TMI Blog2004 (11) TMI 521X X X X Extracts X X X X X X X X Extracts X X X X ..... tate particularly the Department of Food and Civil Supplies. Thus it can be fairly concluded 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. Thus 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. Appeal is allowed. - Appeal (civil) 5047 of 2000 - - - Dated:- 23-11-2004 - Y. K. Sabharwal D. M. Dharmadhikari, JJ. JUDGMENT Dharmadhikari J. The sole point that arises for decision in this appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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] 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 each 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration is an 'instrumentality' or 'agency' of the State and can claim the status of 'State' as defined in Article 12 of the Constitution. Object for which the Corporation was formed :- The object of formation of the Corporation can be gathered from a letter dated 20.3.1965 sent by Chief Secretary of the State of Uttar Pradesh to all Heads of Departments, District Magistrates and Commissioners of Divisions, District Sessions Judges and all Principal Heads of the Offices in the State of Uttar Pradesh. In the contents of the letter, the object of formation of Corporation is stated to be as under :- "I am directed to say that of late, there has been an abnormal rise in prices of almost all consumer goods, including food grains and being persons of fixed and inelastic income government servants are finding it difficult to balance their budget. One of the methods by which real and substantial relief can be given to them is to provide them with articles of daily requirement at reasonable rates. Government have, therefore, decided to set up a corporation wholly financed by government for establishing a chain of stores throughout the State for supply of essential commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er goods. vi) To make or enter into arrangements for transport, processing, manufacturing, grading, packing and distribution of consumer goods. vii) To acquire by purchase or on lease or hire or by licences or otherwise, buildings and premises required for the activities of the Corporation. viii) To lease or let on hire, mortgage, sale, pledge or transfer by licence or otherwise and lands, buildings or other property moveable or immoveable. ix) To enter into any arrangements with the Union or the State Government or any local authority or any person for the purpose of carrying out the objects of the Corporation or furthering its interests and to obtain from such government of authority or person subsiding, loans, indemnities, grants, contract licences rights, concessions, privileges or immunities which the Corporation may think it derisable to obtain and exercise and comply with any such arrangements, rights privileges and concessions. x) To erect buildings or other structures on lands acquired by the Corporation in any manner. xi) To accept gifts, donations etc., of any nature, whatsoever. xii) To lend or borrow money on such terms and conditions as it thinks fits. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Board may with the previous approval of the State Government admit any employee of the State Government as member of the Corporation." Similarly, rule 6 is also relevant and reads thus :- "The Board may, subject to its general control and supervision and subject to such restrictions as it may like to impose, delegate all or any of its powers to any one or more members of the Board. The Board may, likewise delegate any of its powers, not being the powers under clause (b), (c), (h), (i) and (k) of sub-rule 5 of rule 3 of the said Rules in favour of any officer of the Corporation or to an officer of the State Government, not below the rank of a District Magistrate (which will include an Additional District Magistrate also)." [Emphasis supplied] Similarly, rule 12 confers powers of the delegation on Executive Director in favour of any officer of the Corporation or the State. It reads thus :- "The Executive Director may, subject to his general control and supervision and such restrictions as he may like to impose delegate all or any of his powers to any officer of the Corporation or of the State Government." Rule 17 dealing with amendments of the rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od Department will provide amount up to Rs.10 crores from its trading account to the Corporation as working capital for its business and Food Department will be responsible for return of the working capital made available to the Corporation within time. The letter, however, directs the Corporation to return the said amount with interest through a cheque to Commissioner, Department of Food and Civil Supplies before 31.3.2000. On the expenditure of the working capital provided some restrictions have been placed which read thus:- "Out of this working capital, the Corporation will purchase products already approved or to be approved in future by the Product Approval Committee of U.P. State Employees Welfare Corporation constituted vide GO dated 4.9.1999. The Food Commissioner will separately maintain account for the arrangement and will ensure that it functions smoothly." Letter sent on 7.3.2001 by the Executive Director of the Corporation to all District Magistrates indicates overall control on the activities of the Corporation by the functionaries of the State. The contents of the letter directing physical verification of stocks of essential commodities in various stor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, depots and canteens run by the Corporation have been exempted from the provisions of section 4(b) of the said Act. 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the property available after satisfaction of debts and liabilities will not go to its members but shall be at the disposal of the State Government. As observed in the minority view in the case of Pradeep Kumar Biswas (supra) if the corporate mask of the registered society is removed it clearly exposes the real nature of the Corporation as entity of the State. On behalf of the Corporation, learned counsel highlighted the Constitution of the Corporation and the Articles of the Association which regulate its affairs. It is submitted that it is an autonomous body. The Corporation is not engaged in any State function of vital importance making available daily needs of the government servants which is an activity like any other commercial activity. It is also submitted that merely because there is 'patronage', encouragement, push or recognition to the Corporation of the State, it would not make it as an entity following within the definition of 'State' under Article 12 of the Constitution. We have in detail and very carefully examined the Constitution and Articles of Association of the Corporation by which it is regulated. On detailed examination of the administrative, financia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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