TMI Blog2010 (4) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... itizen is entitled to enforce his right to ask for information only from a public authority as defined in section 2( h ) and not from bodies, which are not public authorities. 2. Section 2( h ) of the Act reads as under: "2( h ) "public authority" means any authority or body or institution of self-government established or constituted ( a )by or under the Constitution; ( b )by any other law made by Parliament; ( c )by any other law made by State Legislature; ( d )by notification issued or order made by the appropriate Government, and includes any ( i )body owned, controlled or substantially financed; ( ii )non-Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government;" 3. Section 2( h ) of the Act consists of two parts. The first part states that public authority means any authority or body or institution of self-government established or constituted by or under the Constitution, by any enactment made by the Parliament or the State Legislature or by a notification issued or order made by the appropriate Government. The second part starts from the word includes and states the term publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f control, or ownership, the intention here was that the irrespective of the constitution ( i.e., it might not be under or by a notification), if there was substantial financing, by the appropriate Government, and ownership or control, the body is deemed to be a public authority. This definition would comprehend societies, co-operative societies, trusts, and other institutions where there is control, ownership, (of the appropriate Government) or substantial financing. The second class, i.e., non-Government organization, by its description, is such as cannot be "constituted" or "established" by or under a statute, or notification. 46. The term "non-Government organization" has not been used in the Act. It is a commonly accepted expression. Apparently, the expression was used the first time, in the definition of "International NGO" (INGO) in Resolution 288 (X) of ECOSOC on February 27, 1950 as "any international organization that is not founded by an international treaty". According to Wikipedia http://en.wikipedia.org/wiki/Nongovernmental_organization..accessed on 28-12-2009 @19:52 hrs.) ...Non-Government Organization (NGO) is a term that has become widely accepted as referr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ody is an impermanent one, are not material. Equally, that the institution or organization is not controlled, and is autonomous is irrelevant; indeed, the concept of non-Government organization means that it is independent of any manner of Government control in its establishment, or management. That the organization does not perform - or predominantly perform - "public" duties too, may not be material, as long as the object for funding is achieving a felt need of a section of the public, or to secure larger societal goals. To the extent of such funding, indeed, the organization may be a tool, or vehicle for the executive Government s policy fulfilment plan. This view, about coverage of the enactment, without any limitation, so long as there is public financing,...." [Emphasis supplied] 5. I have referred the second part of section 2( h ) of the Act and the aforesaid judgment, as these are relevant to the present case and give an indication of the legislative intent while defining the term public authority . It is obvious that the term public authority has been given a broad and wide meaning not only to include bodies which are owned, controlled or substantially financed di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India; and we do not see any reason to narrow down this meaning in the context in which the words "other authorities" are used in Article 12 of the Constitution. 6. In Smt. Ujjam Bai v. State of Uttar Pradesh Ayyangar, J., interpreting the words "other authorities in Article 12 held: Again, Article 12 winds up the list of authorities falling within the definition by referring to "other authorities" within the territory of India which cannot obviously be read as ejusdem generis with either the Government and the Legislatures or local authorities. The words are of wide amplitude and capable of comprehending every authority created under a statute and functioning within the territory of India or under the control of the Government of India. There is no characterisation of the nature of the authority in this residuary clause and consequently it must include every type of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andamus etc. or any of them for the enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose. But it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. Thus, an application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute. ( See Sohan Lal v. Union of India ). In Regina v. Industrial Court mandamus was refused against the Industrial Court though set up under the Industrial Courts Act, 1919 on the ground that the reference for arbitration made to it by a Minister was not one under the Act but a private reference. "This Court has never exercised a general power" said Bruce, J. in R. v. Lawisham Union "to enforce the performance of their statutory duties by public bodies on the application of anybody who chooses to apply for a mandamus. It has always required that the applicant for a manda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their functions through instrumentality of agency of a corporation and excluding the same. It was accordingly observed in paragraph 11 of the judgment as under: "11. We may point out that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is borne but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government Company or a Company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute. Whatever be its genetically origin, it would be an "authority" within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a Company or society and in a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant factor ... whether the corporation enjoys monopoly status which is State conferred or State protected. (SCC p. 508, para 15) (4)Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p. 508, para 15) (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. (SCC p. 509, para 16) (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. (SCC p. 510, para 18) If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority case, be an "authority" and, therefore, State within the meaning of the expression in Article 12." 12. Conflict between Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi [1975] 1 SCC 421 and Sabhajit Tewary v. Union of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest. This may happen in a wide variety of ways. For instance, a body is performing a public function when it provides public goods or other collective services, such as health care, education and personal social services, from funds raised by taxation. A body may perform public functions in the form of adjudicatory services (such as those of the criminal and civil Courts and Tribunal system). They also do so if they regulate commercial and professional activities to ensure compliance with proper standards. For all these purposes, a range of legal and administrative techniques may be deployed, including rule making, adjudication (and other forms of dispute resolution); inspection; and licensing. Public functions need not be the exclusive domain of the State. Charities, self-regulatory organisations and other nominally private institutions (such as Universities, the Stock Exchange, L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed and are performing what are regarded as governmental or public functions. Pervasive and deep control of the Government is not necessary. What are public functions has been examined above with reference to De Smith, Woolf and Jowell in the book Judicial Review of Administrative Action, Fifth Edition. An institution which performs public functions and has been created for discharging public or statutory duties as distinguished from private functions can be an institution of self-government . 16. Law Lexicon, P. Ramanatha Aiyar, 2nd edn., 1997 defines body as "a number of individuals spoken of collectively, usually associated for a common purpose, joined in a certain cause or united by some common tie or occupation, as, legislative body, the body of clergy; a body corporate." Authority or institution of self-government are sub-species and can be included in the term body . The terms authority or institution of self-government are restrictive/narrower than the term body . Nature and type of the activity undertaken by a body is not of primary concern or importance. The term body is extremely wide and unless a purposive interpretation is given, keeping in min ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed not be satisfied and are not required to be examined. In Indian Olympic Association s case ( supra ), clause ( ii ) has been interpreted to include private non-Government organisations that are substantially financed, directly or indirectly from Government funds. Again for clause ( ii ) requirements of conditions ( a ) to ( d ) are not required to be satisfied. Read in this manner the term body means an organisation which is owned or controlled or substantially financed directly or indirectly by the Government. The three conditions, i.e., owned, controlled, substantially financed are distinct in alternative and not cumulative. The nature and type of activity and functions undertaken by the organisation are inconsequential and immaterial. If a body satisfies requirements of clause ( i ) or ( ii ), conditions ( a ) to ( d ) need not be satisfied. Thus, when second part of section 2( h ) applies, satisfaction of conditions mentioned in ( a ) to ( d ) need not be examined. 18. Learned counsel for the petitioner laid considerable emphasis on the words "established" and "constituted" and the requirements specified in ( a ) to ( d ) of part one of the section 2( h ). It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nization is set up but a subsequent act or acts which will have the effect of conferring on an organization or a body, a special status and constitute a body with status of an authority or institution of a self-government for the purpose of section 2( h ) of the Act. A private institution or a body may be incorporated or formed by acts of private persons but subsequent statutory enactment or an order or notification issued by the appropriate Government can result in constitution and conferring upon the said body, status of an authority or an institution of self-government . For example, a private or a public company upon incorporation may be a body but not an authority or institution of self-government but subsequently an enactment, order or notification can result in its constitution as an authority or institution of self-government which was not in existence till the enactment, notification or order was made. An organisation in existence can be constituted or established as an authority or institution of self-government by a subsequent enactment or order/notification. A private company upon its incorporation or registration does not become an authority or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There can be bodies which are established or constituted by or under the Constitution or by statutory enactment or by a notification or order issued by appropriate Government. These bodies will be public authorities if they are like authorities or institutions of self-government . Further, the second part of the definition clause which starts with the words "includes" and expands the term "bodies" is not with reference to the establishment or constitution or conditions ( a ) to ( d ) but with reference to body owned, controlled or substantially financed directly or indirectly by funds of appropriate Government or even private bodies or non-Government organizations which are substantially financed directly or indirectly by funds of appropriate Government. 24. The term appropriate Government has been defined in section 2( a ) of the Act to mean : "2. ( a ) "appropriate Government" means in relation to a public authority which is established, constituted, owned, controlled or substantially financed by funds provided directly or indirectly ( i )by the Central Government or the Union Territory administration, the Central Government; ( ii )by the State Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dern facilities for trading, clearing and settlement of securities in a transparent, fair and open manner. It was also incorporated to initiate, facilitate and undertake all such activities in relation to stock exchange, money markets, financial markets, securities markets, capital markets, etc. The third principal object is to support, develop, promote and maintain healthy market in the best interest of the investor and the general public and economy. The objects incidental and ancillary to attain the main objects read as under: "4. To apply for and obtain from the Government of India, recognition of the Exchange as a recognize stock exchange for the purpose of managing the business of purchase, sale, dealings and transactions in the securities within the meaning of the Securities Contracts (Regulations) Act, 1956 and the Rules made thereunder. 5. To frame and enforce Rules, Bye-laws, and Regulations regulating the mode and manner, the conditions subject to which the business on the Stock Exchange shall be transacted and the rules of conduct of the members of the Exchange, including all aspects relating to membership, trading, settlement, constitution of committees, delegatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the interest of the trade and also in the public interest to grant recognition to the stock exchange; it may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed. (2) The conditions which the Central Government may prescribe under clause ( a ) of sub-section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating to, ( i )the qualifications for membership of stock exchanges; ( ii )the manner in which contracts shall be entered into and enforced as between members; ( iii )the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and ( iv )the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. (3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the stock exchange is situate, and such recognition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectly by Government funds . Incorporation of a company or establishment of industry, a society or even a co-operative society by itself may not establish or create a public authority as by recognition or registration, it does not become an authority or institution of self-government or a body of the nature which is owned, controlled or substantially financed directly or indirectly by the appropriate Government . 31. The contention of the petitioner that in the present case there is no order or notification by appropriate Government but only an order passed by the Securities Exchange Board of India ( SEBI , for short) under section 4(3) and, therefore, requirements of condition ( d ) to section 2( h ) of the Act are not satisfied, is not correct. The term "appropriate Government" has been defined in section 2( a ) and the reason for incorporating the said term in section 2( h ) has been explained above. The object and purpose of using the term "appropriate Government" is to clarify the appellate avenue before whom appeals will lie. It cannot be read to water down and read down the scope of the expression "public authority" as defined in section 2( h ) of the Act. Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k exchange has been defined in section 2( j ) to mean "any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities." Section 3 provides for an application for recognition to stock exchanges. Section 4 empowers the Central Government to grant recognition to stock exchanges subject to the conditions imposed upon it upon satisfying itself that it fulfils the criteria thereof. Sub-section (2) of section 4 lays down the conditions "for the grant of recognition to the Stock Exchange may include, among other matters, conditions relating to ( i )the qualifications for membership of Stock Exchanges; ( ii )the manner in which contracts shall be entered into and enforced as between members; ( iii )the representation of the Central Government on each of the Stock Exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and ( iv )the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. 19. Recognition of the Stock Exchange under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self to the jurisdiction of SEBI without any demur whatsoever. The SEBI constituted an independent Committee and despite pendency of the writ petition before this Court arrived at its own finding. This also goes to show that not only the Central Government but also a statutory authority exercises deep and pervasive control of the Stock Exchange. It may be that it does not receive any financial assistance. But receiving the financial assistance is not the only criteria for holding that an instrumentality of the State would come within the purview of the definition of "other authorities". 21. Although, it may not be of much relevance, but we may notice that in Delhi Stock Exchange Association Ltd. v. Commissioner of Income-tax, New Delhi, 1997(3) Scale 353, the Delhi Stock Exchange itself has given out that it is being considered to be "other authorities" within the meaning of Article 12 of the Constitution of India. 22. Admittedly, its main source of revenue is from listing fees received from the listed companies. Its power to list companies flows from a statute. In doing so, it exercises a quasi-judicial function and appeal lies against its order refusing to list companies." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of action taken in good faith has been extended to Stock Exchanges which are granted only to public servants. The Central Government even can delegate its power in favour of SEBI. 31. As would be noticed hereinafter, the history shows that various legislations had been enacted for safeguarding the interests of the investors and particularly small investors. Economy of the country, one way or the other, to a large extent would depend upon the dealings of the Stock Exchange. 32. The concept that all public sector undertakings incorporated under the Indian Companies Act or Societies Registration Act for being State must be financed by the Central Government and under the deep and pervasive control thereof has undergone a sea change. The thrust, in our opinion, should be not upon the composition of the company but the duties and functions performed by it. Thus, whether the appellant is a body which exercises public function, is the primary question which should be raised and answered." 36. The aforesaid judgment of the Delhi High Court has been upheld by the Supreme Court in K.C. Sharma v. Delhi Stock Exchange [2005] 4 SCC 4 observing inter alia that the control of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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