N.K. Aggarwal vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 1708 Del

JUDGMENT

Mukul Mudgal, J.

1. The facts leading to the filing of the present Letters Patent Appeal are discussed below. The Appellant herein, Mr. N. K. Aggarwal joined the service of the Respondent No. 2 Krishak Bharti Cooperative Limited (hereinafter KRIBHCO). The Appellant was appointed in 1985 on the post of Traffic Assistant, and was consequently promoted in 1988 to Senior Traffic Assistant and in 1993 to Junior Manager (Marketing).

2. The Appellant during his ten years of service did not avail of any long leave except on medical grounds on two occasions; from 12.2.1994 to 28.3.1994 and from 30.8.1995 to 15.9.1995.

3. The Appellant was also granted Special Medical Sanction on 29.09.1995 for a period of three months for treatment at Moolchand Hospital, New Delhi. On 13.11.1995 the Appellant telephonically communicated to the Management about his suffering from viral fever combined with hypertension. Appellant was advised bed rest from 18.11.1995 to 1.12.1995 and telephonically informed Sh. B.B. Singh, Consultant and Sh. Shankar Vishwas, Jr. Manager (Marketing) of his sickness.

4. In January 1996, the Appellant had filed the writ petition C.W.P. No. 189/1996 challenging his termination order dated 28.11.1995 wherein his services were terminated by invoking Clause No. 31.11.1 of the Service Rules for employees of Respondent No. 2 on the ground of alleged voluntary abandonment of service. The appellant submitted that no enquiry was held before terminating his services.

5. The Counter Affidavit filed by the Respondent No. 2 contended that it was not a 'State' under the meaning of Article 12 and thus no writ petition was maintainable against it. The Appellant filed his Rejoinder Affidavit contending that the Respondent No. 2 is a 'State'. The Appellant relied upon the Bye laws and Articles of the Respondent in that regard. The Appellant filed an application placing on record that he had sanctioned medical leave to his credit at the time his services were terminated and a detailed Supplementary Affidavit was filed giving examples of documents released to the public and press releases to establish that KRIBHCO treated itself also as 'State'. These facts were not disputed by the Respondents.

6. On 9.1.2002, a learned single judge in a judgment dated 9th January, 2002 in R.K. Mishra v. KRIBHCO, CWP No. 3035/99 and other connected petitions held that KRIBHCO was not a 'State' under Article 12 of the Constitution. The said judgment was followed in the impugned judgment dated 15.2.2002 given by learned single judge dated 15/2/2002, while dismissing the writ petition as not maintainable against KRIBHCO in liming leading to the present appeal.

7. The only question that arises in the present appeal is whether Krishak Bharti Cooperative Limited (hereinafter KRIBHCO) is amenable to the writ jurisdiction of this Court under Article 226?

8. The parent judgment rendered in R.K. Mishra and Ors. v. Krishak Bharti Cooperative Ltd. (CWP No. 3035/99) was followed by the judgment given by S.K. Kaul, J (dt. 15/2/2002). The judgment dated 15/2/2002 is the impugned judgment in this case.

9. Mr. Asim Mehrotra, counsel for the Appellant argued that KRIBHCO may be considered to be 'State' under Article 12 and that it has been treating itself as such as well. He also submitted that irrespective of whether KRIBHCO is 'State' or not under Article 12, in view of the nature of public functions performed by KRIBHCO, a writ petition under Article 226 was maintainable.

10. He submitted that according to documents placed on record, KRIBHCO is under the administrative control of the Department of Fertilizers under the Government of India. It is also clear that KRIBHCO is treating itself as a government enterprise. This is evident from the following extracts of the publications by KRIBHCO .

a) KRIBHCO in its "Diary 2000" has mentioned that it is "under the administrative control of the Department of Fertilizers, Government of India".

b) In the chapter, "Future Plans", details have been given of various projects which have been undertaken by KRIBHCO for which permission has been obtained by the Government of India.

c) In the same Diary, names of the Joint Secretary (Fertilizers), Department of Fertilizers; Joint Secretary and Financial Advisor, Department of Fertilizers; Joint Secretary (Cooperation) Department of Agriculture and Cooperation; Joint Secretary (A & M); Department of Fertilizers, Government of India have been mentioned as the Board of Directors of KRIBHCO.

d) In addition, 67% of shares are held by the Government.

This argument was further substantiated by the Counsel with the Additional Affidavit placed on record and the Press Release at Annexure 2.

11. Mr. V.P. Singh, learned senior counsel for the Respondent submitted that the Respondents were not amenable to the writ jurisdiction under Article 226 of the Constitution for the following reasons:

(a) The Respondents were not covered by the definition of "any person" in Article 226. Article 226 of the Constitution reads as:

226. Power of High Courts to issue certain writs.- (1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation to which it exercise jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibitions, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.

(b) Reliance was placed upon the decision of the Hon'ble Supreme Court in the case of General Manager, Kisan Sahkari Chini Mills Ltd. U.P. v. Shatrughan Nishad wherein the maintainability of a writ petition under Article 226 against a private body such as the Kisan Sahkari Chini Mill was challenged successfully.

(c) The learned senior counsel laid particular emphasis on the following passage from the above judgment.

For coming within the purview of Article 12 the form in which the body is constituted, namely whether it is a society or a cooperative society, or a company is not decisive. The real status of the body with respect to the control of the Government will have to be looked into.

(d) On the basis of the above test, Mr. Singh submitted the following:

(i) That the Government had minimal control over the functioning of KRIBHCO and notwithstanding the presence of Government officials on the Board of Directors, the Government exercised little or no control on the internal functioning of KRIBHCO.

(ii) Going by the indicia laid down in the Supreme Court decision, KRIBHCO being neither an instrumentality nor an agency of the government cannot be said to be an authority and is therefore, not 'State' within the meaning of Article 12 of the Constitution.

(e) The second leg of the argument of the Respondent rested on the premise that the performance of a public function/ public duty can be performed only by an entity akin to the state and since KRIBHCO was not an entity akin to the state, Article 226 of the Constitution was not attracted.

(f) In G. Bassi Reddy v. International Crops Research Institute (ICRISAT) , the Hon'ble Supreme Court while discussing the scope of public functions and public duties, has made the following observations in para 28:

28. Although, it is not easy to define what a public function or a public duty is, it can reasonably be said that functions are similar to or closely related to those performable by the State in its sovereign capacity.

(g) This test was based on the decision of the Supreme Court in Anadi Mukta Sadguru S.S.V.S.J.M.S.T. v. V.R. Rudani in which the Supreme Court examined the various aspects and distinction between an authority and a person and after an analysis of the decisions referred to in that regard came to that conclusion that it is only in the circumstances enumerated in that judgment when the authority or the person performs a public function or discharges a public duty that Article 226 of the Constitution can be invoked. The said principles are as under:

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 Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words 'Any parson 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 judged in the light of positive obligation owed by the person or authority to the affected party.

(h) This principle was later reiterated in VST Industries Ltd. v. Workers' Union (2001) 1 SCC 298 where the Supreme Court observed that the manufacture and sale of cigarettes by a private person will not involve any public function and hence the High Court has no jurisdiction to entertain an application under Article 226 of the Constitution. Relying on the decision in VST Industries Ltd. (supra) the Supreme Court in Chini Mills held:

The Mill was engaged in the manufacture and sale of sugar which, on the same analogy, would not involve any public function. Thus we have no difficulty in holding that the jurisdiction of the High Court under Article 226 of the Constitution could not have been invoked.

12. The counsel for the Respondents relied on the above-discussed principles and submitted the following:

a) That KRIBHCO can neither be declared 'State' under Article 12 and because of the nature of its functions and duties cannot be made amenable to the writ jurisdiction under Article 226 either.

b) That the Chini Mills case fully covered the present case with respect to maintainability of a writ petition against a private person or a body. Therefore, such a writ would lie only if such a body or person performed a public function or discharged a public duty.

c) That an analogy could be drawn between sugar and fertilizers to further substantiate the fact that mere manufacture cannot constitute a public duty or a public function.

13. The other plea of the Respondent referred to internal autonomy of the Cooperative and how there was no pervasive control of the Government on the internal functioning of the Cooperative. The principle foundation of cooperative societies is internal democracy. There is only one vote per person in the running of such an institution. This is in contradistinction to a company where those with larger stake in shares have greater power; cooperative societies are more equitable in their method of functioning. Section 3(g) of the Multi-State Cooperative Societies Act, 2002 read with First Schedule gives complete autonomy to the Cooperative as far as internal functioning is concerned. Reliance was placed on decisions of this Court in Air Vice-Marshall J.S. Kumar v. G.C. of A.F.S.C. 2006 (86) DRJ 711 (DB) and J.S. Arneja v. National Cooperative Consumers Federation of India 1994 (28) DRJ (DB) 546 where using the above-discussed principles of determining the applicability of a writ against a private body on the basis of the functions performed it was found that writ jurisdiction was not attracted in the above decisions. Mr. Singh placed special reliance on the decision in J.S. Arneja (supra) and drew the attention of this Court to the similar arguments advanced in that case with respect to the National Cooperative Consumers Federation of India. The learned Counsel for the appellant argued that the appellant Cooperative received no financial assistance or subsidy for its commercial operations from the Government and neither the Central nor the State Government exercised any control whatsoever over the administration or the functioning of the said Cooperative. Consequently, it was evident that the N.C.C.F. was neither an instrumentality nor an agency of the State within the meaning of Article 12 of the Constitution and therefore not amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution.

14. In the case of Air Vice-Marshall J.S. Kumar v. G.C. of A.F.S.C., 2006 (86) DRJ 711 (DB) the question involved was whether the Air Force Sports Complex (AFSC) notwithstanding the fact that it was not 'State' for the purposes of Article 12, discharged any public duty or function in order for Article 226 to be applicable. The Court held that the institution was providing recreation which did not amount to a public duty or function. The case was therefore distinguished from the decision of the Hon'ble Supreme Court in Zee Telefilms where the existence of a public function was considered essential for a writ petition under Article 226 to lie.

15. The Learned Counsel therefore submitted the following:

a). That neither the Central Government nor any State Government exercised any control whatsoever over the administration and functioning of KRIBHCO. According to its bye-laws, the Board of Directors is the authority responsible for the management, administration, business and functioning. The Board is elected in accordance with the Bye-laws and out of the total number of Directors on the Board, only three are nominees of Government of India.

b) KRIBHCO is governed entirely by its own bye-laws and is therefore not subject to any control of the Government. Bye laws 4G, 53 and 54 (read with p.254) all demonstrate the same.

c) That KRIBHCO is a society, which was sponsored by Co-operatives leaders, interested in the welfare of Consumers. Its functions, therefore, are to ensure availability of consumer goods at reasonable prices to the masses. The functioning of the cooperative is neither controlled nor directly related to the Government.

16. After the judgment of the Constitution Bench of the Hon'ble Supreme Court which authoritatively settled this issued, it is important for us to proceed on the basis that in order to determine the exact jurisdiction of Article 226 and the authorities/persons to which it may apply, it is not necessary to establish that the entity concerned is a State or an instrumentality under Article 12. It is sufficient for the body to be discharging a public function or a public duty. Consequently we are not dealing with the pleas of either counsel in relation to KRIBHCO being 'State' under Article 12 of the Constitution.

17. We find that the arguments advanced by the learned senior counsel on behalf of the Respondents vis-à-vis the decision of a Two-Judge Bench of the Hon'ble Supreme Court in G. Bassi Reddy v. International Crops Research Institute (ICRISAT) (supra) are not applicable given the public nature of functions being performed by KRIBHCO. As regards the line in para 28 of this judgment which has been relied upon by Mr. V.P. Singh, learned Senior Counsel for KRIBHCO, a reproduction of the whole of para 28 may be required in order to appreciate the context in which the said line appears:

28. A writ under Article 226 can lie against a "person" if it is a statutory body or performs a public function or discharges a public or statutory duty (Praga Tools Corporation v. C.A. Imanual, Shri Anadi Mukta Sadguru Trust v. V.R. Rudani SCC at p.698 and VST Industries Ltd. v. Workers' Union). ICRISAT has not been set up by a statute nor are its activities statutorily controlled. Although, it is not easy to define what a public function or a public duty is, it can reasonably be said that functions are similar to or closely related to those performable by the State in its sovereign capacity. The primary activity of ICRISAT is to conduct research and training programmes in the sphere of agriculture purely on a voluntary basis. A service voluntarily undertaken cannot be said to be a public duty. Besides ICRISAT has a role which extends beyond the territorial boundaries of India and its activities are designed to benefit people from all over the world. While the Indian public may be the beneficiary of the activities of the Institute, it certainly cannot be said that ICRISAT owes a duty to the Indian public to provide research and training facilities. In Praga Tools Corporation v. C.V. Imanual this Court mandamus "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." The Court also held that: (SCC p.589, para 6)

[A]n application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute. (See Sohan Lal v. Union of India.)

Viewed as a whole, the distinguishing features of the G. Bassi Reddy case become apparent. ICRISAT was held not to have been set up under a statute "nor are its activities statutorily controlled." The position here, as already explained before, is very different. KRIBHCO is a national cooperative society with a distinct statutory character and subject to statutory controls. In this context a useful reference may be made to the decision of the Hon'ble Supreme Court in Gayatri De v. Mousumi Cooperative Housing Society Ltd. where after noticing G. Bassi Reddy (supra) a three-Judge Bench of the Hon'ble Supreme Court proceeded to hold that a special officer appointed by the High Court to discharge functions of the housing cooperative society should be regarded as a public authority and that accordingly writ petition against the society would be maintainable.

We do not find that the decision of this Court in J.S. Arneja v. National Cooperative Consumers Federation of India (supra) is applicable to the instant case since proving deep or pervasive control, whether structural or financial is not a relevant factor in establishing that KRIBHCO is 'State' so as to be subject to the writ jurisdiction of this Court. Reiterating what we have found above, we hold that the question of Article 226 of the Constitution being applicable to KRIBHCO is not in any way dependent on it being 'State' under Article 12 of the Constitution at all. It is settled law vide the decision of the Hon'ble Supreme Court in the case of Zee Telefilms Ltd. v. UOI where a Constitution Bench of the Supreme Court held that when a private body exercises public functions even if it is not a state, the aggrieved person not only has a remedy under ordinary law but also under the Constitution by way of a writ petition under Article 226.

18. The relevant position of law as laid down by a Constitution Bench of the Hon'ble Supreme Court while considering the functions performed by the BCCI in the Zee Telefilms case read as follows:

31. Be that as it may, it cannot be denied that the Board does discharge some duties like the selection of an Indian cricket team, controlling the activities of the players and others involved in the game of cricket. These activities can be said to be akin to public duties or State functions and if there is any violation of any constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a petition under Article 32. But that does not mean that the violator of such right would go scot-free merely because it or he is not a State. Under the Indian jurisprudence there is always a just remedy for violation of a right of a citizen. Though the remedy under Article 32 is not available, an aggrieved party can always seek a remedy under the ordinary course of law or by way of a writ petition under Article 226 of the Constitution which is much wider than Article 32.

19. While examining and relying on the decision in Anadi Mukta Sadguru (supra) and the notion of public functions and public duties, the Supreme Court in Zee Telefilms further held that:

33. Thus, it is clear that when a private body exercises its public functions even if it is not a State, the aggrieved person has a remedy not only under the ordinary law but also under the Constitution, by way of a writ petition under Article 226.

We, therefore, hold that the decision in R.K. Mishra & Others (supra) is no longer good law in view of Zee Telefilms judgment and rely on the position of law as discussed above and laid down in the Zee Telefilm case (supra).

20. The Respondents have also placed reliance on the decision in Chini Mills case which we feel is clearly distinguishable from the instant case. We do not feel that the decision in Chini Mills can be applied squarely firstly since the Mill was a private company and in the instant case, KRIBHCO is a Cooperative which has 67% per cent shares owned by the Government. Secondly, in Chini Mills, manufacture was the only activity being performed, which could not reasonably be said to constitute a public function. KRIBHCO on the other hand is involved in various other activities such as providing services to Apex-level Cooperatives as well as grass-root level societies, facilitating welfare Schemes and Programmes for upliftment of the farming community and community welfare apart from the manufacture and production of fertilizers which clearly indicates public interest. We have also noted that 67% of the share capital in KRIBHCO is held by the Government of India. Mr. Singh submitted that the proposal for divesting the Government's shareholding has already been mooted. However, for the purpose of this appeal we are concerned with the current shareholding of KRIBHCO by the Government which is indisputably 67%.

21. Apart from the above factors, the following factors indicate clearly that KRIBHCO indeed performs a public function or a duty:

a. In an advertisement dated 13.01.2003 in the Hindustan Times regarding the disinvestment of the Government of India's equity in NFL and other fertilizer companies there is an express reference to KRIBHCO being a "premier fertilizer producing cooperative under the administrative control of the Department of Fertilizers, Government of India.

b. KRIBHCO is a National Cooperative Society and is listed as such in the Second Schedule of the Multi-State Cooperative Societies Act, 1984.

c. On a perusal of KRIBHCO's investments from the 23rd Annual Report 2002-2003 we see that KRIBHCO has made substantial investments in companies such as IFFCO-Tokio General Insurance Company and Gujarat State Energy Generation Limited among others.

d. KRIBHCO has established many Community Development Programmes, which look after the welfare of the community at large in adopted villages and tribal areas. KRIBHCO has adopted 72 villages, which include 6 Scheduled Caste, and 5 Scheduled Tribe dominated villages.

e. In addition to the above, KRIBHCO is also involved in construction activities in various schools (such as constructing halls and computer labs), free distribution of study materials to students of schools and continuing services such as supply of drinking water.

f. With respect to their Marketing activities, KRIBHCO supply their products to Apex-level Cooperative institutions in most states and also supply their products to grass-root level societies in the states of U.P., Uttaranchal, Bihar, A.P., Rajasthan and Punjab helping in timely availability and increase in fertilizer consumption also contributes in making societies financially strong.

g. KRIBHCO also runs various Farmers Benefit Programmes, which facilitate transfer of latest farm technology and welfare schemes for uplifting the farming community at large.

h. Over 2002-2003 alone, over 1000 programmes such as Crop Seminars, Farmers' Meetings, Field Demonstrations, Technology Melas, Farmers Study Visits, Rural Conferences and Human health/veterinary campaigns were conducted benefiting about 3.5 lakh farmers across the country.

i. With a view to strengthening the cooperative system, 125 programmes, such as Cooperative Conferences, Workshops and State Consultative Committee meetings were conducted. Special emphasis has been given to economically weaker societies by providing farm implements, furniture, and technical assistance towards improvement in godown facilities.

j. 67% of the share capital in KRIBHCO is held by the Government.

k. KRIBHCO also runs successful Seed Multiplication Programmes that were initiated in 1991 to provide quality/certified seeds. The Programme was started in U.P. and Haryana and has now been expanded to 9 states of the country thereby demonstrating the widespread influence and general success of the Programme.

22. We are of the view that these factors all contribute to us viewing the functions of KRIBHCO as being essentially public in nature. Their scope of activities is in no way limited to manufacture and production of fertilizers but also clearly involves community development and farmer benefit. Given their activities and objectives, we hold that the activities undertaken by them are essentially public in nature. We have also taken note of the fact that since the functions being performed by KRIBHCO are clearly not limited to mere manufacture of fertilizers the Chini Mills case is clearly distinguishable. If however, KRIBHCO was merely manufacturing fertilizer and had no other public functions, apart from two-thirds of its shareholding by the Government of India, there may have been merit in the plea of Shri Singh, Senior Counsel for the Respondent that it was not amenable to the writ jurisdiction under Article 226 and the Chini Mills judgment applied to the facts of the present case.

23. We, therefore, hold that by virtue of the nature of functions being performed (essentially public) and in particular the fact that the share holding of 67% in KRIBHCO is held by the Government of India, KRIBHCO is amenable to the writ jurisdiction of this Court under Article 226 of the Constitution.

24. Since by the impugned judgment, the learned Single Judge dismissed the writ petition on the ground of maintainability, we set aside the impugned order and remand the matter to the learned Single Judge for disposal of the writ petition on merits.

25. The appeal is accordingly allowed. The impugned order dated 15th February, 2002 of the learned Single Judge is set aside. The writ petition will now be heard by the learned Single Judge on merits. The parties will appear before the learned Single Judge on 16th October, 2006 when the writ petition will be listed for directions for hearing the petition on merits. The appeal is allowed accordingly.