Joshomayee Devi v. Indian Institute of Bank Management & Ors.
2015-03-12
T.VAIPHEI
body2015
DigiLaw.ai
1. The question as to whether the professional institute under the name and style of "Indian Institute of Banking Management" (IIBM) formed by the Reserved Bank of India, State Bank of India, NABARD, NEC and other Nationalised Banks registered under the Societies Registration Act, 1860 for imparting training to their personnel, etc., comes within the purview of the expression "other authority" under article 12 of the Constitution of India, is confronting this court in this writ petition on the basis of the preliminary objection raised by the respondents. 2. The controversy arose on the following facts and circumstances. The petitioner is currently serving as Associate Professor of the Indian Institute of Bank Management (IIBM), Guwahati. According to the petitioner, although the date of superannuation of faculty members of the IIBM was maintained at 60 years, following the adoption of the recommendation of the 5th and 6th Pay Commission, their age of superannuation got extended from 60 years to 62 years, which was made known to them verbally. This particular age of superannuation was also recorded in their service book maintained by the IIBM whereupon the date of superannuation of the petitioner in the leave computation charts was shown as 31.12.2014 (wrongly typed as 31.12.2015). However, on 26.11.2012, the petitioner was served with a copy of the letter dated 23.11.2012 issued by the Chief Administrative Officer, IIBM (respondent 2), informing her that she would be retiring from service at the close of business of 31.12.2012. 3. Aggrieved by this, she approached the respondents for information under the Right to Information Act, 2005 ('the Act'), but was refused on the ground that the IIBM is not a public authority under section 2(h) of the Act. In the meantime, the governing body of the IIBM approved the Retirement Review and Compulsory Retirement Scheme ('the Scheme') in its meeting held on 19.12.2011. The IIBM Staff Services Rules ('the Rules') were thereafter amended and a new rule, namely, rule 29A was incorporated in Chapter III of the Rules to give effect to the said Scheme. Challenging rule 9A as arbitrary, unreasonable, mala fide and against the principles of natural justice, the petitioner filed an appeal on 27.6.2012 before the Chairman and the Board of Governors for review and for recalling rule 29A, which, however, came a cropper. This prompted her to file this writ petition. 4.
Challenging rule 9A as arbitrary, unreasonable, mala fide and against the principles of natural justice, the petitioner filed an appeal on 27.6.2012 before the Chairman and the Board of Governors for review and for recalling rule 29A, which, however, came a cropper. This prompted her to file this writ petition. 4. A preliminary objection was at the outset raised by the respondents contending that the IIBM is neither a State nor an instrumentality of the State and is, therefore, not amendable to the writ jurisdiction of this court under article 226 of the Constitution. It is the case of the answering respondents that the legal status of the IIBM is that of a society registered under the Societies Registration Act, 1860, and being a registered society, it is an autonomous body having its own memorandum and governed by its bye-laws, and is not in any manner controlled by the State. Contending that the writ petition is not maintainable, the answering respondents strenuously urge this court to dismiss the writ petition at the very threshold. 5. Countering the preliminary objection, Mr. K.N. Choudhury, the learned senior counsel, submits that IIBM, though registered as a society, is receiving monetary aid from, is established and maintained by the Reserve Bank of India and other Public Sector Banks and is, therefore, deemed to be other authority within the meaning of article 12 of the Constitution of India. Elaborating his submissions, the learned senior counsel points out that the Chairman of the IIBM is the Deputy Governor, Human Resource, Reserve Bank of India, and other members of the Board of Governors are also officials of the RBI, Guwahati, Managing Director of National Bank for Agriculture and Rural Development NABARD) and senior banking officials of the Nationalised/public sector Banks, Director, IIT, Secretary, NEC and representative of National Institute of Bank Management, Pune. The learned senior counsel further points out that the entire budgetary expenses of IIBM were contributed by the RBI, NABARD, SBI and other Nationalised/public sector Banks. All these factors, according to the learned senior counsel, will go a long way in demonstrating that the IIBM is an instrumentality or organ of the State under article 12 of the Constitution and is, therefore, amenable to the writ jurisdiction of this court.
All these factors, according to the learned senior counsel, will go a long way in demonstrating that the IIBM is an instrumentality or organ of the State under article 12 of the Constitution and is, therefore, amenable to the writ jurisdiction of this court. The learned senior counsel takes me to the decisions of the Constitution Bench of the Apex Court in Ajay Hasia and Others v. Khalid Mujib Sehravardi and Others, (1981) 1 SCC 722 , Satguru Shree Muktaji Trust v. V.R. Rudani, (1989) 2 SCC 691 , Federal Bank v. Sagar Thomas, (2003) 10 SCC 733 and Balmer Lawrie and Company Ltd. and Others v. Partha Sarathi Sen Roy, (2013) 8 SCC 345 . 6. On the other hand, Mr. K.K. Mahanta, the learned senior counsel for the respondents, maintains that the IIBM is merely a society registered under the Societies Registration Act, and is not under the control, even remotely, of the Government or the Reserve Bank of India nor is there any deep or pervasive control over its functions by the State: the working of the IIBM is governed by the Board of Directors in accordance with the provisions of its bye-laws. According to him, there is no capital funding to IIBM by any organization, but the deficit in the budgetary estimates is contributed by the subscribers of the Memorandum of Association on voluntary basis. He, therefore, forcefully argues that the IIBM is neither the instrumentality of the State nor has it the trapping of the State so as come within the purview of the expression "other authorities" under article 12 of the Constitution, and the IIBM is as such not amenable to the writ jurisdiction of this court. To buttress his submissions, strong reliance is placed by him on the decision of the Apex Court in Li. Governor of Delhi v. V.K. Sodhi, (2007) 15 SCC 136 . 7. After hearing the rival submissions advanced by the rival counsel, I am of the view that the main question for consideration is, therefore, whether 'IIBM is a "State" or has the trappings of the State.
Governor of Delhi v. V.K. Sodhi, (2007) 15 SCC 136 . 7. After hearing the rival submissions advanced by the rival counsel, I am of the view that the main question for consideration is, therefore, whether 'IIBM is a "State" or has the trappings of the State. For better appreciation of the controversy, it becomes necessary to look into the constitution of the body, the purpose for which it has been created, the manner of its functioning including the mode of its funding and the broad features which have been found by this court in several decisions to be relevant in the matter of determining a dispute of this type, article 12 of the Constitution provides an inclusive definition of the term "State" by saying: "In this part, unless the context otherwise requires, 'the State' includes the Government and Parliament of India and the Government and the Legislature of each of the Slates and all local or other authorities within the territory of India or under the control of the Government of India." 8. The leading authority in this field is the decision of the Constitution Bench of the Apex Court in Ajay Hasia (supra). In his inimitable words, Justice P.N. Bhagawati, as he then was, explained that the Government in many of its ventures and public enterprises is resorting to more and more frequently to this resourceful legal contrivance as it has many practical advantages and at the same time does not involve the slightest diminution in its ownership and control of undertaking. In such cases, "the true owner is the State, the real operator is the State and the effective controllate is the State and accountability for its actions to the community and to Parliament is of the State. It is undoubtedly true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount of autonomy which is necessary as well as useful from the point of view of effective business management, but behind the formal ownership which is cast in the corporate mould, the reality is very much the deeply pervasive presence of the Government.
It is really the Government which acts through the instrumentality or agency of the corporation and the juristic veil of corporate personality worn for the purpose of convenience of management and administration cannot be allowed to obliterate the true nature of the reality behind which is the Government. Now it is obvious that if a corporation is an instrumentality or agency of the Government, it must be subject to the same limitations in the field of constitutional law as the Government itself, though in the eye of the law it would be a distinct and independent legal entity. If the Government acting through its officers is subject to certain constitutional limitations, it must follow a fortiorari that the Government acting through the instrumentality or agency of a corporation should equally be subject to the same limitations. If such a corporation were to be free from the basic obligation to obey the fundamental rights, it would lead to considerable erosion of the efficiency of the fundamental rights, for in that event the Government would be enabled to override the fundamental rights by adopting the stratagem of carrying out its functions through the instrumentality or agency of a corporation, while retaining control over it. The fundamental rights would then be reduced to little more than an idle dream or a promise of unreality. 9. IIBM is indeed a society registered under the Societies Registration Act, 1860, and the Chairman of the IIBM is the Deputy Governor, Human Resource, Reserve Bank of India, and other members of the Board of Governors are also officials of the RBI, Guwahati, Managing Director of National Bank for Agriculture and Rural Development NABARD) and senior banking officials of the Nationalised/public sector Banks, Director, IIT, Secretary, NEC and representative of National Institute of Bank Management, Pune. The objects of the IIBM, among others, are: 1. to establish and carry on the administration and the management of the IIBM; 2. to plan, promote and provide for education and training in operations of the Region (North Eastern Region) and undertake, organize and facilitate Conference, Seminars, Study Course, Lecturers and similar other activities for the purpose; 3.
The objects of the IIBM, among others, are: 1. to establish and carry on the administration and the management of the IIBM; 2. to plan, promote and provide for education and training in operations of the Region (North Eastern Region) and undertake, organize and facilitate Conference, Seminars, Study Course, Lecturers and similar other activities for the purpose; 3. to provide consultancy and conduct research in matters pertaining to: (a) the improvement of banking operation in the context of the development the needs of the Region; (b) the education, training and development of personnel of banking, cooperative and other financial institutions as also of the Slate/ Central Governments and their Undertakings in the Region; and (c) the maximum augmentation and effective deployment of bank resources including analytical and perspective studies of various sections of the economy with a view to promoting the development of the Region. 4. to assist banking and financial institutions in such matter as designating tests for employee selection and appraisal programmes and review, from time to time, the impact of educational trainings and research activities and offer suggestions for filling the gaps in banking arid financial systems. 5. to provide and undertake faculty development programmes so as to ensure an adequate supply of competent trainers to institutions conducting training programmes for the personal of banking and financial institutions as also of State Governments and statutory agencies associated with the development of the Region. 6. to maintain liaison with banking and financial institutions, State Governments and statutory development agencies operating in the Region and educational bodies for promoting education and training of personnel of banking and financial institutions as also of State Governments in the Region. 10. The memorandum permits the IIBM to establish and maintain funds with the contributions/donations from various sources, receipts by way of fees from organizations, deputing personnel to training programmes and with all other monies acquired by the Society in any other way. It further permits the IIBM to utilize a part of whole of the fund towards capital and recurring expenditures of the IIBM and make appropriate investments or to deal with the funds in any other way the Society may find it necessary for the conduct of the affairs of the IIBM. Who are the sponsors of the IIBM? They are the Reserve Bank of India, State Bank of India, National Bank of Agricultural and Rural Development and other Nationalised Banks.
Who are the sponsors of the IIBM? They are the Reserve Bank of India, State Bank of India, National Bank of Agricultural and Rural Development and other Nationalised Banks. The first members of the Governing Board of the Institute were officials of the aforesaid banks, and no private individuals arc found a place therein. The contributions made by the sponsor banks are as follows: Name of sponsor bank% of share Amount in Rupees 1. Reserve Bank of India305103443 2. National Bank of Agriculture & Rural Development152551722 3. State Bank of India152551722 4. United Bank of India12.52126435 5. UCO Bank12.52126435 6. Allahabad Bank7.51275861 7. Central Bank of India7.51275861 11. Thus, the contributions for the upkeep of the Institute come mostly from the sponsor banks. The Reserve Bank of India and other sponsor banks, which are Nationalised Banks, are undoubtedly the instrumentalities/agencies of the State, and they, therefore, come within the expression "other authorities" under article 12 of the Constitution. If that is so, the Institute is none other than the agency of the instrumentality of the State. The fact that it has been registered under the Societies Registration Act, 1860 does not and cannot alter its true nature and character as the agency of the State. In my opinion, the Institute is an important arm of the sponsor banks for carrying it out its banking and developmental activities in the North Eastern Slates in a more effective manner by giving training to their personnel for achieving the goals set for them the Central Government. Though the Institute is camouflaged as an ordinary and private-like society, on careful examination of the Memorandum of Association and Rules, it becomes obvious that with the Board of Governing Body manned by the high officials of the sponsor banks in their individual names, of the functions carried on by it and of the direct control these officials of the sponsor banks exercise over the Institute, it cannot hide the fact that the Institute is the agency of the instrumentalities of the State, namely, Reserve Bank of India, State Bank of India, NABARD, North Eastern Council (which is another instrumentality of the State) and Nationalised Banks. It is not the form but the substance of the matter, which is decisive in determining the true character of the Institute.
It is not the form but the substance of the matter, which is decisive in determining the true character of the Institute. The test for determining as to when a society or corporation can be held to an instrumentality or agency of the Government is propounded by the Apex Court in Ajay Hasia case (supra), which reads, thus: "9. The tests for determining as to when a corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in the International Airport Authority case. These tests are not-conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression "other authorities", it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority case (supra) as follows: "(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. (SCC p. 507, para 14) (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 corpora lion being impregnated with Governmental character. (SCC p. 508, para 15) (3) It may also be a relevant factor... whether the corporation enjoys monopoly status which is State conferred or State protected. (SCC p. 508, para 15) (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p. 508, para 15) (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.
(SCC p. 508, para 15) (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. (SCC p. 509, para 16) (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." (SCC p. 510, para 18) If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority case (supra), be an "authority" and, therefore, 'State' within the meaning of the expression in article 12. 12. Thus, on the facts found by me earlier, it is quite clear that the entire expenditures are, or virtually, borne by the Reserve Bank of India, SBI, NABAKD and other Nationalised Banks, which are undoubtedly the instrumentalities of the State. The sponsor banks, which are the agencies of the State, who dominate the Board of Governors through their officials, are exercising deep and pervasive control over the Institute. The Institute has been established to train the personnel of the sponsor banks, which arc carrying on important public functions and closely related to Government functions. Without proper training, the personnel of the sponsor banks will not be able to carry out their duty of promoting the development of the North East Region entrusted to them the Central Government. The clothes worn by the institute cannot really camouflage the true character of the Institute, which functions as one of the important arms of the sponsor banks to realize the social and economic goals set for them by the Government in the North East Region. In my judgment, the Institute is undoubtedly the agency of the various instrumentalities of the State, namely, the sponsor banks, for enabling them to carry out their important functions more efficiently and effectively, and, therefore, comes within the expression "other authorities" referred to in article 12 of the Constitution. 13. The result of the foregoing discussion is that the preliminary objection on the maintainability of the writ petition raised by the learned senior counsel for the respondents fails, and is, therefore, rejected. The writ petition will now be listed for hearing on merit.
13. The result of the foregoing discussion is that the preliminary objection on the maintainability of the writ petition raised by the learned senior counsel for the respondents fails, and is, therefore, rejected. The writ petition will now be listed for hearing on merit. List it as and when the business of the court permits. ....