Punjab-Haryana High Court
Dharmender Sharma vs Union Of India And Others on 21 March, 2013
Bench: A.K.Sikri, Rakesh Kumar Jain
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
Letters Patent Appeal No. 1308 of 2012
Date of Decision: 21st March, 2013
Dharmender Sharma ...Appellant
Versus
Union of India and others ..Respondents.
CORAM: HON'BLE MR. JUSTICE A.K.SIKRI, CHIEF JUSTICE.
HON'BLE MR. JUSTICE RAKESH KUMAR JAIN.
1. Whether Reporters of local papers may be allowed to see the judgment?
2. Whether to be referred to the Reporters or not?
3. Whether the judgment should be reported in the Digest?
Present : Mr. P.S.Bajwa, Advocate, for the appellant.
Mr. D.S.Patwalia, Advocate, for the respondents.
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A.K.SIKRI, CHIEF JUSTICE The appellant was working with respondent No.2 herein, namely, Stock Holding Corporation of India (hereinafter referred to as 'the Corporation'). He joined the corporation as Junior Executive on 22.03.1999 and after earning few promotions reached to the rank of Assistant Manager. While working in that capacity, his services were terminated by the Corporation on 26.10.1999. This order of termination alleged that a complaint was received from Ms. Sonia Bansal, Assistant Manager, Panchkula alleging sexual harassment at work place by the appellant and the allegation was found to be true after investigation. Treating this conduct as serious violation of the service Manual of the Corporation, his services were terminated in terms of Clause 4(A), Section-1 Conduct, Discipline and Penalties of the Service Manual, with immediate effect. LPA No. 1308 of 2012 -2-
2. The appellant filed writ petition under Article 226 of the Constitution of India questioning the validity of the aforesaid order primarily on the ground that even when the order was stigmatic in nature which was passed without following the procedure established by law and violating the principles of natural justice, inasmuch as no departmental enquiry was held.
3. The Corporation in its reply took a preliminary objection to the maintainability of the writ petition on the ground that it was a private body and not an authority or instrumentality or agency of the State under Article 12 of the Constitution of India. This contention is accepted by the learned Single Judge while dismissing the writ petition stating that the appellant cannot enforce the contract of service which was admissible only under three situations and the case of the appellant was not covered by any of those categories which are as follow:-
(i) A public service, which is protected under Article 311 of the Constitution of India;
(ii) The termination of service that is protected under a Labour legislation providing for the relief of reinstatement; and
iii) When the termination is in violation of the statutory regulations and rules from the employment in a Corporation, which is established by a specific legislation of the Parliament or the State Legislature.
4. The learned Single Judge did not decide the issue as to whether the Corporation could be treated as instrumentality of the State or that a writ petition could be filed under Article 226 of the Constitution. A perusal of the impugned order would show that it is essentially dismissed on the ground that the service of the appellant is not regulated through statutory service conditions and since the appellant was holding a managerial cadre in the LPA No. 1308 of 2012 -3- corporation, the case does not fall in any of three exceptions to the general proposition of law that the contract of personal service is not enforceable and the remedy is only to seek damages. Operative portion of the impugned order reads as under:-
"3. The learned counsel would also refer to the decision in Zee Telefilms Ltd. and another v. Union of India and others, 2005(4) SCC 649 where the Supreme Court held, inter-alia, that a private body, which is allowed to discharge public duty or positive obligation of public nature and which is allowed to perform regulatory and controlling functions and activities which would be otherwise the job of the government would still be treated as an instrumentality of the State. The filing of the writ petition itself is not the issue. The poser is whether an enforcement of contract of service through the writ petition is possible. I am not raising the issue that the respondents could not be treated as an instrumentality of State or that a writ petition cannot filed. On the other hand, I would hold the prayer for treating the termination of service as bad and seeking for reinstatement shall be impermissible in the present case. The service is not regulated through statutory service conditions the petitioner was of a managerial cadre in a Company to whom the benefit of labour law cannot be applied and the service of the petitioner is not civil service.
4. If the petitioner has a ground that the termination was against the principles of natural justice or in violation of any other terms under which, he was issued with the order of appointment, then, the appropriate line of action would a common law remedy that would include a claim for damage. For the sake of clarity, I reiterate that I have not attempted to pronounce on the legality of the order of termination issued by the 2nd respondent. I only find that the relief cannot be granted through this writ petition for LPA No. 1308 of 2012 -4- the reasons enumerated in the para above. The writ petition is, therefore, dismissed but the petitioner will have the liberty to proceed against the respondents, in the manner referred to above, if he so advised."
5. When this appeal came up for hearing on 10.10.2010, we made prima-facie observations that the findings of the learned Single Judge to the effect that the appellant was enforcing contractual rights may not be correct and directed the counsel for the parties to address the arguments on the question as to whether the Corporation is instrumentality of the 'State' under Article 12 of the Constitution of India or not.
6. The counsel for the parties addressed their arguments on this aspect and the judgment was reserved on 31.01.2013. However, while dictating the judgment, it was felt that the issue relating to the enforcement of contract of personal services also needed full attention. For this purpose matter was listed on 05.03.2013 and learned counsel for both the parties have made elaborate submissions on this aspect as well.
7. To sum up, in this appeal, we called upon to decide the following two issues:-
i) Whether the judgment of the learned Single Judge dismissing the writ petition as not maintainable on the ground that the appellant cannot enforce the contract of personal service as there is no violation of any statutory Regulations and Rules, is correct?
ii) Whether the Corporation is an 'authority' or 'instrumentality' and an agency of the 'State' under Article 12 of the Constitution or not?LPA No. 1308 of 2012 -5-
iii) If the above findings are not correct, then the question as to whether the respondent-corporation is an 'authority' under Article 12 of the Constitution or not may not call for consideration?
Whether the writ petition filed by the appellant was not maintainable as the appellant was seeking enforcement of contract of personal service?
8. There is no quarrel about the general proposition of law that the contract of personal service cannot be enforced. This is, however, a principle of common law that there are exceptions to this general rule which have been noted by the learned Single Judge as well and we have already extracted these three exceptions in para No.3 of our judgment. We are concerned herewith to Exception No. (iii), which is reproduced herein again, for the sake of continuity:-
iii) When the termination is in violation of the statutory regulations and rules from the employment in a Corporation, which is established by a specific legislation of the Parliament or the State Legislature."
9. What needs to be determined is as to whether this exception has to be read only when there is violation of statutory Regulations and Rules and further that the employment has to be in a Corporation which is established by a specific legislation of the parliament or the State legislation.
10. We have to remind ourselves that the aforesaid exception was dealt with in the case of Executive Committee of Vaish Degree College, Shamli and Ors. Vs. Lakshmi Narain and others AIR 1976 Supreme Court 888.
LPA No. 1308 of 2012-6-
11. The provisions of Article 12 of the Constitution were considered narrowly and only those Corporations which are creature of Statute were brought within the ambit of Article 12 of the Constitution.
(See: Sukhdev Singh, Oil & Natural Gas Commission, Life Insurance Corporation, Industrial Finance
Corporation Employees Associations Vs. Bhagat Ram, Association of Clause II Officers, Shyam Lal, Industrial Finance Corporation, 1975(1) SCC 421.
12. However, over a period of time, the Supreme Court gave a very broad expression to an 'Authority' and/or instrumentality and agency of the 'State' as occurring in Article 12 of the Constitution. Though this aspect is considered in detail while discussing issue No. (ii) framed above, at this juncture, we may point out that even a society registered under the Societies Act or a company incorporated under the Indian Companies Act can come within the ambit of Article 12 of the Constitution. Therefore, it is not necessary that the employment has to be in a Corporation established by the specific legislation of the Parliament or the State legislation.
13. The next facet is as to whether there has to be violation of statutory regulations to provide exception to the general rule of enforcement of contract of personal service. Infact, answer to this follows from the first aspect highlighted above. Naturally, if a particular society or a company can be 'State' under Article 12 of the Constitution, the Rules framed by it would not have a statutory character. That would not mean that even when the employees of such a society or a corporation which is 'State' under Article 12 of the Constitution, are in a position to maintain the writ petition under LPA No. 1308 of 2012 -7- Article 226 of the Constitution and the right is still denied by holding that the rules are not of statutory character.
14. It is not necessary to delve into this discussion more elaborately. Inasmuch as in a recent judgment in the case of Gridco Ltd. and another Vs. Sri Sadananda Doloi and others AIR 2012 Supreme Court 729, this very aspect has been elaborately dealt with and answered. A specific question which was formulated therein as question No. (2) was to the following effect:-
"2. If the appointment was contractual, was the termination thereof vitiated by any legal infirmity to call for interference under Article 226 of the Constitution?
15. After extensively quoting from Shrilekha Vidyarthi Vs. State of U.P. 1991(1) S.C.C. 212, Assistant Excise Commissioner and others Vs. Issac Peter and others 1994(4) SCC 104 and State of Orissa Vs. Chandra Sekhar Mishra 2002(1) SCC 583 and few other judgments, the Apex Court summed up the position in the following manner:-
"26. A conspectus of the pronouncements of this Court and the development of law over the past few decades thus show that there has been a notable shift from the stated legal position settled in earlier decisions, that termination of a contractual employment in accordance with the terms of the contract was permissible and the employee could claim no protection against such termination even when one of the contracting parties happened to be the State. Remedy for a breach of a contractual condition was also by way of civil action for damages/compensation. With the development of law relating to judicial review of administrative actions, a writ Court can now examine the validity of a termination order passed by public authority. It is no longer open to the authority passing the order to argue LPA No. 1308 of 2012 -8- that its action being in the realm of contract is not open to judicial review. A writ Court is entitled to judicially review the action and determine whether there was any illegality, perversity, unreasonableness, unfairness or irrationality that would vitiate the action, no matter the action is in the realm of contract. Having said that we must add that judicial review cannot extend to the Court acting as an appellate authority sitting in judgment over the decision. The Court cannot sit in the arm chair of the Administrator to decide whether a more reasonable decision or course of action could have been taken in the circumstances. So long as the action taken by the authority is not shown to be vitiated by the infirmities referred to above and so long as the action is not demonstrably in outrageous defiance of logic, the writ Court would do well to respect the decision under challenge."
16. From the aforesaid, it becomes clear that the impugned order of the learned Single Judge dismissing the writ petition on the ground that the matter was in the realm of pure contract is not correct. It was necessary for the learned Single Judge to go into the issue as to whether the Corporation is a 'State' under Article 12 of the Constitution or not and examine the issue of maintainability of the writ petition under Article 226 of the Constitution from that angle.
17. Thus we proceed to examine the second issue "whether the Corporation is 'State' under Article 12 of the Constitution or not".
18. Test for determining this issue are now well ingrained by catena of judgments of the Apex Court. It is now well settled that for the purpose of Article 12 of the Constitution, the body need not only be a statutory body created by a statute, even a company incorporated under the Companies Act or Society registered under the Societies Registration Act or a trust etc. can also be covered as a 'State' within the meaning of Article 12 of the LPA No. 1308 of 2012 -9- Constitution. The requirement of law in this respect is that such a company must be under 'deep' and 'pervasive' control of the Government.
19. A Seven-Judge Bench of the Apex Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology & Others (2002) 5 SCC 111 held, that while examining such an issue, the court must bear in mind whether in the light of the cumulative facts as established, the body is financially, functionally and administratively, dominated by, or is under the control of the Government. Such control must be particular to the body in question, and must be pervasive. If it is found to be so, then the body comes within the purview of State within the meaning of Article 12 of the Constitution. On the other hand, when the control exercised is merely regulatory, whether under a statute or otherwise, the same would not be adequate, to render the body a 'State'.
20. The entire law discussed in the aforesaid judgment is beautifully summed up by the Supreme Court in a recent case titled as Balmer Lawrie and Co. Ltd. and Ors. Vs. Partha Sarathi Sen Roy and Ors. Civil Appeal Nos. 419-426 of 2004 and Civil Appeal No. 926 of 2013 decided on 20.02.2013. Therefore, we need no more than to find out from the said judgment narrating as to what Pradeep Kumar Biswas's case (supra) decide.
21. The Apex Court, while deciding the said issue placed reliance upon its earlier judgments in Rajasthan State Electricity Board Jaipur Vs. Mohan Lal and others, AIR 1967 SC 1857; and Sukhdev Singh and others Vs. Bhagatram Sardar Singh Raghuvanshi and Anr. AIR 1975 LPA No. 1308 of 2012 -10- SC 1331, wherein it was held that such a body must perform certain public or statutory duties and those duties must be carried out for the benefit of the public, and not for private profit. Furthermore, it was also laid down that such an authority is not precluded from making a profit for pubic benefit. The Court came to the conclusion, that although the employees of the Corporation may not be servants of either the Union, or of the State, at the same time, such a company/corporation must not represent the "voice and hands" of the government. Therefore, this Court in Pradeep Kumar Biswas case (supra), held that financial support of the State, coupled with an unusual degree of control over the management and policies of a body, may lead to an inference that it is a State. Additionally, other factors such as, whether the company/corporation performs important public functions; whether such public function (s) are closely related to governmental function; and whether such function (s) are carried out for the benefit of the public, etc. are also considered. The Apex Court also considered the case of Ramana Dayaram Shetty Vs. International Airport Authority of India and others AIR 1979 SC 1628, wherein it was held that a corporation can be said to be an instrumentality or agency of the government therein under certain conditions, and the same are summarized below:
"(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.
LPA No. 1308 of 2012-11-
3. It may also be a relevant factor ... whether the corporation enjoys monopoly status which is 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 Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government."
22. Two things follow from the above, namely:-
i) firstly, the Court has to take into consideration 'cumulative effect' as established, to find out whether the body is financially, functionally and administratively, dominated by, or is under the control of the Government.
ii) Secondly, the control must be 'pervasive'.
23. Dictionary meaning of word 'pervasive' as per 'Black's Law Dictionary (9th Edition)-2009 is as under:-
"It means that which pervades/tends to pervade in such a way, so as to be, or become, prevalent or dominant.LPA No. 1308 of 2012 -12-
Extensive or far reaching, spreading through every part of something."
24. Thus, in order to determine the issue, this Court is supposed to carry out an in depth examination of who has administrative, financial and functional control over the Corporation and then assess whether the State in such a case is only a regulatory authority or it has deep and pervasive control over the Corporation; whether such company is receiving full financial support from the Government; whether the administrative control over it has been retained by the State and its authorities; and whether it is supervised, controlled and watched over by various departmental authorities of the State, even with respect to its day-to-day functioning. If it is so, then the Corporation can be held to be an instrumentality of the State under Article 12 of the Constitution (See Virendra Kumar Srivastava v. U.P. Rajya Karmachari Kalyan Nigam and Anr. AIR 2005 SC 411).
25. Keeping in view the aforesaid test in mind, we proceed to discuss the structure of the respondent-corporation.
26. It was argued by the learned counsel for the appellants that the respondent-corporation is a Government Company as it was promoted by public financial institutions like Industrial Development Bank of India, Life Insurance Corporation of India Ltd., General Insurance Company, IFCI, Unit Trust of India etc. that too at the initiative of the Government of India. It is also submitted that 83% of the equity shares of the respondent corporation are held by the aforesaid government companies/bodies in the following manner:-
LPA No. 1308 of 2012-13-
IDBI : 18.95% IFCI Ltd. : 16.96% UTI : 16.96% LIC : 14.97% and General Insurance Corporation;
New India Assurance Corp. Ltd.
United India Insurance Company, Oriental Insurance Company and National Insurance Company : 2.99% each.
27. It was further argued that the respondent corporation is also controlled by the aforesaid public sector company inasmuch as the Board of Governors of the Corporation consists of members nominated by the Central Government amongst the high ranking officers of the aforesaid public sector undertakings. The Chairman-cum-Chief Managing Director is always nominated by the Central Government from Industrial Development Bank of India. The Managing Director-cum-Chief Executive Officer is also taken on deputation from Industrial Development Bank of India.
28. Learned counsel for the appellants further argued that the respondent company is even discharging public functions and duties for and on behalf of the Government of India, inasmuch as it is set up specifically for E-stamping which is in the nature of Government meant. Referring to 22nd Annual report of the respondent-corporation for the year 2008-09, Mr. Bajwa pointed out that it is mentioned therein that the respondent corporation is "Central Record Keeping Agency" for the State Government for e-stamping and it has implemented infrastructure, security system and application system for the same".
LPA No. 1308 of 2012-14-
29. He further pointed out E-stamping website of the respondent- corporation which has national emblem over it. This website also gives the following information about the respondent corporation:-
"SHCIL has been promoted by All India Public Financial Institutions and Insurance Majors. SHCIL is known for its Security, integrity, wide network and focus on technology.
E-stamping is a computer based application and a secured electronic way of stamping documents. The prevailing system of physical stamp paper/franking is being replaced by E-
stamping system.
SHCIL is the only CRA appointed by the Government of India. Central Record Keeping Agency is responsible for used Registration, Imprest Balance Administration and overall E-
stamping Application Operations and maintenance. CRA will appoint ACC's who will issue certificates to the clients to their counters."
30. It was further submitted that the respondent corporation has even adopted the Central Government Rules regarding gratuity i.e. Payment of Gratuity (Central) Rules 1972 for its own employees. Therefore, it has all trappings of the Government functionary.
31. Mr. Bajwa also referred to Object Clause 26 of the Memorandum of Association of the respondent-corporation which reads as under:-
"26. To apply for and promote any Act of any legislature, or order or other legislative or legal sanction, either in India or anywhere else in the world; and to take all necessary or proper steps in Parliament or with the authorities, national, local, municipal or LPA No. 1308 of 2012 -15- otherwise, of any place in which the Company may have interests; and to carry on any negotiations or operations for enabling the Company to carry of its objects into effect, or for effecting any modification of the Company's constitution or for any purposes deemed beneficial to the Company or likely directly or indirectly to promote the interests of the company or its members; and to oppose any steps taken by any authority, company, firm or person which may be considered likely directly or indirectly to prejudice the interests of the Company or its members."
32. It was thus argued that the respondent corporation was set up by the Government Companies and was discharging government function and the Government had also deep pervasive control over the functioning of the respondent corporation as the employees of the IDBI were sent on deputation to the managerial post of Chairman as well as Managing Director.
33. Mr. Bajwa further submitted that from the aforesaid functions of the respondent corporation, in any case, it was clear that it was public function being discharged by the respondent corporation and therefore, petition under Article 226 of the Constitution was maintainable against such a body. For this purpose, he referred to the judgment of the Apex Court in case Zee Telefilms Limited & another Vs. Union of India and others, 2005 (4) SCC 649, extensively.
34. Mr. Bajwa also submitted that Calcutta High Court has already held the respondent-Corporation to be State within the meaning of Article 12 of the Constitution in case Kamal Parekh and another Vs. State of West Bengal and others 2007(3) CALLT 251.
LPA No. 1308 of 2012-16-
35. Per-contra, Mr. Patwalia, learned counsel appearing for the respondents per-contra argued that the tests laid down to decide whether a particular body is other authority and or instrumentality of the State under Article 12 of the Constitution are not satisfied in the instant case. His submission was that neither the share capital of respondent No.2 was held by the Government nor the Government was giving any financial assistance to the respondent Corporation nor it was enjoying any monopoly status which is State conferred or State protected nor there was any deep and pervasive control. He also challenged the statement of the appellant that function of the Government was public function and closely related to Government function. Submission of Mr. Patwalia in this behalf was that it was a Public Limited Company incorporated under the Companies Act and regulated by the provisions of the said Act. No doubt, promoters of the respondent- corporation were some public sector undertakings but that would not mean that the respondent corporation also became public sector undertaking. He pointed out that the Board of Directors was constituted in accordance with the provisions of the Companies Act. The Managing Director was whole time Director as per Article 158 of the Articles of Association who was to hold office for a term not exceeding five years at a time. He further submitted that the share holding pattern has been changed and present pattern is as under:-
Equity Share holders Numbers of equity % of total shares of face value equity shares of Rs. 10/-
IDBI Bank Ltd. 39,90,000 18.95 ICICI Bank Ltd. 35,70,000 16.96 IFCI Ltd. 35,70,000 16.96 Administrator of the Specified 35,70,000 16.96 Undertaking of the Unit Trust LPA No. 1308 of 2012 -17- of India. Life Insurance Corporation of 31,50,000 14.97 India. General Insurance Corp. of 6,30,000 2.99 India. New India Assurance Co. Ltd. 6,30,000 2.99 United India Insurance Co. 6,30,000 2.99 Ltd. The oriental Insurance Co. 6,30,000 2.99 Ltd. Others 54,000 0.25 Total 2,10,54,400 100
He submitted that neither the IDBI nor ICICI Ltd. were Government Undertakings. The share holding with other Public Sector Undertaking was about 60%.
OUR ANALYSIS OF THE RESPECTIVE ARGUMENTS:
ARGUMENTS:-
36. From the arguments noted above, the admitted position which appears on record is as follows:-
a) Though the Government does not have any capital share in the Corporation, the Government/Public Sector Undertakings have share capital of more than 50% i.e. 60% even if the IDBI is excluded.
b) The Corporation is creation of some prominent Public Sector Undertaking and other banks like IDBI Bank Ltd. and ICICI Bank Ltd. who are the promoters of the Corporation.
c) One of the activities of the Corporation from which it is making its earning and is highlighted by the appellant is that it is a Central Record Keeping Agency of the State Governments for LPA No. 1308 of 2012 -18- e-Stamping which according to the appellant is a government function.
37. In so far as the position stated in sub paras (a) and (b) is concerned, that by itself would not be sufficient to confer upon the 'Corporation' status of the State under Article 12 of the Constitution. At the most it suggests that some Public Sector Undertakings and few banks in private sector like IDBI Bank Ltd., and I.C.I.C.I. Bank Ltd. joined together to form the 'Corporation'. It was decided to give the entity of a company by incorporating it under the provisions of the Indian Companies Act, 1956 and each of these promoters subscribed to the share capital in the Corporation. Apart from the contribution given by the P.S.Us., in the form of share capital, there is no financial assistance or aid given either by the Government at all either directly or even through the said P.S.Us. The Corporation is administering its affairs in accordance with the provisions of the Indian Companies Act through its Board of Directors. In any case, no documents are produced on record to show that the Government is having any control over the functioning of this Corporation muchless deep and pervasive. In case General Manager, Kisan Sahkari Chini Mills Ltd. Sultanpur, U.P. Vs. Satrughan Nishad and others 2003(8) Supreme Court Cases 369, the question arose as to whether Kisan Sahkari Chini Mills Ltd. which is a Cooperative Society registered under the U.P. Cooperative Societies Act, 1965, would come within the ambit of Article 12 of the Constitution. Holding that none of the tests applied in that case, the Court entailed the following discussion:-
"8. From the decisions referred to above, it would be clear that the form in which the body is LPA No. 1308 of 2012 -19- constituted namely, whether it is a society or co- operative society or a company, is not decisive. The real status of the body with respect to the control of government would have to be looked into. The various tests, as indicated above, would have to be applied and considered cumulatively. There can be no hard and fast formula and in different facts/situations, different factors may be found to be overwhelming and indicating that the body is an authority under Article 12 of the Constitution. In this context, Bye Laws of the Mill would have to be seen. In the instant case, in one of the writ applications filed before the High Court, it was asserted that the Government of Uttar Pradesh held 50% shares in the Mill which fact was denied in the counter affidavit filed on behalf of the State and it was averred that majority of the shares were held by cane growers. Of course, it was not said that the Government of Uttar Pradesh did not hold any share. Before this Court, it was stated on behalf of the contesting respondents in the counter affidavit that the Government of Uttar Pradesh held 50% shares in the Mill which was not denied on behalf of the Mill. 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 no where 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 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 LPA No. 1308 of 2012 -20- of management consisting of 15 members is constituted, out of whom, 5 members are required to be elected by the representatives of individual members, 3 out of co-operative society and other institutions and 2 representatives of financial institutions besides 5 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 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 deep and pervasive one. The role of the Federation, which is the apex body and whose ex- officio Chairman-cum-Managing Director is Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members. The letter sent by Managing Director of the Federation on 22nd November, 1999 was merely by way of an advice and was in the nature of a suggestion to the Mill in view of its deteriorating financial condition. From the said letter, which is in the advisory capacity, it cannot be inferred that the State had any deep and pervasive control over the Mill. Thus, we find none of the indicia exists in the case of Mill, as such the same being neither instrumentality nor agency of government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of the Constitution."
38. The submission that this Corporation is only a Central Record Keeping Agency of the State Governments for e-Stamping and it is a Government functionary needs to be dealt with some elaboration. In the first place, it is required to be noted that this is not the only function of the Corporation and the respondent-corporation is providing financial and LPA No. 1308 of 2012 -21- technical services to its clients. It is generating income from such operations. E-stamping is only one of the operations. Annual reports and final accounts for the years 2008-09 placed on record show that the respondent- Corporation has income from custodial services, depository services, Commission and brokerage (net) Derivatives clearing services and other services. The other source of income is interest from government securities and bonds as well as deposits with banks etc. The Mission Statement of the respondent-Corporation appearing in the said annual report reads as under:-
"To be a world class technology driven and client focused market leader in financial and technical services".
39. In this background, let us understand the agency business of e-stamping assigned to the respondent corporation. E-stamping of property is an advance method of putting stamps on the documents in contrast with the conventional stamping. Such stamp papers are obtained from the treasury by depositing the amount keeping in view the denomination of the stamp paper which is required on a particular document to be executed. The stamp papers upto the particular values are sold through stamp vendors as well. It is a matter of common knowledge that few years ago a scam relating to such stamp papers was unearthed. Finding that huge quantity of forged stamp papers was in circulation, it is in order to curb this menace that e-stamping is evolved as an alternative mode of stamping. Thus, e-Stamping is the 'Revenue's latest On-line and file-service in 'Revenue's On-line Services' (ROS). Any person registered to use the ROS can use e-stamping to file stamp duty returns electronically by making on-line payments to Revenue and to receive a stamping certificate. The methodology adopted is to submit LPA No. 1308 of 2012 -22- an electronic stamping application via the Internet instead of presenting the original instrument to the Stamp Office. After payment of stamp duty, a stamp certificate is issued and the instrument is stamped. It is this job which is outsourced to the respondent-corporation by appointing it as an Agent.
40. The respondent-corporation is thus only an agent for e- Stamping and it cannot be said that thereby it is discharging any governmental function or sovereign function. In essence, the respondent- Corporation is using its information technology to cater to the aforesaid function and merely because the respondent corporation is appointed as a 'Central Record Keeping Agency' for the State Government for e-Stamping would not mean that it becomes the instrumentality of the State.
41. The position would have been different had it been a wholly government enterprise or it was under the administrative control of the State Government or all the Directors were appointed by the State Government or from Government Services. No such feature is available here. It is also not a case that the State Government or the Governor is entitled to issue directives or instructions from time to time. It also does not meet the test of a government company defined under Sections 15 and 17 of the Companies Act, 1956. No matters of policy regarding the corporation or the management issues are decided by or even the control of the State Government. As emphasized above, day-to-day business and operations and decisions in this behalf are taken by the Board of Directors in a totally independent manner.
42. In the case of Lieutenant Governor of Delhi and others Vs. V.K.Sodhi and others 2007(15) Supreme Court Cases 136 while holding LPA No. 1308 of 2012 -23- that SCERT is not the State under Article 12 of the Constitution, the Apex Court made the following observations:-
"Even going as per the judgment of the Hon'ble Apex Court in Case Pradeep Kumar Biswas's case (supra), we have to consider the cumulative effect of all the facts available in the case. So considered, SCERT was not 'State' or 'other authority' within the meaning of Article 12 of the Constitution. According to Pradeep Kumar Biswas's case (supra), each case has to be considered with reference to the facts available for determining whether the body concerned is State or other authority within the meaning of Article 12 of the Constitution."
So considered, the Apex Court found that the Government does not have deep and pervasive control over the working of the SCERT and it does not have financial control in the sense that once the finances are made available to it, the administration of those finances was left to SCERT and there was no further governmental control. The Apex Court held that SCERT was not State or 'other authority' within the meaning of Article 12 of the Constitution of India and the very formation of an independent society under the Societies Registration Act would also suggest that the intention was not to make the body a mere appendage of the State.
43. As far as the judgment of Calcutta High Court in case Kamal Parekh's case (supra) is concerned, it would be relevant to point out that the question as to whether the respondent-corporation is a State or not never fell for discussion. The Court proceeded on the premise that the respondent- corporation is a Government Organization or State within the meaning of Article 12 of the Constitution. Therefore, this judgment cannot be cited as a precedent to decide the issue at hand.
LPA No. 1308 of 2012-24-
44. It is further argued by Mr. Bajwa, learned counsel for the appellant that even if it is so the writ petition under Article 226 of the Constitution of India shall still be maintainable having regard to the judgment of the Supreme Court in Zee Telefilms Ltd. case (supra). However, as rightly pointed out by the learned Single Judge, the filing of the writ petition itself is not the issue. The poser is whether the enforcement of contract of personal service through the writ petition is possible. Once it is held that the respondent-Corporation is not a 'State' under Article 12 of the Constitution, even if it is assumed that this private body is discharging public duty, the writ petition for enforcing of contract of personal service would not be maintainable. In Parag Tools Corporation Vs. Shri C.A.Imanual and others, 1969 IILLJ 479 Supreme Court, the Apex Court made the following pertinent observations in this behalf:-
34. "No doubt, Article 226 provides that every High Court shall have power to issue to any person or authority orders and writs ........ but it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one applies for it has a sufficient legal interest. Thus, an application for mandamus will not lie for an order of reinstatement to an office which is essential of a private character nor can such an application be maintained to secure performance of obligations owned by a company towards its workmen or to resolve any private dispute."
35. It was further observed:-
"It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the LPA No. 1308 of 2012 -25- Statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed only them by the Statutes authorising their undertakings."
36. It was held that appellant company being a non-
statutory body and neither a statutory nor a public duty was imposed on it by a Statute in respect of which enforcement was sought, Therefore, neither was the writ petition maintainable, nor could the declaration granted by the Division Bench be granted. Appeal was allowed."
To the same effect is the judgment of the Apex Court in Vaish Degree College's case (supra).
45. The issue also arose in the case of Shri Anandi Mukta Sadguru Vs. V.R.Rudani and others 1989 IILLJ 324 Supreme Court wherein the Apex Court has held as under:-
"40. Case related to a dispute pertaining to the pay scales which were claimed by the respondents. The High Court had granted the monitory benefits. Appellant was a public trust. It was running a college at Ahmedabad. The college was affiliated to Gujarat University. The University teachers were paid salary in the pay scales recommended by the University Grants Commission. The University required the appellant to pay to its employees, salary as per the pay scales recommended by the UGC, which scales were applicable to the University employees. Taking note of the decision of the Supreme Court reported as (1976) IILLJ 163 SC (noted by me in para 37 above), the Supreme Court (para 12, 13) held that it was not dealing with a dispute of dismissal and, Therefore, the common law principle that a service contract cannot be specifically enforced was irrelevant. The court noted that it was dealing with a dispute pertaining to payment of wages.LPA No. 1308 of 2012 -26-
41. Dealing with the question whether the trust could be compelled to pay by writ of mandamus, the court held:-
"If the rights are purely of a private character no mandamus can issue, if the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to Mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied. The law relating to mandamus has made the most spectacular advance. Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be issued to "any person or authority". It can be issued "for the enforcement of any of the fundamental rights and for any other purpose". The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Art.32. Article 226 confers power on the High Court to issue writs for enforcement of the fundamental rights. The words 'any person or authority' used in Article 226 are, Therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be adjudged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied. It may be pointed out that mandamus cannot be denied on the ground that the duty to LPA No. 1308 of 2012 -27- be enforced is not imposed by the statute. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into water tight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available "to reach injustice wherever it is found".
Technicalities should not come in the way of granting that relief under Article 226."
46. Legal position is tersely summed up by Delhi High Court in Vinay Kumar Tyagi Vs. Harijan Sevak Sangh and others 2005(1) S.L.J. 326 (Delhi) in the following manner:-
"46. The legal position which flows from the decision aforesaid is that a private body, in the matter relating to a service dispute would be amenable to writ jurisdiction if the service conditions are regulated by the Statute under which the body is constituted or is regulated by statutory regulations framed in exercise of statutory power created by the Act under which the private body is constituted. For this would be a case where a statutory right is sought to be enforced. The principle that a contract of service being a private contract between the parties cannot be specifically enforced would not apply. Similarly, where Memorandum of Association or the bye-law of a private body mandates a particular service condition to be followed and the body concerned has a public law element in the discharge of its duties or performance of its obligations, it would be amenable to writ jurisdiction and an action impinging upon the service of its employee would be amenable to judicial review under Article 226 of the Constitution of India.
48. The concept of a public duty imposed upon a private body would mean that there is some law, may be a Statute, a Government Directive or any other instrument having the force of law which obliges it to follow a particular course of action. A public duty, inherently has to be imposed upon a LPA No. 1308 of 2012 -28- private person by an instrument having the force of law. Merely because the respondent by virtue of its activities, carries out or performs a function where society at large is benefited would not mean that it is performing a public duty enjoined upon it by law. We have large number of non- governmental organizations engaged in charitable work of upliftment of the disadvantaged persons in society. They perform a yeoman servant to the society, by removing inequalities in society. Merely because the society is benefited by their work would not mean that all these bodies would be amenable to writ jurisdiction in respect of their action. It cannot be forgotten that these bodies are private bodies and are carrying on work relating to a field of activity which benefits the society, but purely out of volition. No statute imposes any obligation on them to carry out their affairs in a particular manner. Employment effected by these bodies is purely of a personal and a private character. By no means, these employees can be said to have no remedy, but that remedy would be a remedy at common law."
47. In view of our aforesaid discussion, we hold that the respondent-corporation is not a State under Article 12 of the Constitution. Accordingly, the appeal is dismissed.
(A.K.SIKRI)
CHIEF JUSTICE
21st March, 2013 (RAKESH KUMAR JAIN)
'ravinder' JUDGE