramana Dayarama Shetty v. International Airport Authority I find I must lean in
favour of that conclusion. I would have welcomed a wider range of debate before
us on the fundamental principles involved in the issue and on the implications
flowing from the definition in the Companies Act, 1956 of a 'Government
Company'? but perhaps a future case may provide that." We have thus the
tests available in the two decisions to be applied to the facts of the case in
hand for determination as to whether ICPS is 'State' within the meaning of
Article 12.
There
are two more cases to which brief reference may now be made-B.S. Minhas v.
Indian Statistical Institute & Ors., [1984] 1 SCR 395 and P.K. Ramachandra
Iyer & Ors. v. Union of India & Ors., [1984] 2 SCR 200. The case of the
Indian Statistical Institute is also of a society registered under the
Societies Registration Act. The Court found that the entire money required for
funding the Institute was provided by the Central Government and even if any
other money was to be received by the Institute it could be done only with the
approval of the Central Government and the accounts of the Institute were to be
submitted to the Central Government for its scrutiny and satisfaction. The
Society had to comply with all directions as may be issued by the Central
Government. 'The control of the Central Government was deep and pervasive and,
therefore, it was an instrumentality of the Central Government and as such was
an authority within the meaning of Article 12 of the Constitution. in coming to
this conclusion, the Court relied upon the tests indicated in the International
Airport Authority's case as also in the case of Ajay Hasia.
In
Ramchandra Iyer's case, the question for consideration was whether the Indian
Council of Agricultural Research (ICAR) was a set up within the meaning of
Article 12 of the Constitution. ICAR is also a Society registered under the
Societies Registration Act. The Court found that when it was set up, it was an
attached office of the 280 Government of Tndia and had not undergone any change
when it got transferred into a Society. Applying the tests indicated in
International Airport Authority case as also the case of Ajay Hasia, the Court
came to the conclusion that there was little doubt that it was an
instrumentality or agency of the State. It further stated:
"ICAR
came into existence as an integral department of the Government of India and
later on became an attached office of the Central Government. The composition
of the ICAR as evidenced by Rule 3 could not have been more governmental in
character than any department of the Government." It is time to turn to
the facts of the present case to find out as to what the conclusion should be
when the tests formulated by the several cases of this Court referred to above
are applied. There cannot indeed be a strait jacket formula. It is not
necessary that all the tests should he satisfied for reaching the conclusion
either for or against r holding an institution to be 'State'. In a given case
some of the features may emerge so boldly and prominently that a second view
may not be possible. There may yet be other cases where the matter would be on
the border line and it would be difficult to take one view or the other
outright.
Our
struggle for independence which spread over a century bore fruit in 1947.
During the long period of struggle, the British Government following the
pattern of the democratic system prevailing in their own country had patronised
the evolution of a process of self government.
The
Government of India Act of 1935 which was a positive improvement on the
previous Acts had introduced provincial autonomy and the Indian Independence
Act, 1947, adopted that pat tern of Government. Even the Constitution which the
people of India gave unto themselves in 1949 and which came into force from the
26th of January, 1950, followed that pattern, of course, with considerable
modifications. Thus when we became independent a democratic pattern had evolved
in this country through more or less an historical process.
Soon
the princely States disappeared by a process of merger and the Constitution
ultimately came to have a federal base the federating States as the units and
the federation at the Centre.
Democracy
pre-supposes certain conditions for its successful working. It is necessary
that there must be a deep sense of understanding, mutual confidence and
tolerance and regard and acceptance 281 Of the views of others. In the early
years of freedom, the spirit of sacrifice and a sense of obligation to the
leadership that had helped the dream of freedom to materialise had been
accepted. The emergence of a new generation within less than two decades of
independence gave rise to a feeling that the people's representatives in the
Legislatures required the acquisition of the appropriate democratic bias and
spirit. ICPS was born as a voluntary organisation to fulfill this requirement.
At the inception it was certainly not a governmental organisation and it has
not been the case of the parties in their pleadings nor have we been told at
the bar during the long arguments that had been advanced that the objects of
ICPS are those which are a State obligation to fulfill. The Society was thus
born out of a feeling that there should be a voluntary association mostly consisting
of Members of the two Houses of Parliament with some external support to fulfill
the objects which were adopted by the Society.
To
Start with, the Society was accommodated in the Parliament House but in due
course it shifted out. The President of India inaugurated the Society. Very
appropriately the Speaker of the Lok Sabha became its first President and three
Ministers, a former Chief Justice of India and a former Attorney General joined
as its Vice- Presidents. Some of the public officers were also associated in
the administrative set-up of the Society. Individual Members of Parliament and
the corporate body known as Parliament are certainly two different concepts.
Services of some of the employees of Parliament were lent to the Society. While
Article 12 refers to Parliament as such, a few Members of Parliament cannot be
considered as Parliament so as to constitute that body as referred to in
Article 12.
The
Speaker and the Ministers who joined as Vice-Presidents of the Society were
there in their individual capacities and not as Ministers, though designations
were indicated. In the category of Vice-Presidents, Executive Chairman,
Treasurer and members, there were many people who were really not a part of
Government as such and some of them did not belong to Parliament.
The
objects of the Society were not governmental business but were certainly the
aspects which were expected to equip Members of Parliament and the State
Legislatures with the requisite knowledge and experience for better functioning.
Many of the objects adopted by the Society were not confined to the two Houses
of Parliament and were intended to have an impact on society at large.
The
Memorandum of the Society permitted acceptance of gifts, 282 donations and
subscriptions. There is material to show that the Ford Foundation, a US based
Trust had extended support for some time. Undoubtedly, the annual contribution
from the Government has been substantial and it would not be wrong to say that
they perhaps constitute the main source of funding, yet some money has been
coming from other sources. In later years, foreign funding came to be regulated
and, therefore, it became necessary to provide that without Government
clearance like any other institution, ICPS was not to receive foreign
donations. No material has been placed before us f the stand that the Society
was not entitled to receive Contributions from any indigenous source without
Government sanction. Since Government money has been coming, the usual
conditions attached to Government grants have been applied and enforced. If the
society's affairs were really intended to be carrier on as a part of the Lok
Sabha or Parliament as such, the manner of functioning would have been
different. The accounts of the Society are separately maintained and subject to
audit in the same way as the affairs of societies receiving Government grants
are to be audited. Government usually impose certain conditions and
restrictions when grants are made. No exception has been made in respect of the
Society and the mere fact that such restrictions are made is not a
determinative aspect.
Considerable
attempt has been made by Mr. Rao, learned counsel for the appellant, to show
that in the functioning of the Society there is deep and pervasive control of
government. We have examined meticulously the correspondence and the instances
where control was attempted to be exercised or has, as a fact, been exercised
but these again are features which appear to have been explained away We were
taken through the report submitted by the Tripathi Committee which had been set
up to suggest changes in the set up and affairs of the Society. The report and
the steps taken on the basis of the report are also not material which can be
taken to be indisputable features for reaching the conclusion one way or the
other. We were shown the correspondence by the Minister of Law with the
Executive Chairman of the Society. Undoubtedly the Minister has tried to
exercise his authority as the controlling department of Government in the matter
of making the grant. As we have already pointed that itself may not be a
conclusive feature.
We
have several cases of societies registered under Societies Registration Act
which have been treated as 'State' but in each of 283 those cases it would
appear on analysis that either governmental business had been undertaken by the
Society or what was expected to be the public obligation of the 'State' had
been undertaken to be performed as a part of the Society's function. In a
Welfare State, as has been pointed out on more than one occasion by this Court,
Governmental control is very pervasive and in fact touches all aspects of
social existence. ln the absence of a fair application of the tests to be made,
there is possibility of turning every non-governmental society into an agency
or instrumentality of the State. That obviously would not serve the purpose and
may be far from reality. A broad picture of the matter has to be taken and a
discerning mind has to be applied keeping the realities and human experiences
in view so as to reach a reasonable conclusion. Having given our anxious
consideration to the facts of this case, we are not in a position to hold that
ICPS is either an agency or instrumentality of the State so as to come within
the purview of 'other authorities' in Article 12 of the Constitution. We must
say that ICPS is a case of its type- typical in many ways and the normal tests
may perhaps not properly apply to test its character.
While
we were referring to the cases in an earlier part of our judgment, we have
noticed the caution indicated by this Court that even if some institution
becomes 'State' within the meaning of Article 12, its employees do not become
holders of civil posts so as to become entitled to the cover of Article 311.
They would, however, be entitled to the benefits of Part III of the
Constitution. It is unnecessary to examine the appellant's case keeping
Articles 14 and 16 of the Constitution in view as on the concession of Dr.
Anand Prakash the proceedings will have to reopen.
Before
we part with this case, we must indicate what reliefs the appellant would be
entitled to. Now that the order of the dismissal is set aside and the
proceedings have been restored to the stage of enquiry, the appellant shall be
deemed to have been restored to service. The appellant would have become
entitled to the normal relief available in such a situation. He should be
deemed to be in service and we do not agree with Dr. Anand Prakash that his
suspension should continue. His suspension which had merged into dismissal has
been vacated. It shall, however, be open for the employer to make any direction
as is deemed appropriate in that behalf in future. The appellant, therefore,
becomes entitled to the salary for the past period subject to his satisfying the
authorities that he has not earned any other income during that period. The
appellant shall be given reasonable opportunity by the enquiring officer to
meet the charges 284 and the enquiry shall be completed with in four months.
The appellant has personally assured us in Court that he will fully cooperate
in the enquiry. The enquiry officer shall allow inspection to the appellant of
all records relevant to the enquiry.
We
make no order as to costs.
S.L.
Appeal disposed of.
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