Telangana High Court

Ajay Chandra Sadhuneni vs The Union Of India on 22 November, 2022

Bench: P.Madhavi Devi

      THE HONOURABLE SMT. JUSTICE P. MADHAVI DEVI


                WRIT PETITION NO.14155 OF 2022

                               ORDER

In this Writ Petition, the petitioner is seeking a Writ of Mandamus

declaring the termination order passed by the 3rd respondent

dt.14.03.2022 as illegal, arbitrary, malafide, intentional, contrary to the

employment contract and in violation of principles of natural justice and

consequently to set aside the same and to pass necessary orders for the

said purpose.

2. Brief facts leading to the filing of the present Writ Petition are

that the petitioner was appointed as a Manager - People (HR) at India

Alliance of the 3rd respondent organisation after an interview. A contract

of employment was entered on 17.12.2020 and as per the terms and

conditions of the said contract, it was agreed to pay a salary of

Rs.15,00,000/- per annum to the petitioner and the contract period was

up to 31.03.2024. As per the terms and conditions of the contract, there

was a probation period which was successfully completed by the

petitioner and the said fact had been intimated to the petitioner by the 3rd

respondent on 16.09.2021 in writing. After completing the probation W.P.No.14155 of 2022

period, the petitioner was discharging his duties as HR-Manager without

any complaint from any quarter.

3. It is submitted that the 3rd respondent all of a sudden, without

assigning any reasons, terminated the services of the petitioner on

14.03.2022. It is submitted that the present CEO who has passed

termination order had joined the organisation recently after her

retirement in CCMB and she wanted to depute the persons of her choice

and therefore all of a sudden, terminated the services of the petitioner. It

is submitted that Clause-5 of the contract of employment dealt with

termination and the impugned termination order did not fit into or

conform with any of the Clauses mentioned therein. It is submitted that

only if the petitioner wants to discontinue the employment, he has to

give three months written notice, but if the respondents want to

terminate his services, it could only be upon occurrence of certain events

mentioned in Clause-5 and since none of those conditions were fulfilled,

the termination order was clearly illegal and arbitrary. It is further

submitted that after passing of the impugned order, the 3rd respondent

has not appointed anybody but the charge was given to the Personal W.P.No.14155 of 2022

Secretary of the CEO. Therefore, challenging the termination order, the

present Writ Petition has been filed.

4. At the stage of admission itself, an objection was raised about the

maintainability of the Writ Petition. Learned counsel for the petitioner,

Sri K.V. Bhanu Prasad, had submitted that the 3rd respondent is

substantially funded by Union of India and therefore it is a 'State' within

the meaning of Article 12 of the Constitution of India and hence, the

Writ Petition is maintainable. In order to examine the issue, the 1st

respondent was directed to file a note about the funding, constitution and

management of respondent No.3.

5. A counter affidavit has been filed by respondent No.2 on behalf

of respondents No.1 and 2 stating that the 3rd respondent is a Public and

Charitable Trust and was founded in the year 2008 by the Department of

Biotechnology (DBT) and the Wellcome Trust (WT) under an MoU

signed by both parties for implementation of the Biomedical Research

Career Programme in India and that the Biomedical Research Career

programme was established with the approval accorded by the Cabinet.

It is submitted that the Trust, in the current phase, is autonomous in its

operations with both funders exercising equal patronage and W.P.No.14155 of 2022

governance. It is submitted that the joint equal commitment has been up

to UK £ 16 million per year, amounting to a total of Rs.1296 Crore/UK

£ 160 million over a 10-year period. It is submitted that the said

programme was extended further for next 5 years from April 2019-20 to

March 2024 with DBT increasing its commitment to two times that of

the WT with the approval of the Cabinet. It is further submitted that the

Trust Deed signed on 09.09.2008 between the Department of

Biotechnology and Wellcome Trust empowers the Trustees to

administer and manage the Trust. It is further submitted that the Trust

shall, at all times, be managed by up to four Trustees, two each to be

appointed by the Department of Biotechnology of the Ministry of

Science and Technology, Government of India and the Wellcome Trust

or such other ratio as may be decided from time to time by mutual

agreement amongst the Settlers. It is submitted that the Trustees, in

consultation with the Settlers, may appointment a suitable person as the

Chief Executive Officer (CEO) of the Trust, who shall act upon the

directions of the Trustees. It is further submitted that the petitioner has

failed to submit sufficient evidence that the formation and functioning of

respondent No.3 are under the control and management of the

Government or that its objects and purpose in the MoU and therefore, W.P.No.14155 of 2022

this Writ Petition is liable to be dismissed against respondents No.1 and

2. The copies of the Trust Deed and the supplementary Trust Deed are

also filed along with the counter affidavit.

6. Respondent No.3 has also filed a counter affidavit raising an

objection about the maintainability of the Writ Petition stating that the

3rd respondent is not an instrumentality or agency of the State under

Article 12 of the Constitution of India so as to be amenable to writ

jurisdiction of this Court. It was submitted that the burden lies on the

petitioner to establish to the satisfaction of this Hon'ble Court that the

authority against which the relief has been claimed in this Writ Petition

by the petitioner under Article 226 of the Constitution of India, is a

'State' or 'Instrumentality of State' or an 'Agency' under Article 12 of

the Constitution of India. It is submitted that since the petitioner has

failed to show that the Government has any pervasive control in the

administration of the 3rd respondent and that it would fall within the

purview of Article 12 of the Constitution, the Writ Petition is liable to

be dismissed against all the respondents with exemplary costs.

7. In view of the above, the preliminary objection of the respondents

has to be dealt with first.

W.P.No.14155 of 2022

8. Article 12 of the Constitution of India reads as under:

"12. Definition.--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."

9. Though a constitutional or statutory authority would be within the

meaning of the expression "other authorities" in Article 12, if it has been

invested with statutory power to issue binding directions to third parties,

the disobedience of which would entail penal consequence, or it has the

sovereign power to make rules and regulations having the force of law,

and it has been recognised that the body concerned can also be

considered as "State" if it is financially, functionally and

administratively under the control of the Government and such control

must be particular to the body in question, and not general in nature and

that it is deep and pervasive and not merely regulatory, as has been held

by the Hon'ble Supreme Court in the case of Balmer Lawrie & Co.

Ltd. Vs. Partha Sarathi Sen Roy1. In the case of Zee Telefilms Vs.

(2013) 8 SCC 345 W.P.No.14155 of 2022

Union of India2, the Hon'be Supreme Court has held that the test for

whether the entity is financially, functionally and administratively under

Government control is that the control must be pervasive and not merely

regulatory. Therefore, it has to be seen whether the 3rd respondent is

financially, functionally and administratively under the Government

control to be considered as "State".

10. In the Trust Deed, the Department of Biotechnology is one of the

Settlers and along with the 3rd respondent has agreed to settle a pubic

charitable trust to receive, hold and disburse, for the purpose of funding

scientific and technological research and education in India, such

monies or money's worth, as may be agreed between the Settlers, to be

released to the Trust from time to time. As admitted by respondent No.2,

the funding was initially equal and subsequently it has been increased to

double the investment made by the 3rd respondent. Therefore,

financially, respondent No.2 is holding the financial control over

respondent No.3. As regards the control of the Trust, the Trust Deed

empowers the Trustees to administer and manage the Trust. Initially,

there were two Trustees, one each from DBT and Wellcome Trust and

(2005) 4 SCC 649 W.P.No.14155 of 2022

thereafter, number of Trustees was increased from two to four, two each

from DBT and Wellcome Trust. The ownership, management and

control of the Trust vests in these Trustees. The Trustees have power, on

passing a unanimous resolution, to amend, alter, supplement or revoke

any such rule, regulation policy or bye-law relating to the management

of the Trust. The ownership, management and control of the Trust, the

Reserve Fund, the Core Fund and any other Trust property will vest in

the Trustees. It is further submitted that the Trust shall, at all times, be

managed by up to four Trustees, two each to be appointed by

Department of Biotechnology of the Ministry of Science and

Technology, Government of India and Wellcome Trust or in such other

ratio as may be decided from time to time by mutual agreement amongst

the Settlers and unless specified otherwise, all decisions in respect of the

Trust shall be taken by a minimum of two Trustees, provided that at

least one Trustee appointed by each of the Settlers approves such

decision except those decisions in respect of the provision Sub-Clauses

3.d, 3.g, 3.j, 7.f and which shall be made on a unanimous basis. With

regard to meetings of the Trustees, it is also provided that each meeting

of the Trustees shall mandatorily require the presence of at least one

Trustee nominated and appointed by each of the Settlers.

W.P.No.14155 of 2022

11. From the above Clauses of the MoU/Trust Deed, it is clear that

respondents No.1 and 2 are functionally and administratively also

involved in the management of the Trust and without the agreement of

the Trustees of the 2nd respondent, no decision can be taken by

respondent No.3. Thus, there is both deep and pervasive control of the

2nd respondent over the management and administration of respondent

No.3.

12. Learned counsel for the petitioner, Sri K.V. Bhanu Prasad, has

placed reliance upon the Full Bench judgment of Hon'ble Delhi High

court in the case of Ar Abdul Gaffar Vs. Union of India and others3,

wherein the question was whether National Book Trust was a 'State' or

'another authority' under Article 12 of the constitution of India and it

was considered that formation of NBT was on the basis of decision of

the Government of India which decided to establish NBT and the

government is empowered to impose conditions on NBT in respect of

expenditure of grants and the Government of India is also given power

to appoint one or more persons to work and progress of Trust in such

manner as the Government of India may stipulate and the Government is

LPA No.600 of 2010 dt.01.06.2012 W.P.No.14155 of 2022

empowered to decide term of members of NBT and Representatives of

the Government participated in the meetings of the Trust. The Delhi

High Court therefore held that there is a deep and pervasive control of

the Government over the functioning of NBT and the Trust owes its

existence to the resolution passed by the government and it is primarily

run by the funds provided by the Government and therefore all

pervasive administrative control rests with the Government at every

stage and thus it is 'other authority' and thus, "State" within the

meaning of Article 12 of the Constitution of India.

13. Further, the Hon'ble Supreme court in the case of Pardeep

Kumar Biswas Vs. Indian Institute of Chemical Biology4 has also

laid down the tests of determination whether the 'Body' falls within the

definition of the 'State' under Article 12 of the Constitution of India.

14. Therefore, this Court holds that respondent No.3 is 'other

authority' and thus a 'State' within the meaning of Article 12 of the

Constitution of India and hence, the Writ Petition is maintainable.

Civil appeal No.992 of 2002 dt.16.04.2002 W.P.No.14155 of 2022

15. Coming to the merits of the issue on hand, this Court finds that

the appointment of the petitioner has been terminated by order

dt.14.03.2022 and the order has been passed by the Chief Executive

Officer. The contract of employment provides for the term of

employment up to 31.03.2024, which may be renewed at the end of

initial term upon a written agreement between the petitioner and India

Alliance. Clause 5 refers to termination and Sub-clause (i) thereof

provides for termination of appointment by the petitioner in writing by

giving not less than 3 months' written notice of termination. Sub-clause

(ii) thereof deals with the termination of services of the petitioner or any

employee by the organisation upon occurrence of any of the events

mentioned therein. Item (a) of Sub-clause (ii) is not applicable to the

petitioner, but Item (b) thereof refers to written notice stating that the

employee's employment is being terminated for the acts mentioned

therein. Item (c) thereof provides for issuance of a written notice of

termination from the India Alliance of three months, or forthwith by the

India Alliance on payment, in lieu of notice, of an amount equal to three

months instalments of the petitioner's salary, in lieu of the notice period,

for any reason deemed sufficient by the India Alliance. According to the W.P.No.14155 of 2022

learned counsel for the petitioner, the Trust Deed empowers the Trustees

only, to appoint officers and staff members to serve the Trust and to set

their conditions of service and to sanction any payments towards salaries

and expenses and also to appointment, remove or transfer, from time to

time and on such terms and conditions as they may determine, any

employee of the Trust, including Team Managers, Finance Officers,

System Managers, Administration Officers, Grants Advisors and other

officers or staff members for carrying out the activities of the Trust. It is

submitted by the learned counsel for the petitioner that it is not the

Trustees but the Chief Executive Officer of the Trust, who has

terminated the services of the petitioner and therefore, it is in violation

of the Trust Deed. He further submitted that since he does not fall in any

of the circumstances mentioned in Sub-clause (b) of Clause 5 of the

Trust Deed, the termination of the services of the petitioner even with

three months' pay in lieu of notice is not sustainable.

16. The learned counsel representing respondent No.3, Ms. Rubina S.

Khatoon, however, refuted this argument and submitted that the

appointment of the petitioner was by the then Chief Executive Officer

and therefore, the termination order signed by the Chief Executive W.P.No.14155 of 2022

Officer is also legal and valid. It is submitted that if the petitioner's

contention that it is the Trust alone which could appoint and remove the

petitioner from services is to be accepted, then his appointment itself has

to be held as invalid and therefore, the question of termination also

would not arise. She further submitted that the administration of the

Trust is entrusted to the CEO who has been appointed by the Trustees

and accordingly, respondent No.3 has exercised the powers. It is

submitted that the contract employment of the petitioner has been

terminated under Clause 5 (ii) (c) of the employment contract which

enables respondent No.3 to terminate the employment contract of the

petitioner for any reason deemed sufficient to the employer by issuing a

three-month written notice or by paying a sum equal to three months

instalments of the petitioner's salary. It is submitted that on 14.03.2022,

respondent No.3 had issued an e-mail along with formal letter of

termination, terminating the services of the petitioner in accordance with

Clause 5 (ii) (c) of the employment contract. It is submitted that the

employment contract was terminated as respondent No.3 was

reorganising its structure and a separate HR manager was no longer

needed as there were already two other HR executives working in

addition to the petitioner. It is submitted that as per the industry W.P.No.14155 of 2022

standards, the rule of thumb ratio is 1:4 full time HR staff per 100

employees and currently, respondent No.3 consists of two other HR

executives for a staff population of 40 employees and thereby, the

respondent organisation, keeping in mind the overall interests of the

organisation, was left with no other option but to terminate the services

of the petitioner as a separate HR Manager's role was no longer needed.

It is further submitted that after the termination of the petitioner's

services, there has been no new appointment made. In support of her

contention that the petitioner was informed of the reason for termination

of services by way of an e-mail dt.14.03.2022, the learned counsel for

respondent No.3 has also filed a copy of the e-mail which is addressed

to the petitioner stating as under:

"Dear Ajay, As discussed with you in the just-concluded meeting online, in the presence of Vishy, India Alliance is reorganizing and a separate HR manager is no longer part of the structure. Please find attached a formal letter of termination.