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Chander Mohan Khanna Vs. National Council of Educational Research - Court Judgment

LegalCrystal Citation
SubjectService
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 450 of 1971
Judge
Reported inILR1980Delhi1010
ActsConstitution of India - Article 226
AppellantChander Mohan Khanna
RespondentNational Council of Educational Research
Advocates: H.K. Puri,; Roshan Lal,; V.K. Bahl and;
Cases ReferredK. N. Agarwala v. U.
Excerpt:
constitution of india - articles 226 & 12--whether the national council of educational research is amenable to the writ jurisdiction of the high court--what is an `authority' within the meaning of article 12 and article 311.; in the instant writ petition which has been filed by the petitioner for quashing of a n order of termination of his services passed by the respondent a preliminary objection has been raised regarding the maintainability of the writ petition on he ground that the respondent is a society registered under he societies' registration act and is, thereforee, not amenable to the writ jurisdiction of the high court, not being a `state' or `authority' within he meaning of article 12 of the constitution of india. dismissing the writ petition.; 1. the supreme court has.....s. ranganathan, j. (1) by this writ petition, the petitioner, chander mohan khanna, prays for the quashing of an order of termination of his services passed by the second respondent viz. the secretary of the national council of educational research and training (ncert) which is the first respondent in the writ petition. on behalf of the first and second respondents, a preliminary objection has been raised as to the maintainability of this writ petition. the contention is that the first respondent is only a society registered under the societies' registration act and governed by its own memorandum of association and the rules framed there under and is thereforee not amendable to the writ jurisdiction of the high court, not being the state or other authority to whom writs, or directions or.....
Judgment:

S. Ranganathan, J.

(1) By this writ petition, the petitioner, Chander Mohan Khanna, prays for the quashing of an order of termination of his services passed by the second respondent viz. the Secretary of the National Council of Educational Research and Training (NCERT) which is the first respondent in the writ petition. On behalf of the first and second respondents, a preliminary objection has been raised as to the maintainability of this writ petition. The contention is that the first respondent is only a society registered under the Societies' Registration Act and governed by its own memorandum of association and the rules framed there under and is thereforee not amendable to the writ jurisdiction of the High Court, not being the State or other authority to whom writs, or directions or orders in the nature of writs could be issued under Article 226 of the Constitution. After hearing both the counsel we have come to the conclusion that this preliminary objection has to be upheld. We, thereforee, deal with that point only in this judgment though we heard the learned counsel for the petitioner on the merits of the writ petition as well.

(2) The question whether the Ncert is amenable to the supervisory jurisdiction of this court was considered but not decided by this court in Shital Prasad Tyagi v. The Principal, Central Institute of Education, 2nd (1969) Del 1184. Though the decision referred to two earlier decisions in Mohinder Singh v. Union of India and another 1968 Dlt 595(2) and Amir-I-Jamia and others v. Deshrath Raj Capila 2nd 1969 Del 202, in which societies registered under the Societies Registration Act had been considered to be an authority for purposes of Article 226 of the Constitution. The Court did not consider it necessary to deal with the issue inasmuch as such a plea had not been taken in the reply filed on behalf of the respondents in that case. However, in V. Radhakrishnan Murthy v. Secretary, National Council of Educational Research & Training, 2nd (1971) I Del 121, S. N. Shankar, J. (as his Lordship then was) over-ruled a preliminary objection similar to the one in the present case following the two decisions above referred to and after noticing Shital Prasad Tyagi's case as a decision to a similar effect, These decisions however, now need to be considered in the light of the views expressed in certain later decisions of the Supreme Court and of larger benches of this Court. To start with, there are two important decisions of the Supreme Court. One of these is the group of decisions reported as Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi : (1975)ILLJ399SC . In this case, the question that arose for consideration was whether the Oil & Natural Gas Commission (ONGC), Life Insurance Corporation (LIC) and the Industrial Finance Corporation (IFC) were authorities within the meaning of Article 12 of the Constitution of India. It had been contended for the State, apparently relying on the Rajasthan State Electricity Board case : (1968)ILLJ257SC that the respondent corporations could not be said to be 'other authorities' contemplated in Article 12, as they lacked the attributes of a State in making laws and as they were not entitled to commend obedience and enforce directions issued by them on pain of penalty for violation. The majority of judges (A. N. Ray, C.J., Y. V. Chandrachud and A. C. Gupta. JJ.) repelled this contention and observed:

'35.The State undertakes commercial functions in combination with governmental functions in a welfare State. Governmental function must be authoritative. It must be able to impose decision by or under law with authority. The element of authority is of a binding character. The rules and regulations are authoritative because these rules and regulations direct and control not only the exercise of powers by the Corporations but also all persons who deal with these corporations.'

They pointed out that the Rajasthan Electricity Board case had held that the expression 'other authorities' in Article 12 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 that the expression will include all constitutional or statutory authorities on whom powers are conferred by law. In the course of its discussion, the court drew a distinction between the case of a company incorporated under the companies Act and a statutory body. It observed (at p. 1339) :

'THEAdditional Solicitor General submitted that regulations could not have the force of law because these regulations are similar to regulations framed by a company incorporated under the Companies Act. The fallacy lies in equating rules and regulations of a company with rules and regulations framed by a statutory body. A company makes rules and regulations in accordance with the provisions of the Companies Act. A statutory body on the other hand makes rules and regulations by and under the powers conferred by the Statutes creating such bodies. Regulations in Table-A of the Companies Act are to be adopted by a company. Such adoption is a statutory requirement. A company cannot come into existence unless it is incorporated in accordance with the provisions of the Companies Act. A company cannot exercise powers unless the company follows the statutory provisions. The provision in the Registration Act requires registration of instruments. The provisions in the Stamp Act contain provisions for stamping of documents. The non-compliance with statutory provisions will render a document to be of no effect. The source of the power for making rules and regulations in the case of Corporation created by a statute is the statute itself. A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act. It is not a statutory body because it is not created by the statute. It is a body created in accordance with the provisions of the statute.'

Concentrating, thereforee, on the position of a statutory body which had public/statutory duties to perform for the benefit of the public and not for private profit, the Court examined the position in respect of each one of the organisations before it and came to the conclusion that the rules and regulations framed by those organisations had the force of law and that the employees of those statutory bodies had a statutory status, though these employees could not be considered as servants of the Union of India or the State within the meaning of Article 311 of the Constitution. It was held, that these statutory bodies were 'authorities' within the meaning of Article 12. Mathew J. agreed with the conclusion of the majority but on a slightly different line of reasoning. He pointed out that in the Rajasthan State Electricity Board's case (supra) Bhargava J. had taken a view, delivering the judgment of the majority, that the expression 'other authorities' in Article 12 would include constitutional and statutory authorities on whom powers were conferred by law. The learned judge had also said that if any body of persons had authority to issue directions, the disobedience of which would be punishable as a criminal offence, that would be of which would be punishable as a criminal offence, that would be an indication that that authority is 'state'. However, Shah J. who delivered a separate judgment agreeing with the conclusion reached by the majority had taken the view that authorities, constitutional or statutory, would be covered by the expression 'state' as defined in Article 12 only if they are invested with sovereign power of the State, namely, the power to make rules or regulations which have the force of law. Mathew, J. pointed out that though the Oil & Natural Gas Commission satisfied the requirements laid down by the majority judgment in the Rajasthan State Electricity Board case, there was a larger question which had a direct bearing so far as the other two Corporations were concerned. This was whether, despite the fact that there are no provisions for issuing binding directions to third parties the disobedience of which would entail penal consequence, the corporations set up under statutes to carry on business of public importance or which is fundamental to the life of the people can be considered as 'state' within the meaning of Article 12. Discussing this aspect in the context of the widening scope of the 'state' concept in recent years and in the light of certain American decisions, the learned Judge was of opinion that the ultimate question in such cases would be whether such a corporation or statutory authority is an agency or instrumentality of the Government for carrying on a business for the benefit of the public. The learned Judge was of opinion that merely because such a corporation had legal personality of its own, it did not mean that it could not be an agent or instrumentality of the government it was subject to control of government in all important matters of policy. In other words, Mathew J. laid down a test different from the majority in order to determine whether an authority created by the State could be considered as 'other authority' within the meaning of Article 12 of the Constitution. However, the learned Judge was careful to observe:

'Ido not think there is any basis for the apprehension expressed that by holding that these public corporations are 'state' within the meaning of Article 12, the employees of these corporations would become government servants. I also Wish to make it clear that I express no opinion on the question whether private corporations or ether like organisations, though they exercise power over their employees, which might iolate their fundamental rights would be 'state' within the meaning of Article 12.'

The result of this decision was that bodies like the Oil & Natural Gas Commission, Life Insurance Corporation and the Industrial Finance Corporation, which are bodies created by a statute were held to be 'authorities' within the meaning of Article 12 by applying different tests. So far as institutions which are not created by statutes but are merely association of persons which are given a legal personality by the statute are concerned the majority excluded them from the purview of the article while Justice Mathew did not express any final opinion in that regard.

(3) The other decision which is to be placed in a separate category is the decision in Sabhajit Tewary v. Union of India : (1975)ILLJ374SC rendered by the same Bench of the Supreme Court as Sukhdev Singh's case and on the same date. In this case the organisation concerned was the Council of Scientific and Industrial Research (CSIR) and the question was whether a junior stenographer employed by the said organisation could ask for an order declaring two letters to be discriminatory and vocative of Article 14. For reasons which wll be apparent latter it is necessary here to extract the provisions in the rules of the Csir which have been reproduced in para 3 of the judgment :

'THECouncil is a society registered under the Societies Registration Act. Reliance was placed by counsel for the petitioner on these features of the society. Under Rule 3, the Prime Minister of India is the ex-officio President of the Society. The Governing Body under Rule 30 consists of inter alias some persons appointed by the Government of India representing the administrative Ministry under which the Council of Scientific and Industrial Research is included, and the Ministry of Finance and one or more members appointed by the Government of India. The Government of India may terminate the membership of any member or at one and the same time of all members other than the ex-officio members of the Governing Body. Rule 45 states that the Governing Body shall have the management of all the affairs and funds of the Society. Rule 46 states that the Governing Body shall have power, with the sanction of the Government. of India to frame, amend or repeal bye-laws not inconsistent with the rules for the administration and management of the affairs of the Society and in particular to provide for the terms and tenure appointments, emoluments, allowances, rules of discipline and other conditions of service of the officers and staff of the Society. Reference was also made to the Government of India (Allocation of Business) Rules, 1961 and in particular to page 76 where it is stated that all matters relating to the Council of Scientific and Industrial Research are under the department of Science and Technology.'

On the basis of the above rules it was contended that the Csir was really an agency of the Government. This contention was rejected by the unanimous judgment of the court for two reasons; (1) the Csir did not have a statutory character like the Ongc or the Lic or Ifc but was a society incorporated under the Societies Registration Act. It had been held by the Supreme Court in Praga Tools Corporation v. C. B. Imanual, : (1969)IILLJ479SC , Heavy Engineering Mazdoor Union v. State of Bihar : (1969)IILLJ549SC and S. L. Aggarwal v. General Manager, Hindustan Steel Ltd. : (1970)IILLJ499SC that the Praga Tools Corporation, Heavy Enguiecring Corporation Limited and Hindustan Steel Ltd. are all companies incorporated under the Companies Act and the employees of these companies do not enjoy the protection available to Government servants as contemplated in Article 311. The companies were held in those cases to have existence independent of the Government and by the law relating to corporations. These could not be held to be the departments of the Government; (2) Examining the rules and regulations of the Csir, the Court pointed out that the fact that the Prime Minister is the President or that the Government appointed nominees to the Governing Body or that the Government might terminate the membership would not establish anything more than the fact that the Government takes special care that the promotion, guidance and co-operation of scientific and industrial research, the institution and financing of specific researches, establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problem affecting particular industry in a trade, the utilisation of the result of the researches conducted under the auspices of the Council towards the development of industries in the country are carried out in a responsible maaner.

(4) Earlier to the decision of the Supreme Court a Full Bench 'of this court had to consider, in the Industrial Finance Corporation of India v. Delhi Administration, 2nd (1973) Ii Del 29(11), whether the Industrial Finance Corporation (IFC) could be said to be 'state' I within the meaning of Article 12 and whether its employees were entitled to raise a plea of discrimination under Article 16 of the Constitution. This question was answered in the negative after referring to the decisions of the Supreme Court in the Rajasthan State Electricity Board case (supra). This Full Bench has specifically over-ruled Mohinder Singh v. Union of India 1968 Dlt 595. At page 58 the court observed that it was difficult, to appreciate how it could be said that the society in question in that case was an authority within the meaning of Article 12 about the decision on the next question considered in that case (that the rules of the organisation were not statutory in character and did not have the force of law) was approved. The decision in Amir-Jamia and others v. Desharath Raj (2nd 1969 Ii Del 202 was also considered and it was observed :

'WErespectfully agree with the conclusion of the Division Bench so far as the amenability of Jamia Millia to jurisdiction under Article 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'

(5) The above decisions were considered by a Full Bench of five Judges in Dr. Y. P. Gupta v. Union of India, 2nd (1975) Ii Del 453. Here the court was concerned with the Indian Council of Agricultural Research (ICAR) and the question was whether this could be described as an authority within the meaning of Article 12 and also whether the bye-laws and rules of Icar had the force of law. So far as the first question was concerned, after referring to the fact that the Icar had been registered under the Societies' Registration ^ Act, the Court contrasted the position of a society and a company with a statutory body which is created by passing a statute. While the power of a society or a company is their own, the power of a statutory body is derived from the State through legislation. It was pointed out that this distinction was fully brought out by the two decisions of the Supreme Court and, in particular, by the unanimous decision of the Constitution Bench in Sabhajit Tewary. While dealing with the second point also Deshpande J. (our present Chief Justice), who delivered the judgment of the Full Bench, emphasised the distinction between a private person or an association or a society or a company on the one hand and the Government or a.n authority on the other hand and pointed out that while the former sail on their own steam, the latter derive power from the State. The Full Bench also rejected a plea raised on behalf of the petitioner in that case, relying on the judgment of Mathew J. in Sukhdev Singh, that the action of the Icar should be regarded as a state action amenable to writ jurisdiction under Articles 12 and 226 of the Constitution. The learned Chief Justice referred to the reservations in para 12 of Mathew J.'s judgment already referred to and observed :

'THEconstitutional protection could be granted even against private persons and bodies in the United States of America on the ground that their action amounted to State action in view of the nature of the functions discharged by them and because the action affected the public in general and was not confined to private individuals. It was this approach of looking to the nature of the action and ignoring the nature of the actor that led to the evolution of the concept of 'State action' in the United States of America. The situation under our Constitution is otherwise. In considering the application of article 226 as also of Article 12 of the Constitution th'e Courts have to consider the nature of the authority whose action is complained of and is sought to be controlled through the Courts. The petitioners cannot seek to attract the applicability of these provisions by ignoring whether the actors are 'authorities' or not. and by merely proving that their actions had a public and not a merely private impact. It must be some such enosideration which led Mathew, J. not only to agree with the majority judgment in Sukhdev Singh v. Bhagatram (supra) but also to join in the unanimous judgment in Sabhajit Tewary v. Union of India (Supra).'

One more paragraph from the judgment of the Full Bench is opposite here:

'34.What is an 'authority' either for the purposes of Article 226 or of Article 127A three-fold classification may be made of bodies or persons contending to be eligible to be regarded as 'authorities'. On the one hand are statutory authorities. They are created by a statute and derive their power from the statute. They satisfy the usual condition precedent to be considered as 'authorities' within the meaning of Articles 226 and 12. On the other hand are registered societies and companies. These are voluntary creations of associations of private persons. Their power is derived from themselves. The 1021 statutes under which they are registered or incorporated only help them to attain a legal personality. An association before it becomes a legal person is only a metaphor. For instance, we speak of a jury, a bench of judges, a public meeting or even of the community itself as being a person instead of being merely a group of persons. We personify a group of individuals thereby. But legal personality is not reached until the law recognises over and above the associated individuals a legal person which represents them but is not identical with them. The object of the Societies Registration Act and the Companies Act is not to create societies and companies but only to confer legal personality on existing societies and existing, companies. As the companies and the societies are not created by statutes, the powers exercised by them are not the result of a statutory creation but only a result of voluntary association and functioning under statutory regulation. The societies and companies are not, thereforee, 'authorities'. In between these two classes is an indeterminate institution which was held to be an 'authority' within the meaning of Article 226 or by a Division Bench of this Court in Amir-i-Jamia v. Dasharath Raj, 2nd (1969) Del 202(13). On the one hand, the Jamia Millia was a registered society. In that sense, thereforee, it was not an 'authority'. On the other hand, a notification was issued under section 3 of the University Grants Commission Act declaring it to be a deemed University for the purposes of the University Grants Commission Act. The creation of the Jamia Millia as an University was, thereforee, the result of the notification of the Government in exercise of a power conferred on the Government by a statute. The result of the notification was that the Jamia Millia got the power to confer degrees on students. It, thereforee, became a body which had the legal authority of determining questions affecting the rights of subjects and which purported to exercise disciplinary powers over its students and prevented the respondent from appearing at an examination. This power was derived from the statutory authority of conferring degrees. In these circumstances. Jamia Millia was held to be authority under Article 226 of the Constitution. Jamia Millia was, however, deemed to be a University only for the purposes of the University Grants Commission Act. It is only because the withholding of permission to a student to appear at an examination and thus obtain a degree was a function which could be related to the statutory power of conferring degrees that for the purposes of the case before the Division Bench Jamia Millia could be held to be an authority under Article 226. In view of the decisions of the Supreme Court in Sukhdev Singh v. Bhagatram and Sabhajit Tewary v. Union of India, referred to above, however, the I.C.A.R. in the present case cannot be regarded as an 'authority' in the matter of appointing its staff even for the purposes of Article 226.'

(6) In 1976 the Supreme Court rendered two decisions which may be touched upon in this context. The question in Executive Committee of Vaish Degree College v. Lakshmi Narain : (1976)IILLJ163SC was whether the respondent could challenge an order terminating his services passed by the appellant, the Vaish Degree College, which was registered under the Societies Registration Act. Enunciating the rule that a contract of personal service cannot ordinarily be enforced and that a court normally would not give a declaration that the contract subsists, the Court referred to three well recognised exceptions to this rule. One of these was where the termination was by a statutory body acting in breach or violation of the mandatory provisions of the statute. In this context the court had to consider whether the Vaish Degree College could be said to be a statutory body. The majority of the learned judges answered this question in the negative. Although the appellant was a college affiliated to a university and, thereforee, regulated by the provisions of the relevant University Act. At page 892 the court observed :

'ITseems to us that before an institution can be a statutory body it must be created by or under the statute and owe its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by it self is not, in our opinion, sufficient to clothe the institution with a statutory character.'

and the decision in Sukbdev Singh was relied upon. Bhagwati J however, while agreeing with the final order did not agree with this part of the majority judgment. In his opinion, the three exceptions referred to were not intended to be exhaustive and it was difficult to define what other kind of statutory bodies apart from a body or an authority which is created by or under a statute would be included in the expression 'statutory authority'. In Arya Vidya Sabha Kashi v. Krishan Kumar Srivastava : (1976)IILLJ95SC it was held, likewise, that an order of dismissal passed by a college which was not a statutory body though affiliated to the Benaras Hindu University was beyond challenge, following the decision in the Vaish Degree College case and observing that the institution which was the appellant before the court was not a creature of statute but an entity like a company or a co-operative society or other body which has been created under the operation of a statute and that this made all the difference.

(7) Following the above line of decisions it was held by a Division Bench of this court (of which one of us was a member) : AIR1978Delhi262 that the Delhi State Industrial Development Corporation, which was a company incorporated under the Companies Act, was not amenable to writ jurisdiction under Article 226 of the Constitution although it was alleged to be a Government organisation whose shares were held in the name of the President of India.

(8) Had the state of authorities stood there it would have been clear that the present writ petition would not be maintainable since the Ncert is not a statutory authority or body but merely a society registered under the Societies Registration Act having its own independent existence. It should also be noticed in this connection that it is not the allegation of the petitioner that the respondent society has infringed any statutory provisions or was discharging any public function in the impugned matter. However, the learned counsel for the petitioner very strongly relied on the recent decision of the Supreme Court in the case of Ramane v. International Airport Authority of India (IAAI) : (1979)IILLJ217SC . The writ petitioner in that case was aggrieved by the award of a license to run a restaurant & snack bar at Bombay Airport. The conditions of tender required the applicants to fulfill a certain qualification. Eventually the tender of the fourth respondent was accepted even though he did not fulfill the qualification mentioned in the notice calling for tenders. The writ petitioner contended that if he had known that the basic requirements in the invitation for tender were not rigid and were likely to be relaxed, he could also have applied for the license. It was contended that the action of the Iaai in accepting the tender of the fourth respondent had the effect of denying the petitioner equality of opportunity in the matter of consideration for the award of the contract and hence was unconstitutional as being in violation of the equality clause. It may be mentioned at this stage that ultimately the order of the High Court rejecting the writ petition was confirmed on the ground that on the facts and circumstances of the case it was not a fit case in which the discretion of granting relief to the appellant writ petitioner should be exercised. However, having regard to the contentions that were put forward by the parties, it was necessary for the court to discuss whether there was any obligation on the part of the Iaai to follow the condition of the eligibility which had no statutory force and whether a departure from the standard norms for eligibility was at all justiciable. It is in this context that. Bhagwati J., who delivered the judgment of the court, discussed the nature of the obligations that are imposed on bodies like the Taai which were really discharging the functions of the state. In para 32 the judgment discusses the constitution, functions, duties and powers of Iaai and in para 33 the court comes to the conclusion that, by every one of the tests discussed in the case, the Iaat was clearly an instrumentality or an agency of the Central Government. In the earlier discussion the court had to consider the circumstances in which a statutory authority could be treated as an instrumentality or agency of the Central Government. It had to consider the narrow view taken by the majority in Sukhdev Singh and also the broader view indicated by Mathew J. There is no doubt the judgment makes it clear that the Court has preferred the tests laid down by Mathew J. to the narrow view taken by the majority in Sukhdev Singh. Discussing the matter in this context the court has referred to the widening field of activities of a welfare state, and the necessity to ensure that where the Government is dealing with the public whether by way of giving jobs or entering into contracts or quotas or licenses or other affairs, the Government does not act arbitrarily at its sweet will and like a private individual deal with any person it pleases but that it acts in conformity with standards or norms which are not arbitrary, irrational or irrelevant. In applying this principle it is necessary to bear in mind that the Government which represents the executive authority of the state might act through the instrumentality or agency of natural persons or it might employ the instrumentality or agency of juridical persons to carry out its functions. It was pointed out that, so far as India was concerned, the genesis of the emergence of corporations as instrumentalities or agencies of Government was to be found in the Government of India Resolution on Industrial Policy dated 6-4-1948. It was in pursuance of this and subsequent resolutions that corporations were created by Government for setting up and management of public enterprises and carrying out other public functions. Ordinarily these functions could have been carried out by the Government departmentally but the instrumentality or agency of the corporations was resorted to having regard to the nature of the task to be performed. If Government, acting through its officers, was subject to certain constitutional and public law limitations, then, the Court observed, it must follow a fortiori that Government acting through the instrumentality or agency of corporations should equally be subject to the same limitations. But the question was how to determine whether a corporation was acting as an instrumentality or agency of Government. The Court pointed out that there could be several formulae or tests to answer this question the presence of unusual and extensive financial assistance given by the State; the existence of deep and pervasive State control over the management and policies of the corporation; the availability of State-conferred or State-protected monopoly status for the corporation; the nature of the functions entrusted to the corporation being governmental, public or municipal and so on. These and other considerations may have to be taken into account and it was not possible to formulate an all exclusive or exhaustive test which would adequately answer the question, the Court proceeded to discuss this aspect more elaborately and, as already mentioned, come to the conclusion that the Iaai was a State agency by everyone of the tests discussed.

(9) The learned counsel for the petitioner drew our attention to several passages in the judgment. In para 14 the learned Judge observed :

'Acorporation may be created in one of two ways. It may be either established by statute or incorporated under law such as the Companies Act 1956 or the Societies Registration Act 1860...... So also a corporation incorporated under law is managed by a board of directors or committee of management in accordance with the provisions of the statute under which it is incorporated. When does such a corporation become an instrumentality or agency of Government Is the holding of the entire share capital of the corporation by Government enough or is it necessary that in addition, there should be a certain amount of direct control exercised by Government and, if so, what should be the nature of such control ?...... Now, one thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.....'

In paras 28 to 30, the Supreme Court dealt with the earlier judgments referred to in the Sukhdev Singh case. Praga Tool Corporation v. C. V. Imanual, : (1969)IILLJ479SC (which pertained to the case of a company in which the Central and State Governments held 88% of the share capital) was distinguished as being a decision on the question whether a writ of mandamus could lie to the said corporation when there was neither a statutory duty imposed upon it nor a corresponding legal right of which the workmen could seek enforcement and not a case where the corporation was claimed to be an instrumentality of a Government or an authority within the meaning of Article 12. Heavy Engineering Mazdoor Union v. State of Bihar : (1969)IILLJ549SC was distinguished on the ground that the question considered in that case was whether the corporation was 'carried on under the authority of the Central Government'. This question was answered in the negative, holding that these words meant that the industry in question should be carried on 'pursuant to such authority such as where an agent or a servant acts under or pursuant to the authority of his principal or master'. The case did not have occasion to consider the scope of the 'agency principle' not in the sense of a relationship of principal and agent between the Government and the body but in the sense of the body being truly and in substance a mere instrumentality of the State enunciated for determining whether a body could be considered to be an authority within the meaning of Article 12. It was pointed out that S. L. Aggarwal : (1970)IILLJ499SC had also no relevance to the issue because the question there was whether an employee of Hindustan Steel Limited could be said to be entitled to the protection of Article 311(2) and not whether Hindustan Steel Ltd. was an authority within the meaning of Article 12.

(10) Then in para 31 the learned Judge considered the decision in Sabhajit Tewari v. Union of India : (1975)ILLJ374SC and observed:

'31.Lastly, we must refer to the decision in Sabhajit Tewari v. Union of India, : (1975)ILLJ374SC where the question was whether the Council of Scientific and Industrial Research was an 'authority' within the meaning of Article 12. The Court no doubt took the view on the basis of facts relevant to the constitution and functioning of the Council that it was not an 'authority', but we do not find any discussion in this case as to what are the features which must be present before a corporation can be regarded as an 'authority' within the meaning of Art. 12. This decision does not lay down any principle or test for the purpose of determining when a corporation can be said to be an 'authority'. If at all any test can be gleaned from the decision, it is whether the Corporation is 'really an agency of the Government'. The Court seemed to hold on the facts that the Council was not an agency of the Government and was, thereforee, not an 'authority'.'

(11) On the strength of this judgment and the above observations of the Supreme Court, it is contended on behalf of the petitioner that in deciding whether a body is an authority within the meaning of Article 12 or 226, the fact that it is an association of persons or a society or company registered or incorporated under one of the relevant statutes is no longer material. The real question to be considered in all such cases is as to whether the body is really an instrumentality or an agency of the State by the tests laid down by the Supreme Court and if these tests were satisfied then notwithstanding that in form the organisation was only a registered society or company, it would be amenable to the writ jurisdiction under Article 226 of the Constitution.

(12) The scope of the judgment of the Supreme Court in Iaai case C. W. P. 622 of 1978, K. N. Agarwala v. U.0.1.(17). In that case came up for consideration before a Envision Bench of this court in the petitioner was the Manager of the Indian Languages Unit in the Council of Scientific and Industrial Research. But his services were loaned to the Steel Authority of India Ltd. (SAIL) on deputation. Sail, it may be mentioned, was incorporated under the Companies Act, 1956 as a private limited company with five equity shares, three held by the President of India and the remaining two by two officers of the Government of India. Eventually, the petitioner was absorbed in the Sail with retrospective effect from 1-6-1973 and he resigned his substantive post in the CSIR. He obtained certain promotions but eventually his services were terminated with immediate effect and on payment of three months' salary in Feu of notice by an order dated 19-3-1977 purportedly under Rules 9.1 (b) and 9.3 (b) of the relevant service rules of SAIL. He, thereforee, approached this court with a writ petition. The fourth respondent namely, Sail raised the preliminary objection that no writ can issue to it vis-a-vis the impugned order terminating the services of the petitioner as it was neither 'state' nor could it be regarded as an 'authority' amenable to the writ jurisdiction of the court. It was also contended that even if Sail was such an authority, the order of termination was not liable to be challenged in a writ petition as there was no breach of any statutory obligation in terminating the petitioner's services as the relationship was not governed by any statute or statutory rules. In other words, it was contended that the termination might amount, if at all, to a breach of contract for which there could be some other remedy but not a writ petition.

(13) The above case was heard by Prakash Narain and S. S. Wad JJ. Both the learned Judges agreed that the petitioner was merely seeking by the writ petition to establish or enforce a contractual obligation which he was not entitled to and that, thereforee, the writ petition was not maintainable and should be dismissed. However, on the first contention raised on behalf of the respondent Prakash Narain J. came to the conclusion that the Sail was not the State or any other authority within the meaning of Article 12 or an authority within Article 226. On the other hand, Wad J. was of opinion that the Sail was an agency/instrumentality of state and hence 'state' or 'authority' within the meaning of Article 12 and Article 226 of the Constitution of India.

(14) Prakash Narain J., after setting out the facis, contentions and relevant provisions of law, pointed out that the idea of forming statutory corporations or companies or societies registered or incorporated under the ordinary law of the land was intended to take governmental activity in the economic sphere out of the conventional restraints of rules, regulations and conservations associated with the Government activity. He pointed out that a certain amount of leverage is necessary in commercial activity and if that is to be taken avay and commercial activity is also to be governed fully by the procedures which govern traditional governmental activity, the very purpose of the State entering into the commercial field would have been defeated. Then the learned Judge pointed out that there was a distinction between corporations brought into existence by a statute and corporations or societies incorporated under a statute and referred to the decisions in Sukhdev Singh and Rajasthan State Electricity Board (supra). In these cases, the Court was concerned with bodies created by statutes and Ray, C. J., speaking for the majority, had laid down what may be described as the 'structural test' for determining whether such a body would be an 'authority' for purposes of Articles 12 and 226. Mathew J.. while agreeing with the majority in its conclusion, had advocated a more liberal test for this determination, which may be described succinctly as the 'functional or agency test'. Discussing the scope of the observations of Mathew J. In Sukhdev Singh the learned Judge was of opinion that the principle of state instrumentality or agency outlined by Mathew J. was only in the context of public corporations created by a statute and not extended to companies or societies incorporated or registered under the provisions of a statute and referred to paras 85, 86 and 112 of the report (AIR 1975 Sc 1350 and 1357 in this connection. The learned Judge, thereforee, observed :

'THUS,in Sukhdev Singh's case, whether one views it from the point of view of the structural test or the instrumentality or agency test, the rule enunciated was restricted to statutory corporations and it was in terms held that this rule would not be extended to companies or societies registered under the Companies Act or the Societies Registration Act.'

The learned Judge pointed out in this connection that it wa's significant that Mathew J. fully concurred in the judgment delivered on the same day in Sabhajit Tewary v'. Union of India and others : (1975)ILLJ374SC in which the Structural test was adopted as the role enunciated by the Supreme Court. After referring to the Vaish Degree College case and Dr. Gupta's case, the learned Judge proceeded to notice the decision in the Iaai case. He set out the facts and the constitution of the body in question, the circumstances in which the dispute arose, the observations of the learned Judge who delivered the judgment of the court regarding the position of the Government vis- a-vis persons with whom it has to deal and the further observations made in this context. After referring to the respective contentions of the parties, the petitioner contending that the Sail though a limited company would be amenable to the writ jurisdiction and also the obligations under Article 12 if it was an instrumentality or agency of the Government and the arguments of the Solicitor-General on behalf of the respondent trying to restrict the decision in Iaai only to statutory bodies, the learned Judge observed :

'INa nut-shell, thereforee, the broader test propounded by Mathew, J. in Sukhdev Singh's case has been accepted by Bhagwati, J. but without any qualification or extension. The International Airport Authority was held to be amenable to writ jurisdiction under Article 226 and an authority within Article 12. The question of status of a Government Company registered under the Companies Act was not in issue and what Bhagwati, J. has observed is, with respect, no different from what has been laid down in the earlier decisions but, perhaps, sowing the seed for further development of administrative law. In terms the decision goes no further, in my respectful opinion, then the earlier decisions of the Supreme Court. Indeed, if the broader test laid down by Mathew, J. was to be applied to companies incorporated under the Companies Act the decision would really run counter to what has been laid down in the decision in Tewary's case or the decision in the case of the Vaish Degree College. The way I read the opinion, the decision in the International Airport Authority's case, if read carefully, would show that after a general discussion Bhagwati, J. has advisedly and deliberately not made any reference to companies incorporated under the Companies Act. He confined himself to invoking of the broader test of Mathew, J. as one more test to be applied to statutory corporations. The decision does not extend the broader test and make it applicable to companies incorporated under the Companies Act. Indeed, reading of the decisions in Sukhdev Singh's case. Tewary's case and the International Airport Authority's case leaves no doubt in my mind that the rule enunciated is what has been so eloquently propounded by a Full Bench of this court and Dr. Y. P. Gupta's case.'

The learned Judge then referred to the well settled principle that the decision is only an authority as to what it actually decides and to the fact that in Iaai case the Supreme Court was concerned only with what was a body created under a statute and the only question was whether the so-called narrow test propounded in Sukhdev Singh was to be applied or the broader test enunciated by Mathew, J. The learned Judge thereafter observed that he did not find much differences on facts between Sail on the one hand and the Csir on the other. This, broadly, was the basis on which Prakash Narain, J. came to the conclusion that the Sail was not an authority amenable to the writ jurisdiction.

(15) Wad J., in coming to a contrary conclusion laid considerable emphasis on the circumstances which led to the formation of the Sail and the nature and scope of its functions and activities. He did not accept the contention that the functional test in Jaai and Sukhdev Singh should be restricted to statutory corporations. The argument that an extension of the test would run counter to Tewari was met by observing that Tewari, equally, was not concerned with a Government company and by pointing out that the cases relied upon in Tewari, involving government companies, had been distinguished in IAAI. Though it is true that Wad J. did come to a conclusion that even a private limited company like the Sail could come within the meaning of Article 12 and Article 226 of the Constitution in view of the decision in Iaai case. his observations do not appear to extend to all types of companies or to societies as in the present case. In paragraph 24, referring to Dr. Gupta and Vaish Degree College cases, the learned Judge observed :

'BOTHthe cases follow Tewari's decision and are based on the structural tests. They concern only with a society registered under the Societies Registration Act or under Co-operative Societies Act. The courts were not called upon in those cases to decide whether a government company such as Sail was 'State' or 'Authority'. The observations of the Supreme Court in Airport Authority regarding Tewari's case quoted above, are equally applicable to these two carses'

Again in paragraph 27 the learned Judge observed :

'ANOTHERaspect emphasised in some of the Supreme Court cases and followed by this court in Y. P. Gupta's case is that all powers and functions of a company are derived from its memorandum of Association and Articles of Association. The argument is that even if some of the functions are akin to the functions of the Government, since the source of the powers and functions is not State. such companies cannot be described as Authority/State. Some of these cases were concerned with Societies registered under the Societies Registration Act or Co-operative Societies Act. The Government Companies were treated like such societies. With respect this equation merely embhasises the formal attribute of the source or authority but overlooks the function performed by Government companies. It is true that the powers and func- tions ate formally derived from memorandum and Articles of Association. It is also true that mere presence of Secretaries of Government Ministries or providing Government monies would not be themselves decisive. However, in reality a government company like Sail cannot be compared to a Co-operative Society or other society. Can it be seriously said that a large capital of Rs. 2 thousand crores be invested in a private body like a company out of the public funds without the approval of the Cabinet and the Parliament Is it possible under the service rules that civil servant like the Secretaries of the Ministries would form commercial undertakings like Sail Is it possible for any private organisation such as Society to lay down the government policy in regard to a core industry such as steel ?'

In other words it appears that though Justice Wad was prepared to hold that in the case of company like the Sail there were preponderant circumstances in favor of holding it to be a Government instrumentality or agency, which have been set out in para 28 he kept open the question of extension of the principle to all companies or to societies under the Societies Registration Act or Co-operative Societies Act.

(16) It is in the context of these decisions that the question in the present case falls to be decided. On the question whether Iaai decision abrogates the distinction between statutory authority like the Ongc, Ifc and the Lic on the one hand and organisations which are given legal recognition under the Companies Act or the Societies Act, we are inclined to share the view of Prakash Narain J. that this aspect of public law is still in the process of development. The Rajasthan Electricity Board and Sukhdev Singh show that. the concept of an authority for purposes of Articles 12 and 226 was associated with the exercise of a sovereign power by the bodies concerned. In the former case, though an Eletricity Board was discharging what, in recent years, has come to be regarded as a governmental function, a doubt was felt as to how far it could be described as an authority as it was also carrying on a commercial activity. In the latter, a case concerning public corporations created under a Statute, it was basically agreed that the mere constitution under a Statute would not make such a corporation an authority and that something more was needed for the purpose. It was in regard to the content of this further element that the test suggested in Rajasthan Electricity Board was departed from by Mathew J. with whom Iaai has now agreed. The test suggested by the majority in Sukhdev Singh is clearly not applicable to organisations of the type presently under consideration. Further, while it seems clear that once the functional test of Mathew J. is accepted there can be no logical distinction between statutory corporations on the one hand and other companies and societies on the other, the fact remains that Mathew J. himself expressed some reservations about the extension of the test to the latter class of bodies. There was also reason for this for the entire discussion was only in the context of the development and growth of public corporations which, it was pointed out, in recent years, had become the 'third arm' of Government and have needed to be assimilated into the expression ' other authority'. That this distinction was considered to be vital is further clear from the decision in Sabhajit Tewary, reinforced by the observations in the Vaish Degree College case and in the case of Arya Vidya Sabha. The contrast between the decision in Sukhdev Singh and Sabhajit Tewary assumes greater significance when it is noticed that these were decisions rendered on the same day and that Mathew J. also has subscribed to render the decision in the latter unanimous. Iaai again was a case concerning a corporation and the discussion is primarily in this context with but a casual reference to societies and companies. Though in paras 28 to 30, Praga Tools and other decisions relied upon in Sabhajit Tewary were sought to be distinguished, para 31 of the judgment where reference is made to Sabhajit Tewary, does not clarify that the distinction made in it between companies and societies registered under the normal laws on the one hand and authorities created by statute would not be a ground of distinction at all. if the functional test were to be adopted. It is also interesting to notice that, in the Iaai case, the Court came to the conclusion that the writ petition deserved to be dismissed on the question of bonafides and laches. Having regard to this crucial aspect of the case, would it be incorrect to inter, as Prakash Narain J. has done, that the discussion must be read as 'sowing seeds for further development' of this branch of the law rather than as abrogating the distinction approved by Sukhdev Singh and a unanimous Sabhajit Tewary

(17) It appears to us, further, that at least so far as the present case is concerned, we are bound by the decision in Sabhajit Tewary. The decision, as we have seen earlier, was rented on two grounds. The first we have already dealt with. We shall now proceed en the basis that Mathew J., in view of what he had said in Sukhdev Singh. may not have concurred with the others in Sabhajit Tewary on this ground. though the Full Bench of this Court in Dr. Gupta has also attempted to explain his concurrence even on this point, as will be seen from the extract set out earlier. We shall, thereforee, assume that the learned Judge subscribed to this decision only on the second point, as he was satisfied, with the others, that the constitution and powers of the Csir were such that it could not be considered to be an agency 'instrumentality of the Government. It is on this point that Mr. Nag counsel for the respondent rested his contention that the decision in Sabhajit Tewary should be held to govern the present case completely. In this context we would like to refer once again to the various rules and regulations of the Csir which have been extracted earlier and were considered by the Supreme Court in the case of Sabhajit Tewary and compare them with those of the Ncert in this case. The Ncert is governed by a Memorandum of Association subscribed to by seven officers of the Government of India on 6th June 1961. Under clause 3', I of the Memorandum of Association the object of the Council is to assist and advise the Ministry of Education and Social Welfare in the implementation of its policies and major programmes in the field of education, particularly school education. Under clause 3.2 the Council is empowered, for the realisation of the above objectives, to undertake several kinds of programmes and activities which include co-ordination of research, extension services and training, dissemination of improved educational techniques and practices in schools, collaboration in educational programmes, distribution of ideas and information, preparation and publication of books, materials, periodicals and other literature and allied activities. Under clause 5 the income and property of the Council is to be applied towards the promotion of its objects and cannot be disposed of by way of dividends. bonus etc. But. under this clause, the Council is free to apply the income and property towards its objectives in such manner as it may think fit. It is subject to the limitations placed by the Government of India in this regard only in respect of the expenditure of grants made by the Government. Under clause 6 the Government of India could review the work and progress of the Council and take appropriate action to give effect to the reports received on enquiries. In addition, the Government could at any time issue directions to the Council on imp'ortant matters of policy and programmes. Turning to the Rules of the Council, rule 3 constitutes the Council which consists mainly of various Government officials hut also includes the Chairman of the University Grants Commission, four Vice-Chancellors and a number of nominees, four from school teachers and several others. Rule 7 enables the Government to fix the period of appointment of the members and to extend it from time to time. The Council's affairs are conducted by the Executive Committee whose consti- tution is outlined in Rule 23. This also includes various Government servants but it also includes four educationists and three Professors and Heads of Departments who may be nominated by the President, Rule 37 provides that of there is any difference of opinion among the members of the Executive Committee, the opinion of the majority will prevail subject to a veto which could be exercised by the Government of India within a month. It also enables the President to refer any question for the decision of the Government. Rule 40 enables the Executive Committee to frame and amend Regulations not inconsistent with the rules. Rule 42 empowers the Executive Committee to enter into arrangements with Governments, public or private organisations or individuals for furtherance of its objectives and implementation of its programmes. Rule 57 provides that the funds of the Council shall consist of (i) grants made by Government; (ii) Contributions from other sources; (iii) Income from the assets of the Council; and (iv) Receipts of the Council from other sources. Rule 70 requires the Council to maintain proper accounts which are subject to Audit by the Comptroller and Auditor General of India and aliable also to be placed before the Houses of Parliament.

(18) A comparison of the rules and regulations in the instant case with those outlined in the case Sabhajit Tewary will show that the two organisations have somewhat similar constitutions. Though the Ncert is also managed by certain Government officials, the rules indicate that it has a wide latitude of independence in its functioning. Its funds are not entirely provided by the Government and it has other independent sources of income. It is free to decide upon its budget and expenditure, for Government control is postulated only in respect of the expenditure of grants made by the Government. Its field of activities is very wide and includes the conduct of various types of educational programmes, and publication of books and periodicals in which the Council enjoys no monopoly or protection. The provision for Government interference only in certain eventualities shows that. except under these circumstances, it functions quite independently The decisions of the Ncert have no force and are neither binding on the Government nor capable of implementation by it. The observations of the Supreme Court that provisions of this type only show that the Government is keen to ensure that the Council carries out its objects in a responsible manner rather than that the organisation is an agency of the Government are equally apposite in the case of the NCERT. Again, a comparison of these regulations with those that governed the Iaai would amply bear out that the Ncert stands on a totally different footing from the Iaai and lacks many of the features which marked out the Iaai as a Government agency. We have already referred to the observation of Prakash Narain J. that he could not see difference between the Sail on the one hand and Csjr on the other. The difference between the Csir and Ncert is even much more insignificant. Having regard to these circumstances we are of opinion that, even on the basis that it is open by us to consider in the case of a society, the question whether it is a state agency or not, the Ncert lias to be held not to be 'State' or an 'authority' for the same reasons as the Csir was held not to be so in Sabhajit Tewary.

(19) For the above reasons we have come to the conclusion that the present writ petition has to be dismissed as not maintainable. It is accordingly dismissed but we make no order as to costs.


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