Sonanda Bhandare ( 1 ) THE petitioner was appoined as a Clerk withthe respondent-Jammu and Kashmir Bank Limited in the year 1958 and continued to work with the Bank in various capacities and ultimately was promoted as Chief Manager. He was transferred to the Divisional Office at New,delhi in April 1984. The petitioner was served with a charge-sheet dated19. 7. 1984 on alleged charges of misconduct. He submitted a reply on 13. 8. 1984denying the allegations. Thereafter, a supplementary charge-sheet was given tothe petitioner on 20. 11. 1984 and additional allegations of misconduct werelevelled against him. The petitioner submitted a further detailed reply on28. 121984 to the supplementary charge and denied the correctness of thealleged charges. Not being satisfied by the reply given by the petitioner, therespondent communicated to the petitioner that it had been decided to holdan enquiry against him and appointed Dr. B. L. Wanchoo, Deputy Generalmanager, Delhi as Enquiry Officer in the matter. Thereafter, enquiry wasconducted by the said Enquiry Officer which commenced on 18. 2. 1985 andended on 10. 10. 1985. The petitioner was placed under suspension on 18. 7. 1986pending final orders. The order of suspension was followed by a show-causenotice dated 23. 7. 1986 communicating to the petitioner that it had been decidedby the respondent to dismiss the petitioner from service and the petitioner wasdirected to show cause as to why he should not be dismssed from service of thebank with immediate effect. In response the petitioner sent a reply dated 8. 8. 86and requested that a copy of the inquiry report be given to him and submittedan interim reply. The respondent vide letter dated 22. 9. 1986 sent a copy of theinquiry report and asked the petitioner to send his further reply within 15 daysfrom the date of the issuance of the said letter. Before the petitioner couldsend the reply to the show-cause notice and before the expiry of 15 days of thereceipt of the letter dated 22. 9. 1986 he received a letter on 15. 11. 1986 fromthe Chief Manager, Divisional Office, New Delhi enclosing an order of dismissal dated 10. 10. 1986. Thereafter, the petitioner filed an appeal against theorder of the dismissal to the appellate authority i. e. the Chairman of therespondent on 21. 11 1986 Which was rejected on 18. 4. 1987. The petitioner has,therefore, filed the present writ petition challenging the order of dismissaldated 10. 10. 10. 1986. Thereafter, the petitioner filed an appeal against theorder of the dismissal to the appellate authority i. e. the Chairman of therespondent on 21. 11 1986 Which was rejected on 18. 4. 1987. The petitioner has,therefore, filed the present writ petition challenging the order of dismissaldated 10. 10. 1986 as also the order dated 14. 4. 1987 rejecting the appeal. ( 2 ) A preliminary objection was raised by the respondent regarding themaintainability of the writ petition and it was submitted that the Jammu andkashmir Bank Limited is not a "state" within the meaning of Article 12 ofthe Constitution of India and thus the writ petition filed against the Bank underarticle 226 of the Constitution of India is not maintainable. ( 3 ) LENGTHY arguments were advanced by the learned Counsel for therespondent and a plethora of authorities were cited. It was submitted thatsince the affairs and working of the respondent Bank is managed by the Boardof Directors and is not subject to any directions or instructions which thegovernment may issue to government departments or statutory organisations,undertakings, body or corporations, the respondent is not an agency or instrumentality or an authority within the meaning of Article 12 of the Constitutionof India and consequently not amenable to the writ jurisdiction of thiscourt. ( 4 ) THOUGH large number of cases were cited by the learned Counselfor the parties in support of the preliminary contention, for the sake of brevity. I will only refer to a few of them. ( 5 ) THE Supreme Court in Ramana Dayaram Shetty v. Internationalairport Authority of India, AIR 1979 SC 1628 considered the question whetherinternational Airport Authority of India was "state" within the meaning ofarticle 12 so as to subject to enforcement of fundamental rights against it. Thesupreme Court observed that the corporations acting as instrumentality oragency of government would obviously be subject to the same limitation in thefield of constitutional and administrative law as government itself, though inthe eye of the law, they would be distinct and independent legal entities If thegovernment acting through its officers is subject to certain constitutional andpublic law limitations, it must follow a fortiori that Government acting throughthe instrumentality or agency of. corporations should equally be subject to thesame limitations. corporations should equally be subject to thesame limitations. While dealing with the question as to how to determine whether a corporation is acting as an instrumentalits or agency of the government, the Supreme Court observed as under : "a corporation may be created in one of the two ways. It maybe either established by statute of incorporated under a law suchas the Companies Act, 1956 or the Societies Regulation Act, 1860. Where a corporation is wholly controlled by Government not only inits policy making but also in carrying out the functions entrusted toit by the law establishing it or by the Charter of its incorporation,there can be no doubt that it would be an instrumentality or agencyof the Government. . . . . . . . "the Supreme Court further observed : "it will thus be seen that there are several factors which mayhave to be considered in determining whether a corporation is anagency or instrumentality of Government. We have REFERRED TO to someof these factors and they may be summarised as under : Whether there is any financial assistance given by the State andif so what is the magnitude of such assistance, whether there is anyother form of assistance given by the State, and if so whether it isof the usual kind or it is extraordinary, whether there is any controlof the management and policies of the corporation by the State andwhat is the nature and extent of such control, whether the corporation enjoys State conferred or State protected monopoly status andwhether the functions carried out. by the corporation are publicfunctions closely related to governmental functions. This particularisation of relevant factors is however. not exhaustive and by its verynature it cannot be because with increasing assumption of new taskgrowing complexities of Management and administration and thenecessity of continuing adjustment in relations between the corporations and Government calling for flexibility, adaptability and innovative skills, it is not possible to make an exhaustive enumeration of thetests which would invariably and in all cases provide an unfailinganswer to the question whether a corporation is Government instrumentality or agency". The Supreme Court came to the conclusion that the Internationalairport Authority is "state" within the meaning of Article 12 of the Constitution of India. The Supreme Court came to the conclusion that the Internationalairport Authority is "state" within the meaning of Article 12 of the Constitution of India. ( 6 ) IN Ajay Hasia v. Khalid Mujib, AIR 1981 SC 487 while holding thatthe Engineering College, a Society registered under the Jammu and Kashmirregistration Societies Act, 1898 is authority within the meaning of Article 12 ofthe Constitution of India, the Supreme Court observed as under : "the tests for determining as to when a corporation can be saidto be an instrumentality or agency of Government may now becalled out from the judgment in the International Airport Authority scase. These tests are not conclusive or clinching, but they are merelyindicative indicia which have to be used with care and caution because while stressing, the necessity of a wide meaning to be placedon the expression "other authorities" it must be realised that it shouldnot be stretched so far as to bring in every autonomous body whichhas some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tampered by a wiselimitation. We may summarise the relevant tests gathered from thedecision in the International Airport Authority s case as follow :1. "one thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towardsindicating that the corporation is an instrumentality or agency ofthe Government. "2. "where the financial assistance of the State is so much as tomeet almost entire expenditure of the corporation, it wouldafford some indication of the corporation being impregnatedwith governmental character ". . 3. "it mayalso be a relevant factor. . . . . . whether the corporationenjoys monopoly status which is State conferred or Stateprotected". 4. "existence or deep and pervasive State Control may afford anindication that the corporation is a State agency or instrumentality. "5. "if the functions of the corporation are of public importance andclosely related to governmental functions, it would be a relevantfactor in classifying the corporation as an instrumentality oragency of government. "6. "specifically, if a department or government is transferred to acorporation. It would be a strong factor supportive of thisinference of the corporation being an instrumentality or agencyof the Government. "the Supreme Court further observed : "we may point out that it is immaterial for this purposewhether corporation is created by a Statute or under a Statute. "6. "specifically, if a department or government is transferred to acorporation. It would be a strong factor supportive of thisinference of the corporation being an instrumentality or agencyof the Government. "the Supreme Court further observed : "we may point out that it is immaterial for this purposewhether corporation is created by a Statute or under a Statute. Thetest is whether it is an instrumentality or agency of the Governmentand not as to how it is created. The inquiry has to be not as tohow the juristic person is borne out why it has been brought intoexistence. The corporation may be a statutory corporation createdby a Statute or it may be a Government Company or a companyformed under the Companies Act, 1956 or i. t may be a society registered under the Societies Registration Act, 1860 or any other similarstatute. Whatever be its genetical origin, it would be an "authority"within the meaning of Article 12 if it is an Instrumentality or agencyof the government and that would have to bedecided on a properassessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limitedto a corporation created by a statute but is equally applicable to acompany or society and in a given case it would have to be decided,on a consideration of the relevant factors, whether the company orsociety is an instrumentality or agency of the Government so as tocome within the meaning of the expression "authority" in the Article12. " ( 7 ) IN a more recent judgment in Tek Raj Vasandi alias K. L. Vasandhiv. Union of India Others, AIR 1988 SC 469 while considering the questionwhether Institute of Constitutional and Parliamentary Studies, an Instituteregistered under the Societies Act is an agency or instrumentality of the State,the Supreme Court observed :it is time to turn to the facts of the present. case to find out asto what the conclusion should be when the tests formulated by theseveral cases of this Court REFERRED TO to above are applied. There cannot indeed be a strait jacket formula. It is not necessary that all thetests should be satisfied for reaching the conclusion either for oragainst holding an institution to be "state". In a given case some ofthe features may emerge so boldly and prominently that a secondview may not be possible. There cannot indeed be a strait jacket formula. It is not necessary that all thetests should be satisfied for reaching the conclusion either for oragainst holding an institution to be "state". In a given case some ofthe features may emerge so boldly and prominently that a secondview may not be possible. There may yet be other cases where thematter would be on the border line and it would be difficult to takeone view or the other outright. ( 8 ) THE Supreme Court, however on the facts of that case came to theconclusion that a broad picture of the matter has to be taken and a discerningmind has to be applied keeping the realities and human experiences in view soas to reach a reasonable conclusion. On consideration of the facts of that casethey held that Institute of Constitutional and Parliamensary Studies (ICPS) isnot an agency or instrumentality of the State so as to come within the purviewof "other authorities" in Article 12 of the Constitution. The Supreme Courtfurther observed: "we must say that ICPS is a case of its type-typical in manyways and the normal tests may perhaps not properly apply to test itscharacter. " ( 9 ) THE Supreme Court in Som Prakash v. Union of India, MR 1981sc 212 held that Bharat Petroleum Corporation is a State within the meaningof Article 12. Similarly, in A. L. Kalra v. Project and Equipment Corporation. AIR1984 SC 1361, the Supreme Court held that Project and Equipment Corporationof India is other authority within the meaning of Article 12 of the Constitution. Similar question came up for consideration before the Supreme Court in Central Inland Water Transport Corporation v. Brojo Nath Ganguly. AIR 1986sc 1571,. and it was held that Central Inland Water Transport Corporation, agovernment company under Section 617 of the Companies Act is State withinthe meaning of Article 12. The Supreme Court observed as under : "if there is an instrumentality or agency of the State which hasassumed the garb of a Government company as defined in Sec. 617of the Companies Act, it does not follow that it thereby ceases to beas instrumentality or agency of the State. For the purpose of Art. 1. 2one must necessarily see through the corporate veil to ascertainwhether behind that veil is the face of an instrumentality or agencyof the State. The Corporation, which is the Appellant in these two. For the purpose of Art. 1. 2one must necessarily see through the corporate veil to ascertainwhether behind that veil is the face of an instrumentality or agencyof the State. The Corporation, which is the Appellant in these two. appeals before us, squarely falls within these observations and it alsosatisfies the distinct tests which have been laid down" ( 10 ) AGAIN in M. K. Aggarwal v. Gurgaon Gramin Bank and Others, air 1988 SC 286 , the Supreme Court held Gurgaon Gramin Bank constitutedunder the Regional Rural Banks Act 1976 to be State within the meaning ofarticle 12 and observed as follows : "now to the second point. The bank is constituted under theregional Rural Banks Act, 1976. Having regard to its constitutionand nature of its legal entity and the measures of State control, it isan instrumentality of the State and is made of latter s own flesh andbones and is, accordingly, "state" within the meaning and for,purposes, of Article 12 of the Constitution. "similarly, Prathma Bank established under Regional Rural Banks Act 1976 washeld to be an in strumentality of the State in Prathma Bank v. Vijay Kumargoel and Another, 1989 (4) SCC 441 . In M/s. Dwarkadas Marafatia and Sons v. Board of Trustees of the Port of Bombay, 1989 (3) SCC 293 , the Supreme Courtheld that Bombay Port Trust established under Major Port Trusts Act, 1989/1963 is other authority and organ of the State and hence its every action/activity in respect of any right conferred or priviledge granted by any Statute issubject to Article 14 and must be reasonable and must be taken only upon lawful and relevant grounds of public interest. . Again, Indian Oil Corporation washeld to be a State in Mahabir Auto Stores and Others v Indian Oil Corporation andothers, 1990 (3) SCC 752 and the Suprerne Court observed that its action mustbe reasonable, fair and just. ( 11 ) IN Modern Food Industries (India) Limited v. M. D. Juvekar, 1988 (2) SLR 659, wherein it is held that Modern Food Industries (India) is a Statewithin the meaning of Article 12. In I. A. Abraham v. Balaram Puli, 1988labour and Industrial Cases NOC 40 the Andhra Pradesh High Court held Pragtools, to be a State. ( 11 ) IN Modern Food Industries (India) Limited v. M. D. Juvekar, 1988 (2) SLR 659, wherein it is held that Modern Food Industries (India) is a Statewithin the meaning of Article 12. In I. A. Abraham v. Balaram Puli, 1988labour and Industrial Cases NOC 40 the Andhra Pradesh High Court held Pragtools, to be a State. The Andhra Pradesh High Court in T. A. Anhraham scase (supra) observed as under : "in the instant case, the facts clearly indicate that almost the entirecapital was held by the Central and State Governments. The Company is under the administrative control of the Ministry of Defencegovernment of India, for a very long time and now under theadministrative control of the Ministry of Industry, Government of. India, the Board of Directors were all appointed by the Governmentand can be removed by the Government, that the tools and machinery manufactured by the appellant s company enjoy monopolystates. It is not enough to examine seriatim each of the factors uponwhich a Corporation is claimed to be an instrumentality or agency ofgovernment and to support a finding to that effect. It is the aggregate or cumulative effect all the relevant factors that is controlling. The cumulative effect of all the relevant factors in the present caserenders the appellant s company to be an "instrumentality of thestate" within the meaning of Article 12 of the Constitution. " ( 12 ) THE question whether Jammu and Kashmir Bank Limited i. e. therespondent herein is an instrumentality or agency of the State Government orwhether it can be termed as an "authority", within the meaning of Article 12of the Constitution came up for consideration before the High Court of Jammuand Kashmir in Jagdish Chander Gupta v. Jammu and Kashmir Bank Limited, AIR19^6 J and K1,. The Division Bench of the Jammu and Kashmir High Court heldas under:from the aforesaiddiscussion we have to analyse as to whetherrspondent Bank fulfills all or any of the tests laid down by thesupreme Court for clothing it with the status of an instrumentality oragency of the State. Entire share capital of the respondent Bank isnot owned by the State Government. It owes only a major portionof it, rest of it is owned by private persons. Entire share capital of the respondent Bank isnot owned by the State Government. It owes only a major portionof it, rest of it is owned by private persons. Therefore, according tothis test, respondent Bank cannot be held to be an authority for purposes of Article 12 of the Constitution of India as it is not an instrumentality or agency of the State Government. The entire expenditure is not met with the financial assistance ofthe State Government of the resportdent-Bank, therefore, it cannotbe termed as an agency or instrumentality of the State Government. It does not enjoy monopoly status which is the State conferredor State protected. Enjoyment of monopoly would mean that therespondent Bank is the only Bank conducting banking business underthe patronage of the State Government. It may have monopoly quathe State Government but it has no monopoly status in the Statewhich is protected by any Jaw. Therefore, it cannot be termed as aninstrumentality or agency of the State Govt. It has no deep or pervasive State control. Its administrativecontrol is vested in the Board of Directors, majority of them arefrom the general public. Adminis ration of the respondent Bank isvested in the Board of Directors and not in the State Government. From among the public it can have seven members on the Board ofdirectors who are in no way connected with the State Government. Its functions are not of public importance and closely related tothe Government functions. It is a business concern and cannot besaid to be discharging any functions which is closely related to thegovt. functions. There is no obligation on the Government to run abanking business. It may patronise a Bank or it may transact itsbusiness with a Bank but that would not mean that the respondentbank is discharging the functions which are closely related to thegovernment functions. . Lastly and finally it may be said that it is not a Governmentdepartment transferred to the Corporation. It was established as abusiness concern for purposes of transacting banking business byeight individuals under the Company law then applicable to the State. Only two of them were in the services of His Highness. It had itsown origin and separate existence. ( 13 ) THUS, it was held that the Jammu and Kashmir Bank Limited doesnot fulfill any of the tests laid down in Ajay Hasia s case (supra) so as to -makeit an instrumentality or agency of the. Only two of them were in the services of His Highness. It had itsown origin and separate existence. ( 13 ) THUS, it was held that the Jammu and Kashmir Bank Limited doesnot fulfill any of the tests laid down in Ajay Hasia s case (supra) so as to -makeit an instrumentality or agency of the. State Government nor can it be termedas an authority, within the meaning of Article 12 of the Constitution, Yetagain, the very question regarding the status of the Jammu and Kashmir Bankcame up for consideration before a Single Judge of the Andhra Pradesh High Court in Rattanlal Koul v. Jammu and Kashmir Bank Limited, 1989 0 ALT 177. The learned Single Judge of the Andhra Pradesh High Court had the benefitof the judgment of the Jammu and Kashmir High Court REFERRED TO to hereinaboveand on analysing the facts set out in the petition before him observed asunder: "the Jammu and Kashmir Bank established in 1938 is a government company under Sec. 617 of the Companies Act, the government owning more than 50% share. That by itself may not besufficient to bring it under the words state in Article 12. But apartfrom this, it is not disputed that (as stated in a Printed Brochureproduced before me), the State of J and K owns 92% of the sharecapital; that it is a bank for the government of J and K, that theclause III (c) of its Memorandum of Association states that thebank is "acting as agent for government or local authority, that asper sub-clause (r) (2), it "undertakes" and "transacts" governmentbusiness including the making of loan to the Co-operative Creditbanks or for agricultural and industrial purposes. This Bank hasitself sponsored to two regional Rural Banks (i ). the Jammu Ruralbank and (ii) The Kamraj Rural Bank, each having 94 branches (i. e. in all 188) and the Jammu and Kashmir Bank itself has branchesall-over the country. It is also a convener of the State Levelbankers Committee and has the Lead-Bank responsibility for thefour districts of the J and K State In Ajay Hasia s case (supra) itwas held that if the entire share capital or "almost" the entireshare capital is held, a body would be a "state". It is also a convener of the State Levelbankers Committee and has the Lead-Bank responsibility for thefour districts of the J and K State In Ajay Hasia s case (supra) itwas held that if the entire share capital or "almost" the entireshare capital is held, a body would be a "state". In Manmohan Singh v. Commissioner, AIR 1985 SC 364 the grant to the schoolwas only 95% but still, the school was held to b. e a State underarticle 12, as highlighted in Central Inland Water s case (supra ). Ido not agree with the Full Bench decision of the Orissa High Courtin Bana Bihari Tripathi v. Registrar, Co-operative Societies, AIR1989 Orissa 31 which held that a Society registered under the Cooperative Societies Act could never be a "state" for purposes ofarticle 12 or an "authority or person" for purposes of Article 226. . In fact, para 9 of the judgment says it depends on whether therelevant tests are satisfied are not. In the present case inasmuch as92% of the shares are held by the Government of J and K and inview of the other undisputed characteristics listed above by me, Ihave no difficulty in holding J and K Bank to be "state" even forpurposes of Article 12". ( 14 ) THE Andhra Pradesh High Court thus held that the Jammu ftkashmir Bank Limited is a State for purposes of Article 12 of the Constitution. ( 15 ) IN the light of the above decisions it is necessary to considerwhether the respondent-Bank is a State within the meaning of Article 12. ( 16 ) LEARNED Counsel for the respondent contended that the respondent-Bank was established on 1. 3. 1938 by 8 persons and registered under thejammu and Kashmir Companies Act 1947 with the sole object of carrying onbanking business. After the coming into force of the Companies Act, 1956 itbecame a Government company within the meaning of Section 617 of thecompanies Act. However, learned Counsel submitted that though themajority of the share holding is of the State Government it has not lost itscharacter and cannot be termed as an instrumentality of the State Governmentsimply because more than 51% of the paid up share capital is held by thegovernment. Learned Counsel submitted that if the share holding is the onlycriteria, then every Government company will have to be considered to be astate within the meaning of Article 12 of the Constitution. Learned Counsel submitted that if the share holding is the onlycriteria, then every Government company will have to be considered to be astate within the meaning of Article 12 of the Constitution. It was submittedthat the alloment of shares is vested in Directors of the Bank at their absolutediscretion and the management has to be carried on by the Chairman of thebank subject to the control of the Board of Directors. The Bank is required ohave not more than 10 directors or less than 7 at any time and not more thanthree directors can be appointed by the Jammu and Kashmir Government thoughonly the Government director can be elected as the Chairman. Learnedcounsel submitted that the State Government has issued directions to itsdepartment to transact the banking business through Jammu and Kashmir Bank,however the Bank does not enjoy monopoly status. ( 17 ) ON the. other hand, it was submitted by the learned Counsel forthe petitioner that more than 80% of the shares are held by the government6f Jammu and Kashmir and the State of Jammu and Kashmir has all pervasivecontrol over the respondent Bank and thus is an authority or State within themeaning of Article 12 of the Constitution of India. ( 18 ) UNDOUBTEDLY, every government company under Section 617 ofthe Companies Act cannot be termed as an instrumentality of the State oran organ of the State within the meaning of Article 12 of the Constitution ofindia. Moreover, the extent of government share holding certainly is indicative of control the government has on the Bank because the share holding ofthe government would show who is in actual management of the Bank. Asthe Supreme Court has observed in Bharat Petroleum case (supra) for thepurpose of Article 12 one must necessarily see through the corporate veil toascertain whether behind that veil is the face of an instrumentality or agencyof the State. In the present case, the Jammu and Kashmir Bank, i. e. , therespondent herein though was established in the year 1938 by 8 persons andregistered under the Jammu and Kashmir Bank Companies Act 1947 aftercoming into force of the Companies Act 1956 it became a government companywithin the meaning of Section 617 of the Companies Act. Naturally, therefore, the government share holding is more than 51%. Naturally, therefore, the government share holding is more than 51%. In fact, in one of thebrochures issued by the respondent-Bank itself it has advertised that thegovernment of Jammu and Kashmir holds 80% of the shares of the Bank andthe Andhra Pradesh High Court in its judgment Rattan Lal Koul s case (supra)has on the basis of material placed before it observed that the State of Jammuand Kashmir holds 92% of the shares. Learned Counsel for the respondentwas unable to tell the exact share holding of the Government of Jammu andkashmir at present but it was not disputed that the Government of Jammu andkashmir holds substantial share holding. The Memorandum and Articlesof Association of the respondent-Bank was filed in Court by the learnedcounsel for the respondent. On perusal of the Memorandum of Associationit appears that under clause 3 (c) the respondent Bank acts as an agent forgovernment and local authorities. Under clause 3 (c) the respondent acts asbankers on behalf of the government including the making of loans to Cooperative Banks or for agricultural and industrial purposes. Under Clause4 (r) the terms and conditions on which the business of the Bank has to beundertaken has to be first settled with the government. Under Clause 69 (1)of the Articles of Association, the number of directors of the respondent-Bankat a time shall not be more than 10 or less than 7, out of which 3 directors areto be appointed by the Jammu and Kashmir Government and no other directorother than a government director is entitled to be elected as Chairman of theboard of Directors. In fact, it was submitted by the learned Counsel for thepetitioner that at the relevant time there were no private directors and theboard consited of only the government directors and directorappointed by thereserve Bank of India. The J and K Bank is a scheduled Bank and is thussubject to directory and regulatory control of Reserve Bank of India. Theshape holding of the Bank is directly controlled by, the Board of Directorsinasmuch as allotment or disposal of shares and the terms and conditions atwhich transfer would be made is entirely in the hands of the Board of Directors the Bank. Theshape holding of the Bank is directly controlled by, the Board of Directorsinasmuch as allotment or disposal of shares and the terms and conditions atwhich transfer would be made is entirely in the hands of the Board of Directors the Bank. Under Clause 128 the audit of the Bank has to be done oncein a year by the Auditors of the Company had it was not disputed that it wasdeclared as a government company under the Companies Act the Auditorgeneral of Government of Jammu and Kashmir has been auditing the accountsof the Bank. In fact, the accounts of the Bank are subject to review bycommittee on public undertaking of the legislative assembly of Jammu andkashmir. The respondent-Bank is also a sponsored bank within the meaningof Section 21 the Regional Rural Banks Act 1976. By Central Governmentnotification under Section 3 of the said Act two Regional Rural Banks wereestablished namely Jammu Rural Bank and Kamraj Rural Bank and therespondent-Bank is a sponsored Bank of both these Rural Banks. Thesupreme Court in M. K. Aggarwal v. Gramin Bank and Others, AIR 1988 SC 286 has held Regiisonal Rural Bank established under Section 3 of Regionalrural Banks Act 1976 to be an other authority within the meaning of Article 12of the Constitution of India. Under sub-Section (3) of Section 3 of the saidact it is the duty of the sponsored Bank to aid and assist the Regional Ruralbanks sponsored by it by subscribing it to the share capital of such Rural Bankand by extending facilities of training personnel and recruitment during thefirst five years of the functioning of the said Rural Banks. Thus, the respondent-Bank in effect is guided by the government in its policies regardingadvance of loans etc. and accordingly it implements the plans and schemes ofthe State Government and the Central Government and extends credit facilitiesfor agricultural and allied activities to small scale industries etc. The creditis also given at economical reasonable rates of interest because of the policy ofthe government to uplift the rural poor,. Now, undoubtedly, policies of govern-ment are implemented because of the large share holding of the governmentand since at a given time the government had held about 92% of shares, thebank was naturally guided by the policy of the government. It also appearsthat even the non-official directors of the Board of Directors cannot be electedunless the State Government agrees to the appointment of that member. It also appearsthat even the non-official directors of the Board of Directors cannot be electedunless the State Government agrees to the appointment of that member. Thus,insubstance the entire Board of Directors owes its existence to the Stategovernment. Naturally, the respondent Bank does not carry out all theactivities with a profit motive because otherwise request for loans at subsidisedrates of interest as per the policy of the government could have never beengiven. Furthermore, I find that anemployee of the respondent Bank is apublic servant under the Ranbir Penal Code and the status of a governmentservant is given to such an employee under Section 2 (iv) of the Jammu andkashmir Government Servants Prevention of Corruption Act, 1975. ( 19 ) IN the light of the above facts, I find it difficult to accept thereasoning given by the Jammu and Kashmir High Court that the respondent-Bank is not a State within the meaning of Article 12. I respectfully disagreewith that view, I find that the Government of Jammu and Kashmir has allpervasive control over the activities of the Bank and thus is. an instrumentalityor agency of the State Government within the meaning of Article 12 of theconstitution of India. The preliminary objection is thus rejected. ( 20 ) NOW coming to the merits of the case. As per the charge-sheetissued to the petitioner he was alleged to have committed gross misconductwhile functioning as Chief Manager of the Aurbindo Road Branch, New Delhiof the Bank. The charge-sheet was issued to the petitioner alongwith thestatement of articles of charges on 9. 7. 1984. The petitioner replied to thecharges and after he had sent the preliminary reply, the supplementary articlesof charges were given to him on 20. 11. 1984 to which the petitioner replied. Onconsideration of the reply and the explanation given by the petitioner to thecharges levelled against him the competent authority by a memorandum dated7. 1. 1985 communicated to the petitioner that the explanation is found unsatisfactory by the competent authority and, therefore, the competent authorityappointed Dr. B. L. Wanchoo, Deputy General Manager as the Inquiry Officer. The Inquiry Officer submitted his report to the competent authority and thereafter a show cause notice was issued to the petitioner on 23. 7. 1986 calling uponhim to show cause why he should not be dismissed from the service of the Bankfrom the date he was placed under suspension. B. L. Wanchoo, Deputy General Manager as the Inquiry Officer. The Inquiry Officer submitted his report to the competent authority and thereafter a show cause notice was issued to the petitioner on 23. 7. 1986 calling uponhim to show cause why he should not be dismissed from the service of the Bankfrom the date he was placed under suspension. The petitioner in response totheshow cause notice asked for a copy of the inquiry report, which accordingto the respondent, was forwarded to the petitioner vide letter dated 22. 9. 1986. The petitioner was required to submit his reply within 15 days from the date ofthe issuance of the said letter which expired on 7. 10. 1986. It is the case of thepetitioner that in fact the inquiry report was received by the petitioner after the15 days period had expired i. e. on 10. 10. 1986. However, the impugned orderwas also passed on 10. 10. 1986 itself. The petitioner received the order of dismissal on 15. 10. 1986 though he had come to know about it because of thepublication of a report in Kashmir Times on 11. 10. 1986. The petitioner thereafter filed an appeal to the Chairman on 9. 11. 1986 which was also dismissedwithout giving any reasons on 18. 4. 1987. ( 21 ) IT was submitted by the learned Counsel for the petitioner that theinquiry held by the respondent was completely against the rules of naturaljustice. Learned Counsel submitted that right from the inception of the disciplinary proceedings, the respondent had acted contrary to the Rules. Underrule 5 (c) (i) of the Recruitment Discipline and Appeal Rules 1972 the appointing authority as well as the disciplinary authority of the petitioner was theboard of Directors. However, the charge-sheet was issued to the petitionerby letter addressed by the Manager (Personnel) though he had mentioned inthe said letter that he was communicating the decision of the Competentauthority. However, the show cause notice dated 23. 7. 1986 and the order ofdismissal dated 10. 10. 1986 were issued by the General Manager of the Bank. It was thus submitted that the General Manager is not authorised to take anydisciplinary action against the petitioner. It was further submitted that thecharges were vague and pertained to the period and incident with which thepetitioner was not concerned The charges were mechanically issued withoutapplication of mind. Learned Counsel submitted that the conduct of theinquiry was also very novel. It was thus submitted that the General Manager is not authorised to take anydisciplinary action against the petitioner. It was further submitted that thecharges were vague and pertained to the period and incident with which thepetitioner was not concerned The charges were mechanically issued withoutapplication of mind. Learned Counsel submitted that the conduct of theinquiry was also very novel. The Inquiry Officer put the whole burden ofdisproving the charges on the petitioner though the whole burden of provingthe charges was on the person who alleged the charges i. e. the respondent-Bank. The petitioner was put in the witness box immediately after statementswere filed and the Presenting Officer and the Inquiry Officer cross-examinedhim at length. The cross-examination runs into 100 pages, however thepetitioner was not allowed to ask more than 2 questions to the witness of therespondent. The respondent did not adduce specific evidence inasmuch as thedefence put up by the petitioner that the alleged irregularities were at theinstance of the Chairman of the Bank. Thus, it was necessary for thechairman to come in the witness box. However, neither the Chairmannor the General Manager were examined on the point. It was furthersubmitted that the Presenting Officer had required the production of certaindocuments for conducting the inquiry but the documents were never producedand the inquiry proceeded only on the basis of incomplete documents receivedonly from one Branch. Learned Counsel submitted that the petitioner wasnever informed that he could be represented by a legal practitioner. If thepetitioner had been assisted by a trained person, then the petitioner wouldhave never agreed to his statement being recorded on alleged charges and tolengthy cross-examination before the respondent had produced its evidence. The order of dismissal is also alleged to be passed without application of mindon the ground that the order mentions that the Inquiry Officer had found thepetitioner guilty of all the charges though in fact the Inquiry Officer hadexonerated the petitioner of some of the charges and the Inquiry Officer himselfhad dropped Charge No. 1 (B), 3, Supplementary Charge l (iii) and 8. Supplementary Charge 1 (ii) and 7 were partly proved. Learned Counsel submittedthat if an opportunity had been given to the petitioner he would have broughtit to the notice of the General Manager that in view of the fact that severalcharges had been dropped, an extreme penalty of dismissal from service maynot be imposed. Supplementary Charge 1 (ii) and 7 were partly proved. Learned Counsel submittedthat if an opportunity had been given to the petitioner he would have broughtit to the notice of the General Manager that in view of the fact that severalcharges had been dropped, an extreme penalty of dismissal from service maynot be imposed. Learned Counsel further submitted that the Chairman whodecided the appeal erred in not giving any reasons. This shows that even theappellate authority passed the order without application of mind. The factthat the petitioner had not received the inquiry report before he made therepresentation in reply to the show cause notice and the order of dismissal waspassed even before the inquiry report reached the petitioner, was not consideredby the appellate authority. It was, therefore, submitted that the order of dismissal \and the non-speaking order dismissing the appeal was completely inviolation of the rules of natural justice. The sheet-anchor of the argument ofthe learned Counsel for the petitioner was that the petitioner did not get opportunity to reply to the show cause notice after the report was submitted by theinquiry Officer inasmuch as even before the petitioner could reply, the order ofdismissal was already passed. ( 22 ) ON the other hand, it was submitted by the learned Counsel forthe respondent that the Chairman is the competent authority to take disciplinary action against the petitioner and the Chairman had authorised thegeneral Manager of the Bank to take action. Accordingly, the show causenotice as well as the order of dismissal was issued by the General Manager. ( 23 ) IT was not disputed by the respondent that the inquiry report wasnot sent alongwith the show cause notice, but the report of the Inquiry Officerwas sent with letter dated 22. 9. 1986 and the petitioner was required to submithis explanation within 15 days from the date of the issuance of the letter. Learned Counsel for the respondent could not dispute the fact that the petitioner received the letter alongwith the inquiry report after the period of 15days had expired and that the order of dismissal was passed on 10. 10. 1986. Itwas however submitted that the petitioner did not choose to send a replyimmediately but instead only filled an appeal to the Chairman. 10. 1986. Itwas however submitted that the petitioner did not choose to send a replyimmediately but instead only filled an appeal to the Chairman. It was also notdisputed that no reasons have been given in the order passed on the appealfiled by the petitioner, however it was submitted that non-giving of reasons doesnot vitiate the inquiry. Learned Counsel for the respondent submitted that atbest, the order on appeal could be set aside by the Court and the matter besent back to the appellate authority to re-consider the appeal. ( 24 ) I find great force in the contention raised by the learned Counselfor the petitioner. It is well settled that before any order affecting the serviceof a person is passed he must be given adequate opportunity to representagainst the conclusion of the Inquiry Officer holding that the charges areestablished against him. In a recent judgment of the Supreme Court in Unionof India and Others v. Mohd. Ramzan Khan and Others, 1990 (16) Indian Factoriesand Labour Reports 742 the Supreme Court has held as follows : "deletion of the second opportunity from the scheme of Article311 (2) of the Constitution has nothing to do with providing of acopy of the report to the delinquent in the matter of making hisrepresentation. Even though the second stage of the inquiry inarticle 3 II (2) has been abolished by amendment, the delinquent isstill entitled to represent against the conclusion of the inquiry officerholding that the charges or some of the charges are established andholding the delinquent guilty of such charges. For doing away withthe effect of the inquiry report or to meet the recommendations ofthe inquiry officer in the matter of imposition of punishment, furnishing a copy of the report becomes necessary and to have the proceedings completed byusing some material behind the back of the delinquent is a position not countenanced by fair procedure. While bylaw application of natural justice could be totally ruled out ortruncated nothing has been done here which could be taken as keeping natural justice out of the proceedings and the series of pronouncements of this Court making rules of natural justice applicable to suchan inquiry are not affected by the 42nd Amendment. While bylaw application of natural justice could be totally ruled out ortruncated nothing has been done here which could be taken as keeping natural justice out of the proceedings and the series of pronouncements of this Court making rules of natural justice applicable to suchan inquiry are not affected by the 42nd Amendment. We, therefore,come to the conclusion that the supply of a copy of the inquiryreport alongwith recommendations, if any, in the matter of proposedpunishment to be inflicted would be within the rules of natural justiceand the delinquent would, therefore, be entitled to the supply of acopy thereof. The Forty Second Amendment has not broughtabout any change in this position. " ( 25 ) UNDOUBTEDLY, if a person is dismissed without giving an opportu-nity to represent after an inquiry report is submitted, the action of dismissalwould be against the rules of natural justice. Every person must not onlyknow what he is to meet but must have the opportunity to meet the caseagainst him. ( 26 ) IN the present case I find that the petitioner was not given theinquiry report before the order was passed and did not get an opportunity toreply to the show cause notice dated 23. 7. 1986. It appears that the respondentonly went through an empty formality of sending the inquiry report to thepetitioner. Ordinarily, the time to reply is given from the date of the receiptof the communication and not from the date of the issuance of the communication. I find that in the present case the petitioner was given 15 days timefrom the date of the issuance of the letter enclosing the inquiry report. Theinquiry report was sent from Sri Nagar to Delhi. Therefore, naturally theservice of the inquiry report and the receipt would take sometime. It is notdisputed that the petitioner received the inquiry report after the 15 days timehad expired. The respondent hastily passed the order of dismissal on10. 10. 1986 without ascertaining whether the letter dated 22. 9,1986 had reachedthe petitioner. It is not disputed that a news item to that effect appeared inkashmir Times of 11th October 1986. Thus, the petitioner was quite justifiedin filing an appeal rather than reply to the show cause notice. ( 27 ) THERE is also substantial merit in the contention raised by the petitioner that the disciplinary authority did not fully apply its the mind to thereport of the Inquiry Officer. Thus, the petitioner was quite justifiedin filing an appeal rather than reply to the show cause notice. ( 27 ) THERE is also substantial merit in the contention raised by the petitioner that the disciplinary authority did not fully apply its the mind to thereport of the Inquiry Officer. The Inquiry Officer has exonerated the petitionerof some of the charges and yet I find that the impugned order observes that thepetitioner has been found guilty of all the charges by the Inquiry Officer. Ifthe petitioner had opportunity to represent after having received the inquiryreport he would have certainly been in a position to point out to the disciplinary authority that extreme punishment of dismissal was not warranted and benot imposed. Moreover, it is also not disputed by the respondent that theorder passed on appeal also does not give any reasons. It has time and againbeen held that the failure to give reasons vitiates the order passed by theappellate authority. The Supreme Court in Ram Chander v. Union of Indiaand Others, 1986 (2) LLJ 334 held that reasoned decisions by Tribunal promote public confidence in administrative process and observed that : "an objective consideration is possible only if the delinquentservant is heard and given a chance to satisfy the authority regarding the final orders that maybe passed on his appeal. Considerationof fair play and justice also requires that such a personal hearingshould be given. " ( 28 ) I find it difficult to accept the contention of the learned Counselfor the respondent that though the Chairman has not given reasons in the orderpassed in the appeal, only that order be set aside and the case may be remanded back to the Chairman to give a reasoned order. I find that the petitionerhad raised the question of non-supply of inquiry report before the Chairman inthe appeal itself. In my view, since the petitioner did not get the opportunityto represent at the initial stage i. e. at the show cause stage, the order of dismissal cannot be sustained as being violative of rules of natural justice. Professor H. W. R. Wade in his Administrative Law, 5th Edition at page 487observes: "whether a hearing given on appear is an acceptable substitutefor a hearing not given, or not properly given, before the initialdecision is in some cases an arguable question. In principle thereought to be an observance of natural justice equally at both stages. . Professor H. W. R. Wade in his Administrative Law, 5th Edition at page 487observes: "whether a hearing given on appear is an acceptable substitutefor a hearing not given, or not properly given, before the initialdecision is in some cases an arguable question. In principle thereought to be an observance of natural justice equally at both stages. . . If natural justice is violated at the first stage, the right of appeal isnot so much a true right of appeal as a corrected initial hearing;instead of fair trial followed by appeal, the procedure is reduced tounfair trial followed by fair trial " ( 29 ) IT has been time and again held that the only time a delinquentofficer gets an opportunity of showing cause against the action proposed againsthim pleading to be exonerated from the charge by showing that the evidenceadduced at the inquiry is not worthy of credence or that the charges provedagainst him are not of such a character as to merit the extreme penaltyofdismissal or removal is when he replies to the show cause notice to him at thefirst instance by the disciplinary authority. In the present case, I find thatsince the petitioner had not received the inquiry report he did not get thatopportunity of showing cause and, therefore, by simply allowing him an oppor-tunity for being heard by the appellate authority, the damage cannot beremedied. ( 30 ) I have, therefore, no hesitation in holding that the departmentalproceedings held in this case were violative of the rules of natural justice andthe order of dismissal deserves to be set aside on that ground. Since in myview the order is vitiated as being violative of rules of natural justice, I do notconsider it necessary to go into the other contentions raised by the petitionerchallenging the action of the respondent. ( 31 ) IN the circumstances the writ petition is allowed. The Rule ismade absolute. The order of dismissal dated 10. 10. 1986 and the order dated18. 4. 1987 rejecting the appeal are not set aside. The petitioner is entitled toreinstatement with all consequential benefits. The petitioner will also be entitledto costs quantified at Rs. 5000. 00.