Kumar Biswas Vs. Ibnidoilaongyin  Insc 208 (16 April 2002)
Syed Shah Mohammed Quadri, N. Santosh Hegde, Ruma Pal & Arijit Pasayat Ruma
1972 Sabhajit Tewary, a Junior Stenographer with the Council of Scientific and
Industrial Research (CSIR) filed a writ petition under Article 32 of the
Constitution claiming parity of remuneration with the stenographers who were
newly recruited to the CSIR. His claim was based on Article 14 of the
Bench of five judges of this Court denied him the benefit of that Article
because they held in Sabhajit Tewari V. Union of India that the writ application was not maintainable against CSIR
as it was not an "authority" within the meaning of Article 12 of the
Constitution. The correctness of the decision is before us for re-
immediate cause for such re-consideration is a writ application filed by the
appellants in the Calcutta High Court challenging the termination of their
services by the respondent No.1 which is a unit of CSIR. They prayed for an
interim order before the learned Single Judge. That was refused by the Court on
the prima view that the writ application was itself not maintainable against
the respondent No.1. The appeal was also dismissed in view of the decision of
this Court in Sabhajit Tewary's case .
the order of the Calcutta High Court, the appellants filed an appeal by way of
special leave before this Court. On 5th August, 1986 a Bench of two Judges of
this Court referred the matter to a Constitution Bench being of the view that
the decision in Sabhajit Tewary required re-consideration "having regard
to the pronouncement of this Court in several subsequent decisions in respect
of several other institutes of similar nature set up by the Union of
questions therefore before us are - is the CSIR a State within the meaning of
Article 12 of the Constitution and if it is should this Court reverse a
decision which has stood for over a quarter of a century? The Constitution has
to an extent defined the word 'State' in Article 12 itself as including:
Government and Parliament of India and the Government and the 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".
an 'inclusive' definition is generally not exhaustive is a statement of the
obvious and as far as Article 12 is concerned, has been so held by this Court .
The words 'State' and 'Authority' used in Article 12 therefore remain, to use
the words of Cardozo , among "the great generalities of the
Constitution" the content of which has been and continues to be supplied
by Courts from time to time.
would be a practical impossibility and an unnecessary exercise to note each of the
multitude of decisions on the point. It is enough for our present purposes to
merely note that the decisions may be categorized broadly into those which
express a narrow and those that express a more liberal view and to consider
some decisions of this Court as illustrative of this apparent divergence. In
the ultimate analysis the difference may perhaps be attributable to different
stages in the history of the development of the law by judicial decisions on
before considering the decisions it must be emphasized that the significance of
Article 12 lies in the fact that it occurs in Part III of the Constitution
which deals with fundamental rights.
various Articles in Part-III have placed responsibilities and obligations on
the 'State' viz-a-vis the individual to ensure constitutional protection of the
individual's rights against the State, including the right to equality under
Article 14 and equality of opportunity in matters of public employment under
Article 16 and most importantly the right to enforce all or any of these
fundamental rights against the 'State' as defined in Article 12 either under
Article 32 by this Court or under Article 226 by the High Courts by issuance of
writs or directions or orders.
range and scope of Article 14 and consequently Article 16 have been widened by
a process of judicial interpretation so that the right to equality now not only
means the right not to be discriminated against but also protection against any
arbitrary or irrational act of the State. It has been said that:
14 and 16 strike at arbitrariness in State action and ensure fairness and
equality of treatment".
pace with this broad approach to the concept of equality under Articles 14 and
16, Courts have whenever possible, sought to curb an arbitrary exercise of
power against individuals by 'centres of power', and there was correspondingly
an expansion in the judicial definition of 'State' in Article 12.
the definition of State was treated as exhaustive and confined to the
authorities or those which could be read ejusdem generis with the authorities
mentioned in the definition of Article 12 itself. The next stage was reached
when the definition of 'State' came to be understood with reference to the
remedies available against it. For example, historically, a writ of mandamus
was available for enforcement of statutory duties or duties of a public nature
. Thus a statutory corporation, with regulations framed by such Corporation
pursuant to statutory powers was considered a State, and the public duty was
limited to those which were created by statute.
decision of the Constitution Bench of this Court in Rajasthan Electricity Board
vs. Mohan Lal & Ors. (1967) 3 SCR 377 is illustrative of this. The question
there was whether the Electricity Board - which was a Corporation constituted
under a statute primarily for the purpose of carrying on commercial activities
could come within the definition of 'State' in Article 12.
considering earlier decisions, it was said:
decisions of the Court support our view that the expression "other
authorities" in Article 12 will include all constitutional or statutory
authorities on whom powers are conferred by law. It is not at all material that
some of the powers conferred may be for the purpose of carrying on commercial
followed that since a Company incorporated under the Companies Act is not
formed statutorily and is not subject to any statutory duty vis a vis an
individual, it was excluded from the purview of 'State' In Praga Tools
Corporation V. Shri C.A. Imanual & Ors. where the question was whether an
application under Article 226 for issuance of a writ of mandamus would lie
impugning an agreement arrived at between a Company and its workmen, the Court
was neither a statutory nor a public duty imposed on it by a statute in respect
of which enforcement could be sought by means of a mandamus, nor was there in
its workmen any corresponding legal right for enforcement of any such statutory
or public duty. The High Court, therefore, was right in holding that no writ
petition for a mandamus or an order in the nature of mandamus could lie against
1975 Mathew, J. in Sukhdev Singh & Ors. v. Bhagatram Sardar Singh Raghuvanshi
& Ors. noted that the concept of "State" in Article 12 had
undergone "drastic changes in recent years". The question in that
case was whether the Oil and Natural Gas Commission, the Industrial Finance
Corporation and the Life Insurance Corporation each of which were public
corporations set up by statutes were authorities and therefore within the
definition of State in Article 12. The Court affirmed the decision in Rajasthan
State Electricity Board V. Mohan Lal (supra) and held that the Court could
compel compliance of statutory rules. But the majority view expressed by A.N.
Ray, CJ also indicated that the concept would include a public authority which:
is a body which has public or statutory duties to perform and which performs
those duties and carries out its transactions for the benefit of the public and
not for private profit. Such an authority is not precluded from making a profit
for the public benefit".
added) The use of the alternative is significant. The Court scrutinised the
history of the formation of the three Corporations, the financial support given
by the Central Government, the utilization of the finances so provided, the
nature of service rendered and noted that despite the fact that each of the
Corporations ran on profits earned by it nevertheless the structure of each of
the Corporations showed that the three Corporations represented the 'voice and
hands' of the Central Government.
Court came to the conclusion that although the employees of the three
Corporations were not servants of the Union
or the State, "these statutory bodies are 'authorities' within the meaning
of Article 12 of the Constitution".
J in his concurring judgment went further and propounded a view which presaged
the subsequent developments in the law. He said:
state is an abstract entity. It can only act through the instrumentality or
agency of natural or juridical persons. Therefore, there is nothing strange in
the notion of the state acting through a corporation and making it an agency or
instrumentality of the State.." For identifying such an agency or
instrumentality he propounded four indicia:
"A finding of the state financial support plus an unusual degree of
control over the management and policies might lead one to characterize an
operation as state action."
"Another factor which might be considered is whether the operation is an
important public function."
"The combination of state aid and the furnishing of an important public
service may result in a conclusion that the operation should be classified as a
state agency. If a given function is of such public importance and so closely
related to a governmental functions as to be classified as a government agency,
then even the presence or absence of state financial aid might be irrelevant in
making a finding of state action. If the function does not fall within such a
description then mere addition of state money would not influence the
"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?"
Tewary was decided by the same Bench on the same day as Sukhdev Singh (supra).
The contentions of the employee was that CSIR is an agency of the Central
Government on the basis of the CSIR Rules which, it was argued, showed that the
Government controlled the functioning of CSIR in all its aspects. The submission
was somewhat cursorily negatived by this Court on the ground that all this
"will not establish anything more than the fact that the Government takes
special care that the promotion, guidance and co-operation of scientific and
industrial research, the institution and financing 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."
Although the Court noted that it was the Government which was taking the "special
care" nevertheless the writ petition was dismissed ostensibly because the
Court factored into its decision two premises:
"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 Society's Registration Act", and
"This Court has held in Praga Tools Corporation V. Shri C.A. Imanual &
Ors.  3 SCR 773, Heavy Engineering Mazdoor Union v. The State of Bihar & Ors.  3 SCR 995 and in
S.L. Agarwal v. General Manager Hindustan Steel Ltd. 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 do not enjoy the protection available to Government servants as
contemplated in Article 311. The companies were held in these cases to have
independent existence of the Government and by the law relating to
could not be held to be departments of the Government".
respect, we are of the view that both the premises were not really relevant and
in fact contrary to the 'voice' and 'hands' approach in Sukhdev Singh. Besides
reliance by the Court on decisions pertaining to Article 311 which is contained
in Part XIV of the Constitution was inapposite. What was under consideration
was Art. 12 which by definition is limited to Part III and by virtue of Art. 36
to Part IV of the Constitution. As said by another Constitution Bench later in
because a juristic entity may be an "authority" and therefore
"State" within the meaning of Article 12, it may not be elevated to
the position of "State" for the purpose of Articles 309, 310 and 311
which find a place in Part XIV.
definition of "State" in Article 12 which includes an
"authority" within the territory of India or under the control of the
Government of India is limited in its application only to Part III and by
virtue of Article 36, to Part IV: it does not extend to the other provisions of
the Constitution and hence a juristic entity which may be "State" for
the purpose of Parts III and IV would not be so for the purpose of Part XIV or
any other provision of the Constitution. This is why the decisions of this
Court in S.L. Aggarwal v. Hindustan Steel Ltd., and other cases involving the
applicability of Article 311 have no relevance to the issue before us".
a precedent like Sabhajit Tewary which has stood for a length of time should
not be reversed, however erroneous the reasoning if it has stood unquestioned,
without its reasoning being 'distinguished' out of all recognition by
subsequent decisions and if the principles enunciated in the earlier decision
can stand consistently and be reconciled with subsequent decisions of this
Court, some equally authoritative. In our view Sabhajit Tewary fulfills both
the majority approach in Sabhajit Tewary, the 'drastic changes' in the
perception of 'State' heralded in Sukhdev Singh by Mathew, J and the tests
formulated by him were affirmed and amplified in Ramana v. International
Airport Authority of India . Although the International Airport Authority of
India is a statutory corporation and therefore within the accepted connotation
of State, the Bench of three Judges developed the concept of State. The
rationale for the approach was the one adopted by Mathew J in Sukhdev Singh:
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
the tasks of the Government multiplied with the advent of the welfare State, it
began to 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 forge 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
this perspective, the logical sequitur is that it really does not matter what
guise the State adopts for this purpose, whether by a Corporation established
by statute or incorporated under a law such as the Companies Act or formed
under the Societies Registration Act, 1860. Neither the form of the
Corporation, nor its ostensible autonomy would take away from its character as
'State' and its constitutional accountability under Part III vis-a-vis the
individual if it were in fact acting as an instrumentality or agency of
as Sabhajit Tewary was concerned it was 'explained' and distinguished in Ramana
Court no doubt took the view on the basis of facts relevant to the constitution
and functioning of the Council that it was not an 'authority', but we do not
find any discussion in this case as to what are the features which must be
present before a corporation can be regarded as an 'authority' within the
meaning of Art.12. 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'. The Court seemed to hold
on the facts that the Council was not an agency of the Government and was,
therefore, not an 'authority' ".
tests propounded by Mathew, J in Sukhdev Singh were elaborated in Ramana and
were re-formulated two years later by a Constitution Bench in Ajay Hasia v. Khalid
Mujib Sehravardi . What may have been technically characterised as 'obiter
dicta' in Sukhdev Singh and Ramana (since in both cases the
"authority" in fact involved was a statutory corporation), formed the
ratio decidendi of Ajay Hasia. The case itself dealt with a challenge under
Article 32 to admissions made to a college established and administered by a
Society registered under the Jammu & Kashmir Registration of Societies Act
1898. The contention of the Society was that even if there were an arbitrary
procedure followed for selecting candidates for admission, and that this may
have resulted in denial of equality to the petitioners in the matter of
admission in violation of Article 14, nevertheless Article 14 was not available
to the petitioners because the Society was not a State within Art. 12.
Court recognised that:
Obviously the Society cannot be equated with the Government of India or the
Government of any State nor can it be said to be a local authority and
therefore, it must come within the expression "other authorities" if
it is to fall within the definition of 'State' ".
courts should be anxious to enlarge the scope and width of the Fundamental
Rights by bringing within their sweep every authority which is an
instrumentality or agency of the government or through the corporate
personality of which the government is acting, so as to subject the government
in all its myriad activities, whether through natural persons or through
corporate entities, to the basic obligation of the Fundamental Rights".
made clear that the genesis of the corporation was immaterial and that:
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".
was noted and quoted with approval in extenso and the tests propounded for
determining as to when a corporation can be said to be an instrumentality or
agency of the Government therein were culled out and summarised as follows:
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.
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 impregnated with governmental character.
may also be a relevant factor..whether the corporation enjoys monopoly status
which is State conferred or State protected.
Existence of deep and pervasive State control may afford an indication that the
corporation is a State agency or instrumentality.
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.
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.
dealing with Sabhajit Tewary the Court in Ajay Hasia noted that since Sabhajit Tewary
was a decision given by a Bench of Five Judges of this Court it was undoubtedly
Court read Sabhajit Tewary as implicity assenting to the proposition that CSIR
could have been an instrumentality of agency of the Government even though it
was a Registered Society and limited the decision to the facts of the case. It
held that the Court in Sabhajit Tewari :
did not rest its conclusion on the ground that the council was a society
registered under the Societies Registration Act, 1860, but proceeded to
consider various other features of the council for arriving at the conclusion
that it was not an agency of the government and therefore not an
conclusion was then reached applying the tests formulated to the facts that the
Society in Ajay Hasia was an authority falling within the definition of
"State" in Article 12.
same day that the decision in Ajay Hasia was pronounced came the decision of Som
Prakash Rekhi v. Union of India . Here too, the reasoning in Ramana was
followed and Bharat Petroleum Corporation was held to be a 'State' within the "enlarged
meaning of Art.12". Sabhajit Tewary was criticised and distinguished as
being limited to the facts of the case. It was said:
rulings relied on are, unfortunately, in the province of Art.311 and it is clear that a body may be
'State' under Part III but not under Part XIV. Ray, C.J., rejected the argument
that merely because the Prime Minister was the President or that the other
members were appointed and removed by Government did not make the Society a
'State'. With great respect, we agree that in the absence of the other features
elaborated in Airport Authority case (1979) 3 SCC 489:
1979 SC 1628) the composition of the Government Body alone may not be decisive.
The laconic discussion and the limited ratio in Tewary (1975) 3 SCR 616 : (AIR
1975 SC 1329) hardly help either side here." The tests to determine
whether a body falls within the definition of 'State' in Article 12 laid down
in Ramana with the Constitution Bench imprimatur in Ajay Hasia form the
keystone of the subsequent jurisprudential superstructure judicially crafted on
the subject which is apparent from a chronological consideration of the
P.K. Ramachandra Iyer and Others V. Union of India and Others 1984 (2) SCC 141,
it was held that both the Indian Council of Agricultural Research (ICAR) and
its affiliate Indian Veterinary Research Institute were bodies as would be
comprehended in the expression 'other authority' in Article 12 of the
Constitution. Yet another judicial blow was dealt to the decision in Sabhajit Tewary
when it was said:
water has flown down the Jamuna since the dicta in Sabhajit Tewary case and
conceding that it is not specifically overruled in later decision, its ratio is
considerably watered down so as to be a decision confined to its own
facts." B. S. Minhas v. Indian Statistical Institute & Ors. held that
the Indian Statistical Institute, a registered Society is an instrumentality of
the Central Government and as such is an 'authority' within the meaning of
Article 12 of the Constitution.
basis was that the composition of respondent No.1 is dominated by the
representatives appointed by the Central Government. The money required for
running the Institute is provided entirely by the Central Government and even
if any other moneys are to be received by the Institute it can be done only
with the approval of the Central Government, and the accounts of the Institute
have also to be submitted to the Central Government for its scrutiny and
satisfaction. The Society has to comply with all such directions as may be
issued by the Central Government. It was held that the control of the Central
Government is deep and pervasive.
decision in Central Inland Water Transport Corporation Ltd. V. Brojo Nath Ganguli
held that the appellant company was covered by Article 12 because it is
financed entirely by 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 and also that the
activities carried on by the Corporation are of vital national importance.
the tests propounded in Ajay Hasia were not applied in Tekraj Vasandi alias
K.S. Basandhi V. Union of India and Others 1988 (1) SCC 237, where the
Institute of Constitutional and Parliamentary Studies (ICPS), a society
registered under the Societies Registration Act, 1860 was held not to be an
"other authority" within the meaning of Article 12.
reasoning is not very clear. All that was said was :
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
the Court was careful to 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
India Sainik Schools Employees' Association V. Defence Minister-cum-Chairman
Board of Governors, Sainik Schools Society, New Delhi and Others 1989 Supp.(1)
SCC 205 held applying the tests indicated in Ajay Hasia that the Sainik School
Society is a 'State'.
this rather over - enthusiastic application of the broad limits set by Ajay Hasia
may have persuaded this Court to curb the tendency in Chander Mohan Khanna v.
National Council of Educational Research and Training and Others 1991 (4) SCC
578. The Court referred to the tests formulated in Sukhdev Singh, Ramana, Ajay Hasia,
and Som Prakash Rekhi but striking a note of caution said that "these are
merely indicative indicia and are by no means conclusive or clinching in any
that case, the question arose whether the National Council of Educational
Research (NCERT) was a 'State' as defined under Article 12 of the Constitution.
The NCERT is a society registered under the Societies Registration Act. After
considering the provisions of its Memorandum of Association as well as the
rules of NCERT, this Court came to the conclusion that since NCERT was largely
an autonomous body and the activities of the NCERT were not wholly related to
governmental functions and that the Government control was confined only to the
proper utilisation of the grant and since its funding was not entirely from
Government resources, the case did not satisfy the requirements of the State
under Article 12 of the Constitution. The Court relied principally on the
decision in Tekraj Vasandi @ K.L.Basandhi v. Union of India (supra) However, as
far as the decision in Sabhajit Tewary v. Union of India (supra) was concerned,
it was noted that "the decision has been distinguished and watered down in
the subsequent decisions".
off the judicial anvil is the decision in the Mysore Paper Mills Ltd. vs. The Mysore
Paper Mills Officers Association JT 2002 (1) SC 61 which fairly represents what
we have seen as a continuity of thought commencing from the decision in
Rajasthan Electricity Board in 1967 upto the present time. It held that a
company substantially financed and financially controlled by the Government,
managed by a Board of Directors nominated and removable at the instance of the
Government and carrying on important functions of public interest under the
control of the Government is 'an authority' within the meaning of Art.12.
picture that ultimately emerges is that the tests formulated in Ajay Hasia are
not a rigid set of principles so that if a body falls within any one of them it
must, ex hypothesi, be considered to be a State within the meaning of Article
12. The question in each case would be whether in the light of the cumulative
facts as established, the body is financially, functionally and
administratively dominated by or under the control of the Government. Such
control must be particular to the body in question and must be pervasive. If
this is found then the body is a State within Article 12. On the other hand,
when the control is merely regulatory whether under statute or otherwise, it
would not serve to make the body a State.
now to the facts relating to CSIR, we have no doubt that it is well within the
range of Article 12, a conclusion which is sustainable when judged according to
the tests judicially evolved for the purpose.
Formation of CSIR On 27th
April 1940 the Board
of Scientific and Industrial Research and on 1st February 1941, the Industrial Research Utilisation Committee were set up
by the Department of Commerce, Government of India with the broad objective of
promoting industrial growth in this country. On 14th November 1941, a resolution was passed by the Legislative Assembly
and accepted by the Government of India to the following effect:
Assembly recommends to the Governor General in Council that a fund called the
Industrial Research Fund be constituted, for the purpose of fostering
industrial development in this country and that provision be made in the Budget
for an annual grant of rupees ten lakhs to the fund for a period of five
years." For the purpose of coordinating and exercising administrative
control over the working of the two research bodies already set up by the
Department of Commerce, and to oversee the proper utilisation of the Industrial
Research Fund, by a further resolution dated 26th September 1942, the
Government of India decided to set up a Council of Industrial Research on a
permanent footing which would be a registered society under the Registration of
Societies Act, 1860. Pursuant to the resolution, on 12th March, 1942 the CSIR was duly registered. Bye-laws and Rules were
framed by the Governing Body of the Society in 1942 which have been
subsequently revised and amended. Unquestionably this shows that the CSIR was
'created' by the Government to carry on in an organized manner what was being
done earlier by the Department of Commerce of the Central Government. In fact
the two research bodies which were part of the Department of Commerce have
since been subsumed in the CSIR.
26th September 1942
Resolution had provided that the functions of the CSIR would be:
implement and give effect to the following resolution moved by the Hon'ble Dewan
Bahadur Sir A.R. Mudaliar and passed by the Legislative Assembly on the 14th
Nov' 1941 and accepted by the Government of India.
earlier in this Judgment)
promotion, guidance and co- ordination of scientific and industrial research in
India including the institution and the
financing of specific researches;
establishment or development and assistance to special institutions or
Department of existing institutions for scientific study of problems affecting
particular industries and trade;
establishment and award of research student-ships and fellowships;
the utilisation of the results of the researches conducted under the auspices
of the Council towards the development of industries in the country and the
payment of a share of royalties arising out of the development of the results
of researches to those who are considered as having contributed towards the
pursuit of such researches;
the establishment, maintenance and management of laboratories, workshops,
institutes, and organisation to further scientific and industrial research and utilise
and exploit for purposes of experiment or otherwise any discovery or invention
likely to be of use Indian Industries;
collection and dissemination or information in regard not only to research but
to industrial matters generally;
of scientific papers and a journal of industrial research and development, and
(i) any other activities to promote generally the objects of the resolution
mentioned in (a) above.
objects which have been incorporated in the Memorandum of Association of CSIR
manifestly demonstrate that CSIR was set up in the national interest to further
the economic welfare of the society by fostering planned industrial development
in the country. That such a function is fundamental to the governance of the
country has already been held by a Constitution Bench of this Court as far back
as in 1967 in Rajasthan Electricity Board v. Mohan Lal (Supra) where it was
State, as defined in Art.12, is thus comprehended to include bodies created for
the purpose of promoting the educational and economic interests of the
in respectful agreement with this statement of the law. The observations to the
contrary in Chander Mohan Khanna v. NCERT (supra) relied on by the Learned
Attorney General in this context, do not represent the correct legal position.
the CSIR was and continues to be a non-profit making organization and according
to clause (4) of CSIR's Memorandum of Association, all its income and property,
however derived shall be applied only 'towards the promotion of those objects
subject nevertheless in respect of the expenditure to such limitations as the
Government of India may from time to time impose'.
the Government of India resolved to set up the CSIR on 26th February, 1942 it
also decided that the Governing Body would consist of the following members:
The Honourable Member of the Council of His Excellency the Governor General in
charge of the portfolio of Commerce (Ex- officio).
representative of the Commerce Department of the Government of India, appointed
by the Government of India.
representative of the Finance Department of the Government of India, appointed
by the Government of India.
Two members of the Board of Scientific and Industrial Research elected by the
Two members of the Industrial Research Utilisation committee elected by the
The Director of Scientific and Industrial Research.
One or more members to be nominated by the Government of India to represent
interests not otherwise represented.
present Rules and Regulations 1999 of CSIR provide that :
The Prime Minister of India shall be the ex-officio President of the Society.
The Minister-in-Charge of the Ministry or Deptt. dealing with the Council of
Scientific & Industrial Research shall be the ex-officio Vice President of
that during any period when the Prime Minister is also such Minister, any
person nominated in this behalf by the Prime Minister shall be the
Ministers Incharge of Finance and Industry (ex-officio).
The members of the Governing Body.
Chairman, Advisory Board.
Any other person or persons appointed by the President, CSIR." The
Governing Body of the Society is constituted by the:
Directors of two National Laboratories,
Two eminent Scientists/ Technologists, one of whom shall be from Academia;
Heads of two Scientific Departments/Agencies of the Government of India.
dominant role played by the Government of India in the Governing Body of CSIR
is evident. The Director- General who is ex-officio Secretary of the Society is
appointed by the Government of India [Rule 2(iii)]. The submission of the
learned Attorney General that the Governing Body consisted of members, the
majority of whom were non-governmental members is, having regard to the facts
on record, unacceptable. Furthermore, the members of the Governing Body who are
not there ex officio are nominated by the President and their membership can
also be terminated by him and the Prime Minister is the ex-officio President of
CSIR. It was then said that although the Prime Minister was ex-officio
President of the Society but the power being exercised by the Prime Minister is
as President of the Society. This is also the reasoning in Sabhajit Tewary .
With respect, the reasoning was and the submission is erroneous. An ex- officio
appointment means that the appointment is by virtue of the office; without any
other warrant or appointment than that resulting from the holding of a
particular office. Powers may be exercised by an officer, in this case the
Prime Minister, which are not specifically conferred upon him, but are
necessarily implied in his office (as Prime Minister), these are ex-officio .
control of the Government in the CSIR is ubiquitous. The Governing Body is
required to administer, direct and control the affairs and funds of the Society
and shall, under Rule 43, have authority 'to exercise all the powers of the
Society subject nevertheless in respect of expenditure to such limitations as
the Government of India may from time to time impose'. The aspect of financial
control by the Government is not limited to this and is considered separately.
The Governing Body also has the power to frame, amend or repeal the bye-laws of
CSIR but only with the sanction of the Government of India. Bye-law 44 of the
1942 Bye-laws had provided 'any alteration in the bye-laws shall require the
prior approval of the Governor General in Council'.
41 of the present Rules provide that:
The President may review/amend/vary any of the decisions of the Governing Body
and pass such orders as considered necessary to be communicated to the Chairman
of the Governing Body within a month of the decision of the Governing Body and
such order shall be binding on the Governing Body. The Chairman may also refer
any question which in his opinion is of sufficient importance to justify such a
reference for decision of the President, which shall be binding on the
Governing Body." (emphasis added) Given the fact that the President of
CSIR is the Prime Minister, under this Rule the subjugation of the Governing
Body to the will of the Central Government is complete.
as the employees of the CSIR are concerned the Central Civil Services
(Classification, Control & Appeal) Rules and the Central Civil Services
(Conduct) Rules, for the time being in force, are from the outset applicable to
them subject to the modification that references to the 'President' and
'Government Servant' in the Conduct Rules would be construed as 'President of
the Society' and 'Officer & establishments in the service of the Society'
respectively. ( Bye Law 12). The scales of pay applicable to all the employees
of CSIR are those prescribed by the Government of India for similar personnel,
save in the case of specialists (Bye Law 14) and in regard to all matters
concerning service conditions of employees of the CSIR, the Fundamental and
Supplementary Rules framed by the Govt. of India and such other rules and
orders issued by the Govt. of India from time to time are also, under Bye Law
15 applicable to the employees of the CSIR. Apart from this, the rules/Orders
issued by Government of India regarding reservation of posts for SC/ST apply in
regard to appointments to posts to be made in CSIR.( Bye Law 19) The CSIR
cannot lay down or change the terms and conditions of service of its employees
and any alteration in the bye-laws can be carried out only with the approval of
Government of India. (Bye Law 20).
Aid The initial capital of the CSIR was Rs. 10 lakhs, made available pursuant
to the Resolution of the Legislative Assembly on 14th November, 1941. Paragraph 5 of the 26th September, 1942 Resolution of the Government of India pursuant to which CSIR was formed
Government of India have decided that a fund, viz., the Industrial Research
Fund, should be constituted by grants from the Central Revenues to which
additions are to be made from time to time as moneys flow in from other
sources. These 'other sources' will comprise grants, if any, by Provincial
Governments by industrialists for special or general purposes, contributions
from Universities or local bodies, donations or benefactions, royalties, etc.,
received from the development of the results of industrial research, and
miscellaneous receipts. The Council of Scientific and Industrial Research will
exercise full powers in regard to the expenditure to be met out of the
Industrial Research Fund subject to its observing the Bye-laws framed by the
Governing Body of the Council, from time to time, with the approval of the
Governor General-in-Council, and to its annual budget being approved by the
Governor General-in-Council." As already noted, the initial capital of Rs.
10 lakhs was made available by the Central Government. According to the
statement handed up to the Court on behalf of CSIR the present financial
position of CSIR is that at least 70% of the funds of CSIR are available from
grants made by the Government of India. For example out of the total funds
available to CSIR for the years 1998-99, 1999-2000, 2000- 01 of Rs.1023.68 crores,
Rs.1136.69 crores and Rs.1219.04 crores respectively, the Government of India
has contributed Rs.713.32 crores, Rs.798.74 crores and Rs.877.88 crores. A
major portion of the balance of the funds available is generated from charges
for rendering research and development works by CSIR for projects such as the Rajiv
Gandhi Drinking Water Mission Technology Mission on oilseeds and pulses and
maize or grant in aid projects from other Government Departments. Funds are
also received by CSIR from sale proceeds of its products, publications,
royalties etc. Funds are also received from investments but under Bye-Law 6 of
CSIR, funds of the Society may be invested only in such manner as prescribed by
the Government of India. Some contributions are made by the State Governments
and to a small extent by 'individuals, institutions and other agencies'. The
non-governmental contributions are a pittance compared to the massive
as expenditure is concerned, under Bye-law (1) as it stands at present, the
budget estimates of the Society are to be prepared by the Governing Body
'keeping in view the instructions issued by the Government of India from time
to time in this regard'. Apart from an internal audit, the accounts of the CSIR
are required to be audited by the Controller and Auditor General and placed
before the table of both Houses of Parliament(Rule 69).
event of dissolution, unlike other registered societies which are governed by
Section 14 of the Societies Registration Act, 1860, the members of CSIR have no
say in the distribution of its assets and under clause (5) of the Memorandum of
Association of CSIR, on the winding up or dissolution of CSIR any property
remaining after payment of all debts shall have to be dealt with "in such
manner as the Government of India may determine". CSIR is therefore both
historically and in its present operation subject to the financial control of
the Government of India. The assets and funds of CSIR though nominally owned by
the Society are in the ultimate analysis owned by the Government.
whichever perspective the facts are considered there can be no doubt that the
conclusion reached in Sabhajit Tewary was erroneous. If the decision of Sabhajit
Tewary had sought to lay down as a legal principle that a society registered
under the Societies Act or a company incorporated under the Companies Act is,
by that reason alone, excluded from the concept of State under Article 12, it
is a principle which has long since been discredited. "Judges have made worthy,
if shamefaced, efforts, while giving lip service to the rule, to riddle it with
exceptions and by distinctions reduce it to a shadow".
assessment of the facts, the Court had assumed certain principles, and sought precedential
support from decisions which were irrelevant and had "followed a groove
chased amidst a context which has long since crumbled".
the facts been closely scrutinised in the proper perspective, it could have led
and can only lead to the conclusion that CSIR is a State within the meaning of
Sabhajit Tewary still stand as an authority even on the facts merely because it
has stood for 25 years? We think not. Parallels may be drawn even on the facts
leading to an untenable interpretation of Art. 12 and a consequential denial of
the benefits of fundamental rights to individuals who would otherwise be
entitled to them and "there is nothing in our Constitution which prevents
us from departing from a previous decision if we are convinced of its error and
its baneful effect on the general interests of the public." Since on a
re-examination of the question we have come to the conclusion that the decision
was plainly erroneous, it is our duty to say so and not perpetuate our mistake.
a new fact relating to CSIR has come to light since the decision in Sabhajit Tewary
which unequivocally vindicates the conclusion reached by us and fortifies us in
delivering the coup de grace to the already attenuated decision in Sabhajit Tewary.
On 31st October 1986 in exercise of the powers conferred by sub-section (2) of
Section 14 of the Administrative Tribunals Act, 1985, the Central Government
specified 17th November 1986 as the date on and from which the provisions of
sub-section (3) of Section 14 of the 1985 Act would apply to CSIR 'being the
Society owned and controlled by Government'.
learned Attorney General contended that the notification was not conclusive of
the fact that the CSIR was a State within the meaning of Article 12 and that
even if an entity is not a State within the meaning of Article 12, it is open
to the Government to issue a notification for the purpose of ensuring the
benefits of the provisions of the Act to its employees.
cannot accept this. Reading Art. 323 (A) of the Constitution and Section 14 of
the 1985 Act it is clear that no notification under section 14 (2) of the
Administrative Tribunals Act could have been issued by the Central Government
unless the employees of the CSIR were either appointed to public services and
posts in connection with the affairs of the Union or of any State or of any
local or other authority within the territory of India or under the control of
the Government of India or of any corporation owned or controlled by the
Government. Once such a notification has been issued in respect of CSIR, the
consequence will be that an application would lie at the instance of the
appellants at least before the Administrative Tribunal. No new jurisdiction was
created in the Administrative Tribunal. The notification which was issued by the
Central Government merely served to shift the service disputes of the employees
of CSIR from the constitutional jurisdiction of the High Court under Article
226 to the Administrative Tribunals on the factual basis that CSIR was amenable
to the writ jurisdiction as a State or other authority under Article 12 of the
the notification issued in 1986 by the Central Government under Article 14 (2)
of the Administrative Tribunals Act, 1985 serves in removing any residual doubt
as to the nature of CSIR and decisively concludes the issues before us against
Tewary's decision must be and is in the circumstances overruled. Accordingly
the matter is remitted back to the appropriate Bench to be dealt with in the
light of our decision. There will be no order as to costs.