Important pointThe U.P. Rajya Karamchari Kalyan Nigam is an ‘instrumentality and agency of the State’ in the definition of ‘State’ under Article 12 of the Constitution, amenable to the writ petition of the High Court under Article 226 of the Constitution.

Headnote:Constitution of India—Articles 12 and 226—Definition of ‘State’—U.P. Rajya Karamchari Kalyan Nigam—Whether covered by the definition of ‘State’ under Article 12 of the Constitution and is amenable to writ jurisdiction of the High Court—(Yes)—The Corporation is an ‘instrumentality and agency of the State’—Control of the State is not only ‘regulatory’ but it is ‘deep and pervasive’—The Corporation is formed with the object of catering to the needs of the government employees as a supplement to their salaries and other perks—It is amenable to the writ petition of the High Court under Article 226 of the Constitution—Order of termination of services of petitioner from the post of Salesman in Rajya Karamchari Kalyan Nigam—Writ petition filed challenging order of termination—Whether High Court was justified in dismissing the writ petition on the preliminary ground based on Article 12 of the Constitution—(No)—Case remitted to the High Court for taking a decision on merits of the case—Societies Registration Act, 1860.
       Held : The multiple test which is to be applied to ascertain the character of a body as falling within Article 12 or outside as laid down by majority view in Pradeep Kumar Biswas case (supra) is to ascertain nature of financial, functional and administrative control of the State over it and whether it is dominated by the State Government and the control can be said to be so deep and pervasive as described the minority view in Pradeep Kumar Biswas case (supra) so as to satisfy the court ‘of brooding presence of the government’ on the activities of the Corporation. (Para 16)
       From the memorandum of the Articles of Association, it is clear that one of its objects is that it can act as an agent or stockist on behalf of the government. The members and office bearers of the Corporation are all executive officers of the State representing different departments concerned with civil supplies. They are on the management of the Corporation in their capacity as officers of the State Government. In accordance with Rule 4 of the Rules of Association, other employees of the State Government can be included as members of the Corporation only with the previous approval of the State Government. In accordance with rule 6, the Board may delegate specified powers to the officers of the State Government not below the rank of District Magistrate or Addl. District Magistrate. Similarly, in accordance with rule 12, Executive Director can delegate his powers to any officers of the State Government. The rules of the Corporation can be added to, amended, varied or deleted only with prior approval of the State Government. The above mentioned objects and the provisions in the memorandum and rules of the Corporation clearly go to show that the administrative control of the Corporation vests in the Executive Officers representing different departments of the State. (Para 20)
       On detailed examination of the administrative, financial and functional control of the Corporation, we have no manner of doubt that it is nothing but an ‘instrumentality and agency of the State’ and the control of the State is not only ‘regulatory’ but it is ‘deep and pervasive’ in the sense that it is formed with the object of catering to the needs of the government employees as a supplement to their salaries and other perks. The top executives of the government department ex officio are members and office bearers of the Corporation. The Corporation is fully supported financially and administratively by the State and its authorities. Even day-to-day functioning of the Corporation is watched, supervised and controlled by the various departmental authorities of the State particularly the Department of Food and Civil Supplies. The multiple test indicated to be applied both by the majority and minority view in Pradeep Kumar Biswas (supra) is fully satisfied in the present case for recording a conclusion by us that the Corporation is covered as an ‘agency and instrumentality of the State’ in the definition of ‘State’ under Article 12 of the Constitution. It is, therefore, amenable to the writ petition of the High Court under Article 226 of the Constitution. (Para 26)
       Before parting with the case, it is necessary for us to clarify that even though a body, entity or Corporation is held to be a ‘State’ within the definition of Article 12 of the Constitution what relief to the aggrieved person or employee of such a body or entity is to be granted is a subject matter in each case for the court to determine on the basis of the structure of that society and also its financial capability and viability. The subject of denial or grant of relief partially or fully has to be decided in each particular case by the court dealing with the grievances brought by an aggrieved person against the bodies covered by the definition of ‘State’ under Article 12 of the Constitution. (Paras 27)

Judgment

Dharmadhikari, J.—The sole point that arises for decision in this appeal before us is whether U.P. Rajya Karmachari Kalyan Nigam [for short ‘the Corporation’] is covered by the definition of “State” under Article 12 of the Constitution of India and is amenable to writ jurisdiction of the High Court under Article 226 of the Constitution of India.

2. The services of the petitioner from the post of Salesman in one of the stores of the Corporation have been terminated against which he approached the High Court of Allahabad. A preliminary objection was raised by the Corporation to the maintainability of writ petition on the ground that the Corporation does not fall in the definition of “State” under Article 12 of the Constitution.

3. Relying on decisions of the Lucknow Bench of the same Court in the case of Vijay Kumar Verma vs. U.P. Government Employees Welfare Corporation [Writ Petition No. 8246 (ss) of 1992 decided on 13.4.1993], the writ petition filed by the petitioner in the High Court was dismissed as not maintainable against which the petitioner has preferred the present appeal.

4. After passing of the impugned judgments by the High Court, the scope of Article 12 came up for consideration before a Constitution Bench comprising seven judges of this Court in the case of Pradeep Kumar Biswas vs. Indian Institute of Chemical Biology [2002(5) SCC 111]. The seven judges Constitution Bench in the case of Pradeep Kumar Biswas (supra) overruled the decision of five judges Constitution Bench in the case of Sabhajit Tewary vs. Union of India [1975(1) SCC 485. By explaining and relying on Constitution Bench decision in the case of Ajay Hasia vs. Khalid Mujid Sehravardi [1981(1) SCC 722] by a majority of five against two this Court has laid down a multiple test for determining whether a particular Corporation or Body can be held to be included within the definition of “State” under Article 12 of the Constitution. Learned Sister Ruma Pal, J., expressing the opinion of majority of Judges in the case of Pradeep Kumar Biswas (supra) on re-examination of all previous cases decided by this Court on the subject, laid down the multiple test in the following words:—

“The picture that ultimately emerges is that the tests formulated in Ajay Hasia’s case (supra) 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. 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 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. [Emphasis supplied]

5. We may also refer to the minority view expressed by learned Brother Lahoti J. [as he then was] in the case of Pradeep Kumar Biswas (supra) because the examination of nature of difference in opinion between majority and minority view, for the purpose of present case, may be of some relevance. In the minority view, different tests are required to be applied in such particular case. The claim of a body as included within the definition of “State” based on it being a statutory body falling in the expression `other authorities’ is to be considered differently from claim of a body based on the principles propounded in the case of Ajay Hasia (Supra), that it is an `instrumentality or agency’ of the State. In the opinion of minority, the tests laid down in the case of Ajay Hasia (supra) are relevant only for the purpose of determining whether an entity is `an instrumentality or an agency of the State’. The minority view is expressed thus:—

“Simply by holding a legal entity to be an i

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2004 Supreme(SC) 1457

Important pointThe U.P. Rajya Karamchari Kalyan Nigam is an ‘instrumentality and agency of the State’ in the definition of ‘State’ under Article 12 of the Constitution, amenable to the writ petition of the High Court under Article 226 of the Constitution.

Cases Referred (3)