Calcutta High Court
Sri Anupam Ghosh vs Union Of India (Uoi) And Ors. on 31 August, 1990
Equivalent citations: (1991)1CALLT300(HC)
Author: Ganendra Narayan Ray
Bench: Ganendra Narayan Ray
JUDGMENT Ganendra Narayan Ray, J.
1. This appeal is directed against the judgment dated 10.8,87 passed by Mr. Justice Umesh Chandra Banerjee in C.O. No. 11155(W) of 1986. By the aforesaid judgment, the learned trial Judge dismissed the writ petition. Sri Anupam Ghosh was the Finance Director of Andrew Yule & Co. Ltd., which is admittedly a Government Company within the meaning of the Companies Act. In the letter of appointment of the writ petitioner-appellant, Sri Anupam Ghosh, it was,inter alia, provided that the service of Sri Ghosh was liable to be terminated on either side on three months' notice or on payment of three month's salaries in lieu thereof. The service of Sri Ghosh was terminated by an order dated 22.8.86 and he was served with a letter of termination with immediate effect and a cheque of three months salary in lieu of notice was enclosed with the letter, of termination. Such letter of terminaion was the subject matter of challenge in the writ petition concerning Civil Order No. 11155(W) of 1986 and it was contended that such order of termination was malafide and an utter abuse of the power vested in the concerned authority and the same was also bad on the ground of lack of fairness. In the writ proceeding, it was strongly contended on behalf of M/s. Andrew Yule & Co. Ltd. and also other respondents that the said Company not being a 'State' within the meaning of Article 12 of the Constitution, the writ petition for challenging the order of termination of contract of service was not maintainable. It was also contended that in any event, the said order of termination squarely belongs to the field of private law and not to the field of public law and no public duty being involved in regulating the contract of service between the, writ petitioner and M/s. Andrew Yule & Co. Ltd. no writ would be issued in a challenge of the said order of termination of service. The learned trial Judge has held that the said Company was not a 'State' within the meaning of Article 12 of the Constitution, the writ petition therefore, was not maintainable for challenging the said order of termination. The learned trial Judge indicated the outline of the arguments advanced by the parties on the question of nature of duties, namely, whether public or private law was involved in dealing with the contractual service of the writ petitioner but the learned trial Judge refrained from making any finding on the said question in view of his finding that the Company not being an instrumentality of the Government, no writ would lie against the Company and therefore, the decision on the said question was not necessary for the disposal of the writ petition. It appears that large number of decisions were cited at the hearing of the said case and the learned trial Judge has taken pains in summarising the decisions cited by the respective parties on the question as to whether or not M/s. Andrew Yule & Co. Ltd. (hereinafter referred to as the 'Company') was an instrumentality of the Central Government and as such, a 'State' within the meaning of Article 12. The features and characteristic of an institution, corporation, company or society making it an instrumentality of the State as indicated in various judgment of the Supreme Court have been indicated by the learned trial Judge very succinctly and considering the facts and circumstances of the case and the incorporation and functioning of the Company and the nature of control exercised by the Central Government over the Company, the learned trial Judge has come to the finding that the said Company is not an instrumentality of the Central Government and as such, not a 'State' within the meaning of Article 12 of the Constitution. The various aspects relevant for the consideration as to whether or not an institution, company, society or a body corporate is an instrumentality of the 'State' within the meaning of Article 12 of the Constitution have been indicated by the learned trial Judge with reference to the decisions of the Supreme Court and other High Courts in order to appreciate the contentions of the parties raised in the writ petition and also in the instant appeal. It will be only desirable to refer to the said aspect constituting an instrumentality of the State. The learned trial Judge has held that whether the functions are closely related to governmental function and whether department of a Government is transferred to a corporation or whether rule making or regulation making power has been given, which when made would regulate the dealing with the people at large are clear feature in support of treating the institution as an instrumentality or agency of the Government. But when the Government while embarked upon the commercial activity put funds and exercise direct or indirect control arid receive the profits such facts by themselves will not be adequate to hold the institution an agency or instrumentality of the Government. Large number of decisions of the Supreme Court and other High Courts were cited at the hearing of the writ proceeding and the learned trial Judge having referred to the said decision have summarised the ratio of the decisions. The learned trial Judge has considered amongst other, the; following decisions of the Supreme Court arid other High Courts. ... .
(i) Praga Tools Corporation v. Imannual ,
(ii) Heavy Engineering Mazdoor Union v. State of Bihar
(iii) Sukhdeb Singh v. Bhagat Ram (AIR 1979, SC 1331),
(iv) Sabhajit Tewari v. Union of India (AIR 1975, SC 1325),
(v) Rammanna D. Shetty v. International Airport Authority ,
(vi) A joy Hasia v. Khatid Mujit ,
(vii) G.C. Gupta v. Kashmir Bank ,
(viii) Tekraj v. Union of India (AIR 1980, SC 469),
(ix) B.K. Patra v.. .."... and
(x) Central Inland Water Transport Corporation v. B. N. Gangully .
2. The learned trial Judge has held that the shares of the Company, which were privately owned were acquired from time to time and the majority of holding now belongs to the Central Government. Such shares are regularly quoted in the Stock Exchange Market. The Company did not receive any grant in aid or subsidy atleast in Seventh Plan period from the Central Government and the Company also functions as a holding Company of large number tea growing and manufacturing Companies. There are a number of competitors in the market and the Company does not enjoy any privilege of monopoly in its trading activity. The Company also does not get any preferential treatment in the matter of contract or orders from the Government. The Company generates its own funds from financial corporations, whatever money has come from the Central Government, has been credited to the Company's account as loan repayable with interest. In the matter of policy and management, the Company is wholly independent. The whole time Directors are appointed by the President of India, who holds 86.31% ordinary shares. Its account is liable to audit and scrutiny by the Comptroller and Auditor General of India as provided in the Companies Act, 1956. There is no other control by the Central Government. In regard to the functioning of the Company, it is neither of public importance nor closely related to Government functions. The entire share capital of the Company is not held by the Government. The Government's loan and equity as a percentage of total expenditure comes to 5.57% and the Government loan as a percentage of total expenditures comes to 2.311 % and that is also restricted upto the Sixth Plan period. The learned trial Judge has also held that the management of the Company rest with the Board of Directors and the decisions are also of the Board and not by the Government. No department of the Government has been transferred to the Company. Accordingly, there is no deep any pervasive State Control as far as the function of the Company is concerned. The learned trial Judge has also held that the company is a trading company like similar other companies in the field and its functions cannot be termed to be the functions of. public importance and of nature closely related to the governmental functions. The learned trial Judge has held that to be an instrumentality or agency of the Government, it is necessary to consider the cumulative effect of various tests indicated by the Supreme Court in the aforesaid decisions and satisfaction of one or two may not be sufficient to constitute an institution, company, society or corporation a 'state' within the meaning of Article 12 of the Constitution. Referring to the decision made in the case of Central Inland Water Transport Corporation, the learned trial Judge has indicated that the Supreme Court in the said case had taken note of the monopolistic status and trading in water transport by the said Corporation and on consideration of such nature of trading together with the financial assistance and deep and pervasive State control and also on consideration of the fact that the said Corporation is discharging the function of public importance in regard to the river transport, the Supreme Court has held that such corporation is art instrumentality of the Government but the company does not satisfy of the said tests.
3. Mr. Malay Kumar Basu, the learned counsel appearing for the appellant has contended that the various tests, satisfaction of which makes an institution, company or society etc. an instrumentality of the Government have been indicated in the decisions referred to by the learned trial Judge. The trial Judge has summarised the decisions made in the cases referred to by him but he has failed to appreciate the facts relating to the company, which clearly establish that the finance of the company is more or less fully controlled by the Central Government and the share capital is principally owned by the President of India. In the matter of constitution of the Board of Directors, there is deep and pervasive control of the Central Government and the nominees of the Central Government are in the Board of Directors. The policy outline made by the Central Government from time to time is strictly followed by the company in moulding its trading activities. Although under the Companies Act, 1956, the company, a Government company functions through the Board of Directors but there is deep and pervasive control of the Central Government in the functioning of the company by nominating a number of Directors in the Board. He has also submitted that the Board of Directors of the Company has virtually no decision making power starting from capital expenditure, payment of dividend, appointment of persons beyond a certain limit, settlement of charter of demands and fixation of pay scales of the employees. The Board of Directors are bound to give effect to orders, directives or instructions issued by the Central Government. Mr. Basu has submitted that the said features clearly point out that the company enjoins a deep and pervasive control of the Government and the factors which weighed with the Supreme Court in coming to the decision that the Central Inland Water Transport Corporation was an instrumentality of the Government are also satisfied in the instant case. Mr. Basu has referred to the guidelines of Bureau of Public Enterprises for contending that such guidelines relate to the functioning of the company and contrary to the guidelines, the company is not permitted to function. The Board of Directors of the Company cannot take any independent decision overriding the guidelines issued by the Bureau of Public Enterprises. It has been contended by Mr. Basu that when the company became public enterprise in 1979, it became part of the Government planning process and was asked to put up its proposal for the Sixth Plan period covering 1980-81 and 1984-85 to be indicated by the Government in Sixth Five Year plan. The Board of the company submitted its plan to the Government for Rs. 10 crores against which actual expenditure incurred during the period was 7.36 crores. The Central Government also provided finance to the extent of Rs. 2.62 crores, which was about 85% of the total requirement of the company. Mr. Basu has submitted that the company could not deny the said fact but at the time of hearing before the learned trial Judge, an attempt was made to distort the facts by adding the revenue expenditure with capital expenditure during the said period to indicate that financial assistance was only 5.57% and the learned trial Judge was misled and made an erroneous finding to that effect. Mr. Basu has contended that merely because the company is a trading concern and is engaged in trading activities with other companies in the field, the company cannot be held to be an instrumentality or agency of the State is not a correct proposition. The anxiety of the Government in the development of public sector enterprises thereby achieving the goal of planned development of the country cannot be under-estimated. The Central Government has set up a separate department, known as department of Public Enterprise under the Ministry of Industries in order to ensure proper functioning of the public enterprises. The effect of such deep and pervasive control have been indicated in various decisions of the Supreme Court including the decision in Ajoy Hasia and International Airport Authority's case. Mr. Basu has submitted that what constitutes deep and pervasive control cannot be formulated precisely and the question as to whether or not there are deep and pervasive control of the Central Government or State Government over a company, society, etc. are to be decided on consideration of the relevant facts relating to such company, society, etc. He has contended that if the articles of the company are referred to, it will be evident that the Board of Directors is functioning in accordance with the orders, instruments and directions of the Government. The control of the Government over the company is not nominal but real. Under the Articles of Association of the Company, the President of India has derived enormous power in controlling the affairs of the company. Such power together with the rights by virtue of being a majority share holder, the President and for that matter, the Central Government exercises control to a very great extent on the functioning of the company. The overall effect of the control being exercised by the Central Government on the company should be appreciated for deciding the true character of the company.
4. Mr. Basu has submitted that the learned trial Judge has held that excepting scrutiny by the ComptoUer and Auditor General of India of the accounts of the company, there is no other Governmental control. He has contended that such scrutiny by the Comptroller and Auditor General of India clearly reveals the deep and pervasive control of the Central Government on the affairs of the Company and checking of the audited account of the company by the Comptroller and Auditor General of India would not have been made if the Central Government was not vitally interested in the affairs of the company and did not intend to exercise control on the functioning of the company. Mr. Basu has submitted that the decision made in the case of Central Inland Water Transport Corporation being a later decision should have been followed by the learned trial Judge in preference to other earlier decisions of the Supreme Court for deciding the question as to whether or not the company was an instrumentality or agency of the Government by applying the principle laid down in the decision of Central Inland Water Transport Corporation's case. Mr. Basu has contended that financial assistance from the Central Government to the company and its funds generated by the contributions from the central Government by itself may not be the sole factor to determine the agency or instrumentality of the Government, but deep and pervasive control of finance is a very important guideline. In this connection, he has referred to the decision in Sukdeb Singh's case wherein it has been held that financial control is undoubtedly one of the very positive indication of deep and pervasive control of the Government. In Tekraj's case, the effect of financial control has been highlighted by the Supreme Court., He has submitted that so far as the company is concerned, even if there is no financial assistance in the Seventh Plan period as contended, it has clearly emerged that there is deep and pervasive control on the functioning of the company by the Central Government as indicated hereinbefore. Hence, the company cannot be held to be a ordinary Government Company engaged in trading activities like similar other companies in the field. He has submitted that in the facts of the case, the decisions indicated by the Supreme Court can be applied in the matter of consideration and functioning of the company. Hence, the learned trial Judge was wrong in not holding that the company is an instrumentality or agency of the Central Government. Mr. Basu has submitted that an agency or instrumentality of the Government cannot take any unjust action not backed by reasons by resorting to contract of service. Mr. Basu has contended that an agency or instrumentality of the State Government is not permitted to deal with its employees in any manner it likes if such action does not create any breach of contract of service. The action relating to the service of the employees of the company must be reasonable and not arbitrary and irrespective of any contract of service it should be demonstrated that the impugned action of termination of service was fairly made in the interest of the company. Any arbitrary power to terminate the service by giving a notice of three months or pay of three months in lieu of notice simply on the basis of terms of contract has been held to be illegal and void by the Supreme Court. He has contended that the pleasure doctrine of master in relation to servant in good older days is not applicable in the field of public employment concerning public enterprise including the Government Company. Accordingly, the company is under an obligation to satisfy the Court as to whether or not there was a real justification for terminating the service of the Director of Finance, namely, the petitioner. He has submitted that such exercise has unfortunately not been made by the learned trial Judge as he has proceeded under an erroneous view that the company is not a 'state' within the meaning of Article 12 of the Constitution and as such, any further consideration about the validity of the order of termination is not necessary. Mr. Basu has submitted that the appeal court should come to the finding that the company is a 'state' within the meaning of Article 12 and in the absence of any just cause, warranting termination of service of the writ petitioner, the impugned action under the cover of terms of contract of service just at the sweetwill of the company is illegal and invalid. The Court of Appeal should, therefore, quash the impugned order of termination and/or to remit the matter back before the learned trial Judge to consider as to whether or not in the absence of the said terms of contract, namely, termination of service by giv-ing three months' notice, the order of termination can be held to be otherwise justified and as such reasonable.
5. Mr. Milan Banerjee, the learned Solicitor General, appearing for the respondent-company, has submitted that the law is well settled as to under what circumstance an institution, company or a body corporate may be held as instrumentality or agency of the State. He has submitted that the learned trial Judge has summarised the decisions cited before him at the hearing and has correctly applied the principles involved in the said decisions. Mr. Banerjee has submitted that the learned trial Judge has elaborately dealt with various aspects relevant for a decision about an institution, society of a body corporate to be an instrumentality or agency of the state. He has analysed the facts and circumstances of the case relating to the company in applying the principles formulated in the said decisions and on such analysis, has come to the finding that the factors which make a company or body corporate etc., an agency or instrumentality of the Government are not present in the case of the company. Mr. Banerjee has contended that simply because a company is a Government company or the guidelines or instructions issued by the Bureau of Public Enterprises or the Central Government from time to time are taken note of by the Government company in moulding its activities, it cannot be held that there is a deep and pervasive control of the Central Government on the functioning of the company. So far as the financial aid and assistance of the Central Government is concerned, Mr. Banerjee has contended that at initial stage substantial financial aid and assistance had been given by the Government so that the company could properly function but with the lapse of time, such aid and assistance has been minimised and in the Seventh Plan period, there is no provision for giving financial aid or subsidy to the company. The learned trial Judge has rightly held that the company is generating its own funds by taking loans and finance from various financial institutions and whatever money was advanced by the Central Government had been credited to the accounts of the company as loan repayable with interest. The fact that entire share capital is not held by the Government and the company is generating its own funds by raising loans clearly demonstrate that the company is not fully controlled by the Central Government in the matter of finance. Mr. Banerjee has contended that the analysis of relevant facts relating to the company by the learned trial Judge in his judgment is correct and basing on the summary of various decisions cited before him, the learned trial Judge has decided the question of instrumentality or agency of the State. He has contended that the decision made in Ajoy Hasia's case, Takrafs case, Som Prokash Rekhi's case have indicated that the cumulative factors should be taken into consideration in determining the case of instrumentality or agency of the Government. He has submitted that the concept of 'authority' under Article 12 should not be unnecessarily stretched so as to bring any autonomous body or government company which has some nexus with the Government within the sweep of the expression 'State'., Mr. Banerjee has submitted that the factors constituting an entity a 'state' are cumulative rather than sequential. Mr. Banerjee has. contended that the company functions in accordance with the Companies Act and the Articles of Association of the Company. It is managed by the Board of Directors. It is not very material that nominees of the Government are in the Board of Directors. In a Government company, such nominees are given. It is also not very material that a Government Company formulates its policy according to various policy decisions of the Government and guidelines issued by the Bureau of Public Enterprise. By various Acts, and Circulars, functioning of private institutions are also controlled by the Government in various ways. Such control by itself does not make any institution or company or a corporate body an instrumentality or agency of the Government. Mr. Banerjee has submitted that in Som Prakash Rekhi's case, Justice Pathak (as his Lordship then was) has indicated that there is a scope for wider debate on the proposition that Government Companies are not authority within the maning of Article 12 of the Constitution. Mr. Banerjee has submitted that the company is a trading company competing with similar other companies trading in the field of its commercial activities and no monopoly status or monopolistic trading in such field is enjoyed by the company. In Central Inland Water Transport Corporation's case, the Supreme Court has highlighted this monopoly status and monopolistic trading in water transport together with the obligation of public nature being discharged by the said Corporation for holding that the said corporation was an instrumentality of the Government. He has submitted that the learned trial Judge has considered the various aspects relating to deep and pervasive control of the Government by referring to the tests demonstrating such control and has given a very cogent reason why the company does not fulfil such tests. Mr. Banerjee has submitted that the company does not discharge functions of public nature partaking governmental actions but it is an ordinary commercial trading body. The learned trial Judge has rightly held that the company is not engaged in functions of public importance. He has submitted in Sukdev Singh's case, International Airport Authority's case, Som Prakash Rekhi's case and Central Inland Water Transport Corporation's case, the functions of public importance have been highlighted by the Supreme Court for deciding the case of instrumentality or agency of the Government. He has, therefore, submitted that the finding of the learned trial Judge that the company is not an instrumentality or agency of the Central Government is a correct finding on appreciation of relevant facts and the principles of law well decided in various decisions of the Supreme Court and no exception should be made to such finding.
6. Mr. Banerjee has also submitted that even it is assumed for argument's sake that the company is an instrumentality or agency of the Government and as such 'State' within the meaning of Article 12 of the Constitution, no public duty or statutory duty has been imposed on the non-statutory company in relation to its obligation to the employees of the company., The employees of the company have also no public nature of duties and /of corresponding legal right under any statutory law. Hence, in the matter of termination of service of the writ petitioner flowing from private contract no writ will lie. Mr. Banerjee has referred to the decision of the Supreme Court made in Praga Tool's case and has contended that in case of a public utility concern there is a duty to give reasonable and adequate service to the public and for failure to give such service as enjoined under a statute a writ may lie against the public utility Concern. Such case is not applicable to the company. Mr. Banerjee has submitted that the distinction between the instrumentality and functional aspect of the action of the instrumentality has to be clearly appreciated. Any action of an instrumentality or agency of the Government in dealing with its employees per 5|e does not make such action a public action amenable to public law remedy by way of writ. The question for consideration in the instant case is whether of not there is any statutory restriction relating to the service of the employee of the company or such relation has been left to the governed by the private contract of service between the employer and the employee. In this connection, Mr. Banerjee has referred to the decision in ex parte Walsh reported in (1984) 3 All England Reporter, page 425. It has been held in the said decision that whether action of an authority pertains to the public law domain that is a state action as opposed to private action must be decided in each case with reference to the particular action and the activity in which the State or instrumentality of the State is involved., He has submitted that state action relating to contractual obligation will not be examined unless the actions have some public law character. If the matter comes in the realm of contract, then there is no scope for interference under Article 226 of the Constitution, which only encompasses public remedies. In this connection, Mr. Banerjee has also referred to a Queen's Bench decision in R v. Secretary for the Home Department ex parte Benwelf reported in 1984(3) All England Reporter, page 854. In considering the question whether applicant was entitled to public law remedy of judicial review by way of writ, it has been held that as in exercise of disciplinary authority on the applicant, the Secretary of State was required to perform a duty imposed on him by a statute, such duty imported a sufficient public law element into the dismissal of the applicant making such dismissal amenable to public law remedy. Mr. Banerjee has submitted that the Supreme Court has reiterated that High Court in the exercise of this jurisdiction under Article 226 of the Constitution would be guided by the broad and fundamental principle that regulates character attached to it. However, the Court will examine the action of the State if they pertain to be public law domain or private law domain. This distinction about the public law character and private law character or field has been clearly brought out by the decision of the Master of Rolls in the case of ex parte Walsh. Mr. Banerjee has submitted that correctness of the decision made by the two Judges' Bench in the decision in Central Inland Water Transport Corporation's case has been questioned by three Judges' Bench by his order dated 28.1.88 and the case has been referred to a larger Bench of the Supreme Court for decision. He has submitted that in Central Inland Water Transport Corporation's case, the Court was concerned not with the breach of contract of the employment or the action of termination of service but the action of the 'State' in framing a condition of service as a term of contract or forcing upon the employees of a large association a contract of employment containing a very harsh clause of termination of service on a short notice. Mr. Banerjee has submitted that the observation in the judgment in Central Inland Water Transport Corporation's case to the effect that as the Corporation is a 'state' within the meaning of Article 12, it is amenable to writ jurisdiction under Article 226 of the Constitution must be understood in the context it was made and not as a broad proposition for holding that if an entity is 'state' its action relating to its employees is amenable to writ jurisdiction. Such broad proposition is contrary to well settled principles of larger Bench decisions of the Supreme Court, including the later decision of the Supreme Court in M.C. Mehta v. Union of India, . The aforesaid observation in the decision of Central Inland Water Transport Corporation's case, ignoring the fundamental distinction between the instrumentality and functional aspect and also ignoring the earner decision of a larger Bench of the Supreme Court made in the case of L.I.C., Ltd. v. Escorts Limited, cannot be held to be a valid exposition of law. Such observation contrary to the principles laid down in the larger decisions of the Supreme Court and made in an attempt to distinguish the three Judges' decision in Ram Krishna Agarwal v. State of Bihar, , should not be treated as law laid down by the Supreme Court under Article 141 of the Constitution. Moreover, the said observation may be distinguished in the facts of the case. In this connection, Mr. Banerjee has referred to a decision of this court made in the case of Oriental Longman reported in (1988) 2 Calcutta High Court Notes 23, where the decision of the Central Inland Water Transport Corporation's case has been distinguished by the Division Bench of this Court. Mr. Banerjee has submitted that in the instant case, the court is not concerned with the status of government servant in public employment, which is governed by the provisions of statutory conditions including the provisions of the Constitution. In Roshanlal Tandoris case and also in Triloki Nath Khosa's case, the Supreme Court has held that a public servant holds a status and condition of service are controlled by statutory provision and not by terms of contract as in the case of private employment. The employees of the company does not enjoy any status and the conditions of service are not also controlled by any statutory provision. He has submitted that in Satis Chandra Anand's case and Purusottam Lal Dhingra's case (AIR 1956 SC 38), it has been held that it is always open in a contract of employment to provide for termination even with regard to the Government servants and such a provision will be effective. Mr. Banerjee has submitted that the proposition that action of the State authority is not par se amenable to writ jurisdiction has been reiterated in two decisions of the Constitution Bench of the Supreme Court, one in the case of Escorts Limited (Supra) and the other in the case of M. C. Mehta (supra). The Constitution Bench in Escorts Limited's case relying upon earlier three Judges' Bench decision of the Supreme* Court in Ram Krishna Agarwal's case (supra) has held that the Court may not ordinarily examine an action of the state unless the action is public law character attached to it. Mr. Banerjee has submitted that the company having terminated the service of one of its employees purely on the basis of terms of contract between the parties has not discharged any function of public nature nor the company is required to perform any duty of public nature in regulating the condition of service of the employees of the company as enjoined by statutory rules or regulations. In the aforesaid circumstances, even if the company is a 'state' within the meaning of Article 12, the legality and validity of the order of termination 6annot be questioned in a writ proceeding and on that score alone, the writ petition is liable to be dismissed without making any enquiry as to whether or not the company is a 'state' within the meaning of Article 12 of the Constitution. Mr. Banerjee has also submitted that the dismissal of the writ petitioner has not occasioned to any failure of justice and such order of dismissal is clearly sustainable in law. The appeal, therefore, should be dismissed.
7. After giving our anxious consideration on the facts and circumstances of the case and the submissions made by the learned counsels appearing for the parties, it appears to us that various tests have been indicated by the Supreme Court for determining whether an institution, society or body corporate can be held to be an agency or instrumentality of the Government and as such 'State' within the meaning of Article 12 of the Constitution. In this connection, reference may be made to the decision in Som Prakash Rekhi and Aioy Hand's case . The decision in Ajoy Hahia's case has been made by a Constitution Bench of the Supreme Court (Five Judges' Bench). It has been held by the Constitution Bench in Ajoy Hasia's case that it is immaterial how a Corporation, a Society or a body corporate is formed namely whether by a statute or under a statute. Whatever may be genetical origin, it would be an authority within the meaning of Article 12 if it is an instrumentality or agency of the Government. The question of instrumentality or agency has to be decided on proper assessment of fact in the light of relevant factors. The relevant factors determining the agency and instrumentality have been indicated in various decisions of the Supreme Court. In Som Prakash Rekhi's case , the Supreme Court has held that prepondarant considerations for pronouncing an entity as state agency or instrumentality are (i) financial resources of the State being the chief funding source ; (ii) functional character being governmental in essence ; (iii) plenary control residing in Government; (iv) prior history of the same activity having been carried on by Government and made over to the new body ; (v) some element of authority or command. The tests indicated by the Supreme Court in Som Prakash Rekhi and Ajoy Hasia's case have been taken note of in other decisions of the Supreme Court. In Central Inland Water Transport Corporation's case, the principle laid down in Ajoy Hasia's case has been followed for applying the tests for determining the instrumentality or agency of an entity or corporate body by piercing the veil. It may be noted here that the decisions of the Supreme Court are uniform that it is the cumulative effect of all the relevant factors which are to be assessed in order to find out the instrumentality or agency of the Government and one or two tests by themselves will not be the determinant factors. The tests are not conclusive or clinching but they are indicative in-dica to be considered carefully. In a later decision of the Supreme Court in Tekrafs case , it has been held that there are tests formulated by the Supreme Court in various decisions to find out whether an institution is 'State'. There cannot be indeed a straight jacket formula. It is not necessary that all the tests should be satisfied for reaching the conclusion either for or against for 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. It has also been indicated that in a Welfare State, Governmental control is very pervasive and in fact touches all aspects of social existence. In 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 in the matter has to be taken and a discerning mind has to be applied, keeping the realities and human experience in view so as to reach a reasonable conclusion. This note of caution, in our view, should not be lost sight of. The concept of authority under Article 12 should not be stretched very far so as to bring every autonomous body or other body corporate which have some nexus with Government within the sweep of the expression 'State'. This note of caution has been restated in Tekraj's case by relying on the decisions in Inter--national Airport Authority's case, Ajoy Hasia's case and Som Prakash Rekhi's case. On the question of financial aid by way of holding the entire share capital of a company and or giving full or very substantial financial aid for the running! of the entity in question and on the question of deep pervasive control of the Government over the functioning of an entity, reference may be made to the decisions in Praga Tool's case , Hind Mazdoor's case , Central Inland and Water Transport's case , Sukdev Singh's case , Sabhejit Tiwari's case , Ajoy Hasia's case , Som Prakash Rekhi's case , International Air Port Authority's case and Tekraj's case . The monopoly status and monopolistic trading carried by a body corporate and involvement in the functioning of public importance by such body corporate have also been held to be guiding factors constituting the body corporate a 'State' within the meaning of Article 12 of the Constitution. The learned trial Judge has succinctly summarised the principles laid down by the Supreme Court and other High Courts in various decisions referred to in the judgment. The Company is governed by the provisions of the Companies Act and the entire share capital of the company is not owned by the Central Government. The other non-governmental share-holders are also entitled to exercise rights as share-holders in effecting various controls on the functioning of the company. The company raises fund by way of loans from financial institutions for the running of the trading activities of the company. The company does not enjoy any monopoly in the field of its trading activities and it competes with other companies in the field of its business. It is not the case that in its trading activities, the company is engaged in matters of great public importance partaking character of governmental function. The company is no doubt a Government company and it is reasonably expected that a Government will issue outlines of policy decision and also other guidelines so that the Government company functions in a desired manner. It should be noted that the powers of the President to nominate members in the Board of Directors have been provided in the Articles of Association. The learned trial Judge has considered relevant aspects for determining the extent of financial aid and' assistance and financial control of the Central Government in the company and the question of deep and pervasive control of the Central Government. The learned trial Judge has given cogent reasons for holding that there has not been a deep and pervasive control of the Central Government on the functioning of the company and the entire share capital of the company is not owned by the Government but it is only a major shareholder and although there was substantial financial aid by the I Central Government in the beginning such aid is not being given at present and the company on its own is raising or generating funds for its function- ing. The Central Government certainly ensures that the Government company follows the general policy decision of the Government and guide lines and directives of the Bureau of Public Enterprises so that the company functions in a desired manner. Such exercise of control by itself will not constitute deep and pervasive control on the functioning of the company so as to make it an instrumentality or agency of the Government. Even if it is assumed that a Government Company cannot escape deep and pervasive control by the Government in the matter of its functioning, such fact alone does not render the Government Company an instrumentality or agency of the State. Various other tests should also be satisfied so that the cumulative effect of such tests renders the; company or a body corporate to be an agency or instrumentality of the State. The writ petitioner has not been able to establish that financial resources of the State are the Chief funding resource of the company or the activities of the Company are governmental in essence and the plenary control fully rests with Government. It is also not a case where some of the determining features have emerged so boldly and prominently that a second view on the question of instrumentality or agency is not possible., In our view, the company being a Government Company has some of the trappings of the tests indicated by the Supreme Court for determining the true character of an entity to be held as instrumentality or agency but in a border line case, great care, and caution are required to be taken to determine the true character of the entity in question. It should be borne in mind that a Government company exfacie does not become an instrumentality or agency of the State and in case of a Government company there is no necessity for considering the applicability of various tests indicated by the Supreme Court for holding an entity, an agency or instrumentality of the Government is not a correct proprosition in law. It may be noted here that Constitution Bench of the Supreme Court in Ajoy Hasia's case has held that a corporation may be statutory corporation created by a statute or it may be a government company or society registered under the Societies Registration Act but whatever may be its genetical origin, it would be 'state' under Article 12 if only it becomes an agency or instrumentality on consideration of various relevant factors indicated hereinbefore. This decision of the Constitution Bench of the Supreme Court therefore does not support any contention that a Government company is ex facie a State and any exercise of application of various tests for determination of its true character as a 'State' within the meaning of Article 12 is not called for. We have indicated that the learned trial Judge has taken into consideration the relevant factors and/or tests relating to the decision of the question of instrumentality or agency and by giving a cogent reason has held that the company is not an instrumentality or agency of the Government. We find no reason to take a contrary view and the said finding of the learned trial Judge is endorsed by us.
8. Even if it is assumed' that the company is 'State' within the meaning of Article 12, in our view, no writ should lie against the order of ter- miration passed against the writ petitioner. The nature of the State action impugned in the writ proceeding is required to be considered carefully for deciding as to whether, or not the same can be held to be a subject matter of public law remedy of writ. It is not the mere fact of employment by a public authority or instrumentality per se which makes an action of such instrumentality touching the question of employment of its employee a subject matter for interference under the constitutional writ jurisdiction. In our view, if the right of the employee of an instrumentality or agency of the state flows from private contract between the parties and conditions of service are not governed or controlled by any statutory provision and the impugned action of the instrumentality or agency in the matter of employ-'fnent of its employee has no public law character, there will be no occasion for interference in the writ jurisdiction. In the absence of other consideration namely existence of statutory provisions, the breach of which is complained in a state action relating to the employment of the concerned employee seeking for a remedy in writ jurisdiction, a state action relating to contractual obligations will not be examined unless the action has some public law character for exercising constitutional writ jurisdiction. In such a case, the employee of the agency or instrumentality may avail other alternative remedies in a different forum. In this connection, reference may be made to the decision in Praga Tool'i case. It has been held in the said decision that it is well understood that a mandamus lies to secure" the performance of a public or statutory duty. It is not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. If the company is a non statutory body but incorporated under the Companies Act, there is neither a statutory nor a public duty imposed on it by a statute in respect of which enforcement could be sought by means of a mandamus nor is there in its workmen any corresponding legal right for enforcement of any such statutory or public duty. Similar view has also been taken in H.E.M. Union's case. The decision in Praga Tool's case and H.E.M. Union's case have been approved by the Constitution Bench in Sabhajit Tiwari's case. The decisions in the said two cases have also been approved in a later decision of the Supreme Court in Tekraj's case. Although the said two judgments have not been referred to in the decision of the Constitution Bench of the Supreme Court in Ajoy Hasia's case, but in this case, the decision of the Sabhajit Tiwari's case has. been followed and it has been held that the said decision in Sabhajit's case is binding on the Constitution Bench. The distinction about private and public law character or field in the matter of intervention by a writ has been highlighted in the decision of Master of Rolls in the case Ex parte Walsh reported in (1984) 3 All England Reporter, page 425.
9. That all actions of an authority are not per se amenable to writ jurisdiction, have been reiterated by Constitution Bench decisions of the Supreme Court in Escort's case and M.C. Mehta's case . In Escort's case, the Constitution Bench has relied on an earlier decision of the Supreme Court in Radhakrishna Agarwala's case that the Court may not ordinarily examine an action of the State unless the action has some public character attached to it.
10. It appears to us that any broad proposition that any action of an instrumentality or agency of a State relating to employment of its employee irrespective of the fact as to whether or not the employment of the concerned employee and terms thereof flow from a private contract between the parties and not controlled by any statutory provisions and such employment does not involve any public nature of duties, is amenable to writ jurisdiction cannot held to be in consonance with the decisions of the larger Benches and Constitutional Benches of the Supreme Court. In Central Inland Water Transport's case, the principal consideration of the Supreme Court was as to whether or not a public undertaking discharging duties of great public utility thereby partaking the character of governmental action, can frame arbitrary service conditions concerning large number, of employees. It is in this context, the Supreme Court has held that the arbitrary clause in the contract of service empowering the said authority to dispense with the services of large number of employees just on its pleasure by issuing a short notice or offering pay in lieu of such notice was void on the score of arbitrariness. There has not been any consideration by the Supreme Court in the said decision on the distinction between public and private law character of the state action in the matter of bringing it under constitutional writ jurisdiction, In our view, for consideration of this question, the decision in Central Inland Water Transport's case cannot be held to be an authority and the same may be left out. of consideration. We respectfully agree with the Bench decision of this Court made in Orient Longman's case (1988(2) High Court Notes 23) wherein the Division Bench has held that the decision in Central Inland Water Transport's case can be distinguished in an enquiry on the nature of the breach of contract of employment.
11. It may be mentioned here that in the decision in Executive Committee, Vaish Degree College v. Lakshmi Narayan Singh reported in AIR 1970 SC 888, it has been indicated by the Supreme Court that for enforcing personal contract of employment writ cannot be enforced as a general rule but such writ may be issued if conditions of service are controlled by statutory rules and regulations. In a recent decision of the Supreme Court in Anadi Mukta Sadgura S.M.V.S. Jayanti Mahotsav Trust v. V. R. Rudani it has been held that power to issue writ under Article 226 is not confined to statutory authorities and instrumentalities of State. Such writ may be issued to person or authority performing public nature of duties. It has been held that the expression 'authority' under Article 226 must receive a liberal constructions unlike 'State' under Article 12. It has also been indicated in this judgment the form of the body concerned is not very much relevant. What is relevant is the nature of duty imposed on the body. Relying on the said decision, the Full Bench of Andhra Pradesh High Court has held in Kohaseema Co-operative Central Bank Ltd v. N. Seetharaman reported in AIR 1990 AP 71, that contractual obligation which is not statutory cannot be enforced by way of a writ petition. It has also been held that writs in the nature of Mandamus, prohibition and certiorari are public law remedies. They are not available for enforcing private law rights.
12. We cannot persuade ourselves to hold that the impugned action of termination of service was made in contravention of any statutory provision and the employment and corresponding duties relate to matters of public law character. The service of the writ petitioner and conditions thereof flow from private contract between the parties and in view of the position of law discussed hereinbefore, the impugned action of termination of service is not amenable to writ jurisdiction even if it is held that the company is 'State' within the meaning of Article 12 of the Constitution.
13. This appeal, therefore, fails and is dismissed. There will be no order as to costs.
P.K. Banerjee, J.
14. I agree.