Sadiq & Ors Vs. State of Uttar Pradesh & Ors  Insc 967 (21 September 2007)
Arijit Pasayat & Lokeshwar Singh Panta
APPEAL NO. 4590 OF 2004 [With Civil Appeal No.4606 of 2004] Dr. ARIJIT PASAYAT,
These appeals are inter-linked and are directed against common judgment of the Allahabad
High Court. By the impugned judgment the order passed by the learned Single
Judge was set aside.
Background facts in a nutshell are as follows:
employees of Institute of Engineering and Rural Technology (for short 'IERT'),
105 in number, filed a writ petition against the State of U.P. and its
functionaries as well as the IERT praying for quashing the order dated
24.3.1999 by which it was decided that the Training-cum-Production Centre of
IERT was to be closed down w.e.f. 31.3.1999 and the workmen employed were to be
retrenched after paying compensation.
allowing the writ petition the learned Single Judge gave directions which
essentially read as follow:- "The respondents are directed to prepare a
list of the employees who were appointed prior to 1.10.1986 in the
production-cum-training Centre of IERT, and were working continuously till the
date of their retrenchment i.e. 31.3.1999 by excluding those who have retired,
or have not given their option for absorption, to be absorbed in the vacancies
in other polytechnics of the State of Government, which are recognized and
funded or in any other technical institution, or any post which it may deem to
be fit, in accordance with their eligibility and after relaxing age and other
terms and conditions of recruitment. As and when petitioners are offered
absorption on any equivalent post, they will vacate the quarters occupies by
some of them in the premises of IERT. Since petitioners have accepted
retrenchment compensation, no direction with regard to payment of salary is
required to be given. The State Government is directed to draw the list,
prepare the scheme and to offer appointment by absorption, preferably within a
period of four months. There is no order as cost."
present respondents questioned correctness of the order by filing special
appeal before the High Court. By the impugned judgment the High Court allowed
the special appeal. It held that IERT is not an instrumentality of the State
and/or could not be termed to be State Government or a public Corporation. It
was held that the finding of learned Single Judge that IERT is wholly owned,
controlled and managed by the State Government is not correct.
Learned counsel for the appellants submitted that the basic questions are as
Whether IERT was an instrumentality of the State.
Whether the Uttar Pradesh Absorptions of Retrenched Employees of
Government/Corporations in Government Service Rules, 1991 (in short the
'Absorption Rules') is applicable to the writ petitioners-appellants.
Whether after receiving compensation, the concerned employees could question
was submitted that IERT is registered under the Societies Registration Act, 1860
(in short the 'Societies Act') and in terms of the Absorption Rules the
concerned employees were entitled to be given protection of the Absorption
Rules. It is submitted that the expression "established" means that
the institution has come into existence and, therefore, even though IERT has
been registered under the Societies Act, that does not mean it is not
established or constituted under any Uttar Pradesh Act.
response, learned counsel for the respondent submitted that the concept of
"established" or "constituted" is different from a body
registered under the Societies Act.
contentions raised need consideration. It has been accepted that there was no
material placed before the High Court to establish that IERT is an
instrumentality of the State.
Kumar Biswas v. Indian Institute of Chemical Biology and Ors. (2002 (5) SCC
111), it has been clearly stated that even if a society or institute is
registered under the Societies Act and some functionaries of the State
Government and other members of the institute, such an institute may not be
termed as an instrumentality of the State, if deep and pervasive control over
the affairs of the institute was not with the State Government. Texts
formulated in Ajay Hasia and Ors. v. Khalid Mujib Sehravardi and Ors. (1981 (1)
SCC 722) were highlighted. There is basic distinction between a society and a
corporation. In Board of Trustees, Ayurvedic and Unani Tibia College, Delhi v. State of Delhi (Now Delhi
Administration) and another (AIR 1962 SC 458), it was inter alia held as
The first and foremost question is whether the old Board was a corporation in
the legal sense of that word. What is a Corporation? Corporations may be
divided into two main classes, namely, corporations aggregate and corporations
sole. We are not concerned in the present case with corporation sole. "A
Corporation aggregate has been defined as a collection of individuals united
into one body under a special denomination, having perpetual succession under
an artificial form, and vested by the policy of the law with the capacity of
acting in several respects as an individual, particularly of taking and
granting property, of contracting obligations and of suing and being sued, of
enjoying privileges and immunities in common, and of exercising a variety of
political rights, more or less extensive, according to the design of its
institution, or the powers conferred upon it, either at the time of its
creation or at any subsequent period of its existence". (Halsbury's Laws
of England, 3rd Edn. Vol. 9, page 4.) A
corporation aggregate has therefore only one capacity, namely, its corporate
capacity. A corporation aggregate may be a trading corporation or a non-trading
corporation. The usual examples of a trading corporation are
incorporated by special acts of parliament,
registered under the Companies Act, etc. Non- trading corporations are
essential element in the legal conception of a corporation is that its identity
is continuous, that is, that the original member of members and his or their
successors are one. In law the individual corporators, or members, of which it
is composed are something wholly different from the corporation itself; for a
corporation is a legal persona just as much as an individual.
it has been held that a name is essential to a corporation; that a corporation
aggregate can, as a general rule, only act or express its will by deed under
its common seal; that at the present day in England a corporation is created by
one or other of two methods, namely, by Royal Charter of incorporation from the
Crown or by the authority of Parliament that is to say, by or by virtue of
statute. There is authority of long standing for saying that the essence of a
corporation consists in
authority of incorporation,
persons to be incorporated,
name by which the persons are incorporated,
sufficient in law to show incorporation.
particular words are necessary for the creation of a corporation; any
expression showing an intention to incorporate will be sufficient.
The learned Advocate for the petitioners has referred us to various provisions
of the Societies Registration Act, 1860 and has contended that the result of
these provisions was to make the Board a corporation on registration. It is
necessary now to read some of the provisions of that Act. The Act is entitled
an Act for the registration of literary, scientific and charitable societies
and the preamble states that it was enacted for improving the legal condition
of societies established for the promotion of literature, science, or the fine
arts, or for the diffusion of useful knowledge etc., or for charitable
purposes. Section 1 of the Act states that any seven or more persons associated
for any literary, scientific, or charitable purpose, or for any such purpose as
is described in Section 20 of the Act may, by subscribing their names to a
memorandum of association and filing the same with the Registrar or Joint-stock
Companies form themselves into a society under the Act.
2 lays down that the memorandum of association shall contain and one of the
particulars it must contain is "the objects of the society". Section
3 deals with registration and the fees payable therefor. Sections 5 and 6 are
important for our purposes and should be read in full.
The property, movable and immovable, belonging to a society registered under
this Act, if not vested in trustees, shall be deemed to be vested, for the time
being, in the governing body of such society, and in all proceedings, civil and
criminal, may be described as the property of the governing body of such
society by their proper title.
Every society registered under this Act may sue or be sued in the name of the
president, chairman, or principal secretary, or trustees, as shall be
determined by the rules and regulations of the society, and, in default of such
determination, in the name of such person as shall be appointed by the
governing body for the occasion :
that it shall be competent for any person having a claim or demand against the
society, to sue the president or chairman, or principal secretary of the
trustees thereof, if on an application to the governing body some other officer
or person be not nominated to be the defendant."
7 provides for non-abatement of suits or proceedings and the continuance of
such suits or proceedings in the name of or against the successor of the person
by or against whom the suit was brought. Section 8 says that if a judgment is
recovered against a person or officer named on behalf of the society, such
judgment shall not be put in force against the property, movable or immovable,
or against the body of such person or officer, but against the property of the
society. Section 10 provides that in certain circumstances mentioned therein a
member of the society may be sued by the society; but if the defendant shall be
successful in any such suit brought at the instance of the society and shall be
adjudged to recover his costs, he may elect to proceed to recover the same from
the officer in whose name the suit was brought, or from the society. Sections
13 and 14 provide for dissolution of societies and the consequences of such
dissolution. These provisions have also an important bearing on the questions
before us and are quoted in full.
Any number not less than three- fifths of the members of any society may
determine that it shall be dissolved, and thereupon it shall be dissolved
forthwith, or at the time then agreed upon, and all necessary steps shall be
taken for the disposal and settlement of the property of the society, its
claims and liabilities, according to the rules of the said society applicable
thereto, if any, and, if not then as the governing body shall find expedient,
provided that, in the event of any dispute arising among the said governing
body or the members of the society, the adjustment of its affairs shall be
referred to the principal court of Original civil jurisdiction of the district
in which the chief building of the society is situate, and the Court shall make
such order in the matter as it shall deem requisite :
that no society shall be dissolved unless three-fifths of the members shall
have expressed a wish for such dissolution by their votes delivered in person,
or by proxy, at a general meeting convened for the purpose :
that whenever any Government is a member of, or a contributor to, or otherwise
interested in any society registered under this Act, such society shall not be
dissolved, without the consent of the Government of the State of registration.
upon the dissolution of any society registered under this Act there shall
remain, after the satisfaction of all its debts and liabilities, any property
whatsoever, the same shall not be paid to or distributed among the members of
the said society or any of them, but shall be given to some other society, to
be determined by the votes of not less than three- fifths of the members
present personally or by proxy at the time of the dissolution, or, in default
thereof, by such Court as aforesaid :
however, that this clause shall not apply to any society which shall have been
founded or established by the contributions of shareholders in the nature of a
Joint Stock Company."
other crucial question is whether the Absorption Rules applied to IERT. The
relevant provisions in the rules read as follows:
exercise of the powers conferred by the proviso to Article 309 of the
Constitution, the Governor is pleased to make the following rules to provide
for the absorption in Government Service of the retrenched employees of the
Government or of Public Corporations.
UTTAR PRADESH ABSORPTION OF RETRENCHED EMPLOYEES OF GOVERNMENT OR PUBLIC
CORPORATIONS IN GOVERNMENT SERVICE RULES, 1991.
xx xx xx
xx 2(b) "Public Corporation" means a body corporate established or constituted
by or under any Uttar Pradesh Act expect a University of local authority
constituted for the purpose of Local Self Government and includes a government
Company within the meaning of Section 617 of the Companies Act, 1956 in which
the State Government has prepondering interest.
"Retrenched Employees" means a person who was appointed on a post
under the Government or a public corporation on or before October 1, 1986 in
accordance with the procedure laid down for recruitment to the post and was
continuously working in any post under the Government or such corporation up to
date of his retrenchment due to reduction in, or winding up of, any
establishment or the Government of the Public Corporation, as the case may be
and in respect of whom a certificate of being retrenched employees has been
issued by his appointing authority."
bare reading of the provisions makes the positions clear that in order to bring
application of the Rules the public corporation has to be a body corporate
established or constituted by or under any Uttar Pradesh Act.
The fundamental requirement is that the corporation should have been
constituted by or under any Uttar Pradesh Act. Undisputedly, the Societies Act
is a Central Act.
The impugned judgment of the High Court does not suffer from any infirmity to
warrant interference. The appeals are dismissed but without any order as to