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2004 DIGILAW 296 (ALL)

State of U. P. v. Dasrath Prasad Yadav

2004-02-13

TARUN CHATTERJEE, VINEET SARAN

body2004
JUDGMENT : VINEET SARAN, J. 1. This appeal has been preferred against the judgment and order dated 7.5.2002 passed by a learned Judge of this Court in Civil Misc. Writ Petition No. 20562 of 1999. The writ petition was filed by 105 retrenched employees of Institute of Engineering and Rural Technology (for short IERT), Allahabad, against the State of U.P. and its officers as well as the IERT, praying for quashing the Government order dated 24.3.1999 by which it was decided that the Training -cum-Production Centre of the IERT be closed down with effect from 31.3.1999 and the workmen employed at the Centre be retrenched after being paid retrenchment compensation. The consequent notice/declaration dated 31.3.1999 issued by the IERT for closure of the Centre had also been challenged. A further prayer for mandamus directing the State-Respondent to absorb the writ-Petitioners in an alternative employment of the State Government or organizations under the State Government had also been made. 2. While allowing the writ petition the learned Judge gave the following directions: .......The Respondent are directed to prepare a list of the employees who were appointed prior to 1.10.1986 in the production-cum-training centre of IERT, and were working continuously till the date of their retrenchment, i.e. 31.3.1999 by excluding those who have retired, or have not given their option for absorption, to be absorbed in the vacancies in other polytechnics of the State Government, which are recognized and funded or in any other technical institution, or any post which it may deem to be fit, in accordance with their eligibility and after relaxing age and other terms and conditions of recruitment. As and when Petitioners are offered absorption on any equivalent post, they will vacate the quarters occupied by some of them in the premises of IERT. Since Petitioners have accepted retrenchment compensation, no direction with regard to payment of salary is required to be given. The State Government is directed to draw the list, prepare the scheme and to offer appointment by absorption, preferably within a period of four months. There is no order as to cost. 3. Aggrieved by the judgment and order of the writ Court, this appeal has been preferred by the State of U.P. and its officers as well as the Institute-IERT. 4. The facts, in brief, giving rise to this appeal are that IERT, Allahabad, is a society registered under the Societies Registration Act. There is no order as to cost. 3. Aggrieved by the judgment and order of the writ Court, this appeal has been preferred by the State of U.P. and its officers as well as the Institute-IERT. 4. The facts, in brief, giving rise to this appeal are that IERT, Allahabad, is a society registered under the Societies Registration Act. The members of the society, as per its bye-laws, are certain Government officials who are mentioned by their designation, Executive President (Technical) of Triveni Engineering Works as well as Managing Director of Bharat Heavy Electricals Limited and three Professors of Curriculum Development Centre. The object of the society is to conduct development courses in various branches and to hold examinations conducted by the Board of Technology Education. Allegedly the total funding of the academic side is borne by the State Government and that the State Government exercises all pervasive control and issues directions for management and control of the society. The IERT is also recognized under the provisions of the U.P. Pravidhik Shiksha Adhiniyam, 1962 and receives grant-in-aid from the State Government. 5. In the year 1969, a Training-cum-Production Centre was established in the Institute for imparting practical studies to the students and the same was to be a self-financing Centre. The State Government vide its order dated 18.10.1969, while granting permission to establish the Centre, had made it clear that the Government would not give any grant for running the Centre and the Institute itself shall be liable to bear its expenses. The State Government in the years 1972 and 1973 granted certain short-term loans for the purpose of running the Centre, which had been repaid. Since the Centre was a self-financing unit of the Institute and it was unable to meet its expenses, the Board of Management of IERT took a decision on 19.4.1987, to close it down due to financial constraints. The Centre remained closed for about three months but thereafter, with the efforts of the State Government and the Deputy Labour Commissioner, Allahabad, it was again re-opened on 17.7.1987. The State Government constituted a Five-Members Committee, which was to submit its report regarding the functioning of the Centre. Vide its report dated 13.9.1996, the Committee recommended that the Centre may not be closed down and further that the State Government may sanction grants for running it. The State Government constituted a Five-Members Committee, which was to submit its report regarding the functioning of the Centre. Vide its report dated 13.9.1996, the Committee recommended that the Centre may not be closed down and further that the State Government may sanction grants for running it. However, the report was not accepted and no action was taken on the same and considering the non-viability of running the Centre as a self-financing unit, the State Government issued a Government order on 24.3.1999, notifying its decision to close down the Training-cum-Production Centre with effect from 31.3.1999. A sum of Rs. 1,42,41,908 was sanctioned for disbursement of arrears of salary and payment of retrenchment compensation to the employees of the Centre. Consequently the Authorised Controller of IERT issued a notice/declaration on 31.3.1999, notifying the closure of the Training-cum-Production Centre of the Institute. 6. The writ petition challenging the said orders has been allowed by the learned Judge by directing the State Government to absorb the retrenched employees of the Centre, after holding that the Institute IERT is a society which is managed and controlled by the State Government ; and that the Centre had been established as an integral part of the Society to carry out its function and thus it was an instrumentality of the State Government within the meaning of Article 12 of the Constitution of India. It was also held that the Petitioners were entitled to the benefit of the U.P. Absorption of Retrenched Employees of Government or Public Corporation in Government Service Rules, 1991 (hereinafter referred to as the "Rules of 1991") and as such a direction was issued to absorb the Petitioners in the vacancies in other Polytechnics of the State Government which are recognized and funded; or in any technical institute or on any post which it may deem to be fit in accordance with their eligibility and after relaxing the age and other terms and conditions of recruitment. 7. Having heard Sri R. N. Singh, learned senior Counsel appearing for the Appellants as well as Sri Ashok Khare, learned senior Counsel appearing for the Respondent-writ-Petitioners and on perusal of record, we are unable to subscribe the view expressed by the learned Judge on the question whether the Appellant, namely, Training-cum-Production Centre of the Institute can be held to be an instrumentality of the State Government. 8. 8. The tests to determine as to whether a body or a society registered under the Societies Registration Act comes within the definition of the "State" as defined in Article 12 of the Constitution have been laid down in Ramana Dayaram Shetty vs. International Airport Authority of India and Others, (1979) 3 SCC 489 and also in a Constitution Bench decision of the Supreme Court in Ajay Hasia and Others vs. Khalid Mujib Sehravardi and Others, (1981) 1 SCC 722 and also in B.S. Minhas vs. Indian Statistical Institute and Others, (1983) 4 SCC 582 . In the case of B.S. Minhas (supra) it was held by the Supreme Court that a society like the present one, registered under the Societies Registration Act, being under the control of the Government of India was an instrumentality of the Central Government and, therefore, an "authority" within the meaning of Article 12 of the Constitution. In that decision the basis on which it was held to be an "authority" within the meaning of Article 12 of the Constitution of India was that the composition of the Institute was dominated by the representatives appointed by the Central Government. The fund required for running the Institute was also provided entirely by the Central Government and even if any other moneys were to be received by the Institute it could be done only with the approval of the Central Government, and the accounts of the Institute had also to be submitted to the Central Government for its scrutiny and satisfaction. The Institute had to comply with all such directions, which were issued by the Central Government from time to time. Accordingly for that composition the Supreme Court held that when the control of the Central Government was deep and pervasive which was main criteria for consideration of an 'authority' within the meaning of Article 12 of the Constitution, the Institute was an instrumentality of the State. 9. The Supreme Court again in Central Inland Water Transport Corporation Limited and Another vs. Brojo Nath Ganguly and Another, (1986) 3 SCC 156 , has held that the Company is covered by Article 12 of the Constitution because it is financed entirely by the Central Government and is completely under the control of the Central Government ... 9. The Supreme Court again in Central Inland Water Transport Corporation Limited and Another vs. Brojo Nath Ganguly and Another, (1986) 3 SCC 156 , has held that the Company is covered by Article 12 of the Constitution because it is financed entirely by the Central Government and is completely under the control of the Central Government ... and is managed by the Chairman and Board of Directors appointed by the Central Government and removable by it and in every respect it is thus a veil behind which the Central Government operates through the instrumentality of a Government company. However, there were certain other decisions of the Supreme Court where it was held that although the Institute was merely a society registered under the Societies Registration Act, the same can be said to be a "State" within the meaning of Article 12 of the Constitution. These controversies were set at right by a Constitution Bench of the Apex Court of our country in Pradeep Kumar Biswas and Others vs. Indian Institute of Chemical Biology and Others, (2002) 5 SCC 111 . In the said decision, it has been clearly held that even if a Society or an Institute is registered under the Societies Registration Act and some officers of the State Government are also the members of the Institute such an Institute may not be termed as an "instrumentality" of the State if the deep and pervasive control over the affairs of the Institute was not with the State Government. In Pradeep Kumar Biswas (supra), the Supreme Court has held that the picture that emerges from the case-law is that the tests formulated in Ajay Hasia and Others vs. Khalid Mujib Sehravardi and Others (supra) for determining as to when a corporation can be said to be an instrumentality or agency of the Government are not a rigid set of principles so that if a body falls within any one of them it must, ex-hypothesi, be considered to be a State within the meaning of Article 12. In the said decision the Supreme Court also observed that the question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. It was further observed that such control must be particular to the body in question and must be pervasive. It was further observed that such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within the meaning of Article 12 of the Constitution. However, on the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State. 10. Let us now, therefore, consider whether the Institute is a "State" within the meaning of Article 12 of the Constitution. 11. Keeping in mind the principles laid down by the Supreme Court, particularly the Constitution Bench of the Supreme Court, as referred to hereinabove, we are of the view that the Training-cum-Production Centre of the IERT is neither an "agency" nor "instrumentality" of State so as to come within the purview of "other authorities" under Article 12 of the Constitution. 12. The Institute is registered as a society, the members of which are mostly officers of the Government or senior executives of public sector companies. It is also true that the permission for opening the Training-cum-Production centre of the Institute was granted by the State Government with the specific condition that it would not grant any financial assistance for running the same. In our view, even if the members of the Training-cum-Production Centre of the Institute are mostly officers of the State Government or senior executives of the public sector companies, but ...that alone would not be sufficient for the ......Institute to be termed as an "instrumentality" of the State. From the record it appears that in the years 1972 and 1973, certain short-term loans had been granted by the State Government to the Centre of the Institute but as has been specifically averred in the counter-affidavits to the writ petition filed by the State Government as well as the Institute, the said short-term loans had been repaid by the Institute within time. Accordingly, it cannot be said that at any stage, the running of the Centre was funded by the State Government. It is also apparent from the record that the posts on which the writ Petitioners-Respondent had been appointed had neither been sanctioned by the State Government nor approved by it. The recruitment of the employees of the Centre was also not made by or under the supervision of the State Government. It is also apparent from the record that the posts on which the writ Petitioners-Respondent had been appointed had neither been sanctioned by the State Government nor approved by it. The recruitment of the employees of the Centre was also not made by or under the supervision of the State Government. The employees at the Centre were at best engaged as work charged employees by the Training-cum-Production Centre and they were not working on the pay scales which had been sanctioned by the State Government for the other employees of the Institute, who were working on posts which were duly approved and sanctioned by the State Government. We are also of the view that merely because the Centre is recognised under the provisions of the U.P. Pravidhik Shiksha Adhiniyam, 1962, it would, for this reason alone, not become an instrumentality of the State as the Institute is an autonomous body and is registered under the Societies Registration Act. It also appears from the available records that in the present case the Institute is not dominated by the representatives appointed by the State Government and the fund required for running the Institute is not provided, at all, by the State Government. It is not evident from the materials on record that if any other fund is to be received by the Institute the same can be done only with the approval of the State Government and the accounts of the Institute have to be submitted to the State Government for its scrutiny and satisfaction. Such being the position, we are unable to hold that the control of the State Government on the Society is deep and pervasive. 13. Before we part with this aspect of the matter, we may refer to the submissions of Mr. Ashok Khare, learned senior advocate appearing on behalf of the writ Petitioners-Respondent. It was contended by the learned Counsel for the writ Petitioners-Respondent that the learned Judge was justified in granting the benefit of the provisions of the U.P. Absorption of Retrenched Employees of Government or Public Corporation in Government Service Rules, 1991 (hereinafter referred as the Rules, 1991) to the writ Petitioners-Respondent. In Rule 2(c) of the aforesaid Rules, 1991, it is clearly provided that the benefit of the said Rules would be given to persons who were appointed on posts under the State Government or a Public Corporation, on or before October 1, 1986. In Rule 2(c) of the aforesaid Rules, 1991, it is clearly provided that the benefit of the said Rules would be given to persons who were appointed on posts under the State Government or a Public Corporation, on or before October 1, 1986. The Courts cannot read something more in the Rules than what has been provided for. The clear intention of the State Government in framing the said Rules, 1991, was to absorb the employees who were retrenched from the service of the State Government or a Public Corporation. Therefore, the benefit of the Rules, 1991, could be granted only to the employees of the State Government or a Public Corporation. The learned Judge extended the benefit of the Rules, 1991, to the writ Petitioners-Respondent treating them to be in the service of the State Government after holding that IERT as well as its Training-cum-Production Centre was an instrumentality of the State Government. In our view, the learned Judge was not justified in extending the benefit of the Rules, 1991, to the writ Petitioner-Respondent who were admittedly employees of the IERT as well as its Training-cum-Production Centre. Mere grant of approval of the State Government for opening an independent Centre in the institute on self-financing basis would not make the employees of the Centre as employees of either the State Government or a Public Corporation. 14. There is a distinction between "Society" and "Corporation." In the case of The Board of Trustees, Ayurvedic and Unani Tibia College, Delhi vs. State of Delhi and Others, AIR 1962 SC 458 , the Supreme Court has dealt with the word "Corporation" and "Society" in paragraphs 9 and 10 of its decision, which read as under: The first and foremost question is whether the old Board was a corporation in the legal sense of that word. What is a Corporation/Corporations may be divided into two main classes, namely, corporations aggregate and corporations sole. We are not concerned in the present case with corporations sole. What is a Corporation/Corporations may be divided into two main classes, namely, corporations aggregate and corporations sole. We are not concerned in the present case with corporations sole. A Corporation aggregate has been defined as a collection of individuals united into one body under a special denomination, having perpetual succession under an artificial form, and vested by the policy of the law with the capacity of acting in several respects as an individual, particularly of taking and granting property of contracting obligations and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation or at any subsequent period of its existence." (Halsbury's Laws of England, 3rd Edn. Vol. 9. page 4). A corporation aggregate has, therefore, only one capacity namely, its corporate capacity. A corporation aggregate may be a trading corporation or a non-trading corporation. The usual examples of a trading corporation are: (1) charter companies, (2) companies incorporated by special Acts of Parliament, and (3) companies registered under the Companies Act, etc. Non-trading corporations are illustrated by: (1) Municipal Corporations, (2) district boards, (3) benevolent institutions and (4) universities, etc. An essential element in the legal conception of a corporation is that its identity is continuous, that is, that the original member or members, and his or their successors are one. In law the individual corporators, or members, of which it is composed are something, wholly different from the corporation itself ; for a corporation is a legal person just as much as an individual. Thus, it has been held that a name is essential to a corporation that a corporation aggregate can, as a general rule, only act or express its will by deed under its common seal that the present day in England corporation is created by one or other of two methods, namely, by Royal Charter of incorporation from the Crown or by the authority of Parliament that is to say, by or by virtue of statute. There is authority of long standing for saying that the essence of a corporation consists in: (1) lawful authority of incorporation, (2) the persons to be incorporated, (3) a name by which the persons are incorporated, (4) a place and (5) words sufficient in law to show incorporation. No particular words are necessary for the creation of a corporation, any expression showing an intention to incorporate will be sufficient. 15. The learned advocate for the Petitioners has referred us to various provisions of the Societies Registration Act, 1860, has contended that the result of these provisions was to make the Board a corporation on registration. It is necessary now to read some of the provisions of that Act. The Act is entitled an Act for the registration of literary, scientific and charitable societies and the preamble states that it was enacted for improving the legal condition of societies established for the promotion of literature, science or the fine arts or, for the diffusion of useful knowledge, etc., or for charitable purposes. Section 1 of the Act states that any seven or more persons associated for any literary, scientific or charitable purpose or for any such purpose as is described in Section 20 of the Act may, by subscribing their names to a memorandum of association and filing the same with the Registrar of Joint-Stock Companies, form themselves into a society under the Act. Section 2 lays down that the memorandum of association shall contain and one of the particulars it must contain is "the objects of the society." Section 3 deals with registration and fees payable therefor. Sections 5 and 6 are important for our purpose and should be read in full. 5. The property, movable and immovable, belonging to a society registered under this Act, if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body of such society and in all proceedings, civil and criminal, may be described as the property of the governing body of such society by their proper title: 6. The property, movable and immovable, belonging to a society registered under this Act, if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body of such society and in all proceedings, civil and criminal, may be described as the property of the governing body of such society by their proper title: 6. Every society registered under this Act may sue or be sued in the name of the President, Chairman, or Principal Secretary, or Trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion: Provided that... 16. Considering the facts and circumstances of the instant case and applying the principles laid down in the decision in Board of Trustees (supra) at paragraphs 9 and 10, we are of the view that an autonomous society, which may have been recognised by the State Government, cannot be termed as a State Corporation. Thus, the benefit of the Rules, 1991, could not be available to the writ Petitioners-Respondent, who were simply employees of Training-cum-Production Centre of the IERT. In that view of the matter the decisions cited by Mr. Khare, learned senior advocate, namely, U.P. Chal Chitra Nigam Ltd. vs. State of U.P. 1990 AWC 1463 and Civil Misc. Writ Petition No. 17195 of 1998, Bageshwari Prasad Srivastava vs. State of U.P. cannot be applied in the present case as we have already held that the employees of the Institute cannot be said to be employees of the Public Corporation and as such the ratio of the aforesaid two decisions is not, at all, applicable to the facts and circumstances of the instant case. In any view of the matter, in the case of U.P. Chal Chitra Nigam (supra) the order of the absorption had been passed as the State Government had itself directed for the same, which fact had been accepted by the learned Advocate General for the State. In the present case, there was no such direction of the State Government for absorption or providing alternative employment. The only direction was for payment of retrenchment compensation to the writ Petitioners-Respondent, which had been complied with. In the present case, there was no such direction of the State Government for absorption or providing alternative employment. The only direction was for payment of retrenchment compensation to the writ Petitioners-Respondent, which had been complied with. As has already been held above, the Centre of the Institute (IERT) could neither be considered as an instrumentality of the State nor could it be termed to be a State Government or a Public Corporation. The finding of the learned Judge that IERT is wholly owned, controlled and managed by the State Government cannot be said to be a correct view. 17. The learned Judge has also wrongly placed reliance on an order dated 10.5.1999, treating the same to be a Government order, whereas a perusal of the same (copy of which has been filed as Annexure-25 to the writ petition) goes to show that the same is merely a communication sent by the Director of the Institute to the State Government with regard to the absorption of Class III and IV employees of the Centre in other technical institutions of the State Government. The same could thus not to be termed as a Government order but it is a mere request to the State Government, which was not accepted. Further it is not denied that by the Government order dated 24.3.1999, by which the closure of the Centre of the Institute had been directed, an amount of Rs. 1,42,41,908 had been sanctioned by the State Government for payment of arrears of salary and retrenchment compensation. The same has admittedly been paid to and accepted by the writ Petitioners-Respondent. In our view, once the retrenchment compensation has been accepted by the employees, in the facts and circumstances of this case, the writ Petitioners would not be entitled to any further relief. 18. For the foregoing reasons, this appeal is hereby allowed and the judgment and order dated 7.5.2002 passed by the writ Court is, accordingly, set aside. Consequently the writ petition stands dismissed. No orders as to costs.