Orissa High Court
Surendra Kumar Sahoo vs State Of Odisha & Others on 24 January, 2022
ORISSA HIGH COURT: CUTTACK
W.P.(C) No. 30107 of 2021,
W.P.(C) No. 31137 of 2021
And
W.P.(C) No. 41959 of 2021
In the matter of applications under Articles 226 and
227 of the Constitution of India.
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AFR
W.P.(C) No. 30107 of 2021
Surendra Kumar Sahoo ..... Petitioner
-Versus-
State of Odisha & others ..... Opp. Parties
For Petitioner : Mr. P.K. Mohanty,
Senior Advocate along with
M/s. S.B. Das and
P.K. Nayak, Advocates.
For Opp. Parties : Mr. S.N. Nayak,
Addl. Standing Counsel
W.P.(C) No. 31137 of 2021
Ranjan Kumar Prusty and others
..... Petitioners
-Versus-
Chief Executive Officer, (C.E.O.),
Tata Power Central Odisha Distribution
Limited ( TPCODL), BBSR and others ..... Opp. Parties
// 2 //
For Petitioners : M/s. B.K. Mohanty and J.
Sahu, Advocates
For Opp. Parties : None
W.P.(C) No. 41959 of 2021
Geeta Choudhury
..... Petitioner
-Versus-
The Chief Executive Officer,
Tata Power Central Odisha Distribution
Ltd (TPCODL), BBSR and another..... Opp. Parties
For Petitioner : M/s. Satyabrata Mohanty,
S.S. Mohapatra, A.K. Jena,
A.P. Rath and P. Sinha,
Advocates.
For Opp. Parties : None
P R E S E N T:
THE HONOURABLE DR. JUSTICE B.R.SARANGI
Date of Hearing: 18.01.2022: Date of Judgment: 24.01.2022
DR. B.R. SARANGI, J. A good number of writ petitions,
having been filed against different electricity
distribution companies, this Court called upon
// 3 //
learned counsel appearing for the petitioners in those
writ petitions to address this Court with regard to
their maintainability. In response, learned counsel
appearing for the petitioners in the above noted three
writ petitions participated in the process of hearing
and addressed the Court on the question of
maintainability of the writ petitions. Therefore, these
three writ petitions are taken up for consideration
with regard to their maintainability before this Court
against the distribution companies, irrespective of the
factual matrix mentioned in each of the writ petitions.
2. Mr. P.K. Mohanty, learned Senior Advocate
appearing along with Mr. S.B. Das, learned counsel
for the petitioner in W.P.(C) No. 30107 of 2021
contended that as the opposite party-Tata Power
Northern Odisha Distribution Limited (TPNODL)
performs activity of supply of electricity, which is a
duty of public nature, therefore, it is a 'State' and, as
such, the writ is maintainable as against TPNODL. To
substantiate his contention, he has relied upon the
// 4 //
judgments of the apex Court in M/s. Zee Tele Films
Ltd. and another v. Union of India and others,
(2005) 4 SCC 649 : AIR 2005 SCC 2677; North
Eastern Electricity Supply Company of Orissa Ltd
v. State of Orissa and others, 2010 (supp.-1) OLR-
919; and NESCO Power Engineers Association v.
Managing Director, NESCO, WESCO & Director,
SOUTHCO and others (W.P.(C) No. 9745 of 2010
disposed of on 18.04.2011).
3. Mr. Binaya Kumar Mohanty, learned
counsel for the petitioner in W.P.(C) No. 31137 of 2021
supported the argument advanced by Mr. P.K.
Mohanty, learned Senior Advocate appearing for the
petitioner in W.P.(C) No. 30107 of 2021. He also relied
on the judgment of this Court in National Bank for
Agriculture and Rural Development (NABARD) and
another v. Chita Ranjan Patnaik and others, 126
(2018) CLT 633.
// 5 //
4. Mr. Satyabrata Mohanty, learned counsel
appearing for the petitioner in W.P.(C) No. 41959 of
2021 also supported the contention raised by Mr. P.K.
Mohanty, learned Senior Advocate appearing for the
petitioner in W.P.(C) No. 30107 of 2021 and Mr.
Binaya Kumar Mohanty, learned counsel for the
petitioner in W.P.(C) No. 31137 of 2021. He
unequivocally contended that since TPCODL is
discharging the duties and responsibilities of
supplying electricity to the people, is performing
"public duty". Therefore, the writ petition is
maintainable against TPCODL.
5. At the outset, it is of relevance to mention
here that initially the supply of electricity, including
transmission, maintenance and distribution, was
undertaken by Orissa State Electricity Board, a
corporation created under the statute and completely
regulated by the State. Subsequently, with a view to
restructuring of the electricity industry for
rationalization of the generation, transmission,
// 6 //
distribution and supply of electricity; and for avenues
for participation of private sector entrepreneurs in the
electricity industry in the State in an efficient,
economic and competitive manner, including the
constitution of Electricity Regulatory Commission for
the State and for the matters connected therewith and
incidental thereto, the State Government, in exercise
of the powers conferred under Sub-section (5) of
Section 23 read with Section 55 of the Orissa
Electricity Reforms Act, 1955 (Orissa Act 2 of 1996) as
amended by the Orissa Electricity Reforms
(Amendment) Ordinance, 1998 (Orissa Ordinance No.
3 of 1998) and after consultation with the Grid
Corporation of Orissa Limited, made the transfer
scheme rules, for the purpose of providing and giving
effect to preparation and implementation of a scheme
for the transfer of distribution undertakings of the
Grid Corporation of Orissa Limited to the distribution
companies, called "Orissa Electricity Reform (Transfer
of undertakings, Assets, Liabilities, Proceedings and
// 7 //
Personnel of Gridco to Distribution Companies) Rules,
1998 (hereinafter to be referred as "Rules, 1998").
Accordingly, the entire State of Odisha was
divided into four distribution zones/areas for supply
of electricity and incorporated four distribution
companies, namely, WESCO, NESCO, CESCO and
SOUTHCO. As such they were performing the
essential public duty and also executing schemes
sponsored by the Central and the State Government.
These companies came into existence as per the
Rules, 1998 and were entrusted with the task of
spending the Central and State Government
assistance, while executing such schemes. Those four
distribution companies were in charge of collection of
electricity duty, which is government revenue, along
with the energy charges, collected from the customers.
They were subsidiary of GRIDCO, a wholly owned
company of the State Government, which holds 49%
share and, therefore, those companies were funded by
the State Government through the share held by the
// 8 //
GRIDCO. More so, various schemes like Accelerated
Power Development & Reform Programme (APDRP)
and Minimum Need Programme (MNP) etc. were
carried out by those distribution companies, for which
funds were provided by the State Government for
electrification work in the State.
6. For a just and proper adjudication of the
maintainability issue, the factual matrix of W.P.(C) No.
30107 of 2021, which is essential only for the purpose
of deciding the issue of maintainability, is referred to
herein below.
7. North Eastern Electricity Supply Company
of Odisha Limited (NESCO), which is one of the four
above named distribution companies and whose
against WP(C) No. 30107 of 2021 has been preferred,
was incorporated on 19th November, 1997 under the
Companies Act, 1956. Pursuant to the Odisha
Electricity Reforms Act 1995 and Odisha Electricity
Reforms Rules, 1998, all the assets of GRIDCO
// 9 //
pertaining to the distribution business in the Northern
Zone of GRIDCO comprising districts of Balasore,
Mayurbhanj, Keonjhar, Jajpur, and Bhadrak were
transferred to NESCO. On 1st April, 1999, 51% (fifty
one percent) shares of GRIDCO in NESCO were
transferred to BSES Limited selected through
competitive bidding process. NESCO continued to be
managed by BSES Limited and later by its successor
R-Infra Limited. Under Section 19 of the Electricity
Act, 2003 (the "Act, 2003"), the Commission revoked
license of NESCO with effect from March, 2015 and
appointed CMD, GRIDCO as the Administrator under
Section 20(d) of Act, 2003 and vested the management
and control of NESCO Utility along with their assets,
interests and rights with the CMD, GRIDCO Limited.
The order on revocation of licenses by the Commission
was upheld by the APTEL in Appeal No. 64 of 2015
and also confirmed by the apex Court vide order dated
24.11.2017 in Civil Appeal No.18500 of 2017. In terms
of Section 20 of Act, 2003, the Commission initiated a
// 10 //
transparent and competitive bidding process for
selection of an investor for sale of utility of NESCO
and had issued the updated Request for Proposal
("RFP") on 31.07.2020. In response to the said RFP,
single bid was received by due date. After detailed
evaluation by independent bid evaluation committee
set up by the Commission, Tata Power Company
Limited ("TPCL") was recommended as the successful
bidder and Commission accepted the same under
Section 20(1)(a) of the Act, 2003. Thereafter, the
Commission issued a Letter of Intent (the "LoI") to
TPCL vide letter dated 29.01.2021. TPCL
communicated the acceptance of the LoI vide letter
dated 05.02.021.
8. As per the terms of the RFP, upon
completion of sale, NESCO Utility shall vest in a
Special Purpose Vehicle ("Project SPV" or "Operating
Company") in which TPCL shall hold 51% (fifty one
percent) equity shares and Government of Odisha
shall hold 49% (forty nine percent) equity shares
// 11 //
through GRIDCO. The Commission, vide letter dated
29.01.2021, directed GRIDCO to incorporate the SPV,
to which the utility of NESCO shall be vested and
license of NESCO Utility shall be transferred. TP
Northern Odisha Distribution Limited ("TPNODL") will
be incorporated as a wholly owned subsidiary of
GRIDCO with an authorized share capital of Rs. 1000
crores (Indian Rupee One thousand crores) only and
paid-up capital of Rs. 5 lakhs (Indian Rupee Five
lakhs) only. TPNODL shall be the SPV, in which TPCL
and GRIDCO shall hold 51% (fifty one percent) and
49% (forty nine percent) equity shares respectively
after the completion of sale. The Commission, vide
letter dated 29.01.2021, provided GRIDCO/ OPTCL
the RFP Documents namely - Share Acquisition
Agreement, Shareholders Agreement, Bulk Supply
Agreement and Bulk Power Transmission and SLDC
Agreement for execution by concerned parties. TPCL
quoted a purchase price of Rs. 375 crores (Indian
Rupee Three hundred seventy five crores) in its
// 12 //
financial bid in response to the RFP for 100% (one
hundred percent) equity in the SPV. TPCL is required
to pay 51% (fifty one percent) of the purchase price of
Rs. 375 crores (Indian Rupee Three hundred seventy
five crores) quoted in its bid. As per terms of RFP, this
amount is required to be deposited by TPCL with the
Commission. The Commission, vide letter dated
29.01.2021 (LoI), had directed TPCL to submit the
Performance Guarantee and deposit the amount
equivalent to 51% (fifty one percent) of the purchase
price with the Commission. In compliance thereto,
TPCL vide letter dated 10.03.2021 communicated that
they have deposited Rs.191.25 (Indian Rupee One
ninety one crore and twenty five lakhs only) with the
Commission which is 51% of the bid amount of Rs.
375 crore and submitted the Performance Guarantee
of Rs. 150 crores (Indian Rupee One hundred fifty
crores) as per the directions of the Commission.
9. As a consequence thereof, TPNODL has
come to existence and carrying on business of
// 13 //
distribution of electricity in the northern part of the
State of Orissa. Similarly, in the other parts of the
State, TPCL has also entered into the agreement and
engaged in the business of distribution of electricity.
As per the terms of the RFP, upon completion of sale,
the earlier distribution company shall vest in a SPV, in
which TPCL shall hold 51% (fifty one percent) equity
shares and Government of Odisha shall hold 49%
(forty nine percent) equity shares through GRIDCO. In
view of the provisions of Section 21(a) of the Act, 2003,
the utility of NESCO shall be vested in TPNODL with
effect from 01.04.2021. As a consequence thereof, the
license, the rights and responsibilities of NESCO
utility transferred to TPNODL with effect from
01.04.2021, pursuant to the vesting order dated
25.03.2021 passed by the Orissa Electricity
Regulatory Commission in Case No. 9/2021. The
vesting order dated 25.03.2021 also clarifies with
regard to the management, funds and control over the
distribution company by the State Government
// 14 //
through GRIDCO. The petitioner in W.P.(C) No. 30107
of 2021 files an affidavit on 09.11.2021 placing the
vesting order dated 25.03.2021 on record and
thereafter by way of a memo filed on 13.12.2021
placed on record the Shareholders Agreement
between GRIDCO Limited and The Tata Power
Company Limited and TPNODL dated 1st day of April
2021, the Share Acquisition Agreement between
GRIDCO Limited and The Tata Power Company
Limited and TPNODL dated 1st day of April, 2021 and
Bulk Supply Agreement between GRIDCO Limited and
TPNODL dated 1st day of April, 2021.
10. Shareholders agreement dated 1st April,
2021 clearly signifies its utility and responsibility and
also deals with its objective under Article 2. Article-4
thereof deals with the Management of TPNODL-
Directors, Chairman, Managing Director/ Manager.
Clasue-4.1, 4.2 and 4.3 of Article-4, being relevant,
are extracted herein below:-
// 15 //
"4.1 The Board of Directors of TPNODL shall consist
of the nominees of the respective parties, i.e. GRIDCO
and TPCL in proportion to the shares held by them.
For as long as each of GRIDCO and TPCL is the
registered shareholders of ten percent (10%) or more
of the shares it shall be entitled to appoint one
Director of TPNODL for each tranche of ten percent
(10%) of the Shares of which it is the registered
holder at the relevant time and to remove and replace
such Director.
4.2 Given the shareholding of fifty one percent
(51%) by TPCL and forty nine percent (49%) by
GRIDCO, the Board of TPNODL shall consist of nine
(9) Directors nominated by Shareholders. TPCL shall
be entitled to nominate five (5) Directors whereas
GRIDCO shall be entitled to nominate four (4)
Directors. The Directors nominated by GRIDCO may
include all or any one from among the Chairman of
GRIDCO, the Principal Secretary, Department of
Energy, Government of Odisha and the Chief
Secretary, Government of Odisha as decided by the
Government of Odisha.
4.3 Any one from among Chairman of GRIDCO or
the Principal Secretary, Department of Energy,
Government of Odisha or the Chief Secretary,
Government of Odisha, who are nominated as
Directors by GRIDCO, shall be the Chairman of the
Board of Directors as decided by the Government of
Odisha. The Parties may also mutually agree to
appoint an eminent person, who is appointed as an
independent Director on the Board, as the Chairman
of the Board. In the absence of the Chairman of the
Board at any of the Board meetings, the members
personally present at such meeting shall elect one of
the Directors nominated by the GRIDCO to be the
Chairman, on a show of hands, to preside over such
meeting."
Article 5 deals with Business of TPNODL; Article 6
deals with funding; Article 7 deals with matters
requiring consent of both parties; Article 8 deals with
// 16 //
the financial policy, accounts and audit; Article 13
deals with termination; and Article 18 deals with
Mutual Cooperation.
11. Similarly, in Share Acquisition Agreement
dated 1st April, 2021 it has been clearly specified at
Clause 1.2 (a) that all references in this agreement to
statutory provisions shall be construed as meaning
and including references to any statutory
modification, amendment, consolidation or re-
engagement made after the date of this agreement and
for the time being in force. Thereby, the law which is
applicable has given effect to by virtue of this
agreement.
12. Even in the Bulk Supply Agreement dated
1st April, 2021, it is provided that they are also to be
regulated under the provisions of the law and in
definitions, it has also been specified that "Act" means
Electricity Act, 2003. Thereby, TPNODL is regulated
and guided by the existing Acts, Rules and
Regulations framed for distribution of electricity.
// 17 //
13. The petitioner in W.P.(C) No. 30107 of 2021
has also filed a memo on 18.01.2022 bringing on
record, the notifications nominating the Directors on
behalf of GRIDCO in the Board of Directors of
TPNODL, TPWODL, TPSODL and TPCODL and also
incorporated the Memorandum of Association of
TPNODL and Article of Association of TPNODL. On
perusal of the Notification dated 31st March, 2021, it
is made clear that the Principal Secretary to
Government, Energy Department, Chairman, GRIDCO
and Managing Director, GRIDCO are nominated as the
Directors to the Board of Directors of TPNODL, but
subsequently in place of Chairman, GRIDCO, the
Managing Director has been included to the Board of
Directors by notification dated 24.05.2021. Thereby
there is a pervasive control of the State over the
Management of TPNODL.
14. In the Memorandum of Association, Clause
III (b) deals with matters which are necessary for
// 18 //
furtherance of the objects specified in Clause 3 (a),
sub-clause (1) of which reads thus-
"1. To enter into any arrangement with the
government of India or the Government of Odisha,
the Orissa Electricity Regulatory Commission
("OERC") or any Local or State Government or with
authorities, national, local, municipal or otherwise or
with any person for the purpose of directly or
indirectly carrying out the objects or furthering the
interest of the Company or its members and to obtain
from any such Government, State Authority, the
OERC or other persosn any licenses, charters,
subsidies, loans, indemnities, grants, contracts,
decrees, rights, sanctions, privileges, permissions,
consents, approvals or concessions whatsoever,
(whether statutory or otherwise) which the Company
may think it desirable to obtain and to carry out
exercise and comply with the same and to do
anything which the Company is authorized or
required to do under or by virtue of any licence
granted to the Company by the OERC for attainment
of its objects."
15. In the Article of Association, it has been
clarified a public company means a company which is
not a private company and that a company, which is a
subsidiary of a company, not being a private company,
shall be deemed to be public company for the
purposes of this Act even where such subsidiary
company continues to be a private company in its
// 19 //
articles. Clasue-89 thereof deals with Shareholders'
Agreement Provisions, which reads as follows:-
"The provisions of the Shareholders' Agreements
dated April 01, 2021 among the Company, The Tata
Power Company Limited and GRIDCO Limited (as
amended from time to time) ("Shareholders'
Agreement"), a copy of which is attached as
Annexure A, shall form an integral part of the Articles
of Association of the Company, which thereby means
that in the event of any conflict or inconsistency,
between Articles 1-88 of these Articles of Association
and the Shareholders' Agreement, the provisions of
the Shareholders' Agreement will be followed."
16. Before adverting to the core issue, it is
required to take a look at Articles 12 and 226 (1) of
the of the Constitution of India, which read as under :
"12. In this part, unless the context otherwise
requires, "the State" includes the Government and
Parliament of India and the Government and the
Legislature of each of the States and all local or
other authorities within the territory of India or
under the control of the Government of India."
xxx xxx xxx
"226. (1) 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."
// 20 //
17. In Article 12, the 'State' has not been
defined. It is merely an inclusive definition. It includes
all other authorities within the territory of India or
under the control of the Government of India. It does
not say that such other authorities must be under the
control of the Government of India. The word 'or' is
disjunctive and not conjunctive. Similarly, Article 226
(1) envisages that the power of the High Court to issue
certain writs to 'any person' or 'authority' including in
appropriate cases to any Government within the
territories for enforcement of rights conferred by Part
III and for any other purpose.
18. The expression 'authority' has a definite
connotation. It has different dimensions and, thus,
must receive a liberal interpretation to arrive at a
conclusion, as to which "other authorities" could come
within the purview of Article 12 or the meaning of the
word 'authority' as mentioned in Article 226 (1).
// 21 //
19. The term "other authorities" contained
in Article 12 is not to be treated as ejusdam generis.
Similarly, the word 'authorities', as mentioned in
Article 226 of the Constitution, has to be taken into
consideration for adjudication of the matter itself.
20. In "Concise Oxford English Dictionary",
10th Edition, the word 'authority' has been defined as
under :
"1. the power or right to give orders and enforce
obedience. 2. a person or organization exerting
control in a particular political or administrative
sphere. 3. the power to influence others based on
recognized knowledge or expertise."
21. According to Corpus Juris Secundum (at
p.1290), the following are the meanings of the term
'authority':
"In its broad general sense, the word has been
defined as meaning control over; power; jurisdiction;
power to act, whether original or delegated. The
word is frequently used to express derivative power;
and in this sense, the word may be used as meaning
instructions, permission, power delegated by one
person to another, the result of the manifestations by
the former to the latter of the formers consent that
the latter shall act for him, authority in this sense in
the laws of at least one state, it has been similarly
used as designating or meaning an agency for the
// 22 //
purpose of carrying out a state duty or function;
some one to whom by law a power has been given."
"Authority, as the word is used throughout the
Restatement, is the power of one person to affect the
legal relations of another by acts done in accordance
with the others manifestations of consent to him; an
agency of one or more participating governmental
units created by statute for specific purpose of
having delegated to it certain functions governmental
in character; the lawful delegation of power by one
person to another; power of agent to affect legal
relations of principal by acts done in accordance
with principals manifestations of consent to him."
The above meaning of 'authority' has been referred to
in Steel Authority of India Ltd V. National Union
Waterfront Workers, (2001) 7 SCC 1.
22. From the above meaning, there are three
different concepts which exist for determining the
question which fall within the expression 'authorities'.
(i) The Corporations and the Societies created
by the State for carrying on its trading activities in
terms of Article 298 of the Constitution where for the
capital, infrastructure, initial investment and
financial aid etc. are provided by the State and it
also exercises regulation and control there over.
(ii) Bodies created for research and other
developmental works which is otherwise a
governmental function but may or may not be a part
of the sovereign function.
(iii) A private body is allowed to discharge
public duty or positive obligation of public nature and
furthermore is allowed to perform regulatory and
// 23 //
controlling functions and activities which were
otherwise the job of the government.
23. There cannot be same standard or yardstick
for judging different bodies for the purpose of
ascertaining as to whether it fulfills the requirements
of law therefor or not.
24. What is necessary is to notice the functions
of the Body concerned. A 'State' has different
meanings in different context. In a traditional sense, it
can be a body politic but in modern international
practice, a State is an organization which receives the
general recognition accorded to it by the existing
group of other States. Union of India recognizes the
Board as its representative. The expression "other
authorities" in Article 12 of the Constitution of India is
'State' within the territory of India as
contradistinguished from a State within the control of
the Government of India. The concept of State
under Article 12 is in relation to the fundamental
rights guaranteed by Part-III of the Constitution and
// 24 //
Directive Principles of the State Policy contained in
Part-IV thereof. The contents of these two parts
manifest that Article 12 is not confined to its ordinary
or constitutional sense of an independent or sovereign
meaning so as to include within its fold whatever
comes within the purview thereof so as to instill the
public confidence in it.
25. Article 12 must receive a purposive
interpretation as by reason of Part III of the
Constitution a charter of liberties against oppression
and arbitrariness of all kinds of repositories of power
have been conferred the object being to limit and
control power wherever it is found. A body exercising
significant functions of public importance would be an
authority in respect of these functions. In those
respects it would be same as is executive government
established under the Constitution and the
establishments of organizations funded or controlled
by the Government.
// 25 //
26. It is not that every body or association
which is regulated in its private functions becomes a
'State'. What matters is the quality and character of
functions discharged by the body and the State
control flowing therefrom.
The development of law in this field is well-
known. At one point of time, the companies, societies
etc. registered under the Indian Companies
Act and Societies Registration Act were treated as
separate corporate entities being governed by its own
rules and regulations and, thus, held not to be 'States'
although they were virtually run as department of the
Government, but the situation has completely
changed. Statutory authorities and local bodies were
held to be States in Rajasthan State Electricity
Board, Jaipur Vs. Mohan Lal & Ors. (1967) 3 SCR
377 : AIR 1967 SC 1857.
27. The concept that all public sector
undertakings incorporated under the Indian
// 26 //
Companies Act or Societies Registration Act or any
other Act for answering the description of 'State' must
be financed by the Central/State Government and be
under its deep and pervasive control has in the past
three decades undergone a sea change. The thrust
now is not upon the composition of the body but the
duties and functions performed by it. The primary
question which is required to be posed is whether the
body in question exercises "public function".
28. The expansion in the definition of 'State' is
not to be kept confined only to business activities of
Union of India or other State Governments in terms
of Article 298 of the Constitution of India but must
also take within its fold any other activity which has a
direct influence on the citizens.
29. In Rajasthan Electricity Board (supra),
the Constitution Bench of the Apex Court considered
the question whether the Electricity Board - which
was a Corporation constituted under a statute
// 27 //
primarily for the purpose of carrying on commercial
activities could come within the definition of 'State'
in Article 12. After considering earlier decisions, it was
said:
"These decisions of the Court support our view that
the expression "other authorities" in Article 12 will
include all constitutional or statutory authorities on
whom powers are conferred by law. It is not at all
material that some of the powers conferred may be
for the purpose of carrying on commercial activities".
30. It followed that since a Company
incorporated under the Companies Act is not formed
statutorily and is not subject to any statutory duty
vis-a-vis an individual, it was excluded from the
purview of 'State'. In Praga Tools Corporation V.
Shri C.A. Imanual & Ors., (1969) 1 SCC 585 : (1969)
3 SCR 773, where the question was whether an
application under Article 226 for issuance of a writ of
mandamus would lie impugning an agreement arrived
at between a Company and its workmen, the Court
held that:
"[T]here was neither a statutory nor a public duty
imposed on it by a statute in respect of which
enforcement could be sought by means of a
// 28 //
mandamus, nor was there in its workmen any
corresponding legal right for enforcement of any such
statutory or public duty. The High Court, therefore,
was right in holding that no writ petition for a
mandamus or an order in the nature of mandamus
could lie against the company".
31. In Rajasthan SEB (supra), the Constitution
Bench of the apex Court has held as follows:-
"The expression 'other authorities' in Art. 12 is
wide enough to include within it every authority
created by a statute and functioning within the
territory of India, or under the control of the
Government of India. The expression 'other
authorities' will include all constitutional or statutory
authorities on whom powers are conferred by law.
32. In Sukhdev Singh & Ors. v. Bhagatram
Sardar Singh Raghuvanshi & Ors, (1975) 1 SCC
421 : 1975 SCC, by following the said ratio, the apex
Court noted that the concept of 'State' in Article
12 had undergone "drastic changes in recent years".
The question in that case was whether the Oil and
Natural Gas Commission, the Industrial Finance
Corporation and the Life Insurance Corporation each
of which were public corporations set up by statutes
were authorities and therefore within the definition of
// 29 //
State in Article 12. The Court affirmed the decision
in Rajasthan State Electricity Board (supra) and
held that the Court could compel compliance of
statutory rules. But the majority view expressed by
A.N. Ray, CJ also indicated that the concept would
include a public authority which:
"is a body which has public or statutory duties
to perform and which performs those duties and
carries out its transactions for the benefit of the
public and not for private profit. Such an authority is
not precluded from making a profit for the public
benefit".
33. The tests propounded by Mathew, J in
Sukhdev Singh (supra) were elaborated in Ramana
Dayaram Shetty v. International Airport Authority
of India, (1979) 3 SCC 489 : AIR 1979 SC 1628 and
were re-formulated two years later by a Constitution
Bench in Ajay Hasia v. Khalid Mujib Sehravardi,
(1981) 1 SCC 722. What may have been technically
characterised as 'obiter dicta' in Sukhdev Singh and
Ramana (since in both cases the 'authority' in fact
involved was a statutory corporation), formed the ratio
decidendi of Ajay Hasia.
// 30 //
34. In Ajay Hasia (supra), the Constitution
Bench summarized the relevant tests gathered from
the decision in R.D.Shetty for determining whether an
entity is a 'State' or "instrumentality of the State" 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
indicting that the corporation is an
instrumentality or agency or 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
the State conferred or State protected.
(4) Existence of 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 of public
importance and closely related to
governmental functions, it would be a relevant
factor in classified the corporation as a
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."
It was held in Ajay Hasia that if on consideration of
the relevant factors, it is found that the Corporation is
// 31 //
an instrumentality or agency of Government, it would,
as pointed out in the International Airport Authority's
case, be an 'authority' and, therefore, 'State' within the
meaning of the expression in Article 12. The same
view has also been taken into consideration by the
apex Court in U.P.Warehousing Corporation v.
Vijay Narain, AIR 1980 SC 840.
35. On the same day that the decision in Ajay
Hasia was pronounced came the decision of Som
Prakash Rekhi v. Union of India, (1981) 1 SCC 449:
AIR 1981 SC 212. Here too, the reasoning in Ramana
was followed and Bharat Petroleum Corporation was
held to be a "State" within the "enlarged meaning
of Art.12". Sabhajit Tewary v Union of India (1975)
1 SCC 485 : AIR 1975 SC 1329 was criticised and
distinguished as being limited to the facts of the case.
It was said:
"The rulings relied on are, unfortunately, in the
province of Art.311 and it is clear that a body may
be 'State' under Part III but not under Part XIV. Ray,
C.J., rejected the argument that merely because the
Prime Minister was the President or that the other
// 32 //
members were appointed and removed by
Government did not make the Society a 'State'. With
great respect, we agree that in the absence of the
other features elaborated in Airport Authority case
the composition of the Government Body alone may
not be decisive. The laconic discussion and the
limited ratio in Tewary hardly help either side here."
36. In Tekraj Vasandi alias Basandi v.
Union of India , AIR 1988 SC 469 (paragraphs 17-A
and 20), it is held that the expression 'authority' in its
etymological sense means a body invested with power
to command or give an ultimate decision, or enforce
obedience, or having a legal right to command and be
obeyed. But in paragraph 20 the Court observed as
follows:
"In a Welfare State, as has been pointed out on more
than one occasion by this Court, Governmental
control is very pervasive and in fact touches all
aspects of social existence in the absence of a fair
application of the tests to be made, there is
possibility of turning every non- governmental
society into agency or instrumentality of the State.
That obviously would not serve the purpose and may
be far from reality."
37. In Andi Mukta Sadguru Shree Muktajee
Vandas Swami Suvarna Jayanti Mahotsav
Smarak Trust v. V.R. Rudani, (1989) 2 SCC 69, the
apex Court held as follows:-
// 33 //
"15. If the rights are purely of a private character
no mandamus can issue. If the management of the
college is purely a private body with no public duty
mandamus will not lie. These are two exceptions to
Mandamus. But once these are absent and when the
party has no other equally convenient remedy,
mandamus cannot be denied. It has to be
appreciated that the appellants-trust was managing
the affiliated college to which public money is paid
as Government aid. Public money paid as
Government aid plays a major role in the control,
maintenance and working of educational
institutions. The aided institutions like Government
institutions discharge public function by way of
imparting education to students. They are subject to
the rules and regulations of the affiliating University.
Their activities are closely supervised by the
University authorities. Employment in such
institutions, therefore, is not devoid of any public
character. * So are the service conditions of the
academic staff. When the University takes a decision
regarding their pay scales, it will be binding on the
management. The service conditions of the academic
staff are, therefore, not purely of a private character.
It has super- added protection by University
decisions creating a legal right-duty relationship
between the staff and the management. When there
is existence of this relationship, mandamus cannot
be refused to the aggrieved party.
* * *
17. There, however, the prerogative writ of
mandamus is confined only to public authorities to
compel performance of public duty. The 'public
authority' for them means every body which is
created by statute - and whose powers and duties
are defined by statute. So Government departments,
local authorities, police authorities, and statutory
undertakings and corporations, are all 'public
authorities'. But there is no such limitation for our
High Courts to issue the writ 'in the nature of
mandamus'. Article 226 confers wide powers on the
High Court to issue writs in the nature of prerogative
writs. This is a striking departure from the English
law. Under Article 226, writs can be issued to 'any
// 34 //
person or authority'. It can be issued 'for the
enforcement of any of the fundamental rights and for
any other purpose'.
* * *
19. The term 'authority' used in Article 226, in the
context, must receive a liberal meaning like the term
in Article 12. Article 12 is relevant only for the
purpose of enforcement of fundamental rights
under Art.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 person 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. No matter by what means the duty is
imposed. If a positive obligation exists mandamus
cannot be denied."
38. In para 15 of Andi Mukta Sudguru case,
the Court spelled out two exceptions to the writ of
mandamus, viz. (i) if the rights are purely of a private
character, no mandamus can issue; and (ii) if the
management of the college is purely a private body
"with no public duty", mandamus will not lie. The
Court clarified that since the Trust in the said case
was an aiding institution, because of this reason, it
discharges public function, like Government
// 35 //
institution, by way of imparting education to students,
more particularly when rules and regulations of the
affiliating University are applicable to such an
institution, being an aided institution. In such a
situation, held the Court, the service conditions of
academic staff were not purely of a private character
as the staff had super-aided protection by University's
decision creating a legal right and duty relationship
between the staff and the management.
39. Further, the Court explained in para 20 of
Andi Mukta Sudguru case that the term "authority"
used in Article 226, in the context, would receive a
liberal meaning unlike the term in Article 12,
inasmuch as Article 12 was relevant only for the
purpose of enforcement of fundamental rights
under Article 31, whereas Article 226 confers power
on the High Courts to issue writs not only for
enforcement of fundamental rights but also non-
fundamental rights. What is relevant is the dicta of the
Court that the term "authority" appearing in Article
// 36 //
226 of the Constitution would cover any other person
or body performing public duty. The guiding factor,
therefore, is the nature of duty imposed on such a
body, namely, public duty to make it exigible to Article
226.
40. In Chandra Mohan v. NCERT, AIR 1992
SC 76, in paragraph-3, the apex Court held as follows:
"It must not be lost sight of that in the modern
concept of Welfare State, independent institution,
corporation and agency are generally subject to
State control. The State control does not render such
bodies as "State" under Art.12. The State control,
however, vast and pervasive is not determinative.
The financial contribution by the State is also not
conclusive. The combination of State aid coupled
with an unusual degree of control over the
management and policies 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"."
41. The tests, which have been determined in
Ajay Hasia (supra), are also held not rigid set of
principles so that a body falling within any one of
them must be considered to be 'State'. The question in
case would be: whether on facts, the body is
financially, functionally and administratively
// 37 //
dominated by or under the control of Government and
such control must be particular to that body and
must be pervasive. Therefore, the decision in
Sabhaijit Tewary (supra) has been overruled by the 7
Bench judgment of the apex Court in Pradip Kumar
Biswas v. Indian Institute of Chemical Biology,
(2002) 5 SCC 111 and the apex Court by over- ruling
Sabhaijit Tewary (supra) held as follows:
"(1) 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 been 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 or other people- their rights,
duties, liabilities or other legal relations. It created
under a statute, then there must exist some other
statute 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
flavor and clear indicia of power- constitutional or
statutory, 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
// 38 //
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 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.
Therefore, the question whether an entity is an
"authority" cannot be answered by applying Ajay
Hasia tests.
(2) The tests laid down in Ajaya Hasia case
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."
42. In Virendra Kumar Srivastava v. U.P.
Rajya Karmachari Kalyan Nigam and another,
AIR 2005 SC 411, taking into consideration Pradip
Kumar Biswas (supra), the apex Court has held that
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
// 39 //
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'.
43. In Zee Telefilms Ltd. and another v
Union of India and others, (2005) 4 SCC 649, the
majority view of the apex Court, referring to the
guidelines laid down in Pradeep Kumar Biswas
(supra), held that for a body to be a part of 'State'
under Article 12 are:-
(1) Principles laid down 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.
(2) The Question in each case will have to be
considered on the bases of facts available as to
whether in the light of the cumulative facts as
established, the body is financially, functionally,
administratively dominated, by or under the control
of the Government.
(3) Such control must be particular to the body in
question and must be pervasive.
(4) Mere regulatory control whether under statute
or otherwise would not serve to make a body a
State.
// 40 //
The facts established in the said case shows
the following :-
1. Board is not created by a statute.
2. No part of the share capital of the Board is
held by the Government.
3. Practically no financial assistance is given by
the Government to meet the whole or entire
expenditure of the Board.
4. The Board does enjoy a monopoly status in
the field of cricket but such status is not State
conferred or State protected.
5. There is no existence of a deep and pervasive
State control. The control if any is only regulatory in
nature as applicable to other similar bodies. This
control is not specifically exercised under any special
statute applicable to the Board. All functions of the
Board are not public functions nor are they closely
related to governmental functions.
6. The Board is not created by transfer of a
Government owned corporation. It is an autonomous
body.
To these facts, applying the principles laid down by
seven Judge Bench in Pradeep Kumar Biswas
(supra), it would be clear that the facts established do
not cumulatively show that the Board is financially,
functionally or administratively dominated by or is
under the control of the Government. Thus the little
// 41 //
control that the Government may be said to have on
the Board is not pervasive in nature. Such limited
control is purely regulatory control and nothing more.
With the majority view of the apex Court, it
was held that when a private body exercises its public
functions even if it is not a part of the 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. Therefore, merely
because a non- governmental body exercises some
public duty that by itself would not suffice to make
such body a part of the State for the purpose of Article
12.
Thereby, the BCCI 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 the public duties or State functions
and if there is any violation of any constitutional or
// 42 //
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 part of the 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.
44. In K.K. Saksena v. International
Commission on Irrigation & Drainage and others,
(2015) 4 SCC 670, the apex Court held as follows:-
"The term "authority" used in Article 226 to be more
liberally interpreted that same term used in Article
12 since Article 12 is relevant only for enforcement of
fundamental rights, while Article 226 confers power
on High Courts to issue writs for enforcement of non-
fundamental rights also. Thereby, it is held even if a
person or authority does not come within the sweep
of Article 12 of the Constitution, but is performing
public duty, writ petition can lie and writ of
mandamus or appropriate writ can be issued.
However, such a private body should either run
substantially on State funding or discharge public
duty/positive obligation of public nature or is under
// 43 //
liability to discharge any function under any statute,
to compel it to perform such a statutory function."
45. In North Eastern Electricity Supply
Company of Orissa Ltd. (supra), this Court has come
to a conclusion that the said 4 distribution companies
are governed by the different rules and regulations
framed by the State Government, for supply and
distribution of electricity in the State of Orissa under
the Electricity Act, 2003 and Orissa Electricity Reform
Act, 1995, the performance of the distribution
companies and the rate of tariff to be collected by
them and regulated by OERC. Moreover, the 4
distribution companies, including the petitioner
company, are discharging governmental functions of
distribution and supply of electricity to the people of
the State, which is an essential public duty. Thereby,
held that company is a "public authority" and,
therefore, fall within the definition of "public
authority" as defined in the RTI Act.
// 44 //
46. In NABARD (supra), this Court had come to
a conclusion that taking into account the nature of
constitution of NABARD and discharge of its duties
and keeping in view the parameters provided in the
cases of Dr. S.L. Agarwal, Ajay Hasia and Pradeep
Kumar Biswas, NABARD can be construed as a 'State'
within the meaning of Article 12 of the Constitution of
India, being an instrumentality of the State and an
'authority'. Thus, writ application against NABARD is
maintainable.
47. In NESCO Power Engineers Association
(supra), which is an unreported judgment, this Court
held that the opposite parties are the creatures of the
Statute of 1995 and the distribution companies are
public utility companies formed under the Orissa
Electricity Reforms Act, 1995 to discharge the
statutory functions and their functions are also for the
general public, meaning thereby, their public duty is
to supply power to the consumers in the State of
Orissa. Hence, they come under the definition of
// 45 //
Articles 12 and 226 of the Constitution of India.
Therefore, the writ petitions are maintainable.
48. In view of the foregoing discussions, it is
made clear that though TPCL is a company, but it has
indulged in distribution of electricity in four
distribution areas of the State in different names,
such as, TPNODL, TPWDL, TPSODL and TPCODL,
and, thereby, discharging the public duty and, as
such, its management is also controlled by the State
through GRIDCO. Therefore, TPCL can be said to be
an "authority" within the meaning of Article 226 of the
constitution of India.
49. On conspectus of the facts available on
record and the propositions of law, as discussed
above, it can be safely held that the distribution
companies like TPNODL, TPWDL, TPSODL and
TPCODL, in which the Government through GRIDCO
has got 49% of equity share, whereas as TPCL has got
51% of equity share, are discharging their functions
// 46 //
under the Statute and the activities undertaken by
them are in the nature of a public duty. Therefore,
they are coming within the meaning of 'authority'
under Article 226 of the Constitution of India, if not as
'State' as prescribed under Article 12 of the
Constitution of India, and otherwise satisfy the
requirement of the law and thereby it can be held that
writ petitions are maintainable against those
distribution companies.
50. Accordingly, all the writ petitions be
segregated and listed before the assigned bench under
appropriate heading for disposal on their own merits.
..................................
DR. B.R. SARANGI,
JUDGE
Orissa High Court, Cuttack
The 24th January, 2022, ARUN/GDS
