Manju Sharma vs Indian Council For Research On ...
2001 Latest Caselaw 862 Del

JUDGMENT

Dr. Mukundakam Sharma, J.

1. As the facts and the questions involved in the present case are similar in nature, I propose to dispose of both these writ petitions by this common judgment and order.

2. In both these writ petitioner, the issue that was vehemently urged and that crops up for my consideration at this stage is whether the respondent is an agency or instrumentality of the Government and is a 'State' within the meaning of Article 12 and that whether it is not subject to the writ jurisdiction of the High Court.

3. The petitioners were appointed as Typist in the office of the respondent and their services were extended from time when finally a notice of termination was issued to them as against which the present writ petitions were filed. In the writ petitions, the petitioners have challenged the legality of the aforesaid notice of termination. This court while issuing notice of termination. This Court while issuing notice on the writ petitions stayed the operation of the impugned orders which orders are still in operation. The respondent filed a counter affidavit contending and raising a preliminary objection to the maintainability of the writ petitions on the ground that the respondent is neither an agency nor an instrumentality of the Government and is not a 'State' within the meaning of Article 12 and, therefore, is not amendable to the writ jurisdiction of this Court and sought for dismissal of the writ petitions on the said preliminary ground itself.

4. I have heard the learned counsel appearing for the parties on the aforesaid preliminary objection raised and I propose to dispose of the same by this common judgment and order.

5. The respondent is a Society and was registered under the Societies Registration Act on 18th August, 1981. The aims and objects for which the aforesaid Society was established have been set out in the Memorandum of Association of the respondent. Some of the relevant aims and objects have been enumerated as follows:-

"(1) To study the interaction between international environment and national development, to achieve a deeper awareness of its impact on the country's economic development and social progress, and to promote an understanding of how it can be made more favorable;

(2) To understand and interpret international and multinational efforts including those in the United Nations System to influence the course of the international economy and their effects on the development process;

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(5) To promote and conduct scientific research on socio-economic and politico-economic issues of concern to industrial and other entrepreneurs and corporate managers, especially in such areas affected by the impact of international forces on the national economy as : foreign trade, foreign exchange, balance of payments, industrial collaboration, technology transfer, international negotiation, resource mobilisation and allocation, fiscal measures, tourism, banking, insurance and other services and international financial markets;

(6) To improve linkages between researchers, professional managers, policy makers and negotiators;

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(8) To conduct research independently or jointly with other institutions (including institutions of higher learning ) in international management of science and technology and research and development for industrial and commercial applications for accelerating the rate of economic development;

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6. The Society has a General Body and the said General Body is composed of Founder members, Life members, Ordinary members, Corporate members, Institutional members, Donor members and Associate members. The mode of constitution of Board of Governors is also best out in paragraph 7 of the Memorandum of Association. The Board of Governors is to be elected and the General Body is to elect the Chairman and 13 other members of the Board of Governors. According to the said provision, the Board of Governors of the Council shall consist of 20 members, six of whom shall be co-opted members and the said Board of Governors is to hold office for a period of four years. Paragraph 10 thereof empowers the Board of governors to accept the management of any endowment for trust fund or subscription or donation provided the same is not accompanied by any condition inconsistent or in conflict with the objects of the Council. Paragraph 18 provides that the Accounts of the Council shall be annually audited by a qualified auditor to be appointed by the Council and the accounts so audited shall be included in the Annual Report of the Council and circulated to Members.

7. In terms of the mandate of the Memorandum of Association an Annual Report was prepared by the Council for the year 1997-98, a copy of which is also placed on record. The said Report is dated September, 1998. The said Report states that the Council has been dependent for its finances on sponsors of specific research projects and general endowments, which include institution of Chairs and that it was received such support from the Government of India, Ford Foundation, IDRC of Canada, the Japanese Embassy, Reserve Bank of India, Unit Trust of India, industrial Finance corporation of India and other banks and financial institutions. It is also stated that in particular, a major drive to modernise the computer and information technology infrastructure of the respondent is under way with support from the Industrial Finance Corporation of India. At another place of the said Report, it is stated that as international economic issues have acquired additional significance in view of the gradual opening up of the Indian economy, research ate the Council needs to be refocused in the light of these developments and, therefore, it was proposes to strengthen the research work at the Council with new initiatives for a programme of thematic research which focuses on a few specific themes, such as foreign trade and investment, financial sector reforms, competitiveness of Indian industry, WTO related issues for Indian industry, WTO and agriculture, and regional economic co-operation. The said Report also included the details of the studies which were completed and were in various stages of progress during the period 1997-98 and the same related to research programme of the respondent. It also contained a writ up on the accounts which was audited for the year 1997-98. Paragraph 7.4 of the said Report stated that actual receipts for the year ended March 31, 1998 by way of grants, donations and other incomes amounted to Rs. 1,16,24,711 and that the Project funds were received from Ministry of External Affairs, Government of India and Reserve bank of India and Project support was also extended by the International Centre for Economic Growth, United Nations Development Programmed, Work Bank, Embassy of Japan, New Delhi and Institute of South East Asian Studies, Singapore.

8. The aforesaid materials on record signify that the Society was established with the main object to promote research on issues which are central to India's international position and its economic exposure to the rest of the world. The Society is to generate position papers on matters under international negotiations based on the development experience of other developing countries and the subjects studied by the Council broadly fall in the categories of international trade, foreign, investment, money and capital markets, infrastructure, balance of payments, economic reform in India, China and other countries. The Council undertakes projets and Research works on behalf of the various organisations which sponsor the Projects in which they are interested and such sponsorship from the Projects have come from various Organisations as also from the Government Ministries.

9. The Board of Governors and the Chairman, according to the Memorandum of Association, are to be elected by the General Body of the Council which is composed of the Founders members, Life members, Ordinary members, Corporate members, Institutional members, Donor members and Associate members. The names of the persons in the governing Body for the year 1997-98 have been set out in the aforesaid Report which also indicates that although some of the said persons are from government Departments, but they have been so appointed due to their expertise and knowledge in the fields of economics, finance, business, international trade, etc. It is indicated there form that the said persons have not been appointed to the governing Body in their capacity of representatives of the particular Ministry or the Government as a whole.

10. In several cases decided by the Supreme Court certain tests have been formulated to find out whether an Institution is a State. It was held in the said decisions that in order to decide as to whether a particular Institution is a State or not, it is necessary to look into the constitution of the body, the purpose for which it has been created, the manner of its functioning, including the mode of its funding and the broad features which have been fund to be relevant in the matter of determining a dispute of the type. At this stage, it is appropriate to tun my attention to judicial precedents to find out as to what should be the test to be applied for determining when an institution like the respondent would be treated as a 'State' or an 'instrumentality of the Government" or 'other authorities' within the meaning of Article 12 of the Constitution of India.

11. In Tekraj Vasandi alias, K.L. Basandhi v. Union of India and Ors.; , the Supreme court considered the various judicial precedents in order to decide a similar question which cropped up in the said case. The Supreme Court considered the ratio of the decisions in Rajasthan State Electricity Board, Jaipur v. Mohan Lal; , Ujjam Bai v. State of U.P.; reported in AIR 1962 SC 1621, Sabhajit Tewari v. Union of India; , Sukhdev Singh v. Bhagatram Sardar Singh Raghuvansi; as also the cases of Ramana Dayaram Shetty v. International Airport Authority of India; , B.S. Minhas v. Indian Statistical Institute; and P.K. Ramachandra Iyer v. Union of India; and then held that there cannot indeed be a strait jacket formula and it is not necessary that all the tests should be satisfied for reaching the conclusion either for or against holding an institution to be 'State'. It was held that in a given case some of the features may emerge so boldly and prominently that a second view may note be possible and that there may yet be other case where the matter would be on the border line and it would be difficult t to take one view or the other outright. The features and the tests for determining as to when a organisation can be said to be an instrumentality or agency of the Government could be culled out from the judgment in the case of International Airport Authority of India (supra). The said test could be 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 or 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."

12. In subsequent decisions like Chander Mohan Khanna v. National Council of Educational Research and Training and Ors. , the Supreme Court held that NCERT is not a 'State' under Article 12 of the Constitution of India and while holding so, it was observed by the Supreme Court that Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the government within the sweep of the expression "State". It was held that the combination of State aid coupled with an unusual degree of control over the management and polices of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is "State'. In this connection, reference could also be made to the decision of this Court in R. Gopinath v. Union of India and Ors. (C.W.P. No. 3434/2001) disposed of on 17th April, 2001.

13. Having stated the legal principles which would be applicable to the issue involved, let me now revert toe the facts of the case and apply the principles which have been set out.

14. The primary aims and objects for which the respondent was established and the nature of functions that it carries out have been set out at length in the proceeding paragraphs. The objects of the Society cannot be said to be strictly government business. More or less, the object is to carry out research work on specific Projects which are given to the Society by various organisations. The Memorandum of Association of the Society also permitted acceptance of gifts, donation and subscription. There is also material on record to show that various organisation like Ford Foundation, IDRC of Canada, the Japanese Embassy, Reserve Bank of India, Unit Trust of India, Industrial Finance Corporation of India and other banks and financial institutions extended support to the Society at different points of time. Records have been placed on which counsel for the Petitioner laid considerable stress that the Government of India, Ministry of Finance, Department of Economic Affairs, had given a grant of Rs. 250 lacs to the respondent as Endowment and Administrative Grant and the Annual Report for the said year was to be laid in the Table of Lok Sabha and Rajya Sabha. Stress a was also placed by the counsel for the petitioner on the grant of Rs. 1 crore which was sanctioned by the Government. Relying on the same, counsel sought to submit that since the Annual Report of the respondent was to be laid on the Table of the Lok Sabha and Rajya Sabha, therefore it is amenable to the State Control.

15. However, some additional documents have also been placed on record which indicate that those Societies which receive on time financial assistance from the Government of India are also made accountable to Parliament for the fund provided to them. By a notification dated 23rd February, 1996, issued by the Ministry of Finance, it was laid down that the Societies/Organisations receiving one time.assistance of Rs. 50 lacs or above should be required to alow lay their Annual Reports and audited accounts before the Parliament. In terms of the same, the Annual Reports, and audited accounts for the said relevant periods were laid before the Parliament. Said actions alone, therefore, would not conclusively prove that the respondent No. 1 is a State. It is disclosed from the records that the said grant to the respondent was only one time grant to wars Endowment Grant and Administrative Grant, which was given during the period of 1993-94 and 1997-98. Even of it is assumed that the respondent received substantial grants fro the Government of India from time to time, yet considerable and substantial amount has been given to the respondent from various other sources as well, as indicated hereinabove.

16. The Accounts of the Society are separately maintained. From the records placed before me, it cannot be said that there is a deep pervasive control of the Government in the functioning of the Society. No document has been placed on behalf of the petitioner on record to prove the aforesaid point that in the functioning of the Society there is a deep pervasive control of the Government. The report for the year 1997-98 to which reference has already been made would indicate that the objective of the Society is mainly to carry out research and Project works on behalf of the Organisations which sponsor such Research, Schemes and Projects.

17. Therefore, even after having given my discerning consideration to the facts of this case, I am not in a position to hold that the respondent NO. 1 is either an 'Agency' or 'Instrumentality of the Government' or a 'State' within the purview of Article 12 of the Constitution of India. In that view of the matter and in view of the aforesaid findings, the only conclusion that could be arrived at is that the respondent is not subject to the writ jurisdiction of the High Court and on the basis thereof, the writ petitions stand dismissed on the aforesaid preliminary objection. The interim orders stand vacated. Pending applications stand disposed of accordingly.