Allahabad High Court

Atul Kumar Rai And 11 Others vs Utility Powertech Limited And 4 Others on 9 September, 2025

Author: Saurabh Shyam Shamshery

Bench: Saurabh Shyam Shamshery





HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 


2025:AHC:158187
 
Reserved  27/08/2025
 
Delivered  09/09/2025
 
HIGH COURT OF JUDICATURE AT ALLAHABAD
 
WRIT - A No. - 19840 of 2024
 

 
Atul Kumar Rai And 11 Others
 

 
..Petitioner(s)
 

 

 

 

 
Versus
 

 

 

 

 
Utility Powertech Limited And 4 Others
 

 
..Respondent(s)
 

 

 
Counsel for Petitioner(s)
 
:
 
Hari Krishan Mishra,
 
Kamlesh Shrama,
 
Lakshmi Kant Singh,
 
Prabhakar Awasthi
 
Counsel for Respondent(s)
 
:
 
Jitendra Rana
 

 

 
Court No. - 5
 

 
HONBLE SAURABH SHYAM SHAMSHERY, J.

1. The writ petitioners (12 in number) were employees of Utility Powertech Limited (A Joint Venture of National Thermal Power Corporation and Reliance Infrastructure Limited).

2. As per the chart mentioned in paragraph 9 of writ petition, petitioners were appointed between 2000 and 2012 after going through a recruitment process.

3. Appointment letters were given to petitioners in which there was a condition No. 8 in regard to termination of service and for reference, said condition is quoted below :-

8. After confirmation in employment, your services are liable for termination at any time by three months' notice in writing by either party or in the case of Company by the payment of three months' salary in lieu thereof. The Company may not assign any reason for such termination which shall be at the sole discretion of the Company and you will not be entitled to any damage, compensation or any other payment on that account.

4. Appointment of petitioners were terminated vide letters dated 30.09.2024 and 04.11.2024. Contents of order of termination of their respective appointments were similar, therefore, for reference, one of such letters is quoted below :-

As you are aware there is many fold reduction in UPL 's work due to the closure of awarded contracts from a major customer and stoppage of new work assignments. This reduction in work has led to severely deteriorating financials of the company and closure of many sites across India.

It is hereby informed to you that as per the clause No.7 as reproduced below, of your Appointment offer letter issued vide ref No. UPL/REG.APT/HRD/2012/04, dated 07.07.2012 with Utility Powertech Ltd. (UPL), you are given 3 months' Notice of Termination of your employment with UPL w.e.f. 05-11-2024. Accordingly, your employment with UPL will be terminated on 04-02-2025 (AN).

Quote

Cl. 7 "After confirmation in employment, your services are liable for termination at any time by three months' notice in writing by either party or in case of Company by payment of three month's salary in lieu thereof. The company may not assign any reason for such termination which shall be at the sole discretion of the Company, and you will not be entitled to any damage, compensation or any other payment on that account"

Unquote.

Your Full and Final Settlement shall be done as per the terms & conditions of your appointment Offer Letter, after clearance of all your dues and handing over of your all-official documents/equipment, as well as vacation of company's Quarter allotted to you, if any.

This is issued with the approval of the competent authority.

5. S/Sri Tarkeshwar Nath and Jitendra Rana, learned advocates for respondents have raised a preliminary objection that employer in present case i.e. Utility Powertech Limited is neither a State nor its instrumentality, therefore, present writ petition is not maintainable and they have placed reliance upon judgment of this Court in Anil Kumar vs. State of U.P. and others, 2024:AHC:105323, judgment of High Court of Madhya Pradesh at Jabalpur in Shashikant Singh vs. NTPC Limited and others, 2024:MPHC-JBP:56463 and judgment of High Court of Orrisa at Cuttack in A. Ravi Chaitanya and others vs. NTPC Ltd. New Delhi and others, WP(C) No. 10211/2024 decided on 24th December, 2024. For reference, relevant part of above judgments are quoted below :-

Anil Kumar (Allahabad High Court)

This writ petition has been filed for quashing the impugned notice dated 31.05.2024 issued by respondent no. 6, Utility Powertech Ltd.

At the very outset, the Court had asked the petitioner's counsel to address on the maintainability of the writ petition as no writ petition lies against a private company. Respondent no. 6 is a joint venture of NTPC Ltd and Reliance Infrastructure Ltd and not the instrumentality of the State as defined under Article 12 of Constitution of India.

The Supreme Court in case of Pradeep Kumar Biswas & Ors. v. Indian Institute of Chemical Biology & Ors, (2002) 5 SCC 111 has verified as to against which authority the writ petition under Article 226 would be maintainable.

In view of said fact, as respondent no. 6 is a Company and not instrumentality of State, the writ petition against a private Company is not maintainable and the same stands dismissed.

Shashikant Singh (High Court of Madhya Pradesh)

However, in view of the consideration of the important feature of the Society by the Supreme Court and also expressing the determining factor, I do not find any substance in the submission made by learned counsel for the petitioner because on the basis of documents available and reply filed by respondent No.1, it is clear that the respondent No.2 was having some business relation with respondent No.1 and have been assigned some contract by the respondent No.1. It is nowhere indicated that the State Government or the Central Government is having any direct connection with the respondent No.2 and any monetary assistance was being provided by the Central Government or State Government to respondent No.2. Merely because petitioner is claiming that the respondent No.2 was a joint venture of respondent No.1, although, it was denied by respondent No.1, respondent No.2 cannot be treated to be a State.

In the case of Cricket Association of Bihar (supra), the Supreme Court has considered the function which was being performed by the Cricket Association and also by the Cricket Control Board and then observed that a petition under Article 226 of the Constitution of India is maintainable because the Cricket Control Board was discharging important public function whereas in the present case, the respondent No.2 was a company assigned some contract by respondent No.1 just to get their professional profit and to get business from respondent No.1 and as such, it is not proper to consider that the respondent No.2 was discharging public function. The submission made by learned counsel for the petitioner in this regard, in my opinion, is misconceived and having no foundation. This Court in the case of Sanjay Singh Rajput (supra) has considered this aspect elaborately and almost in a similar circumstances, dismissed the petition observing therein as under :-

"10. So far as the counsel for the petitioner is concerned, he has placed reliance on a decision rendered by Seven-judges Bench of Supreme Court in re Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and others (2002) 5 SCC 111 and also on the decision passed by our High Court in W.P.No.8786/2021 (M/s Shanti Construction v. M/s Aavantika Gas Ltd. & Ors.).

11. The learned counsel for the respondents has also placed reliance upon the decision in re Pradeep Kumar Biswas (supra) and submitted that the yardstick laid down by the Supreme Court so as to determine a body falls within the definition of State as per Article 12 of the Constitution of India. According to which, respondent No.4 is not a State and therefore writ petition is not maintainable before this Court.

12. In case of Pradeep Kumar Biswas (supra), the Supreme Court relying upon a test formulated in its earlier decision viz. Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722, has observed as under:-"27. Ramana [(1979) 3 SCC 489] was noted and quoted with approval in extenso and the tests propounded for determining as to when a corporation can be said to be an instrumentality or agency of the Government therein were culled out and summarised as follows:

(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.

(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.

(3) It may also be a relevant factor whether the corporation enjoys monopoly status which is State conferred or State protected.

(4) Existence of deep and pervasive State control may afford an indication that the corporation is 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.

40. 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 hypothesi, 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."

13. The counsel for the petitioner during the course of argument had emphasized that respondent No.4 is the joint venture of BPCL. BPCL is a government sponsored company and is an undertaking of Union Government having full financial control over the said company. Shri Chourasiya has submitted that BPCL though a promoter company of BORL and as per article of association of BORL, BPCL has a right to appoint a Chairman alongwith four nominee Directors and in the event of a dead-log BPCL has a right of casting vote. Shri Chourasiya has also contended that the BPCL through its officers and employees placed in BORL has deep-rooted control on the day-to-day affairs of the company which is clearly evident from the speech of Chairman in 21st Annual General Meeting of BPCL. It is also submitted that BPCL has absolute administrative control over BORL. As per Shri Chourasiya, both BORL and BPCL have identical trade-mark and according to him, BORL is instrumentality to State and amenable to writ jurisdiction.

14. I have gone through the judgment in the case of Pradeep Kumar Biswas (supra) laying down the criteria to determine any body to be instrumentality of State if a 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. However, here in this case in a whole article of association of BORL nowhere it is revealed and none of the provisions indicates that the Government has any control over the BORL. It is BPCL which is a joint venture having share in the respondent-Company with a limited rights. Merely because Chairman is nominated by BPCL among its Directors with their four members of Board, it does not mean that the Government has direct control over the BORL. Respective provision i.e. Clause 100-2 further clarifies that Oman Oil Corporation (OOC) nominated two members of the Board including the Vice-Chairman. However, if Clause 176 of article of association is seen it is clear that BPCL shall provide OOC its written no-objection in the form as may be required by OOC for this purpose. It shows dominating role and feature of OOC in the joint venture. For ready reference, Clauses 176.1 and 176.2 are reproduced hereinunder:-

176.1 Except as otherwise provided in Articles 175.1 to 175.4 (both inclusive), BPCL hereby irrevocably and unconditionally consents and agrees at all times to consent to OOC, in Associated Companies and/or any of their Affiliates entering into any future ventures collaborations, tie-up through investment in shares or debentures or technology transfer licences or trade mark licences or investment by whatever name called with any other person or entity in India in the same field in which the Company is engaged at the Relevant Time BPCL, shall provide OOC its written no objection/consent in the form as may be required by OOC for this purpose.

176.2 Except as otherwise provided in Articles 175.1 to 175.4 (both inclusive), the Company hereby irrevocably and unconditionally consents and agrees at all times to consent to OOC, its Associated Companies and/or any of their Affiliates entering into any future ventures, collaborations, tie-up through investment in shares or debentures or technology transfer licences or trade mark licences or investment by whatever name called with any other person or entity in India in the same field in which the Company is engaged at the relevant time. The Company shall provide OOC its written no-objection/consent in the form as may be required by OOC for this purpose.

16. There is nothing available on record indicating that the Government has any control over BORL in the nature of financial, functional or administrative. It is nowhere available on record to show that a control which is required to determine a body as a State organisation, that is also not available because as per the requirement, the control must be pervasive but here in this case no indication about any type of control of Government over the respondent-BORL. However, the petitioner has also placed reliance upon a decision of Division Bench of this Court in the case of M/s. Shanti Construction (supra) in which the Division Bench after relying upon the case of Pradeep Kumar Biswas (supra) and other cases of Supreme Court has determined that M/s Aavantika Gas Limited is a body within the definition of State. But that judgment does not give any help to the petitioner at this stage for the reason that in SLP No.19801/2021 preferred against that judgment, the Supreme Court vide order dated 10.12.2021 stayed the operation of said judgment. Even otherwise, that judgment and facts involved therein are not similar to the case in hand because in the said case both the companies of joint venture were government undertakings i.e. Gas Authority of India Ltd. (GAIL) and Hindustan Petroleum Corporation Ltd. (HPCL), in which the Division Bench has after taking note of the existing facts of that case observed the body is financially, functionally and administratively dominated by or under the control of Government, but here in this case no such situation exists and no such indication made from the available documents on record even from the memorandum of association of BORL. The Division Bench has also observed that the entire shares were held by the bodies which are State within the meaning of Article 12 of the Constitution but here in this case the situation is not same because the BPCL a government undertaking has a limited share. The Division Bench has observed the majority financing or shareholding is not crucial or determining factor for the purpose of deciding whether the entity is covered as an authority or instrumentality of the State but even otherwise considered the significant shareholding and financial involvement of the Government was sufficient to bring the entity within the ambit of Article 12 of the Constitution. But here in this case, BORL has no such situation and nowhere it reveals that the Government has any control especially the pervasive control over the BORL. It was limited role of BPCL of appointing Chairman, but nothing more. It is also not clear as to how BPCL or Government has any financial control over the BORL. In such a condition, especially the fact that a dispute which is being raised by the petitioner is not related with public duty but it is a private dispute that too about termination of service of the petitioner in which enquiry was conducted and appeal was also preferred but dismissed."

Thus, it is clear that in view of the aforesaid and considering the documents available on record, I fail to appreciate the submissions made by learned counsel for the petitioner to convince this Court that respondent No.2 is a State under Article 12 of the Constitution of India and therefore, the termination of contract services of the petitioner can be assailed under Article 226 of the Constitution of India. Petition, in my opinion, is not maintainable and the cause which is being raised by way of Article 226 of the Constitution of India is accordingly untenable. The petition is, therefore, dismissed as not maintainable.

A. Ravi Chaitanya & Ors. (High Court of Orrisa)

15. Upon a thorough analysis of the facts and submissions made, this Court finds the petitioner's reliance on the alleged connection between Utility Powertech Limited and NTPC to be wholly misplaced. While NTPC is a public sector undertaking holding a 50% stake in Utility Powertech Limited, this fact, by itself, does not bring Utility Powertech Limited under the purview of writ jurisdiction. The two entities are distinct legal entities, with independent objectives and functions. Utility Powertech Limited is neither a subsidiary nor an instrumentality of the State, and there exists no pervasive control of the NTPC over its operations. Consequently, this Court rejects the petitioner's assertion that Utility Powertech Limited qualifies as an instrumentality of the State under Article 12 of the Constitution of India.

16. Moreover, the petitioner's grievance revolves around the enforcement of individual service contracts, which fall outside the scope of Article 226 of the Constitution. The petitioners cannot, therefore, seek writ jurisdiction for the enforcement of a private contract.

17. The present petition is not maintainable, and consequently, there is no necessity to delve into the merits of the case. The writ jurisdiction is not intended to adjudicate disputes arising from private contractual relationships, particularly where the issue pertains to business decisions such as downsizing due to low revenue. The Court finds no grounds for intervention, especially since the dispute concerns a contract of service, and termination is governed by Clause 13 of the agreement, which provides that Utility Powertech Limited has the right to terminate the petitioner's services with one month's notice or payment of one month's basic pay in lieu thereof.

18. In light of the above, this Court finds no reason to interfere with the decision of Utility Powertech Limited to terminate the petitioner's services.

19. However, given that the Petitioners have complied with the attendance procedure set by the Utility Powertech Limited, as communicated through the email on 31.05.2024, which required employees to mark their attendance and submit a picture at the TTPS Plant gate, and this Court had earlier directed that the order of removal was not to be given effect until the next date, there is no valid reason to withhold their salary for the months they have worked. Their salary is crucial for the sustenance of their families, and it should be provided during the pendency of the Writ Petition.

20. Accordingly, W.P.(C) No. 10211 of 2024 is dismissed with a direction to the Utility Powertech Limited to release the Petitioners' withheld salary for the duration of the service rendered.

21. Consequently, all connected Writ Petitions are dismissed in terms of the judgment passed today in W.P.(C) No. 10211 of 2024.

22. Interim order, if any, passed earlier stands vacated.

6. As referred above, all three High Courts have passed orders on basis of consideration of rival submissions as well as after taking note of judgments passed by Supreme Court that Utility Powertech Limited is not a State.

7. In aforesaid circumstances, Court has made a query to Sri Vikash Kumar along with Sri Lakshmi Kant Singh, learned advocates for petitioners that why this Court may take a contrary view to the view taken by this Court as well as two other High Courts that writ petition is not maintainable at the instance of petitioners against their employer i.e. Utility Powertech Limited.

8. To aforesaid query, learned counsel for petitioner has submitted that some relevant facts were not brought into notice of Coordinate Bench of this Court as well as two other High Courts and he may be allowed to made such submissions.

9. Learned counsel has submitted that Utility Powertech Limited is a 50-50 Joint Venture Company and on the Board of Directors, 3 Directors are from NTPC and 3 Directors are from Reliance Infrastructure Limited.

10. Learned counsel also submitted that petitioners are working under the guidance and control of NTPC and they have been put at different places of NTPC. In support of his submissions, he has placed reliance upon judgments in the cases of Ramana Dayaram Shetty vs. The International Airport Authority of India and others (1979) 3 SCC 489 ; Ajay Hasia vs. Khalid Mujib Sehravardi and others, (1981) 1 SCC 722 ; Pradeep Kumar Biswas and others vs. Indian Institute of Chemical Biology and others, (2002) 5 SCC 111 ; Rajkaran Singh and others vs. Union of India and others, (2024) 8 SCR 516.

11. Learned counsel has further placed reliance upon a judgment in the case of Balmer Lawrie and Co. Ltd. and others vs. Partha Sarthi Sen Roy and others, (2013) 4 SCR 1018 that unfair or unjust clause in a contract would be hit by Section 23 of Indian Contract Act, 1872 and being against public policy, would be amenable to judicial review.

12. Per contra, learned counsel for respondents have placed reliance on earlier referred three judgments as well as below referred judgments that Utility Powertech Limited is not a State :-

(i) K.K. Saksena vs. International Commission of Irrigation and Drainage and others (2015) 4 SCC 670 ;

(ii) Ram Niwas Sharma vs. Union of India and others, 2020:AHC:34917 ;

(iii) Naresh Kumar Beri and others vs. Union of India and others, 2022 SCC Online Del 3585 ;

(iv) St. Marys Education Society and another vs. Rajendra Prasad Bhargava and others, (2023) 4 SCC 498 ;

(v) Uttam Chand Rawat vs. State of U.P. and others, 2021 0 Supreme (All) 845 ;

(vi) Mahesh Kumar vs. State of U.P. and others, 2024:AHC:44464 ;

(vii) Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology and others, (2002) 5 SCC 111 ;

(viii) The Bihar Eastern Gangetic Fishermen Cooperative Society Ltd. vs. Sipahi Singh and others, (1977) 4 SCC 145 ;

(ix) Vidyavardhaka Sangha and another vs. Y.D. Deshpande and others, (2006) 12 SCC 482 ;

(x) Sri P.B. Ghayalod vs. M/s Maruti Udyog Ltd. and others, 1991 SCC Online Del 501.

13. I have considered above submissions and perused the records.

14. As referred above, there are three judgments passed in Anil Kumar, Shashikant Singh and A. Ravi Chaitanya and others (supras) wherein claim of similarly situated employees of Utility Powertech Limited on maintainability of writ petition was rejected by reasoned orders and it has also been submitted by learned counsel for respondents that above referred three judgments still hold good.

14. The judgment passed by Supreme Court in Ajay Hasia (supra) and tests laid down therein are relevant for purpose of determining whether an entity is an instrumentality or agency of the State and the Court takes note of following paragraph of recent judgment of Rajkaran Singh and others (supra) wherein aforesaid tests and applicability as mentioned are quoted below :-

9. The tests for determining as to when a corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in the International Airport Authority case..... We may summarise the relevant tests gathered from the decision in the International Airport Authority case as follows:

"(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (SCC p. 507, para 14)

(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. (SCC p. 508, para 15)

(3) It may also be a relevant factor ... whether the corporation enjoys monopoly status which is State conferred or State protected. (SCC p. 508, para 15)

(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p. 508, para 15)

(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. (SCC p. 509, para 16)

(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." (SCC p. 510, para 18)

If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority case, be an "authority" and, therefore, 'State' within the meaning of the expression in Article 12.

11. We may point out that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a government Company or a Company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetical origin, it would be an "authority" within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a Company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the Company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression "authority" in Article 12."

(emphasis supplied)

24. This Court in Ajay Hasia (supra) established several tests to determine whether an entity can be considered an instrumentality or agency of the Government, and thus an "authority" under Article 12 of the Constitution of India. These tests include but are not limited to;

1. Extent of financial support from the government;

2. Deep and pervasive control of the government;

3. Functions performed are of public importance tance and closely related to governmental functions:

4. Entity enjoys monopoly status conferred or protected by the State:

5. The government department has been transferred to the entity.

25. In Pradeep Kumar Bishwas (supra), this Court held that the tests laid down in Ajay Hasia (supra) are relevant for the purpose of determining whether an entity is an instrumentality or agency of the State. Neither all the tests are required to be answered in positive nor a positive answer to one or two tests would suffice. It will depend upon a combination of one or more of the relevant factors depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be by removing the mask or piercing the veil disguising the entity concerned.

26. The relevant paragraphs of Pradeep Kumar Biswas (supra) are reproduced below: -

"98. We sum up our conclusions as under:

(7) Simply by holding a legal entity to be an instrumentality or agency of the State it does not necessarily become an authority within the meaning of "other authorities" in Article 12. To be an authority, the entity should have been created by a statute or under a statute and functioning with liability and obligations to the public. Further, the statute creating the entity should have vested that entity with power to make law or issue binding directions amounting to law within the meaning of Article 13(2) governing its relationship with other people or the affairs of other people rights, duties, liabilities or other legal relations. If created under a statute, then there must exist some other statute their conferring on the entity such powers. In either case, it should have been entrusted with such functions as are governmental or closely associated therewith by being of public importance or being fundamental to the life of the people and hence governmental. Such authority would be the State, for, one who enjoys the powers or privileges of the State must also be subjected to limitations and obligations of the State. It is this strong statutory flavour and clear indicia of power and its potential or capability to act to the detriment of fundamental rights of the people, which makes it an authority; though in a given case, depending on the facts and circumstances, an authority may also be found to be an instrumentality or agency of the State and to that extent they may overlap. Tests 1, 2 and 4 in Ajay Hasia [Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722] enable determination of governmental ownership or control. Tests 3, 5 and 6 are "functional" tests. The propounder of the tests himself has used the words suggesting relevancy of those tests for finding out if an entity was instrumentality or agency of the State. Unfortunately thereafter the tests were considered relevant for testing if an authority is the State and this fallacy has occurred because of difference between "instrumentality and agency" of the State and an "authority" having been lost sight of sub silentio, unconsciously and undeliberated. In our opinion, and keeping in view the meaning which "authority" carries, the question whether an entity is an "authority" cannot be answered by applying Ajay Hasia [Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722] tests.

(2) The tests laid down in Ajay Hasia case [Ajay Hasia v. Khalid Mujib Sehravardi (1981) 1 SCC 722] are relevant for the purpose of determining whether an entity is an instrumentality or agency of the State. Neither all the tests are required to be answered in the positive nor a positive answer to one or two tests would suffice. It will depend upon a combination of one or more of the relevant factors depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be by removing the mask or piercing the veil disguising the entity concerned. When an entity has an independent legal existence, before it is held to be the State, the person alleging it to be so must satisfy the court of brooding presence of the Government or deep and pervasive control of the Government so as to hold it to be an instrumentality or agency of the State."

(emphasis supplied)

15. Court also takes note that similar issue was agitated before High Court of Kerala at Ernakulam in a case filed by Welfare Association of KITCO Employees and others vs. Kerala Industrial and Technical Consultancy Organization (KITCO) and others, 2024:KER:5327 wherein it was held that said Organization was held to be State under Article 12 of the Constitution that a PSU has more than 50% shares in said Organization.

16. Aforesaid judgment was challenged by KITCO before Supreme Court in Special Leave to Appeal No. 9327/2024 wherein impugned order therein was stayed and following order was passed on 29.04.2024.

1. Heard Mr. Vikas Upadhyay, learned counsel appearing for the petitioner.

2. The counsel takes exception to the finding that the Kerala Industrial and Technical Consultancy Organisation (KITCO) is held tobe a State, underArticle 12of the Constitution as aninstrumentality of the Union of India, under the impugned judgment. To say so, the Division Bench in the impugned judgment relied on the judgment of the Madhya Pradesh High Court inShanti Construction v. Avantika Gas Limited & Ors. (Annexure P/13) reported in 2021 SCC OnLine MP 1666 and also the ratio inAshok Kumar Singh & Anr. v. Bihar Industrial and Technical Consultancy Organisation Ltd. & Ors.reported in 1997 SCC OnLine Pat 239. It is then pointed out that notice was issued on 10.12.2021 by this Court in the SLP (Civil) No. 19808 of 2021 filed by M/s. Avantika Gas Limited & Ors.

3. The basic issue in these cases is whether a company where the shares are held by various Public Sector Undertakings, would be an instrumentality of the State, underArticle 12of the Constitution or not.

4. Issue notice.

5. Tag with SLP (Civil) No. 19808 of 2021.

6. In the meantime, there shall be stay of operation of the impugned judgment of the High Court.

17. For reference, relevant part of judgment passed by High Court of Kerala at Ernakulam in above referred case would be relevant since argument raised by learned counsel for petitioners were dealt with therein and were accepted :-

12.We, therefore, deem it necessary to consider the contentions and the materials on record with regard to the 1 st respondent. We notice that the Memorandum and Articles of Association of the 1st respondent company would make it clear that it is a company incorporated with public entities, including the SIDBI, IFCI, ICICI Public Sector Banks and Government of Kerala as its share holders. There is, admittedly, no private share holding in the company. The company is recognised as a public sector enterprise by the Central Government and the Government of Kerala and is listed as a Central Government company. Admittedly, the affairs of the company are being run under the directions and supervision of its share holders, who are admittedly public sector undertakings. The Government of Kerala habitually nominates two of the Directors of the Company. The provisions of the Memorandum and Articles of Association would make it clear that the SIDBI has a decisive opinion in all matters of policy of the company.

13.It is submitted that in the judgment of the learned single Judge in K.J.Johnson, it was stated that the Government of Kerala has only 3% share in the 1st respondent. It was further stated that the accounts of the company do not require scrutiny and satisfaction of the Government and auditing is not done by State agency. It was further held that merely because nationalised banks have contributed to the share capital of the respondent, it does not become an authority as provided under Article 12 of the Constitution of India and that the memorandum and articles of association do not show any substantial control over the company by the Government. Further it was held at paragraph 11 of the judgment as follows:-

11. Respondent company is a public limited company registered under the Companies Act and its shares are held by Industrial Development Bank of India, Industrial Finance Corporation of India, Industrial Credit and Investment Corporation of India, Kerala State Industrial Development Corporation, Government of Kerala and various nationalised banks. It is governed by the Board of Directors, members of which are to be nominated by the shareholders. Industrial Development Bank of India being the holder of major shares has the right to appoint five directors including the Chairman and the Managing Director. The control of the company is vested with the Board of Directors as per Art.141 of the Memorandum and Articles of Association of the Company. The object of the respondent company is to serve the needs of small scale and medium scale industries in the State viz., to provide quality consultancy services at reasonable cost. It is run on commercial lines. Expenses are met from the income received for its services. These features sufficiently clearly show that the respondent is not an instrumentality of the State or authority under Art.12 of the Constitution.

14.Having considered the contentions advanced on either side and having gone through the decisions which have been placed before us, we are unable to agree with the finding in K.J.Johnson that the KITCO is not an instrumentality of the State and would therefore not be amenable to writ jurisdiction. We notice that the large majority of shares of the 1st respondent are held by admitted instrumentalities of the Central Government. Though the State Government has only 3% share in the 1st respondent, it has a decisive representation in the Board by sending two directors out of twelve. Further, the policy decisionS of the 1st respondent are controlled by the SIDBI which nominates 1/3rd of the Directors including the Chairman and the Managing Director. It is clear from a reading of the Articles of Association and the documents produced in the writ petition and in this writ appeal that the State and Central Governments themselves specifically consider the 1st respondent as a Central Government company. It is also discernible that the accounts of the 1st respondent are audited by the Comptroller and Auditor General of India treating it as a deemed Government company. It is recognised as an accredited Government agency for the purpose of public works in the State.

17. As referred above, in the challenge before Supreme Court in Special Leave to Appeal, aforesaid order is stayed, therefore, at this stage, this Court cannot follow Welfare Association of KITCO Employees and others (supra).

18. In aforesaid circumstances, at this stage, Court is of the view that orders passed in Anil Kumar, Shashikant Singh and A. Ravi Chaitanya and others (supras) are based on legal premises and at this stage, Court has no other substance or material to take a contrary view, therefore, being in agreement with judgments as referred above, this Court is of the opinion that writ petition is not maintainable.