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P.V. Nayudu and ors. Vs. Andhra Pradesh Mining Corporation and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtAndhra Pradesh High Court
Decided On
Judge
Reported in(1974)IILLJ353AP
AppellantP.V. Nayudu and ors.
RespondentAndhra Pradesh Mining Corporation and ors.
Excerpt:
- - in order to better his prospects the petitioner applied to the post and was selected and appointed with effect from april 15, 1963, in the scale of rs. the company may also declare dividends but no dividend shall exceed the amount recommended by the board. the government is empowered to issue, from time to time, such directives as they may consider necessary in regard to the conduct of the business of the corporation or directors thereof and in like manner, vary and annul any such directive. choudary, if an action of the corporation like the present one terminating the services of the petitioners is not to be construed as an act of the state, then the government, by the device of forming corporations, can completely exclude the jurisdiction of the court thus rendering the.....obul reddy, j.1. these two writ petitions filed by employees of the andhra pradesh mining corporation limited (hereinafter referred to as the corporation), raising a common question, are directed against the orders of the corporation terminating the services of the petitioners. the common question involved is whether the action of the corporation, incorporated under the companies act, 1956, in terminating the services of the petitioners is an act of 'the state' so as to entitle the petitioners to seek a writ of mandamus or any other appropriated writ or direction under article 226 of the constitution.2. the facts necessary for determination of the question involved are these : the petitioner in w.p. no. 1457 of 1971 is a first class diploma-holder in ceramics having obtained the same in.....
Judgment:

Obul Reddy, J.

1. These two writ petitions filed by employees of the Andhra Pradesh Mining Corporation Limited (hereinafter referred to as the Corporation), raising a common question, are directed against the orders of the Corporation terminating the services of the petitioners. The common question involved is whether the action of the Corporation, incorporated under the Companies Act, 1956, in terminating the services of the petitioners is an act of 'the State' so as to entitle the petitioners to seek a writ of mandamus or any other appropriated writ or direction under Article 226 of the Constitution.

2. The facts necessary for determination of the question involved are these : The petitioner in W.P. No. 1457 of 1971 is a first class diploma-holder in ceramics having obtained the same in the year 1947 from the School of Arts and Crafts, Madras. He joined in the Industries Department of the Government of Madras first as Supervisor and was later promoted to the Gazetted cadre as Superintendent. Consequent on the formation of Andhra Pradesh, he was allotted to the Andhra Pradesh State. In 1963, the Corporation, a wholly State-owned undertaking, advertised and invited applications for the post of Ceramic Engineer. In order to better his prospects the petitioner applied to the post and was selected and appointed with effect from April 15, 1963, in the scale of Rs. 600-1,100, He worked as Ceramic Engineer in the Corporation service till his services were terminated by the Corporation on March 31, 1971 giving him three months' notice as required under the service rules of the Corporation. He attributed mala fides to the 2nd and 3rd respondents in terminating his services. The petitioner in W.P. No. 1468 of 1971 passed his B. E. (Mining) Examination in 1962 and joined Tata Iron and Steel Company Ltd., in 1963 in the scale of pay of Rs. 700-1,300, where he worked till November, 1968. The Corporation had invited applications for the post of Mining Engineer in 1968. By then, the petitioner had secured First Class Mines Manager Certificate from the Ministry of Mines, Government of India. In November, 1968, he was appointed as Mining Engineer of the Corporation. He was given to understand that the post of Mining Engineer was a permanent post ; but to his surprise, his service was terminated by the Corporation by its memo, dated March 31, 1971. His case is that he has been serving the Corporation over two and half years and that the termination of his services is illegal. He also attributed mala fides to the 2nd respondent the Managing Director of the Corporation, who issued the order of termination of his services.

3. The petitions are resisted by the respondents. The allegation of mala fides attributed to the 2nd and 3rd respondents is denied. According to them, the services of the petitioners were terminated as their posts were abolished. It is their case, that the Corporation is a private limited company registered under the Companies Act and managed by a Board of Directors having its own service rules and regulations and that the termination of the services of the petitioners is made in accordance with those rules. It is also stated that, as a measure of economy, certain posts had to be abolished including those held by the petitioners and as a result thereof, the services of the petitioners had to be terminated.

4. Mr. Choudary, very strongly contended that the Corporation is formed, owned and controlled by the Government of Andhra Pradesh; that it is a commercial activity of the State ; and that, therefore, it comes within the meaning of Article 12 of the Constitution. He amplified the argument by contending that the jurisdiction of the Court extends to the areas of operation of the State Government and when the Corporation is under the control of the State Government administered through one of its own servants, the jurisdiction of the Court extends throughout the territories or spheres in relation to which the State exercises its jurisdiction. It is further contended by him that the case does not come under the old common law of master and servant, but comes under the administrative law, and, therefore, this Court has unlimited powers under Article 226 to reach and remove injustice wherever it exists. This argument is put forward in view of the executive power of the State as specified in Articles 154 and 298 of the Constitution. Article 154(1) and Article 298 of the Constitution, to the extent relevant, read:

154(1): The executive power of the State shall be vested in the Governor and shall be exercised by him either directly or through officers subordinate to him in accordance with this Constitution.

298. Power to carry on trade, etc.: The executive power of the Union and of each State shall extend to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose.

It is on the strength of Article 298 that Mr. Choudary sought to show that, when the executive power of the State extends to a trading activity, as in this case forming a mining corporation and controlling it through a managing director, a Government servant, anything done by it affecting the rights of its servants would bean act of 'the State' exposed to judicial review by this Court.

5. The Corporation is incorporated under the Companies Act (I of 1956) and is a limited company. The objects of the company are to be found in the memorandum and Articles of the Association. Among its numerous objects are : To search for iron-ores, other minerals and precious stones in the State of Andhra Pradesh and other rights in the lands within the State of Andhra Pradesh, and to win, open and work iron ores and other mines, quarries and minerals ; to acquire by purchase or otherwise any ores or mineral produce for the purpose of working and rendering the same market-table and selling and disposing of the same and to carry on any business which seem convenient in connection with development of the company's mines ; to acquire mining rights by obtaining licences, leases from Government and to raise on behalf of Government iron-ores and such other 'specified' minerals which have been reserved or likely to be reserved for exploitation in public sector, sell and dispose of the same, to invest moneys of the company in such form as may be thought expedient; to undertake and carry on scientific, technical and economic surveys, technical researches, experiments and tests of all kinds by providing subsidies endowing or assisting loboratories, workshops, etc.; and to do all such other things as the company may deem incidental or conducive to the attainment of any of the aforesaid objects of the company.

6. The liability of the members is limited. The share capital of the company is two crores divided into 20,000 equity shares of rupees one thousand each. It has a Board of Directors and Chairman and Directors are to be appointed by the Government by nomination. The Government also appoints one of the Directors to be the Managing Director for the conduct or management of the business of the company subject to the control and supervision of the Board of Directors. The Managing Director shall be paid such salary and allowances as may be fixed by the Government. The Chairman of the Board of Directors appointed by the Government holds office for a period of two years. The Board has its own seal and records its own proceedings and regulates its meetings. The company may also declare dividends but no dividend shall exceed the amount recommended by the Board. The Government is empowered to issue, from time to time, such directives as they may consider necessary in regard to the conduct of the business of the Corporation or Directors thereof and in like manner, vary and annul any such directive. The Directors shall give immediate effect to directives so issued. The auditors of the Corporation are appointed by the Central Government on the advice of the Comptroller and Auditor-General of India. The Auditors shall submit a copy of their audit report to the Comptroller and Auditor-General of India. The Corporation has its own service rules. The power of interpreting the rules vests in the Managing Director who is also empowered to issue such administrative instructions as may be necessary to give effect to and carry out the purposes of the provisions of the rules. All appointments to the service of the Corporation against sanctioned posts upto and inclusive of the scale of Rs. 300-600 are to be made by the Managing Director and to all other posts by the Board of Directors. The petitioners, it may be stated, were appointed by the Board of Directors. The rules provide for commencement of service, period of probation and termination of service by notice. An employee shall not leave or discontinue his service in the Corporation without first giving notice to the Managing Director in writing of his intention to leave or discontinue the service, the period of notice, after confirmation, being three months. The Corporation is also empowered to determine the service of an employee after the expiry of the period of his probation on giving him three months' notice or substantive pay in lieu thereof, if he is an employee in Class 'A'. It is by virtue of the power vested in the Board under Rule 19(2) that the services of the two petitioners were terminated. It may be stated here that it is also the case of the petitioners that their services were not terminated by the Board of Directors, but by the Managing Director, who is not competent to terminate the services of employees in the scale of pay of over Rs. 600.

7. According to Mr. Choudary, if an action of the Corporation like the present one terminating the services of the petitioners is not to be construed as an act of the State, then the Government, by the device of forming Corporations, can completely exclude the jurisdiction of the Court thus rendering the fundamental rights absolutely ineffectual and, therefore, it cannot be said that the petitioners have no locus standi to question the arbitrary actions of the Corporation formed, run, managed and directed by the Government. The Corporation, according to him, corresponds to a department of the Government wielding generally analogous powers. In support of his argument, Mr. Choudary, quoted from Public Law, 1971 edited by J. A. G. Griffith, the following passage:

An imaginary system cunningly planned for the evil purpose of thwarting justice and maximising fruitless litigation would copy the major features of these extraordinary remedies.

Another passage relied upon is from Freedom under the Lay by Alfred Denning, which is in these terms:

There are many powers which are by necessary intendment coupled with a duty; and when that is so the High Court will always intervene to see that the duty is performed. An example occurred recently when a widow made a claim for pension on account of the death of her husband who died from an obscure disease. The claim was put on one side by the Ministry-from their point of view quite reasonably-to await the decision of a test case about this disease. But they did it without her consent. She did not see why her claim should be held up, and asked for a mandamus to compel the Ministry to deal with it. And it was dealt with. * * * Our procedure for securing our personal freedom is efficient, but our procedure for preventing the abuse of power is not. Just as the pick and shovel is no longer suitable for the winning of coal, so also the procedure of mandamus, certiorari, and actions on the case are not suitable for the winning of freedom in the new age. They must be replaced by new and up-to-date machinery, by declarations, injunctions and actions for negligence; and, in judicial matters, by compulsory powers to order a case stated. This is not a task for Parliament. Our representatives there cannot control the day to day activities of the many who administer the manifold activities of the State, nor can they award damages to those who are injured by any abuses. The Courts must do this. Of all the great tasks that lie ahead, this is the greatest. Properly exercised the new powers of the executive lead to the welfare State: but abused they lead to the totalitarian State. None such must ever be allowed in this country.

To substantiate his contention further that the Corporation is an arm of the State exercising sovereign functions, the learned Counsel relied upon a judgment of the Court of Appeal in Mellenger and Anr. v. New Brunswick Development Corporation [1971] 1 W.L.R. 604 : [1971] 2 All E.R. 593. In that case, the Development Corporation was constituted on behalf of Her Majesty as a body corporate. The Minister of Industry and Development was an ex officio Director of the Corporation, The remaining directors were appointed by the Lieutenant-Governor in Council. The Corporation had power and authority to assist, promote, encourage and advance the industrial development, prosperity and economic welfare of the province. It had also power to carry on any business of an industrial, commercial or agricultural nature. The Corporation shall not exercise any power or authority granted without the prior approval of the Lieutenant-Governor in Council. Two industrial consultants prayed for the issue of a writ against the Corporation claiming commission of 250,000. The defence was that the Corporation was entitled to immunity from the suit. Lord Denning, M. R., in his judgment observed (at p. 608-609):

If the Corporation is part and parcel of the Government of New Brunswick-so much so as to be identified with it like a Government department-it can clearly claim immunity.

* * * *

Apart, however, from the statute, the functions of the corporation, as carried out in practice, show that it is carrying out the policy of the Government of New Brunswick itself. It is its alter ego. If and in so far as the corporation played any part in this case, it was identified with the Government. The evidence shows that the Premier of the province played a leading part. The corporation itself has never been legally involved in the transaction. It was not the owner of the land on which the factory is being built. The Airscrew Weyroc people bought it from some private owner. The corporation has made no contract with any one about these transactions. But the Government of New Brunswick itself has done so. It agreed to guarantee a bond issue if required. There is no single point in which the corporation itself has been involved. It was just the altra ego of the Government, and claim sovereign immunity.

In support of his contention that the termination of the services of the petitioners is contrary to the principles of natural justice, the learned Counsel invited my attention to a decision of the Houses of Lords in Molloch v. Aberdeen Corporation (1971) 1 W.L.R. 1578. That was a case where an unregistered teacher was dismissed by an education authority for the City of Aberdeen. The appellant and 37 other teachers were dismissed on the ground that they are unregistered and that their continued employment is no longer lawful by virtue of the Schools (Scotland), Code, 1956 as amended. Lord Reid, in his speech, observed (at p. 1584):

So if in general Scottish teachers have a right to be heard before they are dismissed, then I think that the appellant had that right and that right and that the respondent's committee were in breach of duty in not hearing him, (I fully realise that it would have been highly inconvenient to hearing him) I fully realise that it would have been highly inconvenient to hear 38 teachers in succession. But that arises from the very clumsy machinery which had to be used if the respondent's interpretation of the regulation is correct.

If, then, the respondents were in breach of duty in denying the appellant a hearing, what is his remedy? It was argued that it would not be right to reduce the resolution of dismissal because that would involve the reinstatement of the appellant-in effect granting specific implement of his contract of employment which the law does not permit. But that would not be the effect. There would be no reinstatement. The result would be to hold that the appellant's contract of employment had never been terminated and it would be open to the respondents at any time hereafter to dismiss him if they chose to do so and did so in a lawful manner. Unless they chose to do that the appellant's contract of employment would continue.

* * * *

We were not referred to any case where a dismissal after failure to afford a hearing which the law required to be afforded was held to be anything but null and void.

It is also Mr. Choudary's case, that the relationship between the employer and the employee is not of a master and servant so as to bring it under the common law of the realm, but a case under the realm of administrative law and in support thereof, he relied upon what Lord Wilberforce said in Molloch's case.(1971) 1 W.L.R. 1578 at 1595.

The argument that, once it is shown that the relevant relationship is that master and servant, this is sufficient to exclude the requirements of natural justice is often found, in one form or another, in reported cases. There are two reasons behind it.

The first is that, in master and servant cases, one is normally in the field of the common law of contract inter partes, so that principles of administrative law, including those of natural justice, have no part to play. The second relates to the remedy ; it is that in pure master and servant cases, the most that can be obtained is damages, if the dismissal is wrongful ; no order for reinstatement can be made, so no room exists for such remedies as administrative law may grant, such as a declaration that the dismissal is void. I think there is validity in both of these arguments, but they, particularly the first, must be carefully used. It involves the risk of a compartmental approach which, though convenient as a solvent, may lead to narrower distinctions then are appropriate to the broader issues of administrative law. A comparative list of situations in which persons have been held entitled or not entitled to a hearing, or to observation of rules of natural justice, according to the master and servant test, looks illogical and even bizarre. A specialist surgeon is denied protection which is given to a hospital doctor ; a university professor, as a servant, has been denied the right to be heard, a dock labourer and an undergraduate have been granted it, examples can be multiplied. One may accept that if there are relationships in which all requirements of the observance of rules of natural justice are excluded (and I do not wish to assume that this is inevitably so), these must be confined to what have been called 'pure master and servant cases', which I take to mean cases in which there is no element of public employment or service, no support by statute, nothing in the nature of an office or a status which is capable of protection. If any of these elements exist, then, in my opinion, whatever the terminology used, and even though in some Inter paries aspects the relationship may be called that of master and servant, there may be essential procedural requirements to be observed, and failure to observe them may result in a dismissal being declared to be void.

8. We are here concerned with the employees of a company which is incorporated under the Companies Act. The existence of a legal right or obligation is the foundation of every writ of mandamus. The principles evolved, in the English decisions will be of utmost guidance if there are no decisions of the Supreme Court covering the points involved. Lord Wilberforce has distinguished between master and servant cases and cases which come within the branch of administrative law. The appointments in question are not made under any statutory provisions, but by Corporation under the regulations made by it bringing the cases within the ambit of 'pure master and servant cases'.

9. Strong reliance is placed by the learned Counsel upon the observations quoted above to contend that this is not a case of a contract between master and servant, but one where the. Corporation is an armor alter ego of the State exercising control through its officers on all matters and that, when the termination of services is made even without affording an opportunity to the petitioners, they are entitled to seek a declaration from this Court that the termination of their services is void. In other words, according to him, these are not cases of straight forward relationship of master and servants.

10. Mr. Choudary, next placed great reliance upon the decisions of the Supreme Court in Rajasthan State Electricity Board v. Mohan Lal and Ors. : (1968)ILLJ257SC ; Prabhakar Ramakrishna Jodh v. A.L. Pande and Anr. : [1965]2SCR713 . Mafatlal Narandas Barot v. Divisional Comptroller, State Transport, Mehsana : (1966)ILLJ437SC , and the decision of the Calcutta High Court in Chittaranjan Roy v. Damodar Valley Corporation (1973) 43 F.J.R. 115 to show that what the Corporation did constitute an act of the State. Before noticing the aforesaid decisions, it may be useful to refer to the decision in Radheshyam Khare v. State of Madhya Pradesh : [1959]1SCR1440 , in which the question arose as [to whether a writ of ccrtiorari will lie to correct the errors of a statutory body entrusted purely with administrative functions. The Supreme Court in answering that question was construing the scope of Section 53 A and 57 of the Central Provinces and Berar Municipalities Act. On a construction of the two provisions, it was observed by the learned Judges:

A cursory reading of the two sections will also indicate that the conditions precedent to the exercise of the powers under both sections overlap to some extent, namely, that action can be taken under both if the committee 'is not competent to perform the duties imposed upon it....' To the extent that requirements of the two sections overlap the State Government has the option of taking steps under one section or the other according to its own assessment of the exigencies of the situation. Incompetency on the part of the committee gives to the State Government an option to apply one of two remedies under the Act, if it considers it necessary to take action at all.

It was, therefore, held that a writ of certiorari will not lie to correct the errors of the statutory body which was entrusted purely with administrative functions and in so coming to the conclusion, the learned Judges followed the earlier decision of the Court. In Advanl's case : [1950]1SCR621 . Chiet Justice S.R. Das, quoted the following passage of Lord Hewart, C.J., in Rex v. Legislative Committee of the Church Assembly L.R. [1928] 1 K.B. 411; 415. which was later quoted with approval by Lord Radcliffe in Nakkuda All's case, L. R. [1951) A. C, 66.

In order that a body may satisfy the required test it is not enough that it should have legal authority to determine questions affecting the rights of subjects; there must be superadded to that characteristic the further characteristic that the body has duty to act judicially.

Subba Rao, J., (as he then was) in a separate judgment observed, (at p. 39):

There may be cases where at one stage of the process the said body may have to act judicially and at another stage ministerially. The rule can be broadly stated thus: The duty to act judicially may not be expressly conferred but may be inferred from the provisions of the statute. It may be gathered from the cumulative effect of the nature of the rights affected, the manner of the disposal provided, the objective criterian to be adopted, the phraseology used, the nature of the power conferred or the duty imposed on the authority and other indicia afforded by the statute. In short a duty to act judicially may arise in widely different circumstances and it is not possible or advisable to lay down a hard and fast rule or an inexorable rule of guidance.

The learned Judge went on to observe:

The Government has to arrive at the finding of their incompetency on the basis of objective facts to be ascertained and to give reasons for its finding. It is against all cannons of natural justice that a Tribunal should arrive at a finding of far reaching consequence without giving an opportunity to explain to the persons who would be affected by such a finding. For the aforesaid reasons, I have no doubt that the section imposes a duty on the Government to act judicially In ascertaining the objective and jurisdictional fact, namely, whether the committee is incompetent. It is a necessary condition of such a duty to give an opportunity to the committee to explain the grave charges levelled against it.

The cases on hand are not ones where the Government interfered in exercise of its jurisdiction under the powers it reserved for itself in the management of the Corporation nor are these cases where the Government failed or omitted to exercise its powers. What we are concerned is whether what has been done by the Corporation in terminating the services of the petitioners amounts to an act of 'the State' so as to entitle to petitioners to seek an appropriate writ under Article 226 of the Constitution.

11. Prabhakar Ramakrishna Jodh v. A.L. Pande and Anr. : [1965]2SCR713 , is a case where the question directly arose whether teachers' pay scales and security of tenure come within the statutory power of the University of Saugar or relate to contractual relationship. The appellant therein was a teacher in an affiliated college managed by the governing body established under Clause 3 of the 'College Code' which is an ordinance made under the provisions of the University of Saugar Act. The Principal of the college served the appellant a charge-sheet and asked him to submit his explanation. The appellant denied all the charges and requested the particulars on which one of the charges was based. The appellant alleged that particulars were not supplied and the governing body terminated his services without holding any enquiry. Thereafter, the appellant moved the High Court for a writ of certiorari quashing the order of the governing body also for his reinstatement on the ground that the governing body discharged him from service in violation of the provisions of the College Code, The High Court rejected the contention of the appellant on the ground that the conditions of service of the appellant were governed not by the College Code, but by the contract between the governing body and the appellant and that no legal rights accrued to him under the College Code. On appeal by Special leave, the Supreme Court held that the view of the High Court was erraneous; that the provisions of the College Code have the force of law and that the provisions relating to the pay scales of teachers and the security of tenure properly fall within the statutory power of affiliation granted to the University under the Act. The learned Judges were not prepared to entertain the question raised before them that the governing body of the college was not a statutory body performing public duties and no writ in the nature of mandamus can be issued against the governing body on the ground that 'on behalf of the respondent it was conceded that these objections were not pressed before the High Court. We are, therefore, unable to entertain these preliminary arguments at this stage and they must be overruled.'' It is, therefore, clear that, on the basis that the governing body was a statutory body performing public duties. Therefore, the question whether it was a statutory body performing public duties was not considered.

12. In Mafatlal Narandas Bavot v. Divisional Comptroller, State Transport, Mehsana : (1966)ILLJ437SC , the question arose whether the appellant, a permanent employee of the Road Transport Corporation was entitled to an opportunity to show cause against the proposed punishment as required by Regulation 61 of the Regulations which governs the service conditions of the employees of the Corporation. It was admitted in that case that no charge was framed against him nor was he given an opportunity to show cause against the action proposed to be taken against him. Satyanarayana Raju, J , speaking for the Court, held that the order of termination passed against such an employee without giving him opportunity to show cause against the action proposed to be taken against him is bad in law since it contravenes the provisions of Clause 4(b) of the Regulations and also the principles of natural justice. In that view, a writ of certiorari was issued with an observation that that will not preclude the Corporation from making a fresh enquiry against the employee after giving him reasonable opportunity to show cause as provided under Clause 4(b) of the Regulations. It may be mentioned here that the question never arose in that/case as to whether the Road Transport Corporation can be brought within the meaning of the expression 'the State' occurring in Article 12 of the Constitution.

13. Strong reliance is placed by a judgment of a single Judge of the Calcutta High Court (Salil Kumar Datta, J. (in Chittaranjan Roy v. Damadar Valley Corporation (1973) 43 F.J.R. 115. The learned Judge preferred the decision of the larger Bench of the Supreme Court in Prabhakar Ramakrishna Jodh v. A.L. Pande and Anr. : [1965]2SCR713 , in preference to the decision of the Supreme Court in Executive Committee of Uttar Pradesh State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi : (1970)ILLJ32SC , and in Indian Airlines Corporation v. Sukhdeo Rat : (1971)ILLJ496SC . I have already pointed out that the Prabhakar Ramakrishna Jodh v. A.L. Pande and Anr. (supra) the question that the college was not a statutory body performing public duties was not enquired into as it was raised at a late stage before their Lordships. Therefore, I am unable to agree with the view expressed by Salil Kumar Datta, J. in Chittaranjan Roy v. Damodar Valley Corporation (supra). The question whether the staff regulations had any statutory force came up directly for consideration in Executive Committee of Uttar Pradesh State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi (supra)and in Indian Airlines Corporation v. Sukhdeo Rai (supra) and it was specifically held by their Lordships that the regulations are not statutory and, therefore, no relief was available for breach thereof.

14. In Vidya Ram Misra v. The Managing Committee, Shri Jai Naraln College : (1972)ILLJ442SC , the question raised was whether the appellant teacher had a statutory status and his services were terminated in violation of the provisions of the statute passed in Lucknow University Act and, therefore, the High Court was wrong in its conclusion that no application for a writ or order in the nature of a certiorari would lie. Another contention put forward was whether the appellant was not given a reasonable opportunity of defending himself against the charges. The learned Judge after referring to the earlier cases of the Court in Executive Committee of U. P. State Warehousing Corporation Ltd. v. Chandra Kiran Tyagi (supra) and Indian Airlines Corporation v. Sukhdeo Rai (supra) held:

In the appointment of a lecturer by a college affiliated to the Lucknow University, there was no element of public employment, nothing in the nature of an office or status which was capable of protection. The terms and conditions of service mentioned in Statute 151 framed under the Lucknow University Act, 1920, have proprio vigore no force of law. They become terms and conditions of service only by virtue of their being incorporated in the contract. Without the contract, they have no vitality and can confer no legal rights. The appellant cannot found a cause of action on any breach of law but only on the breach of the contract. In order that the third exception to the general rule that no writ will lie to quash an order terminating a contract or service albeit illegally might apply, it is necessary that the order must be the order of statutory body acting in breach of a mandatory obligation imposed by the statute. The college or the managing committee in question is not a statutory body and the case in hand will not fall under the third exception.

15. It is thus made plain by the Supreme Court that it is not enough if an authority is a statutory authority or body, but the impugned order of that authority or body must be one in breach of mandatory obligation imposed by the statute.

15-A. A Division Bench of the Allahabad High Court in R.B. Varma v. Food Corporation of India (1972) S.L. R. 751, held that the Food Corporation of India, carrying on commercial activities would come under 'other authorities' as contemplated by Article 12 of the Constitution. In holding that the Food Corporation of India comes within the purview of the expression 'other authorities' in Article 12, the learned Judges followed the decision in Rajasthan State Electricity Board v. Mohan Lal and Ors. : (1968)ILLJ257SC , where there was reference to two earlier cases of the Supreme Court in Smt. Ujjam Bai v. State of Uttar Pradesh : [1963]1SCR778 . and K.S. Ramamurty Reddiar v. The Chief Commissioner, Pondichery : [1964]1SCR656 . This is how the learned Judges of the Allahabad High Court, after quoting Bhargava, J., in Rajasthan State Electricity Board, supra.

A close study of the Supreme Court cases referred to above indicates that a body corporate, like the Food Corporation of India, carrying on commercial activities would come under 'other authorities' as contemplated by Article 12 of the Constitution. Applying the same principle, it can be safely said that the expression 'other authority' occurring in Rule 20 would embrace within its ambit such a body corporate as the Food Corporation of India.

It should not be lost sight of that, when the Supreme Court included the Rajasthan State Electricity Board within the expression of 'other authorities', it examined the provisions of the Electricity Supply Act, which show with the powers conferred on the Board include powers to give directions, the disobedience of which is punishable as a penal offence. Provisions similar to the ones referred to by the Supreme Court do not appear in the Act or rules with which we are now concerned. The Corporation has no power to give directions or command obedience of its orders on pain of punishment. It is not every statutory authority, which carries on some activities of the nature of trade or commerce that can come within the expression 'other authorities' so as to say that it comes within the sweep of Article 12. Justice Shah, in the Rajasthan State Electricity Board case supra, brought out very clearly the powers vested in the Electricity Board, which cover a very wide range including issue of directions under certain provisions of the Act and compliance with those directions. It was, therefore, held that the Board was exercising, in substance, the sovereign powers of the State delegated to it. Unless all such powers are conferred upon the Corporation herein or any other statutory authority, it cannot be said that the statutory Corporation with which we are now concerned is, in substance, exercising the sovereign powers of the State delegated to it and, therefore, an instrumentality of the State.

16. Another case of the Supreme Court which must be noticed is the case of Sirst Municipality v. Cecelia Kom Francis Tellis 1973-I L.L.J. 226; That was a case of an employee working in a municipal hospital accused of negligence towards a patient admitted in the maternity section. After an enquiry into the conduct of the employee, she was dismissed. Thereafter she filed a suit for declaration contending inter alia that her dismissal was contrary to Rule 143 of the rules framed under the Bombay District Municipality Act, 1901, which required the municipality to give an employee reasonable opportunity to defend himself against the charges. The defence of the municipality was that the rules were for the guidance of the municipality and were not mandatory. Ultimately, when the matter went up to the High Court, the High Court held that the municipal committee violated the rule and gave a declaration that the employee must be deemed to have continued in service throughout. It is against that decree that the municipality preferred an appeal to the Supreme Court contending that, even if the dismissal was wrongful, the remedy was not to seek a declaration, but to claim damages. Ray, J., who spoke for the majority, after referring to the decision of the Court in U.P. State Warehousing Corporation Ltd. v. Chandra Kiram Tyagi and Indian Airlines Corporation v. Sukhdeo Rai supra, held that.

The ratio in Tyagi's case, A.I.R. 1970 S. C. was that violation of Regulation 16(3) was breach of terms and conditions of relationship of master and servant and the master was liable for damages for wrongful dismissal. This Court did not find any violation of statutory obligation in Tyagi's case.

Referring to Indian Airlines Corporation case supra, the learned Judge said that the dismissal in the case was found to be wrongful and not to fall within the vice of infraction of statutory limitation or statutory obligation.

17. Then the learned Judge referred to the decision in S.E. Tewari v. District Board, Agra : (1964)ILLJ1SC , and Life Insurance Corporation of India v. Sunil Kumar Mukherjee 1964-I L.L.J. 442, and observed:

These decisions establish that the dismissal of a servant by statutory including local authorities or bodies in breach of the provisions of the statutes or orders or schemes made under the statute which regulate the exercise of their power is invalid or ultra vires and the principle of pure master and servant contractual relationship has no application to such cases.

In Tewari's case what the Supreme Court ruled is:

It is settled law that the form of the order under which the employment of a servant is determined is not conclusive of the true nature of the order. The form may be merely to camouflage an order of dismissal for misconduct, and it is always open to the Court before which the order is challenged to go behind the form and ascertain the true character of the order.

It was also observed by Shah, J., that:

the powers of a statutory body are always subject to the statute which has constituted it and must be exercised consistently with the statute, and the Courts have in appropriate cases, the power to declare an action of the body illegal or ultra vires, even if the action relates to determination of employment of a servant.

That was a case where the District Board terminated the employment of an Engineer in its service by giving him salary for three months' in lieu of notice under Rule 3 A (iv) of the Rules made under Section 172(2) of the U. P. District Board Act and the order was challenged on the ground that the Board had no power to terminate employment of its servant except under the notification dated March 25, 1946. It was held by the learned Judges that the Board had the power to determine the employment of its servants and the Board purported to exercise that power in the manner and subject to the conditions prescribed by Rule 3A. In that case, there was no question of the District Board not coining within the ambit of the expression 'other authorities'.

18. In Life Insurance Corporation of India v. Sunil Kumar Mukherjee (supra), it was observed by Gajendragadkar, J., (as he then was:

What the regulations authorised to do is merely to determine his salary in the category of Development Officers, and so, we do not see how the order terminating his services because he refused to take an assignment as an assistant can be justified. It would have been open to the Corporation to fix Roy's salary at the minimum in the grade prescribed by Clause 5 of the Order and if he had refused to take it an occasion may have arisen for the operation of Section 11(2) of the Act.

It is, therefore, manifest from what is observed that it was a case of breach of 'the statutory regulations and, therefore, their Lordships interfered.

In Calcutta Dock Labour Board v. Jaffar Imam 1965-II L.L.J. 112; it was held that:

The appellant Board in terminating the employment of its employees was exercising authority and power of a quasi-judicial character. Where a statutory body or authority is empowered to terminate the employment of its employees, it cannot exercise its powers in disregard to the principles of natural justice. The tests laid down by Lord Reid in Ridge v. Baldwin [1964] A.C. 40, are relevant in ascertaining the nature of such proceedings with a view to decide whether the principles of natural justice ought to be followed or not and the authority or body conducting the enquiry shall have to consider those tests.

That was a case where it was found that the relevant clauses of the scheme required that, before any disciplinary action was taken, an opportunity must be given to show cause why the proposed action should not be taken against him and since there was breach of the statutory obligations, the Court inter, fered. There is no such scheme or regulation or rule which requires the Corporation to afford an oppotunity before terminating the services of its servants. All that is required under the relevant rules is three months' notice and that has been given in this case. The relationship is purely that of a master and servant governed by the service rules of the Corporation and. therefore, there cannot be any complaint of breach of any mandatory requirements of the statutory rules or regulations. Further, in D.I. Board, Calcutta v. Jaffar Imam, (supra), the question whether the Board's action amounts to a State action did not come up for consideration. That was a case where the dock workers were detained by the Commissioner of Police under the provisions of the Preventive Detention Act and on their release from detention, the Dock Labour Board commenced disciplinary proceedings against them. In the notice served upon them, it was alleged that they committed acts prejudicial to the maintenance of public order. No specific allegation was, however, made against them without giving any specific instances. No evidence was let in the enquiry and without referring to any evidence, the services of the dock workers were terminated. The contention was that the Board was justified in acting upon suspicion, the basis for suspicion being the detention under the provisions of the Preventive Detention Act. It was, therefore, held that the services of the dock workers could not have been terminated without holding a proper enquiry and the fact that they happened to he detained was no justification for not complying with the relevant statutory provision and not following the principles of natural justice. It is, therefore, clear that in that case it was found, as a fact that there was breach of the statutory provisions apart from denying the dock workers an opportunity to defend themselves. Therefore, the above cases arc distinguishable.

19. The Supreme Court, in Indian Airlines Corporation v. Sukhdeo Rai (supra) dealing with the dismissal of an employee of the Airlines Corporation, held that:

As observed earlier, under Sections 8(2) and 20, the appellant-Corporation has been given the power to employ its own officers and other employees to the extent it thinks necessary on terms and conditions provided by it in regulations made under Section 45. The regulations contain the terms and conditions which govern the relationship between the Corporation and its employees. Though made under the power conferred by the statute, they merely embody the terms and conditions of service in the Corporation but do not constitute a statutory restriction as to the kind of contracts which the Corporation can make with its servants or the grounds on which it can terminate them. That being so, and the Corporation having undoubtedly the power to dismiss its employees, the dismissal of the respondent was with jurisdiction, and although it was wrongful in the sense of its being in breach of the terms and conditions which governed the relationship between the Corporation and the respondent it did subsist.

The learned Judges also referred to the Rajasthan Electricity Board case, : (1968)ILLJ257SC , and distinguished it by saying that the Board was held to be a 'State' within the meaning of Article 12 of the Constitution, by emphasising the fact that the Act contain provisions which empowered the Board to issue directions, the disobedience of which was punishable as a penal offence. The Corporation in question does not exercise powers which the Rajasthan Electricity Board exercised so as to make it 'State' within the meaning of Article 12 of the Constitution. These are not cases where the statutory provisions relating to the Corporation and the service rules and the conditions limit the power of the Corporation in dealing with its servants except to the extent indicated therein that it can terminate the services of its employees with three months' notice. The fact that that termination may result in hardship to the servants of the Corporation is not a ground for interference by this Court under Article 226 of the constitution. If the termination of the petitioners were under the orders of the Government, then certainly this Court will examine whether the Government acted within the limits of law and also afforded a reasonable opportunity to the petitioners before they were removed. It is not a case where the termination of the services of the petitioners was made at the instance of the Government or in breach of any of the regulations governing the service conditions of the employees of the Corporation. What Justice Ray, observed in Sirsi Municipality v. Cecelia Kom Francis Tellis (supra), after referring to the English decisions, is this .

These decisions indicate that statutory provisions may limit the power of dismissal. Where such limitation is disregarded a dismissal may be held invalid. In this respect employment under statutory bodies differs from ordinary private employment. Where a public body is empowered to terminate employment on specified grounds or where a public body does not observe the procedure laid down by legislation, e.g., improperly delegates power of dismissal to another body the Courts have declared such dismissal from public employment to be invalid.

It has not been shown that the termination of services of the petitioners is in disregard of the rules or regulations or that the Corporation has not followed the procedure laid down by the Legislature or acted contrary to the directions given by the Government. It is not a case where the petitioners can claim any statutory status as employees of the Corporation for this Court to exercise its jurisdiction under Article 226 of the Constitution.

20. In Subhadra Devi v. Andhra Girls College (1973) 1 An W.R. 94, sitting with Ramachandra Raju, J. I held that the concept of State action does not extend to the action of a private individual or institution, unless that individual or institution acts under some law clothing the private action with the character or impress of a State action. That was a case of a private educational institution run by a managing committee and receiving financial assistance from the Government. Repelling the contention that the institution comes within the ambit of Article 12, it was observed by me that the fact that the Government gives financial assistance does not bring a private college under its control, as it exercises no control either in the management of the affairs of the College or in the matter of appointments or removal of the members of its staff. The mere fact that it received bounty from the Government will not make it an instrumentality of the State. The existence of a legal right said to have been infringed is a condition precedent for the maintenance of an application under Article 226, where the application has been brought for the enforcement of a non-fundamental right. Violation of a right to hold a particular office by an individual in a private institution is not within the purview of Article 226. In so concluding, I only reiterated what the Supreme Court said in State of Orissa v. Madan Gopal Rungta (1952) S.C.R. 28 : 1951 S.C.J. 764 and State of Orissa v. Ramachandra : AIR1964SC685 .

21. In the first place, the Corporation is not a 'State' as defined in Article 12 of the Constitution and in the second place there is no legal right on which the action can be founded, for there is no breach of any statutory rules or regulations. The relationship between the Corporation and petitioners is purely contractual, one of master and servant.

22. In A.J. George v. Coffee Board 1972-II L.L.J. 276, Govindan Nair, J., relying upon the test laid down in Rajasthan State Electricity Board, case : (1968)ILLJ257SC , came to the conclusion that the power exercised by the Coffee Board like deciding internal sale quota for each year is a necessary infringement of the otherwise free right of a grower to sell as he liked and the Board having been given the power to restrict the guarantee under Article 19 of the Constitution, the test laid down in Rajasthan State Electricity Board case (supra) is satisfied.

23. In S. R. S. Many v. Life Insurance Corporation of India and Ors. 1972 -II L.L.J. 546, Subrahmonian Poti, J., held that the Life Insurance Corporation is a 'State' within the meaning of Article 12 of the Constitution as the function performed by the Corporation is that which would ordinarily be the function of the Government in a welfare State and, therefore, it would be quite in accordance with the spirit of Part III of the Constitution to term that body as 'State'. I am unable to share the view of the learned Judges of the Kerala High Court for the simple reason that every autonomous body or authority, by virtue of the fact that it is constituted by a statute irrespective of the fact whether such authority exercises the sovereign functions of the State or not, would come within the meaning of 'other authority' so as to satisfy the definition of the 'State' in Article 12 of the Constitution. As has been pointed out in Rajasthan State Electricity Board case, (supra) the statutory authority must have power to command and compel the obedience of the public by enforcing the provisions of the statute, the disobedience of which is punishable as a penal offence. The powers vested in the Rajasthan State Electricity Board under the statute are nowhere to be seen in the rules and regulations of the Corporation with which we are now concerned, I am in agreement with what is expressed by a Division Bench of the Bombay High Court composed of Patel and Wagle, JJ., in Pramodraiv Insurance Corporation : AIR1969Bom337 , where learned Judges observed:

Obviouly it is a trading Corporation and it is not concerned with implementing any law which affects in any manner any member of the public. The prohibition for any private agency to do the same business is not by reason of any order that is made by the Life Insurance Corporation but by reason of the statute itself as we have already seen.

The two cases on hand are directly governed by the ruling of their Lordships in Praga Tools Corporation v. C.F. Immanua] : (1969)IILLJ479SC , and Indian Airlines Corporation v. Sukhdeo Rai (supra). Here too, the Corporation in question has been given the power to employ its own officers and other employees to the extent it thinks necessary on terms and conditions provided in its own regulations, which govern the relationship between the Corporation and its employees. Though the rules and regulations are made by the Corporation under the powers conferred upon it by the statue, they merely embody the terms and conditions of services and no restrictions are placed upon the Corporation as to the nature or the kind of contracts which it can enter into with its servants or the grounds on which the contract of service can be put an end to. I may here quote with advantage what Chief Justice Chandra Reddy, sitting with Gopala Krishna Nair, J., said in Ramakotayya v. Lakshmanaswamy : AIR1964AP14 .

The Corporation was registered under the provisions of the Indian Companies Act as a private limited concern and it is governed by all the provisions of the Act. It is directed by directors nominated by Government. The day to day control of the administration is vested in the managing director assisted by other officials of the company. The company makes its own appointments, has its own rules in regard to conditions of service, leave for the, staff etc. Thus, it is its own master and it does not act on behalf of the Government.

24. I am unable to agree with Mr. Choudary, that the termination of the services of petitioners by the competent authority is not made in accordance with the rules and regulations. Even if it is to be assumed that the termination of the services of the petitioners was wrongful, even then, the petitioners are only entitled to damages and not to a declaration that the termination of their services was illegal and void.

25. I, therefore, find no merits in these writ petitions and they are accordingly dismissed. No costs. Advocate's fee is Rs. 100 each.


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