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The Industrial Finance Corporation of India Vs. Delhi Administration and Two ors. - Court Judgment

LegalCrystal Citation
SubjectIntellectual Property Rights
CourtDelhi High Court
Decided On
Case NumberLetter Patent Appeal No. 155 of 1972
Judge
Reported in[1973(27)FLR207]; ILR1973Delhi29; 1974LabIC223
ActsConstitution of India - Article 12
AppellantThe Industrial Finance Corporation of India
RespondentDelhi Administration and Two ors.
Advocates: F.S. Nariman,; I.N. Shroff,; H.S. Parihar,;
Cases ReferredLtd. v. Their Workmen
Excerpt:
labour and industrial - industrial dispute - articles 12 and 16 (1) of constitution of india - appellant corporation established for making credits to industrial concerns - committee formed for recommending promotions - candidates interviewed for promotion to post of superintendents - some candidates rejected on basis of seniority cum merit - dispute raised by employees' association - petition filed by corporation stating that dispute raised not industrial dispute - question whether there was any victimisation or discrimination with regard to promotion of workmen - plea of discrimination based on provisions of article 16 (1) was part of industrial dispute - dispute on basis of pleas of victimisation and discrimination was industrial dispute - discrimination mentioned in term of reference.....t.v.r. tatachari, j. (1) this letters patent appeal filed against the judgment of a learned single judge (v.s. deshpande, j.) of this court, dated march 21, 1972, dismissing civil writ petition no. 1060 of 1971, came up before s.n. andley, c.j., and t.p.s. chawla, j. in the first instance. two connected questions viz., (1) whether the appellant, the industrial finance corporation of india, which was established under the industrial finance corporation act, 1948, is an 'authority' within the meaning of article 12 of the constitution of india, and (2) whether promotion of an employee of the appellant corporation is a managerial function and is not, thereforee, covered by the definition of 'industrial dispute' under the industrial disputes act, 1947, are involved in the appeal. the division.....
Judgment:

T.V.R. Tatachari, J.

(1) This Letters Patent Appeal filed against the judgment of a learned single Judge (V.S. Deshpande, J.) of this Court, dated March 21, 1972, dismissing Civil Writ Petition No. 1060 of 1971, came up before S.N. Andley, C.J., and T.P.S. Chawla, J. in the first instance. Two connected questions viz., (1) whether the appellant, the Industrial Finance Corporation of India, which was established under the Industrial Finance Corporation Act, 1948, is an 'authority' within the meaning of Article 12 of the Constitution of India, and (2) whether promotion of an employee of the appellant Corporation is a managerial function and is not, thereforee, covered by the definition of 'industrial dispute' under the Industrial Disputes Act, 1947, are involved in the appeal. The Division Bench considered that there was some conflict in the various decisions cited before them on the first question, and that the second question also was of sufficient importance to be dealt with by a larger Bench, and in that view directed that the appeal be heard by a larger Bench. It is thus that the Letters Patent Appeal has come up for disposal before this Full Bench.

(2) For a proper appreciation of the questions that arise for determination, it is necessary to state the facts which have given rise to this Letters Patent Appeal. The appellant Corporation, viz., the Industrial Finance Corporation of India, was established under the Industrial Finance Corporation Act, No. 15 of 1948, for the purpose of making medium and long term credits more readily available to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or recourse to capital issue methods is impracticable. It is a body corporate having a perpetual succession and a common seal with power to acquire, hold and dispose of property, and can by the said name sue or be sued. The Head Office of the Corporation is at New Delhi, and it has established offices at various other places. The management, i.e. general superintendence and direction of the affairs and business of the Corporation, is vested in the Board of Directors which is empowered to delegate to the Chairman or any officer of the Corporation such of the powers and duties as it may deem necessary. The Board delegated to the Chairman the power to sanction appointments, promotions and removal from service of all employees except those belonging to Senior Officer's Grade subject to a right of appeal to the Board of Directors. The Board also approved the formation of a Committee of Senior Officers for recommending promotions for levels junior to Inspectors (now Accounts/Loans Officers, etc.).

(3) The aforesaid Committee of Senior Officers interviewed 17 Assistants and one Selection Grade Stenographer for the purpose of forming a panel for the year 1970 for promotion to the posts of Superintendents as and when occasion for such promotion arises. The Committee examined the cases of all the candidates on the basis of seniority-cum-merit, and recommended unanimously that out of the candidates interviewed, 8 named candidates were not fit to be put on the panel, and that the remaining candidates were fit to be so placed. The said recommendation was accepted by the Chairman of the Corporation, Thereupon, the Industrial Finance Corporation Employees' Association made a representation on June 16, 1970, inter alia, that the recommendation of the Committee should have been made on the basis of seniority only and not on the basis of seniority-cum-merit, that the usual criteria of selection were not kept in view by the Selection Committee, and that one of the Members of the Committee, Shri Sitaraman, was biased against two of the candidates. The management of the Corporation did not accept the said representation.

(4) Then, on July 30, 1970, the Employees' Association made a representation to the Assistant Labour Commissioner, Delhi, and on August 3, 1970,''the said Assistant Labour Commissioner wrote to the Corporation asking the latter to offer its comments on the said representation. The Corporation sent its comments on or about August 20, 1970, and also sent some further communications explaining its stand and submitting, inter aha, that the dispute sought to be raised by the Employees' Association was not an 'industrial dispute' within the meaning of the Industrial Disputes Act, 1947. Ultimately, on January 21, 1971, the Assistant Labour Commissioner made a 'failure report' under section 12(4) of the Industrial Disputes Act to the Delhi Administration. Thereupon, by an order. No. F.24(48)/71-Lab' dated August 30, 1971 (Annexure A), the Lt. Governor, Delhi, made areference to the Additional Industrial Tribunal under sections 10(1)(d) and 12(5) of the Industrial Disputes Act, 1947. The terms of reference read as under :-

'TERMSof Reference Whether there has been any victimisation or discrimination in the case of the following workmen with regard to their promotion to the post of Superintendent and if so, what directions are necessary in this respect 1. Sliri V. Sriniwasan. 2. Shri P. V. P. Nambiar. 3. Shri N. S. Swaminathan. 4. Shri M. N. Jhanji. 5. Shri P. K. Dass Gupta. 6. Shri K. N. L. Bhatnagar. 7. Shri R. L. Juneja. 8. Smt. K. K. Kaushal.'

(5) The reference was subsequently numbered as I.D. 55 of 1971. On receiving a notice (Annexure B), dated September 2, 1971, from the Tribunal, the Corporation filed its objections before the Tribunal wherein it questioned the legality and validity of the order of reference, dated August 30, 1971, and the reference, I.D. 55 of 1971, as also the jurisdiction of the Tribunal to entertain and adjudicate upon the reference. It also filed a writ petition, Civil Writ Petition No. 1060 of 1971, in this Court on September 23, 1971, contending, inter alia, that the order of reference and the reference were incompetent and illegal, that promotion was a function of the management within the exclusive discretion of the employer Corporation and no employee thereof could claim promotion as a matter of right, that the claim by the employees or the Employees' Association in regard to promotion was not an 'industrial dispute' within the meaning of the Industrial Disputes Act, 1947, and that the Act did not authorise or entitle the Government to refer for adjudication a dispute said to exist regarding promotion on a mere allegation of victimisation or discrimination made by the workmen, however false or baseless such allegation may be. The Corporation prayed for the issuance of an appropriate writ, order or direction quashing the aforesaid order of reference, dated August 30, 1971 the reference I.D. No. 55 of 1971, and the notice dated September 2,1971.

(6) The respondents to the writ petition were (1) The Delhi Administration ; (2) Shri Bir Singh, Presiding Officer, Additional Industrial Tribunal, Delhi, and (3) The Industrial Finance Corporation Employees' Association. In opposition to the writ petition, the Employees' Association (Respondent 3) filed a counter affidavit of its General Secretary. He asserted that there was victimisation and discrimination in the matter of promotion, and that though promotion was normally a part of the management's function, if in promoting one employee in preference to another the management was actuated by malicious considerations, or if the failure to promote an eligible person amounted to an unfair labour practice, the Industrial Tribunal could grant relief in appropriate cases as observed by the Supreme Court in Brooke Bond India Private Ltd. V. their workmen 1962 (5) F.L.R. 368, (1). He submitted that the High Court of Allahabad observed in Upper Doab Sugar Mills Ltd. ShamU v. State of Uttar Pradesh and others 1961 (3) F.L.R. 295, (2) that a matter relating to promotion could be an 'industrial dispute'. He also gave his answers to the other statements made in the various paragraphs of the writ petition, and to the ground set out in the writ petition. In answer to grounds Nos. 4 to 7, 10, Ii, 14, and 19, he submitted that the petitioner Corporation was included within the definition of 'State' in Article 12 of the Constitution of India for the purposes of Part Iii of the Constitution, and thereforee, the workmen of the Corporation, by virtue of Article 16(1) of the Constitution had a fundamental right of equality of opportunity even in matters relating to promotion. He reiterated that the dispute which was referred to the Additional Industrial Tribunal fell within the ambit of 'industrial dispute' as defined in section 2(k) of the Industrial Disputes Act.

(7) The civil writ petition was heard by V.S. Deshpande, J. It was contended on behalf of the Corporation, inter alia, that the reference should be quashed on the ground that in law there was no 'industrial dispute' between the parties within the meaning of section 2(k) of the Industrial Disputes Act which could form the subject matter of the reference.

(8) By his judgment, dated March 21, 1972, the learned Judge rejected the said contention and dismissed the writ petition. In his judgment, the learned Judge pointed out that the definition of the expression 'industrial dispute' in the Industrial Disputes Act was analysed into three elements by S.K. Das. J. in Workmen of Dimakuchi Tea Estate (Assam Chah Karamchari Sangho) V. Dimakuchi Tea Estate 1958 (1) Llj 500 (3), namely, (1) the factum of real or substantial dispute, (2) the parties to the dispute, and (3) the subject matter of the dispute. The learned Judge observed that the second element was satisfied in the present case. As regards the third element, it appears that it was argued on behalf of the Corporation that the said element was not satisfied on the ground that the workmen had no right to promotion which was entirely in the discretion of the Corporation. Referring to the said argument, the learned Judge held that had it been purely a case of master and servant, such a contention could have been tenable; that the Corporation, however, was a statutory Corporation and as such was a 'Stale' within the meaning of Article 12 of the Constitution in view of the decision of the Supreme Court in Rajasthan State Electricity Board. V. Mohan Lal and others Air 1967 S.C. 1956, (4) that consequently Article 16 of the Constitution was applicable and according to it. the State was required to grant equality of opportunity in matters relating to employment under the State; that the Employees' Association (respondent 3) had alleged that the usual criteria of selection were not kept in view by the Selection Committee and that one of the officers of the Selection Committee was biased against two of the workmen; that while the truth or otherwise of the said allegations was to be determined by the Industrial Tribunal, the Court could consider whether an industrial dispute existed in law between the parties on the assumption that the allegations made by the workmen were true; that if the allegations were true they would amount to arbitrary discrimination among similarly situated employees who were entitled to be considered fairly and impartially for the purpose of promotion; and that it could not, thereforee, be said that the third element of the definition was not satisfied in the present case.

(9) As regards the first element of the definition, the learned Judge sub-divided the same into (a) the existence of a dispute as a fact and (b) whether it amounted to an 'industrial dispute' in law. As regards the first of them, learned Judge pointed out that the question of fact whether a dispute or difference existed between the employer and the employees or whether such a dispute or difference was apprehended was for the Government alone to decide; that there could be no judicial review by the Court about the satisfaction of the Government on that question provided that the satisfaction was based on facts as held in the State of Madras V. C.P. Sarathy : (1953)ILLJ174SC ; (5) and that in the present case it could not be denied that facts were brought to the notice of the appropriate Government about the dispute between the parties and there was material before the appropriate Government to be satisfied that the facts constituting the dispute existed. As regards the second subelement, the learned Judge observed that while on the one hand the discretion to promote an employee was of the employer and the employee had no right to be selected for promotion, on the other hand the criteria for promotion employed by the employer must, in view of Article 16 of the Constitution, be relevant to the object of the promotion that the workmen stated that the standard criteria were not used by the Selection Committee while the Corporation asserted that they were so used; and that though the Corporation was a Statutory Corporation financed by the Government and its Chairman was a very responsible person, it could not be said that an 'industrial dispute' did not exist in law when the workmen made the aforesaid allegations, merely because the Corporation had denied the same. In that view, the learned Judge held as follows :-

'Ifind, thereforee, that an industrial dispute in law existed in relation to all the workmen because of these two allegations, namely, (1) that the usual criteria of selection were not observed by the Selection Committee, and (2) that Shri Sitaraman was biased against two of the workmen. The scope of the reference would, thereforee, be limited to the investigation of these two allegations only. The reference being limited to 8 workmen only, the allegation that 3 instead of 2 should have been called for interview for each of these 9 posts cannot be called to be an industrial dispute relating to these 8 workmen. For, all these 8 workmen were called for interview. The reference does not cover the workmen who were not called for the interview. thereforee, it does not cover any industrial dispute which relates to them.'

(10) In the result, the learned Judge dismissed the writ petition. As already stated, it is against the said judgment that the present Letters Patent appeal has been filed and has been placed before this Full Bench.

(11) It has to be noted that the main ground in the writ petition against the validity of the reference under sections 10(l)(d) and 12(5) of the Industrial Disputes Act was that the dispute sought to be raised by the Employees' Association was not 'an industrial dispute' within the meaning of the said Act. The terms of reference mentioned (a) victimisation and (b) discrimination with regard to the promotion of the employees or workmen to the posts of Superintendent . So far as victimisation is concerned, it cannot be doubted that the question as to whether there was victimisation or not is a dispute or difference between the employer Corporation and the workmen or employees which is connected with the employment or conditions of labour, and is as such an 'industrial dispute' as defined in section 2(k) of the Industrial Disputes Act.

(12) As regards discrimination mentioned in the terms of reference, the contention of the Employees' association was that the Industrial Finance Corporation of India is a statutory Corporation and is included within the definition of 'State' in Article 12 of the Constitution of India for the purposes of Part Iii thereof and, thereforee, the workmen or employees of the Corporation, by virtue of Article 16(1) of the Constitution, had a fundamental right of equality of opportunity even in matters relating to promotion, that in view of the provision in Article 16(1) of the Constitution the criteria of promotion employed by the Corporation must be relevant to the object of promotion, that in the instant case the standard criteria of selection were not observed by the Selection Committee and one of the members of the Committee, Shri Sitaraman, was biased against two of the workmen, and that there was thus an arbitrary discrimination among similarly situated employees who were entitled to be considered fairly and impartially for the purpose of promotion, and hence there was an 'industrial dispute' within the meaning of the Industrial Disputes Act. On the other hand, the contention of the Corporation was that promotion was a function of the management within the exclusive discretion of the employer Corporation and no employee there of could claim promotion as a matter of right, that there could not, thereforee, be a dispute between the Corporation and the workmen or employees regarding promotion and consequently there could not also be any 'industrial dispute' regarding promotion, that the Corporation was not included within the definition of 'State' in Article 12 of the Constitution of India for the purposes of Part Iii of the Constitution, and, thereforee, the workmen or employees of the Corporation could not claim to be governed by the provision in Article 16(1) of the Constitution, and that the dispute sought to be raised by the Employees' Association was not, thereforee, an 'industrial dispute' within the meaning of the Industrial Disputes Act. As stated earlier, the learned single Judge held that the Corporation, being a statutory Corporation, was included in the definition of 'State' in Article 12 of the Constitution , that Article 16(1) of the Constitution was consequently applicable to the workmen or employees of the Corporation, and that there was, thereforee, an 'industrial dispute' in view of the allegations of discrimination made by the employees and the Employees' Association.

(13) Shri Nariman, learned Council for the appellant Corporation, contended that the aforesaid view of the learned single Judge was incorrect. The point for determination, thereforee, is whether Article 16(1) of the Constitution is applicable to the workmen or employees of the appellant Corporation. The said Article occurs in Part Iii of the Constitution and provides that 'there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.' The term 'State' has been defined in Article 12 which also occurs in Part Iii of the Constitution. Article 12 reads as follows :-

'INthis Part, unless the-context otherwise requires, 'the State' includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India.'

(14) The question, thereforee, is whether the Industrial Finance Corporation of India, the appellant in this appeal, is a 'State' within the meaning of Article 12. It is obvious that it would be a 'State' only if it falls within the words 'other authorities within the territory of India or under the Control of the Government of India'.

(15) In dealing with the above question, it has to be borne in mind that the question of being a 'State' within the meaning of Article 12 is material only for the purpose of application of the provisions contained in the Articles in Part Iii in which the words 'the State' occur. The said question is not material in the matter of exercise of jurisdiction by a High Court under Article 226 of the Constitution. The issuance of a writ or order or direction under Article 226 depends upon the existence of the well established conditions for such issuance and not upon the question whether the definition of 'State' in Article 12 is satisfied in the case. Thus, as held by the High Court of Calcutta in Kartick Chandra V. W.B.S.I. Corporation. : AIR1967Cal231 'even though a body of persons may not constitute a 'State' within the definition of Article 12. a writ under Article 226 may sometimes lie against it on non-constitutional grounds or on ground of contravention of provisions of the Constitution, outside Part III.' We have referred to this aspect only to emphasise that the question of being a 'State' within the meaning of Article 12 is not to be mixed up with the question of issuance of a writ. order or direction under Article 226.

(16) Coming now to the definition of the words 'the State' in Article 12, as pointed out by the Supreme Court in K. K. Kochunni V. State of Madras. : AIR1959SC725 and in Basheshar Nath V. Income-tax Commissioner, : [1959]35ITR190(SC) , Article 12 gives an extended meaning to the words 'the State' wherever they occur in Part Iii of the Constitution, and unless the context otherwise requires 'the State' will include not only the Executive and Legislative organs of the Union and the States, but also local bodies such as municipal authorities as well as 'other authorities within the territory of India or under the control of the Government of India.'

(17) The connotation of the words 'other authorities within the territory of India or under the control of the Government of India' has been considered by various High Courts. Prior to the decision of the Supreme Court in Rajasthan State Electricity Board V. Mohan Lal A.I.R. 1967 S.C. 1856. some of the High Courts had taken the view that the expression 'other authorities' which occurs in Article 12 was to be interpreted ejusdem generis with the authorities mentioned in the previous portion of the Article and could, thereforee, refer only to authorities similar to those already enumerated. In that view, it was held in those decisions that the expression 'other authorities' used in Article 12 means only authorities exercising 'governmental functions' or which can be regarded as 'instrumentalities of the Government' i.e. only a person or group of persons who exercise the legislative or executive functions of the State or through whom or the instrumentality of whom the State exercises its legislatives or executive power. (Vide The University of Madras V. Shantha Bai A.I.R. 1054 Mad 67; Vicaruddin V. Osmania University A.I.R. 1954 Hyd. 25; Amrita Bazar Patrika Ltd. V. Board of High School and Intermediate Education U.P., : AIR1955All595 ; (ii) Madho Singh V. The State Air 1957 Raj 206 ; Smt. Ena Ghosh V. State of West Bengal, : (1963)ILLJ138Cal S.K. Mukherjee V. Chemicals and Allied Products Export Promotion Council, : (1962)ILLJ475Cal ; B.W.Devdas V. The Selection Committee for Admission for the Karnatak Engineering College A.I.R. 1964 Mys. 6 : V.N. Parameswaran V. Principal. Medical College I.L.R. (1966) Ker 339 ; and Krishna Gopal Ram V. Punjab University, ; on the other hand in Air 1956 Trav-Cochin 19 and Mohan Lal V. Rajasthan State Electricity Board, acontrary view was taken, and on appeal from the said decision of the Rajasthan High Court, i.e. in Rajasthan State Electricity Board V. Mohan Lal. : (1968)ILLJ257SC , the Supreme Court, confirming the High Court's decision, held by a majority that the rule of ejusdem generis is not applicable to the interpretation of the words 'other authorities' in Article 12 for the reason that the said rule is applicable only to cases in which there is a distinct genus or category running through the bodies already named, and it cannot be said with regard to the bodies mentioned in Article 12 in the expressions occurring before the words 'other authorities' that there is any such genus or category running through such bodies. Hence, the view taken in the decisions of the High Courts mentioned above that the rule ofejusdem generis is applicable is no longer good law.

(18) Prior to the decision of the Supreme Court in the aforesaid case of the Rajasthan State Electricity Board, there were some decisions of the Supreme Court in which observations were made regarding the definition, of 'State' in Article 12. In Bidi Supply Co. V. Union of India and others, : [1956]29ITR717(SC) , it was ovserved at page 484 that 'the State' includes its Income tax Department, and it was held that the said Department had by an illegal order denied to the petitioner (Bidi Supply Co.), as compared with other Bidi merchants who were similarly situate, equality before the law or the equal protection of the laws and the petitioner could legitimately complain of an infraction of his fundamental right under Article 14 of the Constitution.

(19) In Basheshar Nath V. Income-tax Commissioner, : [1959]35ITR190(SC) , the Supreme Court observed at page 158 that 'by virtue of Article 12, 'the State' which is. by Article 14, forbidden to discriminate between persons includes the Government and Parliament of India and the Government and the legistlature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India', and that 'Article 12 includes the executive organ'.

(20) In K. K. Kochunni V. Stele of Madras, : AIR1959SC725 , it was observed at page 730 that the Madras Legislature was within the expression 'State' as defined in Article 12.

(21) In Smt. Ujjam Bai V. State of Uttar Pradesh Air 1962 S.C. 1621. the question as to whether the expression 'the State' in Article 12 includes a Court or a tribunal having jurisdiction to decide judicially or the judicial department of the State was left open by S. K. Das and Kapur, JJ. (in paragraphs 8 and 62). In paragraph 59, Kapur, J. observed that there was no dispute that the Sales Tax Department is a department of the State. In paragraph 98, Subbarao J. observed that 'it is manifest that authorities constituted under the Sales Tax Act for assessing the tax would be 'other authorities' within the meaning of Article 12; for the said authorities exercise governmental functions and are the instrumentalities of the government'. In paragraph 118, Hidayatullah, J. observed that 'the taxing departments are instrumentalities of the State..............................and are within the definition of 'State' in Article 12.' In paragraph 152, Rajagopala Ayyangar J. observed as follows:-

'AGAINArticle 12 winds up the list of authorities falling within the definition by referring to other authorities' within the territory of India which cannot obviously be read as ejusdem generis with either the Government and the Legislatures or local authorities. The words are of wide amplitude and capable of comprehending every authority created under a statute and functioning within the territory of India. There is no characterisation of the nature of the 'authority' in this residuary clause and consequently it must include every type of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws. .................................... The article refers to the government (of the Union and of the States) as within the definition of a 'State'. It is. however, admitted that both the Government of the Union as well as of the State, function as quasi-judicial authorities under various statutory enactments. The question would at once arise whether when the 'Government' exercises such power it is deemed to be a 'government' falling within the definition of 'State' or should be classified as a judicial authority wielding ''the judicial power of the State' so as to be outside the definition, so that its decisions and orders do not give rise to a violation of a fundamental right. Article 12 on any reasonable construction cannot permit the dissection of 'government' for the purpose of discovering the nature of the quality of the powers exercised by it into the three fields of executive pure and simple, judicial and legislative for the purpose of a fresh reclassification into certain categories. ...................................................... In other words, the reference to the Government and the Legislature in the definition is a reference to them as institutions known by that name and is not with a view to describe their particular functions in the body politic.'

(22) In paragraph 174. Mudholkar.J. observed that a taxing authority is an instrumentality of the State.

'INK. S. Ramamurthy V. Chief Commissioner, Pondicherry, : [1964]1SCR656 , the Supreme Court held that the words 'under the control of the Government of India' in Article 12 qualify the word 'authorities' and not the word 'territory': ard that the last part of Article 12 on its true interpretation would read as 'all local or other authorities within the territory of India or all local or other authorities under the control of the Government of India.'

(23) Next came the decision of the Supreme Court in Rajasthan State Electricity Board V. Mohan Lal. : (1968)ILLJ257SC .

(24) In that case, the Rajasthan State Electricity Board was a body corporate constituted under the Electricity (Supply) Act No. 54 of 1948. One Mohan Lal who was held to be holding the post of Assistant Engineer under the Board, filed a writ petition in the High Court of Rajasthan claiming, inter alia. that he was entitled to equality of treatment with certain other Assistant Engineers and. in as much as he had not been considered for promotion with them by the Board, the Board had acted in violatio of Articles 14 and 16 of the Constitution. The Board contested the petition, inter alia. on the ground that the Board could not be held to be 'State' as defined in Article 12 of the Constitution and. consequently, no direction could be issued to the Board by the High Court under Article 226 or 227 of the Constitution on the basis that the action of the Board had violated Articles 14 and 16 of the Constitution. The High Court rejected the contentions of the Board, quashed the promotions of the other Assistant Engineers, and issued a direction to the Board to consider the promotions afresh after taking into consideration the claims of Mohan Lal The Board preferred an appeal to the Supreme Court, and one of the contentions of the Board was that it could not be held to be 'State ' within its meaning in Article 12 of the Constitution. We are concerned only with that contention for the purposes of the present Letters Patent Appeal.

(25) It was obvious that the Board could not be held to be covered by the authorities named in Article 12. Viz.. the Government and the Parliament of India and the Government and the Legislature of the State of Rajasthan and local authorities. The question, thereforee. was whether it could be held to be covered by the words 'other authorities within the territory of India or under the control of the Government of India.' In dealing with the said question. Bhargava J., who pronounced the main judgment, after referring to the decisions of the High Courts of Madras, Mysore and Punjab in University of Madras V. Shantha Bai (supra), B. W. Deradas V. Selection Committee (supra) and Krishan Gopal V. Punjab University (supra) respectively, observed as follow :-

'INour opinion, the High Courts fell into an error in applying the principle of ejusdem generis when interpreting the expression 'other authorities' in Article 12 of the Constitution, as they overlooked the basic principle of interpretation that, to invoke the application of ejusdem generis rule, there must be a distinct genus or category running through the bodies already named................................................ In Article 12 of the Constitution, the bodies specifically named are the Executive Governments of the Union and the State, the Legislatures of the Union and the States, and leeal authorities. We are unable to find any common genus running through these named bodies, nor can these bodies be placed in one single category on any rational basis. The doctrine of ejusdem gensris could not, thereforee, be applied to the interpretation of the expression 'other authorities' in this article'.

(26) The learned Judge next referred to the meaning of the word 'authority' given in Webster's Third New International Dictionary viz.,-

'Apublic administrative agency or corporation having quasi governmental powers and authorised to administer a revenue producing public enterprise',

and observed as follows:-

'THISdictionary meaning of the word 'authority' is clearly wide enough to include all bodies created by a statute on which powers are conferred to carry out governmental or quasigovernmental functions. The expression 'other authorities' is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India; and we do not see any reason to narrow down this meaning in the context in which the words 'other authorities' are used in Article 12 of the Constitution'.

(27) The learned Judge next referred no the observation of Rajagopala Ayyangar J. in Ujjam Bai V. State of Uttar Pradesh (supra) which we have set out above, wherein Ayyangar, J. observed that the words 'other authorities' could not be read as ejusdem generis with the bodies specified earlier in the article, and that the said words include-

'EVERYtype of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws'.

(28) The learned Judge next referred to the following observation in K. S. Ramamurthy Reddiar V. The Chief Commissioner, Pondicherry (supra).

'FURTHER,all local or other authorities within the territory of India include all authorities within the territory of India whether under the control of the Government of India or the Governments of various States and even autonomous authorities which may not be under the control of the Government at all.'

(29) The learned Judge then observed that the said decisions support his view?

'THATthe expression 'other authorities' in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law'.

The learned Judge went on to observe as follows:-

'IT is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities. ............................................. The State, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution is further specifically empowered under Article 298 to carry on any trade or business. The circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, thereforee, give any indication that the Board must be excluded from the scope of the word 'State' as used in Article 12. On the other hand, there are provisions in the Electricity Supply Act which clearly show that the powers conferred on the Board include power to give directions, the disobedience of which is punishable as a criminal offence. In these circumstances, we do not consider it at all necessary to examine the cases cited by Mr. Desai to urge before us that the Board cannot be held to be an agent or instrument of the government. The Board was clearly an authority to which the provisions of Part Iii of the Constitution were applicable'.

(30) In the result, the learned Judge confirmed the direction given by the High Court and dismissed the appeal. J. C. Shah J. pronounced a separate judgment but agreeing with the order proposed by Bhargava J. The learned Judge, however, gave his reasons in the following manner:-

'THEBoard is an authority invested by statute with certain sovereign power of the State. It has the power of promoting co-ordinated development, generation, supply and distribution of electricity and for that purpose to make, alter, amend and carry out schemes under Chapter V of the Electricity (Supply) Act, 1948; ............................................. to make rules and regulations for carrying out the purposes of the Act; and to issue directions under certain provisions of the Act and to enforce compliance with those directions. The Board is also invested by statute with extensive powers of control over Electricity Undertakings. The power to make rules and regulations and to administer the Act is in substance the sovereign power of the State delegated to the Board. The Board is, in my judgment, 'other authority' within the meaning of Article 12 of the Constitution. I am unable, however, to agree that every constitutional or statutory authority on whom powers are conferred by law is 'other authority' within the meaning of Article 12. The expression 'authority' in its etymological sense means a body invested with power to command or give an ultimate decision or enforce obedience or having a legal right to command and be obeyed.'

The learned Judge observed:

'INdetermining what the expression ''other authority' in Article 12 connotes, regard must be had not only to the sweep of the fundamental rights over the power of the authority, but also to the restrictions which may be imposed upon the exercise of certain fundamental rights (e.g. those declared by Article 19) by the authority ............................... The true content of the expression 'other authorithy,' in Article 12 must be determined in the light of this dual phase of fundamental rights. In considering whether a statutory or constitutional body is an authority within the meaning of Article 12, it would be necessary to bear in mind not only whether against the authority, fundamental rights in terms absolute are intended to be enforced, but also whether it was intended by the Constitution makers that the authority was invested with the sovereign power to impose restrictions on very important and basic fundamental freedoms.'

(31) In my judgment, authorities, constitutional or statutory, invested with power by law not sharing the sovereign power do not fall within the expression 'slate' as defined in Article 12. Those authorities which are invested with sovereign power, i.e., power to make rules or regulations and to administer or enforce them to the detriment of citizens and others fall within the definition of 'State' in Article 12, and constitutional or statutory bodies which do not share that overeign power of the State are not, in my judgment, 'States' within the meaning of Article 12 of the Constitution.

(32) It has to be recalled that the view of the learned single Judge in the present case was that in view of the decision in the case of Rajasthan State Electricity Board (supra), the appellant Industrial Finance Corporation, by virtue of its being a statutory Corporation, was 'authority' and hence 'State' within the meaning of Article 12 of the Constitution. Shri Nariman. learned counsel lor the appellant Corporation, contended that the various observations of the Supreme Court in Ujjam Bai's case (supra) and Rajasthan State Electricity Board's case (supra) cannot be construed as laying down that every statutory body. without anything more. would be 'other authority' and hence 'State' within the meaning of Article 12. On the other hand, Shri Jitendra Sharma, learned counsel for respondents', contended that the observations in the above decision do lay down that every statutory body would be 'other authority' and hence 'State' within the meaning of Article 12.

(33) On a consideration of the various observations of the Supreme Court which we have set out above, we are inclined to agree with the contention of Shri Nariman. It is true that in Ujjam Bai's case while Kapur, Subbarao, Hidayatulla and Mudholkar, JJ. observed that 'State' would include a department of the State or other authorities which exercise governmental functions or are instrumentalities of the State, .Rajagopala Iyengar J. observed that the words 'other authorities' are of wide implitude and capable of comprehending every authority created under a statute and functioning within the territory of India. But, it has to be noted that immediately after the said observation, the learned Judge observed that the words include every type of authority set up under a statute 'for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws'. Reading the observations together, it is clear that, according to the learned Judge, in order to be 'other authority' within the meaning of Article 12, it is not enough if a body or authority is set up under a statute, but it has also to be one which administers laws enacted by the Parliament or by the State or one vested with the duty to make decisions in order to implement the said laws.

(34) It is also true that in the Rajasthan State Electricity Board's case, Bhargava J. observed that the expression 'other authorities' is wide enough to include within it 'every authority created by a statute and functioning within the territory of India, or under the control of the Government of India'. But, just before making that observation, reference was made to the dictionary meaning of the word 'authority' and it was observed that the said word is wide enough to include all bodies created by a statute on which powers are conferred to carry out governmental or quasi-governmental functions. Then, after referring to the observation of Rajagopala Ayyangar J. in Ujjam Bai's case, and the passage in K.. Ramamurthy Reddiar's case in which the words 'even autonomous authorities which may not be under the control of the Government at all occured, the learned Judge observed that 'other authorities' in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law', and that it is not material if some of the powers conferred may be for the purpose of carrying on commercial activities, or for the purpose of promoting the educational and economic interests of the people. After making the said observations, the learned Judge pointed out that the Electricity Supply Act conferred powers on the Board 'to give directions, the disobedience of which is punishable as a criminal offence, and concluded that the Board was an 'authority' to which the provisions in Part Iii of the Constitution were applicable. Can it be said from the said observations that it was intended to lay down thereby that all statutory bodies or authorities are ipso facto 'other authorities' and hence 'States' whithin the meaning of Article 12 In other words, was it the ratio of the decisions mentioned above that the fact that a body or authority is constituted or set up under a statute is sufficient to constitute it an 'authority' and hence 'State' within the meaning of Article 12. On a consideration of the various observations referred to above, we are of the opinion that a body or authority cannot, by the mere fact that it has been constituted or set up by a statute, be regarded as an 'authority' and hence ' State' within the meaning of Article 12. To be such an 'authority', it should have functions and powers such as are mentioned or indicated in the aforesaid observations of the Supreme Court. Broadly stated, the said observations indicate that a body or authority constituted or set up by or under the Constitution or a statute within the territory of India or under the control of the Government of India would be an 'authority' and hence 'State' within the meaning of Article 12 if-

(1)it is an agent or instrument of the Government; or (2) it has been set up for the purpose of administering laws enacted by the Parliament or by the State, or has been vested with the duty to make decisions in order to implement those laws; or (3) it has been vested with powers to carry out governmental or quasi-governmental functions, or powers to give directions which are to be obeyed and command obedience of the same. or (4) it is invested with power to make rules or regulations and to administer or enforce them to the detriment of citizens and others.

(35) Shri Jitendra Sharma pointed out the observation of J. C. Shah J. in his judgment that he was 'unable to agree' that every constitutional or statutory authority on whom powers are conferred by law is 'other authority' whithin the meaning of Article 12, and argued that the said observation shows that Shah, J. also understood the ratio of the judgment of Bhargava J. as laying down that every constitutional or statutory authority on whom powers are conferred by law is 'other authority' within the meaning of Article 12. We are unable to accept the said argument. When all the observations of Shah J. which have been set out by us earlier are read together, that it can be seen that the words 'I am unable, however, to agree' are not referable to the ratio of the judgment of Bhargava J., but they refer to the argument advanced in the case. The learned Judge pointed out firstly that the Board was an authority invested by statute with certain sovereign powers of the State, enumerated some of the powers so invested, and expressed his conclusion that the Board was 'other authority' within the meaning of Article 12. The learned Judge then observed that he does not agree with the broad proposition that every constitutional or statutory body on whom powers are conferred by law is 'other authority' within the meaning of Article 12, pointed out that in determining what the expression 'other authority' connotes, regard must be had to the sweep of the fundamental rights over the power of the authority as well as to the restrictions which may be imposed upon the exercise of certain fundamental rights by the authority, and then concluded his judgment by observing that authorities, constitutional or statutory, invested with power by law, not sharing the sovereign power, do not fall within the expression 'State' as defined in Article 12, and reiteratting that those authorities which are invested with sovereign power i.e. power to make rules or regulations and to administer or enforce them to the detriment of citizens and others fall within, the definition of 'State' in Article 12, and constitutional or statutory bodies which do not share that sovereign power of the State are not 'States' within the meaning of Article 12. It seems to us to be clear that the criterion mentioned by Shah J. is included in the criteria indicated in the judgment of Bhargava J. and summarised by us above.

(36) We may here refer to a contention urged by Shri Nariman that even if the rule of ejusdem generis is not applicable, the words 'other authorities' (ought to be construed in the light of the previous words 'local authorities' which, according to him, have a demonstrative value. He referred to the decision of the House of Lords in Stag Line Ltd. v. Foscolo, Mango & Co. Ltd. 1932 AC 328, in support of his contention. In that case, a cargo of coal was loaded on a steam ship at Swan Sea for carriage to Constantinople under bills of lading which gave the ship-owners 'liberty.. ....to call at any ports in any order, for bunkering or other purposes...as part of the contract voyage'. There were two engineers on the ship, and it was intended to land them at a place called Lundy, but when the ship reached that place, they were not so landed, and they remained on board and were later landed in St. Ives Bay. In proceeding to St. Ives Bay and for some time after leaving that place, the ship was off the usual route. Shortly after resuming her voyage from St. lves Bay, and before she had returned to the usual route, the ship stranded at a certain place, and both the ship and the cargo were lost. In an action for damages by the cargo owners, the trial court and the Court of Appeal found that the deviation was not reasonable in the circumstances. In a further appeal to the House of Lords, it was contended that to land the two engineers at St. lves Bay was an 'other purpose' within the meaning of the clause in the bill of lading referred to above and consequently permitted by the charter-party itself. The argument depended upon the view that 'it is impossible to get a specified category in which the words 'other purposes' may be defined when the illustrative word at the beginning of the sentence consists only of one description.'..Dealing with the said contention. Lord Buckmaster observed at page 334 as follows:-

'Ifind it difficult, and I think it is undesirable, to attempt to specify in exact language what are the limitations imposed by the use of such a word prefacing others of general import. To my mind, it is impossible to frame a rule applicable to all the various documents in which such phrases are to be found. General words in a will following a specific instance may require different interpretation from that demanded by similar words in an Act of Parliament or a charter-party. To attempt in these circumstances to say that two or more words are essential before you can define a class does not assist in the present case. The word 'bunkering' must have some demonstrative and limiting effect, and the phrase 'or other purposes' following it cannot be so construed as to disregard the effect of the first example and assume that any . purpose is thereby permitted. If that were so, the word 'bunkering' might be left out. Nor am I prepared to define what are the limitations within which the phrase 'other purposes' must be confined, but I can find nothing kindred to bunkering or associated with the operation that is involved in landing two men at a port that is not on any part of the specified route.'

(37) Dealing with the same contention, Lord Warrington of Clyffe observed in his speech at page 338 as follows:-

'......as a matter of construction the words 'or other purposes' cannot in my opinion receive the same wide construction as they might have received has bunkering not been specifically mentioned. They must at all events be limited by reference to the nature and purpose of the contract voyage, and I agree with the learned Judges in the Courts below that the purpose of landing the two engineers was not a purpose which could be brought within the liberty relied upon.'

(38) Shri Nariman. referring to the above passages, argued that the word 'local' which occurs before the expression 'other authorities' in Article 12 of the Constitution, has a demonstrative and limiting effect, and the expression 'other authorities' following the said word should be construed as referring to authorities akin to local authorities. The line of difference between the rule of ejusdem generis and the rule referred to in the above passages seems to be very thin. However, in the view taken by us regarding the observations of the Supreme Court in the case of Rajasthan state Electricity Board (supra) we need not express any opinion on the aforesaid contention of Shri Nariman.

(39) We shall

(40) In Maharashtra State Electricity Board Engineers' Association v. Maharashtra State Electricity Board, : AIR1968Bom65 , it was held that the Maharashtra State Electricity Board which is a statutory Corporation constituted under the Electricity Supply Act is 'State' within the meaning of Article 12 for the reasons that the Board has been invested by statute with certain public functions and has to discharge them as public authority in matters connected with the generation and supply of electricity, and also for the reasons that the said public functions are amenable to the control of the State, the acts of the Board are capable of scrutiny by public authority like the executive Government or the legislature of the State, and the Board has been invested with the power of eminent domain viz., right of entry or enforcing shutting out of transmission lines or taking over transmission plant. This decision also has thus applied one of the criteria referred to by us above.

(41) Similarly, in Umesh Chandra v. V. N. Singh Air 1968 Pat 3, (26) it was held that the University of Patna, being a public statutory body created by an Act of the legislature and empowered to make statutes, ordinances and regulations by the legislature, is 'State' within the meaning of Article 12.

(42) In Ranjit Kumar Chatterjee v. Union of India and others, : AIR1969Cal95 , it was held that the employees of Durgapur Steel plant, appertaining to the Hindustan Steel Limited, a non-statutory company registered under the Companies Act, do not hold civil posts under Government of the Union within the meaning of Article 311(2) of the Constitution. It appears that it was contended, relaying upon the decision of the Supreme Court in Rajasthan State Electricity Board (Supra), that the said decision laid down that a statutory Corporation, such as a State Electricity Board which exercises statutory powers, even though it may be carrying on commercial functions is 'State' within the definition of that term in Article 12 of the Constitution. Rejecting the said contention, it was held that the aforesaid decision of the Supreme Court did not hold that when a statutory Corporation exercises statutory powers, it is to be identified with the Government or a Government Department, that the Supreme Court held that such a Corporation comes under the expression 'other authority' in the definition in Article 12, because it exercise statutory powers conferred by the State affecting private individuals just as any other State action might do, and that the question under Article 311 is not whether a Corporation exercises statutory powers, but whether its employees can be held to be holding their posts or offices under the Union or a State Government. The decision was thus concerned with Article 311, and the reference to Article 12 was made only to distinguish the decision of the Supreme Court in the case of Rajasthan State Electricity Board (Supra).

(43) In Pramodrai Shamaldas Bhavsar v. Life Insurance Corporation of India, : AIR1969Bom337 , (28) the question arose as to whether the Life Insurance Corporation was an 'authority' within the meaning of Article 12 of the Constitution. It was pointed out that the Life Insurance Corporation is a statutory corporate body created under the Life Insurance Act, 1956, and that a perusal of the provisions of the Act shows clearly that the activity of the Corporation is only business activity and it possesses no power which in any manner can be exercised to affect the activities of other citizens. It was further pointed out that the Corporation is not concerned with implementing any law which affects in any manner any liberty of the public, that 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, that it is purely an autonomous busniness body as any other private company except that the initial capital of five Crores of rupees is supplied by the Central Government, that it employes servants as any private house does and enforces discipline amongst it servants as that house, and that the Life Insurance Corporation of India does not, thereforee, fall within the expression 'other authorities' in Article 12 and is not 'state' within the meaning of Article 12 of the Constitution. It is again clear that the criteria pointed out by us were applied in this decision.

(44) In Shy am Lal Sharma v. Life Insurance Corporation of India 1970 (2) Llj 393, a Division Bench of the High Court of Allahabad dissented from the view of the Bombay High Court and held that the Life Insurance Corporation of India has been established by the Life Insurance Corporation Act, 1956, that the Corporation consists of persons nominated by the Central Government, that the original capital of the Corporation was supplied by the Central Government, that the function of the Corporation is to develop life insurance business to the best of advantage of the community, that the Corporation has been empowered to make regulations, and that in view of all these circumstances, the Corporation answers the description 'other authorities' mentioned in Article 12 and, thereforee constitutes 'the State' as contemplated by Article 12. The two High Courts thus took different views on the scope and effect of the provisions of the Life Insurance Corporation Act. We are not concerned with the said Act in the present case, and we need not, thereforee, express our agreement or disagreement with either of the said views. It is sufficient for the purposes of the present case to note that the decision of the High Court of Allahabad also has applied the criteria pointed out by us.

(45) In Sher Singh v. The Vice-Chancellor, Punjab University Chandigarh, and others, , (30) it was held that the Punjab University is an autonomous body created by the East Punjab University Act 7 of 1947, that it is not a State within the meaning of that expression in Part Xiv of the Constitution, and that the employees of the Punjab University, thereforee cannot claim the benfit of the safeguards embodied for a Government servant in Article 311 of the Constitution. While holding in that manner, it was oberved as follows:-

'THEREis no doubt that the Punjab University will be covered by the expression 'the State' as defined in Article 12 of the Constitution, but that is only for the purposes, of Part Iii thereof. In Article 12 'the State' includes all local and other authorities within the territory of India or under the control of the Government of India. The Punjab University is not under the control of the Government of India but it is certainly an authority within the territory of India. In part Xiv, however, 'State' is not used in that sense.'

(46) It is clear that the aforesaid reference to Article 12 was in the nature of obiter dictum, and it was not indicated why the Punjab University is an 'authority' within the territory of India within the meaning of Article 12 of the Constitution.

(47) In Mohinder Singh v. Union of India, : AIR1969Delhi170 (31) the question for consideration was whether Article 311 of the Constitution is not attracted to termination of services consequent upon the abolition of a permanent post in the Lawrence School, Sanawar, Simla Hills. The said school is an educational institution which is being run by a Society registered under the Societies Registration Act, 1860. A Division Bench of this Court (Jagjit Singh and S. N. Shankar, JJ.) held that Article 311 is not attracted to termination of services consequent upon the abolition of a post.

(48) The aforesaid school was originally owned, controlled and managed by the Government of India. Prior to 1949, it was under the control of the Ministry of Finance, and in that year the control was transferred to the Ministry of Education. In 1952, the Ministry of Education resolved that the school should be administered by a Society to be formed under the Societies Registration Act, that the Memorandum of Association and the Rules and Regulations of the Society are to be approved by the Government before being filed with the Registrar of the Joint Stock Company, and that on the registration of the Society the administration of the School is to vest in the Society. The Regulations provided that Secretaries to the Government in the Ministries of Education, Finance, and defense are to be the Ex Officio members of the Society, and in addition to them four members are to be nominated by the Government. The management of the affairs of the Society was entrusted to the Board of Governors of the Society composed of the said Secretaries and nominated members. After the registration of the Society, the employees of the school were intimated that they ceased to be Government servants with effect from December 31, 1952, and became employees of the Board as from January 1, 1953. Thus, at the relevant time, the employees of the school were no longer Government servants. It was contended before the Division Bench that even though the employees had ceased to be Government servants, their further employment under the Board made them Government servants as the Society and the Board were nothing but puppets of the Government, and for all practical purposes persons employed in .the school under the Board were Government servants. It was also contended that the Society and the Board were no better than a department of the Government. The Division Bench rejected the said contentions and held that the Society or the Board was not under the superintendence and control of the Government. It was next contended that even if the Society and the Board were not a department of the Government, a writ could be issued for quashing an order of the Headmaster of the school by which he terminated the services of an employee of the school who was the petitioner before the Division Bench, as statutory obligations imposed on the Society which is a statutory body, were contravened. It was also contended that the Society could be regarded as 'the State' for purposes of Article 12 of the Constitution, being an 'authority' within the territory of India or under the control of the Government. Dealing with the said contention, the Division Bench referred to the observations of Bhargava J. in the case of Rajasthan State Electricity Board (supra) viz.,

'THEexpression 'other authorities' in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities...'The State' as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people,'

and held that-

'THEsociety controlling and administering the school can, in our opinion, be regarded an authority created under a statute, on whom some powers are conferred by law, and which functioned within the territory of India. It is a body created for the purpose of promoting educational interests of the people.'

(49) It appears that the above observations of Bhargava J. set out above were understood as laying down. that every statutory authority on whom powers are conferred by law and which are created for the purpose of promoting educational interests of the people is a 'State'. The Division Bench did not take into consideration the various other observations in the judgment of Bhargava J. which, as pointed out by us earlier, show that a body or authority cannot, by the mere fact that it has been constituted or set up by a statute for promoting educational interests of the people, be regarded as an 'authority' and hence 'State' within the meaning of Article 12, and to be such an 'authority', it should have functions and powers such as are summarised by us earlier in this judgment. The Division Bench merely referred to 'certain powers conferred by the law under which it was registered' and did not set out the nature of the powers conferred upon the Society, and in the circumstances we find it difficult to appreciate how it could be said in that case that the Society in question was 'authority' within the meaning of Article 12. We, however, wish to point out that the next question considered in the case was whether the rules relating to general condition of service of the staff of the school were statutory in character, and it was held that the said rules were not statutory in character and did not have the fores of law, and consequently there was no breach of 'mandatory obligation imposed by statute' and no writ of mandamus could be issued. We should not be understood to have differed from this conclusion.

(50) In Amir-Jamia and other v. Desharath Rai , (32) a Division Bench of this Court (Inder Dev Dua C. J. and V. S. Deshpande J.) held that Jamia Millia Islamia, an educational institution deemed to be University under the University Grants Commission Act, 1966, is an 'authority' within the meaning of Article 226 of the Constitution, and as such is amenable to the jurisdiction of the High Court under Article 226. In the course of the judgment, V. S. Deshpande J. observed that the scops of Article 226 is wider than that of Article 12, and after considering the functions of the Jamia Millia and the control of the University Grants Commission over it, held that it has the 'legal authority of a public authority ' as contemplated by Article 226, and that all the requirements of the amenability to Article 226 are satisfied in the case in regard to Jamia Millia. The learned Judge concluded by observing as follows :-

'TOsum up, a body of persons may become a public authority either because in its inception it is created by a statute or because the governmental authority is conferred upon it later either by statute or even by executive action. The governmental authority to confer degrees on its students was the right derived by the Jamia Millia from a notification issued by the Government under the University Grants Commission Act, though Jamia Milla had existed before the notification as a privately formed institution. From the moment the power to confer degrees was given to Jamia Millia under a statute which expressly called it an 'authority' there can be little doubt that it was an authority of a public nature and as such amenable to the jurisdiction of this Court under Article 226. Our decision to regard it as a public authority is, thereforee, fully covered by the principle underlying Article 226 and Article 12 of the Constitution, though we may be adding a new example of the principle. The novelty is concerned only with the fact that the Jamia Milla became a public authority not because it was created by a statute, but because it was recognised as a University and given the power to confer degrees under the statute.'

(51) We respectfully agree with the conclusion of the Division Bench so far as the amenability of Jamia Mi!!ia to jurisdiction under Artilce 226 is concerned. As regards its being an 'authority' within the meaning of Article 12 we would only state that the said aspect requires to be considered. Keeping in mind that to be such an 'authority' it is not sufficient if Jamia Millia is 'an authority of a public nature' as held by the learned Judges, but it should have functions and powers such as are summarised by us earlier in this judgment.

(52) Lastly, in Aftab Ram v. State of Jammu and Kashmir A.I.R. 1970 J&K; 132, (33) relying on the observations of the Supreme Court in the case of Rajas than State Electricity Board (supra), it was held that 'in order to categorise any person or authority within Article 12 of the Constitution of India, the authority must be a statutory authority, must be set up under a statute with powers which include power to give direction, the disobedience of which is punishable as a criminal offence', and that 'if these two ingredients are wanting an authority cannot be construed as an authority for the purpose of Atricle 12'.

(53) Thus, most of the decisions of High Courts rendered subsequent to the decision of the Supreme Court in the case of Rajasthan State Electricity Board (supra) fortify the view expressed by us as regards the criteria for deciding whether a constitutional or statutory body is 'authority' and hence 'State' within the meaning of Article 12 of the Constitution.

(54) Coming now to the Industrial Finance Corporation of India, it has been, as already stated, established under the Industrial Finance Corporation Act No. 15 of 1948. Keeping in view the criteria referred to by us above, we shall examine the various provisions of the said Act to see whether any of the said criteria is present. The preamble of the Act states that the Corporation was established as it was expedient to do so for the purpose of making medium and long-term credits more readily available to industrial concerns in India, particularly in circumstances where normal banking accommodation is inappropriate or recourse to capital issue methods is impracticable. By virtue of the provision of section 3 of the Act, the Corporation is a body corporate having perpetual succession and a common seal, with power, subject to the provisions of the Act, to acquire, hold or dispose of property, and can sue or be sued by its name. Section 4 contains provisions regarding the share capital and share-holders of the Corporation. It provides, inter-alia, that the authorized capital of the Corporation shall be ten crores of rupees divided into twenty thousand fully paid-up shares of five thousand rupees each of which ten thousand shares of the total value of five crores of rupees shall be issued in the first instance, .and the remaining shares may be issued with the sanction of the Central Government from time to time as and when the Corporation may deem fit. It also provides that of the capital issued in the first instance, the Central Government and the Reserve Bank shall each subscribe for two thousand shares. The Central Government is thus only a minor share-holder and cannot as such be regarded as having such 'control' over the Corporation as is contemplated by Article 12 of the Constitution. The words 'under the control of the Government of India' in Article 12 seem to us to contemplate a complete and effective control by the Government of India. , a minor share-holder, the Central Government cannot be said to have such a complete and effective control over the Corporation. The provision for the sanction of the Central Government in the matter of the issuance of the remaining ten thousand shares can at the most be regarded as a kind of check on the functioning of the Corporation and the same cannot be equated with complete control over the Corporation itself. Also, such shareholding by the Central Government does not make the Corporation an agent or instrument of the Central Government. The provisions in section 4 only show that the Corporation is just akin to an ordinary financing banking company except that that the shareholding is confined to the Central Government and to certain financial institutions only. Section 5 merely provides for the guarantee of the shares the re-payment of the principal, and the payment of the annual dividend by the Central Government. Section 6 deals with the management of the Corporation. The general superintendence and direction of the affairs and business of the Corporation is entrusted to a Board of Directors. and the Board is practically to act according to business principles which any Board of Directors of any ordinary bank have to or would follow. The section provides that in the discharge of its functions, the Board shall be guided by such instructions on questions of policy as may be given to it by the Development Bank. The section also provides that if any dispute arises as to whether a question is or is not a question of policy, the dispute shall be referred to the Central Government whose decision thereon shall be final. The Central Government is also given the power to supersede the Board and appoint a new Board under certain circumstances. Such power also is in the nature of a kind of check over the working of the Corporation and cannot be regarded as 'control' over the entire Corporation within the meaning of Article 12. Section 7 to 9 have since been repealed. Section 10 provides that the Board of Directors shall consist of a Chairman and 12 Directors out of whom the Chairman has to be appointed by the Central Government after consultation with the Development Bank, and two Directors are to be nominated by the Central Government. This. again does not show that the Corporation is under the complete control of the Central Government.

(55) Sections 10A to 20 contain provisions regarding the functions of the Chairman of the Board; term of office and retirement of Directors; disqualification of Director; removal of a Chairman and a Director from office; casual vacancy of a Chairman; Central Committee; Advisory Committees; appointment of officers, advisers, etc.; meeting of Board and Committee; offices and agencies; deposit accounts; and investment of funds. A perusal of the said provisions shows that they are similar to provisions which can be found in the Articles of Association of any company under the Companies Act.

(56) Section 21 deals with powers to borrow, and sub-section (2) thereof provides that bonds and debentures of the Corporation shall be guaranteed by the Central Government as to the repayment of principal and the payment of interest. Section 22 deals with deposits with the Corporation. Section 23 enumerates the kind of business which the Corporation may transact. The business is, generally speaking, guaranteeing, underwriting and granting loans and advances, and the various clauses in the section read like the clauses of the Memorandum of a Company.

(57) Section 23(e) no doubt permits the Corporation to act as an agent for the Central Government or, with its approval, for the International Bank for Reconstruction and Development in the transaction of any business with an industrial concern in respect of loans or advances granted, or debentures subscribed, by either of them. But, it is obvious that such agency is only one kind of business which the Corporation may transact, and the said provision cannot be said to make the entire Corporation an agent or instrument of the Central Government. Sections 24 to 27 deal with limit of accommodation, power to impose conditions for accommodation, prohibitted business and loans in foreign currency.

(58) Section 28 contains provisions regarding the rights of the Corporation in case of default in payment of any loan or advance by an industrial concern which is under liability to the Corporation under an agreement. Sub-section (1) of the said section provides that on such default the Corporation shall have the right to take over the management of the concern, as well as the right to transfer by way of lease or sale and relise the property pledged, mortgaged, hypothecated or assigned to the Corporation. This provision is like the provision in an English mortgage, and the provision to take over the management of the concern, etc. is in the nature of a statutory term of contract between the Corporation and the concern. In other words, the power to take over the management of the concern is contractual in nature and not governmental. Section 29 merely empowers the Corporation to call for repayment of a loan or advance before the agreed period.

(59) Section 30 contains special provisions for enforcement of claims by the Corporation. One of the provisions is that any officer of the Corporation generally or especially authorized by the Board in that behalf may apply to the District Judge for certain stated reliefs viz.(a) for an order for the sale of the property pledged, etc. as security for the loan or advance, or (b) for transferring the management of the industrial con cern to the Corporation, or (c) for an ad interm injunction where there is apprehension of the machinery or the equipment being removed from the premises of the industrial concern in question. The requirement that the officer of the Corporation should apply to the District Judge for the aforesaid reliefs shows that the provision does not enable the Corporation itself to administer any law relating to property, but only provides for the enforcement of the rights of the Corporation under property law through the Court of the District Judge. Sections 30A to 30E deal with the power of the Corporation to appoint Directors of an industrial concern when management thereof is taken over by it, the effect of a notified order appointing Directors under section 30A, the powers and the duties of the Directors so appointed, the right to compensation for termination of contract of managing agents under the Companies Act, 1956, and the application of the provisions of the Companies Act to an industrial concern whose management has been taken over by the Corporation. It may be noted that sections 28 and 30A to 30E only make the Corporation a kind of preferred Corporation in the matter of realization of its dues as compared with other companies incorporated under the Companies Act. The powers or functions of the Corporation under the said sections are not, in our opinion, governmental powers or functions. Shri Jitendra Sharma contended that the provisions in section 30A to 30E of the Industrial Finance Corporation Act, are similar to the provisions in section 18a to 18F of the Industries (Development and Regulation) Act, No. Lxv of 1951, that the latter provisions confer powers on the Central Government in the matter of direct management or control of Industrial Undertakings by the Central Government in certain cases, that the functions of the Central Government under the said provisions are thus governmental functions, and that the functions of the Industrial Finance Corporation of India sections 30A to 30E of the Industrial Finance Corporation Act, being similar to the aforesaid functions of the Central Government, should be regarded as governmental functions. We are unable to accept the contention. The scope and purposes of the two aforesaid Acts are not the same, and even if there is some similarity between the powers conferred under the aforesaid sections of the two Acts, it does not mean that the functions of the corporation under sections 30A to 30E of the Industrial Finance Corporation Act are governmental functions.

(60) Section 31 provides that the Corporation shall be deemed to be a bank for the purposes of the Banker's Books Evidence Act, 1891. Sections 32 to 40 deal with disposal of profits by the Corporation, special reserve fund. General Meeting, Audit, returns, acquisition of shares by the Central Government, liquidation of Corporation, indemnity of Directors, protection of action taken by Directors, declaration of fidelity and secrecy, provision relating to income-tax and super-tax payable by the Corporation delegation of powers by the Board of Directors, and removal of difficulties.

(61) Section 41 deals with offences. It provides that 'whoever in any bill of lading, warehousing receipt or other instrument given to the Corporation whereby security is given or is purported to be given to the Corporation for any accommodation granted by it under this Act willfully makes any false statement, or knowingly permits any false statement to be made, shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to two thousand rupees or with both' ; that whoever without the consent in writing of the Corporation uses the name of the Corporation in any prospectus or advertisement shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to one thousand rupees or with both; and that no Court shall take cognizance of any offence punishable under the Act otherwise than on a complaint in writing signed by an officer of the Corporation authorised by the Board in that behalf. The section thus merely makes certain acts offences punishable under the Act. It has to be noted that the section does not make any disobedience of any direction given by the Corporation punishable as an offence, but that it only makes certain actions of persons dealing with the Corporation punishable as offences. The said actions are punishable not becuase of any disobedience of any order or direction of the Corporation but are punishable by reason of the statute itself.

(62) Section 41 A deals with the effect of the Act on other laws. Section 42 empowers the Central Government to make rules not inconsistent with the provisions of the Act, to give effect to the provisions of the Act. Section 43 empowers the Board to make regulations not inconsistent with the provisions of the Act and the rules made there under by the Central Government, to provide for all matters for which provision is necessary or expedient for the purpose of giving effect to the provisions of the Act, and in particular to provide for the various purposes enumerated in sub-section (2) of the section. A perusal of the said enumerated purposes shows that the provision in section 43 only empowers the Board to make regulations which are like the Articles of a Company or the bye-laws of a statutory body regarding ministerial functions or regulations for its own management.

(63) The above review of the provisions in the Act shows that some of them treat the Corporation as any other financial institution, while some provisions give certain special rights or powers in the matter of recovery of its dues or reliefs in case of default on the part of its debtors or loanees, which provisions do not militate against the Corporation being a trading Corporation or a banking Corporation. No doubt, some of the provisions show that under the Act the Corporation needs the sanction or permission of the Central Government in certain matters and the Central Government has the power to issue directions to the Corporation regarding certain matters. But, they are not, in our opinion. sufficient to make the Corporation an agent or instrument of the Central Government. The provisions do not show that the Corporation has been set up for administering any laws enacted by the Parliament or by the State or that it has been vested with any duty to make decisions in order to implement such laws. They do not also show that the Corporation has been vested with powers to carry out Governmental or quasi-governmental functions, or powers to give directions which are to be obeyed and command obedience of the same.

(64) The position of the Electricity Board under the Electricity (Supply) Act, No. 54 of 1948, which was the subject matter of the decision of Supreme Court in Rajasthan Electricity Board (supra) is different. Sections 55, 57A and B, 58 and 75 read with section 77, of the Electricity (Supply) Act, empower the Electricity Board to give directions, the disobdience of which is punishable as a criminal offence, and to compel obedience of the same. There are no such provisions in the Industrial Finance Corporation Act. Further, the Corporation is not invested with any power to make rules or regulations and to administer or enforce them to the detriment of citizens and others. As already stated, section 43 empowers the Board to make regulations only as regards its own ministerial functions and management of its own affairs under the Act. As such, the observations in paragraphs 9 and 12 of the judgment of Shah J. in the case of Rajasthan Electricity Board (supra) that its power to make rules and regulations and to administer or enforce them to the detriment of citizens and others. As already stated, section 43 empowers the Board to make regulations only as regards its own ministrial junctions and management of it? own affairs under the Act. As such, the observations in paragraphs 9 and 12 of the judgment of Shah J. in the case of Rajasthan Electricity Board (Supra) that its power to make rules & regulation and to administer or enforce them to the detriment of citizens & others is in substance the sovereign power of the State delegated to the Board are not applicable to the Industrial Finance Corporation of India or its Board of Directors. Thus, none of the criteria pointed out by us above is applicable to the Corporation. It cannot, thereforee, be held to be an 'authority' and hence 'State' within the meaning of Article 12 of the Constitution.

(65) Shri Nariman sought to contend, in the alternative, that even if the Industrial Finance Corporation of India is 'State' within the meaning of Article 12 of the Constitution, a plea that the provisions of Article 16 had not been observed could not be referred to the Industrial Tribunal for adjudication as, according to him, it is not open to an authority other than the High Court or Supreme Court to adjudicate upon or enforce compliance of the said provisions of Article 16. In the view taken by us that the Corporation is not 'State' within the meaning of Article 12, we consider that it is not necessary to decide this contention of the learned counsel.

(66) Shri Nariman also pointed out that it was mentioned in the terms of reference that the Tribunal should indicate what directions are necessary in respect of the terms referred to it, and contended that the Tribunal has no power to give directions of any sort. As pointed out by Shri Jitendra Sharma, the Supreme Court has clearly indicated in Brook Bond (India) (Private), Ltd. v. Their Workmen 1966 (1) L. L. J. 402, what directions can properly be made by an Industrial Tribunal in a case where promotions are found to be unjustified on the ground of mala fides or victimisation. The Supreme Court observed :-

'GENERALLYspeaking, promotion is a management function ; but it may be recognised that there may be occasions when a Tribunal may have to interfere with promotions made by the management where it is felt person superseded have been so superseded on account of mala fides or victimisation. Even so after a finding of a malafides or victimisation, it is not the function of a Tribunal to consider the merits of various employees itself and then decide whom to promote and whom not to promote. If any Industrial Tribunal finds that promotions have been made which are unjustified on the gorund of mala fides or of victimisation the proper course for it to take is to set aside the promotions and ask the management to consider the cases of superseded employees and decide for itself whom to promote, except of course the person whose promotion has been set aside by the Tribunal.'

(67) It, thereforee, cannot be contended that no directions of any sort can be given by the Tribunal, and it cannot be said that the requisition contained in the word:, 'and if so what directions are necessary in this respect ?' in the terms of reference was not in accordance with law.

(68) As already stated earlier in this judgment, the main ground in the Writ Petition against the validity of the reference under sections 10(1)(d) and 12(5) of the Industrial Disputes Act was that the dispute sought to be raised by the Employees' Association was not an 'industrial dispute' within the meaning of the said Act. The terms of reference mentioned (a) victimisation and (b) discrimination with regard to the promotion of the employees or workmen to the posts of Superintendent. We have held that the question as to whether there was victimisation or not was an 'industrial dispute' as defined in section 2(k) ofthe Industrial Disputes Act. As regards discrimination, in view of our decision that the Industrial Finance Corporation of India is not 'State' withinthe meaning of Article 12 ofthe Constitution, the workmen or employees ofthe Corporation orthe Employees' Association were not entitled to raise a plea of discrimination on the basis of the provision in Article 16(1) of the Constitution in the matter of the impugned promotion. But, as pointed out by Shri Jitendra Sharma, the plea of discrimination is linked not only with Article 16(1) of the Constitution, but is also linked with victimisation. In other words the plea of discrimination was based on the provision in Article 16(1) and was also a part ofthe plea of victimisation, and was as such a part of the 'industrial dispute' based on the plea of victimisation. It, thereforee, follows that the dispute sought to be raised by the Employees' Association on the basis of the pleas of victimisation and discrimination mentioned in the terms of reference was an 'industrial dispute' within the meaning of the Industrial Disputes Act, except that the ''discrimination' mentioned in the terms of reference cannot be regarded as including any plea of discrimination on the basis of Article 16(1) ofthe Constitution, but is confined to discrimination in so far as it is linked with the plea of victimisation.

(69) In the result, subject to the aforssaid clarification, the aforesaid Letters Patent Appeal is dismissed, but inthe circumstances without costs.


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