Sardar Singh Raghuvanshi & Anr., [1975] 3 SCR 619; Ramana Dayaram Shetty v. The International Airport Authority of India & Ors., [1979] 3 SCR 1014; Managing Director, Uttar Pradesh Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee, [1980] 2 SCR 773; Ajay Hasia, etc. v. Khalid Mujib Sehravardi & Ors. etc., [1981] 2 SCR 79; Som Prakash Rekhi v Union of India and Anr., [1981] 2 SCR 111; B.S.Minhas v. Indian Statistical Institute & Ors., [1984] 1 SCR 395 and P. K Ramachandra Iyer and Ors. v. Union of India and Ors., [1984] 2 SCR 200.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 495 of 1984.
From the Judgment and order dated 1.11.1983 of the Delhi High Court in L.P.A. No. 160 of 1983.
P. P. Rao and A. Mariaputham for the Appellant.
Dr. Anand Prakash, D.N. Dwivedi, Mrs. Anil Katiyar, C.V. Subba Rao, Vineet Kumar and Deepak K. Thakur for the Respondents.
The Judgment of the Court was delivered by
RANGANATH MISRA, J. This appeal by special leave calls in question the judgment of a Division Bench of the Delhi High Court in a Letters Patent Appeal upholding the decision of a learned Single Judge rejecting the writ petition of the appellant. The appellant was an employee of the Institute of Constitutional and Parliamentary Studies (hereafter referred to as ICPS for short) and in a disciplinary action he was dismissed from service by order dated 17th November, 1982. When he assailed the order in a writ petition before the High Court, the question whether lCPS was ’State’ within the meaning of Article 12 of the Constitution came for consideration as the major issue arising in the matter. The learned Single Judge dismissed the writ petition by holding that the employer was neither an agency nor an instrumentality of the Government and did not constitute ’State’ within the meaning of Article 12 and, therefore, was not subject to the writ jurisdiction of the High Court. The appeal against the judgment of the learned Single Judge was dismissed on 1st November, 1983.
In course of hearing of the appeal Dr. Anand Prakash appearing for ICPS fairly stated that whether the Institute be ’State’ or not within the meaning of Article 12 of the Constitution, the employer was prepared to give a fresh opportunity to the appellant to meet the charges so as to dispel from his mind the feeling that he has not been given reasonable opportunity to defend himself. Ordinarily, with that concession the impugned order entailing the dismissal of the employee and the judicial determination against the appellant should have been set aside and the matter should have gone before the enquiry officer for affording reasonable opportunity to the appellant of being heard against the charges. Dr. Anand Prakash, however, invited us to enter into the merits of the issue as to whether ICPS constitutes ’State’ within the constitutional meaning of the term The Union of India which appears before us through counsel also wanted that the question should be decided. Thereupon we suggested to the appellant who was till then appearing in person to get represented through counsel so that the matter could be appropriately argued on his behalf also. He has been rendered suitable assistance by the Supreme Court Legal Aid Committee and Mr. P.P.Rao, Senior Counsel, has appeared on his behalf.
The main question for consideration now, therefore, is whether ICPS is ’State’. For appropriate consideration of this question it is necessary to look into the constitution of the body, the purpose for which it has been created, the manner of its functioning including the mode of its funding and the broad features which have been found by this Court in several decisions to be relevant in the matter of determining a dispute of this type. Article 12 of the Constitution provides an inclusive definition of the term ’State’ by saying:
"In this part, unless the context
otherwise requires, ’the State’ includes the
Government and Parliament of India and the
Government and the State 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." obviously ICPS can become ’State’ only if it is found to be an authority within the territory of India or under the control of the Government of India.
ICPS, respondent No.2, is a society registered under the Societies Registration Act, 21 of 1860, and was registered on 9th March, 1965. As would appear from its Memorandum of Association, the foundation members were 19 in number-13 being members besides a President and five VicePresidents. The first President of the Soci ety was the then Speaker of the Lok Sabha. The five VicePresidents were the then Minister of Railways, Minister of Law and Social Security Minister of Communication and Parliamentary Affairs, a former (Chief Justice of India and a former Attorney General of India. Dr. L.N. Singhvi, then a member of the Lok Sabha, was its Executive Chairman. The Public Trustee in the Department of Company Affairs and Insurance in the Ministry of Finance was the Director and a member of the Lok Sabha was the Society’s Treasurer. The then Minister of Cultural Affairs in the Ministry of Education along with three members of the Lok Sabha, a Senior Advocate of the Supreme Court, a member of the Rajya Sabha, the then Vice-Chancellor of Rajasthan University. the respective Secretaries of the Lok Sabha and the Rajya Sabha Secretariat and the Secretary in the Ministry of Law were its Members. The registered office of the Society was initially located within the Parliament House but was later on shifted to the Vithalbhai Patel House, Rafi Marg, New Delhi . The objects of the Society inter alia were:
( I) to promote and provide for constitutional and
Parliamentary studies with special reference to
comparative studies in constitutional systems of
various countries and working of the Indian
Constitution and parliamentary and governmental
institutions in their various aspects;
(2) to undertake study of courses and fundamental
research relating to developments in constitutional
law, conventions and practices, parliamentary
procedure, legislative drafting, trends in judicial
interpretation and allied matters;
(3) to organise inter alia training programmes in
constitutional problems and matters of current
parliamentary importance;
(4) to set up a legislative research and reference
service for the benefit of all interested members of
the Union Parliament and State Legislature irrespective
of their party affiliations;
(5) to undertake and provide for the publication
of a journal and of research papers and of books and
brochures with a view to disseminate democratic values
and to foster broad based civic education and
awareness, and in particular, to pro. mote study of
constitutional and parliamentary affairs;
(6) to establish and maintain libraries and
information services to facilitate the study of
constitutional and parliamentary subjects and spread
information in regard thereto;
(7) to invite as and when feasible, scholars who
may or may not be members of the Society, to take
advantage of the facilities offered by the Society and
to benefit the Society by their knowledge and
experience; and
(8) to institute appropriate fellowships, offer
prizes and arrange scholarships and stipends in
furtherance of the objects of the society.
The Memorandum permitted the Society to accept gifts, donations and subscriptions of cash and securities and of any property either movable or immovable. The rule classifies the members under heads like Founder Members, Life Members, Honorary Members, ordinary Members, Corporate Members and Associate Members. ordinary membership, according to the Rules, would extend to Members of Parliament or of any State Legislature or those who have been or are members of the Judiciary or advocates of the Supreme Court or the High Courts or persons employed in public service or persons engaged in teaching of study of social sciences particularly of Political Science, Law or subjects related thereto. In the category of Honorary Members were the President, the Vice-President and the Prime Minister of India. Though the Memorandum permitted receipt of gifts and donations from outside, it is not disputed that the main source of income of the society has been the annual Central Government grant.
We think it appropriate at this stage to turn attention to judicial precedents to find out as to what should be the test to be applied for determining when on institution like respondent No.2 would be treated as ’other authorities’ under Article 12 of the Constitution. The first in point of time is the Constitution Bench judgment in the case of Rajasthan State Electricity Board, Jaipur v. Mohan Lal & Ors., [1967] 3 SCR 377 Bhargava, J. who delivered the main judgment observed:
"the meaning of the word ’authority’ given in
Webster’s Third New International Dictionary,
which can be applicable, is a "public
administrative agency or corporation having quasi-
governmental powers and authorised to
administer a revenue-producing public enterprise."
This dictionary 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 quasi-governmental
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 l 7 of the Constitution In Smt. Ujjam Bai v. State of Uttar Pradesh, [1963] 1 SCR 77 Ayyangar, J. had observed:
"Again Article 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 ejusoem 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 or under
the control of the Government of India. Shah, J., as he then was, added a note to the leading Judgment of Bhargava and observed:
"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.
............ In determining what the
expression ’other authority’ in Article 12
connotes, regard must be had not only to the sweep
of 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. Fundamental rights
within their allotted fields trans-
cend the legislative and executive power of the
sovereign authority. But some of the important
fundamental rights are liable to be circumscribed
by the imposition of reason able restrictions by
the State. The true content of the expression
’other authority’ in Article 12 must be deter
mined 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 he
necessary to bear in mind not only whether against
the authority fundamental rights in terms absolute
are intended to be anforced, 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.
In my judgment, authorities, constitutional
or statutory invested with power by law but not
sharing the sovereign power do not fall within the
expression ’State’ 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 sovereign
power of the State are not, in my judgment,
’State’ within the meaning of Article 12 of the
Constitution. Two cases, the First of Sabhajit Tewary v. Union of India & Ors., [1975] 3 SCR 616 and the other of Sukhdev Singh & Ors v. Bhagatram Sardar Singh Raghuvanshi & Anr., l 1975] 3 SCR 6 19 were disposed of by the same Constitution Bench on February 21, 1975. In both these cases, the true meaning of Article 12 of the Constitution fell for consideration. Sabhajit Tewary’s case was one where the status of the Council of Scientific and Industrial Research was examined. This Court took note of the fact that the Council was a society registered under the Societies Registration Act. Under Rule 3, the Prime Minister of India was the ex-officio President of the Society and under Rule 30 the governing body consisted of 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. The Court also took note of the manner in which the affairs of the Society including funding were conducted. Ray, CJ.,in the brief judgment that the Court delivered in the case observed: A
"Extracting the features as aforesaid, it was
contented that these would indicate that the
Council of Scientific and industrial Research was
really an agency of the Government. This
contention is unsound. The society does not have a
statutory character like the oil and Natural Gas
Commission, or the Life Insurance Corporation or
Industrial Finance Corporation. It is a society
incorporated in accordance with the provisions of
the Societies Registration Act. The fact that the
Prime Minister is the President or that the
Government appoints nominees to the governing body
or that the Government may terminate the
membership will not establish anything more than
the fact that the Government takes special care
that the promotion, guidance and cooperation of
scientific and industrial research, the
institution and functioning of specific
researches, establishment or development and
assistance to special institutions or departments
of the existing institutions for scientific study
of problems 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
manner.
This Court has held in Praga Tools
Corporation v. C.A. Imanual & Ors., [1969] 3 SCR
773; Heavy Engineering Mazdoor Union v. The State
of Bihar & Ors., [1969] 3 SCR 995 and in S.L.
Aggarwal v. General Manager, Hindustan Steel Ltd.,
[1970] 3 SCR 363 that the Praga Tools Corporation,
Heavy Engineering Mazdoor Union and Hindustan
Steel Ltd. are all companies incorporated under
the Companies Act and the employees of these
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 these cases lo
have independent existence of the Government and
by the law related to corporations. These could
not be hold to be departments of the Government." The ratio of this decision has been fully relied upon by the High Court in dismissing the claim of the appellant.
In Sukhdev Singh’s case (supra) the leading judgment was delivered also by Ray, CJ. Two questions fell for consideration-( l) whether an order of. removal from service contrary to Regulations would enable the employee to a declaration against the statutory corporation of continuance in service or would it end up in claim for damages only and (2) whether the employee of a statutory corporation is entitled to claim protection of Articles 14 and 16 against the Corporation. The Court, therefore, straight went into the question as to whether statutory corporations were authorities within the meaning of Article 12. As a fact, three corporations being the oil and Natural Gas Commission, the Life Insurance Corporation and the Industrial Finance Corporation were before the Court and each one of them had been set up under a special statute. At page 641 of the Reports, the learned Chief Justice pointed out:
"In the background of the provisions of the
three Acts under consideration, the question
arises as to whether these Corporations can be
described to be authorities within the meaning of
Article 12 of the Constitution . " At page 642 of the Reports the conclusion was reached to the effect that "these statutory bodies are ’authorities’ within the meaning of Article 12 of the Constitution." We are really concerned with what Mathew J., added to the judgment He observed:
"The test propounded by the majority is
satisfied so far as the oil and Natural Gas
Commission is concerned as section 25 of the oil
and Natural Gas Commission Act provides for
issuing, binding direction to third parties not to
prevent the employees of the Commission from
entering upon their property if the Commission so
directs. In other words, as section 25 authorises
the Commission to issue binding directions to
third parties not to prevent the employees of the
Commission from entering into their land and as
disobedience of such directions is punishable
under the relevant provision of the Indian penal
Code since those employees are deemed to be pubic
servants under section 21 of the Indian Penal Code
by virtue of section 27 of the Act, the Commission
is an ’authority’ within the meaning of the
expression ’other authorities’ in Article 12
Though this would be sufficient to make the
commission a ’State’ according to the decision of
this Court in the Rajasthan Electricity Board case
(supra), there is a larger question which has a
direct bearing so far as the other two
corporations are concerned, viz., whether, despite
the fact that there are no provisions for issuing
binding directions to third parties the
disobedience of which would entail penal
consequences, the corporations set up under
statutes to carry on business of public importance
of which is fundamental to the life of the people
can be considered as ’State’ within the meaning of
Article 12." Mathew, J. referred to the precedents and other authorities from England, France and United States and at page 654 of the Reports stated:
"The ultimate question which is relevant for
our purpose is whether such a corporation is an
agency or instrumentality of the government for
carrying on a business for the benefit of the
public. In other words, the question is, for whose
benefit was the corporation carrying on the
business? When it is seen from the provisions of
that Act that on liquidation of the corporation,
its assets should be divided among the
shareholders, namely, the Central and State
governments and others, if any, the implication is
clear that the benefit of the accumulated income
would go to the Central and State Governments.
Nobody will deny that an agent has a legal
personality different from that of the principal.
The fact that the agent is subject to the
direction of the principal does not mean that he
has no legal personality of his own .............
The crux of the matter is that public corporation
is a new type of institution which has sprung from
the new social and economic functions of
government and that it therefore does not neatly
fit into old legal categories. Instead of forcing
it into them, the later should be adapted to the
needs of changing times and conditions.
I do 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 other
like organisations, though they exercise power
over their employees which might violate their
fundamental rights, would be ’State’ within the
meaning of Article 12." Then comes the case of Ramana Dayaram Shetty v. The International Airport Authority of India & Ors., [1979] 3 SCR 1014. The question before the Court was whether the International Airport Authority of India was ’State’ within the meaning of Article 12 so as to be subjected to enforcement of fundamental rights against it. Examining this aspect, Bhagwati, J., as he then was spoke for the threeJudge Bench thus:
"Now it is obvious that the government which
represents the executive authority of the State ,
may act through the instrumentality or agency of
natural persons or it may employ the
instrumentality or agency of judicial persons to
carry out its functions. In the early days, when
the Government had limited functions it could
operate effectively through natural persons
constituting its civil service and they were found
adequate to discharge governmental functions,
which were of traditional vintage. But as the
tasks of the government multiplied with the advent
of the welfare State, it began lo be increasingly
felt that the frame work of civil service was not
sufficient to handle the new tasks which were
often of specialised and highly technical
character. The inadequacy of the civil service to
deal with these new problems came to be realised
and it became necessary to force a new
instrumentality or administrative device for
handling these new problems. It was in these
circumstances and with a view to supplying this
administrative need that the public corporation
came into being as the third arm of the
Government. As early as 1819 the Supreme Court of
the United States in Mac Cullough v . Maryland, (4
Wheat 315) held that the Congress has power to
charter corporations as incidental to or in aid of
governmental functions and , as pointed out by
Mathew J., in Sukhdev v. Bhagat Ram, (supra) such
federal corporations would ex-hypothesi be
agencies of the Government. In Great Britain too,
the policy of public administration through
separate corporations was gradually evovled and
the conduct of basic industries through giant
corporations has now become a permanent feature
of public life. So far as India is concerned, the
genesis of the emergence of corporations as
instrumentalities or agencies of Government is to
be found in the Government of India Resolution on
Industrial Policy dated with April, 1948 where it
was stated inter alia that ’management of state
enterprises will as a rule be through the medium
of public corporation under the statutory control
of the Central Government who will assume such
powers as may be necessary to ensure this.’ It was
in pursuance of the policy envisaged in this and
subsequent resolutions on Industrial policy 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 Government departmentally through
service personnel, but the instrumentality or
agency of the corporations was resorted to in
these cases having regard to the nature of the
task to be performed. The corporations acting as
instrumentality or agency of Government would
obviously be subject to the same limitations in
the field of constitutional and administrative law
as Government itself, though in the eye of the
law, they would be distinct and independent legal
entities. If the Government acting through its
officers is subject to certain constitutional and
public law limitations, 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
is how to determine whether a corporation is
acting as instrumentality or agency of Government.
It is a question not entirely free from
difficulty." It was again pointed out in the same case that:
"A corporation may be created in one of two
ways. It may be either established by statute or
incorporated under a Law such as the Companies
Act, 1956 or the Societies Registration Act, 1860.
Where a corporation is wholly controlled by
Government not only in its policy making but also
in carrying out the functions entrusted to it by
the law establishing it or by the Charter of its
incorporation, there can be no doubt that it would
be an instrumentality or agency of Government ..." The Court further stated:
"But the public nature of the function, if
impregnated with governmental character or ’tied
or ent-wined with government’ or fortified by some
other additional factor may render the corporation
an instrumentality or agency of Government.
Specifically, if a department of Government is
transferred to a corporation, it would be a strong
factor supportive of this inference.
It will thus be seen that there are several
factors which may have to be considered in
determining whether a corporation is an agency or
instrumentality of Government. We have referred to
some of these factors and they may be summarised
as under: whether there is any financial
assistance given by the State, and if so, what is
the magnitude of such assistance whether there is
any other form of assistance, given by the State,
and if so whether it is of the usual kind or it is
extraordinary, whether there is any control of the
management and policies of the corporation by the
State and what is the nature and extent of such
control, whether the corporation enjoys State
confer red or State protected monopoly status and
whether the functions carried out by the
corporation are public functions closely related
to governmental functions This particularisation
of relevant factors is however not exhaustive and
by its very nature it cannot be, because with
increasing assumption of new tasks growing
complexities of management and administration and
the necessity of continuing adjustment in
relations between the corporations and Government
calling for flexibility, adapt ability and
innovative skills, it is not possible to make an
exhaustive enumeration of the tests which would
invariably and in all cases provide an unfailing
answer to the question whether a corporation is
governmental instrumentality or agency. At page 1052 of the Reports the Court proceeded to consider whether International Airport Authority of India could be said to be an ’authority’ falling within the meaning of ’State’ in Article 12. The constitution of the body, the manner of filling it up? Government’s power of control in the matter of appointment of members and termination of membership were utilised as tests for examining whether the Airport authority was ’State’. After referring to the special A aspects, the Court observed:
"It will be seen from these provisions that
there are certain features of the respondent which
are eloquent and throw considerable light on the
true nature of the first respondent. In the first
place, the Chairman and Members of the first
respondent are all persons nominated by the
Central Government and the Central Government has
also the power to terminate their appointment as
also to review them in certain specified
circumstances. The Central Government is also
vested with the power to take away the management
of any airport from the first respondent and to
entrust it to any other person or authority and
for certain specified reasons, the Central
Government can also supersede the first
respondent. The Central Government has also power
to give directions in writing from time to time on
questions of policy and these directions are
declared binding on the first respondent." Reference was made to the case of Sabhajit Tewary (supra). Bhagwati, J. referring thereto stated :-
"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." and ultimately it was held that the Authority was ’State’ under Article 12. This case clearly approves the treatment of the matter by Mathew, J. in Sukhdev Singh’s case (supra). The two-Judge Bench in the case of Managing Director, Uttar Pradesh Warehousing Corporation & Anr. v. Vinay Narayan Vajpayee, [1980] 2 SCR 773 was cited but we do not consider it necessary to refer to the same. On the other hand reference to the two later decisions of this Court may be more useful. Those are Ajay Hasia etc. v. Khalid Mujib Sehravardi & Ors. etc., [1981] 2 SCR 79 of a Constitution Beocll and the other is Som Prakash Rekhi v. Union of India & Anr., [1981] 2 SCR 111 being a three-Judge Bench decision. It is pertinent to indicate that both the judgments were delivered on November 13, 1980.
In Ajay Hasia’s case an Engineering College was also a Society registered under the Jammu & Kashmir Registration of Societies Act, l898, and the question that fell for consideration was whether it was an authority within the meaning of Article 12. The Court found that the Memorandum of Association of the Society in clause (3) set out the objects for which the Society was incorporated and they included among other things establishment of the college with a view to providing instructions and research in such branches of engineering and technology as the college may think fit and for the advancement of learning and knowledge in such branches. Reference was made to the Memorandum of Association, the objects and the powers of the State Government to make appointments and to the fact that the State government with the approval of the Central Government had the power to take such action and to issue such directions as are necessary in respect of all matters relating to the functioning of the college as noticed in the review of the activities. the Court also took note of the fact that the founding members of the society were enumerated in clause (9) of the memorandum and they were the Chairmen to be appointed by the State Government with the approval of the Central Government, two representatives of the State Government, one representative of the Central Government, two representatives of the All India Council for Technical Education to be nominated by the Northern Regional Committee, one representative of the University of Jammu & Kashmir, one nonofficial representative of each of the Punjab, Rajasthan, UttarPradesh and Jammu & Kashmir States and to be appointed by the respective Governments in consultation with the Central Government and the principal who shall also be the ex-officio Secretary. The rules of the Society were referred to with a view to finding out the details of functioning. Sabhajit Tewary’s case was referred to and distinguished and the tests laid down in the International Airport Authority’s case (supra) were approved. Ultimately the Court summarised the position as under: " The tests for determining as to when a
corporation can be said to be an instrumentality
or agency of Government may now be culled out from
the judgment in the International Airport
Authority’s case. These tests ate 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 stretched so far as to bring in
every autonomous body which has some nexus with
the Government within the sweep of the expression.
A wide enlargment 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) "Where 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 inpregnated with governmental
character. "
(3) "It may also be a relevant factor whether
the corporation enjoys monopoly status which
is 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 are
of public importance and closely related to
governmental functions, it would be a
relevant factor in classifying the
corporation as an instrumentality or agency
of Government.
(6) "Specifically, if a department of
Government is transferred to a corporation,
it would be a strong factor supportive of
this inference of the corporation being an
instrumentality or agency of Government." The Court thereafter proceeded to say:
"We may point out that it is immaterial for
this purpose whether the corporation is created by
a statute or under a statute. The test is whether
it is an instrumentality
or agency of the Government and not as to how it
is created. The inquiry has to be not as to how
the juristic person is born but why it has been
brought into existence. The corporation may be a
statutory corporation created by a statute or it
may be a Government Company or a company formed
under the Companies Act, 1956 or it may be a
society registered under the Societies
Registration Act, 1860 or any other similar
statute. Whatever be its genetical origin, it
would be an ’authority’ within the meaning of
Article 12 if it is an instrumentality or agency
of the Government and that would have to be
decided on a proper assessment of the facts in the
light of the relevant factors. The concept of
instrumentality or agency of the Government is not
limited to a corporation created by a statute but
is equally applicable to a company or society and
in a given case it would have to be decided, on a
consideration of the relevant factors, whether the
company or society is an instrumentality or agency
of the Government so as to come within the meaning
of the expression ’authority’ in Article 12." At pages 99 and 100 of the Reports, the Constitution Bench referred to the facts of the particular case and came to hold that the society was an instrumentality or agency of the State. In Som Prakash Rekhi’s case (supra) at page 137 of the Reports, Krishna Iyer, J. referred to the five tests and concluded by saying that:
"The finale is reached when the cumulative
effect of all the relevant factors above set out
is assessed and once the body is found to be an
instrument or agency of Government, the further
conclusion emerges that it is ’State’ and is
subject to the same constitutional limitations as
Government At page 138 the criticism against the conclusions reached in the c, Airport Authority’s case was taken note of and the learned Judge observed:
"There is no doubt that Bhagwati, J. broadened the
scope of State under Article 12 and according to
Shri G.B. Pai the observations spill over beyond
the requirements of the case and must be dismissed
as obiter." Pathak, J., as he then was, added a brief note to the judgment by A saying:
"I must confess to some hesitation in accepting
the proposition that the Bharat Petroleum
Corporation Limited is a ’State’ within the
meaning of Article 12 of the Constitution. But in
view of the direction taken by the law in this
Court since Ramana Dayarama Shetty v.
International Airport Authority I find I must lean
in favour of that conclusion. I would have
welcomed a wider range of debate before us on the
fundamental principles involved in the issue and
on the implications flowing from the definition in
the Companies Act, 1956 of a ’Government Company’?
but perhaps a future case may provide that." We have thus the tests available in the two decisions to be applied to the facts of the case in hand for determination as to whether ICPS is ’State’ within the meaning of Article 12.
There are two more cases to which brief reference may now be made-B.S. Minhas v. Indian Statistical Institute & Ors., [1984] 1 SCR 395 and P.K. Ramachandra Iyer & Ors. v. Union of India & Ors., [1984] 2 SCR 200. The case of the Indian Statistical Institute is also of a society registered under the Societies Registration Act. The Court found that the entire money required for funding the Institute was provided by the Central Government and even if any other money was to be received by the Institute it could be done only with the approval of the Central Government and the accounts of the Institute were to be submitted to the Central Government for its scrutiny and satisfaction. The Society had to comlpy with all directions as may be issued by the Central Government. ’The control of the Central Government was deep and pervasive and, therefore, it was an instrumentality of the Central Government and as such was an authority within the meaning of Article 12 of the Constitution. ln coming to this conclusion, the Court relied upon the tests indicated in the International Airport Authority’s case as also in the case of Ajay Hasia.
In Ramchandra Iyer’s case, the question for consideration was whether the Indian Council of Agricultural Research (ICAR) was a set up within the meaning of Article 12 of the Constitution. ICAR is also a Society registered under the Societies Registration Act. The Court found that when it was set up, it was an attached office of the Government of Tndia and had not undergone any change when it got transferred into a Society. Applying the tests indicated in International Airport Authority case as also the case of Ajay Hasia, the Court came to the conclusion that there was little doubt that it was an instrumentality or agency of the State. It further stated:
"ICAR came into existence as an integral
department of the Government of India and later on
became an attached office of the Central
Government. The composition of the ICAR as
evidenced by Rule 3 could not have been more
governmental in character than any department of
the Government."
It is time to turn to the facts of the present case to find out as to what the conclusion should be when the tests formulated by the several cases of this Court referred to above are applied. There cannot indeed be a strait jacket formula. It is not necessary that all the tests should he satisfied for reaching the conclusion either for or against r holding an institution to be ’State’. In a given case some of the features may emerge so boldly and prominently that a second view may not be possible. There may yet be other cases where the matter would be on the border line and it would be difficult to take one view or the other outright.
Our struggle for independence which spread over a century bore fruit in 1947. During the long period of struggle, the British Government following the pattern of the democratic system prevailing in their own country had patronised the evolution of a process of self government. The Government of India Act of 1935 which was a positive improvement on the previous Acts had introduced provincial autonomy and the Indian Independence Act, 1947, adopted that pat tern of Government. Even the Constitution which the people of India gave unto themselves in 1949 and which came into force from the 26th of January, 1950, followed that pattern, of course, with considerable modifications. Thus when we became independent a democratic pattern had evolved in this country through more or less an historical process. Soon the princely States disappeared by a process of merger and the Constitution ultimately came to have a federal base the federating States as the units and the federation at the Centre.
Democracy pre-supposes certain conditions for its successful working. It is necessary that there must be a deep sense of understanding, mutual confidence and tolerance and regard and acceptance
Of the views of others. In the early years of freedom, the spirit of sacrifice and a sense of obligation to the leadership that had helped the dream of freedom to materialise had been accepted. The emergence of a new generation within less than two decades of independence gave rise to a feeling that the people’s representatives in the Legislatures required the acquisition of the appropriate democratic bias and spirit. ICPS was born as a voluntary organisation to fulfil this requirement. At the inception it was certainly not a governmental organisation and it has not been the case of the parties in their pleadings nor have we been told at the bar during the long arguments that had been advanced that the objects of ICPS are those which are a State obligation to fulfil. The Society was thus born out of a feeling that there should be a voluntary association mostly consisting of Members of the two Houses of Parliament with some external support to fulfil the objects which were adopted by the Society.
To Start with, the Society was accommodated in the Parliament House but in due course it shifted out. The President of India inaugurated the Society. Very appropriately the Speaker of the Lok Sabha became its first President and three Ministers, a former Chief Justice of India and a former Attorney General joined as its VicePresidents. Some of the public officers were also associated in the administrative set-up of the Society. Individual Members of Parliament and the corporate body known as Parliament are certainly two different concepts. Services of some of the employees of Parliament were lent to the Society. While Article 12 refers to Parliament as such, a few Members of Parliament cannot be considered as Parliament so as to constitute that body as referred to in Article 12. The Speaker and the Ministers who joined as Vice-Presidents of the Society were there in their individual capacities and not as Ministers, though designations were indicated. In the category of Vice-Presidents, Executive Chairman, Treasurer and members, there were many people who were really not a part of Government as such and some of them did not belong to Parliament.
The objects of the Society were not governmental business but were certainly the aspects which were expected to equip Members of Parliament and the State Legislatures with the requisite knowledge and experience for better functioning. Many of the objects adopted by the Society were not confined to the two Houses of Parliament and were intended to have an impact on society at large.
The Memorandum of the Society permitted acceptance of gifts, donations and subscriptions. There is material to show that the Ford Foundation, a US based Trust had extended support for some time. Undoubtedly, the annual contribution from the Government has been substantial and it would not be wrong to say that they perhaps constitute the main source of funding, Yet some money has been coming from other sources. In later years, foreign funding came to be regulated and, therefore, it became necessary to provide that without Government clearance like any other institution, ICPS was not to receive foreign donations. No material has been placed before us f the stand that the Society was not entitled to receive Contributions from any indigenous source without Government sanction. Since Government money has been coming, the usual conditions attached to Government grants have been applied and enforced. If the society’s affairs were really intended to be carrier on as a part of the Lok Sabha or Parliament as such, the manner of functioning would have been different. The accounts of the Society are separately maintained and subject to audit in the same way as the affairs of societies receiving Government grants are to be audited. Government usually impose certain conditions and restrictions when grants are made. No exception has been made in respect of the Society and the mere fact that such restrictions are made is not a determinative aspect.
Considerable attempt has been made by Mr. Rao, learned counsel for the appellant, to show that in the functioning of the Society there is deep and pervasive control of government. We have examined meticulously the correspondence and the instances where control was attempted to be exercised or has, as a fact, been exercised but these again are features which appear to have been explained away
We were taken through the report submitted by the Tripathi Committee which had been set up to suggest changes in the set up and affairs of the Society. The report and the steps taken on the basis of the report are also not material which can be taken to be indisputable features for reaching the conclusion one way or the other. We were shown the correspondence by the Minister of Law with the Executive Chairman of the Society. Undoubtedly the Minister has tried to exercise his authority as the controlling department of Government in the matter of making the grant. As we have already pointed that itself may not be a conclusive feature.
We have several cases of societies registered under Societies Registration Act which have been treated as ’State’ but in each of those cases it would appear on analysis that either governmental business had been undertaken by the Society or what was expected to be the public obligation of the ’State’ had been undertaken to be performed as a part of the Society’s function. In a Welfare State, as has been pointed out on more than one occasion by this Court, Governmental control is very pervasive and in fact touches all aspects of social existence. ln the absence of a fair application of the tests to be made, there is possibility of turning every non-governmental society into an agency or instrumentality of the State. That obviously would not serve the purpose and may be far from reality. A broad picture of the matter has to be taken and a discerning mind has to be applied keeping the realities and human experiences in view so as to reach a reasonable conclusion. Having given our anxious consideration to the facts of this case, we are not in a position to hold that ICPS is either an agency or instrumentality of the State so as to come within the purview of ’other authorities’ in Article 12 of the Constitution. We must say that ICPS is a case of its typetypical in many ways and the normal tests may perhaps not properly apply to test its character.
While we were referring to the cases in an earlier part of our judgment, we have noticed the caution indicated by this Court that even if some institution becomes ’State’ within the meaning of Article 12, its employees do not become holders of civil posts so as to become entitled to the cover of Article 311. They would, however, be entitled to the benefits of Part III of the Constitution. It is unnecessary to examine the appellant’s case keeping Articles 14 and 16 of the Constitution in view as on the concession of Dr. Anand Prakash the proceedings will have to reopen.
Before we part with this case, we must indicate what reliefs the appellant would be entitled to. Now that the order of the dismissal is set aside and the proceedings have been restored to the stage of enquiry, the appellant shall be deemed to have been restored to service. The appellant would have become entitled to the normal relief available in such a situation. He should be deemed to be in service and we do not agree with Dr. Anand Prakash that his suspension should continue. His suspension which had merged into dismissal has been vacated. It shall, however, be open for the employer to make any direction as is deemed appropriate in that behalf in future. The appellant, therefore, becomes entitled to the salary for the past period subject to his satisfying the authorities that he has not earned any other income during that period. The appellant shall be given reasonable opportunity by the enquiring officer to meet the charges and the enquiry shall be completed with in four months. The appellant has personally assured us in Court that he will fully cooperate in the enquiry. The enquiry officer shall allow inspection to the appellant of all records relevant to the enquiry.
We make no order as to costs. S.L. Appeal disposed of.