Girish G. , Indragiri, Mannam P. O, North Parur, Ernakulam v. State of Kerala Represented By The Chief Secretary To Government, Secretariat, Thiruvananthapuram
2020-01-10
P.V.ASHA
body2020
DigiLaw.ai
JUDGMENT : 1. Petitioners in all these writ petitions are challenging the termination of their services by the Cochin International Airport Limited (CIAL). Therefore, all these writ petitions are disposed of by this common judgment. Parties and documents referred to in this judgment are as described in W.P. (C).No.7219/2014 unless specifically stated otherwise. 2. The CIAL has raised a preliminary objection as to the maintainability of these Writ Petitions. According to them, CIAL does not come under the definition of a State under Article 12 of the Constitution of India. It is also their case that it does not perform any public duties and therefore the writ petitions will not lie against termination of services of its employees under Article 226 of the Constitution of India also. 3. The respondents have filed counter affidavits and additional counter affidavits. Petitioners have filed reply affidavits and additional affidavits. In view of the objection raised by the respondents it is necessary to consider the question of maintainability of the Writ Petitions. 4. CIAL is a company incorporated under the Companies Act, 1956. It is stated that State Government is holding only 32.24% of the paid up capital of the Company. Therefore, it is not a Government company within the definition of section 617 of the Companies Act, 1956. Article 4 of Articles of Association provides that the allotment of shares shall exclusively be vested in the Board of Directors. The particulars of the allottees shall be entered in the Register of Members maintained under section 150 of the Act. The number of shares to be allotted is left to the discretion of the Board of Directors. As per Article 6, the Company may alter the conditions of its Memorandum of Association in its general meeting by ordinary resolution. Article 7 provides that the Company may reduce its share capital in any manner by special resolution, subject to any incident authorised and consent required by law. As per Article 94 of Ext.R2(a) Articles of Association, the number of Directors shall not be less than 3 and not more than 12. It is stated that there are 11 Directors. Under Article 95 (1), the Cochin International Airport Society shall have the right to nominate one third of the total number of Directors of the Company, as long as the society holds not less than 15% of the equity shares.
It is stated that there are 11 Directors. Under Article 95 (1), the Cochin International Airport Society shall have the right to nominate one third of the total number of Directors of the Company, as long as the society holds not less than 15% of the equity shares. Under Article 102, any financing Corporation or body to which the CIAL has financial obligation, shall have a right to appoint one or more persons as Directors, pursuant to an agreement between it and the company, they would be the nominated Directors, without liability to retire on rotation. As per Article 108, two thirds of the total number of Directors shall retire by rotation and shall be elected by the Company in the General Meeting. The nominees who retire on rotation would include Government nominees also. As per Article 116, the quorum for a meeting of the board shall be one third of the total strength or three Directors, whichever is higher. Except the Chairman and Managing Director, the other Directors in the Board are appointed in the General Meeting of the Company. It is stated that the Chief Secretary to Government is also appointed as Director in the General Meeting. The Director General of Civil Aviation has granted Ext.R2(d) license to CIAL authorising it to use the aerodrome as regular place of landing and departure to all persons on equal terms and conditions for operation by aircraft requiring specifications of runway and associated facilities subject to the conditions specified therein. CIAL has entered into Ext.R2(e) agreement with the Airport Authority of India (AAI). The agreement would indicate that the AAI is responsible for providing air traffic services within Indian airspace and at all civil airports in India. Ext.R2(e) agreement was executed on 25.02.2010 for the provisions of CNS/ATM facilities and services (Communication, Navigation, Surveillance and Air Traffic Management). As per clause 8.1 of the agreement the AAI shall not assign or otherwise transfer its right or obligation under the agreement without prior consent of CIAL. As per clause 8.2, CIAL shall not assign or otherwise transfer its rights or obligations under the agreement without prior consent of AAI.
As per clause 8.1 of the agreement the AAI shall not assign or otherwise transfer its right or obligation under the agreement without prior consent of CIAL. As per clause 8.2, CIAL shall not assign or otherwise transfer its rights or obligations under the agreement without prior consent of AAI. It is stated that the CIAL is only given the license to use the aerodrome and to provide for the facilities of aircraft, runway, aircraft terminal, building, associated infrastructure etc, in addition to its obligation to ensure continuity and reliability of CNS and ATM to ensure safety of aircraft with proper coordination with the responsible agencies. It is stated that the ground handling services at the airport like passenger handling, ramp handling, cargo flight handling, etc. are handled by AIR India on the basis of Ext.R2(f) agreement. It is stated that it has also entered into an agreement with Bharat Petroleum Corporation Limited for providing facilities for refueling of aircrafts. In effect according to the respondents CIAL does not discharge any sovereign or public function. It is stated that State Government does not provide any funds and does not exercise any control over it and, at any rate, there is no deep or pervasive control over the affairs of the CIAL. It is also stated that the nature of functions and duties attached to the 2nd respondent is not of public nature. It is also their case that the CIAL has not undertaken any activity which was carried out by the State Government and hence there is no administrative, financial or functional control for Government over any of the activities of the CIAL. It is stated that while the share holding of Government of Kerala is 32.24%, State Public Sector Undertakings, Central Public Sector Undertakings and Nationalized Banks are holding the share of 1.77%, 9.97% and 3.59% and all the remaining shares are held by members of public. It is stated that the Board of Directors of the 2nd respondent had in its meeting held on 23.06.2016 suggested that the State Government shall hold at least 51% of the equity capital of CIAL. 5. The Government had as per Ext.R2(u) order dated 29.08.1997 (produced along with IA No.7615/2017) decided to enhance the share to 51% and that as on 31.01.2000, 60.9% share of CIAL was to be held by the State Government and Public Sector Undertakings.
5. The Government had as per Ext.R2(u) order dated 29.08.1997 (produced along with IA No.7615/2017) decided to enhance the share to 51% and that as on 31.01.2000, 60.9% share of CIAL was to be held by the State Government and Public Sector Undertakings. However, it is stated that the decision of the Government in Ext.R2(u) to enhance the share capital was not implemented and as per Ext.R2(v) order dated 17.09.2001 it was decided to refix its equity participation in the 2nd respondent company at 26% from 51%. Simultaneously, it was decided that the CIAL would take steps to amend the Articles of Association empowering the State Government to nominate the Chairman, Managing Director and 1/3rd of the Board of Directors of the company. Accordingly, Ext.R2(w) resolution was passed in the Annual General Meeting (AGM) held on 03.11.2001 amending the Articles of Association in accordance with Ext.R2(x). It is stated that as at present the share capital of State Government is only 32.24%. 6. It is further stated that it is providing facilities to the statutory authorities like CISF, Customs Department, Intelligence Bureau, AAI, Meteorological Department, State Police, etc. in its premises for discharging their statutory duties as is being done in other private airports. The memorandum of Association was thereafter amended as per Ext.R2(x). As per amended Article 95.1, so long as Government of Kerala and/or its Public Sector Undertakings jointly or severally hold not less than 26% of the paid up equity capital of the company, Government of Kerala shall have the right to nominate from time to time at its discretion one third of the total number of the directors of the company. It shall also be entitled to remove any such director so appointed and to appoint any other person in their place. The Directors so appointed by the Government shall be liable to retire by rotation. Article 107 provides that all the directors of the Company shall have equal rights and privileges in all matters and be subject to equal obligations and duties in respect of the affairs of the Company. Article 112 provides that the number of directors can be increased or reduced in the general meeting and it can also be determined in what rotation such increased or reduced number has to retire.
Article 112 provides that the number of directors can be increased or reduced in the general meeting and it can also be determined in what rotation such increased or reduced number has to retire. Under article 116(1), the quorum of the meeting of the board shall be one third of the total strength or three directors whichever is higher. It also provides that in case the number of interested directors is equal to or exceeds two-thirds of the total strength, the number of remaining directors who are not interested shall be the quorum, provided it is not less than three. Under article 118, the Chief Minister of Kerala shall be the Chairman of the Company who shall be one of the nominee directors of the State Government. Article 123 provides for the powers and duties of directors. Under Article 123(a), the business of the company shall be managed by the board of directors. Under Article 125(b)(7), the directors shall have the discretion to remove, suspend, dismiss and remunerate bankers, legal advisers, accountants and other professionals, cashiers, clerks, agents, commission agents, dealers, brokers, foremen, servants, employees of every description and to employ professional or technical or skilled assistant from time to time in the interest of the company. As per Article 125(1), the Government of Kerala and/or its Public Sector Undertakings jointly or severally hold not less than 26% of the paid up equity capital of the Company. The Government of Kerala shall have the right to appoint one among the Directors as Managing Director of the company for such term not exceeding five years at a time and to fix his remuneration. It can also have the right to withdraw/cancel the appointment so made and to reappoint any other director as Managing Director at their discretion. However, it is provided that the Government of Kerala shall exercise its rights contained in that article only in consultation with the board of the Company. Article 125(3) provides that the Managing Director shall have the general direction, management and superintendence of the business of the company with power to do all acts and matters for carrying out the business and concerns of the company subject to the general supervision and control of the board. 7.
Article 125(3) provides that the Managing Director shall have the general direction, management and superintendence of the business of the company with power to do all acts and matters for carrying out the business and concerns of the company subject to the general supervision and control of the board. 7. Along with IA No.7572/2017 the respondents have produced the resolution of the board of directors in its meeting held on 23.06.2016 by which the present Chief Minister of the Government of Kerala was appointed as the Chairman. Under Article 118(1) of the Articles of Association, the Chief Minister of the Government of Kerala shall be the Chairman of the Company so long as the share capital held by Government and/or its Public Sector Undertakings is not less than 26%. Ext.R2(n) would show that Dr.T.M.Thomas Issac, who was appointed as the Additional Director on 23.06.2016, was appointed as Director as resolved by the Board of Directors on 27.09.2016. It was also resolved that the period of his office would be liable to determination by retirement of directors by rotation. Adv.V.S.Sunilkumar and Adv.Mathew T.Thomas were also appointed similarly on the same day. Sri.S.M.Vijayan was also appointed as Director on similar terms. 8. Per contra, the learned counsel for the petitioners argued that CIAL is an authority under Article 12. Though Government is having only less than 51% share, the Chief Minister is the Chairman; there are three other members nominated by the Government; more over the Managing Director is also appointed by the Government. Therefore, the decision would be in the hands of Government as there are only 11 members. 9. Sri.U.K.Ramakrishnan, learned Senior Counsel for the CIAL, relying on the judgment of the Apex Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 argued that CIAL does not come under the purview of Article 12. 10. On the other hand Sri.S.P.Aravindakshan Pillai, the learned counsel for the petitioners in W.P.(C).No.7219 of 2014 relied on judgment of this Court in Sreesanth v. Board of Control for Cricket in India :[ 2017 (3) KLT 1033 ] and argued that Airways, Aircraft, provision for Aircrafting etc., come under 7th schedule as item No.29.
10. On the other hand Sri.S.P.Aravindakshan Pillai, the learned counsel for the petitioners in W.P.(C).No.7219 of 2014 relied on judgment of this Court in Sreesanth v. Board of Control for Cricket in India :[ 2017 (3) KLT 1033 ] and argued that Airways, Aircraft, provision for Aircrafting etc., come under 7th schedule as item No.29. Referring to Clause 3.7 of Ext.R2(e) agreement, which obligates that CIAL has to ensure suitable arrangements against all sorts of emergencies occurring in the airport and Clause 8.2 which prohibits assignment of the rights of CIAL without the consent of AAI, relating to assignment by CIAL, the provisions contained in Ext.R2(f) agreement entered into by CIAL with Airlines according to which Air India is selected to undertake exclusive contract of ground handling services and also Ext.P4, it was argued that Government is the authority to decide all matters; it was argued that as Appointing Authority, the Managing Director need only have consultation with the Board of Directors and not concurrence. 11. M/s. Ashok Shenoy and P.S.Gireesh, the learned counsel appearing for the petitioners in W.P.(C) Nos.6949 and 6950/2014 and Sri.R.Sreeraj, the learned Counsel appearing for the petitioner in W.P(c).No.8011/2014 relied on the judgment of the Bombay High Court in Flemingo Duty Free shop Pvt Ltd & anr V Union of India & ors: 2008 SCC online Bom 508 where MIAL was declared an instrumentality of State though the Government was having share capital of only 26%. The contention of the learned counsel is that CIAL is performing all the duties provided under the Airport Authorities Act which the airport authority has to perform. Airport authority is a State. When all the powers, duties and functions of the airport authority provided under the Airport Authorities Act are performed/discharged by the CIAL, it cannot be said that CIAL is not a State. According to him, Government is having sovereign power and the entire administration is in the hands of Government. It is stated that the initiative to constitute and run CIAL was made by the Government of Kerala through its executive and the participation of the private directors is confined to financing to the capital. The decision making authority and the power to control vests in the Government.
It is stated that the initiative to constitute and run CIAL was made by the Government of Kerala through its executive and the participation of the private directors is confined to financing to the capital. The decision making authority and the power to control vests in the Government. When the Chief Minster is the Chairman, Managing Director is the Government Servant from IAS cadre under the Government, Chief Secretary and the Ministers of Finance, Agriculture, Industries and Minister for Airports are in the board of directors, control over the functioning of the CIAL continues with the Government. It is also their case that the function of the CIAL is of public nature and it is enjoying monopoly status. Therefore, in all respects it is a company controlled by the Government of Kerala. 12. Relying on the judgment of the Apex Court in Air India Ltd V CIAL: AIR 2000 SC 801 , Amar Alcohol Ltd. v. Sicom Ltd. And Another: (2006)1 SCC 199 Sri.Gireesh P.S. argued that mere reduction in share cannot be the criteria to determine the nature of the functions of CIAL. Pointing out the preamble of the Airport Authority of India Act, 1994, its statement of objects, its functions under Section 12 it was argued that the main objects of the CIAL as evident from Ext.R2(a) Memorandum of Association are one and the same as contained in Section 12 of the Airport Authority of India Act. Pointing out the licence as well as the agreement executed in Exts.R2(e), R2(f) with reference to Clause 3.1 to 3.3 as well as the cargo handling dealt with in Ext.R2(f) agreement for ground handling, it was pointed out that CIAL was undertaking all the activities under Section 12 of the Airport Authority of India Act, 1994. It is also pointed out that as per Ext.R2(u) order dated 29.08.1997, Government share was enhanced from 26% to 51%. Thereafter on 17.09.2001 the share capital was reduced from 51% to 26% and simultaneously Government ordered amendment of Articles of Association especially to Articles 95, 116, 125, etc., based on which Chairman shall be the Chief Minister of the State. It is pointed out that Articles 74, 76, 77, 78, 82(2) 92, 125(3) etc., would also show the the governmental influence over the affairs of the Company. Under Article 74 the Chairman shall preside over the general meeting of the company.
It is pointed out that Articles 74, 76, 77, 78, 82(2) 92, 125(3) etc., would also show the the governmental influence over the affairs of the Company. Under Article 74 the Chairman shall preside over the general meeting of the company. Under Article 76, a resolution put to vote shall be decided on show of hands, on a declaration by the Chairman. Under Article 77 Chairman shall have a casting vote in the event of equality of votes, in addition to the vote in his capacity as a member. Article 78 deals with the procedure when a poll is demanded in accordance with Section 179 of the Companies Act. Article 82 provides that in the event of objection against the qualification of any voter it shall be referred to the Chairman whose decision shall be final. Article 92 provides that the Chairman shall be the sole judge of every vote tendered in a poll. Article 125 as amended provides that the power to appoint the Managing Director shall be on Government of Kerala as long as it holds not less than 25% of the share. It was argued that in effect the Government is having a supervisory and dominant role and that all the decisions are of Government despite the percentage of shares below 35. It was argued that the dictum laid down in Pradeep Kumar's case (CSIR) would apply to the facts of the case. Referring to the judgment of the Bombay High Court in Flemingo Duty Free Shop's case (supra), it was argued that in all respects the duties and functions of MIAL and CIAL are one and the same and that the CIAL is performing statutory duties in accordance with the provisions contained in the AAI Act. It is pointed out that 1/3rd of the Directors, Managing Director, Chairman would mean that 5 out of the 11 directors are Government nominees and therefore all the decisions would always be of the Government. The learned counsel referred to Ext.P12 order of the Information Commission produced in W.P. (C).No.6950/2014 along with I.A.No.2 of 2019 and argued that there was already a finding that CIAL is a public authority. However the learned Senior Counsel pointed out that the said decision is already stayed and that cannot be relied on. 13.
The learned counsel referred to Ext.P12 order of the Information Commission produced in W.P. (C).No.6950/2014 along with I.A.No.2 of 2019 and argued that there was already a finding that CIAL is a public authority. However the learned Senior Counsel pointed out that the said decision is already stayed and that cannot be relied on. 13. Relying on the judgments of the apex court in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi: (1975) 1 SCC 421 , Pradeep Kumar Biswas V Indian Institute of Chemical Biology: (2002) 5 SCC 111 , learned Senior Counsel argued that CIAL is not created by Government; it is a private limited company; there is no audit by CAG; there is no sovereign power for Government. The judgments in General Manager, KSCM Ltd. v. Satrughan Nishad [ AIR 2003 SC 4531 ], Lt. Governor of Delhi & Ors. v. V.K.Sodhi [ AIR 2007 SC 2885 : (2007)15 SCC 136 (para 10 to 14)], Jatya Pal Singh And Others v. Union of India And Others [ (2013)6 SCC 452 ], Rajbir Surajbhan Singh v. Chairman, Institute of Banking Personnel Selection, Mumbai [ (2019) 3 KHC 625 ], G.Bassi Reddy v. International Crops Research Institute & Another [ (2003) 4 SCC 225 para 28], Binny Ltd. And Another v. V.Sadasivan And Others [ (2005) 6 SCC 657 ] were relied on in support of the contention that a Writ Petition against CIAL is not maintainable as it is neither a State nor is it dealing with any public duties. 14. As much reliance was made on the judgment of the High Court of Bombay where MIAL was declared as an instrumentality of State, I will examine the same. From the contention advanced therein it is seen that the MIAL is a joint venture company, with 26% shares held by Air Port Authority of India. The contention therein was that MIAL is the lessee of the AAI under Section 12 A of the AAI Act for the development, maintenance and operation of the Chhatrapati Sivaji International Airport, an existing airport. It was also the contention that MIAL has to pay 38.7% of its gross revenue to the AAI.
The contention therein was that MIAL is the lessee of the AAI under Section 12 A of the AAI Act for the development, maintenance and operation of the Chhatrapati Sivaji International Airport, an existing airport. It was also the contention that MIAL has to pay 38.7% of its gross revenue to the AAI. It was also found that no change in the Memorandum of Association or Articles of Association can be effected by MIAL without the consent of AAI; monthly reports are to be furnished to AAI; developments can be made only in Central Government lines, etc. In the present case, there is no lease agreement executed with the AAI. There is no lease with AAI and AAI does not have any shareholding also. Therefore the judgment of the Bombay High Court would not apply to the facts of this case. 15. The next contention is that the objects behind the constitution of CIAL is to perform the duties conferred on Section 12 of the AAI Act, 1994 which read as follows: 12. Functions of the Authority.— (1) Subject to the rules, if any, made by the Central Government in this behalf, it shall be the function of the Authority to manage the airports, the civil enclaves and the aeronautical communication stations efficiently. (2) It shall be the duty of the Authority to provide air traffic service and air transport service at any airport and civil enclaves.
(2) It shall be the duty of the Authority to provide air traffic service and air transport service at any airport and civil enclaves. (3) Without prejudice to the generality of the provisions contained in sub-sections (1) and (2), the Authority may— (a) plan, develop, construct and maintain runways, taxiways, aprons and terminals and ancillary buildings at the airports and civil enclaves; (aa) establish airports, or assist in the establishment of private airports, by rendering such technical, financial or other assistance which the Central Government may consider necessary for such purpose; (b) plan, procure, instal and maintain navigational aids, communication equipment, beacons and ground aids at the airports and at such locations as may be considered necessary for safe navigation and operation of aircrafts; (c) provide air safety services and search and rescue facilities in co-ordination with other agencies; (d) establish schools or institutions or centres for the training of its officers and employees in regard to any matter connected with the purposes of this Act; (e) construct residential buildings for its employees; (f) establish and maintain hotels, restaurants and restrooms at or near the airports; (g) establish warehouses and cargo complexes at the airports for the storage or processing of goods; (h) arrange for postal, money exchange, insurance and telephone facilities for the use of passengers and other persons at the airports and civil enclaves; (i) make appropriate arrangements for watch and ward at the airports and civil enclaves; (j) regulate and control the plying of vehicles, and the entry and exit of passengers and visitors, in the airports and civil enclaves with due regard to the security and protocol functions of the Government of India; (k) develop and provide consultancy, construction or management services, and undertake operations in India and abroad in relation to airports, air-navigation services, ground aids and safety services or any facilities thereat; (l) establish and manage heliports and airstrips; (m) provide such transport facility as are, in the opinion of the Authority, necessary to the passengers travelling by air; (n) form one or more companies under the Companies Act, 1956 (1 of 1956) or under any other law relating to companies to further the efficient discharge of the functions imposed on it by this Act; (o) take all such steps as may be necessary or convenient for, or may be incidental to, the exercise of any power or the discharge of any function conferred or imposed on it by this Act; (p) perform any other function considered necessary or desirable by the Central Government for ensuring the safe and efficient operation of aircraft to, from and across the air space of India; (q) establish training institutes and workshops; (r) any other activity at the airports and the civil enclaves in the best commercial interests of the Authority including cargo handling, setting up of joint ventures for the discharge of any function assigned to the Authority.
(4) In the discharge of its functions under this section, the Authority shall have due regard to the development of air transport service and to the efficiency, economy and safety of such service. (5) Nothing contained in this section shall be construed as— (a) authorising the disregard by the Authority of any law for the time being in force; or (b) authorising any person to institute any proceeding in respect of duty or liability to which the Authority or its officers or other employees would not otherwise be subject. 16. The main objects of CIAL as per Ext.R2(a) Memorandum of Association are as follows: “To construct, develop, turn into account, set up, commission, operate, manage and maintain an Airport of international standards with all modern facilities for domestic and international flights by Indian and foreign airlines and all other related activities, to make it an International Airport subject to the guidelines prescribed by the regulating authorities in India and abroad, and to own or hire aircrafts for operation in India and/or abroad as air taxis by the Company or with Airport authorities or other parties as warranted by circumstances in the manner beneficial to the interest of the Company, to provide repair, servicing, engine overhauling and on-line maintenance facilities to all types of aircrafts including wide bodies Turbo Jets, helicopters, turbo propellers by construction of Hangars or otherwise, to collaborate and contract for any or all of the above mentioned acts whether in India or abroad.” 17. CIAL has entered into Ext.R2(d) agreement with AAI, according to which AAI would provide air traffic service for CIAL in terms of the conditions set out therein. AAI will provide the CNS/ATM (Communication, Navigation and Surveillance and Air Traffic Management Services as described in Schedule III); whereas CIAL will provide all facilities for the operations, as agreed to in the agreement. The provisions contained in Section 12(3)(aa) of the AAI Act would show that the duties of AAI includes rendering of assistance in establishing private air ports also. It is an admitted fact that the State Government is having only 32.24% of the share in the paid up capital of CIAL. The Company does not get any financial assistance from the Government. It cannot also be said that the Company is having any State protected monopoly.
It is an admitted fact that the State Government is having only 32.24% of the share in the paid up capital of CIAL. The Company does not get any financial assistance from the Government. It cannot also be said that the Company is having any State protected monopoly. Therefore, it is necessary to examine whether CIAL is an instrumentality of State as defined under Article 12 of the Constitution of India. As pointed out by the learned Counsel for the petitioners the presence of one third of the Directors nominated by Government along with the Chairman is likely to influence the decisions of the Company, especially when the quorum is one third. At the same time there is no provision enabling Government to issue any directives to the Company; company is not also bound to furnish any reports or accounts before Government. Therefore whether presence of Government nominees, the Chairman and the Managing Director would make the control of Government deep and pervasive and whether it is discharging public duties is to be examined in the light of various judgments, interpreting Article 12 as well as 226 of the Constitution of India. 18. First of all I shall examine the applicability of the judgments relied on by the petitioners. In Air India v. CIAL: (200)2 SCC 617, relied on by the learned Counsel for the petitioners, the Apex Court was considering the challenge against a contract awarded to Air India for ground handling. Though in para.2 of the judgment it is stated that CIAL is a public sector undertaking, it appears that the question of maintainability of the Writ Petition was not raised therein. 19. In the judgment in Amar Alcohol Ltd. v. SICOM Ltd., (2006) 1 SCC 199 , relied on by Sri.Ashok Shenoy, the issue was as to whether the State Industrial Investment Corporation of Maharashtra Limited (SIICOM), was an instrumentality of State. It was a company established by the Government of Maharashtra in the year 1966 with 100% shares owned by the State Government. The contention of the appellant was that consequent to reduction in the shares it ceased to have the status of a State Financial Corporation under the Act.
It was a company established by the Government of Maharashtra in the year 1966 with 100% shares owned by the State Government. The contention of the appellant was that consequent to reduction in the shares it ceased to have the status of a State Financial Corporation under the Act. In paras.19 and 20 of the judgment, the apex court found that the State of Maharashtra being the single largest shareholder has retained the overall control over the management by retaining the right to nominate its Directors by virtue of the amended Article 18(a) of the Articles of Association of the Companies. It was held that by mere reduction in its stakes to below 50%, SIICOM would not cease to be a State Financial Corporation, as it was established by the State of Maharashtra for financing industrial concerns and the Central Government had in exercise of its powers under Section 46 of the Act, notified it as a Financial Corporation. No such circumstances are available in the present case. 20. In the judgment in Sreesanth v. Board of Control for Cricket in India: 2017(3) KLT 103, this court held that if the Constitution obliges the State to make law and State allows a private body to act as a substitute, court would be justified in its approach of conceiving a public element in respect of an action to preserve public interest or for the collective benefit of the public. The question whether CIAL is a state or otherwise, whether its action involves any public element can be considered afterwards, after examining whether it fulfills the tests laid down by the apex court. 21. In Ajay Hasia v. Khalid Mujib Sehravardi: (1981) 1 SCC 722 a 5 Judge Constitution Bench approved the following six tests laid down in the judgment in Ramana Dayaram Shetty v. International Airport Authority of India: (1979) 3 SCC 489 , to determine whether an institution is a State under Article 12 of the Constitution of India. “(1) One thing is clear that if the entire share capital of the corporation is held by the Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of the 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.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character. (3) It may also be a relevant factor … whether the corporation enjoys monopoly status which is State conferred or State protected. (4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (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 the Government. 1. ‘Specifically, if a department of the 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 the Government. 22. Later a 7 Judge Constitution Bench in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology: (2002) 5 SCC 111 after considering all the judgments relating to the same held as follows in para 40 of the judgment: “40. The picture that ultimately emerges 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 hypothesi, be considered to be a State within the meaning of Article 12. 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. 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.” 23. In G.Bassi Reddy v. International Crops Research Institute: (2003) 4 SCC 225 , a two Judge Bench considered the question whether ICRISAT, which is an international institution functioning in India is a state and whether a writ will lie against under Article 226 of the Constitution of India, when the employees of ICRISAT challenged the termination of services and the High Court dismissed their writ petitions on the ground that writ will not lie against ICRISAT.
The apex court found that ICRISAT did not fulfill the tests laid down in Pradeep Kumar Biswas's case (supra). It was found that it was not set up by the Government; it is not controlled by Government; it is not accountable to the Government; it gives its services voluntarily to a large number of countries besides India; the Indian Government’s financial contribution to ICRISAT is minimal; its participation in ICRISAT’s administration is limited to 3 out of 15 members and therefore it cannot be said that it is a State or other authority as defined in Article 12 of the Constitution of India. 24. The Apex Court further examined whether a writ will lie under Article 226. After discussing the judgments in Praga Tools Corpn. v. C.A. Imanual: (1969) 1 SCC 585 , Shri Anadi Mukta Sadguru Trust v. V.R. Rudani: (1989) 2 SCC 691 , etc it was observed that public functions or public duties are similar to or closely related to those performable by the State in its capacity. As the primary activity of ICRISAT was to conduct research and training programs in the sphere of agriculture purely on a voluntary basis, it was held that a service voluntarily undertaken cannot be said to be a public duty. It was further found that while the Indian public may be the beneficiary of the activities of the Institute, it cannot be said that ICRISAT owes a duty to the Indian public to provide research and training facilities. Reiterating the dictum laid down in Praga Tools Corporation's case it was held that an application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character or to secure performance of obligations owed by a company towards its workmen. 25. Another constitution Bench with 5 Judges in Zee Telefilms Ltd. v. Union of India: (2005) 4 SCC 649 considered whether BCCI is a State. After discussing the dictum laid down in Pradeep Kumar Biswas' case, to determine whether a body is State, it was held that though the Union of India has been exercising certain control over the activities of the Board it can only be said to be regulatory in nature and not pervasive as interpreted in Pradeep Kumar Biswas's case and hence it is not a State under Article 12.
However in para.31 of the judgment it was found that selection of an Indian cricket team, controlling the activities of the players and others involved in the game of cricket, etc are activities of BCCI akin to public duties or State functions and it was made clear that any aggrieved party can approach the High Court under Article 226 of the Constitution. In this context it is relevant to note the following observations made in para.35 of the judgment. 35. In conclusion, it should be noted that there can be no two views about the fact that the Constitution of this country is a living organism and it is the duty of courts to interpret the same to fulfil the needs and aspirations of the people depending on the needs of the time. It is noticed earlier in this judgment that in Article 12 the term ‘other authorities’ was introduced at the time of framing of the Constitution with a limited objective of granting judicial review of actions of such authorities which are created under the statute and which discharge State functions. However, because of the need of the day this Court in Rajasthan SEB and Sukhdev Singh noticing the socio-economic policy of the country thought it fit to expand the definition of the term ‘other authorities’ to include bodies other than statutory bodies. This development of law by judicial interpretation culminated in the judgment of the seven-Judge Bench in Pradeep Kumar Biswas. It is to be noted that in the meantime the socio-economic policy of the Government of India has changed (see BALCO Employees’ Union v. Union of India) and the State is today distancing itself from commercial activities and concentrating on governance rather than on business. Therefore, the situation prevailing at the time of Sukhdev Singh is not in existence at least for the time being, hence, there seems to be no need to further expand the scope of ‘other authorities’ in Article 12 by judicial interpretation at least for the time being. It should also be borne in mind that as noticed above, in a democracy there is a dividing line between a State enterprise and a non-State enterprise, which is distinct and the judiciary should not be an instrument to erase the said dividing line unless, of course, the circumstances of the day require it to do so.” 26.
It should also be borne in mind that as noticed above, in a democracy there is a dividing line between a State enterprise and a non-State enterprise, which is distinct and the judiciary should not be an instrument to erase the said dividing line unless, of course, the circumstances of the day require it to do so.” 26. In the judgment in Board of Control for Cricket in India v. Cricket Association of Bihar: (2015) 3 SCC 251 , a 2 Judge Bench of the apex court reiterated that though BCCI is not a State within the meaning of Article 12 of the Constitution, it is amenable to writ jurisdiction under Article 226 of the Constitution of India. In the light of the aforesaid judgments the Apex Court in Board of Control for Cricket v. Cricket Assn. of Bihar: (2016) 8 SCC 535 also reiterated that writ will lie against BCCI . 27. A two Judge Bench in Lt.Governor of Delhi vs. V.K. Sodhi : (2007) 15 SCC 136 , while considering the claim of employees in SCERT for parity in pay, held that there is no simple litmus test to determine whether an entity is State or “other authority” within the meaning of Article 12 of the Constitution of India; various facets of the foundation and the working of the entity would be relevant in determining the question in the context of the duties entrusted to it or taken up by it for performance. Referring to the judgment in Pradeep Kumar Biswas's case, it was held that the matter to be considered is whether in the context of the functions entrusted to it, the rules and bye-laws that govern it and the financial position enjoyed by it, SCERT can be said to be financially, functionally and administratively dominated by or under the control of the Government. Observing that SCERT was formed in more or less same lines as NCERT and the judgment in Chander Mohan Khanna V NCERT: (1991)4 SCC 478 that it is not a State was not overruled in Pradeep Kumar Biswas's case, it was held that the society cannot be said to be a state.
Observing that SCERT was formed in more or less same lines as NCERT and the judgment in Chander Mohan Khanna V NCERT: (1991)4 SCC 478 that it is not a State was not overruled in Pradeep Kumar Biswas's case, it was held that the society cannot be said to be a state. It was found that the Government does not have deep and pervasive control over the working of SCERT; once the finances are made available to it, the administration of those finances is left to SCERT and there is no further Governmental control. It was found that, the intention behind the very formation of an independent society itself under the Societies Registration Act, would be not to make the body a mere appendage of the State. The apex court accepted the plea of SCERT that if it spends the whole or major portion of the grant towards the pay and allowances of its employees, the very object with which the Society was formed would be frustrated and held that the court cannot issue a direction which would tend to frustrate the very object with which SCERT is formed. Accordingly the judgment of the Delhi High Court was reversed. 28. In State of U.P. v. Radhey Shyam Rai: (2009) 5 SCC 577 a two Judge Bench of the Apex Court considered the question whether the Uttar Pradesh Ganna Kishan Sansthan, a society registered under the Societies Registration Act is “State” within the meaning of Article 12 of the Constitution of India. It was found that the functions of the Sansthan were being performed by the Cane Development Department of the State Government was performing the functions viz. imparting of knowledge and training to the cane-growers so as to enhance production of sugar in the State, before its constitution. The training centres under the Government were transferred to it. 80 to 90% of its expenditure was met out of the funds provided by the Government. Apart from the fact that the majority of the office-bearers of the Governing Council were holders of various offices of the Government with the Minister in charge of the Cane Department as the ex-officio Chairman of the Governing Council and the Chief Executive Authority, it was found that the Sanstan could appoint only Government servants to every posts. Apart from that it was found that Sansthan was bound by any directives issued by the Governor.
Apart from that it was found that Sansthan was bound by any directives issued by the Governor. Governor could also call for the returns, accounts and other information with respect to the properties and activities of the society. Thus it was found that its functions were public functions under the deep and pervasive control of Government and hence it is a State under Article 12. The judgment in Jatya Pal Singh v. Union of India: (2013) 6 SCC 452 , relates to termination of services of the former employees of VSNL. It is stated that in 1947, Government of India tool over a private company, which was operating the external communication service of India, along with its employees and the department of Overseas Communication Service was formed. Thereafter in 1986, VSNL was constituted and all the international communication services were transferred to it. Government of India gradually divested of its shareholdings in VSNL to 26.97% when Tata group acquired more than 50% of the shares and the name of VSNL was changed as TCL. The orders of termination were issued by TCL. The contention of the employees was that TCL would still fall within the definition of State or other authority within the ambit of Article 12 of the Constitution and that since it is performing public duties writ will lie under Article 226. The Apex Court after referring to various judgments held that TCL cannot be said to be an authority within the meaning of Article 12 of the Constitution of India. It was found that TCL did not enjoy monopoly status. It was found that the Government of India did not exercise deep or pervasive control over either in the management or policy making. It was further held that eventhough the operators were providing service to the subscribers, it cannot be said to be public functions, as the service is made available on commercial charges and though functions were formerly discharged by Government of India.
It was further held that eventhough the operators were providing service to the subscribers, it cannot be said to be public functions, as the service is made available on commercial charges and though functions were formerly discharged by Government of India. After discussing the meaning of public function with referene to the United Kingdom Humans Rights Act, 1998, the judgment in Binny Ltd.'s case (supra), in which referring to the commentary on Judicial Review of Administrative Action (5th Edn.) by De Smith, Woolf and Jowell, in Chapter 3 Para 0.24, it was held that a body is performing a ‘public function’ when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so and that bodies exercise public functions when they intervene or participate in social or economic affairs in the public interest. It was held that TCL was providing commercial service for commercial considerations and it was not discharging any public function. 29. The judgment in Balmer Lawrie & Co. Ltd. v. Partha Sarathi Sen Roy : (2013) 8 SCC 345 relates to termination of the employees of the company which claimed that it was only a subsidiary of a government company; though Government gave some aid, Government does not have any control over its day to day affairs and hence there is no deep or pervasive Government control over it; it does not carry out any public function which could render it as, “any other authority”, for the purposes of Article 226 of the Constitution; it carries on a variety of business activities where there are several competitors and the terms of employment, cannot be enforced through writ jurisdiction. After discussing various judgments on Article 12, the meaning and intent of pervasive control, sovereign function, etc, it was held as follows: 18. Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body’s powers and the manner in which they are exercised.
Often, there is confusion when the concept of sovereign functions is extended to include all welfare activities. However, the court must be very conscious whilst taking a decision as regards the said issue, and must take into consideration the nature of the body’s powers and the manner in which they are exercised. What functions have been approved to be sovereign are the defence of the country, the raising of armed forces, making peace or waging war, foreign affairs, the power to acquire and retain territory, etc. and the same are not amenable to the jurisdiction of ordinary civil courts. 30. Analysing the judgments relating to instrumentality of State, sovereign/public functions, pervasive control, etc, it was found that it was a Government of India Enterprise under the administrative control of Ministry of Petroleum, its Directors are from Government service, it is bound by directives of President, it has to furnish its monthly reports to the Ministry, etc and hence it is an instrumentality of State. 31. In K.K.Saksena v. International Commission on Irrigation & Drainage: (2015) 4 SCC 670 , the apex court examined whether ICID is a state. The object of ICID was found to be “to encourage progress in design, construction, maintenance and operation of large and small irrigation works and canals (including navigation canals); to bring together information thereon; and to study all questions relating thereto.” The contention was that it was performing the functions of Government and it was a state within the meaning of Article 12 apart from the fact that it is amenable to jurisdiction under Article 226. The High Court had after examining the matter in the light of the Constitution Bench judgments found that ICID is not funded by the Government nor is it discharging any function under any statute.
The High Court had after examining the matter in the light of the Constitution Bench judgments found that ICID is not funded by the Government nor is it discharging any function under any statute. The further question as to whether it is discharging public duty or positive obligation of public nature, was examined in the light of the judgments in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, (1989) 2 SCC 691 , K. Krishnamacharyulu v. Sri Venkateswara Hindu College of Engg., (1997) 3 SCC 571 , G. Bassi Reddy v. International Crops Research Institute: (2003)4 SCC 225 , Praga Tools Corporation V C.A. Immanuel: (1969) 1 SCC 585 , Federal Bank Ltd V Sagar Thomas: (2003) 10 SCC 733 , Binny Ltd V Sadasivan: (2005) 6 SCC 657 etc and it was held that a writ petition will lie under Article 226, against a company which is financed and owned by the State; a private body run substantially on State funding; a private body discharging public duty or positive obligation of public nature; and a person or a body under liability to discharge any function under any statute, to compel it to perform such a statutory function. But if the rights are purely of a private character, no mandamus could issue and a contract of personal service cannot be enforced. 32. In the judgment in Rajbir Surabhjan Singh v. Chairman, Institute of Banking Personnel Selection, Mumbai: 2019(3) KHC 625 (SC) the Apex Court upheld the judgment of the High Court that writ petition will not lie against IBPS, as conducting recruitment for appointment in Banks and other financial institutions is not a public duty. It was found that IBPS is not a creature of statute and there are no statutory duties or obligations imposed on it to conduct recruitment tests; the Governor of the Reserve Bank of India, the joint Secretary of the Banking Division in the Ministry of Finance along with Chairmen of certain Public Sector Banks were the members of the governing Body; the IBPS does not receive any funds from Government; it is not controlled by Government; a control which is regulatory under the statute or otherwise would not make the body a State under Article 12. 33.
33. The dictum laid down in the judgment in K.K.Saksena's case (supra) was reiterated in the judgment in Ramakrishna Mission and others vs. Kago Kunya and others : AIR 2019 SC 5570 , while considering the appeal filed by the Ramakrishna Mission. An employee of a Hospital run by the Ramakrishna Mission claimed continuance in service. The Division Bench of the Gauhati High Court held that though Ramakrishna Mission may not be a State under Article 12, the Hospital would be amenable to the writ jurisdiction under Article 226. After considering the aforesaid judgments it was held that though the Hospital is in receipt of some element of grant which covers only part of expenditure it does not discharge any public function and the terms of the grant do not indicate any form of governmental control either in the management or day to day functioning of the Hospital. It was found that there is no statutory obligation of a public nature casting any positive obligation on the Hospital and that the contracts of purely private nature would not be subject to writ jurisdiction merely by reason of the fact that they are structured by statutory provisions and that the general principle is that a contract of personal service cannot be specifically enforced. Hence it was found that writ will not lie against the Hospital under Article 226 of the Constitution also. In the present case also there is no statute which governs the contract of service of the employees under the CIAL. 34. On an analysis of the provisions contained in the Memorandum of Association, Articles of Association and Ext.R2 (a) to (d), it cannot be said that CIAL is financially, functionally and administratively dominated by or under the control of the Government. It cannot also be said that it is having any government conferred monopoly in providing air traffic services; under the Airport Authority of India Act, providing of air traffic service is the function of AAI. AAI is bound to render assistance also for establishment of Airports. CIAL is only facilitating the AAI to perform its statutory obligations. Therefore the contention that CIAL is a State or it is undertaking public function or sovereign function since the Airways, Aircraft, provision for Aircrafting etc, come under 7th schedule as item No.29 would not have any relevance. It does not get any sort of financial aid from Government.
CIAL is only facilitating the AAI to perform its statutory obligations. Therefore the contention that CIAL is a State or it is undertaking public function or sovereign function since the Airways, Aircraft, provision for Aircrafting etc, come under 7th schedule as item No.29 would not have any relevance. It does not get any sort of financial aid from Government. It is not bound to submit reports or accounts before Governmentt; there is no provision enabling Government to issue any directives. Therefore, I am of the view that CIAL cannot be said to be an authority or instrumentality of State within the meaning of Article 12 of the Constitution. 35. The next question is whether a writ petition would lie under Article 226 of the Constitution of India. It is seen that CIAL does not have any statutory duty to be performed. Going by the dicta laid down in the judgments of the Apex Court in Praga Tool Corporation's case, Binny's case, SCERT's case, Jatyapal Singh's case, IBPS' case, K.K.Saksena's case, Ramakrishna Missions' case etc (supra), no direction can be issued to enforce any personal contracts. The employment of the petitioners by CIAL or the termination of their services do not invovle any public element. Therefore it cannot also be said that a writ petition would lie against it under Article 226 of the Constitution of India. In the light of the finding on the preliminary objection in favour of the respondents, I do not find it necessary to go into the merits of the case. It is made clear that petitioners would be free to approach the appropriate forum. As the petitioners were prosecuting the matter before this Court, the delay in approaching any forum on account of the pendency of the Writ Petition shall not stand in the way of entertaining their grievances. The writ petitions are accordingly dismissed.