Karnataka High Court
P.M. Machaiah vs Mysore Sugar Co. Ltd. on 3 October, 1991
Equivalent citations: ILR1991KAR4208, 1992(1)KARLJ510
ORDER Hanumanthappa, J.
1. Since the question of law involved in these cases is common, they are clubbed together and a common order is passed.
2. W.A.No. 2204/1989 is directed against the order passed by our brother Doddakale Gowda, J., in W.P.No. 15457/1988 dated 16-8-1989 rejecting the petitioner's request therein by dismissing the said Writ Petition following the earlier Decision of this Court in MYSORE SUGAR CO-OPERATIVE EMPLOYEES ASSOCIATION v. MANAGEMENT, MYSORE SUGAR CO. LTD. The prayer of the petitioner in W.P.No. 15457/1988 was to quash the order of termination of the petitioner therein as Chief Vigilance Officer from the services of the respondent Company therein. The grounds of attack to the order of termination were (1) the termination was not a valid one as the same was not passed by the Board of Directors of the Company; (2) that the enquiry was not in conformity with principles of natural justice; (3) the termination was harsh and unreasonable and (4) the termination was violative of Article 311 of the Constitution of India, and (5) the Writ Petition is maintainable as the order of termination passed by the respondent, which is an 'authority' under Article 12 of the Constitution.
3. The request of the petitioner in W.P.No. 6621/1986 is to declare the action of the respondents in not considering the petitioner's case for appointment to the post of Garden Overseer.
4. The request of the petitioner in W.P.No. 6643/1983 is to quash the termination of the petitioner as Chief Chemist produced at Annexure-B.
5. The request of the petitioner in W.P.No. 8216/1986 is to direct the respondents to confirm the petitioner in the post of Chief Store Keeper.
6. The request of the petitioner in W.P.No. 33605/1981 is to quash the order at Annexure-C to the Writ Petition by which the petitioner was called upon to acquire the requisite qualification within six months to get his post confirmed as Cost Accountant.
7. In the Writ Appeal as well as in all the Writ Petitions the common points are:-
(1) Whether the respondent Mysore Sugar Company Ltd., Mandya, is an 'authority' and therefore any action taken by it is amenable to Writ Jurisdiction; and (2) Whether the action of the respondent Company either in terminating or not considering the case for confirmation or appointment is quite arbitrary and is against the principles of natural justice.
8. Regarding Point No. 1, it was canvassed that the respondent Company is an 'authority' under Article 12 of the Constitution of India According to them, the Mysore Sugar Company Ltd., has been shown as one of the Public Sector Undertakings in the Directory of Karnataka State Public Sector Undertakings. According to them, out of Rs. 300.54 paid up share capital, Rs. 190 lakhs has been subscribed by the State Government, Rs. 43.23 lakhs has been subscribed by the Central Government/Financial Institutions/ PSC/Central Government, The other share capital is only Rs. 67.22 lakhs. In other words, about 70% of the share capital is owned by the State and thus it is controlled by the State. On this basis, they contended that the Company is an after ego of State of Karnataka and therefore it is an 'authority' as defined under Article 12 of the Constitution of India One more circumstance, according to them, to say that the Company is an instrumentality of the State, is that out of 12 Directors, 4 are from the Government or its Agencies. The product which the Company is manufacturing is a controlled commodity.
9. As an answer to these contentions, the respondent Company has filed its statement of objections in W.P.No. 6621/1986 in which the Company has denied that it is a 'State' within the meaning of Article 12 of the Constitution. According to the Company, it is true that it has been deemed as "Government Company" under Sections 6 and 7 of the Companies Act, 1956. 15% of the shares is held by the Government. According to it, the extent of share holding is as follows:-
Equity Shares 66.11% Preferential Shares 34.19% Total holding:
63.23% As per Article 93 and Article 119 of the Articles of Association of the Company, the Government may nominate 4 Directors - out of them one as Chairman of the Company. As per Article 129, the Government may appoint one of the Directors as Managing Director of the Company. As per Article 116(23), the Board is bound by certain instructions issued by the Government.
The main object of the Company is to manufacture and sell sugar and sugar products, including carrying on any other incidental business. The internal management of the Company is governed by Articles of Association. It consists of 12 Directors - out of them 4 are nominees of the Government. Thus, the entire activities are controlled by the majority. The functions of the Company are neither Governmental in nature nor closely analogous thereof to be labelled as 'State'. Mere 51% of the share capital held by the Government cannot be concluded that the Company to that of the status of 'State'. Nomination of 4 Directors of the Company by the State is not material. So also the appointment of Managing Director. There is no full State control in the affairs of the Company and its functions nor there is any monopoly of trade. According to the respondent Company, the contention of the petitioners/appellant that the respondent Company is a 'State' does not fall within the conditions prescribed by the Supreme Court in the case of AJAY HASIA ETC. v. KHALID MUJIB SEHRAVARDI AND ORS., (which will be dealt with later). According to the respondent Company, similar contention was raised earlier before this Court in the case of SHAMA IYENGAR v. MYSORE SUGAR COMPANY LTD., (which will be referred to later) and this Court, after considering various aspects of the matter, held that Mysore Sugar Company Ltd., is not a 'State'.
For the above reasons, the respondent Company prayed that both the Writ Appeal as well as the Writ Petitions be dismissed as not maintainable.
10. After hearing the learned Counsel on both the sides and going through the pleadings and the Decisions relied upon on either sides, now this Court has to consider first whether the Writ Petitions filed by the petitioners are maintainable. To say they are maintainable, it is to be noticed whether the respondent Company is a 'State' under Article 12 of the Constitution. If this point is answered in favour of the petitioners, then the second point, namely, the correctness or otherwise of the orders passed or the action taken against the petitioners deserve to be considered.
11. In order to know whether the respondent Company is a 'State', we have to see the scope of Article 12 of the Constitution and the law laid down on this issue by the Supreme Court. Article 12 of the Constitution reads as follows:-
"12. In this Part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India."
In SUKHDEV SINGH AND ORS. v. BHAGATRAM SARDAR SINGH RAGHUVANSHI AND ANR., the Supreme Court has held as follows:-
"The expression 'other authorities' in Article 12 is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India. The expression 'other authorities' will include all constitutional or statutory authorities on whom powers are conferred by law."
In the case of RAMAIMA DAYARAM SHETTY v. THE INTERNATIONAL AIRPORT AUTHORITY OF INDIA AND ORS., the Supreme Court after taking into consideration the powers and functions which the International Airport Authority was conferred, held that the said Authority falls within the definition of 'State'. In para 33 of the Judgment the Supreme Court has held as under:-
"33. It will be seen from these provisions that there are certain features of the 1st respondent which are eloquent and throw considerable light on the true nature of the 1st respondent. In the first place, the Chairman and members of the 1st respondent are all persons nominated by the Central Government and the Central Government has also the power to terminate their appointment as also to remove them in certain specified circumstances. The Central Government is also vested with the power to take away the management of any airport from the 1st respondent and to entrust it to any other person or authority and for certain specified reasons, the Central Government can also supersede the 1st 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 1st respondent. The 1st respondent has no share capital but the capital needed by it for carrying out its functions is provided wholly by the Central Government. The balance of the net profit made by the 1st respondent after making provision for various charges, such as reserve funds, bad and doubtful debts, depreciation in assets etc., does not remain with the 1st respondent and is required to be paid over to the Central Government. The 1st respondent is also required to submit to the Central Government for its approval a statement of the programme of its activities as also the financial estimate and it must follow as a necessary corollary that the 1st respondent can carry out only such activities and incur only such expenditure as is approved by the Central Government. The audited accounts of the 1st respondent together with the audit report have to be forwarded to the Central Government and they are required to be laid before both Houses of Parliament. So far as the functions of the 1st respondent are concerned, the entire department of the Central Government relating to the administration of airports and air navigation services together with its properties and assets, debts, obligations and liabilities, contracts, causes of action and pending litigation is transferred to the 1st respondent and the 1st respondent is charged with carrying out the same functions which were, until the appointed date, being carried out by the Central Government. The employees and officers of the 1st respondent are also deemed to be public servants and the 1st respondent as well as its members, officers and employees are given immunity for anything which is in good faith done or intended to be done in pursuance of the Act or any Rule or regulation made under it. The 1st respondent is also given power to frame regulations and to provide that contravention of certain specified Regulations shall entail penal consequences. These provisions clearly show that every test discussed above is satisfied in the case of the 1st respondent and they leave no doubt that the 1st respondent is an instrumentality or agency of the Central Government and falls within the definition of 'State' both on the narrow view taken by the majority in Sukhdev v. Bhagat Ram as also on the broader view of Mathew, J., adopted by us."
In SOM PRAKASH REKHI v. UNION OF INDIA AND ANR., AIR 1981 SC 212, the Supreme Court while considering whether Bharat Petroleum Corporation Limited is coming within the definition of "State" within the meaning of Article 12 of the Constitution, held that the said Corporation comes within the definition of "State" by giving reasons as to what shall be the considerations to treat an organisation comes within the definition of 'other authorities' or the 'State'. In the said Decision, emphasis is laid that a Corporation, Body or other Authority shall be an instrumentality or agency of the Government only will come within the definition of 'other authority'. According to the said Decision, the preponderant consideration for pronouncing an entity as 'State agency' or 'instrumentality' are as follows:-
"(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 and (v) some element of authority or command. Whether the legal person is a Corporation created by a statute, as distinguished from under a statute, is not an important criterion although it may be an indicium. A careful study of the features of the Airport Authority and a Government Company covered by Sections 7, 9, 10 and 12 of Burma Shell (Acquisition of Undertakings in India) Act (1976) discloses a close parallel except that the Airport Authority is created by a statute while Bharat Petroleum (notified under Section 7 of the Act) is recognised by and clothed with rights and duties by the statute. Applying the constellation of criteria collected from Airport Authority, on a cumulative basis, to the given case, there is enough material to hold that the Bharat Petroleum Corporation is "State" within the enlarged meaning of Article 12. The commonsense signification of the expression "other authorities under the control of the Government of India" is plain and there is no reason to make exclusions on sophisticated grounds such as that the legal person must be a statutory corporation, must have power to make laws, must be created by and not under a statute and so on."
In the case of Ajay Hasia etc. v. Khalid Mujib Sehravardi and Ors. in order to treat a Corporation, Body or an Organisation as an 'authority' to come within the meaning of Article 12 of the Constitution, the Supreme Court reiterated the considerations, which are in more detail and exhaustive, making reference to the Decision rendered in International Airport Authority's case and also placing reliance on the earlier Decision of the Supreme Court rendered in UP. WAREHOUSING CORPORATION v. VIJAY NARAIN., According to Their Lordships, the paramount considerations to treat an organisation to be the instrumentality of the State are as follows:-
"9. xxxxx (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 impregnated with governmental character".
(3) "It may also be a relevant factor whether the Corporation enjoys monopoly status which is the State conferred or State protected".
(4) "Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality".
(5) "If the functions of the Corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the 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".
If on a consideration of these relevant factors it is found that the Corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority's case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12.
10. We find that the same view has been taken by Chinnappa Reddy, J., in a subsequent decision of this Court in the UP. WAREHOUSING CORPORATION v. VIJAY NARAIN and the observations made by the learned Judge in that Case strongly reinforced the view we are taking particularly in the matrix of our constitutional system.
11. 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.
12. It is also necessary to add that merely because a juristic entity may be an "authority" and therefore "State" within the meaning of Article 12, it may not be relevant to the position of "State" for the purpose of Articles 209, 310 and 311 which find a place in Part XIV. The definition of "State" in Article 12 which includes an "authority" within the territory of India or under the control of the Government of India is not limited in its application only to Part III and by virtue of Article 36, to Part IV, it does not extend to the other provisions of the Constitution and hence a juristic entity which may be "State" for the purpose of Parts III and IV would not be so for the purpose of Part XIV or any other provision of the Constitution. That is why the Decisions of this Court in S.L Agarwal v. Hindustan Steel Ltd., , and other cases involving the applicability of Article 311 have no relevance to the issue before us.
xxxxx
15. It is in the light of this discussion that we must now proceed to examine whether the Society in the present case is an "authority" fading within the definition of "State" in Article 12. Is it an instrumentality or agency of the Government? The answer must obviously be in the affirmative if we have regard to the Memorandum of Association and the Rules of the Society. The composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu & Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government. The monies required for running the college are provided entirely by the Central Government and the Government of Jammu & Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Governments for their scrutiny and satisfaction. The Society is also to comply with all such directions as may be issued by the State Government with the approval of the Central Government in respect of any matters dealt with in the report of the Reviewing Committee. The control of the State and the Central Governments is indeed so deep and pervasive that no immovable property of the Society can be disposed of in any manner without the approval of both the Governments. The State and the Central Governments have even the power to appoint any other person or persons to be members of the Society and any member of the Society other than a member representing the State or Central Government can be removed from the membership of the Society by the State Government with the approval of the Central Government. The Board of Governors, which is in-charge of general superintendence, direction and control of the affairs of Society and of its income and property is also largely controlled by nominees of the State and the Central Governments. It will thus be seen that the State Government and by reason of the provision for approval, the Central Government also, have full control of the working of the Society and it would not be incorrect to say that the Society is merely a projection of the State and the Central Governments and to use the words of Ray, C.J., in Sukhdev Singh's case the voice is that of the State and the Central Government and the hands are also of the State and the Central Governments. We must, therefore, hold that the Society is an instrumentality or the agency of the State and the Central Governments and it is an 'authority' within the meaning of Article 12."
In B.S. MINHAS v. INDIAN STATISTICAL INSTITUTE AND ORS., the Supreme Court has held that the Indian Statistical Institute is an 'authority' as mentioned in Article 12 of the Constitution for the reasons given hereunder:-
"In the instant case it was contended that having regard to the provisions of the Act and the memorandum of association, the composition of the Institute is dominated by the representatives appointed by the Central Government. The money required for running the Institute is provided entirely by the Central Government and even if any other moneys are to be received by the Institute it can be done only with the approval of the Central Government, and the accounts of the Institute have also to be submitted to the Central Government for its scrutiny and satisfaction. The Society has to comply with all such directions as may be issued by the Central Government. The control of the Central Government is deep and pervasive and, therefore, to all intents and purposes, it is an instrumentality of the Central Government and as such is an 'authority' within the meaning of Article 12 of the Constitution. It is therefore, subject to the constitutional obligations under Articles 14 and 16 of the Constitution. On the facts and circumstances of the case it was held that the institution was an "authority" within Article 12 of Constitution."
Likewise, in the case of P.K. RAMACHANDRA IYER AND ORS. v. UNION OF INDIA AND ORS., the Supreme Court has held that Indian Council for Agricultural Research and its affiliate Indian Veterinary Research Institute are 'other authorities' under Article 12 of the Constitution for the following reasons:-
"ICAR came into existence as a department of the Government, continued to be an attached office of the Government even though it was registered as a society under the Societies Registration Act and wholly financed by the Government and the taxing power of the State was invoked to make it financially viable and to which independent research institutes set up by the Government were transferred. Thus, ICAR being almost an inseparable adjunct of the Government of India having an outward form of being a Society, it could be styled as a Society set up by the State and therefore, would be an instrumentality of the State."
In A.L KALRA v. THE PROJECT AND EQUIPMENT CORPORATION OF INDIA LTD., . The Supreme Court, following the principles laid down in Ajay Hasia's case held that the respondent Corporation therein is an 'authority' within the meaning of 'State' in Article 12 of the Constitution as it answers the considerations prescribed in Ajay Hasia's case.
In the case of CENTRAL INLAND WATER TRANSPORT CORPORATION LTD. AND ANR. v. BROJO NATH GANGULY AND ANR., the Supreme Court has held that the Central Inland Water Transport Corporation Ltd., is a 'State' in view of the fact that the Central and two State Governments having full control over the said Corporation both in respect of administration and finance. The reasons to declare the said Corporation as a 'State' are given as follows:-
"If there is an instrumentality or agency of the State which has assumed the garb of a Government Company as defined in Section 617 of the Companies Act, it does not follow that it thereby ceased to be an instrumentality or agency of the State. For the purposes of Article 12 one must necessarily see through the corporate veil to ascertain whether behind that veil is the face of an instrumentality of agency of the State. The Central Inland Water Transport Corporation squarely falls within these observations and it also satisfies the various tests which have been laid down. Merely because it has so far not the monopoly of inland water transportation is not sufficient to divest it of its character of an instrumentality or agency of the State, it is nothing but the Government operating behind a corporate veil, carrying out a governmental activity and governmental functions of vital public importance. There can thus be no doubt that the Corporation is "the State" within the meaning of Article 12 of the Constitution.
The Central Inland Water Transport Corporation Ltd., is not only a Government Company as defined in Section 617 of the Companies Act, but is wholly owned by the Central Government and two State Governments jointly. It is financed entirely by these three Governments and is completely under the control of the Central Government, and is managed by the Chairman and Board of Directors appointed by the Central Government and removable by it. In every respect it is thus a veil behind which the Central Government operates through the instrumentality of a Government Company. The activities of the Corporation are of great importance to public interest, concern and welfare, and are activities of the nature carried on by a modern State and particularly a modern Welfare State."
A question was cropped up before the Supreme Court as to whether Food Corporation of India is an 'authority' or 'State' within the meaning of Article 12 of the Constitution. The Supreme Court, in the case of THE WORKMEN OF THE FOOD CORPORATION OF INDIA v. FOOD CORPORATION OF INDIA, AlR 1985 SC 670 has held that the said Corporation is an instrumentality of the State within the expression "other authority" in Article 12 of the Constitution.
In K.C. JOSHI v. UNION OF INDIA, the Supreme Court has held that the Oil and Natural Gas Commission is an instrumentality of the State. Further, in ALL INDIA SAINIK SCHOOLS EMPLOYEES ASSOCIATION v. THE DEFENCE MINISTER-CUM-CHAIRMAN, BOARD OF GOVERNORS, SAINIK SCHOOL SOCIETY, NEW DELHI, AIR 1989 SC 88 the Supreme Court has held that the said Society is a 'State'. In the case of OIL & NATURAL GAS COMMISSION AND ANR. v. THE ASSOCIATION OF NATURAL GAS CONSUMING INDUSTRIES OF GUJARAT AND ORS. ETC., the Supreme Court dealing with the question whether Oil and Natural Gas Commission is a 'State' within the meaning of Article 12 of the Constitution, once again reiterated what are the considerations to determine whether a particular Company, Body, Corporation or organisation a 'State' and held that the said Commission is 'State'.
A Division Bench of the Madras High Court in A.M. AHAMED AND CO., MADRAS AND ORS. v. UNION OF INDIA AND ORS., taking into consideration the activities of National Agricultural Co-operative Federation of India Ltd., in canalising agency for export of onions to Singapore and Malaysia, held that the said Federation is an 'authority' as contemplated in the definition of 'State' in Article 12 of the Constitution.
The Supreme Court, in the following cases, held that the organisations mentioned therein do not come with in the meaning of 'other authorities' under Article 12 of the Constitution of India:-
In the case of SABHAJIT TEWARY v. UNION OF INDIA AND ORS., the Supreme Court has held as follows:-
"The Council of Scientific and Industrial Research, a society registered under the Societies Registration Act is not an authority within the meaning of Article 12. The Society does not have a statutory character like the Oil and Natural Gas Commission or the Life Insurance Corporation. 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 co-operation of scientific and industrial research and other activities of the Council towards the development of industries in the country are carried out in a responsible manner."
In TEKRAJ VASANDI alias K.L BASANDHI v. UNION OF INDIA AND ORS. while dealing with the scope of Article 12, the Supreme Court has held that the Institute of Constitutional and Parliamentary Studies registered under the Societies Registration Act is neither an agency nor instrumentality of State so as to come within the purview of "other authorities" in Article 12. The reasons assigned are as under:-
"There are tests formulated by several cases of the Supreme Court to find out whether an institution is a "State". There cannot indeed be a strait jacket formula. It is not necessary that all the tests should be satisfied for reaching the conclusion either for or against 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.
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. IPCS 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 that the objects of IPCS 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.
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 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, IPCS was not to receive foreign donations. There is no material to show 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.
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 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. In the facts of the case, it cannot be held 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. ICPS is a case of its type - typical in many ways and the normal tests may perhaps not properly apply to test its character."
In addition to the Decisions of the Supreme Court, our brother S.G. Doddakale Gowda, J (as he then was), in the case of Shama lyengar v. Mysore Sugar Company Ltd. held that the respondent Mysore Sugar Company is not a 'State' for the following reasons:-
"The entire shares of this Company are not held by State. Maintenance of Company is not met out of financial assistance of State. Business which the Company carries on, is not the monopoly trade of State. In other words, functions of the Company are either governmental in nature nor closely analogous thereto, to be labelled as a projection of the State. Mere fact, that State holds more than 51% shares and by virtue of exercise of power to nominate not more than one-third of total members of Board of Directors and appointment of a Chairman, State wields more power is not that kind of control which would convert any and every legal person into a State for the purpose of Article 12 of Constitution. Likewise, exercise of power regarding appointment of a Managing Director to get accounts audited and to place it before Public Accounts Committee which is normal in case of all Government Companies, where holding of shares by Government exceeds 51% will not by itself, establish it to be an authority or an instrumentality of State. Six tests referred to above may not individually be decisive but their cumulative effect has to be taken into account....Contribution of major shares has enabled State to nominate one-third of Board of Directors, to appoint a Managing Director, and a man of its choice as a Chairman. State's investment must necessarily be audited and placed before Public Accounts Committee. Neither by application of individual test nor cumulative effect of all these tests, first respondent can be considered as an authority or an instrumentality of State...Investment of public revenue necessarily involves exercise of some control. Company like first respondent where State is holding 51% and rest of shares are held by individuals cannot be considered as an authority or an instrumentality of State merely on the ground that State wields more control than other share-holders."
12. If we keep in mind the principles enunciated by the Supreme Court to an organisation, body, corporation or, other authority is an 'agency' or 'instrumentality' of the State or not, from the facts narrated by the petitioners and the respondents in all these cases, it is clear that the respondent Mysore Sugar Company Limited is not a "State" coming within the meaning of Article 12 of the Constitution. Hence, we answer Point No. (1) that respondent Mysore Sugar Company Limited is not an 'authority' and the action taken by it is not amenable to Writ Jurisdiction.
13. When the respondent Company is neither "State" nor an "authority" under Article 12, it cannot be said that the Writ Petitions filed challenging the action taken by it are maintainable.
14. When we have held on point No. (1) against the appellant/petitioners, question of deciding the second point does not arise.
15. Consequently, we dismiss the Writ Appeal and the Writ Petitions reserving liberty to the appellant and the petitioners to agitate their grievances before an appropriate forum, if they are so advised. All other contentions are left open. No costs.