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Allahabad High Court · body

2007 DIGILAW 1788 (ALL)

SARANG DHAR RAI v. GIRI INSTITUTE OF DEVELOPMENT STUDIES

2007-07-04

SANJAY MISRA, SUDHIR AGARWAL

body2007
JUDGMENT By the Court.—Heard Sri S.P. Shukla, learned Counsel for the petitioner and perused the record. 2. The petitioner has filed this petition under Article 226 of the Constitution of India challenging the orders dated 3.9.1983 and 19.7.1983 Annexures 5 and 11 to the writ petition issued by the Director, Giri Institute of Development Studies, Nirala Nagar, Lucknow (hereinafter referred as to the Institute) and has also sought a writ of mandamus commanding the respondent No. 2 to promote/regularise petitioner’s promotion with effect from 1.6.1983 giving him the prescribed scale and other pecuniary benefits on the post of Research/Technical Assistant. 3. A preliminary objection has been raised by the learned Counsel appearing for the respondents that the Institute is not a State within the meaning of Article 12 of the Constitution of India and the petitioner being an employee of private institution cannot avail remedy under Article 226 of the Constitution of India, therefore, the writ petition is not maintainable. 4. The learned Counsel for the petitioner drew our attention to the averments made in paras 4, 5 and 6 of the writ petition, in order to show that the institute is an other authority under Article 12 of the Constitution of India being an instrumentality of the State and therefore, the writ petition under Article 226 of the Constitution of India is maintainable. 5. From the record, it appears that the institute is a society registered under the Societies Registration Act, 1860 (hereinafter referred to as the Act). It is governed by the Memorandum of Association which shows that society was constituted with the aim and object to undertake, aid, promote and coordinate reserch and development, with special omphasis on the problems of India and her regions particularly the promotion and growth of the weak and/or poor sections of the people with a view to bringing about social equality and removing economic disparity; to provide academic and professional guidance to agencies, institutions and persons engaged in research and development; to provide, on request advisory and consultancy services to the Government of India, the State Governments, Universities, colleges and other educational Institutions and organisations in the business, industry or trade including organisations of Employees and Employers etc. The first members of the Board of Governors which were 11 in number included the Minister for Planning Government of India, Sri D.P. Dhar being Chairman; Chief Minister of U.P., Lucknow, (Ex-offcio Member); Head of Department of Economics (ex-officio), Lucknow University, Lucknow; Sri M.R. Sherwani; Dr. Malcolm S. Adiseshiah; Dr. Nagendra Singh; Sri Naval H. Tata; Sri S. Nilkanthan; Deputy Secretary to the President of India, Rashtrapati Bhavan New Delhi; and Vice-Chancellor (ex-officio), Lucknow University, Lucknow as Members, Sri R.S. Pandey, Managing Director, The Tata Iron & Steel Co. Ltd. as honorary Bursar and Dr. V.B. Singh, Department of Economics, Lucknow University, Lucknow as honorary Director. The institute is also governed by rules framed by it for its management which shows that the membership is open to any individual social scientist or society or corporate body or association generally in agreement with the aims and objects of the institute as set out in its Memorandum of Association. The authorities of the institute are the general body, the Board of Governors, Director, faculty and any other body that may be appointed by the Board of Governors, The general body of the institute consist of the members of the institute, members of the Board of Governors and members of the institute faculty. The constitution of Board of Governors and members of the institute faculty. The constitution of Board of Governors is provided in Rule 7 which reads as under : “7 Board of Governors : 1. The Chairman 2. The Vice-Chairman. 3. Not more than two nominees of the Indian Council of Social Science Research. 4. Not more than two nominees of the Government of U.P. 5. Two members of the Institute Faculty. 6. Vice-Chancellor, Lucknow University, Lucknow. 7. Not more than seven distinguished persons with interest in research and studies. 8. Directors.” The manner of constitution of Board of Governors is provided in Rule 8 which reads as under : 1. “The Chairman and the Vice-Chairman shall be elected by the Board of Governors. 2. The members in the categories 7(3) and 7(4) shall be nominated by the Indian Council of Social Science Research and the Government of U.P. respectively. 3. Directors.” The manner of constitution of Board of Governors is provided in Rule 8 which reads as under : 1. “The Chairman and the Vice-Chairman shall be elected by the Board of Governors. 2. The members in the categories 7(3) and 7(4) shall be nominated by the Indian Council of Social Science Research and the Government of U.P. respectively. 3. The representatives of the Faculty of the Girl Institute of Development Studies shall be in the following manner : (a) One person from among the Professors and Senior Fellows together on the basis of seniority and rotation; (b) One person from amongst the Fellows on the basis of seniority and rotation. 4. Members of the category 7(7) shall be invited by the Board of Governors. 5. The Director will be an ex-officio member of the Board of Governors.” 6. The power of management under the Rule primarily vest in the Board of Governors or the authorities specified by the Board of Governors. The funds of the institution are generated in the manner provided in Rule 23 which reads as under : “23. Funds : The funds of the Institute shall consist of : (1) subscriptions from members; (2) grants made by the Government of Uttar Pradesh. (3) grants made by the Indian Council of Social Science Research; (4) Contributions and/or donations from other sources; (5) income from the assets of the Institute. (6) receipts of the Institute from other sources; and (7) borrowings and loans.” Rule 26 provides for the Accounts and audit and since the same has been strongly relied by the learned Counsel for the petitioner the same is also reproduced as under: “26. Accounts and Audit : (1) The Institute shall maintain proper accounts and other relevant records and prepare annual accounts comprising the receipt and payment accounts, statement of assets and liabilities etc. in such form as may be prescribed in the Regulations to be framed by the Board of Governors in pursuance of Rule 27. (2) The accounts of the Institute shall be audited annually by the auditors appointed at the annual general meeting of the Institute. The accounts of the Institute, alongwith the report of the auditors shall be submitted to the next annual general meeting of the Institute and also to the Government of Uttar Pradesh and the Government of India. (2) The accounts of the Institute shall be audited annually by the auditors appointed at the annual general meeting of the Institute. The accounts of the Institute, alongwith the report of the auditors shall be submitted to the next annual general meeting of the Institute and also to the Government of Uttar Pradesh and the Government of India. (3) The Government of India and the Government of Uttar Pradesh shall have the right to carry out a test audit of the accounts of the institute through any person appointed by them in this behalf; and such person shall have the right to demand the production of books, accounts, connected vouchers and other documents and papers and to inspect any of the offices or institutions of the institute. (4) The Institute shall publish an Annual Report of its working which shall also include a statement of audited accounts and the report of the auditors.” 7. The learned Counsel for the petitioner submits that since, the Government of India and Government of Uttar Pradesh have power to carry out the test audit of the accounts of the Institute as provided in Rule 26(3) therefore, it is evident that the State Government has a pervasive control over the functioning of the institute, hence, it is an ‘authority’ under Article 12 of the Constitution and is a ‘State’ where against writ petition under Article 226 of the Constitution is maintainable. He also drew our attention to various letters of the authorities of the U.P. Government showing payment of grant to the institute and payment of salary to some of the employees of the Institute from time to time in support of his submission that the funds of the institute are substantially generated by the grants of the State Government and therefore it satisfy the test of ‘State under Article 12 of the Constitution. 8. On the aforesaid facts and circumstances of this case the question is whether the Institute in question can be said to be an other authority so as to constitute ‘State’ within the meaning of Article 12 of the Constitution of India in order to maintain this writ petition. 9. The tests on which a body can be said to be an ‘authority’ amenable for writ jurisdiction are no more res integra having been considered by the Apex Court time and again. 9. The tests on which a body can be said to be an ‘authority’ amenable for writ jurisdiction are no more res integra having been considered by the Apex Court time and again. The definition of ‘State’ was initially treated to be exhaustive confined to the authorities stipulated under Article 12 and those which could be read ejusdem generis with the authorities mentioned therein and prior to 1960 i.e. in early sixties even the statutory bodies, like Universities, Government Colleges etc. were not held to be “other authorities” for the purpose of Article 12. For the first time in Rajasthan State Electricity Board, Jaipur v. Mohan Lal and others, AIR 1967 SC 1857 , it was held that the expression “other authorities” are such which are conferred powers under law irrespective of the fact whether they were constituted for the purpose of carrying on commercial activities etc. Thereafter in Sukhdeo Singh and others v. Bhagat Ram Sardar Singh Raghuvanshi and others, AIR 1975 SC 1331 , Oil & Natural Gas Commission, the Industrial Finance Corporation and Life Insurance Corporation, were held to be ‘State’ under Article 12 of the Constitution, though employees thereof are not civil servants. Thereafter in Ramana Dayaram Shetty v. International Airport Authority of India and others, AIR 1979 SC 1628 , it was held that a Corporation may be created in one of two ways, namely, either by statute or incorporated under a law, such as, the Companies Act, 1956 or the Societies Registration Act, 1860. Where a Corporation is wholly controlled by Government not only in its policy making but also carrying out the functions entrusted to it by the law establishing it or by the Charter of its incorporation, it has to be treated as an instrumentality or agency of Government. The Apex Court propounded certain tests to determine whether a particular body is an instrumentality of the State or not. We do not propose to elaborate the said principles for the reason that subsequently a Constitution Bench of the Apex Court in Ajay Hasia v. Khalid Mujib Sehravardi and others, AIR 1981 SC 487 , considered this issue and summarized the relevant tests discovered from Ramana Dayaram Shetty (supra) as under : 1. We do not propose to elaborate the said principles for the reason that subsequently a Constitution Bench of the Apex Court in Ajay Hasia v. Khalid Mujib Sehravardi and others, AIR 1981 SC 487 , considered this issue and summarized the relevant tests discovered from Ramana Dayaram Shetty (supra) as under : 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 the 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 classifying the corporation as an instrumentality or agency of Government.” 6. “Specifically, if a department of Govt. 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.” 10. In Ajay Hasia (supra) the question whether Regional Engineering College which was being administered by a Society registered under the provisions of Societies Registration Act, 1860 is a State under Article 12 of the Constitution of India, came up for consideration. The Court held it to be an instrumentality of the State for the following reasons : “............. The composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu & Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government. The monies required for running the college are provided entirely by the Central Government. The monies required for running the college are provided entirely by the Central Government and the Government of Jammu & Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The monies required for running the college are provided entirely by the Central Government and the Government of Jammu & Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Governments for their scrutiny and satisfaction. The Society is also to comply with all such directions as may be issued by the State Government with the approval of the Central Government in respect of any matters dealt with in the report of the Reviewing Committee. The control of the State and the Central Governments is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the Governments. The State and the Central Governments have even the power to appoint any other person or persons to be members of the Society and any member of the Society other than a member representing the State or Central Govt. can be removed from the membership of the Society by the State Government with the approval of the Central Government. The Board of Governors, which is incharge of general superintendence, direction and control of the affairs of Society and of its income and property is also largely controlled by nominees of the State and the Central Governments. It will thus be seen that the State Government and by reason of the provision for approval, the Central Government also, have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Government......” 11. It will thus be seen that the State Government and by reason of the provision for approval, the Central Government also, have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Government......” 11. In Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and others, (2002) 5 SCC 111 , a Constitution Bench of Seven Hon’ble Judges of the Apex Court also considered the issue as to whether the Council for Scientific and Industrial Research is an authority within the meaning of Article 12 and upon consideration of earlier cases, observed as under : “The picture that ultimately merges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesis, be considered to be a State within the meaning of Article 12. The question 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. 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 Article 12. 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.” 12. A writ petition against Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P., a Co-operative Society registered under the provisions of U.P. Co-operative Societies Act, 1965 came up for consideration before the apex Court in General Manager, Kisan Sahkari Chini Mills, Ltd. Sultanpur, U.P. v. Satrughan Nishad and others, (2003) 8 SCC 639 and the Court held as under : “...........Therefore, even if it is taken to be admitted due to non-traverse, the share of the State Government would be only 50% and not entire. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. It has nowhere been stated that the State used to meet any expenditure of the Mill much less almost the entire one, but, as a matter of fact, it operates on the basis of self-generated finances. There is nothing to show that the Mill enjoys monopoly status in the matter of production of sugar. A perusal of the bye-laws of the Mill would show that its membership is open to cane-growers, other societies, Gram Sabha, State Government etc. and under bye-law 52, a Committee of Management consisting of fifteen members is constituted, out of whom, five members are required to be elected by the representatives of individual members, three out of the co-operative society and other institutions and two representatives of financial institutions besides five members who are required to be nominated by the State Government which shall be inclusive of the Chairman and Administrator. Thus, the ratio of the nominees of the State Government in the Committee is only 1/3rd and the management of the Committee is nominated by 2/3rd non-government members. Under the bye-laws the State Government can neither issue any direction to the Mill not determine its policy as it is an autonomous body. The State has no control at all in the functioning of the Mill much less a deep and pervasive one. The role of the Federation, which is the Apex Court and whose ex-officio Chairman-cum-Managing Director is the Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members. .......Thus, we find none of the indicia exists in the case of the Mill, as such the same being neither and instrumentality nor an agency of the Government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of Constitution.” 13. .......Thus, we find none of the indicia exists in the case of the Mill, as such the same being neither and instrumentality nor an agency of the Government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of Constitution.” 13. In Federal Bank Ltd. v. Sagar Thomas, AIR 2003 SC 4325 , the question was whether the Federal Bank is an instrumentality of the State and negativing the same, the Court held as under : “As indicated earlier, share capital of the appellant bank is not held at all by the Government nor any financial assistance is provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant bank does not enjoy any monopoly status not it can be said to be an institution having State protection. So far control over the affairs of the appellant bank is concerned, they are managed by the Board of Directors elected by its share-holders. No governmental agency or officer is connected with the affairs of the appellant bank nor any one of them is a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State and its Authorities the statutes have been framed regulating the financial and commercial activities so that fiscal equilibrium may be kept maintained and not disturbed by the mal-functioning of such companies or institutions involved in the business of banking. These are regulatory measures for the purposes of maintaining the healthy economic atmosphere in the country.” “.......Any business or commercial activity, may be banking manufacturing units or related to any other kind of business generating resources, employment, production and resulting in circulation of money are no doubt, such which do have impact on the economy of the country in general. But such activities cannot be classified as one falling in the category of discharging duties or functions of a public nature. Thus the case does not fall in the fifth category of cases enumerated in the case of Ajay Hasia. Again we find that the activity which is carried on by the appellant is not one which may have been earlier carried on by the Government and transferred to the appellant company.” 14. Thus the case does not fall in the fifth category of cases enumerated in the case of Ajay Hasia. Again we find that the activity which is carried on by the appellant is not one which may have been earlier carried on by the Government and transferred to the appellant company.” 14. In G. Bassi Reddy v. International Crops Research Institute and another, (2003) 4 SCC 225 , it was considered as to whether International Crops Research Institute is a ‘State’ under Article 12 of the Constitution and whether a writ petition would lie against it and after referring to Ramana Dayaram Shetty (supra), the Court observed as under : “The facts which have narrated earlier clearly show that ICRISAT does not fulfil any of these tests. It was not set up by the Government and it gives its services voluntarily to a large number of countries besides India. It is not controlled by nor is it accountable to the Government. The Indian Government’s financial contribution to ICRISAT is minimal. Its participation in ICRISAT’s administration is limited to 3 out of 15 members. It cannot, therefore, be said that ICRISAT is a State of other authority as defined in Article 12 of the Constitution.” 15. Lastly, the issue as to whether Board of Control for Cricket in India is a ‘State’ under Article 12 of the Constitution of India, has been considered in M/s Zee Tele Films Ltd. and another v. Union of India and others, (2005) 4 SCC 649 and Hon’ble Hegde, J. in the majority judgment held as under : “The facts established in this case shows the following : 1. Board is not created by a statute. 2. No part of the share capital of the Board is held by the Government. 3. Practically no financial assistance is given by the Government to meet the whole or entire expenditure of the Board. 4. The Board does enjoy a monopoly status in the field of cricket but such status is not State conferred or State protected. 5. There is no existence of a deep and pervasive State control. The control if any is only regulatory in nature as applicable to other similar bodies. This control is not specifically exercised under any special statute applicable to the Board. All functions of the Board are not public functions nor are they closely related to governmental functions. 6. 5. There is no existence of a deep and pervasive State control. The control if any is only regulatory in nature as applicable to other similar bodies. This control is not specifically exercised under any special statute applicable to the Board. All functions of the Board are not public functions nor are they closely related to governmental functions. 6. The Board is not created by transfer of a Government owned corporation. It is an autonomous body. To these facts if we apply the principles laid down by seven-Judge Bench in Pradeep Kumar Biswas (supra), it would be clear that the facts established do not cumulatively show that the Board is financially, functionally or administratively dominated by or is under the control of the Government. Thus the little control that the Government may be said to have on the Board is not pervasive in nature. Such limited control is purely regulatory control and nothing more.” 16. Applying various test as discussed above, we find that membership of the institute is open to all individuals including governmental, private or otherwise. The Board of Governors in all have 17 persons as Chairman and members etc. other than Directors out of which only two are to be nominated by the Government of U.P.; two by the Indian Council of Social Science Research and one is the Vice-Chancellor, Lucknow University, Lucknow. It is not that the Institute discharges or undertakes necessary governmental function or enjoy monopoly status. The funds are derived from several sources including the grants by the Government of U.P. which is one of the various sources. And the entire bye-laws, there is nothing to show that the Government of U.P. and/or the Government of India exercise pervasive control in respect to financial, administrative and general management of the Institution in any manner. 17. As observed in the case of Pradeep Kumar Biswas (supra) it is not one, two or more factors as laid down in the case of Ajay Hasia (supra) which would determine whether the body constituted ‘other authority’ within the meaning of Article 12 of the Constitution but has to be seen 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. Such functions and control must be pervasive and only then it is “State” within the meaning of Article 12 and not otherwise. Such functions and control must be pervasive and only then it is “State” within the meaning of Article 12 and not otherwise. In our view certain letters issued by the authorities of the Government without showing the authority under which the same have been issued, would not determine the status of the Institute but it has to be seen in the light of bye-laws, rules etc. which govern the Institute and in view of the various provisions as discussed. We are clearly of the view that the institute in question cannot be said to be a State within the meaning of the Article 12 of the Constitution of India and therefore, the preliminary objections regarding maintainability of this writ petition has to sustain. 18. In the result, the writ petition fails and is dismissed as not maintainable. There shall be no order as to costs. ————