1. The short question which arises for consideration in this revision is whether a co-operative society can be construed to be an authority controlled by the State Government within the ambit of S. 41A of the Arbitration Act, 1940, which was introduced by way of amendment by Orissa Act 3 of 1983, so that if a dispute arises where such society is a party to the dispute then the reference is to be made to the Arbitration Tribunal in accordance with the said provision of the Arbitration Act, 1940 (for short ‘the Act’).

2. Opposite party No. 1 is a contractor and had entered into an agreement with the petitioners for construction of some factory buildings in the spinning mills of the petitioners at Tora in the district of Sambalpur. In respect of execution of the said work, dispute arose and opposite party No. 1 wanted that the matter should be referred to an arbitrator invoking the arbitration clause in the agreement. Petitioner No. 1 was of the view that the arbitration can be made only by the Tribunal under S. 41A of the Act and not by anybody else. Opposite party No. 1, however, nominated one Superintending Engineer, who is opposite party No. 2, as the Arbitrator. An application was then filed on behalf of opp. party No. 1 before the Civil Court under S. 28(1) of the Act for extension of time of the arbitrator which was registered as Misc. Case No. 100 of 1984. The petitioners appeared before the learned Subordinate Judge and took the stand that the dispute should be referred to the Arbitration Tribunal under S. 41A of the Act. The said contention of the petitioners having been rejected by the learned Subordinate Judge, they have approached this Court.

3. The sole contention of Mr. Nanda, learned counsel for the petitioners, is that in the petitioners' society the State Government has more than 70% paid up share capital and the Government has full control over the administration and management of the society. The various provisions of the Bye-Laws of the society unequivocally indicate that the Government has all pervasive control over the affairs of the society and, therefore, the society must be held to be an authority controlled by the State Government and consequently S. 41A of the Act must apply.

4. S. 41A, sub-sec. (1) which is relevant for this case is extracted below:

“41A. Constitution of and reference to the Arbitration Tribunal.

(1) Notwithstanding anything contained in this Act or in any contract or any other instrument, but without prejudice to the provisions contained in S. 47, in all cases where the State Government, a local or other authority controlled by the State Government, a statutory corporation or a Government Company is a party to the dispute, all references to arbitration shall be made to the Arbitration Tribunal.”

According to the petitioners, the petitioners' society comes within the expression ‘other authority controlled by the State Government’. The aforesaid expression has not been defined in the Act. The learned counsel for the opposite parties on the other hand contended that in view of the Full Bench decision of this Court in the case of Banabihari Tripathy v. Registrar of Co-operative Societies, Orissa, (1989) 67 Cut LT 5 (AIR 1989 Orissa 31), a co-operative society cannot be held to be an authority within the meaning of Art. 12 of the Constitution so as to be amenable to the jurisdiction of the High Court under Art. 226 of the Constitution and the same analogy would apply for coming to the conclusion that it would not be an authority controlled by the State Government. According to Mr. Nanda, learned counsel for the petitioners the definition of ‘State’ in Art. 12 though uses the expression ‘other authorities within the territory of India or under the control of the Government of India’ to be included in the State, the enunciation of law with regard to that expression occurring in Art. 12 will have no application while interpreting the expression ‘other authority controlled by the State Government’ under S. 41A of the Act, and, therefore, the Full Bench decision on which reliance has been placed by the learned counsel for the opposite party is of no application.

5. Art. 12 of the Constitution defines ‘State’ to mean:

“Unless the context otherwise requires, ‘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.”

S. 41A of the Act which has come up for consideration in this case also uses the expression ‘other authority controlled by the State Government’. Therefore, the expression used in Art. 12 of the Constitution is almost similar to that used in S. 41A of the Act and consequently, the ratio of several decisions explaining the meaning of the aforesaid expression in Art. 12 will have a great bearing in interpreting the same expression used in S. 41A of the Act.

6. In the Full Bench case of this Court, the question for consideration was whether a co-operative bank which is a co-operative society acquires the status of an authority controlled by the State within the meaning of Art. 12 so as to be amenable to the writ jurisdiction of the High Court or not. This Court answered the said question to the effect that if the said society is born under or created by statute, then it may acquire the status of an ‘authority’ within the meaning of Art. 12 of the Constitution. Otherwise, it has to satisfy the essential tests formulated by the various decisions of the Supreme Court for which, however, there cannot be a strait jacket formula. However, it may not be necessary that the society must satisfy all the tests for qualifying to be an ‘authority’ and in a given case, only some of the prominent features may give it that status. But that must be so predominant that on tearing the veil, it may appear that the society is merely a projection of the State, the voice being that of the State and the hands also of the State. This Court observed that whether a society would come within the expression ‘authority controlled by the Government or not’ the same has to be examined in the light of the tests indicated by the Supreme Court in the cases of Som Prakash Rekhi v. Union of India, AIR 1981 SC 212 and Ajay Hasia v. Khalid Mujid Sehravardi, AIR 1981 SC 487. In Som Prakash Rakhi's case referred to supra, where the Supreme Court was considering the status of Bharat Petroleum Corporation Ltd., five tests had been laid down and they are as follows:

(1) If the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.

(2) Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.

(3) Whether the corporation enjoys monopoly status which is State conferred or State protected.

(4) If the functions of the corporation are of public importance and, closely related to Government functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.

(5) 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.

In fact these principles were enumerated in the well-known case commonly called ‘The International Airport Authority's case’, AIR 1979 SC 1628 and were quoted in Ajay Hasia's case referred to supra. Bearing in mind the aforesaid tests, would now examine the relevant Bye-Laws of the society and other provisions to find out as to whether and to what extent they apply.

7. So far as the management of the society is concerned, Bye-Law 14 vests the management with a Board of Directors consisting of fifteen members of whom three would be nominated by the State Government, two nominated by the financial institutions giving term loan, eight elected by the governing body and an additional Registrar of co-operative societies or his nominee is an ex officio member. Further, the Managing Director is to be nominated by the State Government. Thus, in the Board the number of persons nominated by the Government are only five though of course the Managing Director is nominated by the Government. This being the position it cannot be said that the management of the society is controlled by the Government. There is no material to come to conclusion that the entire expenditure of the society is met by the financial assistance of the State Government. No monopoly status has been conferred on the society. Neither it can be said that the functions of the society are related to Government functions. The only other important factor for consideration is whether there is deep and pervasive State control. In support of his contention that the State has deep and pervasive control Mr. Nanda for the petitioners took me through Bye-Laws 17, 21 and 24 as well as Ss. 35 and 53 of the Co-operative Societies Act. There is no doubt that the Registrar exercises some control over all the co-operative societies. The provisions of the Bye-Laws referred to by Mr. Nanda are the powers of different State officials with regard to the management and affairs of the society. According to Mr. Nanda, the Managing Director being nominated by the State Government and the said Managing Director having powers of appointment and dismissal, it must be held that the State Government has deep and pervasive control. I am unable to accept the aforesaid contention. The control of the Registrar over all the societies under the Co-operative Societies Act is regulatory in nature. The society is not a statutory body, but created under the Statute to do functions in accordance with the provisions of the Statute. It has its own independent existence and the management of the society vests in a body and not in the State, though in the said body State might have its own nominated members. Basically, the management is under the effective control of a committee majority of whom are elected members of the society.

8. In this view of the matter, in my considered opinion, the petitioners' society cannot be construed to be an authority under the control of the State Government within the said expression used in S. 41A of the Act and accordingly, the dispute in question is not required to be referred to the Arbitration Tribunal. The conclusion of the learned Subordinate Judge is, therefore, wholly justified and does not require any interference by this Court.

9. In the result, this civil revision accordingly, fails and is, therefore, dismissed; but in the circumstances there would be no order as to costs.

Petition dismissed.