Clarification of “Deep and Pervasive” Control and Discretionary Grant-in-Aid in Social Science Research Bodies

Introduction

This Judgment, delivered by the Supreme Court of India in the case “INDIAN COUNCIL OF SOCIAL SCIENCE RESEARCH (ICSSR) v. NEETU GAUR (2025 INSC 374),” addresses a significant question regarding the nature of control exerted by a government-supported entity (ICSSR) over a private institution (CRRID) that receives grants-in-aid. The dispute arose when ICSSR withheld grants to CRRID, prompting CRRID’s employees to seek judicial intervention to secure their unpaid salaries. This Judgment clarifies two principal issues:

1. The definition and extent of “deep and pervasive” control that would render an entity amenable to certain constitutional obligations.
2. The discretionary nature of government grants to autonomous research institutions and the legal conditions under which such grants may be withheld.

The appellant, ICSSR (an instrumentality of the Government of India), and the respondents, including CRRID and its employees, advanced opposing arguments on the validity of withholding grants and on whether ICSSR effectively controlled CRRID to a degree that it should be held liable for employee salaries. The Court’s findings reaffirm that institutions set up under the Societies Registration Act, 1860, which receive government funds, are not automatically considered state-controlled entities unless they meet the stringent standard of “deep and pervasive” control.

Summary of the Judgment

The Supreme Court allowed the appeal filed by ICSSR and set aside the High Court’s orders that had directed ICSSR to release grants to CRRID in order to pay the salaries of CRRID employees. Key points are as follows:

• The Court held that the presence of one or two government nominees on CRRID’s Governing Body does not amount to “deep and pervasive” control. CRRID retains autonomy over its day-to-day financial and administrative affairs.
• ICSSR is justified in withholding grants if the recipient institution violates the grant-in-aid conditions. The fixing of staff salaries and day-to-day operations are internal matters for CRRID, not responsibilities of ICSSR.
• CRRID’s employees, being employed by CRRID and not by ICSSR, do not have any direct, enforceable right to claim their salaries against ICSSR.
• Ultimately, the Court directed CRRID to pay the withheld salaries out of its own resources and authorized ICSSR to withhold future grants if CRRID failed to comply.

Analysis

Precedents Cited

The Court invoked the principle of “deep and pervasive” control explicated in earlier Supreme Court rulings:

• S.S. Rana v. Registrar Coop. Societies and Anr. (2006) 11 SCC 634: Confirmed that regulatory or financial support alone does not translate to pervasive control.
• Chander Mohan Khanna v. NCERT (1991) 4 SCC 578: Discussed the question of whether a body receiving government funding qualifies as an instrumentality under Article 12 of the Constitution.
• Balmer Lawrie & Co. Ltd. v. Partha Sarathi Sen Roy (2013) 8 SCC 345: Reiterated that an entity must exhibit more than mere financial dependence on the government to be considered under state control.

These precedents emphasize that only if the government exerts considerable administrative and functional influence over the inner workings of an institution would that institution be deemed substantially controlled by the state or its instrumentalities.

Legal Reasoning

The Court undertook a careful reading of the rules governing both ICSSR and CRRID. It concluded that while ICSSR nominates a limited number of members to CRRID’s Governing Body—and CRRID depends heavily on ICSSR funds—this relationship does not cross the threshold into “deep and pervasive” control. Instead:

• CRRID enjoys autonomy over its day-to-day administrative decisions.
• CRRID retains the right to reject nominees from ICSSR and government agencies without disclosing reasons.
• The discretionary nature of grants-in-aid from ICSSR is affirmed by specific clauses under the Grant-in-Aid Rules—particularly Rules 3, 4, 6, 16, and 17—which allow ICSSR to withhold or withdraw grants if an institution fails to comply with stipulated conditions.

Crucially, the Court found no direct employer-employee relationship between ICSSR and CRRID’s personnel. As a private, autonomous entity receiving government support, CRRID is obliged to ensure its employees’ salaries irrespective of whether grants continue uninterrupted.

Impact

This Judgment establishes a critical precedent for government-funded institutions operating under the Societies Registration Act, 1860. It clarifies that:

1. Recipients of government grants retain independent responsibility for the welfare of their employees and operations. The burden of employee salaries cannot be shifted to the granting authority.
2. “Deep and pervasive” control is a high threshold requiring substantial involvement by the state in both financial and administrative realms. Mere appointments to governing boards or partial funding does not satisfy this threshold.
3. Government institutions or agencies have the legal right to withhold grants if the funded body breaches the conditions under which funds are disbursed, subject to fundamental fairness and due notice.

Future disputes involving government-funded institutions and their employees are likely to refer to this decision, especially on questions surrounding constitutionality, the scope of governmental involvement, and the discretionary nature of grant-in-aid.

Complex Concepts Simplified

“Deep and Pervasive” Control: In simple terms, “deep and pervasive” control means that the government not only funds, but also heavily manages and directs the day-to-day and overall policy decisions of an entity. If a body only receives monetary grants or has nominal government representation on its board, this is insufficient to prove all-encompassing state control.

Grant-in-Aid: These are funds made available by government agencies or bodies (such as ICSSR) to further certain objectives or public interests (in this case, fostering social science research). However, the institutions that receive these grants have to follow specific rules and conditions, failing which the grants can be legally withheld.

Autonomous Body under the Societies Registration Act, 1860: CRRID is registered under this Act, which allows private individuals to collectively form a society for various purposes, including educational or scientific. While these societies may accept government funds and collaborate on public projects, they are still privately governed unless proven otherwise.

Conclusion

The Supreme Court’s ruling underscores that mere financial dependence on the government or presence of government nominees on a board does not constitute “deep and pervasive” control under constitutional law. ICSSR was acting within its rights when it withheld grants to CRRID upon finding substantial irregularities in CRRID’s administration and accounting practices. CRRID’s employees, in turn, cannot look to ICSSR to meet their salary obligations, as there is no direct employment connection.

This Judgment serves as a powerful reminder that autonomous institutions must uphold all conditions tied to government grants, and that employees of those institutions cannot hold the grantor responsible for any lapses in salary or benefits. It thus brings clarity to both donors and recipients regarding their rights and responsibilities, reinforcing the notion that autonomy also carries accountability.