Alladi Kuppuswami, J.
1. The petitioners in these two writ petitions are permanent workers of the respondent, Nellore Co-operative Spin ning Mills Ltd. The mill was closed on 24th May, 1975, until further notice on the ground that there was clash among the workers on the night of 23rd May, 1975 which resulted in the death of a worker and serious injuries to a number of workers, and the situation became tense, and the management felt that the normal working of the mill was likely to endager the person and property of the mill Thereafter by a G. O. Ms. No. 840 dated 27th August, 1975, a notification was published including the respondent-mill in the First Schedule to the Andhra Pradesh Relief Under takings (Special Provisions) Act XIX of 1971 (referred to in this judgment as the Relief Undertakings Act). Another notification was made on the same day in G.O. Ms. No. 842 declaring that the respondent-mill shall be deemed to be a relief undertaking. Another notification comprised in the same G. O. stated that the provisions of the Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947 shall not apply to the said undertaking. The mill was re-opened on 2nd September, 1975 but on the same day the managing director of the respondent-mill served notices of termination on32 workers of the mill, 28 of whom are the petitioners in W.P. No. 4707 of 1975 and the other 4 petitioners in W.P. No. 4759 of 1975. The termination order is in the following terms:
The following workers are employed under this management as permanent workers. Among the workers of the management there are two rival, groups sponsored by two unions. These workers belonged to such groups and are engaging themselves in violent acts to muster support against other workers to the detriment of normal working of the mill for sometime past. As a result of such activities there was a clash among the workers in the colony on the night of 23rd May, 1975 over an issue concerned the management. Consequently one worker died and number of workers were injured in the said clash. Tension prevailed among the rival groups and normal working of the factory had become impossible. Admission of such enraged rival group of workers was found to be dangerous to the person and property. Hence without any recourse, the management had to close the factory from 24th May, 1975 and the factory remains closed in the interests of internal and external peace.
In the meanwhile police charge-sheeted some of the following workers for murder and rioting. Cases are pending against others under security proceedings.
While so the management decided to reopen the mill in view of the declaration of emergency and in the interest of production. The tension among rival groups still persists. Numerous reports are received by the management against the following workers that they are threatening the workers likely to depose against them either in a Court of law or in any domestic enquiry with dire consequences. They are still pursuing the illegal activities to muster strength among the workers. They are more interested in their political activities. The management is helpless to hold any enquiry into the said reports for want of anybody forthcoming to depose due to fear. On investigation by the officers of the management it is found that the following workers are adopting terrorising activities against those not . amenable to their dictates. More over some of those workers are involved in serious offences like murder and rioting and security proceedings are pending whereas others are sup porting their cause to muster strength for their activities by resorting to violent acts. Even their behaviour for sometime past is highly detrimental to the smooth working of the mill. Hence the management decided that the continuation of the following workers under them is not in the interests of peaceful working of the mills. Some of the innocent workers
are suffering and production suffers during the emergency. Hence the Government notified the mill under the Andhra Pradesh Relief Under takings (Special Provisions) Act, 1971, from 28th August, 1975 and thereby suspended the application of Industrial Disputes Act and Standing Orders of the mill.
In these circumstances, the management hereby terminates the services of the following workers from 2nd September, 1975 since continuation of their presence in the mills is not conducive to the smooth working of the mill.
They are eligible for notice pay in lieu of one month's notice as per Standing Order 16(A) and the same is herewith sent.
As one of such workers who have engaged in the afore-detailed acts of indiscipline, threat, violence or riotous conducts, your continuation in the service is detrimental to the peaceful working of the mills.
Hence you are hereby informed that your services are terminated from 2nd September, 1975 and you cease to be worker of this management from that date, viz., 2nd September, 1975.
S/d. R. Venkatesam,
The Nellore Co-operative
Spinning Mills Ltd., Nellore'
2. The petitioners have filed these writ petitions praying for the issue of writ of mandamus or any other appropriate writ or direction calling for the records relating to the impugned order and declaring the termination order as illegal and void.
3. It is contended on behalf of the petitioners that the termination order is in gross violence of the principles of natural justice as no enquiry was conducted into the various vague and sweeping charges contained in the order of termination and no opportunity was given to the petitioners to make their representations. The petitioners herein were discriminated against on account of the vindictive attitude of the respondents for their trade-union activities in their capacities of office-bearers and active members. The termination amounts to victimisation and unfair labour practice. Further, the termination of the petitioners' services is in gross violation of the very purpose and objective of the Relief Undertakings Act, 1971 which is intended to provide relief against unemployment. It is further contended that the allegations made in the order of termination are not true. The statement that some of the petitioners had been charge-sheeted by the police for murder or rioting is false. It is true that security proceedings were pending against some of the petitioners but they were pending against several other workers also and in spite of that circumstance they are being continued in service. Out of 52 persons involved in security proceedings, petitioners 1 to 16 in W.P. No. 4707 of 1975 alone were chosen for the purpose of termination. Petitioners 17 to 28 are free from any charges. The sweeping allegation made in the impugned order that the other workers are being threatened by the petitioners and are afraid to depose either in a Court of law or in any domestic enquiry is also false and baseless and is a lame excuse for avoiding domestic enquiry. The allegations that their behaviour in the past is highly detrimental to the smooth working of the mill is also false and baseless.
4. In the counter-affidavit filed by the managing director of the respondent-mill it was denied that the management terminated the services due to any prejudice or as a measure of victimisation. It was to ensure effective and successful implementation of the objective of affording peaceful working conditions to the large majority of the employees without being subject to threats of violence and intimidation by a small group of recalcitrant employees and safeguarding the economic survival of' the mills in which the State and Central Government invested large sums of money that the management was constrained to terminate the services of the petitioners. The petitioners had been indulging repeatedly in serious acts of indiscipline, willful negligence of .duties, instigating stoppage of work, intimidation and assaults on other employees, etc. The management found itself unable to deal with the situation under the process of any statute by conducting domestic enquiries, etc. It could not conduct any domestic enquiry also due to reluctance of the helpless workers to depose against the petitioners in an open enquiry for fear of reprisal, etc. The past conduct of the petitioners was also detrimental to the smooth working of the mills.
5. The respondent also raised the contention that the writ petition is not maintainable against the co-operative society and it should, therefore, be rejected in limine on that ground.
6. We shall deal with the contention as to the maintainability of the writ petition against the respondent which is a co-operative society in the first instance. In support of this preliminary objection Sri Srinivasamurthy, learned counsel for the respondent, relied upon the decisions in Sabhajit Teswari v. Union of India : (1975)ILLJ374SC , Vaish Degree College v. Lakshmi Narayan 1976-II L.L.J. 163 : A.I.R. 1976 S.C. 888 Arya Vidya Sabha, Kashi v. K.K. Srivastava : (1976)IILLJ95SC , Nayagar Co-op. Central Bank v. Narayan : AIR1977SC112 , and the decision of one of us reported in C.V. Narasimma Naidu and Ors. v. The Chittoor Dist. Co. op. Bank Ltd. (1971) 2 A.P.L.J. (S.N.) 16 and of the Madras High Court in Lakshmiah v. S.P.T.C.M. Society Ltd. : AIR1962Mad169 , in addition to other decisions of the Supreme Court and other High Courts. Sri Kannabiram, who argued for the petitioners submitted that though it is his contention that a writ petition is maintainable against a co-operative society it is all unnecessary for this Court to go into the general question as to how far a writ petition is maintainable against a co-operative society in this case, as according to the petitioners the respondent-mill would fall within the definition of ' State ' in Article 12 of the Constitution in view of the fact that it has been declared as a relief undertaking under the Relief Undertakings Act. If he is right in his submission that the respondent-mill is a 'State', he argued that the termination of the services of 32 of the employees is discriminatory and violative of Article 14 of the Constitution as there is no rational basis for chosing the thirty-two employees alone for inflicting the punishment of termination of services when there were a number of employees who were similarly situated.
7. In support of his contention that the respondent-mill should be regarded as a 'State' within the meaning of Article 12 of the Constitution, Sri Kannabiram drew our attention to the various provisions of the Relief Undertakings Act and the notifications made thereunder. The preamble to the Act says that it is an Act to make special provisions for a limited period in respect of industrial relations and other matters to enable the Government to conduct certain industrial under takings as a measure of unemployment relief or of preventing unemployment in the State of Andhra Pradesh. Section 3(1) provides that the Government may by notification declare that any industrial undertaking specified in the First Schedule to the Act whether started, acquired or otherwise taken over by the Government and carried on or proposed to be carried on by the Government or under their authority or to which any loan, guarantee or other financial assistance has been provided by the Government, shall.,. be conducted to serve as a measure of unemployment relief or of preventing unemployment and every such under taking shall be a relief undertaking for the purposes of the Act.
(2) A notification under Sub-section (1) shall have effect for such period not exceeding twelve months as may be specified in the notification ; but it shall be renewable by like notifications from time for further periods not exceeding twelve months at a time, so, however, that all the periods in the aggragate do not exceed five years.
8. The two undertakings referred to in the first schedule at the time when the Act was passed were Azamjahi Mills, Hyderabad, and the Netha Co-operative Spinning Mills Ltd., Hyderabad Section 5, however, gave power to the Government to add to the first Schedule by a notification after obtaining the concurrence of the Central Government. Accordingly, the Government made a notification in G.O. No. 840 date 27th August, 1975 amending the First Schedule by adding the following item: 'The Nellore Co-operative Spinning Mills Ltd. Nellore'. They also issued another notification No. 1 in G.O. No. 842, dated 28th August, 1975, declaring that the respondent-mills shall, with effect from 28th August, 1975, be conducted to serve as a measure of preventing unemployment and it shall be deemed to be a relief undertaking. The notification shall have effect for a period of 12 months commencing from 28th August, 1975. Section 4 of the Act is in the following terms:
4 (1) Notwithstanding any law, usage, custom, contract, instrument, decree, order, award, submission, settlement, standing order or other provisions whatsoever the Government may, by notification direct that--
(a) in relation to any relief undertaking and in respect of the period for which the relief undertaking continues as such under Sub-section (2) of Section 3.
(i) all or any of the laws in the Second Schedule to this Act or any provisions thereof shall not apply or shall, if so directed by the Government be applied with such modifications, not affecting the policy of the said law ; as may be specified in the notification;
(ii) all or any of the agreements, settlements, awards or standing orders made under any of the laws in the Second Schedule to this Act, which may be applicable to the undertaking immediately before it was acquired or taken over by the Government before any loan guarantee or other financial assistance was provided to it, by, or with the approval of the Government, for being run as a relief under taking shall be suspended in operation or shall, if so directed by the Government, be applied with such modifications as may be specified in the notification;
(iii) rights, privileges, obligations and liabilities shall be determined and be enforceable in accordance with Sub-clause. (i) and (ii) and the notification;
(vi) any right, privilege, obligation or liability accrued or incurred before the undertaking was declared a relief undertaking and any remedy for the enforcement thereof be suspended and all proceedings relative thereto pending before any Court, Tribunal, officer or authority shall be stayed;
(b) the right, privilege, obligation or liability referred to in Sub-clause (iv) of Clause (a) shall, on the notification ceasing to have force, revive and be enforceable and the proceedings referred to therein shall be continued : Provided that in computing the period of limitation for the enforcement of such right, privilege, obligation or liability, the period during which it was suspended under Sub-clause (iv) of Clause (a) shall be excluded notwithstanding anything contained in any law for the time being in force.
(2) A notification under Sub-section (1) shall have effect from such date, not being earlier than the date referred to in Sub-section (1) of Section 3, as may be specified therein, and the provisions of Section 15 of the Andhra Pradesh General Clauses Act, 1891 shall apply to the power to issue such notification.
(3) Nothing in this section shall affect the rights, privileges, obligations and liabilities accruing from or arising out of any contract, agreement, assurance of property, settlement, award, standing order or other instrument in force, decree, judgment or final order of a Court to which the Central Government or any institution wholly or partly financed by that Government is partly or with which the Central Government is concerned.
The Second Schedule referred to in this section consists of the Industrial Employment Standing Orders Act, 1946, the Industrial Disputes Act, 1947 and the Andhra Pradesh Co-operative Societies Act, 1964. The Government issued Notification (II) in G.O. No. 842 under Section 4(1) of the Act stating that the Industrial Employment Standing Orders Act and the Industrial Disputes Act shall not apply to the respondent-mills. Though the Andhra Pradesh Co-operative Societies Act is also one of the Acts mentioned in the Second Schedule as the notification referred only to the Industrial Disputes Act and the Industrial Employment Standing Orders Act and said they will not be applicable to the respondent-mills it would follow that the Co-operative Societies Act would continue to apply. The notifications referred to above have to be laid before the each House of the State Legislature under Section 6 of the Act and it must be taken that the provision was complied with.
9. The contention of the petitioners is that as the respondent-mill was declared as a relief undertaking, though the provisions of the Co-operative Societies Act continued to be applicable, it would fall within the definition of ' State ' under Article 12 of the Constitution. It is submitted that the result of declaring the mills as a relief undertaking under the provisions of the Act is practically sub stituting the Government in the place of the management. The Act itself is intended to enable the Government to conduct industrial undertakings as a measure of unemployment relief or preventing unemployment. The provisions of the Industrial Disputes Act and the Industrial Employment Standing Orders Act which are applicable to normal industrial undertakings are declared by notification not to apply to this undertaking. Section 4 expressly excludes the application of any other law, usage, custom, contract, etc. and provides that all agreements, settlements, awards or standing orders made under these Acts referred to in the Second Schedule shall be suspended to be in operation. In other words, by reason of the declaration as a relief undertaking the respondent-mills has all the attributes of a State agency or instrumentality.
10. In a recent decision of ours in W.P. No. 818 of 1975. dated 29th July, 1977,after considering a number of decisions of the Supreme Court including the decisions relied on by the respondents referred to at the commencement of this judgment, we observed that the present view of the Supreme Court is that a writ petition does not lie against a co-operative society especially as against an order terminating the services of an employee. We are, therefore, unable to agree to the extreme contention of Sri Kannabiram that even treating the respondent as an ordinary co-operative society the writ petition would be maintainable. But Sri Kannabiram submitted that it is un necessary for him to go so far as the respondent stands on a special footing. In view of the fact that it has been declared as a relief undertaking, his contention is that it is an agency or an instrumentality of the State and hence falls within the definition of ' State ' under Article 12 of the Constitution.
11. Article 12 of the Constitution defines ' State ' in Part III of the Constitution as including the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. The question as to whether, any local or other authority is a 'State', within the meaning of this Article and what are the tests to be applied in order to ascertain whether such authorities can be regarded as 'State' has been the subject-matter of innumerable decisions. It is sufficient to refer to the leading decisions of the Supreme Court in Rajasthan Electricity Board v. Mohan Lal : (1968)ILLJ257SC and Sukhdev Singh v. Bhagatram : (1975)ILLJ399SC , where all the previous decisions on the subject were exhaustively considered. In the first case it was held that the expression ' authority' in Article 12 was wide enough to include all bodies created by a statute on which power are conferred to carry out Governmental or quasi-Governmental functions. It is not material that some of the powers conferred may be for the purpose of carrying on commercial activities. It was held that the Electricity Board was a 'State' within Article 12. In this connection importance was attached to the circumstances that it could give directions, disobedience of which was punishable as a criminal offence. In the second case the Supreme Court had to consider whether the Life Insurance Corporation, Oil and Natural Gas Commission and the Industrial Finance Corporation are authorities within the meaning of Article 12 of the Constitution. Speaking for himself and on behalf of Chandrachud, Gupta, JJ' A.N. Ray, C.J., held that these bodies are authorities within the meaning of Article 12 of the Constitution and the employees of these statutory corporations are entitled to claim protection of Articles 14 and 16. The Supreme Court pointed out that these are statutory bodies created by a statute as distinguished from other bodies like companies which merely come into existence in accordance with the provisions of the statute and are merely governed by the provisions of that statute. After considering the provisions of the enactment under which each of the bodies was constituted in detail, the Supreme Court held that each of the bodies was an instrumentality or agency of the Government. Mathew, J., in a separate judgment observed that it is difficult to give a categorical answer to the question whether an act of a privately owned and managed operation which receives direct financial aid from the State is an act of State. There is no formula to divide cases into neat categories of State action and private action. It may, however, be stated generally that State financial aid alone does not render the institution receiving such aid a State agency. Financial aid plus some additional factor might lead to a different conclusion. A mere finding of State control also is not determinative of the question since a State has considerable measure of control under its police power overall types of business operators. A finding of State financial support plus an unusual degree of control over the management and policies might lead to characterize an operation as State action. Another factor, which according to Mathew, J., may be considered is whether the operation is an important public function. The combination of State aid and the furnishing of an important public service may result in a conclusion that the operation should be classified as a State agency. After considering the various provisions of the Life Insurance Corporation Act, Oil and Natural Gas Com mission Act and the Industrial Financial Corporation Act he held that the Corporations are agencies or instrumentalities of the State and are. therefore, ' State ' within the meaning of Article 12. The fact that these Corporations are independent personalities in the eye of law does not mean that they are not subject to control of the Government, or that they are not instrumentalities of the Government. The Madras High Court had to consider the position of National Insurance Co. in K.G. Mathew v. National Insurance Co. (1976) 32 F.L.R. 337. Though the company was registered under the Companies Act and could not be held to be a department of the Government it was held that the control and supervision which the Government exercises over its affairs would make it an authority under Article 12 of the Constitution. The Court after considering the provisions of the General Insurance Business (Nationalisation) Act, 1972, observed that the provisions clearly indicate that the company cannot claim functions independent of the Central Government and what it does is only under the general directions and control of the Central Government. The company should, therefore, be taken as an authority to which & writ lies under Articles 12, 226 of the Constitution as also a ' State ' within the meaning of Article 12 and a writ petition directed against the National Insurance Company is maintainable.
12. In the light of the above decisions it has ?to be considered whether the respondent-mills as a 'State' within the meaning of Article 12. Though in the first instance it was only a co-operative society like any other co-operative society, its character was completely changed by its being included in Schedule to the Relief Undertakings Act and by its being declared as a relief undertaking. We have already set but in detail the relevant provisions of the Act. The Act was intended to enable the Government to conduct certain industrial undertakings as a measure of unemployment relief or of preventing unemployment in the State. Section 3(1) provides that a relief undertaking is to be conducted to serve as a measure of unemployment relief or of preventing unemployment. Under S. 4, such of the laws in the second schedule as may be notified have no application to the institution and two of the laws that were notified were Industrial Disputes Act and Industrial Employment Standing Orders Act. The Government has the power to suspend the operation of agreements, settlements, awards, etc., Even the rights, privileges, obligations, etc., accrued or incurred before the under taking was declared a relief undertaking and any remedy for the enforcement thereof shall be suspended. Thus, it is clear that by reason of its declaration as a relief undertaking the institution which was ordinarily a co-operative society in the first instance became practically an instrument or agency of the State for the specific purpose of affording unemployment relief and preventing unemployment. In other words it would be in the position of an agent or instrumentality of the State. In the words of Mathew, J. in Sukhdev Singh v. Bhagatvam : (1975)ILLJ399SC , there is here State financial support plus an unusual degree of control over the policies and management after it is declared as a relief undertaking. The operation of the mills has also become an important public function as the main purpose of the Act and the declaration as a relief undertaking is to provide unemployment relief. We are, there fore, of the view that the case before us is analogous to the cases of the various bodies considered by the Supreme Court in Sukhdev Singh v. Bhagatram (supra) which were held to be agencies of the Government, having regard to the provisions of the Acts under which they were incorporated. It is no doubt true that the Supreme Court was concerned with institutions which were incorporated under a statute; whereas in this case we are concerned with a co-operative society which in the first instance was not incorporated under a statute but was an institution which was merely governed by the provisions of a statute. But as we have pointed out there was a complete metamorphosis in the character of the institution when it was declared as a relief undertaking under the provisions of the Relief Undertakings Act. On and from that date, having regard to the provisions of the Act we are of the view that, in its capacity as a relief undertaking, it was a body constituted as such by a statute, viz., the Relief Undertaking Act and it, therefore, acquired the character of a ' State ' or authority within the meaning of Article 12 of the Constitution. It is true that the notification under the Act is to have effect only for a period of 12 months but under Section 3(2) the notification is renewable from time to time for a further period not exceeding 12 months provided that all the periods in the aggregate do not exceed five years. So long as the notification is in operation and the institution is regarded as a relief undertaking it would be an instrumentality of the State and would, therefore, fall within the definition of ' State ' under Article 12 of the Constitution.
13. It is no doubt true that one of us, Kuppuswami, J. in the order of reference to the Bench stated that as the notification made under Section 4(1) of the Act refers only to the Industrial Disputes Act and the Industrial Employment Standing Orders Act, the Co-operative Societies Act continued to be applicable to the petitioner and hence it could not be said that the respondent ceased to be a co-operative society, and therefore, the preliminary objection regarding the maintainability of the writ against co-operative societies falls to be considered. But at that time attention was not drawn to the decision in Sukhdev Singh v. Bhagatram (supra). Further at the time of the final hearing we had the benefit of hearing elaborate arguments by both sides on the effect of the Reliefs Undertaking Act and the declaration that the petitioner is a relief undertaking made thereunder which was not available at the time when the order of reference was made.
14. It is not denied that no notice was given to the petitioners when their services were terminated. In the termination order which is set out in extenso in the earlier part of this judgment it was stated that there were rival groups of workers which were engaged in violent acts and this resulted in a clash among the workers on the night of 23rd May when one worker died and a number of workers were injured. The police charge-sheeted some of the workers for murder and rioting and cases are pending against others under the security proceedings. The management was helpless to hold any enquiry into the reports for want of anybody forthcoming to depose due to fear and as it was found that the workers against whom termination orders were issued adopted terrorist activities like murder and rioting and security proceedings are pending, the continuation of their services was not in the interest of the peaceful working of the mill and their services were terminated. It is clear that these orders of termination were by way of punishment for the various reasons set out in the order. No opportunity was given to the petitioners to show cause against the termination of their services. No enquiry was held and no evidence was taken. Further it is clear from the writ petition that several other workers also were charge-sheeted for murder and security proceeding were pending against them. Out of 52 persons involved in the security proceedings, only 16 were chosen for the purpose of terminating the services. Against petitioners 17 to 28 there are no charges at all. The counter-affidavit does not disclose any basis for picking out the petitioners alone for terminating the services and leaving out the others. It is clear therefore that the termination of the services is not only contrary to the principles of natural justice but also discriminatory and violative of Article 14 of the Constitution. We, therefore, hold that the orders of termination of the services of the petitioners are liable to be quashed.
15. The order will not preclude the management of the mill from issuing separate notices to the various workers and after giving an opportunity to them to show cause why their services should not be terminated and conducting a domestic enquiry to take such action as may be necessary.
16. The writ petitions are allowed, but in the circumstances without costs.
17. An oral application is made on behalf of the respondent for leave to appeal to the Supreme Court. As we are of the view that a substantial question of law of general importance which requires consideration by the Supreme Court is involved, we grant leave to the respondent to appeal to the Supreme Court under Article 133(1) of the Constitution.