Andhra HC (Pre-Telangana)
T. Ranga Reddy vs Joint Project Co-Ordinator, ... on 5 April, 1999
Equivalent citations: 1999(3)ALD173, 1999(3)ALT51
Author: C.V.N. Sastri
Bench: C.V.N. Sastri
ORDER
1. In WP No. 16587 of 1994, the order dated 6-6-1994 terminating the services of the petitioner as Deputy Director of Non-Ferrous Materials Technology Development Centre ('NFTDC' for short) is under challenge. The other three writ petitions are filled by casual employees and workers of NFTDC seeking regularisation of their services.
2. The common question which arises in all these writ petitions is whether NFTDC is 'State'/ 'Instrumentality of State' or 'other authority' within the meaning of Article 12 of the Constitution and a writ may be issued against it.
3. Judicial review of private action or in other words regulation of the exercise of power by private bodies discharging public functions is one of the major concerns of administrative law in recent times. The concept of 'State' and 'State Action' has undergone drastic changes and the line of demarcation between public law and private law has become blurred. After all, the purpose of law, be it public or private, is to impart justice to the needy people. With the manifold increase of the activities undertaken by the State and its instrumentalities, the State is now virtually treated as a service corporation. More recently we have been witnessing increasing privatisation which is pushing back the frontiers of the public sector and generally replacing public monopoly power by substantial elements of private monopoly power. The need has, therefore, arisen for further adaptation and extention of public law principles to private bodies to make them more accountable and conform to the discipline of law. Keeping in view the need to curb arbitrary and unregulated power wherever or howsoever reposed, the Supreme Court in several landmark judgments beginning with the leading case of Rajasthan State Electricity Board v. Mohan Lal, , followed by Sukhdev Singh v. Bhagat Ram, , (popularly known as ONGC case), R.D. Shelly v. International Airport Authority, , Ajay Hasia v. Khalid Mujib, , Somprakash Rekhi v. Union of India, AIR 1981 SC 212, Central Inland Transport Corpn. v. Brojonath Ganguli, , M.C. Mehta v. Union of India, and Sri Anadimukta Sadguru etc., Trust v. R. Rudani, , through creative interpretation and bold innovation has expanded and liberalised the ambit and scope of the expression 'other authorities' and paved the way for the development of human rights jurisprudence in our country to a remarkable extent.
4. The tests for determining whether a particular society or company is an agency or instrumentality of the State so that it can be characterised as an authority within the meaning of Article 12 have been enunciated in International Air Port Authority case (supra) and affirmed in Ajay Hasia's case (supra). They are as follows :
"(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.
(3) It may also be a relevant factor.....whether the corporation enjoys monopoly which is State conferred or State protected.
(4) Existence of deep and pervasive control amy afford an indication that the Corporation is a State agency or instrumentality.
(5) If the functions of the Corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the Corporation as an instrumentality or agency of Government.
(6) Specifically if a department of Government is transferred to a Corporation, it would be a strong factor supportive of the inference of the Corporation being an instrumentality or agency of Government.
It was held that the above tests are not conclusive or clinching but they re merely indicative indicia which has to be used with care and caution because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities', it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. The Court further observed as follows :
"We may point out that it is immaterial for this purpose whether the Corporation is created by a State or under a statute. 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 bom but why ii 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 genelogical 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 it is equally applicable to a Company or Society and in a given case, it would have to be decided, on consideration of the relevant factors, whether a 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."
5. In Sabhajit Tiwari v. Union of India, , the same Constitution Bench, which disposed of the ONGC case, held that the Council of Scientific and Industrial Research, which was a society registered under the Societies Registration Act for the purpose of promoting scientific and industrial research and which was administered by its governing body consisting of persons appointed by the Government, was not an agency or instrumentality of the State. This case was, however, distinguished and not followed in the later judgments of the Supreme Court in International Airport Authority case (supra), Ajay Hasia's case (supra) and in Ramachandra Iyer v. Union of India, wherein the Supreme Court observed, "Much water has flowed down the Yamuna since the dicta in Sabhajit Tiwari case and conceding that it is not specifically overruled in later decision, its ratio is considerably watered down so as to be a decision confined to its own facts."
In this last judgment, the Indian Council of Agricultural Research was held to be 'State' within the meaning of Article 12. The learned Counsel for the petitioners has brought to my notice that the decision of the Supreme Court in Sabhajit Tiwari's case (supra) is referred to a Constitution Bench for reconsideration in SLP No.5034 of 1986 as mentioned in the judgment of the Central Administrative Tribunal in OA No.758 of 1987 dated 27-2-1992.
6. In Tekraj v. Union of India, , the Institute of Constitutional and Parliamentary Studies, which was also a Society registered under the Societies Registration Act, was held to be neither an agency nor instrumentality of State so as to come within the purview of 'other authorities' in Article 12. In this judgment, the Court, while referring to the judgments of the Supreme Court in Praga Tools Corporation v. C.V. Imanual, and Heavy Engineering Mazdoor Union v. State of Bihar, , noted that even if some institution becomes 'State' within the meaning of Article 12, its employees do not become holders of civil Posts so as to become entitled to the cover of Article 311. They would, however, be entitled to the benefits of Part III of the Constitution. So also in Chander Mohan v. NCERT, AIR 1991 SCW 274, it was held that National Council of Educational Research and Training was not 'State'.
7. In Administrative Staff College, Hyderabad, v. D.P. Seshachalam, 1989 (1) ALT 691, a Division Bench of this Court held that the Administrative Staff College of India does not fall within 'State' or 'other authorities' under Article 12 and a writ petition under Article 226 questioning the order of termination of services of an employee of the college was not maintainable. In this judgment the Court, after examining the objects in the memorandum of association, came to the conclusion that the College is not a wing of the Education Department and it is started only for the purpose of enriching and disseminating managemental knowledge and improving the professional excellence of executives and administrators of its members containing many public as well as private undertakings and other institutions and no governmental functions arc being discharged by it. The mere fact that a number of State Governments and Public Sector Undertakings have chosen to become members of the College-Society and that eminent persons, who hold outstanding posts in public life, are elected as members of the Court of Governors, does not, in any manner, indicate that the Government has control over the Court of Governors.
8. In SKCC Bank Ltd. v. N. Seetharama Raju, 1990 (2) ALT 1 (FB), a Full Bench of this Court had to consider the question whether a writ petition lies against Co-operative Society and if it does, in what circumstances. The said question arose in the context of the enforcement of bye-laws governing service conditions of the employees. The Full Bench, after an elaborate and exhaustive discussion of the earlier judgments, Indian as well as foreign, summarised the emerging propositions in para 53 of its judgment as follows :
"(i) If a particular Co-operative society can be characterised as a 'State' within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be an 'authority' within the meaning, and for the purpose, of Article 226 of the Constitution. In such a situation, an order passed by a Society against its employees in violation of the bye-laws, can be corrected by way of a writ petition. This is not because the bye-laws have the force of law, but on the ground that having framed the bye-laws prescribing the service conditions of its employees, the Society must follow them, in the interest of fairness. If it is left to the sweet will and pleasure of the Society either to follow or not to follow the bye-laws, it would be inherently arbitrary, and may very likely give rise to discriminatory treatment. A society, which is a 'State', has to act in conformity with Article 14 and, for that reason, it will be made to follow the bye-laws.
(ii) Even if a Society cannot be characterised as a 'State within the meaning of Article 12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the Society. In such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person', or an 'authority', within the meaning of Article 226 of the Constitution. What is material is the nature of the statutory duty placed upon it, and the Court will enforce such statutory public duty .
(iii)The bye-laws made by a Co-operative Society registered under the A.P. Cooperative Societies Act do not have the force of law. They are in the nature of contract, terms of contract, between the Society and its employees, or between the Society and its members, as the case may be. Hence, where Society cannot be characterised as 'State' the service conditions of its employees governed by bye-laws, cannot be enforced through a writ petition. However, in the matter of termination of service of the employees of a Co-operative Society, Section 47 of the A.P. Shops and Establishments Act provides a certain protection, and since the said protection is based upon public policy, it will be enforced in an appropriate case, by this Court under Article 226 of the Constitution. Ordinarily, of course, an employee has to follow the remedies provided by the A.P. Shops and Establishments Act. But, in an appropriate case, this Court will interfere under Article 226, if the violation of a statutory public duty is established. It is immaterial which Act or Rule casts such a statutory public duty.
(iv) Mandamus, certioran and prohibition are public law remedies. They are not available to enforce private law rights. Every act of a Society which may be a'State' within the meaning of Article 12, does not necessarily belong to public law field. A Society, which is a 'State', may have it private law rights just like a Government. A contractual obligation, which is not statutory, cannot be enforced by way of a writ petition under Article 26 of the Constitution. Prior to entering into contract, however, Article 14 operates as explained by the Supreme Court in E.E. & C Ltd v. State of West Bengal and Ramana Daywam Shetty, (supra).
9. In Balbir Thomas v. Centre for Cellular and molecular Biology', , a learned single Judge of this Court, relying on the decision of the Supreme Court in Sabhajit Tiwari's case (supra), held that the Centre for Cellular and Molecular Biology (CCMB), which is an affiliated institution of the Council of Scientific and Industrial Research (CSIR) is not an authority falling under Article 12 and writ petition is, therefore, not maintainable against such an institution. The learned Judge further held that the judgment of the Supreme Court in Sabhajit Tiwari's case (supra) still holds the field as it has not been overruled and as such it has to be followed.
10. In Air India Statutory Corpn. v. United Labour Union, , the Apex Court in a masterly survey highlighted the development of law on the subject focussing attention on the preamble, the fundamental rights and the directive principle of the Constitution. In this decision the Court, while referring to the judgment in Rajasthan State Electricity Board case (supra), observed that an authority under the control of the 'State' need not carry on governmental functions. It can carry on commercial activities. It was further held that the State and its instrumentality entering into the commercial field must act in consonance with the rule of law. It was also held that judicial review of administrative action has become expansive and its scope is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. It was also held that the ratio in Praga Tools case (supra) that no writ would lie against a Corporation is no longer good law. The Court further observed that after recent liberalisation of the economy, private and multinational entrepreneurship has gained ascendancy and even some of the public corporations are thrown open to the private national and multi-national investments. "It is axiomatic, whether or not industry is controlled by Government or public corporations by statutory form and administrative clutch or private agents, juristic persons, corporation whole or corporation sole. Their Constitution, control and working would also be subject to the same constitutional limitations in the trinity viz., the preamble, the fundamental rights and the directive principles. They throw open an element of public interest in its working. They share the burden and shoulder constitutional obligations to provide facilities and opportunities enjoined in the directive principles, the preamble and the fundamental rights enshrined in the Constitution. The word 'Control', therefore, requires to be interpreted in the changing commercial scenario broadly in keeping with the aforesaid constitutional goals and perspectives." The Court finally summarised the principles emerging from the discussion in para 26 of the judgment as follows :
"(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 Slate. 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 State.
(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 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 ifs 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.
(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 power is arbitrary, unjust and unfair, the public authority, instrumentality, agency or the person acting in public interest, though in the field of private taw, is not free to prescribe any unconstitutional conditions or limitations in their actions."
Reference may also be made to the latest decision of the Supreme Court in UP. State Coop. Land Development Bank Ltd. v. Chandra Bhan Dubey, , where the U.P. State Co-operative Land Development Bank was held to be an instrumentality of the 'State' or an authority as mentioned in Article 12 and hence writ petition filed by its dismissed employees to challenge the orders of their dismissal was maintainable. Considering the scope of Article 226, the Court expressed the view that prima facie, the language of Article 226 does not appear to make any distinction between public and private law and observed :
"It does appear to us that Article 226 while empowering the High Court for issue of orders or directions to any authority or person, does not make any such difference between public functions and private functions.....
When any citizen or person is wronged, the High Court will step in to protect him, be that wrong done by the State, an instrumentality of the State, a Company or a Co-operative Society or association or body of individuals, whether incorporated or not, or even an individual.
Right that is infringed may be under Part III of the Constitution or any other right which the law validly made might confer upon him. But then the power conferred upon the High Courts under Article 226 of the Constitution is so vast, this Court has laid down certain guidelines and self imposed limitations have been put there subject to which the High Courts would exercise jurisdiction, but those guidelines cannot be mandatory in all circumstances. The High Court does not interfere when an equally efficacious alternative remedy is available or when there is an established procedure to remedy a wrong or enforce a right. A party may not be allowed to bypass the normal channel of civil and criminal litigation. The High Court does not act like a proverbial "bull in china shop" in the exercise of its jurisdiction under Article 226."
11. Let us now turn to the main question which arises for decision in the present case i.e., whether NFTDC is a 'State'. For appropriate consideration of this question it is necessary to look into the Constitution of the body, the purpose for which it has been created, the manner of its functioning including the mode of its finding and the other relevant factors mentioned in the several decisions noted above.
12. The NFTDC owes its origin to the Memorandum of Understanding dated 14-11-1998 by and amongst the four public sector undertakings, namely, Hindustan Zinc Limited (HZL), Hindustan Copper Limited (HCL), National Aluminium Company Limited (NALCO), Bharat Aluminium Company Limited (BALCO) under the Department of Mines, Ministry of Steel & Mines and Defence Metallurgical Research Laboratory (DMRL) under the Department of Defence. Research & Development, Ministry of Defence, who were activity engaged in the development of speciality products based on non-ferrous metallic materials for specialised applications in various sectors including defence, electronics telecommunications, space and atomic energy. Realising that the development of these speciality materials and products which are of strategic importance is crucial it was felt that it is in the national interest to pool all the research and development efforts towards production of such critically useful materials and products. The said constituents, who are parties to the Memorandum of Understanding, decided to establish NFTDC at an estimated capital cost of rupees 12 crores and operating cost of approximately rupees 2.5 crores per annum. The four Public Sector Undertakings, referred to as sponsors in the Memorandum of Understanding, agreed to contribute in equal share the requirement of the capital for the project and the DMRL agreed to provide the land and buildings for the project. The DMRL also agreed to provide necessary power and water to the NFTDC. The DMRL shall act as nodal agency to coordinate the administrative research and development activities of the Centre and shall also provide access to all relevant equipment as may be required for the purpose of research and development. It was agreed that the NFTDC shall be registered as a Society. Each of the constituents shall nominate not less than one officer to work as a member of the Project Management Authority and the Joint Controller of the Defence Accounts will be one of the members of the PMA. MOU further provided that there shall be a Project Management Board with the Secretary, Department of Defence Research & Development as Chairman and Secretary, Department of Mines as Co-Chairman. The CMDs. of HCL, HZL, BALCO and Director, DMRL, shall be members and coordinators of the Project Management Authority. It was further agreed that as and when NFTDC is registered as a Society, the constituents shall transfer the assets of the centre to the Society but the ownership of the buildings provided by the DMRL would remain with DMRL. Should the cessation of activities for setting up of NFTDC become necessary for any reason at a future date, the land and the buildings provided by DMRL would revert to them and the remaining assets acquired sJiall be divided at book value amongst the sponsors. It was finally agreed that the MOU shall be effective from the date of its signing and shall be terminated either on directions from the concerned Government Departments or on being superceded by any other organisational set up to subserve the same objectives envisaged. The Memorandum was signed by the respective CMDs. of the four Public Sector Undertakings and the Director of DMRL. it was also approved and signed by Scientific Advisor to Defence Minister and Secretary, Department of Defence Research and Development, Ministry of Defence and by the Secretary, Dept. of Mines, Ministry of Steel & Mines. It is thus clear from the Memorandum of Understanding that NFTDC was floated by the four Public Sector Undertakings under the Ministry of Steel & Mines and the DMRL under the Ministry of Defence and it was entirely funded by them. Subsequently NFTDC was registered as a 'Central Government autonomous body' under the Public Societies Registration Act 1350 Fasli on 16-1-1990. As would appear from its memorandum of Association the founder members were 7 in number. The Scientific Advisor to the Defence Minister and Secretary Department of Defence Research and Development, Ministry of Defence, figured as the Chairman whereas Secretary, Department of Mines, Ministry of Steel and Mines figured as Co-Chairman. The Director of DMRL and the CMDs. of HZL, HCL, NALCO and BALCO figured as members i.e., the same officials who signed the memorandum of Understanding figured as founder members in the Memorandum of Association also. There are five categories of members characterised as founder members, ex-officio members, institutional members, ordinary members and honorary members. The memorandum of Association provides that the membership of the Society shall be open to any citizen of India without distinguishing as to sex, caste, religion, creed, etc., and to public and private corporations, Government companies, bodies corporate associations or institutions established under Indian Law which are committed with the aims and objects of the Society, on such terms and conditions as may be decided by the governing Council and to any Government Departments. The objects of the Society, inter alia, are :
To undertake, aid, promote, guide, manage, co-ordinate and execute research activities in sophisticated high technology non-ferrous materials with a view to progressively indigenise supplies of these materials and products; to undertake, promote, co-ordinate and develop technical know-how and basic engineering for production of products related to non-ferrous materials; to promote technology development for the manufacture of products involving non-ferrous materials, especially those related to primary metals being now produced by Hindustan Copper Limited, Hindustan Zinc Limited, Bharat Aluminium Company Limited and National Aluminium Company Limited;
To undertake pilot plant production of sophisticated high technology products with a view to meet critical requirements of the Defence, Electronics, Atomic Energy. Space and other sectors; To collaborate with scientific agencies, research centres and educational institutions on specific projects and undertake investigations in the field of technologies relevant to the objects of the society; any other object of general public utility as the society deem fit and proper in the attainment of the objects of the society. The memorandum of Association further provides that the affairs of the Society shall be managed, administered directly and controlled, subject to rules and regulations and orders of the Society, by the Governing Council as may be framed from time to time. The Governing Council shall exercise all such powers provided herein subject to such limitations as the General Body may, from to time, impose in respect of the expenditure from the funds of the society and of grants made by the Government at its meetings duly convened and held, provided always that the Governing Council shall have no greater power in the matter of expenditure from the funds of the society than the Government possesses in respect of expenditure from public funds. The Governing Council shall have the power, subject to the provisions of these Rules and Regulations to :
"(i) Consider the annual and supplementary budget placed before it by the Secretary from time to time, and pass them with such modifications as the Governing Council may think fit;
(ii) Create and abolish posts;
(iii)Appoint various scientific, technical, administrative and other officers and staff of the society, fix their remuneration and define their duties.
(iv) Enter into arrangements with the Government and through them with Foreign and international agencies and organisations, the State Governments and other public or private organisations or individuals for securing and accepting grants-in-aid, endowments, donations or gifts to the society, on mutually agreed terms and conditions :
Provided that such terms and conditions, if any, shall not be contrary to or inconsistent or in conflict with the objects of the society;
(v) .....
(vi) Borrow funds from banks or other financial institutions for the purpose of the society with or without security in accordance with the instructions of the Government issued from lime to time;
Explanation : For removal of doubts, it is explained herein that the functions, and powers of the Governing Council are subject In the directions of the Central Government issued from time to time in furtherance of the objects of the society and for ensuring its proper and effective functioning and the society will carry out such directions "
The funds of the Society shall consist of the following :
(a) Lumpsum and recurring grant made by the Government and the promoting institutional members HZL, HCL, BALCO, NALCO and DMRL
(b) Fees and other charges received by the Society;
(c) All other money received by the Society.
13. From a perusal of the Memorandum of Understanding and the Memorandum of Association, it is clear that NFTDC is sponsored and floated by four Public Sector Undertakings under the Department of Mines, Ministry of Steel & Mines, Government of India, and the DMRL which is an Undertaking of the Ministry of Defence. It is entirely funded by the sponsors. The entire capital expenditure as well as the recurring expenditure is met by the sponsors only. There is no material on record to show that funds from any other sources are made available to the NFTDC. In Unnikrishnan's case, , it is held that public funds when given as grant and not as loan carry the pubic character wherever they go. The element of public character necessarily means a fair conduct in all its aspects consistent with constitutional mandate of Articles 14 and 15. The primary object of the Society is to develop and produce speciality non-ferrous materials which are of strategic importance. The affairs of the Society are managed by the Governing Council which is composed of officials and representatives of the two Central Ministries and the sponsor members. The Secretary, Department of Defence Research & Development, Ministry of Defence is the Chairman, the Secretary, Department of Mines, Ministry of Steel & Mines, is the Co-Chairman, the CMDs. of the four Public Sector Undertakings, Director of DMRL, Additional Secretary, Mines, Additional Secretary and PA, Steel & Mines, Joint Secretary and Additional FA, DRDO, Government of India, Ministry of Defence, Chief Controller (R&D)(DRDO), Ministry of Defence and Chief Technical Officer, Department of Mines, Ministry of Steel & Mines arc the members of the Governing Council. The Governing Council functions under the direct control and supervision of the Central Government. The day-to-day administration is carried on by the Director under the direction and guidance of the Governing Council. The Director of DMRL in his capacity as Project Coordinator of NFTDC was himself managing the affairs ofNFTDC also. Thus for all practical purposes, the Chief Executive of DMRL was the Chief Executive of NFTDC also. The, material on record reveals that the research undertaken and the technology developed by the NFTDC is in strategic areas like defence, atomic energy, space research, missiles and tele-communications etc., and hat it is engaged in the production, on a large scale, of various materials and products which were exclusively supplied to Government Ordinance Factories. Atomic Energy Commission etc., like TAPS (used as war-head in missiles), ring-magnets (supplied to the Atomic Energy Commission), bullet-proof jackets (supplied to the armed forces) etc. NFTDC has obtained licences under APGST Act and Central Excise Act and it is a regular assessee paying huge amounts every year by way of sales tax and central excise. It is also registered as a factory under the Factories Act. Thus the NFTDC is performing an essential governmental function and it is practically a limb or extended arm of the Government though it is wearing the mask of a autonomous society. This conclusion is reinforced by the fact that the appointment order issued to the petitioner in WP No. 16587 of 1994 specifically stipulates that the appointee is also liable to serve in the defence forces for the period(s) in accordance with the instructions/orders issued by the Central Government/Centre in this behalf from time to time if the situation so warrants. Likewise in the official communications of the DMRL also, the NFTDC and certain other organisations are described as "Our Vehicles of technology transfer". Further the very fact that the services of some of the personnel belonging to DMRL and the other public sector undertakings have been transferred to NFTDC shows that it is virtually a sister organisation of DMRL and the other sponsors who are admittedly instrumentalities of the State. It also appears from the material on record that, by and large, the Government rules relating to TA and DA etc., are made applicable to the employees of NFTDC also. The Circular dated 13th April, 1994 shows that April 14, 1994 was declared as a holiday by NFTDC for Dr. B.R. Ambedkar's birthday celebrations as per the directives of the Government of India. In its letterheads also, NFTDC is described as a Central Government registered autonomous society. It is thus clear that there is deep and pervasive control of the Central Government over NFTDC. On an overall view of all the relevant factors, I am satisfied that NFTDC is a 'State' or other authority within the meaning of Article 12 of the Constitution and as such writ petition against the NFTDC is maintainable. The decisions relating to the Council of Scientific & Industrial Research (CSIR), Administrative Staff College of India, Centre for Cellular and Molecular Biology (CCMB) on which the learned Counsel for the respondents placed strong reliance are easily distinguishable on facts. In all those cases, on an examination of all the relevant factors, it was found that the concerned organisations or bodies were not performing any governmental function and they cannot be characterised as instrumentalities of the State. Even assuming that the activities carried on by the NFTDC cannot be considered to be a governmental function, it is, at any rate, discharging a public function. As such it is amenable to writ jurisdiction as held in the case of Anadimukta Sadguru etc., Trust v. R. Rudani (supra). Viewed in any manner, it cannot but be held that NFTDC is a 'State' or other authority within the meaning of Article 12 of the Constitution.
14. Let us now consider the individual cases on merits.
WP No. 16587 of 1994 :
The petitioner in this case was initially appointed as SSO Gr.II in DMRL in the year 1968. He was later promoted as SSO Gr. I and further promoted as Scientist D. He was thus a permanent employee of the Central Government. When the proposal for starting NFTDC was mooted, a core group of executives belonging to DMRL and other sponsors was created with a view to inducting them into NFTDC by regular appointments. The petitioner's services were also drafted as a member of the said core group' of executives and right from the inception i.e., from the year 1986 onwards he played a very active role in the establishment of NFTDC. On 6-2-1992 the Project Coordinator of NFTDC addressed a letter to the Director, DMRL, expressing the desire to avail the services of the petitioner by permanent absorption as Executive (E.IV) in the pay scale of Rs.4,500-150-5700. The Director, DMRL, was requested to consider the said proposal and accord approval. The said proposal was examined by the Committee for Permanent Absorption which sent its recommendations on 1-9-1992. It is useful to extract the relevant portions of the recommendations of the said Committee which reads as follows :
"2. While examining the proposal of permanent absorption of Shri T. Ranga Reddy, Scientist "D". DMRL, in NFTDC, the Committee highly appreciated the valuable techno-commercial services rendered by him since the inception of the Centre. While in DMRL he spearheaded the indigenisation programme of OFE Copper he was mainly responsible for production of OFE Copper in DMRL followed by user evaluation and acceptance of the product in the initial stages, based on which a 100 TPY programme is now being implemented by NFTDC. Having thus sensitised the market, 1000 TPY production facility is being contemplated to totally eliminate our dependence for this strategic material on foreign sources.
During the formative stages of NFTDC he was intimately associated with the preparation of Prefeasibiliry Report based on which NFTDC was established. He played an important role in the preparation of the Constitution and Manpower Policy documents of the Centre. After the establishment of NFTDC he is looking after the overall techno-commercial activities of the Centre. He is the key member representing DMRL in NFTDC and is solely responsible for interfacting the two organisations. To sum up Shri Reddy's contributions in bringing up NFTDC to the present stage can be rated outstanding. Hence, he is admirably suited to fill the role of the core group executive, not only for the purpose of continuity, but also for the expeditious implementation of various technical programmes on hand at NFTDC.
3. Recommendations
(i) The Committee recommends the induction of Shri T. Ranga Reddy, Scientist "D" to NFTDC on permanent cadre as a core group executive.
(ii) Shri T. Ranga Reddy has been working as Scientist "D" in the pay scale of 3700-125-4700-150-500 (E-I1I level) for the last 12 years. The Committee hence recommends his induction in one higher scale of pay i.e., 4500-50-5700 (E-IV level) protecting his present total monthly emoluments.
(iii)The Committee recommends that the Joint Project Coordinator of NFTDC may request Director, DMRL, to take suitable steps for seeking clearance from DRDO Headquarters for expediting the permanent absorption of Shri T. Ranga Reddy in NFTDC.
Sd/-
(S.L.N. Acharyulu) Director DMRL & Joint Project Co- ordinator NFTDC, Chairman Sd/-
(Dr.C.R.Chakravorty) Director (IMSD) Member Sd/-
(R.K.. Mahapatra) Director (Production) Member"
It may be mentioned that Shri S.L.N. Acharyulu, Director DMRL & Joint Project Coordinator, NFTDC, was the Chairman of this Committee. Based on the said recommendations of the Committee, Shri S.L.N. Acharayulu in his capacity as Joint Project Coordinator of NFTDC addressed a letter on 2-9-1992 to the Director, DMRL, requesting the latter to take up the matter suitably at his level with DRDO Headquarters for obtaining necessary clearance for permanent absorption of the petitioner in NFTDC. Ultimately a letter of appointment by direct absorption in NFTDC as Deputy Director in the pay scale of 4500-150-5700 was issued to the petitioner on 1-1-1993. Para 14 of the said order of appointment under the heading of Probation & Confirmation reads as follows :
"You will be on probation for 12 months and on successful completion of probation, you will be confirmed in the post. Your confirmation in the regular cadre of the Centre is subject to your final release and severance of employment with your present organisation i.e., DRDO.
If the above terms and conditions are acceptable to you, please return the duplicate copy of this offer letter duly signed by you as a token of your acceptance."
The presidential sanction for the permanent absorption of the petitioner in NFTDC was, however, granted with effect from 14-7-1993 and the same was communicated on 3-9-1993. The petitioner accordingly joined duty as Deputy Director (core group) in NFTDC on permanent absorption with effect from 14-7-1993 by submitting the joining report on 14-7-1993. On 6-6-1994 he was served with the impugned order terminating his services with immediate effect. The order is signed by Shri S.LN. Acharyulu in his capacity as Joint Project Coordinator NFTDC. It is useful to extract the said order which reads as follows :
"Dear Shri Ranga Reddy, You were offered appointment as Deputy Director (core group) in NFTDC vide offer NFTDC/Rectt(core)11/92 dated 1-1-1993. Under Clause 14 thereof you were placed on probation for 12 months from the date of your joining NFTDC. You joined the post on July 14, 1993.
Your performance during probation has been reviewed and found to be unsatisfactory. Your work assessed was found to be utterly inadequate for the needs of the job and your performance unsuitable for retention in the post. You are therefore not confirmed and your appointment in NFTDC as Deputy Director (core group) is hereby terminated with immediate effect.
Yours faithfully, Sd/-
S.L.N. Acharyulu Joint Project Coordinator NFTDC"
dated: June 6, 1994 It is this order which is under challenge in the writ petition.
15. It is the settled legal position that where a person is appointed to a post, permanent or temporary, either on probation or on officiating basis, he has no right to the post and as such the termination of his services cannot amount to punishment and it does not attract the provisions of Article 311 of the Constitution. (See Parshotam Lal Dhingra v. Union of India, , Samsher Singh v. State of Punjab, , Oil & Natural Gas Commission v. Md. S. Iskandar Ali, . In M. Venugppal v. Divnl. Manager, LIC of India, Machilipatnam, , it was held that the termination of services of a probationer for failure to achieve the target stipulated in the contract of employment cannot be assailed for non-compliance of Section 25-F of the Industrial Disputes Act and that the same cannot also be deemed to be retrenchment as it comes under the exemption clause (bb) to Section 2(oo) of the Industrial Disputes Act. In the said judgment, it was further held that even under general law. the service of a probationer can be terminated after making an overall assessment of his performance during the period of probation and no notice is required to be given before terminating his service. In Smt. P. Usha Radhey Mohan v. M. V, Ramu, Manager (Personal) and others, 1998 (1) LS 568, a Division Bench of this Court held that it is no part of the law Court to extend the probationary period or direct cancellation of termination notice and the Court cannot act as an employer or substitute is opinion for that of the employer with regard to the suitability of the employee for confirmation. The learned Counsel for the petitioner, however, contended that the petitioner in the instant case was not a probationer but he was a regular employee in view of the sanction accorded by the President for his permanent absorption in NFTDC and that the probation clause was erroneously introduced in the appointment order in a mechanical and routine manner. In any case, the said clause has become redundant and inoperative after the presidential sanction. It is difficult to accept this submission of the learned Counsel for the petitioner. A reading of the order of presidential sanction and, more particularly, paras 3, 5 and 7 of said order makes it clear that presidential sanction for permanent absorption was granted mainly for the purpose of enabling the petitioner to receive pension and all other terminal benefits from DMRL and that the same has no bearing on the question of probation. The said order, in my view docs not supersede or nullify the specific condition relating to probation incorporated in the order of appointment which was accepted by the petitioner with eyes wide open.
16. The [earned Counsel for the petitioner has also contended that termination of services of a probationer even on the ground of inefficiency or unsatisfactory performance cannot be passed without enquiry and without giving opportunity to the employee as it casts stigma and it is in the nature of punishment. I do not, however, find any substance in this contention in view of the well established legal position as noticed above. It is sufficient to notice in this context the latest judgment of the Supreme Court in Radhey Shyaru Gupta v. U.P. Agro Industries Corpn. Ltd., , wherein after analysing all the earlier cases it has been authoritatively laid down that the termination of the services of a temporary servant or one on probation, on the basis of adverse entries or on the basis) of an assessment that his work is not satisfactory will not be punitive inasmuch as the above facts are merely the motive and not the foundation. The reason is that the assessment is not done with the object of finding out misconduct on the part of the officer. It is done only with a view to decide whether he can be retained or continued in service. In the instant case, the order is not founded upon any misconduct on the part of the petitioner. The order is on the sole ground that the performance of the petitioner during the probation has been reviewed and found to be not satisfactory and he was found unsuitable for retention in the post. He was, therefore, not confirmed and his appointment was, therefore, terminated. The petitioner has not attributed any mala fides to the authority who passed the order. It is, no doubt, true that the services of the petitioner were abruptly terminated during the period of probation without giving him even a warning or opportunity to improve his performance. The file, however, discloses that two persons reviewed the performance of the petitioner during probation viz., (1) S.L.N. Acharyulu, Director, DMRL and Joint Project Coordinator, NFTDC, (2) Dr. C.R. Chakravorty, Associate Director of DMRL and one of the Directors of NFTDC. The file contains a confidential note of S.LN. Acharyulu dated 6-6-1994 which reveals that during the discussion when his deficiencies were pointed out to him, the petitioner expressed willingness to leave the NFTC. In the counter-affidavit filed by S.L.N. Acharyulu in the writ petition, it is stated that S.L.N. Acharyulu had a detailed discussion with the petitioner on his poor and unsatisfactory performance and that the petitioner responded stating that he was not keen on continuing in NFTDC and he was planning to quit to pursue his personal business after receiving his full commuted pension which was just obtained by him. There was, therefore, no alternative than to terminate the probation. A similar affidavit from one Dr. D. Banerjee who was the then Associate Director of DMRL and who was allegedly present at the time of discussion was also filed.
17. It is finally contended by the learned Counsel for the petitioner that, in any case, the termination order passed within the period of probation is bad and that the appointment order does not state that the services can be terminated at any time without assigning any reasons and without notice. In support of this contention, reliance is sought to be placed on the following decisions :
Express Newspapers (P) Ltd v. Labour Court, Utkal Machinery Ltd. v. Miss Santi Patnaik, and Brooke Bond India v. Y.K. Gautam, .
I am afraid none of those judgments can render any assistance to the petitioner since they are all cases dealing with the jurisdiction of the Industrial Tribunal to interfere with the contractual right to terminate. It was held therein that even in the case of a probationer whose services have been terminated before the expiry of the probationary period without assigning any reasons, in accordance with the terms of contract, an Industrial Tribunal can go into the question of the validity of the order of termination. What has to be seen is whether the action of the employer is mala fide or whether it amounts to victimisation of the employee or is an unfair labour practice, or is so capricious or unreasonable as would lead to inference that it has been passed for ulterior motives and is not in bona fide exercise of the power arising out of the contract. But in the present case we are not at all concerned with the scope of the powers of the Industrial Tribunal. As already noticed above in M. Venugopal v. Divn. Manager, LIC of India. Machilipatnam, (supra), an order of termination passed within the period of probation was upheld holding that the services of a probationer can be terminated after making over all assessment of his performance "during the period of probation" and no notice is required to be given before terminating his service. In Samsher Singh's case (supra), the Supreme Court observed that "Before a probationer is confirmed, the authority concerned is under an obligation to consider whether the work of the petitioner is satisfactory or whether he is suitable for the post. In the absence of rules governing a probationer in this report the authority may come to the conclusion that on the ground of inadequacy or for any temperamental or any other object not involving moral turpitude, the probationer is unsuitable for the job and hence must be discharged."
I do not, therefore, find any legal infirmity in the impugned order. Though the case is a hard case where an officer who has put in long years of blemishless service has been unceremoniously sent out without giving any opportunity, this Court cannot grant relief merely on sympathetic consideration contrary to the settled principles. Proverbially hard cases make bad law.
18. The learned Counsel for the petitioner has finally made a submission that the petitioner may be allowed to go back to his parent organisation i.e., DMRL by permitting him to pay back the pension and other terminal benefits received by him in instalments. As the petitioner resigned from DMRL and also received all his terminal benefits, it is not possible to put the clock back now.
19. For all the aforesaid reasons, the writ petition fails and it is accordingly dismissed but without costs.
20. WPNos.15410, 15430 and 17729 of 1994 These three writ petitions are filed by the casual employees, retrenched workers and persons engaged for a fixed period on contract basis by the NFTDC seeking regularisation of their services. The learned Counsel appearing for the petitioners has contended that all the petitioners were recruited through the Employment Exchange, that they have been continuously working from 1988 onwards and that they have been discharging regular duties. Though the work done by them is of a perennial nature, the NFTDC, without framing recruitment regulations and regularising their services, has been continuing them either on ad hoc basis or converting them into contractual labour for fixed periods and that the same amounts to unfair labour practice. It is also sought to be contended that NFTDC is an industry and the retrenchment of the petitioners in violation of the provisions of the Industrial Disputes Act and it is illegal, and such of the workers, who are retrenched, have got to be re-employed in view of Section 25-H of the Industrial Disputed Act.
21. On the other hand, the learned Counsel appearing for the respondents has contended that NFTDC is neither an industry nor an industrial establishment. But it is only a research institute developing technical know-how. It is not producing any goods and services and that the petitioners are not workmen. It is also contended that the work is purely experimental in nature and that it is not known how long it is likely to last and whether it will ultimately prove successful or not. Therefore, all the personnel are engaged purely on contract basis and that the petitioners are not entitled to any of the reliefs sought for by them. It is further contended that, in any case, they have an effective alternative remedy by way of raising an industrial dispute and the writ petitions are, therefore, not maintainable.
22. Courts have generally deprecated the practice of making ad hoc appointments and continuing them on temporary basis for long spells creating artificial breaks in their service and ultimately dispensing with their services on the pretext that their appointments are temporary and that their work having been completed, their services are no longer required. However, having regard to the nature of the work that is primarily carried in NFTDC, the practice of engaging persons on contract basis for fixed periods cannot be characterised as arbitrary or illegal or unfair labour practice. In T. Bupal v. Director, National Remote Sensing Agency, Hyderabad and others, 1997(4) ALT 500, and B. Panduranga Rao v. Union of India, this Court, following the decision of the Supreme Court in Union of India v. D.K. Saxena, 1991 (4) ALT 473, upheld the retrenchment on the expiry of the period of the contract. The Court, however, directed that the department should consider the case of the retrenched workers for appointment in regular vacancies that may arise subsequently. Similarly in Gazia Development Authority v. Vikram Chaudhary, , it was held that the principle of last-come-
first-go will apply even for temporary employees. There is no material placed before the Court to show that any seniors are retrenched while continuing their juniors in service. I do not find it necessary to go into the question whether NFTDC is an industry or not for the purpose of disposing of these writ petitions as the consideration of this question necessarily involves the examination of several disputed questions of fact which cannot be appropriately done in a writ proceeding under Article 226 of the Constitution, more so, when the petitioners have an effective alternative remedy by way of raising an industrial dispute. However, as NFTDC is held to be a 'State', it has to act fairly in all its dealings with its employees and it has to follow the principle of last-come-first go whenever there is need for retrenchment of workers. So also whenever there is any need for re-employment, cases of retrenched workers will have to be considered giving them priority of re-employment. If there are any regular vacancies to be filled, the cases of eligible temporary/ad/ hoc/casual employees should be considered for filling up those vacancies.
23. With the above directions, these writ petitions are disposed of. There will be no order as to costs.