Skip to content


Bipinchandra Jugaldas Soni Vs. Gujarat State Co-operative Cotton Federation and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Case NumberSpl. C.A. Nos. 4559 and 4560 of 1984
Judge
Reported in(1985)2GLR698; (1986)ILLJ13Guj
ActsGujarat Co-operative Societies Act, 1961; Constitution of India - Article 12
AppellantBipinchandra Jugaldas Soni
RespondentGujarat State Co-operative Cotton Federation and ors.
Excerpt:
- - is a transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of government. 1 are clearly stated in the bye-laws of the society. now that, therefore, if we consider all these aspects what is clearly found is that respondent no......not 'state' or 'state agencies' within the meaning of art. 12 of the constitution of india. 4. the state government which contributed preferential share capital is redeemable. the borrowings are mainly from national co-operative development corporation on which interest is required to be paid at the rate of 11.75%. it also appears that no grant from the state government or any state agency is required by the federation. respondent no. 1 is also not the monopoly created by the state for its purpose. purchase of cotton is also done by the cotton corporation of india and by private traders in the state of gujarat. now that, therefore, if we consider all these aspects what is clearly found is that respondent no. 1 is a society registered under the co-operative societies act. there are eight.....
Judgment:

1. Special Civil Application No. 4559 of 1984 is filed by the Deputy Manager (Administration) and Special Civil Application No. 4560 of 1984 is filed by the Deputy Manager (Marketing). They came to be appointed by separate orders by Gujarat State Co-operative Cotton Federation Limited, respondent No. 1. Their services came to be terminated because according to respondent No. 1 as a measure of economy they wanted to abolish posts of Deputy Managers from that Organisation. Now Gujarat State Co-operative Cotton Federation Limited in an Apex body of Co-operative Societies and the first question which is required to be decided is whether respondent No. 1 is a State within the meaning of Art. 12 of the Constitution of India. Now so far as Art. 12 of the Constitution of India is concerned, it reads as under :

'12. Definition. In this 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.'

2. Now an effort is made to show that respondent No. 1 would come within the words 'other authorities' as contemplated by Art. 12 of the Constitution of India. For that purpose the learned advocate Shri J. J. Yagnik for the petitioner submitted that 65% of the share capital of respondent No. 1 is contributed by the State of Gujarat. It is further stated that respondent No. 1 is working as an Agent of the State of Gujarat for the purpose of purchasing cotton and respondent No. 1 is helping the agriculturists who are mainly cotton growers and, therefore, the objects of the State are undertaken by respondent No. 1 and respondent No. 1 for that purpose receives assistance from the State of Gujarat and Government of India and, therefore, in any case it is an instrumentality or an agency of the State and, therefore, it is covered by the words 'other authorities' as stated in Art. 12 of the Constitution of India. It is further submitted that three Directors are appointed by the Govt. of Gujarat on the Board of Directors of respondent No. 1 and Ministry of Agriculture is supervising the affairs of respondent No. 1. My attention is drawn to a case of Ajay Hasia etc. v. Khalid Mujib Sehravardi and others etc. reported in [1981-I L.L.J. 103 at P. 112-113]. The relevant paragraph is 9 which is reproduced hereunder :

'9. The tests for determining as to when a corporation can be said to be an instrumentally or agency of Government may now be culled out from the judgment in the International Airport Authority's case (A.I.R. 1979 S.C. 1628). These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities', it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government with the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority's case as follows :

(1) '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.'

(2) 'Whether the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.

(3) 'It may also be relevant factor.... whether the corporation enjoys monopoly status which is the State conferred or State protected.'

(4) 'Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.'

(5) 'If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporations as an instrumentality or agency of Government.'

(6) 'Specifically, if a department of Govt. is a transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government.'

If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, it would, as pointed out in the International Airport Authority's case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Art. 12'.

3. In the light of the submissions made and in the light of the judgment cited above, it is required to be stated that Gujarat State Co-operative Cotton Federation Ltd.-respondent No. 1 is a Co-operative Society registered under the Gujarat Co-operative Societies Act, 1961. The objects of respondent No. 1 are clearly stated in the bye-laws of the society. Respondent No. 1 was not brought into existence for the purpose of Government. The management of respondent No. 1 vests in the Board of Directors as provided in Bye-law No. 17. There are 27 Directors. Now only 3 Directors are nominated by the Government. It cannot be said for a moment that the Government has any control over the activities or objectives of respondent No. 1. The Government has contributed preferential share capital and has also given loan on which interest at rate of 12% per annum is required to be paid. The funds and finance of respondent No. 1 consists of share capital and the borrowings. There are 8 member-societies and they are all members of respondent No. 1 and the societies which are members of respondent No. 1 - are registered under the Co-operative Societies Act. Those members are also not 'State' or 'State Agencies' within the meaning of Art. 12 of the Constitution of India.

4. The State Government which contributed preferential share capital is redeemable. The borrowings are mainly from National Co-operative Development Corporation on which interest is required to be paid at the rate of 11.75%. It also appears that no grant from the State Government or any State Agency is required by the Federation. Respondent No. 1 is also not the monopoly created by the State for its purpose. Purchase of cotton is also done by the Cotton Corporation of India and by private traders in the State of Gujarat. Now that, therefore, if we consider all these aspects what is clearly found is that respondent No. 1 is a society registered under the Co-operative Societies Act. There are eight Co-operative Societies who are members of this respondent No. 1 which is an Apex-society. It is managed by the elected Directors as provided by the Bye-laws and because there is contribution of the share capital which is redeemable and of preference type there are three nominated Directors and they cannot dominate the proceedings of respondent No. 1. The State has neither effective control nor any control whatsoever in the appointment of the staff, etc. Full management vests in respondent No. 1. Now merely respondent No. 1 is asked to purchase cotton as many other agencies could be asked in the State or merely because respondent No. 1 is asked to help the farmers in growing cotton without any assistance or grant from the Government, merely because the State Government has contributed some share capital or given loan, the society cannot by any stretch of imagination become an instrumentality or agency of the State. There is no control by the State Government on respondent No. 1. The whole management and full control lies with respondent No. 1 and the whole society is run by the Board of Directors who are chosen as per bye-law No. 17 of the Bye-laws which are framed by the Society. Under no circumstances one could even come to the conclusion that respondent No. 1 is a State within the meaning of Art. 12 of the Constitution of India. Under these circumstances if a society decides to abolish the posts of Deputy Managers in view of the fact that they have already got Managers and other staff, it cannot be suggested for a moment that any injustice is done to any of the parties. The question of seniority or otherwise would not arise because four posts which are abolished were of Deputy Managers, one was Deputy Manager (Administration) another Deputy Manager (Marketing) and others were Deputy Managers on different heads. Now, therefore, when each of the Deputy Managers post is required to be abolished, there is no question of senior or junior.

5. The last grievance is that the procedure followed or the resolution adopted is not a correct resolution inasmuch as the Board under the Rules was not given power to the Executive Committee but was with the Board and, therefore, the society did not follow its own rules at the time of terminating the services of the petitioners. I have already come to the conclusion that the society of respondent No. 1 is not a State within the meaning of Art. 12 of the Constitution of India. Under these circumstances if there is such grievance that grievance cannot be ventilated by filing Special Civil Application.

6. The other argument that the petitioner was required to be offered a lower post, that also cannot be agitated by filing Special Civil Application. If the petitioners feel that their services are wrongly terminated and they are entitled to have some redress the only thing that could be said is that for that purpose no Special Civil Application is maintainable. What other remedies are open to them it is for the petitioners to decide. But one thing is absolutely clear that respondent No. 1 decided to abolish the posts of Deputy Managers and respondent No. 1 is not the State within the meaning of Art. 12 of the Constitution of India. Under these circumstances these petitions are not maintainable and, therefore, they are dismissed.

7. Interim relief is vacated. Notice discharged. No costs.

8. Ad-interim stay granted during the pendency of the petition shall continue in force for a period of ten days from today.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //