Calcutta High Court (Appellete Side)
Aziz Ansari vs Webcon Consulting (India) Limited & Ors on 26 November, 2024
1
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
Appellate Side
Present: - Hon'ble Mr. Justice Subhendu Samanta.
WPA 22594 (W) of 2019
IN THE MATTER OF
Aziz Ansari
Vs.
WEBCON Consulting (India) Limited & Ors.
For the Petitioners : Mr. Sarajit Sen, Adv.,
Mr. Pingal Bhattacharyya, Adv.,
Mr. Subhankar Das, Adv.,
For the respondent No. 4 : Mr. Ankur Singhi , Adv.,
Ms. Riti Basu, Adv.,
Mr. Ayan Shaw Adv.
Reserved on : 16.08.2024
Judgment on : 26.11.2024
Subhendu Samanta, J.
1. The petitioner has challenged an order of termination of petitioner's service dated 04.10.2019 and also prayed for issuance of mandamus upon the respondent company to reinstate him in service, in the post of Manager under Webcon Consulting (India) Limited.
2. It is the case of the petitioner that respondent No. 1 Webcon consulting (India) Limited (hereinafter referred to as Webcon), is a State Government Company which was incorporated under the Company's Act 1956. The said 2 Company was incorporated with the State government and the shareholder of the Company were the financial institution of Central Government as well as State Government and also some of the Nationalised Banks. The Webcon was incorporated with the object of aiding assisting the public sector undertakings and to render consultancy service to the various Government Department and public sector undertakings including the services of Engineering and Consultancy.
3. It is the further case of the petitioner that the Webcon performed and discharged the function of "skill upgradation" projects by conducting different technical projects which they so perform as an agent on behalf of the different departments of the Government of India in complying the concerned projects of such departments of the Government of India. It is the further case of the petitioner that the Webcon has been implementing the programme, namely Primary Skill Development programme under HRD sub-scheme of Indian Foot wear, Leather and Accessories Development Programmed (IFLADT) for West Bengal, North and North & South Eastern State of the Department of Policy and promotion, Leather Section, Ministry of Commerce and Industry of the Government India. It is the further case of the petitioner that the Government of India and Ministry of Commerce and industries utilise and disburse the 3 necessary funds to the Webcon for conducting the such projects linked schemes. It is the case of the petitioner that the Webcon is performing public duties on behalf of the departments of Government of West Bengal as well as the Government of India.
4. It is further case of the petitioner that initially he was appointed as professional Associates (full time) on October 21, 2005. Such appointment was further extended time to time. Thereafter on December 4, 2010 petitioner was appointed in the post of Project Officer in the erstwhile West Bengal consultancy Organisation Limited which were subsequently incorporated as Webcon. The said post of Project Officer was re- designated as Assistant Manager. During the tenure, he performed satisfactory service. Consequently, he was promoted to the post of Deputy Manager with effect from 01.01.2015. Thereafter the present petitioner was again promoted to the post of Manager with effect from 01.01.2018. While working as such in the post of Manager, he was assigned to the duties to perform as a manager and HD-HR and Admin.
5. It is the further case of the petitioner that Article 104 (3a) of the Article of Association of Webcon, Small scale Industries Development, Bank of India in short (SIDBI) individually passed highest share in the Share Capital of the Company, and as such SIDBI be entitled to 4 appoint up to 1/4th of total number of Director of the Company, and/or also be entitled to remove any or all of them from that office and, or to appoint directors who may be designated one person as Managing Director of the Company.
6. It is the case of the petitioner that the private respondent was appointed as a Managing Director of the said Company in terms of the said appointment the tenure of three years of appointment as Managing Director of the said private respondent was scheduled to expired on the close of the officer hours on 3rd October 2019.
7. It is the further case of the petitioner that the selection of private respondent to the post of Managing Director and consequently the appointment/service of the said private respondent stood withdrawn by letter dated 20.03.2019.
8. It is the further case of the petitioner that the private respondent despite termination of his tenure as Managing Director in the said Webcon has posted arbitrarily and illegally, an e-mail dated 03.10.2019, thereby terminated the service of the petitioner as manager Webcon with immediate effect; effective from end of day of Webcon business operation on 03.10.2019. Beside the said e-mail correspondent dated 03.10.2019, the said private respondent still claim himself to be the 5 Managing Director of Webcon and sent a notice dated 04th October, 2019 whereby he purported to have terminated the service of the petitioner with immediate effect without proper direction of handing over and taking over of charge and responsibilities of petitioner's office.
9. The alleged order of termination dated 4th October 2019 was challenged by the petitioner on two grounds:-
firstly- the private respondent has no authority to issue any order of termination on 4th October 2019 as a managing direction of Webcon, secondly- the order of termination is not according to the staff rules of Webcon.
10. Respondent No. 1, 2 and 3 used affidavit-in- opposition against the writ petition. The pleadings of the respondent No. 1, 2 and 3 disclosed that- The board members of Webcon Consulting (1) Ltd. manage the affairs of the company without any "deep & pervasive" control exercised by any Government entity. It is submitted that the Memorandum & Articles of Association of Webcon authorizes the members of the Board to manage entire operations & affairs of the company.
including: -
6
a. To invest & deal with company's moneys & fund b. To acquire by way of purchase Lease etc. any movable &/or immovable property for company c. To purchase, acquire any business, goodwill, property et all.
d. To employ any person for the purpose of running the business of the company e. It is submitted that the members of the board of Webcon have the exclusive power & authority to appoint the Managing Director of the company. It is further submitted that the current serving Managing Director of the Company was appointed by the Board of Directors of the Company in their 162nd Board Meeting held on 29- 09-2016 and the same appointment was also ratified by the company shareholders in 37th Annual General Meeting of the company held on 29-12-2016 f. To sell, mortgage, lease, dispose any movable or immovable assets of the company g. To amalgamate the company with any entity 7 h. To borrow money on behalf of company i. To draw, accept, endorse, discount any monies on behalf of Webcon.
j. None of the Directors on the board of the company are appointed either by the State Government or the Central Government for the sole & exclusive role of directorship with the company.
Furthermore, the shares of the company are under the control of the Board of Directors. The Board of Directors is not required to take permission from the Government to make calls as it thinks fit upon the members in respect of the moneys unpaid on the shares held by them respectively. It is, therefore, submitted that Webcon is not a state within the meaning of Article 12 of the Constitution of India. In this connection, the relevant extracts of the Memorandum & Articles of Association of Webcon Consulting.
6. It is submitted that the Board has full powers to raise or borrow any sum or sums of money for the company and all decisions pertaining to the management and functioning of the company including acquisition of properties, distribution of bonus, effecting policies, 8 determining signing policies, giving security by way of indemnity, investing moneys of the company, conducting legal proceedings, appointing trustees of the company.
Accepting surrender of shares, securing contracts by mortgage, paying for property, paying commission or interest, acquiring property rights, are taken by the Board of Directors independently without any interference of the government. It is stated that the appointment and removal of officers, establishing local boards for managing any of the affairs of the company in the specified locality, entering into contracts, delegating powers, are all within the exclusive domain of the Board of Directors without any government interference.
7. It is submitted that the pay-scale for the Webcon employees & staff are not as per norms of any Central or State government pay structure. It is submitted that the Webcon pay scale & salary as well as all perquisites are sole & exclusively determined by the Managing Director of Webcon. It is submitted that Webcon Staff rule, guiding the details of pay scale, salary perquisites & other facilities applicable to Webcon employees also gets regular revision & updation under the sole & exclusive jurisdiction of Webcon MD. It is submitted that the present & current Webcon Staff rule, effective on & from 01-10-2018 was finalized by Webcon MD. 9
8. It is submitted that there is and/or are no direct or indirect control effected by any Central and/or any State Government department towards functioning of Webcon. It is stated that Webcon is managed under the professional Management of the Board, with the Managing Director, being the sole Executive Board member, appointed by the members of the Board and ratified by the shareholders of the company to run and manage the entire operations of the company.
9. It is pertinent to note that Webcon receives no grant, government treasury fund transfer and/or budgetary support for its sustenance and it operates as a self-sustaining entity. It is submitted that the company earns its income from "revenue from operations" and only with profitable business execution, it earns its sustenance. It is submitted that for the purpose of increase and reduction in capital of the company, it may issue shares without the interference of the State Government or the Central Government. The shares of the company are under the control of the Board of Directors. The Board of Directors is not required to take permission from the Government to make calls as it thinks fit upon the members in respect of the moneys unpaid on the shares held by them respectively. 10
11. It is the further pleading of the respondent that while Webcon under the present management went up to create qualified and sustainable future for the company and to reach newer milestones in terms of business performance, the petitioner under the rapid of ultravires instituted several evils and harmful schemes to dislodge Webcon and his futures. It is the further pleadings of the respondent that prior to his termination, the petitioner being the oldest employee of the organisation and employed at the category of manager, displayed plethora of ultra viers motives and hatched schemes to cause harm and dangers to the company, by way of active participation in slew of anti establishment activities, leveraging his access to insider and clarified business information about the company.
12. Respondent No. 4 SIDBI used affidavit-in- opposition contending inter alia that the SIDBI has transferred his all shares in the company in the name of private respondent No. 5. The Affidavit-in-opposition of respondent No. 4 also annexed an order of National Company Law Tribunal for short (NCLT) in Calcutta Branch, (Court No.-12) dated 28th December 2023 demonstrating the necessary direction of NCLT. 11
13. After perusing the pleading of the parties it appears to me that there are two issues involved in the instant writ petition.
Point No. 1- Whether the alleged order of termination is amenable to the writ jurisdiction.
Point No.2- Whether the order of termination is arbitrary and illegal.
Point No. 1
14. Mr. Sarajit Sen, Learned Counsel appearing on behalf of the petitioner submits that the Webcon was established to perform the duties of assisting public sector undertakings and also render consultancy services to the various Government Department and services of Engineering Consultancy, Webcon is obviously performing public duties of providing skill development training programme on behalf of the Central and State Government. Thus Webcon being exercising the public function, it comes under the definition of State within the meaning Article 12 of the Constitution of India, and is amenable to the writ jurisdiction under Article 226 of the Constitution of India.
15. In support of his contention he cited decision reported in -
1) Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust And Ors. Vs. 12 R. Rudani and Ors. (1989) 2 Supreme Court Cases 691 If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied. It has to be appreciated that the appellants-trust was managing the affiliated college to which public money is paid as government aid. Public money paid as government aid plays a major role in the control, maintenance and working of educational institutions. The aided institutions like government institutions discharge public function by way of imparting education to students. They are subject to the rules and regulations of the affiliating University. Their activities are closely supervised by the University authorities.
Employment in such institutions, therefore, is not devoid of any public character. So are the service conditions of the academic staff. When the University takes a decision regarding their pay scales, it will be binding on the management. The service conditions of the academic staff are, there- fore, not purely of a private character. It has super- added protection by University decisions creating a legal right-duty relationship between the staff and the management.
When there is existence of this
relationship, mandamus cannot be
refused to the aggrieved party.
2) Federal Private Ltd. Vs. Sagar Thomas and Ors. (2003) 10 SCC 733 A reference has then been made to Air India Statutory Corpn. v. United Labour Unions, a decision of a three-Judge Bench. It has been held that the industry 13 carried on by Air India under authority of the Central a Government would involve public law element even though its activity may be commercial in nature. It was held that Air India was being run by the Airports Authority of India of the Central Government and there was an element of deep and pervasive governmental control. Initially it was an statutory authority under the International Airports Authority of India Act, 1971. Later it was amalgamated with the National Airports Authority and thereafter it is constituted as a company under the Companies Act. In that context, it has been held, if the company is run wholly or partially by the share capital floated from public exchequer, it gives indication of its control by the appropriate Government. On consideration of a number of decisions on the point, the Court found the following principles which may be considered, for coming to a conclusion whether any public element is involved or not. Para 26 of the decision reads as under: (SCC pp. 409-10) "26.1) The constitution of the corporation or instrumentality or agency or corporation aggregate or corporation sole is not of sole material relevance to decide whether it is by or under the control of the appropriate Government under the Act, (2) If it is a statutory corporation, it is an instrumentality or agency of the State. If it is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indicia that it is controlled by or under the authority of the appropriate Government.
(3) In commercial activities carried on by a corporation established by or under the control of the appropriate Government having protection under Articles 14 and 19(2), it is an instrumentality or agency of the e State.
14(4) The State is a service corporation. It acts through its instrumentalities, agencies or persons natural or juridical.
(5) The governing power, wherever located, must be subject to the fundamental constitutional limitations and abide by the principles laid in the directive principles.
(6) The framework of service regulations made in the appropriate rules or regulations should be consistent with and subject to the same public law, principles and limitations.
(7) Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately g accountable under their appropriate bye-laws or memorandum of association, they become the arm of the Government.
(8) The existence of deep and pervasive State control depends upon the facts and circumstances in a given situation and in the altered situation it is not the sole criterion to decide whether the agency or instrumentality or persons is by or under the control of the appropriate Government.
(9) Functions of an instrumentality, agency or person are of public importance following public interest element. (10) The instrumentality, agency or person must have an element of authority or ability to effect the relations with its employees or public by virtue of power vested in it by law, memorandum of association or bye- laws or articles of association.
(11) The instrumentality, agency or person renders an element of public service and is accountable to health and strength of the workers, men and women, adequate means of livelihood, the security for payment of living wages, reasonable conditions of work, decent standard of life and opportunity to enjoy full leisure and social and cultural activities to the workmen.
15(12) Every action of the public authority, agency or instrumentality or the person acting in public interest or any act that gives rise to public element should be guided by public interest in exercise of public power or action hedged with public element and is open to challenge. It must meet the test of reasonableness, fairness and justness.
(13) If the exercise of the power is arbitrary, unjust and unfair, the public authority, instrumentality, agency or the person acting in public interest, though in the field of private law, is not free to prescribe any unconstitutional conditions or limitations in their actions."
One of the important factors to be considered is, if it is a statutory corporation, an instrumentality or agency of the State or a company owned wholly or partially by a share capital floated from public exchequer, it gives indicia that it is controlled by and under the authority of the appropriate Government. We find that it is this factor which brings in the public element. Para 61 of the judgment reads:
(SCC pp. 436-37) "61. The legal right of an individual may be founded upon a contract or a statute or an instrument having the force of law. For a public law remedy enforceable under Article 226 of the Constitution, the action of the authority needs to fall in the realm of public law- be it a legislative act of the State, an executive act of the State or an instrumentality or a person or authority imbued with public law element. The question requires to be determined in each case. However, it may not be possible to generalise the nature of the action which would come either under public law remedy or private law field nor is it desirable to give exhaustive list of such actions.... The distinction between public law and private law remedy has now become thin and practically obliterated."16
3) Marwari Balika Vidyalaya Vs. Asha Shrivastava and Ors. (2020) 14 SCC 449 Writ application was clearly maintainable in view of aforesaid discussion and more so in view of the decision of this Court in Ramesh Ahluwalia v. State of Punjab in which this Court has considered the issue at length and has thus observed: (SCC pp. 336-37, paras 13 & 14) "13. In the aforesaid case, this Court was also considering a situation where the services of a Lecturer had been terminated who was working in the college run by the Andi Mukti Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust. In those circumstances, this Court has clearly observed as under: (V.R. Rudani case, SCC pp. 700-701, paras 20 & 22)
20. The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty obligation exists mandamus cannot be denied. is imposed, if a positive
22. Here again, we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor de Smith states: "To be enforceable by mandamus a public duty does 17 not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract"." We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available "to reach injustice wherever it is found". Technicalities should not come in the way of granting that relief under Article 226. We, therefore, reject the contention urged for the appellant on the maintainability of the writ petition.' The aforesaid observations have been repeated and reiterated in numerous judgments of this Court including the judgments in Unni Krishnan¹t and Zee Telefilms Ltd. 12 brought to our notice by the learned counsel for the appellant Mr Parikh.
14. In view of the law laid down in the aforementioned judgment of this Court, the judgment of the learned Single Judge13 as also the Division Bench14 of the High Court cannot be sustained on the proposition that the writ petition would not maintainable merely because the respondent institution is a purely unaided private educational institution. The f appellant had specifically taken the plea that the respondents perform public functions i.e. providing education throughout India." to children in their institutions (emphasis supplied)
16. Having heard the Learned Counsel for the petitioner, it appears to me that the Webcon cannot be terms as a Government Company as per Section 2 (45) of Company's Act 2013. The majority shares (51% or above) are not held by either the Central Government or any 18 State Government or partly by one or more State Governments. The shareholding pattern of Webcon as on 22.10.2019 depicted that, SIDBI, being a private financial institute, was the major shareholder of the said company. Memorandum of articles of association of Webcon authorised by member of the board to manage the entire biasness and affairs of the company; none of the director of the board of the company are appointed either by the State Government or the Central Government; for the sale and exclusive performance of directorship with the company the shares of the company are under the controller of the Board of Directors. The Board of Directors is not required to seek permission from the Government to perform the business of the companies in respect of selling or purchasing shares respectively. Thus it is clear that the board of Directors of Webcon manage the affairs of the company without any deep and pervasive control exercise by Government entity.
17. Further, the website of Webcon propound as follows:-
WEBCON has been established in 1979 as a multi- disciplinary public sector consultancy organization by a consortium of all-India and state - level financial institutions like the company vision is to become a leading consultancy house in this sub-continent with international accreditation. To provide-quality, cost effective and timely consultancy services 19 to the satisfaction of clients/customers / sponsors. Since 1979 as a development agency, WEBCON has been designing and providing consultancy services in the field of economic, management, technical, industry, infrastructure planning and micro enterprise development mostly on cost basis under one roof to the entrepreneurs, promotional agencies and financial institutions towards promotion of entrepreneurship, industry, infrastructure, joint venture, and technology transfer from abroad, rehabilitation of sick units.
(emphasise supplied from page 58 of the judgment of NCLT Calcutta Branch, dated 20th December, 2023).
18. It also appears to me that the business of the Webcom also involved with the various ongoing Government Projects. Thus the Webcon is performing some public duties apart from their internal affairs of business. Further, to decide the issue involved in this matter it is required to follow the present decision of Hon'ble Apex Court in St. Mary's Education Society & Anr. Vs. Rajendra Prasad Bhargava And Ors (2023) 4 SCC 498
75. we may sum up our final conclusions as under:
75.1 An application under Article 226 of the Constitution is maintainable against a person or a body discharging public duties or public functions. The public duty cast may be either statutory or otherwise and where it is otherwise, the body or the person must be shown to owe that duty or obligation to the public involving the public law element.
Similarly, for ascertaining the discharge 20 of public function, it must be established that the body or the person was seeking to achieve the same for the collective benefit of the public or a section of it and the authority to do so must be accepted by the public.
75.2 Even if it be assumed that an educational institution is imparting public duty, the act complained of must have a direct nexus with the discharge of public duty. It is indisputably a public law action which confers a right upon the aggrieved to invoke the extraordinary writ jurisdiction under Article 226 for a prerogative writ. Individual wrongs or breach of mutual contracts without having any public element as its integral part cannot be rectified through a writ petition under Article 226. Wherever Courts have intervened in their exercise of jurisdiction under Article 226, either the service conditions were regulated by the statutory provisions or the employer had the status of "State within the expansive definition under Article 12 or it was found that the action complained of has public law element.
75.3 It must be consequently held that while a body may be discharging a public function or performing a public duty and thus its actions becoming amenable to judicial review by a constitutional court, its employees would not have the right to invoke the powers of the High Court conferred by Article 226 in respect of matter relating to service where they are not governed or controlled by the statutory provisions. An educational institution may perform myriad functions touching various facets of public life and in the societal sphere. While such of those functions as would fall within the domain of a "public function" or "public duty" be undisputedly open to challenge and scrutiny under Article 226 of the Constitution, the actions or decisions taken solely within the confines of an ordinary contract of service, having no statutory force or backing cannot be recognised as being amenable to 21 challenge under Article 226 of the Constitution. In the absence of the service conditions being controlled or governed by statutory provisions, the matter would remain in the realm of an ordinary contract of service.
75.5 From the pleadings in the original writ petition, it is apparent that no element of any public law is agitated or otherwise made out. In other words, the action challenged has no public element and writ of mandamus cannot be issued as the action was essentially of a private character.
19. Following the above decisions of Hon'ble Apex Court it appears to me that the Webcon may have performed public duties regarding private undertaking schemes for the benefit of public, but internal performance of the company regarding appointment and termination of staff of the company by the Managing director and their pay protection etc does not governed by any statute. Thus, the alleged of termination does not involve any public element. It further appears to me that the termination of petitioner No. 1 is solely internal affairs of a private company so it is not at all amenable to the writ jurisdiction.
Under the above observation point No. 1 decided against the petitioner.
Point No. 2.
It is true that in a writ jurisdiction the High Court can enter into any issue where actual injustice has been 22 caused. In the present case it has been alleged that the private respondent had no authority to issue the order of termination. It has been alleged that the order of termination is arbitrary by virtue of the Staff Rules. The staff Rule 5 of Webcon read as follows :-
Rule -5 TERMINATION OF SERVICE The service of any confirmed employee may be terminated by the company at any time after giving minimum one month & maximum three month's notice or one / three month's pay (BASIC monthly salary) in lieu thereof. For exceptional cases as perceived by the management of company &/or disciplinary /integrity issues, the concerned employee will be terminated without any notice or notice pay. The decision of the Managing director of the company will be taken as final in this regard.
20. I have perused the impugned order of termination. It has clearly and unequivocally demonstrates grounds for immediate termination of the petitioner. In the writ petition the petitioner has not pleaded any reason as to contradict such findings in the impugned order of termination. The authority of the private respondent to issue letter of termination was fairly accepted/approved by the shareholders of the company before Learned NCLT.
Considering the entire aspect, I find no justification to entertain the present petitioner for quashing the impugned order of termination.
23
21. Under the above observation the instant writ petition fails. I find no justification to entertain the petitioner. Accordingly the writ petition is disposed of.
22. Parties to act upon the server copy and urgent certified copy of the judgment be received from the concerned Dept. on usual terms and conditions.
(Subhendu Samanta, J.)