A sugar factory which is financially assisted by the State Government, subject to deep and pervasive State control, and performs functions of public importance, can be considered a 'state' within the meaning of Article 12 of the Constitution and an 'authority' for the purpose of issuance of writs under Article 226 of the Constitution.

Headnote:
WRIT PETITION - MAINTAINABILITY - SUGAR FACTORY - WHETHER A STATE OR AUTHORITY - ARTICLE 12 OF THE CONSTITUTION - ARTICLE 226 OF THE CONSTITUTION - SCOPE OF POWER UNDER ARTICLE 226 - PUBLIC LAW REMEDY - DOCTRINE OF PROMISSORY ESTOPPEL - APPLICABILITY.
Fact of the Case:

The petitioner-union, representing the workers of the respondent-sugar factory, filed a writ petition seeking implementation of a settlement reached between the parties, wherein the management agreed to absorb 53 workers. The management resisted the petition, contending that the writ petition was not maintainable as the sugar factory was not a 'state' or an 'authority' within the meaning of Article 12 of the Constitution, and that the union had failed to withdraw all industrial disputes as per the settlement.
Finding of the Court:

The Court held that the sugar factory was a 'state' within the meaning of Article 12 of the Constitution and an 'authority' for the purpose of issuance of writs under Article 226, considering the pervasive control and supervision exercised by the State Government and the Registrar of Co-operative Societies over the affairs of the factory. The Court further held that the writ petition was maintainable as the dispute involved a public law element and the inaction of the management was amenable to judicial review.
Issues: 1. Whether the sugar factory is a 'state' or an 'authority' within the meaning of Article 12 of the Constitution and Article 226 of the Constitution? 2. Whether the writ petition is maintainable? 3. Whether the management is justified in insisting on the withdrawal of all industrial disputes as a condition precedent to implementing the settlement? 4. Whether the doctrine of promissory estoppel is applicable in the present case?
Ratio Decidendi: 1. The Court applied the tests laid down in Ajay Hasia v. Khalid Mujib Sehravardi and Ors. (AIR 1981 SC 487) to determine whether the sugar factory could be considered a 'state' or an 'authority'. The Court found that the sugar factory satisfied the tests of financial assistance, deep and pervasive State control, and functions of public importance, and thus held that it was a 'state' within the meaning of Article 12 of the Constitution. 2. The Court held that the writ petition was maintainable as the dispute involved a public law element, namely, the pervasive control and supervision exercised by the State Government and the Registrar of Co-operative Societies over the affairs of the sugar factory. The Court relied on the decisions in Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V. R. Rudani and Ors. (AIR 1989 SC 1607) and Uttar Pradesh State Co-operative Land Development Bank Limited v. Chandra Bhan Dubey and Ors. (2002 (50) BLJR 1197) to support its conclusion. 3. The Court held that the management was not justified in insisting on the withdrawal of all industrial disputes as a condition precedent to implementing the settlement. The Court found that the settlement clearly stated that only the 53 workers concerned were required to withdraw their disputes, and that the management's demand for the withdrawal of all disputes was unreasonable and contrary to the terms of the settlement. 4. The Court held that the doctrine of promissory estoppel was applicable in the present case. The Court found that the management had made a promise to the workers to absorb them in service, and that the workers had acted on this promise by withdrawing their industrial disputes. The Court held that the management could not now be allowed to go back on its promise and that it was bound to implement the settlement.
Final Decision: The Court allowed the writ petition and issued a writ of mandamus directing the management of the sugar factory to implement the settlement and continue the 51 workers already reinstated into service, and to pay 40% of backwages, if not already paid, within a period of one month.

S. R. NAYAK, J.

( 1 ) THIS writ petition is preferred by Chitradurga District Mazdoor Sangh, trade union represented by its President calling in question the inaction of the Management of Bhadra Sahakari Sakkare karkhane Niyamita represented by its Managing Director, first respondent in the writ petition, in implementing the settlement produced as Annexure-A, dated 14-5-1998 and for a consequent direction to the management to implement the aforementioned settlement.

( 2 ) THE events leading to the filing of the writ petition be noted briefly as under: the services of members of the petitioner-Sangha, while serving as daily wagers, seasonal and regular employees in the establishment of the first respondent-factory, were terminated by the management. The concerned workmen instituted industrial disputes before the Labour Court, hubli assailing the above action of the management. When those disputes were pending before the Labour Court, the management in response to several representations made by the union and its members negotiated with the office-bearers of the union for an amicable settlement of the industrial dispute and that has ultimately resulted in a settlement dated 14-5-1998 which is sought to be implemented in the present writ proceedings. According to the union, in terms of the settlement, the management ought to have absorbed the services of 53 workmen named in the settlement.

( 3 ) OPPOSING the writ petition, the management has filed statement of objections.

( 4 ) AT the threshold, on behalf of the management, it is contended that writ petition is not maintainable for the first respondent-sugar factory could not be regarded as a "state" within the meaning of Article 12 of the Constitution nor an "authority" for the purpose of issuance of writs or orders under Article 226 of the Constitution. It is further contended by the management that the union, in terms of the settlement dated 14-5-1998, ought to have withdrawn the industrial dispute with regard to all workmen numbering 124 whereas union has withdrawn dispute concerning only 53 workmen and since the union has failed to stand by its solemn promise, it is not entitled to seek mandamus at the hands of this Court to implement the terms of the settlement which are favourable to its members without performing reciprocal obligations.

( 5 ) SINCE the preliminary objection raised by management goes to the root of the matter, it is appropriate that the Court should deal with that question in the first instance. Article 12 reads thus: "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".

( 6 ) THE question as to under what circumstances private bodies like a Company, or a Corporation or a Society could be considered to be 'other authorities' within the meaning of that term occurring in Article 12 of the Constitution of India arose for decision before the Apex Court in ajay Hasia v. Khalid Mujib Sehravardi and Ors. AIR1981 SC 487 , (1981 )I LLJ103 SC , (1981 )1 SCC722 , [1981 ]2 SCR79 , 1981 (2 )SLJ651 (SC ) A constitution Bench of the Supreme Court, on an in-depth and comprehensive treatment of the question and on consideration of its earlier decision in Ramana Dayaram Shetty v. The international Airport Authority of India and Ors. , AIR1979 SC 1628 , (1979 )II LLJ217 SC , (1979 )3 SCC489 , [1979 ]3 SCR1014 evolved certain tests for determining as to when a Corporation or a Company or a Society can be said to be an 'instrumentality or an agency of the State'. Paragraph 9 of the said judgment reads" the tests for determining as to when a Corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in the International Airport authority's case, supra. These tests are not conclusive or cl

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2003 Supreme(Kar) 195

Cases Referred (2)