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1992 DIGILAW 205 (RAJ)

Ram Avtar v. Indian Farmers Fertilizers Cooperative

1992-02-21

G.S.SINGHVI

body1992
JUDGMENT 1. - A declaration has been sought by the petitioners against the respondents to the effect that the action of the respondents in depriving the petitioners of their right to participate in the Elections of Indian Farmers Fertilizers Cooperative Ltd.(hereafter referred to as respondent No.1) be declared as unconstitutional and elections, if any held without allowing the petitioners to participate in such election and to caste their vote, be declared unlawful and be quashed. 2. The facts which are necessary for deciding this writ petition filed jointly by the two petitioners under Article 226 of the Constitution of India are that the petitioners are resident of District Tonk and District Sawaimadhopur respectively. The petitioner No.1- Ram Avtar Choudhary represents Ranoli Gram Seva Sahkari Samiti and petitioner - Tara Singh Beniwal represents Mandawar Gram Seva Saha kari Samiti Ltd. The respondent No.1 has been claimed to be an instrumentality of the State under Article 12 of the Constitution of India. Its representative general body consists of elected delegates from all over the country. For the purpose of election entire country is divided into different constituencies. Each Cooperative Society, which is a member of the respondent No.1, nominates one representative, who is a voter for the election of representatives to the general body. In constituency No.11, which covers Districts of Sawaimadhopur, Dholpur and Tonic there are 21 voters. Elections for general body for the years 1992-94 of the respondent No.1 commenced recently. The Returning Officer sent ballot papers. According to petitioner No.1 when he received the envelop from the Returning Officer, he found that the envelop did not contain ballot papers. He, therefore, submitted a representation to the Returning Officer on 28.11.91 stating therein that he had received the empty envelop. He requested for issue of a ballot paper. The petitioner made an attempt to file a complaint with the police. The same was not accepted. Then he sent the compliant to the Superintendent of Police, Tonk. He forwarded it to the police station, Diggi and therefore the case has been registered by the police. The petitioner has stated that he was initially assured by the Returning Officer about issue of fresh ballot paper but no such ballot paper has been issued. On 9.12.91 the respondent No.2 refused to issue fresh ballot paper. Petitioner No.2 sent his ballot paper for exercising his vote but the same ballot paper was lost. The petitioner has stated that he was initially assured by the Returning Officer about issue of fresh ballot paper but no such ballot paper has been issued. On 9.12.91 the respondent No.2 refused to issue fresh ballot paper. Petitioner No.2 sent his ballot paper for exercising his vote but the same ballot paper was lost. He also lodged a First Information Report and made request for supply of fresh ballot paper but that request has not been accepted. 3. The petitioners have alleged that the refusal of respondent No.2 to furnish ballot paper/fresh ballot paper to them clearly amounts to infringement of their fundamental right guaranted by Articles 19 and 21 of the Constitution of India. 4. Originally only respondents No.1 and 2 were impleaded in the writ petition as opposite parties. Subsequently Shri Banna Lal applied for being impleaded as party. His application was accepted. He then filed an application under Article 226(3) of the Constitution of India for vacation of an interim order passed on 11.12.91 in favour of the petitioners by this Court, permitting them to cast their ballots. The petitioners contested this application filing a detailed reply. 5. A preliminary objection has been raised by the learned Counsel for the non-petitioners about the maintainability of the writ petition on the ground that respondent No.1 does not come within the scope of the term "other authorities" under Article 12 of the Constitution of India. Therefore, no writ can be issued against the respondent No.1 for enforcement of the fundamental rights of the petitioners. The respondents have placed reliance on a decision of this Court in S.B. Civil writ Petition No. 139/86, Chhitter Singh v. IFFCO and others, decided on 3.3.86 . In that case the learned Single Judge of this Court held that IFFCO doesn't fall within the scope of the term State as used in Article 12 of the Constitution of India. The learned Counsel for the non- petitioners also placed relinace on another decision of a Single Judge in S.B. Civil Writ Petition No.594/91, Dehare Gram Seve Sahkari Samiti Ltd. v. IFFCO decided on 15.1.92. In that case the learned Single Judge has decided the writ petition in the light of earlier decision dated 3.3.86. The learned Counsel for the non- petitioners also placed relinace on another decision of a Single Judge in S.B. Civil Writ Petition No.594/91, Dehare Gram Seve Sahkari Samiti Ltd. v. IFFCO decided on 15.1.92. In that case the learned Single Judge has decided the writ petition in the light of earlier decision dated 3.3.86. Shri R.S. Rathore, learned Counsel for the petitioner has argued that the decision of a learned Single Judge in the Case of Chhittar Singh does not lay down correct law because in that case the principles laid down by the Supreme Court in various decisions have not been considered. Shri Rathore referred to the provisions of the by-laws applicable to respondent No.1 in extenso and also invited the court's attention to the provisions contained in the Multi State Cooperative Societies Act, 1984 and submitted that the activities of the respondent No.1 are such which could otherwise be undertaken only by Government Department. The Government exercises substantially financial and administrative control over the working of the respondent No.1. Respondent No. 1 is, therefore, an agency of the State. Shri Rathore submitted that the learned single Judge in Chhittar Singh's case was greatly influenced by the fact that the respondent No.1 is not a creature of statue. That consideration is wholly irrelevant for the purpose of examining the question as to whether a Company, Corporation or Society falls within the scope of the term "other authorities" as used in Article 12 of the Constitution of India. Shri Rathore invited the Court's attention to the decisions of the Supreme Court in Ramanna Dayaram Shetty v. International Airport Authority of India and others, AIR 1979 SC 1628 , Ajay Hasia v. Khalid Mujib Seharawardi, AIR 1981 SC 487 , Somnath Rekhi v. Bharat Petroleum Corporation, AIR 1981 SC 212 , Central Inland Water Transport Corporation v. Brojonath Gaungoli, AIR 1986 SC 1571 , All India Sainik Schools Employees Association v. Sainik School Society, 1989 Supplement(1) SCC 205 , Chairman, Centre of Buddhists Philosophy v. Makhan Lal Mattoo, 1990 (4)SCC 6 . 6. In Chhittar Singh's case M.B.Sharma,J. has referred to the provisions of Multi State Cooperative Societies Act,jj974, He also referred to the provisions contained under the by-laws of the Society and then held that respondent No.1 is not an instrumentality of the Government nor its agency. 6. In Chhittar Singh's case M.B.Sharma,J. has referred to the provisions of Multi State Cooperative Societies Act,jj974, He also referred to the provisions contained under the by-laws of the Society and then held that respondent No.1 is not an instrumentality of the Government nor its agency. He placed reliance on the decision of the Supreme Court in Sabajit Tewari v. Union of India and others, AIR 1975 SC 1329 and J.C. Gupta v. Jammu & Kashmir Bank Ltd. and others, AIR 1986 J&K 1 in arriving at this conclusion. M.B.Sharma,j. observed: "In my opinion, therefore, IFFCO is not a creature of statute and is a society registered under the Bombay Cooperative Societies Act as well as under the Act. Therefore, it is neither the State nor an authority under Article 12 of the Constitution of India and as such it is not amenable of writ jurisdiction of this Court under Article 226 of the Constitution of India." 7. Therefore, it is neither the State nor an authority under Article 12 of the Constitution of India and as such it is not amenable of writ jurisdiction of this Court under Article 226 of the Constitution of India." 7. The objects of the respondent No.1, as contained in the by- laws are as under:- "(a) The objects of IFFCO shall be to promote the economic interests of its members by undertaking manufacture of chemical fertilisers and allied products/bye-products and their conversion,storage, transportation and marketing; (b) In furtherance of the above objects, IFFCO may undertake one or more of the following activities : (i) to set up plant or plants for manufacture of chemical fertilizers & allied products/bye products; (ii) to acquire, establish, construct, provide and maintain and administer factories, townships, estates,railway sidings, build yards, wells, water reservoirs, channels, pumping installations, purification plants, pipe lines, carriages, storage sheds and accommodation of all description for facilitating the business of IFFCO; (iii) to manufacture, store, maintain, sell, buy, repair, alter, exchange, let on hire, export, import and deal in all kinds of articles and things which may be required for the purpose of any of the business of IFFCO or are commonly supplied or dealt in by persons engaged in any such business or which may seem capable of being profitably dealt in connection with any of the business of IFFCO; (iv) to subscribe to the shares of cooperative and other institutions; (v) to enter into contracts for purchase and sale of raw materials and finished products; (vi) to enter into collaboration with cooperative or others in India or in foreign countries for machinery and equipment, and for designing, engineering, construction, erection, operation and maintenance of fertilisers and chemical plants; (vii) to establish branch offices and sales depots; (viii) to carry on agency business of every kind and description connected with the business of IFFCO; (ix) to undertake research and such other activities as are incidental and conducive to the development of the industry as well as IFFCO; and (x) to undertake such other activities as are conducive or incidental to the attainment of main objects of IFFCO." 8. As per clause 4 Membership of the respondent No.1 is open to various bodies. As per para 5 share capital shall be Rs. As per clause 4 Membership of the respondent No.1 is open to various bodies. As per para 5 share capital shall be Rs. 200 / - drawn from 3 categories of shares, some of which are allotted to the Government of India, the National Cooperative Development Corporation, National/State/Regional/Federations and large processing cooperatives District and Primary Marketing/Processing /Supply and other Cooperative Societies and primary societies. Para No.21 deals with the funds. This para reproduced as under: "21. The IFFCO may raise funds from one or more of the following sources: (i) Admission fee; (ii) Share capital; (iii) Loans and deposits; (iv) Grants-in-aid and donation; and (v) Profit." 9. The Board of Directors consists of various persons including representatives of the different cooperative societies /federations. A maximum 5 persons can be nominated by the Government of India. Para No. 42 contains a transitory provision which authorised the Government of India to nominate the Chairman for a_ period of 10 years and to constitute the nominated Wed. In terms of para No. 43(vi) the Board of Directors of IFFCO has the powers to appoint or remove the Managing Director, Financial Director and the Marketing Director subject to the prior approval .of the Government of India. The Executive Committee consists of various individuals including two nominees of the Government of India. The executive Committee is responsible for efficient Management of the Society in various Establishments/Projects and it is to discharge multifarious functions. 10. The Multi State Cooperative Societies Act, 1984 has been enacted in order to consolidate and amend the law relating to the Cooperative Societies with the objects not confined to one state and serving the interests of members in more than one State. This Act applies to various Multi State Cooperative Societies including those to which Multi Unit Cooperative Societies Act, 1942 was applicable. Respondent No. 1 is a Society which has been registered under the Multi Unit Cooperative Societies. Act, 1942. Chapter 4 of 1984 Act contains provision regarding direction and management of Multi State Cooperative Societies. Section 41 empowers the Central Government or State Government to nominate on the Board of the Cooperative Society such number of persons as may be prescribed. Respondent No. 1 is a Society which has been registered under the Multi Unit Cooperative Societies. Act, 1942. Chapter 4 of 1984 Act contains provision regarding direction and management of Multi State Cooperative Societies. Section 41 empowers the Central Government or State Government to nominate on the Board of the Cooperative Society such number of persons as may be prescribed. This provisions attracted whether the Central or State Government has subscribed to the share capital of a Multi State Cooperative Society or has guaranted, the repayment of the principal and payment of interest on loans and advances to a Multi State Cooperative Society. Section 47 authorises the Central Government to give directions in public interest. 11. On the strength of these provisions in the bye-laws and the Act of 1984, Shri Rathore argued that the Government exercises financial as well as administrative control over the respondent No.1 and therefore, it must be held to be a instrumentality of the State. 12. In Ramanna Dayaram Shetty v. International Airport Authority of India and others (Supra) Bhagwati J. as he them was laid down certain tests for considering as to when a body can be treated as an agency or instrumentality of the State. In Ajay Hasia v. Khalid Mujib Seharawardi while considering the question as to whether Society registered under the Societies Registration Act, 1861 can be treated as state within meaning of Article 12 of the Constitution of India and after making reference to Ramanna Dayaram Shetty's case, the court indicated these tests in the following words: (1) One thing is clear that if the entire share capital of the corporation is held by government, it would go a long way towards indicating that the corporation is an instrumentality or agency of government. (2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. (3) It may also be a relevant factor ....whether the corporation enjoys monopoly status which is State conferred or State protected. (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (3) It may also be a relevant factor ....whether the corporation enjoys monopoly status which is State conferred or State protected. (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (5) If the functions of the Corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classing the corporation as an instrumentality or agency of government. (6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of government." 13. These tests have been followed and reiterated by the Supreme Court in all the subsequent decisions. Of course, application of these tests might have differed from case to case. 14. In Tekraj Vasandhi v. Union of India, 1988 (2) SCC 260 their Lordships of the Supreme Court were concerned with the Institute of Constitutional and Parliamentary studies. That institute was a registered Society financed mostly by the Central Government and partly by gifts and donations from Indian and Foreign agencies. The first President of the society was the then Speaker of the Lok Sabha. Out of the five vice Presidents three were the then central ministers; the other two were the then Chief Justice of India and the Attorney General. The objects of the society were to provide for constitutional and parliamentary studies, promotion of research in constitutional law, setting up of legislative, research and reference service for the benefit of legislators, organisation of training programmes in matters of parliamentary interest and importance and publication of a journal. The court found that ICPS was born as a voluntary organisation. It found further that though the annual financial contribution from the State was substantial, it was entitled to receive aid from the public and in fact, received contributions from other sources. Its objects were not governmental business. As regards the argument that the Government exercised pervasive control over ICPS, the court said: "In a Welfare State Governmental control is very pervasive and touches all aspects of social existence..... 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." 15. 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." 15. That judgement has been followed in Chandra Mohan Khanna v. NCERT, JT 1991 (4) SC 233 , wherein the Supreme Court has held that NCERT, even though it may be receiving finances from the Government and might be advising the Government in educational matters, cannot be treated as a State. In Chandra Moha n Khanna's case the Supreme Court has taken note of its earlier decision in Sabhajit Tewari v. UOI and others (supra) and observed that the said decision has been watered down in the subsequent decision Ajay Hasia and P.K. Ramchandra Iyer v. UOI, 1984(2) SCC 141 . In Chandra Mohan Khanna's, case their Lordships have also observed that: 1. "The powers, functions, finances and control of the Government are some of the indicating factors to answer the question whether a body is "State" or not. Each case should be handled with care and caution." 2. "Where the financial assistance from the State is so much as to meet almost entire expenditure of the institution, or the share capital of the corporation is completely held by the government, it would afford some indication of the body being impregnated with governmental character." 3. "It may be a relevant factor if the institution or the corporation enjoys monopoly status which is State conferred or State protected." 4. "Existence of deep and pervasive State control may afford an indication. If the functions of the institution are of public importance and related to governmental functions, it would also be a relevant factor." 5. "The State control, however, vast and pervasive is not determinative. The financial contribution by the State is also not conclusive. The combination of state aid coupled with an unusual degree of control over the management and policies of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is "State ". 16. The test indicated in R.D. Shetty's case which have been culled out in Ajay Hasia's case and which have further been explained in Chandra Mohan's case may now be applied to the facts of the present case. 16. The test indicated in R.D. Shetty's case which have been culled out in Ajay Hasia's case and which have further been explained in Chandra Mohan's case may now be applied to the facts of the present case. In this case it is clear that although the Central Government might be giving some financial assistance in the form of share capital and might exercise some degree of control in the functioning of the respondent No.1, in as much as it nominates some members of the boards and it can give certain general directions in the matters of public interest and also that the Managing Director, Financial Director, Marketing Director can be appointed or removed with the approval of the Government of India, it cannot be said that funding by the Central Government is so much as to meet almost entire expenditure of the institution or the share capital of the respondent No.1 is completely held by the Government or that the Government exercises deep and pervasive control. The functions of the respondent No.1 cannot be described as of public importance or akin to the governmental functions. The management of the respondent No.1 is primarily done by the Board of Directors and Executive Committee. The funds are collected from different sources and its activities are purely commercial in nature. No doubt element of public interest is always involved in the functioning of such institution but their functions cannot be termed as public functioning or governmental functions. Therefore,in my considered opinion the respondent No.1 cannot be held as State under Article 12 of the Constitution of India. I am in complete agreement with the opinion expressed by M.B. Sharma J. in Chhittar Singh's case (supra) and even though in that judgment reference to the case of the Supreme Court in Sabhajit Tewari v. Union of India and others (supra) may not be as very appropriate, the conclusion arrived at by M.B. Sharma J. cannot be in any manner be described as incorrect. 17. The decision of this Court in Rajasthan State Cooperative Dairy Federation Limited, Jaipur v. Mohan Lal Sharma, 1983 RLR 558 is clearly distinguishable. One of the main object of the Rajasthan Cooperative Dairy Federation is to formulate and implement Dairy Development Schemes as per the direction of the State Government. The Principal financer to the Federation is the State. 17. The decision of this Court in Rajasthan State Cooperative Dairy Federation Limited, Jaipur v. Mohan Lal Sharma, 1983 RLR 558 is clearly distinguishable. One of the main object of the Rajasthan Cooperative Dairy Federation is to formulate and implement Dairy Development Schemes as per the direction of the State Government. The Principal financer to the Federation is the State. The Directors of the Federation are nominated by the State Government and one of them is Chairman of the Federation. The Chief Executive Officer of the Federation is the Managing Director and he is also appointed by the State Government. Thus it is evident that the Government has deep and pervasive control over the administration of the Rajasthan Cooperative Dairy Federation and it provides finances to the corporation. Moreover, the corporation has been constituted to formulated & implement the dairy development schemes as per Government directions. Such elements are completely missing in the case of the respondent No.1. 18. In view of the aforesaid findings. I do not consider it necessary to go into the merits of the claims of the petitioners. 19. The writ petition fails and it is hereby dismissed. Parties are left to bear their own costs.Writ Petition Dismissed. *******