Writ Petition No.1611 of 1997

11th December, 1997

Petitioner Counsel: S. M. DHARAP
Respondent Counsel: P. K. RELE, K.R. CHAUDHARI

Cases Cited:
(1989) 2 SCC 691 [Para 3]
1991 Mh.L.J. 1 [Para 4]
AIR 1975 SCC 1329 [Para 4]
(1991) 4 SCC 578 [Para 4]

JUDGMENT

A. Y. SAKHARE, J. :- By the present writ petition under Article 226 of the Constitution of India, the petitioners are praying for directions to the respondent No.4 that respondent No.4 should pay bonus to its employees as per the circulars issued by Government of India from time to time.

2. The respondent No.4 has filed affidavit in reply dated 22.10.1997 stating therein that the respondent No.4 is not a State or instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India. The respondent No.4 has, thus, raised issue of maintainability of this writ petition.

3. Heard Mr. Dharap, advocate for the petitioners and Mr. Rele, advocate for the respondent No.4. By placing reliance upon decision of the apex Court in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and others Vs. V. R. Budani and others reported in (1989) 2 Supreme Court Cases 691, it is contended that the respondent No.4 is a State instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India. Submission is made that in view of Rule 32(a) of the Rules, the Central Government has full control over the management of the respondent No.4 and/or management of the respondent No.4 rests with the Central Government. It is further submitted that the respondent is substantially funded by the Central Government. Hence it is instrumentality or agency of the State. The petitioners further submitted that as the respondent No.4 is discharging public duties, this Court can issue writ/direction against the respondent No.4 as prayed for.

4. On behalf of the respondents, material is placed on record regarding the constitution, functioning and management of the respondent No.4 and it is contended that the respondent No.4 is not an instrumentality or agency of the State nor the respondent No.4 is discharging or performing public duties. By placing reliance on decision of Full Bench of this Court in The Shamrao Vithal Co-operative Bank Ltd. and another Vs. Padubidri Pattabhiram Bhat and another reported in 1991 Mh.L.J. 1 and the decisions of the apex Court in Sabhajit Tewary Vs. Union of India and others reported in AIR 1975 Supreme Court 1329, Tekraj Vasandi alias K. L. Basandhi Vs. Union of India and others reported in (1988) 1 Supreme Court Cases 23.. (Sic -ed.), Chander Mohan Khanna Vs. National Council Educational Research and Training and others reported in (1991) 4 Supreme Court Cases 578, it is contended that the respondent No.4 is not the instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India nor it is amenable to the writ jurisdiction of this Court.

5. The respondent No.4 is a society registered under the Societies Registration Act, 1860. Leading captains of the man-made textile industry found the need for founding a research organisation and mooted the proposal for a co-operative research organisation for the industry, where the Government and the industry could co-operate. In the General Body meeting dated 26.5.1948, Silk and Art Silk Mills Association Ltd. passed resolution to establish a research institute for silk, rayon and allied products in India with the help of Central Government. Rs.20 lakhs was the amount provided by the said association and the funds were to be raised by levy on the landed costs of rayon yarn imported, by members contribution, by subscription fees, testing fees, income from techno-economic services, technical service charges, income from instruments, income from journals, bulletins, publications and training courses so also grant received from the Ministry of Textiles. Pursuant to the said resolution, the respondent No.4 came to be registered on 12.1.1950 under the Societies Registration Act, 1960. Rs.45 lakhs were received at the time of registration through contribution from the establishments engaged in man-made textile industry and Rs.15 lakhs from CSIR and Rs.15 lakhs from Silk and Art Silk Mills Association Ltd. The activities of the respondent No.4 are that of research and development, technical and testing services, technical education and training, demonstration plaint, power-loom service centres and computer aided design centre. After establishment of the respondent No.4, the Government also started giving grants. As per the memorandum of association, the respondent No.4 is governed by the rules framed by it. Rule 5 provides for membership of the respondent No.4 viz. ordinary members, associate members, delegate members, honorary members and the members appointed by Government or local authorities. The ordinary members or representatives of the ordinary members only have the right to vote in the General Body meetings. The representatives of the Government and local authorities have no power to vote. The administration and management of the association is entirely in the hands of council of the respondent No.4. The rule clearly indicates that the respondent No.4 has exclusive rights to either admit or refuse the membership and to look after day to day work of the association and sole control in regard to all the matters relating to the management of the association vests with the council formed under the Rules. The affidavit in reply filed by the respondent No.4 also shows that percentage of the grant received during the years 1995-96 and 1996-97 in relation to the total expenditure are 25% and 19.20.% respectively.

6. The petitioners have placed reliance upon Rule 32A of the Rules to contend that the pervasive control vests with the Central Government. As per this rule, Central Government has authority to dissolve the council and arrange to have new council elected as provided for in the memorandum and rules and regulations of the association. As per the petitioners, as the Government is providing grant-in-aid and has power to dissolve the council, the respondent No.4 is a instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India. It is further submitted that the respondent No.4 is discharging public duties and consequentially amenable to writ jurisdiction of this Court. In support of this plea, petitioners have placed reliance upon decision of this Court in Andi Mukta Sadguru case (cited supra) to contend that as the respondent No.4 is performing public duties and having positive obligation towards the society, therefore, the respondent No.4 is amenable to the writ jurisdiction of this Court. In our judgment, on facts of the present case, the decision relied upon by the petitioners is of no assistance to them.

7. Full Bench decision of this Court in The Shamrao Vithal Co-op. Bank case (cited supra) has held that the societies registered under the provisions of the Maharashtra Co-operative Societies Registration Act, 1860 are not State and are not amenable to the writ jurisdiction of this Court. The Hon'ble Supreme Court in Sabhajit Tewary case (cited supra) has held that the council of scientific and Industrial Research is not an authority within the meaning of Article 12 of the Constitution of India. In para- 4 of this decision the apex Court has observed as under:

"The Society does not have a statutory character like the Oil and Natural Gas Commission, or the Life Insurance Corporation or Industrial Finance Corporation. It is a society incorporated in accordance with the provisions of the Societies Registration Act. The fact that the Prime Minister is the President or that the Government appoints nominees to the Governing Body or that the Government may terminate the membership will not establish anything more than the fact that the Government takes special care that the promotion, guidance and co-operation of scientific and industrial research, the institution and financing of specific researches, establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problem affecting particular industry in a trade, the utilisation of the result of the researches conducted under the auspices of the Council towards the development of industries in the country are carried out in a responsible manner."

The Hon'ble Supreme Court in Tekraj Vasandi case (cited supra) has found that the Institute of Constitutional and Parliamentary Studies is not a State within the meaning of Article 12 of the Constitution of India. In para-20 of the judgment, the Hon'ble Supreme Court has observed as under:

"We have several cases of societies registered under Societies Registration Act which have been treated as 'State' but in each of those cases it would appear on analysis that either governmental business had been undertaken by the Society or what was expected to be the public obligation of the 'State' had been undertaken to be performed as a part of the Society's function. In a Welfare State, as has been pointed out on more than one occasion by this Court, governmental control is very pervasive and in fact touches all aspects of social existence. In the absence of a fair application of the tests to be made, there is possibility of turning every non-governmental society into an agency or instrumentality of the State. That obviously would not serve the purpose and may be far from reality. A broad picture of the matter has to be taken and a discerning mind has to be applied keeping the realities and human experiences in view so as to reach a reasonable conclusion. Having given our anxious consideration to the facts of this case, we are not in a position to hold that ICPS is either an agency or instrumentality of the State so as to come within the purview of 'other authorities' in Article 12 of the Constitution. We must say that ICPS is a case of its type - typical in many ways and the normal tests may perhaps not properly apply to test its character."

In Chander Mohan case (cited supra), the Hon'ble Supreme Court has held that the finance or control of Government is not a conclusive test as every autonomous body is having some nexus with the Government and cannot be treated as State or instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India. The Hon'ble Supreme Court held that National Council of Educational Research and Training is not a State within the meaning of Article 12 of the Constitution of India. In para-5, the Hon'ble Supreme Court has observed as under:

"The object of the NCERT as seen from the above analysis is to assist and advise the Ministry of Education and Social Welfare in the implementation of the governmental policies and major programmes in the field of education particularly school education. The NCERT undertakes several kinds of programmes and activities connected with the coordination of research extension services and training, dissemination of improved educational techniques, collaboration in the educational programmes. It also undertakes preparation and publication of books, materials, periodicals and other literature. These activities are not wholly related to governmental functions. The affairs of the NCERT are conducted by the Executive Committee comprising government servants and educationists. The Executive Committee would enter into arrangements with government, public or private organisations or individuals in furtherance of the objectives for implementation of programmes. The funds of the NCERT consist of : (i) grants made by the government, (ii) contribution from other sources and (iii) income from its own assets. It is free to apply its income and property towards the promotion of its objectives and implementation of the programmes. The government control is confined only to the proper utilisation of the grant. The NCERT is thus largely an autonomous body."

8. In our judgment, the decision of the Full Bench of this Court and decisions of the Hon'ble Supreme Court referred to above are applicable to the facts of the present case. The respondent No.4 is the autonomous body governed by its own rules and regulations. Even-though, the respondent No.4 is receiving some grants and Rule 32A provides for removal of council, the respondent No.4 is not under pervasive control of the Central Government. The management and control of the respondent No.4 vest in the elected representatives of the respondent No.4. In our judgment, the respondent No.4 is not discharging public duties or owing positive obligation as contended by the petitioners. Thus, we conclude that the respondent No.4 is not a State or instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India. Consequently, no writ can be issued against the respondent No.4.

9. Writ petition to stand dismissed with no order as to costs.

10. Learned counsel for the petitioners applies for leave to appeal to Supreme Court against this order. In view of settled law, prayer for stay is rejected.

Petition dismissed