JUDGMENT :- P. S. Mishra & B. Prasad, JJ. The petitioner which claims to be an Association of Selected candidates for appointment in various capacities in the Bihar State Financial Corporation, (a body created by a notification of the State Government as contemplated in the State Financial Corporation Act, 1951) has moved this court by filing the instant writ application as well as a contempt petition, being M. J. C. No. 41/89. stating inter alia that although this court in C. W J. C. No. 764 of 1987 and analogous cases gave a direction to the Respondent State Government as well as the State Financial Corporation to decide as to whether directives issued by the State Government shall be applied by the Respondent Corporation in the matter of appointments in Class I and Class II posts in the Corporation or not, has failed to carry out the directions of this Court and instead chosen to nullify the selection already made and to desist from making recruitment in accordance with law. 2. The aforementioned judgment of this Court by a Bench has taken pains to consider various provisions of the State Financial Corporations Act, the validity of creation and the role of Bureau of Public Enterprises which functions as a body representing the interests of the State Government and resolves the controversy as to whether a directive issued by the State Government to the State Financial Corporation to make appointments in accordance with the recommendations of the said Bureau by stating inter alia:- We do no propose to go into the question whether in the past appointments in Class I and Class II posts in the Corporation were made in accordance with the directives issued, by the State Government or not. We may, however state that the State Financial Corporation does not appear to have framed any regulation for recruitment in Class I and Class II of its service. It is, indeed, a cause of concern for in making the recruitment of various categories of trainees in Class I and Class II of the Corporation Services, it is required to take decision as to qualifications etc to be incorporated in the advertisement. It is, indeed, a cause of concern for in making the recruitment of various categories of trainees in Class I and Class II of the Corporation Services, it is required to take decision as to qualifications etc to be incorporated in the advertisement. Without there being any law framed for the said purpose when there is a number of provisions in the Act, for such regulations, petitioners herein and any other person qualified for such appointments may have a genuine grievance to such arbitrary Act, of the Corporation. In cases, the Corporation is to decide the modality of making recruitments, it advisedly should frame regulations and abide by it but subject to the provisions as contained in Sections 23 and 39 of the Act. No arguments have been advanced before us by either party as to the scope and limitations under which section 39 of the Act, has to work. It, however, is not in doubt that any matter relating to the functions of the Corporation shall be within its reach and the State Government shall be accordingly empowered to issue instructions directives. This however, may not amount to saying that in case regulations are framed, instructions issued in exercise of the power under section 39 of the Act, shall nullify them. At the moment the controversy is confined to the consultation and advise of the Development Bank. Consultation with it may, for the present, resolve the controversy, if, however, any dispute shall arise between the State Government and the Board as to whether the instructions issued by it concern any question of policy or not, parties shall be well advised to take recourse to Section 39 (2) of the Act. Having noticed, as above, this Court directed as follows:- Having noticed as above, in our considered view a direction to respondent State of Bihar be given to consult the Development Bank that is to say, Industrial Development Bank of India, within a reasonable time and accordingly decide whether to insist upon observance of the instructions as contained in Annexure-3 or not. The Corporation shall be at liberty to seek State Government's decision on the question after such consultation is made in accordance with Sub-Section (2) of Section 39 of the Act. The Corporation shall be at liberty to seek State Government's decision on the question after such consultation is made in accordance with Sub-Section (2) of Section 39 of the Act. It shall be open to the Petitioners and/or the intervenor-respondents to seek such remedy as may be available under the law in the event of either the State Government enforcing any instruction in the Dame of policy decision or the Corporation proceeding to make appointments without framing regulations as provided in the Act. The Court accordingly ordered for issuing writ of mandamus in the following words- “ Let a writ in the nature of mandamus issue the respondent-State of Bihar to forthwith make consultation with the Industrial Development Bank of India and obtain its advice and thereafter take a decision whether to enforce upon the Bihar State Financial Corporation directives as contained in Annexure-3 or not. The Consultation as directed must be made within six weeks of the receipt of the order and decision whether to enforce directive upon the Corporation or not, be taken within two months from the said date. Unreasonable delay has already taken place in making the appointments. If any further delay is made that will cause prejudice to the petitioners as well as intervonor respondents. It is accordingly clarified that in case no consultation is made by the State Government of Bihar within six weeks as indicated above and decision taken within two months as above, the Corporation shall proceed to make appointments in accordance with law. The aforementioned judgment was delivered by the Court on 18. 4. 1988. 3. It appears from the documents appended to the writ application that the State Government took steps to consult the Industrial Development Bank on 20. 5. 1988 and after completing the consultation, issued an instruction on 15. 6. 1988 to the effect, inter alia that the Development Bank bad advised and accordingly the State Government bad decided that , instructions issued by the Bureau of Public Enterprises, directives thereof and guide-lines issued by it shall be binding upon the Bihar State Financial Corporation. The letter, however, also indicated that the State Government had decided that if any departure or variation in the aforementioned directions and guidelines were needed the respondent, Corporation could request the Bureau to approve such variations or departure for a specified period. The letter, however, also indicated that the State Government had decided that if any departure or variation in the aforementioned directions and guidelines were needed the respondent, Corporation could request the Bureau to approve such variations or departure for a specified period. After the aforementioned Government order was issued, the respondents were required to proceed to make appointments in accordance with the directives as contained in Annexure-3 of the aforementioned writ application. They however kept all appointments in abeyance. Toe petitioner after waiting for redressal of their grievances by the respondents moved this court by filing a contempt petition being M. J. C. No 41/89. This Court observed that issues raised in the contempt application were dependent upon the answers to the questions which were left in the aforementioned writ application, such as the scope and limitations under which section 39 of the Act, has to work. There may not be a case of contempt but for examination of the whole matter in a properly constituted writ application, the petitioner has accordingly filed the instant writ application. 4. During the pendency of aforementioned contempt application but before the filing of the instant writ application by the petitioners, the State Government has issued a further order on 6. 5. 1989 saying that the State Government had decided to prohibit appointments of Management Trainees in the respondent Corporation for the time being. The petitioner has taken this to be a further violation of the mandamus of this court in the aforementioned writ application and has filed a Supplementary affidavit in the contempt application. 5. The respondent-Corporation bas appeared and filed a counter-affidavit. The respondent Bureau of Public Enterprises has shown cause in the con temp' application. The State of Bihar has, however, not filed any counter affidavit in the writ application, After hearing learned counsel for the petitioner, learned Advocate General for the respondents and learned counsel for the Respondent Corporation this Court on 13.2.1990 ordered : “The respondent-Corporation has admitted existence of vacancies and asserted that it has been making correspondence but has not been receiving any instruction from the Bureau of Public Enterprises. Fact that vacancies exist, is not in dispute. The Bureau of Public Enterprises, it appears, has failed to discharge its obligation until now. Fact that vacancies exist, is not in dispute. The Bureau of Public Enterprises, it appears, has failed to discharge its obligation until now. It is time for it to realise that by not acting in accordance with Jaw, it hail been causing injury to the Bihar State Financial Corporation on the one hand and persons eligible for appointments on the other hand. For the said reason alone, we order here by that Bureau of Public Enterprises shall within one month from today issue necessary orders permitting the Corporation to proceed with the appointments or in the alternative furnish to the, Corporation a list of eligible candidates after completing necessary formalities for selection of suitable candidates. We, however, do not dispose of this application finally, this application as well as the Contempt petition has since been heard by us. 6. The two provisions of the State Financial Corporations Act, which were noticed in the earlier 'Hit cases are, for the reason of the Respondent. Corporation and the State Government some how confusing the whole issue as determination by us. Section 23 states Officers and other employees of the Corporation The Financial Corporation may appoint such officers, advisers and employees as it considers necessary for the efficient performance of its functions, and determine, by regulations their conditions of appointment and service and the remuneration payable to them. Provided that the State Government may in consultation with and after obtaining the advice of the Development Bank, specify the class or categories of posts. in respect of which appointments may be made by the Board on such remuneration and other conditions of service as the Board may determine, and no regulation made under this Act, shall apply to such posts in respect of matters so determined by the Board” 7. This provision is clear and unambiguous in empowering the Respondent Financial Corporation to make appointments of its officers, advisers and employees as it considers necessary and 'also to determine by regulations, their conditions of appointment and service and the remuneration payable to them. This provision is clear and unambiguous in empowering the Respondent Financial Corporation to make appointments of its officers, advisers and employees as it considers necessary and 'also to determine by regulations, their conditions of appointment and service and the remuneration payable to them. The proviso, however, bas created exceptions with respect to specified class or categories of posts in respect of which appointments may be made by the Board on such remuneration and other conditions of service as the Board may determine without following the determined regulation as to the conditions of appointment and service and the remuneration payable to the officers, advisers and employees of the specified class and categories. The proviso further states that this power to specify the class or categories is vested in the State Government which Government may advise the Corporation accordingly in consultation with and after obtaining the advice of the Development Bank. 8. Section 39 states :- Power to give instructions to Financial Corporation on questions of policy. (1) In the discharge of its functions, the Board shall be guided by such instructions on question of policy as may be given to it by the State Government and after obtaining the advice of Development Bank. (2) If any dispute arises between the State Government and the Board as to whether a question is or is not a question of policy the decision of the State Govern meat shall be final. (2) If any dispute arises between the State Government and the Board as to whether a question is or is not a question of policy the decision of the State Govern meat shall be final. (3) If the Board fails to carry out the instructions on the question of policy laid down by the State Government under sub-section (1) of this section or the instructions given to the Board under sub-section (4) of section 37 A the State Government shall have the power to supersede the Board and appoint a new Board in its place to function until a properly constituted Board is set up and the decision of the State Government as to the grounds for superseding the Board shall not be questioned in any court Instructions on the question of policy after obtaining the advice of the Development Bank as referred to in section 39 of the Act, have been made subject to Section 37 A which states - Inspection-(1), The Development Bank at any time may with the approval of the Central Government, and on being directed so to do by that Government shall cause an inspection to be made by one or more of its officers of the working of any Financial Corporation and its books and accounts; and the Development Bank shall send the report of such inspection to the Central Government and to the State Government and shall supply a copy thereof to the Financial Corporation. (2) It shall be the duty of every director or every officer of the Financial Corporation to produce to any officer making an inspection under sub• section (1) all such books, accounts and other documents in his custody or power and to furnish him with any statement and information relating to the affairs of the Financial Corporation as the said officer may require of him within such time as the said officer may specify. (3) Notwithstanding anything contained in the Indian Evidence Act, 1872, or in any other law for the time being in force, no Court, tribunal or other authority shall have power to require the Development Bank or any of its officers to produce before such Court, tribunal or other authority the report of the inspection made by it under sub• section (1) or any copy thereof. (4) The State Government may, after considering any report sent to it under sub• section (1), give such instruction to the Board as it considers necessary and it shall be the duty of the Board to comply with such instructions. 9. The scheme of the provisions afore mentioned, thus, make it clear that the right to make appointments, determine the vacancies against which appointments are to be made and framing the regulations for such appointments have been given to the State Financial Corporation. The only power in this behalf given to the State Government is to specify the class or categories of posts in respect of which appointments may be made by the Board without following the regulations and without adhering to the conditions of appointment and service and the remuneration payable to the employees or the officers appointed in such specified class or categories of posts. 10. The power to issue instructions on the question of policy cannot be brought into the realm of appointments, determination of classes or categories of posts and regulations framed for making appointments. No policy decision of the State Government shall prevail upon the statutory power of the Corporation under section 23 of the Act. That shall have to be ignored or struck down if it shall have any effect upon the Corporation's rights acknowledged under section 23 of the Act. 11. Any statutory authority which chooses to function without there being regulations to operate upon its discretion does it at the risk of being branded arbitrary. Respondent- Financial Corporation, it is regrettable has not framed any regulation. It has been creating posts and making appointments as and when necessary by deciding to advertise such posts and each time deciding as to what may be the procedures and conditions of service and remuneration payable to the officers and employees. In the aforementioned writ application, I have already mentioned this Court has taken notice of the Corporation's failure to Act, as required under section 23 of the Act. It had ample time, if it had the will to frame regulations, determine the class or categories as well as conditions of service and• decide what remunerations may be paid to different class or categories of the employees. It has not done so. 12. It had ample time, if it had the will to frame regulations, determine the class or categories as well as conditions of service and• decide what remunerations may be paid to different class or categories of the employees. It has not done so. 12. The State Government on its part has consulted the Development Bank and communicated its decision to the Respondent-Corporation that latter shall abide by the directives issued by the Bureau of Public Enterprises. The Government decision, thus, will be one which shall be on the one hand within the purview of section 39 of the Act, on the other hand within purview of section 23 of the Act. Viewed with this angle, the one and the only angle, in accordance with which the State Government's orders can be viewed. It may be a policy decision to entrust to the Bureau of Public Enterprises with the authority to issue guidelines or direct instructions on the question of policy as contemplated under section 39 of the Act, and leave the State Government's function co be performed by the Bureau; to specify the class or categories of posts, in respect of which appointments may be made by the Board on such recommendations and other conditions of service as the Board may deter mine which are not in accordance with the regulations and conditions of service framed by it for its officers, advisers and employees. The Bureau cannot get any authority more thans given to the State Government by Sections 23 and 39 of the Act. This may be the limit under which the Bureau may function. It cannot go beyond. We are saying so without going into the question as to whether the State Government can delegate one or other of its statutory function to an entity in which in no sense can be equated with the State Government. Bureau may be an agent or a department of the State Government. Sections 23 and 39 all the time refer to the role the State Government and not ad apartment or an agent of the State Government. Any State Government has to function in accordance with the rules of executive business under Article 166 of the Constitution of India. Nothing has been shown to us that the rules framed under Article 166 of the Constitution of India have recognised the Bureau's role as the role of the State Government. 13. Any State Government has to function in accordance with the rules of executive business under Article 166 of the Constitution of India. Nothing has been shown to us that the rules framed under Article 166 of the Constitution of India have recognised the Bureau's role as the role of the State Government. 13. In view of the discussions above, what follows it irresistible. The State Government could never get the authority to order the Respondent Financial Corporation to suspend recruitments. Its order dated 6.5 1989 as contained in Annexure B/2 to the Supplementary counter affidavit of Respondent no. 2 (Bureau) in M. J. C. No. 41/89 is wholly without jurisdiction. The decision of the State Government not to go in for recruitments of Management trainees in the Respondent Corporation is, thus, declared non est. 14. Nothing has been brought to our notice showing that the Bureau representing the State Government has specified Management trainess as a class or category who cannot be recruited by Financial Corporation except from a pool of Management trainees, which can be prepared by the Respondent-Bureau. It shall, however be always within the powers of the State Government to declare the Management trainees as a class or category of employees who may be recruited by the Corporation in accordance with the regulations that the Corporation may separately make for them and subject to the guidelines issued by the State Government. Nothing of the sort, it appears has been done. 15. This court has already noticed in its earlier judgments on the subject that a large number of vacancies are existing, that the Corporation had already advertised such vacancies, that applications received were duly scrutinised by the Corporation and that when it was going to make appointments the Bureau came to intervene to exercise its authority over the Corporation's right to make appointments of Management Trainees. This court had no material at that time to decide as to whether decision to create a pool of Management trainees had been taken in consultation with the Development Bank or not and whether any policy decision had been taken with respect to the regulations which were sought to be applied to the Management trainees or net. This court had no material at that time to decide as to whether decision to create a pool of Management trainees had been taken in consultation with the Development Bank or not and whether any policy decision had been taken with respect to the regulations which were sought to be applied to the Management trainees or net. This court's direction to the State Government to consult the Development Bank has given to the State Government the limited function which proviso to section 23 of the Act, has contemplated with respect to the appointments of the officers and other categories of employees of •the Respondent Corporation. The State Government, we have already noticed, has not exercised that power. That being the position in fact and in law, the only possible conclusion is that the Respondent-State Government has failed to comply with the direction issued by this Court in C. W. J. C. No. 764 of 1987. The Respondent- Financial Corporation is for the said reason obliged to proceed to make appointments in accordance with law as directed by this court in C. W. J. C. No. 764 of 1987 and other analogus cases. Let a writ in the nature of Mandamus accordingly issue. Since inordinate delay has already taken place the Respondent Corporation must complete all the formalities of recruitments within a period of two months from the date of the receipt of the order, of this Court. We, however, take a compassionate view of the violation of the direction of this court by the Respondent-State Government and the Respondent-Corporation for the reason that they apparently functioned under misapprehension of their respective power and functions. Accordingly, we do not propose to proceed with the contempt any further. The rule issued in M. J. C. No. 41/89 is accordingly discharged. 16. 10 the result, C. W. J. C. No. 8110/89 is allowed. Let a writ in the nature of mandamus issue to the Respondent-Corporation as above. M. J. C. NO. 41/89 is dismissed. HP Writ application allowed and Contempt petition dismissed.