TMI Blog2002 (1) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... in rural areas by undertaking programmes to assist and promote activities for the growth of national economy which are akin and related to the public duties of the State, that out of 12 directors 5 are Government and departmental persons, besides other elected directors also are to be with the concurrence and nomination of the Government and the various other form of supervision and control, as enumerated supra, will go to show that the State Government had deep and pervasive control of the appellant-company and its day-to-day administration, and consequently confirm the position that the appellant-company is nothing but an instrumentality and agency of the State Government and the physical form of company is merely a cloak or cover for the Government. Despite best and serious efforts made on behalf of the appellant, the decision under challenge has not been shown to suffer any infirmity whatsoever to call for interference in our hands. - CIVIL APPEAL NOS. 5247 AND 5248 OF 1998 - - - Dated:- 8-1-2002 - G.B. PATNAIK AND DORAISWAMY RAJU, JJ. L. Nageswara Rao, Ranjit Kumar, K.C. Sudarshan, M.A. Chinnasamy, Jayanth Muthraj, E.M.S. Anam and Fazlin Anam for the Appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of service as well as Officers Service Rules and necessitated on account of the exigencies of work and the interests of business of the appellant-company and, therefore, not vitiated due to any mala fides or other extraneous considerations, as alleged. Since, in certain earlier decisions of the Division Bench, the appellant-company was held to be not State within the meaning of article 12 and it was considered to require reconsideration in the light of certain decisions of this Court, the matter was referred to a Full Bench for consideration. 3. Before the Full Bench, the following questions were taken up for consideration : (1) Whether the Mysore Paper Mills which is a company incorporated under the Companies Act, 1956, and which is a Government-company as defined in section 617 of the Companies Act falls within the meaning of the word State as defined in article 12 of the Constitution of India ? (2) Whether the action taken by the appellant-company transferring the second respondent to Calcutta under the memo bearing No. FPA/TRF/384, dated 27-11-1997, is vitiated by mala fides and whether it is arbitrary and illegal ? 4. On a review and consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directly and sometimes though the machinery of Karnataka State Bureau of Public Enterprises in respect of matters entrusted to it: as disclosed from the book published by the Department of Personnel and Administration Reforms of the Government of Karnataka. ( g ) Apart from the directors who are nominees of the Government and the financial institutions controlled by the Central Government even the elected directors were also to be nominated by the Government of Karnataka and one cannot become a director of the appellant-company without the concurrence or nomination by the Government. ( h )Appointment of several officers, playing vital role in the day-to-day administration of the company can be done only with the prior permission or approval of the Government of Karnataka. The general manager also may be appointed on such terms and remunerations as may be fixed, only subject to the approval of the Government of Karnataka. ( i )For any investment or expenditure above Rs. 25 lakhs the approval of the Government of Karnataka is required. Any revision of pay scales and allowances of employees and officers also have to be done only with the approval of the KSBPE. Recruitments to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factual findings were ever shown to be incorrect or unwarranted and without basis. Even this grievance is sought to be made on the basis of national level factual assumption and not by producing any material to disprove the statement recorded in the judgment that no other company than the appellant is allowed to produce newsprint in the State of Karnataka, which alone being relevant for the purpose. 7. In Praga Tools Corpn. v. C.V. Imanual [1969] 1 SCC 585, this Court declared that the person or authority on whom the statutory duty is imposed need not be a public official or an official body and further held that a mandamus can be issued to a society to compel it to carry out the terms of the statute to which it owe its constitution as well as to companies or corporations to carry out their duties enjoined by the statutes, authorising their undertakings. In Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani [1989] 2 SCC 691, this Court held that the words any person or authority used in article 12 of the Constitution of India are not to be confined to only statutory authorities and instrumentalities of the State and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would go a long way towards indicating that the corporation is an instrumentality or agency of Government . (para 14) (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 are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an 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 . If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment to constitute such Government to be the appropriate Government for purposes of section 2(1)( a ) of the Contract Labour (Regulation and Abolition) Act, 1970, and section 2( a ) of the Industrial Disputes Act, 1947, this Court adverted to the relevant decisions and after an analytical consideration of the principles therein observed as follows : "31. In interpreting the said phrase, support is sought to be drawn by the learned counsel for the contract labour from the cases laying down the principles as to under what circumstances a Government company or undertaking will fall within the meaning of State or other authorities in article 12 of the Constitution. We shall preface our discussion of those cases by indicating that for purposes of enforcement of fundamental rights guaranteed in Part III of the Constitution the question whether a Government company or undertaking is State within the meaning of article 12 is germane. It is important notice that in these cases the pertinent question is appropriateness of the Government which is the appropriate Government within the meaning of the Contract Labour (Regulation and Abolition) Act, whether, the Central or the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee taking the view that when the Government is bound to observe the equality clause in the matter of employment, the corporations set up and owned by the Government are equally bound by the same discipline. 35. In Ajay Hasia v. Khalid Mujib Sehravardi, the question decided by a Constitution Bench of this Court was : whether the Jammu and Kashmir Regional Engineering College, Srinagar, registered as a society under the Jammu and Kashmir Registration of Societies Act, 1898, was State within the meaning of article 12 of the Constitution so as to be amenable to writ jurisdiction of the High Court. Having examined the memorandum of association and the Rules of the society, the Court decided that the control of the State and the Central Government was deep and pervasive and the society was a mere projection of the State and the Central Government and it was, therefore, an instrumentality or agency of the State and the Central Government and as such an authority State within the meaning of article 12. 36. The principle laid down in the aforementioned cases that if the Government acting through its officers was subject to certain constitutional limitations, a fortiori the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of the Constitution of India. The said definition has a specific purpose and that is Part III of the Constitution, and not for making it a Government or the Department of the Government itself. This is the inevitable consequence of the other authorities being entities with independent status distinct from the State and this fact alone does not militate against such entities or institutions being agencies or instrumentalities to come under the net of article 12 of the Constitution. The concept of instrumentality or agency of the Government is not to be confined to entities created under or which owes its origin to any particular statute or order but would really depend upon a combination of one or more of relevant factors, depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be, by piercing the corporate veil of the entity concerned. 12. The indisputable fact that the appellant-company is a Government company as envisaged in section 617 attracting section 619 of the Companies Act, that more than 97 per cent of the share capital has been contributed by the State Government and the financial instit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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