IMPORTANT POINT
For determining whether a body or corporation was a State or instrumentality of State, real status of body with respect to control of government will have to be looked into.

Headnote:(i) Constitution of India-Article 12-Order terminating services of respondent workmen set aside in writ petition and directions issued for regularisation of their services-Appeal-Objection that appellant co-operative society was neither State nor instrumentality or agency of State was over ruled-Point for consideration as to when a Corporation can be said to be an instrumentality or agency of Govt.-Test for determination as laid down in International Airport Authority case-Form in which body is constituted namely whether it is a society or co-operative society or a Company is not decisive-Real status of body with respect to control of government will have to be looked into-Appellant Mill found not to be a State.
       Held : From the decisions referred to above, it would be clear that the form in which the body is constituted, namely, whether it is a society or co-operative society or a company, is not decisive. The real status of the body with respect to the control of government would have to be looked into. The various tests, as indicated above, would have to be applied and considered cumulatively. There can be no hard and fast formula and in different facts/situations, different factors may be found to be overwhelming and indicating that the body is an authority under Article 12 of the Constitution. In this context, Bye Laws of the Mill would have to be seen. In the instant case, in one of the writ applications filed before the High Court, it was asserted that the Government of Uttar Pradesh held 50% shares in the Mill which fact was denied in the counter affidavit filed on behalf of the State and it was averred that majority of the shares were held by cane growers. Of course, it was not said that the Government of Uttar Pradesh did not hold any share. Before this Court, it was stated on behalf of the contesting respondents in the counter affidavit that the Government of Uttar Pradesh held 50% shares in the Mill which was not denied on behalf of the Mill. Therefore, even if it is taken to be admitted due to non traverse, the share of the State Government would be only 50% and not entire. Thus, the first test laid down is not fulfilled by the Mill. It has been stated on behalf of the contesting respondents that the Mill used to receive some financial assistance from the Government. According to the Mill, the Government had advanced some loans to the Mill. It has no where been stated that the State used to meet any expenditure of the Mill much less almost the entire one, but, as a matter of fact, it operates on the basis of self generated finances. There is nothing to show that the Mill enjoys monopoly status in the matter of production of sugar. A perusal of Bye-Laws of the Mill would show that its membership is open to cane growers, other societies, Gram Sabha, State Government, etc. and under Bye-Law 52, a committee of management consisting of 15 members is constituted, out of whom, 5 members are required to be elected by the representatives of individual members, 3 out of co-operative society and other institutions and 2 representatives of financial institutions besides 5 members who are required to be nominated by the State Government which shall be inclusive of the Chairman and Administrator. Thus, the ratio of the nominees of State Government in the committee is only 1/3rd and the management of the committee is dominated by 2/3rd non-government members. Under the Bye-Laws, the State Government can neither issue any direction to the Mill nor determine its policy as it is an autonomous body. The State has no control at all in the functioning of the Mill much less deep and pervasive one. The role of the Federation, which is the apex body and whose ex-officio Chairman-cum-Managing Director is Secretary, Department of Sugar Industry and Cane, Government of Uttar Pradesh, is only advisory and to guide its members. The letter sent by Managing Director of the Federation on 22nd November, 1999 was merely by way of an advice and was in the nature of a suggestion to the Mill in view of its deteriorating financial condition. From the said letter, which is in the advisory capacity, it cannot be inferred that the State had any deep and pervasive control over the Mill. Thus, we find none of the indicia exists in the case of Mill, as such the same being neither instrumentality nor agency of government cannot be said to be an authority and, therefore, it is not State within the meaning of Article 12 of the Constitution. (Para 8)
       (ii) Constitution of India-Article 226-Authority or a person performing public function or discharging public duty-Interference in writ jurisdiction was permissible-Appellant Mill was engaged in manufacture and sale of sugar and it would not involve any public function-Writ jurisdiction could not have been invoked. (Para 9)

JUDGMENT

B.N. Agrawal, J.-Judgment impugned in these appeals has been rendered by a Division Bench of Lucknow Bench of Allahabad High Court in special appeals upholding that passed by a learned Single Judge of that Court in writ applications filed by the workmen of Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P. (hereinafter referred to as the Mill ) whereby the same have been allowed, orders of termination of services of the workmen (hereinafter referred to as the contesting respondents ) quashed and directions have been given for regularisation of their services within a period of two years.

2. The short facts are that the Mill is a co-operative society registered as such under Uttar Pradesh Co-operative Societies Act, 1965. The contesting respondents filed various writ applications in the High Court alleging therein that they had worked on class III and IV posts in the Mill for a period ranging from 5 to 12 years. According to them, some of them were permanent workmen whereas others were seasonal. Uttar Pradesh Co-operative Sugar Factories Federation Limited (hereinafter referred to as the Federation ) is the apex body of co-operative sugar mills in the State and its function is advisory in order to safeguard operational and financial interest of the sugar mills. On 22nd November, 1999, Chairman-cum-Managing Director of the Federation, who was also Secretary to the Government of Uttar Pradesh in the Department of Sugar Industry and Cane Development, had sent a letter to General Manager of the Mill in which it was mentioned that during the course of discussion the Managing Director had with the General Manager and other officers of the Mill, it transpired that out of 708 workmen working in the Mill, 401 were surplus whose services were required to be dispensed with in view of the deteriorating financial condition of the Mill. By the said letter the Mill was advised to consider the desirability of dispensing with services of its surplus workmen. Thereupon, services of surplus workmen were dispensed with without giving any notice and paying retrenchment compensation as required under Section 6N of Uttar Pradesh Industrial Disputes Act, 1947 (hereinafter referred to as the Act ) in spite of the fact that they had worked for more than 240 days which necessitated filing of the various writ applications in the High Court.

3. Writ applications were contested by the Mill on grounds, inter alia, that the Mill, which is a co-operative society, was neither State nor instrumentality or agency of the State within the meaning of Article 12 of the Constitution of India, hence, the writ jurisdiction of the High Court could not be invoked. According to them, service conditions of the contesting respondents, who were the workmen, were governed by standing orders of the Mill and the dispute raised by them related to enforcement of rights and obligations created under the Act, as such the remedy available to them was to raise an industrial dispute under the provisions of the Act. Further ground of contest was that although the workmen had claimed to have worked between the years 1983-84 to 2000-01 but in not a single year, the Mill was operational for a period of 240 days inasmuch as the period of operation of the Mill during the aforesaid period was from 45 days to 199 days. According to them, the contesting respondents were seasonal workers and as they did not work for a period of 240 days in any year, were not entitled to claim protection under Section 6N of the Act.

4. The learned Single Judge of the High Court overruled preliminary objection raised on behalf of the Mill, came to the conclusion that the Mill, which is a society, was State within the meaning of Article 12 of the Constitution as it was instrumentality of the State and there was infraction of the provisions of Section 6N of the Act. Accordingly, the writ applications were allowed, orders of termination of the contesting respondents were quashed and it was directed that their s

Click Here to Read the rest of this document

2003 Supreme(SC) 997

IMPORTANT POINTFor determining whether a body or corporation was a State or instrumentality of State, real status of body with respect to control of government will have to be looked into.

Cases Referred (8)

IMPORTANT POINT
For determining whether a body or corporation was a State or instrumentality of State, real status of body with respect to control of government will have to be looked into.