National Bank For Agriculture And Rural Development v. Chita Ranjan Patnaik
2018-08-03
B.R.SARANGI, VINEET SARAN
body2018
DigiLaw.ai
JUDGMENT Dr. B.R. Sarangi, J. - This is an intra Court appeal filed by the appellants challenging the judgment dated 27.04.2018 passed in W.P.(C) No. 15402 of 2012, by which the learned Single Judge has remitted the matter to the competent authority to consider the case of respondent no.1 and to take final decision in accordance with law for promotion to the post of Executive Director notionally within reasonable period, preferably within three months from the date of production of certified copy of the order. 2. The factual matrix of the case, in hand, is that respondent no.1 joined the Reserve Bank of India (RBI) on 22.10.1971 and subsequently in the year 1979 he was selected as a Direct Recruit Officer in Grade-B (Manager) in the erstwhile ARDC, the then subsidiary of RBI, and then he joined in National Bank for Agriculture and Rural Development (NABARD) after its formation in the year 1982. The respondent no.1, after working in various capacities, was promoted to the rank of Chief General Manager (CGM) in the year 2002. The next promotion due to the respondent no.1was in the rank of Executive Director. The selection committee convened a meeting to select two Executive Directors in the year 2011. The respondent no.1, being eligible for the same, his name was short listed at serial no.2, along with other three candidates. As against the candidate at serial no.1, since departmental cases were pending, his case was not considered. Consequently, the respondent no.1 ought to have been extended with the benefit of promotion by promoting him to the post of Executive Director, but the claim of the respondent no.1 was rejected in gross violation of the National Bank for Agriculture and Rural Development (Staff) Rules, 1982. 3.
Consequently, the respondent no.1 ought to have been extended with the benefit of promotion by promoting him to the post of Executive Director, but the claim of the respondent no.1 was rejected in gross violation of the National Bank for Agriculture and Rural Development (Staff) Rules, 1982. 3. The respondent no.1 filed writ application and the writ Court, after considering the grievance of respondent no.1, disposed of the same by judgment dated 27.04.2018 stating inter alia that the respondent no.1 cannot take the benefit of actual service even if he would be promoted to the post of Executive Director, since he has already retired from service w.e.f. 30.04.2011, but if he would be found to besuitable, certainly he would be entitled to get monetary benefit by getting the notional promotion, and therefore remitted the matter to the competent authority to consider the case of the respondent no.1 and to take final decision in accordance with law for promotion to the post of Executive Director notionally within reasonable period, preferably within three months from the date of production of certified copy of the order. Even though an objection was raised before the writ Court with regard to maintainability of the writ application against the NABARD, the answer was given in affirmative by learned Single Judge. Hence this application. 4. Mr. J.K. Tripathy, learned Senior Counsel appearing for the appellants submitted that although the appellants raised a preliminary question with regard to maintainability of the writ application before the learned Single Judge stating that NABARD is not a 'State' within the meaning of Article 12 of the Constitution of India and therefore the writ application was not maintainable, the learned Single Judge, without considering such objection in proper perspective, passed the impugned judgment. Hence, the appellants have filed this appeal to nullify the judgment of the learned Single Judge dated 27.04.2018. It is contended that the writ application was not maintainable, as the appellant-organization is not a 'State' for the purpose of ventilating grievance of its employees like that of the respondent no.1 relating to service conditions. It is further contended that the learned Single Judge did not at all refer to decisions, which were cited before him, and thereby completely missing the point canvassed on the maintainability issue and came to a wrong conclusion that the appellant-institution was a 'State' within the meaning of Article-12 of the Constitution of India.
It is further contended that the learned Single Judge did not at all refer to decisions, which were cited before him, and thereby completely missing the point canvassed on the maintainability issue and came to a wrong conclusion that the appellant-institution was a 'State' within the meaning of Article-12 of the Constitution of India. Therefore, the appellants have sought for interference of this Court by means of this appeal. To substantiate his contention, he has relied upon the judgments rendered in Dr. S.L. Agarwal v. The General Manager, Hindustan Steel Ltd., (1970) 1 SCC 171 ; Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1SCC 722 ; and Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 . 5. We have heard Mr. J.K. Tripathy, learned Senior Counsel for the appellants and perused the records. Since the appellants had raised a preliminary question with regard to maintainability of the writ petition, the same question has already been reiterated here in appeal. Therefore, the moot question which arises for consideration is whether the writ application as against NABARD is maintainable or not. 6. It is the admitted case that NABARD has been constituted under the provisions of the National Bank for Agriculture and Rural Development Act, 1981 and as such, it is a creation of statute. The prerogative writ of mandamus confined only to public authorities to compel performance of public duty. The 'public authority' for them means everybody which is created by statute and whose powers and duties are defined by statute. Therefore, the Government departments, local authorities, police authorities and statutory-undertakings and corporations, are all 'public authorities'. Thereby, there is no such limitation for the High Court to issue writ in the nature of mandamus under Article 226 of the Constitution of India. But the preliminary question raised with regard to maintainability of the writ application, is against the NABARD, as it is not a 'State' within the meaning of Article 12 of the Constitution. Therefore, the minimum requirement is that unless NABARD is a 'State' or "instrumentality of the State" or "other authority", the writ application is not maintainable. 7. Article 12 of the Constitution of India reads as follows:- " 12.
Therefore, the minimum requirement is that unless NABARD is a 'State' or "instrumentality of the State" or "other authority", the writ application is not maintainable. 7. Article 12 of the Constitution of India reads as follows:- " 12. Definition - 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 State and all local or other authorities within the territory of India or under the control of the Government of India." 8. The definition of 'State' is not confined to Governmental function and the legislature but extends to any action administrative (whether statutory or non8 statutory), judicial or quasi judicial, which may be brought within the fold of State action being the action, which violates fundamental rights. It appears that prima facie protection against infraction of Article 14 is available only against the State and complaint of arbitrariness and denial of equality can therefore, be sustained against the NABARD only if the NABARD can be shown to be State for the purpose of Article 14. The 'State' is defined in Article 12 to include inter alia the Government of India and the Government of each of the States and all local or other authorities within the territory of India or under the control of the Government of India and the question therefore is whether the NABARD can be said to be 'State' within the meaning of this definition. Obviously the NABARD cannot be equated with the Government of India or the Government of any State nor can it be said to be a local authority and therefore, it must come within the expression of "other authorities" if it is to fall within the definition of 'State'.Therefore, the question is what are "other authorities" contemplated in the definition of 'State' in Article 12. While considering this question, it is necessary to bear in mind that an authority falling within the expression "other authorities" is, by reason of its inclusion within the definition of 'State' in Article 12, subject to the same constitutional limitations as the Government and is equally bound by the basic obligation to obey the constitutional mandate of the Fundamental Rights enshrined in Part III of the Constitution.
Similar question as to whether a corporation can be regarded as an 'authority' within the meaning of Article 12 arose for consideration in R.D. Shetty v. The International Airport Authority of India, AIR 1979 SC 1628 and the apex Court though has given wide enlargement of the meaning of "other authorities", but cautioned that it must be tempered by a wise limitation. 9. If the NABARD is an 'authority' and therefore, "State" within the meaning of 'Article 12, it must follow that it is subject to the constitutional obligation under Article 14.The true scope and ambit of Article 14 has been the subject matter of numerous decisions and it is not necessary to make any detailed reference to them and it is sufficient to state that the content and reach of Article-14 must not be confused with the doctrine of classification because the view taken was that that Article forbids discrimination and there would be no discrimination where the classification making the differentia fulfils two conditions, namely, (i) that the classification is founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group; (ii) that the differentia has a rational relation to the object sought to be achieved by the impugned legislative or executive action. Reference can also be made to other judgments of the apex Court in Gulam Abbas & Ors v. State of U.P. & Ors AIR 1981 SC 2198 , Som Prakash v. Union of India, AIR 1981 SC 212 . But all thesequestions have been considered by the Constitution Bench of the apex Court in Ajay Hasia v. Khalid Mujib Sehravardi and others, AIR 1981 SC 487 . 10. In Tekraj Vasandi alias Basandi v. Union of India, AIR 1988 SC 469 (paragraphs 17-A and 20), with the approval, the observations of Justice Shah in Uajm Bai case, it is held that the expression 'authority' in its etymological sense means a body invested with power to command or give an ultimate decision, or enforce obedience, or having a legal right to command and be obeyed.
But in paragraph 20 the Court observed as follows: "In a Welfare State, as has been pointed out on more than one occasion by this Court, Governmental control is very pervasive and in fact touches all aspects of social existence in the absence of a fair application of the tests to be made, there is possibility of turning every nongovernmental society into agency or instrumentality of the State. That obviously would not serve the purpose and may be far from reality." 11. In Chandra Mohan v. NCERT, AIR 1992 SC 76 , in paragraph-3, the apex Court held as follows: "It must not be lost sight of that in the modern concept of Welfare State, independent institution, corporation and agency are generally subject to State control. The State control does not render such bodies as 'State' under Article 12. 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'." 12. In Ajay Hasia (supra) the Constitution Bench summarized the relevant tests gathered from the decision in R.D.Shetty for determining whether an entity is a 'State' or "instrumentality of the State" 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 indicting that the corporation is an instrumentality or agency or 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 of public importance and closely related to governmental functions, it would be a relevant factor in classified the corporation as a instrumentality or agency of Government.
(5) If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classified the corporation as a 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. " It was held in Ajay Hasia that if on consideration of the 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's case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12. The same view has also been taken into consideration by the apex Court in U.P. Warehousing Corporation v. Vijay Narain, AIR 1980 SC 840 . 13. The tests, which have been determined in Ajay Hasia (supra) are also held not rigid set of principlesso that a body falling within any one of them must be considered to be 'State'. The question in case would be: whether on facts, the body is financially, functionally and administratively dominated by or under the control of Government and such control must be particular to that body and must be pervasive. Therefore, the decision in Sabhaijit Tewary v. Union of India, AIR 1975 SC 1329 , has been overruled by the 7-Judge Bench judgment of the apex Court in Pradip Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 and the apex Court by over-ruling Sabhaijit Tewary (supra) held as follows: "(1) simply, by holding a legal entity to be an instrumentality or agency of the State it does not necessarily become an authority within the meaning of " other authorities" in Article 12. To be an authority, the entity should have been created by a statute or under a statute and functioning with liability and obligations to the public. Further, the statute creating the entity should have been vested that entity with power to make law or issue binding directions amounting to law within the meaning of Article 13(2) governing its relationship with other people or the affairs or other people their rights, duties, liabilities or other legal relations. Itcreated under a statute, then there must exist some other statute conferring on the entity such powers.
Itcreated under a statute, then there must exist some other statute conferring on the entity such powers. In either case, it should have been entrusted with such functions as are governmental or closely associated therewith by being of public importance or being fundamental to the life of the people and hence governmental. Such authority would be the State, for, one who enjoys the powers or privileges of the State must also be subjected to limitations and obligations of the State. It is this strong statutory flavor and clear indicia of power constitutional or statutory, and its potential or capability to act to the detriment of fundamental rights of the people, which makes it an authority; though in a given case, depending on the facts and circumstances, an authority may also be found to be an instrumentality or agency of the State and to that extent they may overlap. Tests 1, 2 and 4 in Ajay Hasia enable determination of governmental ownership or control. Tests 3, 5 and 6 are "functional" tests. The propounder of the tests himself has used the words suggesting relevancy of those tests for finding out if an entity was instrumentality or agency of the State. Therefore, the question whether an entity is an "authority" cannot be answered by applying Ajay Hasia tests. (2) The tests laid down in Ajaya Hasia case relevant for the purpose of determining whether an entity is an instrumentality or agency of the State. Neither all the tests are required to be answered in the positive nor a positive answer to one or two tests would suffice. It will depend upon a combination of one or more of the relevant factors depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be by removing the mask or piercing the veil disguising the entity concerned." 14. Taking into consideration Pradip Kumar Biswas (supra) the apex Court in Virendra Kumar Srivastava v. U.P. Rajya Karmachari Kalyan Nigam and another, AIR 2005 SC 411 has held 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. Such control must be particular to the body in question and must be pervasive.
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'. 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. 15. As it has been pleaded by the appellants that the definition of "State", as finds place in Article 12 of the Constitution, is only applicable to Part-III of the Constitution of India which deals with the fundamental rights of Citizen of India and Part-IV of the Constitution which imports themeaning of word 'State' as occurs in Article-12 of Part-III of the Constitution. The definition of 'State' and 'other authority' as find place in Article-12 of the Constitution of India, is only limited to Part-III and part-IV thereof. Against any grievance relating to illegality/infirmity/violation of service rules could only be challenged by a Civil Servant ventilating any grievance against the Government only and therefore, it is not applicable to the employees of NABARD. This contention is a fallacious one. 16. As such, in view of the law discussed above, taking into account the nature of constitution of NABARD and discharge of its duties and keeping in view the parameters provided in the cases of Dr. S.L. Agarwal, Ajay Hasia and Pradeep Kumar Biswas (supra), we are of the considered opinion that NABARD can be construed as a 'State' within the meaning of Article 12 of the Constitution of India, being an instrumentality of the State and an 'authority'. Thus, writ application against NABARD is maintainable. In view of such position, we are unable to accept the arguments advanced by Sri. J.K. Tripanty, learned Senior Counsel appearing for the appellants that NABARD is not a 'State'. Even though we have held that the writ application is maintainable, so far as merits of the case is concerned no arguments were advanced. More so, the learned Single Judge has considered the same elaborately and as a matter of fact, the case has been remitted back to the authority for consideration. In that view of the matter, we are not inclined to interfere with the same. 17. Accordingly, the writ appeal stands dismissed being bereft of merit. No order to costs. Vineet Saran, C.J. - I agree.