Delhi High Court
N.K.Sharma vs All India Handloom Fabrics ... on 4 October, 2013
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) No. 6340/1998
% 4th October , 2013
N.K.SHARMA ......Petitioner
Through: None.
VERSUS
ALL INDIA HANDLOOM FABRICS MARKETING CO-OP. SOCIETY
LTD. & ORS. ...... Respondents
Through: None.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not?
VALMIKI J. MEHTA, J (ORAL)
1. This writ petition impugns the orders passed by employer-respondent
no.1 terminating the services of the petitioner. The impugned orders dated
17.4.1998 and 21.8.1998 were passed after the report of the enquiry officer
was received.
2. Respondent no.1 has contended that it is not a State. Following are
the averments in this regard made in the counter-affidavit of the
respondents:-
" I. It is submitted that Respondent-Society is a duly registered Co-
Operative Society under the Multi-State Cooperative Societies Act, 1984
and has its own byelaws to regulate its internal management,
administration and control. As such the respondent Society is not
amenable to Writ Jurisdiction. The Writ Petition is misconceived and is
not maintainable.
II. In any event, the relationship between the Respondent Co-
operative Society and its employees is such that there is no right vested in
the petitioner which is enforceable by a Writ Petition. It is well settled law
that for enforcing contractual obligations, Writ Petition is not a remedy.
III. Thus apart from the fact that there is no merit, justice or equity in
the claim of the petitioners, who has been found dishonest in his dealings,
and has been fairly dealt with in the departmental enquiry, his Writ
Petition is misconceived and is not maintainable.
IV. The prayer of the petitioner for re-instatement is misconceived as
there can be no specific enforcement of a service contract. Apart from
that, in the case of the Petitioner, there is a crisis of confidence for the
management.
V. It is submitted that the Society is engaged in purely commercial
activity in the field of handloom fabrics and is neither discharging any
governmental function nor is the society having any monopolistic
Character. There is no state control over the Society or any substantial
state funding. The Respondent Society is not a State or a local or other
authority within the meaning of Article 12 of the Constitution.
VI. As per the bye-laws, the membership of the Society consists of
State Level/Regional level Apex Handloom Weavers Co-operative
Societies (A Class), Primary level Handloom Weavers' Co-operative
Societies (B Class) and Public Trusts/Government and Government
owned/controlled organizations (C Class). The Society is not dependent
upon any State funding and the State does not have any deep and
pervasive control in the running of its affairs. As such a Writ Petition
against it in a service matter is totally misconceived.
VII. In view of the above facts present writ petition is not maintainable.
Tests have been laid down by the Hon'ble Supreme Court of India in a
number of judgments, notable being R.D.Shetty Vs. International Air
Ports Authority of India, 1979 3 SCC 489, Tek Raj Vs. Union of India,
1988 1 SCC 236 and Chander Mohan Khanna Vs. NCERT 1991 4 SCC
578, the respondent-Society does not come within the purview of the
expression "State" under Article 12 of the Constitution of India.
VIII. Society has made its own bye-laws for regularizing its own
function and management. The said bye-laws of the Society do not have a
force of Statutory and are not a law as understood under Article 13 of the
Constitution of India. Further, the services regulations framed by the
Society laying down the conditions of service of its employees do not have
the force of law or statute and are only contracts between the Society and
its employees.
IX. It is submitted that Co-operative society functioning in several
states attains the status of national cooperative society if its field of
operation extends to whole of India and vice versa. The cooperative
society mentioned in second schedule of Multistate Cooperative Societies
Act 1984 are such cooperative societies which are registered under the
Multi Unit Cooperative Societies Act, 1942 and have been acknowledged
by the Act to have the status of national cooperative society. They have
not been created under or by the statute by the union government nor they
are a limb of the state. It has been submitted that as to whether a company
or society is an instrumentality or agency of the government or not and
whether it is an authority under Article 12 of the Constitution has been set
forth and settled down by the leading judgment of the constitution bench
of the Apex Court in the case of Ajay Hasia Versus Khalid Mujib 1981
Supreme Court 487. The Apex Court after considering all the
pronouncements as well as relevant authorities have ultimately set forth
the tests for determining as to whether a company or society is a state
within the meaning of Article 12 of the Constitution. The following tests
have been laid down:
1. One thing is clear that if the entire share capital of the corporation
is held by the government, it would go 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 impregnate with governmental
character.
3. It may also be relevant factor, whether the corporation enjoys
monopoly status, which is the state conferred or state protected.
4. Existence of deep 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.
The respondent society is not covered by any of the tests making it state
within the meaning of Article 12 of the Constitution and is not amenable
to writ jurisdiction of this court.
X. It is submitted that the administrative affairs of the all India society
vest in its executive committee. The statements of the accounts are
audited and approved by the general body and sent to the central registrar
co-operative society. A close scrutiny of provisions of bye laws clearly
shows that the state has no manner of control over the society except in
accordance with the provisions of the Act itself which provides for
curbing and regulating the powers of the central registrar. Under the bye
laws the ultimate authority in all matters relating to the affairs of all India
society vests with the general body of the members. It is thus clear that
society can neither be a limb of the state nor the same has any deep and
pervasive control over its functioning.
XI. It is submitted that a similar writ petition was filed by an employee
of the respondent society dismissed from service on account of
misappropriation of funds of society before the Patna High Court against
the respondent society which was dismissed on the preliminary objection
that the respondent society is not a state within the Article 12 of the
Constitution and writ petition therefore is not maintainable. A copy of the
order passed in the writ petition Case no. 963/92 would be placed before
this Hon'ble Court.
XII. It is submitted that a similar writ petition was filed by an employee
of the respondent society for arrears of salary before the High Court of
Madras against the respondent society which was also dismissed on the
preliminary objection that respondent society is not a state within the
scope of Article 12 of the Constitution and this writ petition also therefore
is not maintainable. A copy of the order passed in the said writ petition
Case no. 15135/89 would also be produced before this Hon'ble Court.
XIII. It is submitted if an that society does not receive any financial
assistance or subsidy from the government and it runs its own business on
commercial principles, raising its own funds/resources and obtaining loans
from the financial institutions/commercial banks on commercial terms and
it does not enjoy any monopoly status in its business even according to the
bye laws the board of directors is the authority responsible for the
management, administration, business and functioning of the society. As
such it will not be a state under Article 12 of the Constitution.
XIV. The Apex Court has laid down in 1991 4 SCC 578 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 has been held that the state control, however vast and pervasive is
not determinative. That the financial contribution by the state is also not
conclusive.
XV. It is well settled that general regulations under an Act, like the
companies act or the co-operative societies act would not render the
activities of a company or a society as subject to control of the state. Such
control in terms of the provisions of the act are meant to ensure proper
functioning of the society and the state or statutory authorities would have
nothing to do with its day to day functions."
3. In view of the aforesaid facts in the counter-affidavit, and to
which no rejoinder-affidavit is filed, it is clear that respondent no.1 is not a
State and it is also not doing any public duty or public function. Respondent
no.1 does not receive strong government funding and nor is there all
pervasive governmental control as is found from the averments in the above
reproduced portions of the counter affidavit.
4. In view of the above, the respondent no.1 is held not to be a
State, nor is any public function or public duty being performed by it and
therefore, the writ petition is dismissed as not maintainable.
OCTOBER 04, 2013 VALMIKI J. MEHTA, J.
ib
