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1989 DIGILAW 964 (ALL)

H. M. Abdul Khiyum v. I. I. M. , Lucknow

1989-12-16

S.H.A.RAZA, U.C.SRIVASTAVA

body1989
JUDGMENT 1. The order of termination dated 9.4.87 and dated 18.6.87 terminating the services of the petitioner as a Member Secretary of the Board of Governors in exercise of rules 5 (26) is subject matter of the challenge of this petition. 2. The petitioner who is a graduate in Mechanical Engineering from the Institute of Engineers of India did postgraduation diploma in operation management From Bombay University and he also did U.S. International University, Sandeego, California in Organisation and Development and Industrial Relations. He also did M. B.A. from the same university. He is a Fellow of the Institution of Engineers (India). He was selected in open competition in January, 1986 by the Board of Selection, for the post of Chief Administrative Officer in the Management of the opposite party No. 1. He was also authorised to act as a Member Secretary. The petitioner started performing his duties honestly and diligently. He could not keep the director happy as he wanted to perform all administrative functions which were pleasant and authoritative with no unpleasant consequences, whereas he wanted to use the petitioner as a scapegoat for unpleasant, irregular and questionable actions, and when the petitioner refused to associate with such dubious methods it resulted in the order which is under challenge. 3. The petitioner proceeded on leave from 9.2.1987 and remained on leave till 10.4.87 and resumed duty on 13.4.1987. When the petitioner resumed duty he was threatened and asked to go back to Banglore. He was also orally told that his services have been terminated. The petitioner requested opposite party No. 2 to serve a copy of the termination order. Then the opposite party No. 2 suddenly changed his attitude and told the petitioner to keep the matter confidential, but he was deprived of the powers to function as Chief Administrative Officer and ultimately a letter of termination was sent to him at Bangalore on 10.4.87. The petitioner was asked to return him the letter of termination but he firmly refused to do so. Then the petitioner was told orally that the said order of termination was inoperative. The petitioner continued to attend the office though he was harassed by various methods and in May, 1987 the petitioner was assigned many duties of administrative nature. The petitioner was intimidated. Then the petitioner was told orally that the said order of termination was inoperative. The petitioner continued to attend the office though he was harassed by various methods and in May, 1987 the petitioner was assigned many duties of administrative nature. The petitioner was intimidated. He was served with an order dated 2.6.86 whereby the powers of the petitioner as Member Secretary of the Board of Governors were withdrawn. The petitioner had sent a representation in May, 1987 narrating the injustice done to him but no reply was given to him and suddenly, on 18.6.87 termination order was served upon him. The petitioner left his job from Nairobi and many overseas assignments, brought his family to Lucknow though he belongs to Bangalore. 4. By an order dated 3rd January, 1986 the petitioner was appointed as Chief Administrative Officer and was placed on probation for first two years after joining and during the period of probation, opposite party could terminate the service without notice and without giving reasons. On completion of this period the probationary period would either be extended by another two years or the appointment would be confirmed in writing. After confirmation either party can terminate the service after giving three month's notice or salary in lieu thereof. 5. Opposite parties have filed counter affidavit in which it has been stated that the work and conduct of the petitioner as Chief Administrative Officer was not found to be satisfactory during the period of probation. Therefore, his services were terminated in terms of the contract. The petitioner had requested that his services may not be terminated but he may be permitted to resign. However, he did not keep his commitment to resign from the service. Therefore, Board of Governors at their meeting held on 17.6.1987 decided to terminate the services of the petitioner. 6. The first question that requires consideration is as to whether Indian Institute of Management is an instrumentality of the State or not. According to the petitioner opposite party No. 1 is wholly controlled and financed by the Government of India. The various provisions of the Memorandum of Association indicate that the Government of India exercises complete and total control over the affairs of the opposite party No. 1. The object of the Society is to establish and to carry on the administration and management of the Indian Institute of Management, Lucknow. The various provisions of the Memorandum of Association indicate that the Government of India exercises complete and total control over the affairs of the opposite party No. 1. The object of the Society is to establish and to carry on the administration and management of the Indian Institute of Management, Lucknow. The function of the society shall be : (i) to create with the prior approval of the Central Government administrative, technical and ministerial and other posts under the Society other than the post of Director of the Institute and to make appointments thereto. The appoinment to the post of Director shall be made on such terms and conditions as may be decided by the Central Government. (ii) to make Rules and Byelaws for the conduct of the affairs of the Society and to add, to amend, to vary or rescind them from time to time with the approval of the Central Government. 7. Para 5 reads as under : The Central Government my at any time appoint one or more persons to review the works and progress of the Society or the institute and to hold an enquiry into the affairs thereof and to report thereon in such manner as the Central Government may stipulate. Upon receipt of any such report, the Central Government may take such action and issue such directions as it may consider necessary in respect of any of the matters dealt with in the report regarding the Society of the Institute as the case may be and the Society shall be bound to comply with such directions. Para 6 provides that in case the Central Government is satisfied that the Society or the Institute is not functioning properly, the Central Government shall have the power to take over the administration and the assets of the Institute. 8. Para 7 provides that if on winding up or dissolution of the Society, there shall remain after satisfaction of all its debts and liabilities, any assets and property whatsoever, the same shall not be paid to or distributed among members of the Society or any of them but shall be dealt with in such manner as the Central Government may determine. 9. Rule 12 of the memorandum deals with powers and functions of the Board. 9. Rule 12 of the memorandum deals with powers and functions of the Board. One of the functions of the Board is to create teaching, administrative, technical, ministerial and other posts under the institute other than post of Director with the prior approval of the Central Government and to make appointment thereto. The appointment to the post of Director shall be made by the Board according to such procedures and on such terms and conditions as may be decided by the Central Government. 10. Rule 16 reads as under : to make, adopt, amend, vary or rescind from time to time with the prior approval of the Central Government Byelaws for the regulations of, and for any purposes connected with the management and administration of affairs of the Institute and for the furtherance of its object; 11. In this connection it may be noted that in the Memorandum of Association and Rules the object of para 5 is to maintain a Fund to which shall be credited : (a) all moneys provided by the Central and the State Governments : (b) all fees and other charges received by the Society; (c) all moneys received by the Society by way of grants; gifts, donations, benedictions, bequests or transfers; and (d) all moneys received by the Society in any other manner or from any other sources. 12. Para 6 of the Memorandum of Association deals with to deposit all moneys credited to the fund in such banks or to invest them in such manner as the Society may with the approval of the Central Government decides. 13. Para 7 of the Memorandum deals with to meet the expenses of the Society including expenses incurred in the exercise of its powers and discharge of its functions out of the Fund. 14. Para 9 of the Memorandum deals with to forward annuall to the Central Government the accounts of the Society as certified by the Auditor General of India or any other authority as may be decided by the Central Government. 15. Para 10 deals with to do all such things as may be necessary, incidental or conducive to the attainment of all or any of the objects of the Society. 16. It, thus, indicates that the Central Government has full control over the administration of the Indian Institute of Management. 15. Para 10 deals with to do all such things as may be necessary, incidental or conducive to the attainment of all or any of the objects of the Society. 16. It, thus, indicates that the Central Government has full control over the administration of the Indian Institute of Management. Para 5 of the memorandum extracted above deals, that the Central Government may at any time appoint one or more persons to review the works and progress of the Society or the Institute and to hold an enquiry into the affairs thereof and to report thereof in such manner as the Central Government may stipulate. Upon receipt of any such report, the Central Government may take such action and issue such directions as it may consider necessary in respect of any of the matters dealt within the report regarding the Society or the Institute as the case may be and the Society shall be bound to comply with such directions. 17. Rule 12 deals with powers and functions of the Board. The power of the Board is to receive grants and contributions and to have custody of the funds of the Institute and to manage the properties of the Institute and to prepare the budget estimates of the Society for each year, and to sanction the expenditure within the limits of the budget as approved by the Central Government. 18. This question as to whether a Society registered under the Society Registration Act will be instrumentality of the State has been considered in various cases. In Sabhajit Tewari v. Union of India and others (AIR 1975 Supreme Court 1229) it was held that the Council of Scientific and Industrial Research, which was sponsored and controlled by the Central Government, registered under Societies Registration Act, cannot be held as 'State'. In Sabhajit Tewari v. Union of India and others (AIR 1975 Supreme Court 1229) it was held that the Council of Scientific and Industrial Research, which was sponsored and controlled by the Central Government, registered under Societies Registration Act, cannot be held as 'State'. The Prime Minister is exofficio Chairman of the Society and the Governing Body consists of persons appointed by the Government whose membership can be terminated by the Government of India at one or the same time other than the exofficio member of the Governing body which shall have power with the sanction of the Government of India to frame, amend or repeal Byelaws not inconsistent with the rules for administration and management of the affairs of the society and in particular to provide for the terms and tenure of appointments, emoluments, allowances, rules of discipline, and other conditions of service of the officers and staff of the Society. On these facts the court held : ...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 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 financing of special research establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problem 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 and carried out in a responsible manner. In AjayHasia v. Khalid Mujib ( AIR 1981 SC 487 ) the case of Sabhajit Tewari (supra) was distinguished, though was not specifically overruled, but its ratio was diluted to a great extent and it was observed that the said case was not an authority for the proposition that a society registered under the Societies Registration Act for that reason alone would not be comprehended in the expression 'other authority'. 19. 19. In the Ajay Hasia's case it was observed that the enquiry 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 Art. 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, and hence a juristic entity which may be 'State' for the purpose of PartIII and IV would not be so, for the purpose of part XIV or any other provision of the Constitution. It was a case of registered society which was an Engineering College which was sponsored by the Government of India and was managed and administered by the Society. It was dominated by the representatives appointed by the Central Government and the State Governments. The nominees required for running the college were provided entirely by the Central Government and the Government of Jammu and Kashmir and if any other monies are to be received by the society, it can be done only with the approval of the State and the Central Government. The rules were to be made by the Society with the prior approval of the society and were also to be submitted to both the Government for their scrutiny and satisfaction. The Society was also to comply with all such directions as may be issued by the State Governmentwith the approval of the Central Government in respect of any matter, dealt with in the report of the Reviewing Committee. No immovable property of the society could be disposed of in any manner without the approval of both the Government. The State and the Central Government had even the power to appoint may other person or persons to be members of the society and any member of the society other than a member representing the State or the Central Government could be removed from the membership of the society by the State Government with the approval of the Central Government. The State and the Central Government had even the power to appoint may other person or persons to be members of the society and any member of the society other than a member representing the State or the Central Government could be removed from the membership of the society by the State Government with the approval of the Central Government. The Board of Governors which was in charge of general superintendence, direction and control of the affairs of the society and of its income and property was also largely controlled by the nominee of the State and the Central Governments. 20. In Tekraj Vasandi alias K.L. Basandhi Vs. Union of India and others reported in (1988) 1 SCC page 236 the Hon'ble Court after considering various cases on the point observed : For appropriate consideration of the question whether ICPS is 'State' within the meaning of Article 12 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 broard features which have been found by the Supreme Court in several decision to be relevant in the matter of determining a dispute of this type. 21. It was also observed that we have several cases of societies registered under the Societies Registration Act which have been treated as State' but in each of 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. In the absence of fair application of the tests to be made, there is possibility of turning a very nongovernmental 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. 22. 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. 22. In the instant case as we have seen it is noticed that the objects for which the Society is established are to carry on administration and management of the Indian Institute of Management, Lucknow. It is only with the prior approval of the Central Government that posts are created and appointments are made and the terms and conditions of the appointment of the Director are decided. Rules and byelaws are framed, can be varied only with the approval of the Central Government. The Central Government has got a power to take over the administration and assets of the Institute, and even after winding up or dissolution of the Society assets are dealt with in the manner as determined by the Central Government. 23. Our attention has been drawn towards writ petition No. 5882 of 1988, decided by this Bench in which we have held that Institute of Cooperative & Corporation Management Research & Training is not instrumentality of the State. After considering various cases and in the light of this case we have observed; .....................although the objects which the society is to carry on is provided in the Cooperative Societies Act and it has also the sanction of the State Legislation under the Directive Principle of the State Policy, but its objects are not confined to that only. The Government is only a member and its membership can also be terminated like that of any other member in cases of default by it. The finances are not fully provided by the Government and the Government has got no deep and pervasive control over the same. The external control of the Society is not vested in the Government and various matters are also not referred to the Government and the approval of the State Government is not to be obtained even in the matter of expenditure. The external control of the Society is not vested in the Government and various matters are also not referred to the Government and the approval of the State Government is not to be obtained even in the matter of expenditure. The tests which have been laid down by the Hon'ble Supreme Court in the cases referred above are not fully satisfied in respect of Institute of Cooperative & Corporate Management, Research and Training, Lucknow and consequently the Society cannot be held to be 'State' within the meaning of Article 12 of the Constitution of India. But the fact of the present case is distinguishable from the above mentioned case, as in the instant case the Central Government has full control over the administration of the Indian Institute of Management. Power of the Government cannot be curtailed and finances are fully provided by the Government and it can give other source as memorandum of association indicates that the Central Government has got pervasive control over the affairs of the Society. As such, we are of the view that the Indian Institute of Management is an instrumentality of the State and consequently amenable to the jurisdiction of the court and under Article 226 of the Constitution of India mandamus can be issued. In Andi Mukta Satguru Muktayee Vandas Swami Suvarna Jayantri Mahotsav Smarak Trust and others. v. V. R. Rudani and others 1989 (2) SCC 691 it was held that mandamus can be issued even against a private body. In J.R. Raghu Pathy and others V. State of Andhra Pradesh and others (1988) 4 SCC 364 it has been held that in nonstatutory inferior authority like the Board albeit constituted under the prerogative powers, is just as well amenable to the jurisdiction of the Court as a statutory body. In view of the fact that the petitioner was an employee of an instrumentality of the State his services cannot be terminated. 24. From the counter affidavit it appears that the petitioner started discharging his duties of Member Secretary of the Institute. However, his work and conduct was not found to be satisfactory during the period of probation. Therefore, an order of termination of services was sent to him. He implored to permit him to resign so that he could avail alternative employment. However, he did not submit his resignation, as such his services were terminated. However, his work and conduct was not found to be satisfactory during the period of probation. Therefore, an order of termination of services was sent to him. He implored to permit him to resign so that he could avail alternative employment. However, he did not submit his resignation, as such his services were terminated. According to the opposite parties duties of Chief Administrative Officer were never given to him. In case the petitioner was unsuitable, obviously communication should have been given to him for explanation. Without giving any communication to the petitioner pointing his deficiency termination order becomes arbitrary and it hits article 14 of the Constitution of India as has been held in Dr. Mrs. Sumati P. Shere v. Union of India and others AIR 1989 Supreme Court 1431 it has been held that in the matter of unsuitability an advance communication of deficiencies was necessary. In the instant case there being no communication regarding his unsuitability, the termination order became arbitrary and is hit by Article 14 of the Constitution. Consequently, it deserves to be quashed. The writ petition is allowed and the termination order dated 9.4.87 and 18.6.87 are quashed. However, there will be no order as to costs.