Allahabad High Court
Ashok Kumar Sharma S/O Sri O.P. Saraswat ... vs Union Of India (Uoi) Through Secretary, ... on 4 May, 2007
Author: Sudhir Agarwal
Bench: Sudhir Agarwal
JUDGMENT Sudhir Agarwal, J.
1. In these writ petitions the questions of law and fact involved are common and, therefore, as requested by learned Counsel for the parties have been heard together and are being decided by this common judgment.
2. 35 petitioners in writ petition No. 21772 of 2006 have filed this writ petition seeking a writ of certiorari quashing the orders dated 21.2.2006 (Annexure 11 to the writ petition) whereby the petitioners have been terminated by respondent No. 8. Further a writ of certiorari has been sought against the condition mentioned at item No. 5.1.2 of the agreement dated 3.11.2005 contained in Annexure 7 to the writ petition. It provides that marketing personnel of respondent No. 8 shall not be absorbed. A writ of mandamus has also been sought directing respondents No. 1 to 5 to allow the petitioner to continue as Marketing Personnel and to pay their salary with effect from the date, persons junior to the petitioners, mentioned in Table I in para 25 of the writ petition have been retained in service. In writ petition No. 56026 of 2006 there are four petitioners. Reliefs sought are similar as referred above.
3. The facts in brief giving rise to these writ petitions are narrated as under:
Oswal Chemicals and Fertilizers Limited {hereinafter referred to as 'OCFL') having its registered office at Kasturba Gandhi Marg, New Delhi is a company registered under the Companies Act, 1956 and was engaged in the manufacture of chemicals and fertilizers. The petitioners were appointed as Marketing Officers of the company. There is another company named M/s Shyam Basic Infrastructures Products Pvt. Ltd. (hereinafter referred to as 'SBIPPL'). An agreement was executed between OCFL and SBIPPL on 3.11.2005 wherein the entire assets of OCFL agreed to be sold to SBIPPL for a consideration of Rs. 1100 Crores. The purchasing company vide Clause 5.1.2 of the agreement also agreed to take over all the employees of OCFL on terms not less favourable than those they currently enjoyed except Marketing Personnel. Thereafter it appears that another company Kribhco Shyam Fertilizers Limited (hereinafter referred to as 'KSFL') was incorporated under the Companies Act, 1956 vide registration certificate of incorporation dated 8.12.2005 issued by the Registrar of Companies and and N.C.T. Of Delhi and Haryana. The said new company was incorporated being a joint venture of SBIPPL and M/s Krishak Bharti Cooperative Limited (hereinafter referred to as 'KRIBHCO') As per the object stated in Memo of Association, it was incorporated to acquire the assets of Shahjahanpur unit of OCFL. An agreement dated 23/12/2005 was executed between SBIPPL and KSFL whereby Shahjahanpur plant was sold to KSFL. All the employees of respondent No. 8 who were taken by SBIPPL except the Marketing Personnel, ultimately became the employees of KSFL and are in service. However, the petitioners who were the employees in Marketing Section, their services have been dispensed with by their original employer OCFL, respondent No. 8 by means of the impugned orders of termination where against these writ petitions have been filed.
4. Dr. L.P. Misra, Senior Advocate assisted by Sri Sharad Pandey and Sri Ajay Kumar Singh appeared for the petitioners in these cases. Learned counsel for the petitioners vehemently contended that KRIBHCO is an instrumentally of the Government and SBIPPL worked as an agent of KRIBHCO for purchase of OCFL as is evident from agreement dated 3.11.2005 where in the definition Clause 1.1.6 it is mentioned that 'party' or "parties' means as the context may require Shyam or KRIBHCO or both. It is, therefore, submitted that in effect transfer of the assets of the company from OCFL to SBIPPL and thereafter to KSFL is nothing but for all practical purposes is a transfer under the direct control of KRIBHCO which is an instrumentality of the State. Being a State under Article 12 of the Constitution it is incumbent upon it not to act arbitrarily and cause discrimination. However, acting illegally, in the agreement dated 3.11.2005, it provided in Clause 5.1.2 for transfer of all other employees of OCFL except Marketing Personnel which is arbitrary and discriminatory and even otherwise unconscionable. It is further contended that Articles 41, 42 and 43 of the Constitution of India cast a duty upon the State and its instrumentality to eradicate poverty and provide employment and ensure improvement of working condition of the citizens of the country. Hence, KRIBHCO acting in a fraudulent manner by indirectly purchasing respondent No. 1 has rendered the petitioners unemployed which is illegal and unconstitutional and violative of Article 21 of the Constitution.
5. Respondent No. 4 has filed a counter affidavit stating that KRIBHCO was initially registered under the Delhi Cooperative Societies Act, 1972 and thereafter registered as Multi State Cooperative Society under Multi State Cooperative Societies Act, 1984 and now governed by the provisions of Multi State Cooperative Societies Act, 2002 (hereinafter referred to as "2002 Act"). The object 1of KRIBHCO is to promote the economic interest of its members by undertaking manufacture of chemical fertilizers and other allied products which are conducive and incidental thereto. The membership of KRIBHCO is open to various cooperative societies which are primarily engaged in development of agriculture. Since the society is now governed by the provisions of Multi State Cooperative Societies Act 2002, the bye-laws have been amended and the presently applicable to KRIBHCO are the amended certified bye-laws dated 28.12.2004. There is no pervasive control of Government over KRIBHCO and neither it carries out the essential public duty and function or duties closely related to governmental functions nor even otherwise, it is wholly owned and controlled by the Government of India or State and, therefore, it is not a 'State' under Article 12 of the Constitution of India. It has also denied that SBIPPL acted as an agent of KRIBHCO. It is said that KRIBHCO being a separate entity, as a joint venture, floated the company namely, KSFL wherein KRIBHCO and SBIPPL both have their share and control in the manner provided in the Articles of Association and the said joint venture has resulted in birth of a separate independent entity 'KSFL'. The said KSFL has entered into an agreement on 23.12.2005 with SBIPPL in respect to - Shahjahanpur unit of the company, and it is totally a private and separate arrangement.
6. On behalf of respondent No. 5 also a counter affidavit has been filed stating that respondent No. 5 is wholly a private company not answering the requirement of 'State' under Article 12 of the Constitution of India and, therefore, in respect to its contractual matters, the petitioners who are strangers for all practical purposes to respondent No. 5, have no occasion or cause of action to challenge their contractual breach that too by respondent No. 8 with which it has no concern and even otherwise, the writ petitions are not maintainable.
7. Sri B.P. Jauhari, learned Counsel for the respondent No. 5 raised a preliminary objection regarding maintainability of the writ petitions urging that the petitioners are employees of a private company and are mainly aggrieved by orders of their termination issued by a private company, i.e., respondent no.8. It is further contended that even respondents no.4 and 5 cannot be said to be the authorities or instrumentality of State answering the description of State under Article 12 of the Constitution of India and, therefore, the writ petitions are not maintainable. Reliance is placed on a Division Bench decision of this Court in Jyoti Kumar Malviya v. Indian Farmers Fertilizers Cooperative Ltd. Phoolpur Project, Phoolpur and Ors. 2006(3) ADJ 383 (All).
8. From respective submissions advanced by the learned Counsel for the parties, it is evident that the petitioners have set up their case centring around respondent no.4 by contending since KRIBHCO is a State under Article 12 of the Constitution, therefore, the writ petitions are maintainable. Therefore, without entering into other aspects of the matter, it would be appropriate first to consider as to whether respondent no.4, i.e., KRIBHCO can be said to be a 'State' under Article 12 of the Constitution for the reason that if it is not so, the basic premise of the entire case set up by the petitioners would fall and the writ petitions would render not maintainable. It is * only when it is found that respondent no.4 is a 'State' under Article 12 of the Constitution, then it would be necessary for this Court to consider other questions.
9. As observed earlier, KRIBHCO is a society registered under the provisions of 2002 Act. Therefore, it would be useful to consider 2002 Act and the bye-laws of KRIBHCO to find out whether it is amenable to writ jurisdiction.
10. The preamble to the 2002 Act reads:
An Act to consolidate and amend the law relating to co-operative societies, with objects not confined to one State and serving the interests of members in more than one State, to facilitate the voluntary formation and democratic functioning of cooperative as people's institutions based on self help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy and for matters connected the with or incidental thereto.
11. Section 3(g) of 2002 Act defines the 'Co-operative Principles' to mean those specified in the First Schedule and those relevant for our purpose are:
1. Voluntary and Open Membership. Cooperatives are voluntary organisations, open to all persons capable of using their services and willing to accept the responsibilities of membership, without discrimination on basis of gender, social inequality, racial, political ideologies or religious consideration.
2. Democratic Member Control. - Cooperatives are democratic organisations controlled by their members, who actively participate in setting their policies and decision making. Elected representative of these cooperatives are responsible and accountable to their members.
3. Member's Economic Participation Members contribute equally and control the capital of their Co-operative democratically. At least a part of the surplus arising out of the economic results would be the common property of the co-operatives. The remaining surplus could be utilized benefiting the members in proportion to their share in the Cooperative.
4. Autonomy and independences-Cooperatives are autonomous, self-help organisations controlled by their members. If cooperatives enter into agreement with other organisations including Government or raise capital from external sources they do so on terms that ensure their democratic control by members and maintenance of Cooperative autonomy.
12. Section 5 of 2002 Act provides that no Multi State Cooperative Society shall be registered under the Act unless its main objects are to serve the interests of members in more than one State and its bye-laws provide for social and economic betterment of its members through self help and mutual aid in accordance with the cooperative principles.
13. Section 10 of 2002 Act provides that every Multi State Cooperative Society may make its bye-laws consistent with the provisions of the Act while Section 11 of the Act deals with amendment of bye-laws and provides that they shall be made by a resolution passed by two-third majority of the members present and voting at the general meeting of the society.
14. Bye-laws in accordance with the aforesaid provisions of the 2002 Act have been framed by KRIBHCO and those dealing with its main object are as under:
KRIBHCO shall be a body corporate and shall have the power to acquire, hold and dispose of property, both movable and immovable, enter into contract, institute and defend suit and other legal proceedings and to do all things necessary for the purpose of furthering the interests of the members based on cooperative principles. KRIBHCO shall conduct its operations in a professional and commercial manner to ensure the social and economic development of its members and optimum returns to its members on their contributions in KRIBHCO.
OBJECTS
(a) The objects of KRIBHCO shall be to promote the economic interest of its members by undertaking the business of manufacture, production, development, processing, conversion, sale, distribution, marketing, import, export, trade or otherwise deal in, store, or transport, build, construct, fabricate or otherwise turn to account, in India and abroad of chemical fertilisers, bio fertilisers, man made fibres, detergents, soaps, chemicals, petro-chemicals, refining, hydrocarbons, drugs and Pharmaceuticals, industrial products, cement, steel, electronic products, satellite receivers, pesticides, seeds, agricultural machinery and implements and other agricultural inputs/outputs, agricultural items, agro-based industrial items, food products, aquaculture, forestry products, power generation and distribution from conventional or non-conventional energy sources, automobiles, breweries, housing and real estate, construction and fabrication, and to provide/undertake the business of oil exploration, communication and telecommunication, information technology, shipping, trading, banking and insurance and to undertake such other activities which are conducive and incidental thereto.
(b) In furtherance of these objectives, KRIBHCO may undertake one or more of the following activities:
(i) to set up, lease, take on hire, acquire plant or plants for manufacture/production/ conversion/processing of all or any of the product including their allied products/byproducts, and inputs either directly or in collaboration or as a Joint Venture with any other agencies or persons including other cooperative societies, public sector or private sector enterprises;
(ii) to undertake production, processing, manufacture, sale, distribution, marketing, import, export and to otherwise deal in agricultural production requisites;
(iii) to acquire, establish, construct, provide and maintain and administer factories, townships, estates, railway sidings, build yards, wells, water reservoirs, channels, pumping installations, purification plants, pipe lines, carriages, storage sheds and accommodation of all description;
(iv) to manufacture, store, maintain, sell, buy, repair, alter, exchange, let on hire, export, import and deal in all kinds of articles and things which may be required for the purpose of any of the business of KRIBHCO or are commonly supplied or dealt in by persons engaged in any such business or which may seem capable of being profitably dealt in connection with any of the business of KRIBHCO;
(v) to act as warehousing agency under the Warehousing Act and own and construct its own godowns or hire godowns for the storage of fertilisers and other goods;
(vi) to set up storage units for storing fertilisers and other goods by itself or in collaboration with any other cooperative institution or any other agency;
(vii) to maintain transport units of its own or in collaboration with any other organisation in India and abroad for movement of goods by any form or manner of transportation including by land, sea etc;
(viii) to acquire, take on lease or hire, buildings, fixtures and vehicles and to sell, give on lease or hire them;
(ix) to promote and organise other Cooperative Societies in the fields to which KRIBHCO extends its activities;
(x) to subscribe to the shares of Cooperative and other Institutions, and bodies corporate;
(xi) to enter into contracts and collaboration for purchase, production, manufacture and marketing, sale and distribution of raw materials, auxiliary products, packing materials, finished products, by-products and other waste products and also enter into joint marketing and products exchange agreements with other Cooperative Institution, Public Sector Undertaking or any other agency or person;
(xii) to enter into collaboration with Cooperative or others in India and in foreign countries for machinery and equipment, and for technical know-how, consultancy, designing, engineering, construction, erection, operation and maintenance of fertilisers, chemicals and other Plants; and marketing of the produce of the same;
(xiii) to provide technical, consultancy and other services to member societies and other agencies and persons;
(xiv) to set up agricultural farms by purchasing, acquiring or taking on lease of land from Government, Institutions and private agencies for research and development of agriculture;
(xv) to set up institute for providing training to the farmers and others in the modern and improved agricultural practices, technology and other areas of human resource development;
(xvi) to provide and arrange for the training of employees of the Cooperative Societies, to promote and develop the sales of fertiliser, other agricultural production requisites and other activities in which KRIBHCO is interested;
(xvii) to take up such other activities which are incidental and conducive to the agriculture and rural development;
(xviii) to establish branch offices and sales depots in India and abroad;
(xix) to carry on agency business of every kind and description connected with the business of KRIBHCO;
(xx) to undertake research and such other activities as are incidental and conducive to the development of the industry as well as KRIBHCO;
(xxi) to undertake production and/or processing of agricultural items including mushroom, and agro-based industrial items and food products including sugar, fruit and vegetable processing, starch products, and fibre board, molasses based products;
(xxii) to set up forestry;
(xxiii) to undertake Bio-technology based industries;
(xxiv) to acquire real estates in rural and urban areas and also promote cooperative housing for employees and members;
(xxv) to promote subsidiary institutions for the purpose of furthering the objects of KRIBHCO; and (xxvi) to undertake such other activities as are conducive or incidental to the attainment of main objects of KRIBHCO;
(C) KRIBHCO shall take all steps necessary to:
(i) conduct its affairs with Professional Management;
(ii) Solicit participation of the Cooperative Societies in terms of contribution to equity and participation in the Business;
(iii) Give effect to the provisions in letter and in spirit of the Multi-State Cooperative Societies Act, 2002 (hereinafter referred to as "the Act")to ensure democratic functioning of the society, economic betterment of members and for greater functional autonomy.
MEMBERSHIP (A) No individual shall be eligible for membership of KRIBHCO. The Membership of KRIBHCO will be open to the following:
(i) National Cooperative Federations of agricultural credit/ marketing processing/supply and other agricultural Cooperative Societies;
(ii) Apex Cooperative Federations of agricultural credit/marketing/processing/supply and other agricultural Cooperative Societies at the State and Union Territory level;
(iii) Regional and District Cooperative credit/marketing/processing/supply and other agricultural Cooperative Societies;
(iv) Primary agricultural Cooperative credit/marketing/processing/supply and other agricultural Cooperative Societies including sugar factories, cane unions, dairy cooperatives, farmers service societies etc;
(v)Consumers' Cooperatives at various levels engaged in the sale of fertilisers and other agricultural production requisites;
(vi) Tribal Cooperative Federations and Tribal Cooperative development Corporations engaged or designed to engage amongst others in the sale of fertilisers and other agricultural production requisites;
(vii) Indian Farmers Fertiliser Cooperative Limited; (viii) National Cooperative Development Corporation;
(ix) Govt. of India,
(x) Other Government Organisations/Undertakings engaged or designed to engage in the sale of fertiliser or other agricultural production requisites;
(xi) Public Financing Institutions;
(xii) Any Cooperative Society, activities of which are augmentative to the activities and conducive to overall growth of KRIBHCO;
(b) Nominal Membership:
Any such other persons/Societies/Institutions not covered under Bye-Law 6(a) above with whom KRIBHCO is likely to do business in connection with construction of plants, purchase, sales, storage and transport of raw materials for finished goods, may be admitted as nominal members provided the application for admission to such membership is received along with the admission fee of Rs. 10001-and is duly accepted by the Board of Directors. Such admission fee shall not be refundable in any case. Such members will not have right to vote or participate in the management of KRIBHCO or in the sharing of its profits or liabilities.
12. Section 38 of the Act deals with Constitution, powers and functions of general body and amongst others, provides that the ultimate authority of a multi-State co-operative society shall vest in the general body of its members. Section 41 deals with the Board of Directors and provides that there shall be a board of directors for every multi-State co-operative society consisting of such number of directors as may be specified in the bye-laws, provided that the maximum number of directors in no case shall exceed twenty-one but the board may co-opt two directors in addition to twenty-one directors. The directors are elected by the members of the multi-State Co-operative Society by a resolution in the general meeting. Section 44 of the Act deals with prohibition to hold office of Chairperson or Vice-chairperson and provides that no member of the board shall be eligible to be elected as the Chairperson or Vice-chairperson of a multi-State co-operative society if such member is a Minister in the Central Government or State Government. Section 45 of the Act provides that the conduct of elections to the board of a multi-State co-operative society shall be the responsibility of the existing board and the election shall be held by secret ballot in the prescribed manner. Section 48 of the Act deals with nominee of Central Government or State Government on board. The relevant Bye-Laws of KRIBHCO in this regard are:
BOARD OF DIRECTORS
38. The Board of Directors of KRIBHCO shall not exceed 21 Directors excluding Functional Directors and Co-opted Directors. It shall consist of:
(i) Eight Directors to be elected by the General Body of whom three shall be the representatives of the Apex Marketing Federation of different States/Union.
(ii) Not more than three persons to be nominated by the Government of India based on equity share capital held by the Central Government i.e. one person if the equity share capital is less than 26%, two persons if the equity contribution is 26% or more but less than 51%; and three persons if the equity contribution is 51% or more of the total issued share capital;
(iii) (Deleted vide Section 126 of 2002 Act);
(iv) The Managing Director, Finance Director and Marketing Director of IFFCO (all ex-officio);
(v) The Indian Financing agency or agencies, if any, providing long term credit to KRIBHCO shall also be eligible to nominate one Director if there is a provision to that effect in the loan agreement;
(vi) The Board may co-opt two experts as Directors from amongst eminent economists or management experts or experts on cooperation.
13. Section 49 of the Act deals with the powers and functions of the board and includes the power to appoint and remove a Chief Executive and such other employees of the Society as are not required to be appointed by the Chief Executive, to make provisions for regulating the appointment of employees and the service conditions, to place the annual report, annual financial statements, annual plan and budget for the approval of the general body, to acquire or dispose of immovable property, to review membership in other co-operatives and to sanction loans to the members. Section 51 of the Act stipulates that the Chief Executive of every multi-State co-operative society shall be appointed by the board and he shall be a full-time employee of such multi-State co-operative society. It has further been provided in Section 52 of the Act that the Chief Executive shall under the general superintendence, direction and control of the board, exercise the powers and discharge the functions and some of the functions enumerated in the said Section are for making the appointment to the post in the Society, assisting the board in the formulation of policies, objectives and planning and furnishing to the board periodical information necessary for appraising the operations and functions of the multi-State cooperative society.
14. Section 61 of the Act deals with the government aid to multi-State Co-operative Society and is as follows:
Notwithstanding anything contained in any law for the time being in force, the Central Government or a State Government, on receipt of request from a multi-State co-operative society and with a view to promoting co-operative movement, may,-
(a) subscribe to the share capital of a multi-State co-operative society;
(b) give loans or make advances to a multi-State co-operative society;
(c) guarantee the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society;
(d) guarantee the repayment of share capital of a multi-State co-operative society and dividends thereon at such rates as may be specified by the Central Government or the State Government;
(e) guarantee the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society;
(f) give financial assistance in any other form, including subsidies, to any multi-State co-operative society; and
(g) provide aid to any other multi-State co-operative society on such terms and conditions as may be prescribed.
15. Section 70 of the Act deals with appointment and remuneration of auditors and provides that every multi-State Co-operative Society shall appoint an auditor at each annual general meeting. Section 77 of the Act deals with power of Central Government to direct special audit in certain cases where the affairs of any multi-State cooperative society are not being managed in accordance with self-help and mutual aid and co-operative principles or prudent commercial practices; or with sound business principles; or that any multi-State co-operative society is being managed in a manner likely to cause serious injury or damage to the interests of the trade, industry or business to which it pertains; or that the financial position of any multi-State co-operative society is such as to endanger its solvency.
16. Chapter X of the Act deals with winding up of multi-State Cooperative Society. Section 122 contained in Chapter XV deals with the power of the Central Government to give directions to specified multi-State co-operative societies in public interest and is quoted below:
If the Central Government is satisfied that in the public interest or for the purposes of securing proper implementation of co-operative production and other developmental programmes approved or undertaken by the Central Government or to secure proper management of the business of the specified multi-State co-operative societies generally or for preventing the affairs of such society being conducted in a manner detrimental to the interests of the members, any depositors or creditors thereof, it is necessary to issue directions to any class of the specified multi-State co-operative societies generally or to any specified multi-State cooperative society or societies in particular, the Central Government may issue directions to it or to them, from time to time, and all such specified multi-State co-operative society or the societies concerned, as the case may be, shall be bound to comply with such directions.
17. The provisions contained in the bye-laws relating to Share Capital and Funds are as below:
SHARE CAPITAL The authorised share capital of KRIBHCO shall be Rs. 500 crores consisting of
(i) 44,500 shares of Rs. 1 lakh each to be subscribed by Government of India, National Cooperative Development Corporation, Government Organizations/Undertakings, National/ State Cooperative Federations and large Processing Cooperatives such as Cooperative Sugar Factories etc.
(ii) 16,000 shares of Rs. 25000 each to be subscribed by Regional, District Cooperative Societies, Dairy Cooperatives, Tribal Cooperative Federations and Tribal Cooperative Development Corporations.
(iii) 15,000 shares of Rs. 10,000 each to be subscribed by Primary Cooperative Societies including Cane Unions and Farmers' Service Societies.
Provided that the societies/Organisations mentioned in sub-clause(1) and (ii) which have taken one share of Rs. 1 lakh and Rs. 25,000 respectively are eligible to take shares of lower denomination as well.
Provided also that societies/Organisations in Sub-clause (ii) and (iii) are eligible for the allotment of higher denomination shares.
SOURCES OF FUNDS (A) The KRIBHCO may raise funds from one or more of the following sources:
(i) Admission fee;
(ii) Share capital;
(iii) Loans and deposits within India and abroad;
(iv) Debentures, Bonds and Commercial Papers within India and abroad;
(v) Grants-in-aid and donations; and
(vi) Profit.
18. Based on the aforesaid legal provisions and bye-laws of KRIBHCO and also from the pleadings of the parties this Court has to find out whether KRIBHCO can be said to be an instrumentality of the State in order to constitute "any other authority" under Article 12 amenable to writ jurisdiction of this Court.
19. The test on which a body can be said to be an authority amenable for its jurisdiction are no more res Integra having been considered by the Apex Court time and again. The definition of 'State' was initially treated to be exhaustive confined to the authorities stipulated under Article 12 and those which could be read ejusdem generis with the authorities mentioned therein and prior to 1960 and early sixties even the statutory bodies, like Universities, Government Colleges etc. were not held to be "other authorities" for the purpose of Article 12. For the first time in Rajasthan State Electricity Board, Jaipur v. Mohan Lal and Ors. it was held that the expression "other authorities" are such which are conferred powers under law irrespective of the fact whether they were constituted for the purpose of carrying on commercial activities etc. Thereafter in Sukhdeo Singh and Ors. v. Bhagat Ram Sardar Singh Raghuvanshi and Ors. , Oil & Natural Gas Commission, the Industrial Finance Corporation and Life Insurance Corporation, were held to be 'State' under Article 12 of the Constitution, though their employees are not civil servants. Thereafter in Ramana Dayaram Shetty v. International Airport Authority of India and Ors. it was held that a Corporation may be created in one of two ways, namely, either by statute or incorporated under a law, such as, the Companies Act 1956 or the Societies Registration Act 1860. Where a Corporation is wholly controlled by Government not only in its policy making but also carrying out the functions entrusted to it by the law establishing it or by the Charter of its in corporation it has to be treated as an instrumentality or agency of Government.
20. The Apex Court propounded certain tests to determine whether a particular body is an instrumentality of the State or not. I do not propose to elaborate the said principles for the reason that subsequently a Constitution Bench of the Apex Court in Ajay Hasia v. Khalid Mujib Sehravardi and Ors. considered this issue and summarized the relevant tests discovered from Ramana Dayaram Shetty (supra) as under:
(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 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 Govt. 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.
(emphasis supplied).
21. In Ajay Hasia {supra) the question whether Regional Engineering College which was being administered by a Society registered under the provisions of Societies Registration Act 1860 is a State under Article 12 of the Constitution of India, came up for consideration. The Court held it to be an instrumentality of the State for the following reasons:
...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 Govt. 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....
22. In Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and Ors. , the Constitution Bench of Seven Hon'ble Judges of the Apex Court also considered the issue as to whether the Council for Scientific and industrial Research is an authority within the meaning of Article 12 and upon consideration of the earlier cases, observed as under:
The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesis, be considered to be a State within the meaning of Article 12. The question in each case would be whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State.
(emphasis supplied).
23. Recently a writ petition against Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P., a Co-operative Society registered under the provisions of U.P. Co-operative Societies Act, 1965, came up for consideration before the Apex Court in General Manager, Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P. v. Satrughan Nishad and Ors. and the Court held as under:
Therefore, even if it is taken to be admitted due to non-traverse, the share of the State Government would be only 50% and not entire. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. It has nowhere been stated that the State used to meet any expenditure of the Mill much less almost the entire one, but, as a matter of fact, it operates on the basis of self-generated finances. There is nothing to show that the Mill enjoys monopoly status in the matter of production of sugar. A perusal of the bye-laws of the Mill would show that its membership is open to cane-growers, other societies, Gram Sabha, State Government etc. and under Bye-law 52, a Committee of Management consisting of fifteen members is constituted, out of whom, five members are required to be elected by the representatives of individual members, three out of the cooperative society and other institutions and two representatives of financial institutions besides five members who are required to be nominated by the State Government which shall be inclusive of the Chairman and Administrator. Thus, the ratio of the nominees of the State Government in the Committee is only 1/3rd and the management of the Committee is dominated by 2/3rd non-government members. Under the bye-laws, the State Government can neither issue any direction to the Mill nor determine its policy as it is an autonomous body. The State has no control at all in the functioning of the Mill much less a deep and pervasive one. The role of the Federation, which is the apex body and whose ex officio Chairman-cum-Managing Director is the Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members.... Thus, we find none of the indicia exists in the case of the Mill, as such the same being neither an instrumentality nor an agency of the Government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of the Constitution.
(emphasis supplied).
24. In Federal Bank Ltd. v. Sagar Thomas the question was whether the Federal Bank is an instrumentality of the State and negativing the same, the Court held as under:
As indicated earlier, share capital of the appellant bank is not held at all by the government nor any financial assistance is provided by the State, nothing to say which may meet almost the entire expenditure of the company. The third factor is also not answered since the appellant bank does not enjoy any monopoly status not it can be said to be an institution having State protection. So far control over the affairs of the appellant bank is concerned, they are managed by the Board of Directors elected by its share-holders. No governmental agency or officer is connected with the affairs of the appellant bank nor anyone of them is a member of the Board of Directors. In the normal functioning of the private banking company there is no participation or interference of the State or its authorities. The statutes have been framed regulating the financial and commercial activities so that fiscal equilibrium may be kept maintained and not get disturbed by the mal-functioning of such companies or institutions involved in the business of banking. These are regulatory measures for the purposes of maintaining the healthy economic atmosphere in the country.
...Any business or commercial activity, may be banking, manufacturing units or related to any other kind of business generating resources, employment, production and resulting in circulation of money are no doubt, such which do have impact on the economy of the country in general. But such activities cannot be classified as one falling in the category of discharging duties or functions of a public nature. Thus the case does not fall in the fifth category of cases enumerated in the case of Ajay Hasia. Again we find that the activity which is carried on by the appellant is not one which may have been earlier carried on by the Government and transferred to the appellant company.
(emphasis supplied).
25. In G. Bassi Reddy v. International Crops Research Institute and Anr. it was considered as to whether International Crops Research Institute is a 'State' under Article 12 of the Constitution and whether a writ petition would lie against it and after referring to Ramana Dayaram Shetty (supra), the Court observed as under:
The facts which have been narrated earlier clearly show that ICRISAT does not fulfil any of these tests. It was not set up by the Government and it gives its services voluntarily to a large number of countries besides India. It is not controlled by nor is it accountable to the Government. The Indian Government's financial contribution to ICRISAT is minimal. Its participation in ICRISAT's administration is limited to 3 out of 15 members. It cannot, therefore, be said that ICRISAT is a State or other authority as defined in Article 12 of the Constitution.
26. Lastly, the issue as to whether Board of Control for Cricket in India is 'State' under Article 12 of the Constitution of India, has been considered in Zee Tele Films Ltd. and Anr. v. Union of India and Ors. and Hon'ble Hegde, J. in the majority judgment held as under:
The facts established in this case shows the following:
1. Board is not created by a statute.
2. No part of the share capital of the Board is held by he Government.
3. Practically no financial assistance is given by the Government to meet the whole or entire expenditure of the Board.
4. The Board does enjoy a monopoly status in the field of cricket but such status is not State conferred or State protected.
5. There is no existence of a deep and pervasive State control. The control if any is only regulatory in nature as applicable to other similar bodies. This control is not specifically exercised under any special statute applicable to the Board. All functions of the Board are not public functions nor are they closely related to governmental functions.
6. The Board is not created by transfer of a Government owned corporation. It is an autonomous body.
To these facts if we apply the principles laid down by seven-Judge Bench in Pradeep Kumar Biswas (supra), it would be clear that the facts established do not cumulatively show that the Board is financially, functionally or administratively dominated by or is under the control of the Government. Thus the little control that the Government may be said to have on the Board is not pervasive in nature. Such limited control is purely regulatory control and nothing more.
27. From the above, it is evident that 2002 Act has been enacted to facilitate the democratic functioning of cooperatives and to facilitate voluntary formation thereof as people's institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy and for matters connected therewith or incidental thereto. Multi-State Co-operative Society can be registered under the Act only if its objects are to serve the interests of members in more than one State and if its bye-laws provide for social and economic betterment of its members through self help and mutual aid in accordance with the cooperative principles, i.e., voluntary organisations, open to all persons capable of using their services and willing to accept the responsibilities of membership controlled by their members in democratic way, permitting their participation in setting their policies and decision making. The members contribute equitably and control the capital of their Co-operatives democratically. In other words, the Co-operatives are autonomous, self help organisations controlled by their members and if they enter into agreement with other organisations including Government or raise capital from external sources, they do so on terms that ensure their democratic control by members and maintenance of co-operative autonomy. The Bye-Laws of KRIBHCO show that the ultimate authority vests in the general body and its membership is open to, amongst others, National Co-operative Federations and State Level Co-operative Federations of agricultural credit, marketing, processing, supply and other cooperative societies, apex cooperative federations of the same nature of the State and Union Territories, Regional and District Cooperatives, Primary agricultural Cooperative, consumer cooperatives at various levels etc. besides IFFCO, National Cooperative Development Corporation, Government of India Public Financing Institutions and other Government of India Undertaking Organisations engaged or designed to engage in the sale of fertilisers and other agricultural production requisites;
28. Strength of the Board of Directors also cannot exceed 21, excluding Functional Directors and Co-opted Directors. Out of these, 8 Directors are to be elected by the General Body, not more than three persons to be nominated by the Government of India based on equity share capital held by the Central Government i.e. one person if the equity share capital is less than 26%, two persons if the equity contribution is 26% or more but less than 51%; and three persons if the equity share capital is 51% or more of the total issued share capital. It is open to the Board to co-opt two experts from amongst eminent economists and management experts of cooperatives. Therefore, out of 21 Directors of the Board, the Central Government cannot nominate more than three and that too based on equity share capital showing a very minimal/nominal representation of the Government. The Board of Directors have also such powers as are considered necessary and expedient for the purpose of carrying out the functions under the bye-laws and the Act. It is not the case of the petitioners that KRIBHCO enjoy any monopoly status in the matter of production of fertilisers etc. There is nothing also to show that it has been created by transfer of a government owned corporation or its financial control is done by the Government of India in any manner.
29. Thus, from various provisions of the Act and bye-laws of KRIBHCO, in my view, it is borne out that neither it can be said that KRIBHCO is the creature of Statute nor it gets whole or entire expenditure or financial assistance from the Government nor it enjoys a monopoly status. It is also difficult to say that there is a deep and pervasive control of the State and whatever control, if any, is mere regulatory in nature. KRIBHCO does not perform the functions of public nature, neither can if be said to be closely related to government functions, nor is an autonomous body which has been created by transfer of Government owned Cooperative. In this view of the matter, I am of the view that KRIBHCO cannot be said to be a 'State1 under Article 12 of the Constitution of India. Indian Farmers Fertilizers Co-operative Ltd (hereinafter referred to as 'IFFCO' is also a body which is not created by any statute and no part of its share capital is held by the Government. It is a Multi State Cooperative Society like KRIBHCO. A Division Bench of this Court in Jyoti Kumar Malviya (Supra) after considering the matter in detail has held that "IFFCO" does not answer the "State" for the purpose of Article 12 of the Constitution and in para 44, 45 and 47 of the judgment held as under:
44. Thus, from the aforesaid it is clear that IFFCO is not created by a Statute; that no part of the share capital is held by the Government; that practically no financial assistance is given by the Government to meet the whole or entire expenditure of IFFCO; that IFFCO does not enjoy a monopoly status; that were is no existence of deep and pervasive State control and whatever control s there, is merely regulatory in nature; that IFFCO does not perform public functions and nor are they closely related to Government functions and that IFFCO is an autonomous body which has not been created by transfer of a Government owned corporation.
45. The principles laid down by the Constitution Bench in Pradeep Kumar Biswas when applied to the aforesaid facts do not cumulatively demonstrate that IFFCO is financial!;/, functionally or administratively dominated by the Government or is under its control.
47. In the present case we nave found as a fact that the State does not have any pervasive control over IFFCO and as such the said decision in the case of Land Development Bank Ltd. does not help the petitioner.
30. Learned Counsel for the petitioners sought to place reliance on a number of authorities in support of his contention that writ petition against KRIBHCO is maintainable. Some of the judgments are Sukhdeo Singh (supra), Ramana Dayaram Shetty (supra), Ajay Hasia (supra), and Pradeep Kumar Biswas (supra) which have already been dealt with by this Court. The other judgments cited are Gujarat State Financial Corporation v. Lotus Hotels Pvt. Ltd. ; B.M. Minnas v. Indian Statistical Institute ; M.C. Mehta v. Union of India ; Anadi Mukta Sadguru Shri Mukta Ji Vandana Ji Swamy Swam Jayanti Mahotsava Smarak Trush and Ors. v. B.R. Rupani and Ors. ; U.P. State Cooperative Land Development Bank Ltd. v. Chandra Bhan Dubey and Ors. ; Gayatri De v. Mousumi Cooperative Housing Society and Ors. ; Virendra Kumar Srivastava v. U.P. Rajya Karmchari Kalyan Nigam and Anr. and Radhey Shyam Rai v. State of U.P. and Ors. (2005) UPLBEC 2549 (FB). I have considered and perused all the said judgments and do not find anything contrary to the view which I have already taken in this judgment reiterating the same principles which have been culled down by the Court from all the aforesaid authorities. Moreover all these aspects have also been dealt with by a Division Bench of this Court in Jyoti Kumar Malviya (Supra) while considering a similar issue in respect to IFFCO and I follow the same.
31. This Court also held in the aforesaid judgment (Jyoti Kumar Malviya, supra) that IFFCO also does not discharge any public function and therefore is a purely private body and not amenable to writ jurisdiction. The same thing applies to KRIBHCO also for the same reasons. That being so, the entire edifice of the arguments of the learned Counsel for the petitioner based on the violation of Article 14 and 16 of the Constitution, fails for the reasons that if respondent No. 4 does not answer description of State under Article 12 of the Constitution, Articles 12 and 21 also would have no application. The dispute involved in the present writ petition thus is purely of breach of contract, if any, by a private employer and against such action no writ petition under Article 226 of the Constitution of India would be maintainable but the petitioner may have common law remedy as available to him.
32. Learned Counsel for the petitioners further contended that in order to maintain a petition under Article 226 of the Constitution of India, it is not necessary that there must exist statutory obligation only but Article 226 provides that a writ can be issued for any other purpose and, therefore, writ petition would be maintainable. He placed reliance on Dwarka Nath v. Income Tax Officer AIR 1966 SC 8; Rohtash Industries Ltd. v. Rohtash Industries Staff Union ; Praga Tool Corporation v. C.A. Imanual ; U.P. State Cooperative Land Development Bank Ltd. {supra); Common Cause Registered Society v. Union of India and Ors. and A.B.L. International v. Credit Export Corporation of India Ltd. . He also contended that KRIBHCO performs and discharge public duty and therefore, the writ petition would be maintainable. The various judgment reiterate that language of Article 226 of the Constitution is very wide and clear. Prima facie, from the language of Article 226 there does not appear to exist such a divide between public law and private law. When any citizen or person is wronged, the High Court will step in to protect him, be that wrong be done by the State, an instrumentality of the State, a company or a cooperative 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 that the Apex Court has laid down certain guidelines and self imposed limitations subject to which High Courts would exercise its jurisdiction. The guidelines may not be mandatory in all circumstances but have to be followed invariably. 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 to 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 a china shop" in exercise of its jurisdiction under Article 226. Where there is a dispute between two private parties or complaint of breach of contract, the remedy lies in common law and in such matters, Article 226 would not be an appropriate remedy.
33. In the case in hand, the petitioners have been terminated by respondent No. 8, a private company and, therefore, at the best his claim is against respondent No. 8, complaining alleged breach of contract and for damages. In the case of breach of contract of employment, remedy of specific performance would not lie unless it is shown that the employee is entitled to reinstatement under some statutory provision etc, as laid down by the Apex Court in U.P State Warehousing Corporation v. C.K. Tyagi ; Executive Committee, Vaish Degree College v. State of U.P. AIR 1976 SC 888; Smt. J. Tiwari v. Smt. Jwala Devi and Pearlite Liners (P) Ltd. v. Manorama . Therefore, considering from any angle, the remedy of the petitioner would lie in common law and not under Article 226 of the Constitution of India.
34. In view of the aforesaid, I do not find it appropriate to go into other questions as to whether the agreement executed between respondents No. 7 and 8 was in fact on behalf of respondent no.4, etc. inasmuch as, it is not necessary in the light of the aforesaid discussion. The writ petition is dismissed as not maintainable. No costs.