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Showing contexts for: NDDB in Mother Dairy Fruit & Vegetable Private ... vs Hatim Ali & Anr. on 2 February, 2015Matching Fragments
20. In the year 1970, the Government of India incorporated Indian Dairy Corporation - a company registered under the Indian Companies Act, 1956
- for the implementation of the Operation Flood Programme. Mother Dairy, Delhi was commissioned in the first phase of Operation Flood in 1974 and Fruit and Vegetable Project was established in Delhi in the year 1988. These were initiatives of the Government of India and it cannot be disputed that, at this stage, the Government was in control of the Mother Dairy, Delhi as well as Fruit and Vegetable Project either through its company Indian Dairy Corporation or Society established by the Government. The National Dairy Development Board and other initiatives had become a project of national importance and, accordingly, it was decided to enact the National Dairy Development Board Act, 1987 (hereafter 'NDDB Act') to incorporate NDDB as an incorporated entity. Section 2 of the NDDB Act declared NDDB as an institution of national importance. By virtue of section 44 of the NDDB Act, NDDB is exempt from payment of any tax on income.
22. By virtue of section 8 of the NDDB Act, the management of NDDB was vested with its Board of Directors. Section 8(2) of the Act provides that the board of directors of NDDB shall consists of a Chairman; one director from amongst the officials of the Central Government; two directors from amongst the Chairmen of the State Co-operative Dairy Federations; whole- time directors - not more than three in number - appointed from the executives of the higher grade of the NDDB; and one expert from outside NDDB. By virtue of Section 8(3) of the Act, the Central Government is empowered to appoint all directors including the Chairman of NDDB whereas the Chairman and the official of the Central Government are to be appointed directly by the Central Government. The other directors are to be nominated by the Central Government in consultation with the Chairman. Thus, the Central Government has the exclusive power to constitute the board of directors of NDDB. Section 9 of the NDDB Act provides for the term of the Chairman and the board of directors. However, by virtue of Section 9(2) of the Act, the Central Government has a right to terminate the services of the Chairman by giving him a notice of not less than three months or salary and allowances in lieu thereof. Section 9(6) of the Act expressly provides that "every director, other than the Chairman, shall hold office during the pleasure of the Central Government".
23. As I see it, the Central Government retains complete control over NDDB and for all practical purposes, it is an instrumentality of the Central Government.
24. Section 43 of the NDDB Act empowers the Board to form, with the previous approval of the Central Government, one or more companies for implementation of any of its objectives. NDDB, by its letter dated 17.02.1999, sought the necessary approval of the Central Government for the resolution passed by the Board of Directors of NDDB in its 51 st meeting held on 11.02.1999 to create a wholly owned private limited company to take over the functioning of Mother Dairy, Delhi - which, by virtue of section 42 of the NDDB Act, was an undertaking of NDDB - and Fruit and Vegetable Project. The Director of Department of Animal Husbandry and Dairying, Ministry of Agriculture, Government of India issued a letter dated 13.12.1999 granting the government's approval as sought for by NDDB.
27. It is apparent from the above that the formation of the petitioner was only for the purposes of corporatizing certain activities and undertakings, which were being managed directly as divisions of NDDB. The entire shareholding of the petitioner is held by NDDB and indisputably the petitioner is under control of NDDB.
28. The controversy to be addressed is whether vesting certain undertakings by NDDB in a wholly owned subsidiary would result in the Central Government losing control over those undertakings. In my view, the answer to this must be in the negative. It is apparent that the incorporation of the petitioner as a wholly owned subsidiary of NDDB was for the purpose of better management of certain undertakings and the petitioner was to continue functioning to further the objectives of NDDB. Plainly, NDDB is under the control of the Central government and the petitioner being a subsidiary of NDDB would be indirectly under the control of the central government.