Organizer, Dehri C.D. & C.M. Union Limited v. State Of Bihar

Navaniti Prasad Singh, J.:— A Division Bench of two Hon'ble Judges of this Court, presided by Hon'ble the Chief Justice, by Order dated 6.8.2013, passed in this Letters Patent Appeal, has referred the matter to this Special Bench consisting of Five Hon'ble Judges, doubting the correctness of the Division Bench Judgment in the case of Nand Kishore Rai v. The State of Bihar, 1988 PLJR 1065, and the Full Bench Judgment of three Hon'ble Judges of this Court in the case of Rajendra Prasad Sah v. The State of Bihar, 2000 (4) PLJR 273, in respect of the issue whether a private Cooperative Society, duly registered under the provisions of the Bihar Cooperative Societies Act, 1935 (hereinafter referred to as ‘the Cooperative Act’ for brevity) not being a “State” by itself, within the meaning ascribed to it under Article 12 of the Constitution, would become a ‘State’ if the elected Managing Committee thereof is taken over and replaced by an Administrator appointed by the Registrar, Cooperative Societies, Bihar as a short term arrangement and whether under those circumstances, Writ Petition is maintainable questioning the Orders passed by the said Administrator.

2. The two Judgments referred to above, namely, Nand Kishore Rai (supra) and Rajendra Prasad Sah (supra), while dealing with the case of Bihar State Cooperative Marketing Union (BISCOMAUN), registered under the Cooperative Act, during the period of supersession, held that the Writ Petition challenging orders of the Administrator was maintainable.

3. In my view, in order to answer the reference, it would first be essential to decide the concept of ‘State’ as envisaged under Article 12 of the Constitution. The second legal issue, that is to be decided, would be the relative scope of Writ jurisdiction and/or the power to issue Writs as contemplated under Article 32 of the Constitution and Article 226 of the Constitution. As corollary to the second issue, it would be necessary to decide the distinction between the respective scope of Article 32 of the Constitution and Article 226 of the Constitution considering the scope of the concept of ‘State’ as envisaged under Article 12 of the Constitution.

4. Before proceeding further, I deem it necessary to notice salient facts of the case leading to the reference. The facts are not in dispute.

5. On 21.11.2003, the Writ Petition being C.WJ.C No. 12878 of 2003 was filed by Nawal Kishore Singh and Sushil Kumar Sinha, who were employed as Assistant and Cashier-cum-Assistant Accountant, respectively, in the Dehri Cane Development and Cane Marketing Union Limited, a Cooperative Society, registered under the provisions of the Cooperative Act. They challenged the Order dated 1.10.2003 passed by the Administrator (Respondent No. 6), appointed under Section 41(5) of the Cooperative Act, by which they were dismissed from service. This Order of Dismissal was preceded by a Notice dated 13.1.2003 as to why Departmental proceeding be not initiated against them. They replied. Thereafter, neither charges were framed nor evidence were supplied and without holding a formal Departmental proceeding, the Administrator passed the impugned Order dismissing them from service. Under these circumstances and upon these findings of fact, the Order of Dismissal dated 1.10.2003 was quashed and the Writ Petition was allowed by the Judgment and Order dated 4.2.2010 by an Hon'ble Single Judge of this Court. Being aggrieved and dissatisfied with the Judgment and Order aforesaid, the Organizer of Dehri C.D & C.M Union Limited (Respondent No. 7 in the Writ Petition) preferred an Intra-Court Appeal being L.P.A No. 746 of 2010 on 21.4.2010

6. A Division Bench, presided by Hon'ble the Chief Justice, by Order dated 22.4.2010, permitted the said Appeal to be withdrawn upon learned Counsel for the Appellant seeking leave of the Court to file a Review Application for review of the Judgment and Order dated 4.2.2010 passed in C.W.J.C No. 12878 of 2003.

7. On 21.5.2010, Civil Review No. 129 of 2010 was filed for review of the Judgment and Order dated 4.2.2010 as passed by the Hon'ble Single Judge in C.W.J.C No. 12878 of 2003. In this Review Application, the original Writ Petitioners were made Opposite Parties Nos. 8 & 9 and the Review Application was filed by the Organizer, Dehri C.D & C.M Union Limited, who, as noticed above, was Respondent No. 7 in the Writ Petition. At the review stage on behalf of the Review Petitioner, an issue was raised that the Writ Petition was not maintainable as the Cooperative was a private Cooperative Society registered under the Cooperative Act and it was not ‘State’ under Article 12 of the Constitution of India. The Court, relying on decisions in the case of Nand Kishore Rai (supra) and Rajendra Prasad Sah (supra) held, inter alia, that as the Order was passed by the Administrator, the Writ Petition was maintainable and, thus, the Court found no reason to interfere and Review the Judgment and Order dated 4.2.2010 as passed in the Writ Petition and consequently the Review Application was dismissed by Judgment and Order dated 30.3.2011

8. Thereafter, the Organizer, Dehri C.D & C.M Union Limited filed L.P.A No. 1005 of 2011, the present Intra-Court Appeal. Initially, this Appeal was filed against the Order dated 30.3.2011 passed in Civil Review No. 129 of 2010, not interfering with Judgment and Order dated 4.2.2010 passed in C.W.J.C No. 12878 of 2003, but later the Memorandum of Appeal was amended substantively challenging the Judgment and Order dated 4.2.2010 as passed in the Writ Petition. After condoning the delay in course of hearing at the stage of admission and after appearance of private Respondents Nos. 6 & 7 who, were the original Writ Petitioners, issue of maintainability of the Writ Petition being raised, that by Order dated 6.8.2013 the matter has been referred to the Special Bench as noted above.

9. As before the Division Bench in Appeal so before this Special Bench Shri Bindhyachal Singh, learned Counsel for the Appellant, would submit that the Cooperative in question was a private Cooperative exercising no public function even though ex-officio Chairman of the Managing Committee was the Sub-Divisional Officer, Dehri, District Rohtas. The rest of the Members of the Managing Committee as constituted under By-law 31 were Members to be elected at the Annual General Meeting from the delegates. The delegates were all private members. The said Cooperative was registered and its By-laws were framed and approved sometime in or about 1941. The membership consisted of Cane Growers' Cooperative Society and Sugar Mills purchasing sugar-cane, but apparently in due time sugar industry in the area became defunct. It had taken up the business of distribution of L.P.G Gas as duly appointed dealer by Indian Oil Corporation Limited, a Government of India Undertaking. There were directions issued by the Registrar, Cooperative Societies, Bihar to the ex-officio Chairman of this Cooperative, who, as noted above, was the Sub-Divisional Officer, to hold election, convene general body meeting and elect the Managing Committee, but it was not so done and, accordingly, the District Cooperative Officer, Rohtas was appointed as Administrator to exercise the functions of the Committee of Management by Registrar, Cooperative Societies, Bihar under Section 41(5) of the Cooperative Act on or about 19.4.2001

10. It would be the submission of Shri Bindhyachal Singh that the Administrator, so appointed in exercise of powers conferred on the Registrar, Cooperative Societies, Bihar under Section 41(5) of the Cooperative Act, was only discharging the functions of the Committee of Management and that too for a temporary period till an appropriate Committee was elected and constituted in accordance with By-laws of the Cooperative. Thus, since neither the Cooperative was carrying on any public function nor the Administrator exercising any public function, the Cooperative during the tenure of the Administrator would not be “State” within the meaning of Article 12 of the Constitution nor would the Administrator, thus, be amenable to Writ jurisdiction of this Court under Article 226 of the Constitution and as such the Writ Petition was not maintainable and ought to have been dismissed in respect of challenge to the Order of the Administrator. It is in these perspective, the question of law, as referred to the Special Bench, arises.

11. We have heard Shri Bindhyachal Singh, learned Counsel for the Appellant and Shri Lalit Kishore, learned Senior Advocate-cum-Principal Additional Advocate General for the State, both of whom virtually took the same stand and the learned lawyer for private Respondent Nos. 6 & 7 to the Appeal, who were original Writ Petitioners, addressed the Court. Considering the importance of the issues involved, at the request of the Special Bench, Shri Abhay Kumar Singh, learned Senior Advocate assisted the Court as Amicus Curiae.

12. In fairness to learned Principal Additional Advocate General, I must notice the stand of the State in slightly more detailed manner. His submission would be that the Cooperative by itself being a private Cooperative cannot be ‘State’ within the meaning ascribed to it under Article 12 of the Constitution. Merely temporary appointment of Administrator will not change the nature of Cooperative and make it a ‘State’. One has to look to the cumulative effect of various functions of the Cooperative and that of the Administrator to determine the nature. That being so, no plea of infringement of Part III (Fundamental Rights) can be raised by the Writ Petitioners as against the Cooperative. The Administrator would not be exercising sovereign functions or Governmental executive functions or legislative functions and he can also not be ‘State’ within the meaning of Article 12 of the Constitution and, thus, the writ remedies for alleged violation of Part III Rights of the Constitution cannot be raised by the Writ Petitioners. In other words, submission would be that the protection of Part III Rights including their enforcement is not available as against either the Cooperative or the Administrator and Writ Petitioners must avail of statutory remedy, if any, as provided under the Cooperative Act against orders and actions of the Administrator. He tacitly conceded that orders of the Administrator, subject to availing of statutory remedy where final orders may be passed either by the State or by the Registrar, Cooperative, Bihar, under the Cooperative Act could be amenable to Writ jurisdiction under Article 226 of the Constitution. It is in this perspective the question of inter play between the concept of ‘State’ under Article 32 & Article 226 of the Constitution, as noted earlier, arises.

13. For the purposes of appreciating the niceties involved in the cross section of arguments, I deem it necessary first to point out certain salient Constitutional features.

14. The importance of ‘State’ as contemplated under Article 12, apart from other, is that various restrictions have been placed in Part III of the Constitution upon ‘State’ as against rights conferred by the said Part, which deals with the fundamental rights. Only by way of illustration, Article 13 prohibits ‘State’ in taking away or abridging by law any fundamental right and any such law would be void. Article 14 obliges ‘State’ not to deny equality. Article 15 prohibits ‘State’ against discrimination on grounds of religion, race, caste, sex or place of birth. Article 16 provides for equal opportunity in matters of public employment, etc. under the ‘State’ Article 19 relates to fundamental freedom with right on ‘State’ to impose reasonable restrictions. Article 21-A obliges the ‘State’ to provide free and compulsory education to children. I may also note that so far as Part IV ‘Directive Principles of State Policy’ is concerned as envisaged under the Constitution, ‘State’ has been ascribed the same meaning as for the purposes of Part III (Article 36 of the Constitution). Thus, seen ‘State’ as contemplated under Article 12 of the Constitution, has significant role so far as rights conferred by Part III are concerned. One of the important rights conferred by Part III is contained in Article 32 of the Constitution, where remedy for enforcement of Part III Rights itself has been made a fundamental right and confers jurisdiction in this regard on the Supreme Court. From this, it flows that the jurisdiction of the Supreme Court under Article 32 could be invoked only in respect of rights conferred by Part III in relation to ‘State’ actions. Thus, for a person to invoke this Constitutional remedy, the infringement complained must essentially be against ‘State’, of course exceptions being, inter alia, Article 21. Thus, we have Judgments, where Supreme Court has declined reliefs in Petitions under Article 32 of the Constitution upon finding that infringing authority is not ‘State’ and as such Article 32 Writ Petitions are not maintainable. Thus, there is importance of the concept of ‘State’. But when we come to Article 226 of the Constitution, the power and jurisdiction of the High Court is much wider. The jurisdiction extends to enforcement and/or Complaint against infringement of Part III Rights, inevitably ‘State’ being involved and also to “any person” or “authority” mid “for any other purpose”. Thus, limitation of ‘State’ action alone is not there.

15. A significant feature of the Constitutional scheme, thus, emanates, whereby for invoking Part III Rights and complaining of its infringement, the person against whom it is claimed must be ‘State’ for if it is not ‘State’ then restrictions as contained in Part III would not apply. In other words, if offending person or authority is not ‘State’ then it is not bound by various Articles of Part III of the Constitution.

16. Another distinction is that the Supreme Court for the purposes of Article 32 would have relatively restricted jurisdiction limited to enforcement of Part III rights alone unlike the jurisdiction of High Court under Article 226, which includes enforcement of Part III rights against ‘State’ and against “any other person/authority” and for “any other purposes”. Again Part III rights would be in relation to ‘State’ action and that could not extend to any other person or authority, which is not ‘State’ Thus, there is distinction between the power to issue Writs as between the Supreme Court and the High Court. The power to issue writ conferred on Supreme Court by Article 32 is for enforcement of Part III rights, but the power to issue Writs as conferred under Article 226 of the Constitution upon the High Court is for enforcement of fundamental rights as against ‘State’ and as against any other person or authority or ‘State’ for any other purpose. Thus, seen if a body is not ‘State’ within the meaning of Article Part III rights cannot be invoked against it either before the Supreme Court under Article 32 or under Article 226 before the High Court. Thus the distinction between Writ jurisdiction of the Supreme Court and the High Court. I have noted this distinction only to point out that even when the Supreme Court declines a Article 32 Writ Petition on the ground that the offending party (authority) is not ‘State’ yet the High Court can interfere and issue Writ under Article 226 in appropriate cases. One can usefully refer to the case of Zee Tele Films Ltd. v. UoI., (2005) 4 SCC 649 : AIR 2005 SC 2677; and Fertilizer Corporation Kamagar Union v. UoI., 1981 (1) LLN 288 (SC) : AIR 1981 SC 344 : (1981) 1 SCC 568.

17. Thus, before a party seeks to invoke Part III rights against an authority, the party will have to satisfy that the authority is ‘State’ within the meaning of Article 12 of the Constitution, failing which, Part III rights cannot be invoked against the said authority. Thus the importance of the concept and understanding of what is ‘State’ within the meaning of Article 12 of the Constitution.

18. For convenience and ready reference, Article 12 of the Constitution is quoted hereunder:

“12. Definition.— In this Part, unless the context otherwise requires, “the 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.”

19. The first case in order to understand the scope of Article 12 that I would like to refer is a Seven-Judge Constitution Bench Judgment of the Apex Court being Ujjam Bai v. State of Uttar Pradesh., AIR 1962 SC 1621. In this case, an assessment was made under the provisions of the U.P Sales Tax Act. The Assessment Order was directly challenged before the High Court under Article 226, which Petition was dismissed on the ground of alternative remedy. Appeal to Apex Court under Article 132 was filed, but the same was dismissed for non-prosecution. In the meantime, the Petitioner also filed a Writ Petition under Article 32 before the Apex Court challenging the Assessment Order. An objection was taken as to the maintainability of the Writ Petition under Article 32 on the ground that for invoking Article 32, first the authority, whose action was challenged, must be ‘State’ within the meaning of Article 12 of the Constitution. Article 12, the objectors submitted, did not include judicial authorities of the ‘State’. It is in this perspective the question of interpretation of Article 12 arose. The Apex Court held that the expression ‘other authorities’ in Article 12 could not be read ejusdem generis with Government and Parliament of India and the Government and the Legislature of State and local authorities as there was no common genus. In Paragraph 152 of the said Judgment, this is what their Lordships held:

“152. ….In the first place, it has to be pointed out that the definition is only inclusive, which itself is apt to indicate that besides the Government and the Legislature there might be other instrumentalities of State action which might be comprehended within the expression “State' That this expression ‘includes’ is used in this sense and not in that in which it is very occasionally used as meaning “means and includes could be gathered not merely from other provisions of Part III but also from Art. 12 itself ………There is no characterization 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 decisions in order to implement those laws.”

Thus, quasi judicial statutory authorities acting under Statutes were held to be ‘State’.

20. The next case, I would like to notice, is the Constitution Bench Judgment of the Apex Court in the case of Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 SC 1857. This case arose out of an Appeal before the Apex Court from a Petition under Article 226 of the Constitution before the High Court. It related to a dispute as regards service conditions. Electricity Board in Appeal urged that it was an autonomous body carrying out commercial activities and was not comprehended as ‘State’ within the meaning of Article 12 as reading Article 12 and other authority therein ejusdem generis, State Electricity Board would not fall within Article 12 as ‘State’ The Hon'ble Judges, who constituted the majority, rejected the argument in the following words:

“4. …………In Article 12 of the Constitution, the bodies specially named are the Executive Governments of the Union and the State, the Legislatures of the Union and the States, and local authorities. We are unable to find any common genus running through these named bodies, nor can these bodies be placed in one single category on any rational basis. The Doctrine of ejustem generis could not, therefore, be applied to the interpretation of the expression “other authorities” in this Article.”

“5. ……The expression “Other authorities” is wide enough 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.”

21. Here it is important to note that Justice Shah, though broadly agreed with the majority, dissented in relation to concept of ‘State’ under Article 12. His dissent was that no other Constitutional or statutory authorities would fall within the expression “other authorities” under Article 12. Only those, which were exercising sovereign powers, would fall within the said expression and become ‘State’ under Article 12. As noted above, this was not approved by majority whose views have been noted above.

22. In fairness to learned Principal Additional Advocate General, he has strongly raised the same plea. As noticed earlier, contention put very strongly was that unless an authority exercises powers and functions akin to sovereign functions, it cannot be held to be ‘State’ within the meaning of Article 12. This argument has been noted only to be rejected in view of the aforesaid decision of the Constitution Bench of the Apex Court.

23. The next decision, which I would like to refer, is the Judgment of the Apex Court in the case of Praga Tools Corporation v. Shri C.A Imanual, (1969) 1 SCC 585 : AIR 1969 SC 1306. This was an Appeal to the Apex Court. Here the question arose whether the Writ Petition was maintainable against the said Corporation. Though High Court held that the Writ Petition was not maintainable still granted some relief. It was urged before the Apex Court that the Corporation was a company incorporated under the provision of the Indian Companies Act. 56% of the share holding was of Union of India and 32% was that of Government of Andhra Pradesh. Only 12% was of public. The Apex Court held that the Company was a non-statutory body exercising no public functions though merely incorporated under the provisions of the Companies Act. Thus, a distinction was drawn between a Company, which was created by a Statute being a statutory Company or Corporation or body corporate and a Company incorporated under the Companies Act, the latter, incorporation under Companies Act, being statutory necessity for all body corporates. Apex Court allowed the Appeal and dismissed the Writ Petition before the High Court.

24. Next I would like to refer to two Judgments of the Apex Court delivered by the same Constitution Bench on the same day, the first being in the case of Sukhdev Singh v. Bhagatram, 1975 (1) LLN 366 (SC) : AIR 1975 SC 1331 : (1975) 1 SCC 421, and the second being in the case of Sabhajit Tewary v. Union of India, 1975 (1) LLN 362 (SC) : AIR 1975 SC 1329 : (1975) 1 SCC 485. In the latter Judgment the former is noticed. The case of Sukhdev Singh (supra) arose out of an Appeal, whereas, the case of Sabhajit Tewary (supra) arose out of a Writ Petition before the Apex Court. In both, the issue was with regard to interpretation of ‘State’ and, in particular, the expression “authorities” as used in Article 12 of the Constitution. In the case of Sukhdev Singh (supra), the Apex Court held ONGC, LIC and IFCI to be ‘State’ on the premise that they were formed by a Statute and were statutory Corporations. They were financed and controlled by the Government. Their Rules and Regulations had force of law. They were not mere body Corporates. There was deep and pervasive control and they were statutory Corporations. But when they came to the case of Sabhajit Tewary (supra), the Writ Petition before the Apex Court was dismissed holding that the Council for Science and Industrial Research (CSIR) was not a statutory Corporation like ONGC, LIC and IFCI, but only a society registered under the appropriate Societies Registration Act. It was not a ‘State’ even though its Managing Committee was appointed by the Prime Minister, but the Employees were not Employees of the Prime Minister, rather of an autonomous Society registered under the Societies Registration Act. This gave rise to a controversy whether a Governmental organization registered under Societies Registration Act stood outside the purview of Article 12 of the Constitution or not. It may be noticed that first another Constitution Bench in the case of Ajay Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487 : (1981) 1 SCC 722, read down the import of Sabhajit Tewary's case (supra). Later in the case of P.K Ramchandra Iyer v. Union of India, (1984) 2 SCC 141 : AIR 1984 SC 541, Sabhajit Tewary's case (supra) was confined to its peculiar facts and later it was specifically overruled by Seven Judges Constitution Bench in the case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111. From these two cases what comes to light is the concept of deep and pervasive control and distinction between statutory and non-statutory Corporations.

25. The next is the celebrated Judgment of the Apex Court in the case of Ramana Dayaram Shetty v. International Airport Authority of India, 1981 (1) LLN 270 (SC) : AIR 1979 SC 1628 : (1979) 3 SCC 489. In this case, there was dispute regarding a tender issued by the International Airport Authority of India Ltd. for establishing a catering establishment. In Paragraph 20 of the Reports-AIR, the Apex Court held as under: (AIR)

“20. Now, obviously where a Ccorporation is an instrumentality or agency of Government, it would, in the exercise of its power or discretion, be subject to the same Constitutional or public law limitations as Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is dealing with the public whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevant.”

26. But the question is when does a Corporation become an instrumentality or agency of the Government? This is answered in Paragraph 19 of the Reports-AIR, wherein the Apex Court held that considering the vast expanding Government involvement in almost all facets, the complexities of Management and increasing responsibility of Government, it is not single factor, which determines, but a cumulative effect that has to be seen. In the words of the Apex Court, “It is the aggregate or cumulative effect of all the relevant factors that is controlling”. In my view, in short, what it says is not only, there must be Government control on a Corporation, but the Corporation must also be for performing some functions on behalf of the Government. In other words, it is a case of functionality test.

27. In fairness to the learned Principal Additional Advocate General, he emphasized on this cumulative effect test aspect to submit that the Cooperative in question, with which we are dealing, in cumulative effect could not partake the nature of ‘State’. He is correct as will be shown later.

28. The next decision would be the case of J. Tewari v. Jawala Devi Vidya Mandir, (1979) 4 SCC 160 : AIR 1981 SC 122. This was a case of an unaided College affiliated to a University. The Apex Court rejected the contention that merely because it was affiliated to University it became ‘State’ within the meaning of Article 12. It was not a public body or statutory authority. A distinction was made between affiliated under Statute and created by a Statute.

29. The next case, I would refer, is the celebrated Judgment in the case of Ajay Hasia (supra), a Constitution Bench Judgment of the Apex Court. Here the question was with regard to the status of Regional Engineering College, which was registered as a Society under the J & K Society Registration Act. The dispute was with regard to admission therein. This was a Writ Petition under Article 32 to the Apex Court. An objection was taken as to the maintainability of the Writ Petition on the ground that it was merely an incorporated Society and in view of Sabhajit Tewary's case (supra), it could not be ‘State’ The Apex Court rejected the contention holding that not merely statutory Corporations formed under a Statute would be ‘State’ but other incorporated bodies could also be ‘State’ within the meaning of Article 12 of the Constitution. It noticed that the Society was registered at the instance of the Central Government. The Management thereof was dominated by Central Government and various State Governments. Money for running the College came from the Central Government. The institution was to comply with the directions of the Central Government. Thus, it was held to be an instrumentality or agency of the Government and as such ‘State’ within the meaning of Article 12 of the Constitution. Sabhajit Tewary's case (supra) was read down as noticed in Paragraph 13 of the Reports-AIR of the said Judgment. Thus, in my view, the test evolved was whether it was instrumentality or agency of the Government and whether there was deep and pervasive control of the Government and not merely because it was a Society registered under the appropriate law, the same would not be excluded from being considered as ‘State’.

30. Here I may appropriately deal with other two cases of the Apex Court. The first case being U.P Ware Housing Corporation v. Vijay Narayan Vajpayee, (1980) 3 SCC 459 : AIR 1980 SC 840, wherein the U.P Ware Housing Corporation was held to be ‘State’ as it was created under a Statute for Governmental functions and the second case being State of Punjab v. Raja Ram Singh, 1980 (1) LLN 297 (SC) : (1981) 2 SCC 66 : AIR 1981 SC 1694, where the Food Corporation of India (FCI) was held to be ‘State’ being agency and instrumentality of a Government. It was clarified that it would not be ‘State’ for the purposes of Article 311 of the Constitution as it was not a department of any Government.

31. The next decision to be noticed of the Apex Court being P.K Ramchandra Iyer v. Union of India, AIR 1984 SC 541 : (1984) 2 SCC 141. This arose out of an Appeal from the Judgment of the Full Bench of Delhi High Court, which held that Indian Council of Agricultural Research (I.C.A.R) being a registered Society was not ‘State’ The decision of the Full Bench was overruled by the Apex Court and I.C.A.R was held to be ‘State’ Upon review of its function and its formation, it was held that it was an adjunct of the Government though later registered independently as a Society. Sabhajit Tewary (supra) was confined to its facts. In my view, the Apex Court applied functionality test to determine the status.

32. The next case, I would consider, is the case of B.S Minhas v. Indian Statistical Institute, 1984 (1) LLN 239 (SC) : AIR 1984 SC 363 : (1983) 4 SCC 582, wherein the Indian Statistical Institute was held to be ‘State’ on the basis of deep and pervasive control though independently registered as a Society. It was fully financed by the Government and bound by the directions of the Government.

33. The next case is that of Tekraj Vasandi v. Union of India, 1988 (1) LLN 892 (SC) : AIR 1988 SC 469 : (1988) 1 SCC 236, which case was an Appeal from the Judgment of the Delhi High Court rejecting the Writ Petition holding that the Institute of Constitutional and Parliamentary Studies was not a ‘State’. The Apex Court dismissed the Appeal holding that the ICPS was a voluntary organization, not set up for discharge of any State obligation nor was its object a Governmental business. It further held that there was no deep and pervasive control of either the Parliament or the Government over that organization. Again, in my view, the twin test of functionality and deep and pervasive control was applied to test its status. A caution was sounded by the Apex Court, “In the absence of a fair application of tests to be made, there is possibility of turning every non-governmental Society into an agency or instrumentality of the State. That obviously would not serve the purpose and may be far from reality.”

34. The next case which I would like to refer is of some importance specially in the facts of the present case. The case in issue is Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust v. V.R Rudani, 1989 (2) LLN 281 (SC) : AIR 1989 SC 1607 : (1989) 2 SCC 691. A Private Trust was running a Private College, which was affiliated to Gujarat University. Question of payment of terminal benefits upon closure of the College was in issue. There was recommendation of the University for payment of certain terminal benefits, which were not being given by the College. The Employees filed Writ Petition under Article 226 before the Gujarat High Court, which was allowed and directions in the nature of Mandamus were issued to the Private College. The Trust appealed to the Apex Court. An objection was taken to the maintainability of the Writ Petition as against the Trust on the ground that it would not be subjected to Writ jurisdiction of the High Court. The Apex Court dismissed the Appeal affirming the Order of the High Court. While doing so, it held that the Writ Petitioners were not asserting purely a private right against a purely private body. The Trust was receiving aid from the Government through the University, to which it was affiliated. The Employees of the College were governed by the University Service conditions. Thus, the College was held to be performing public functions and Mandamus could issue even though the Trust or the College was not ‘State’ within the meaning of Article 12. This case illustrates the distinction between concept of ‘authority’ under Article 12 and the scope of Article 226 of the Constitution, as also the powers of the Court under Article 32 & Article 226 of the Constitution. This is what the Court said in Paragraph 19 of the Reports-AIR, as follows:

“19. The term “authority” used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue Writs for enforcement of the fundamental rights as well as non-fundamental rights. The words “Any person or authority” used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists Mandamus cannot be denied.”

35. Here I may also notice that the Court dispelled the notion that mandamus could only be issued for enforcing duty imposed by Statute. This is what their Lordships held in Paragraph 21 of the Reports-AIR as follows:

“21. Here again we may point out that Mandamus cannot be denied on the ground: that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, professor De Smith states: “To be enforceable by Mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract.” (Judicial Review of Administrative Act, 4th Ed. p. 540). We share this view……….”

36. The next case would be the case of Chandra Mohan Khanna v. National Council of Educational Research & Training, (1991) 4 SCC 578 : AIR 1992 SC 76. This case arose out of an Appeal from the Judgment of the Delhi High Court, which dismissed the Writ Petition under Article 226 filed by terminated Employees of NCERT holding that NCERT was not ‘State’ under Article 12 of the Constitution and that was the primal question before the Apex Court. Here again the Apex Court cautioned with regard to expanding concept of Article 12 of the Constitution as was earlier done in the case of Tekraj Vasandi (supra). This is what their Lordships held in Paragraph 3 of the Reports-AIR, while holding that NCERT was not ‘State’ within the meaning of Article 12 of the Constitution, as follows:

“3. Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression “State”. A wide enlargement of the meaning must be tempered by a wise limitation. It must not be lost sight of that in the modern concept of Welfare State, independent institution; corporation and agency are generally subject to State control. The State control does not render such bodies as “State” under Article 12. The State control, however vast and pervasive, is not determinative. The financial contribution by the State is also not conclusive. The combination of State aid coupled with an unusual degree of control over the Management and policies of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is “State”. If the Government operates behind a corporate veil, carrying out Governmental activity and Governmental functions of vital public importance, there may be little difficulty in identifying the body as “State” within the meaning of Article 12 of the Constitution………….”

37. In my view, the two concepts relied by the Apex Court, in short, were absence of unusual degree of control and absence of rendering public service, which persuaded the Court to hold that NCERT was not ‘State’ within the meaning of Article 12.

38. The next case I would like to refer is the case of the Mysore Paper Mills Ltd. v. The Mysore Paper Mills Officers' Association, 2000 (1) LLN 590 (Kar.) : AIR 2002 SC 609 : (2002) 2 SCC 167. An Employee of the Mysore Paper Mills Ltd., was transferred. He challenged his transfer before the Karnataka High Court. A Full Bench of the Karnataka High Court allowed the Writ Petition holding the Company to be ‘State’ under Article 12 of the Constitution. Company filed Appeal before the Apex Court, which was dismissed affirming the Judgment of the Full Bench of the Karnataka High Court, noticing that the Company was a Government Company when 97% of the share capital was of the State Government and as per Memorandum of Association, the Company was entrusted with important public duties. The Directors were either Government appointees or appointed with the concurrence or nomination of Government. Court held that there was deep and pervasive control. Court also held that if need be the true character could be seen by piercing the corporate veil. It, thus, held the Company to be nothing but an instrumentality and agency of the State though in the cloak or cover of a Company. This is what their Lordships said in Paragraph 12 of the Reports-AIR as follows:

“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% of the share capital has been contributed by the State Government and the financial institutions controlled and belonging to the Government of India on the security and undertaking of the State Government, that the amendments introduced to the Memorandum of Association in the year 1994 introducing Articles 5-A & 5-B, entrusts the Appellant-Company with important public duties obligating to undertake, permit, sponsor rural development and for social and economic welfare of the people 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 has 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”

39. The next decision which I would like to refer is of some great consequences. It is a decision of Seven-Judge Constitution Bench in the case of Pradeep Kumar Biswas, (2002) 5 SCC 111, which now effectively overruled the Constitution Bench Judgment of the year 1975 rendered in Sabhajit Tewary's case (supra), which, as noticed earlier, was first limited to the facts of its case by a Constitution Bench decision, then virtually read down by other Judgments and now was specifically overruled. Sabhajit Tewary's case (supra), as noticed earlier, had ruled that a body registered as a society could not be considered to be ‘State’ even though it was controlled by the Government. In the present case i.e Pradeep Kumar Biswas (supra), an Employee of Indian Institute of Chemical Biology, a unit of Council of Scientific and Industrial Research (CSIR) was terminated and he filed a Writ Petition in the Calcutta High Court. The Calcutta High Court relying on Sabhajit Tewary's case (supra), which was a Constitution Bench Judgment in relation to CSIR itself dismissed the Writ Petition and, accordingly, the Appeal was filed before the Apex Court. The question directly arose as to the correctness of the Judgment of the Constitution Bench in Sabhajit Tewary's case (supra). By a majority of 5:2, the Apex Court held that Sabhajit Tewary's case (supra) was not correctly decided and was overruled. CSIR was held to be ‘State’. The Apex Court noticed that though CSIR was registered as an independent society, there was deep and pervasive control of the Government. This is what their Lordships said in Paragraphs 6, 8, 9 & 10 of the Reports-AIR, as follows:

“6. That an “inclusive” definition is generally not exhaustive is a statement of the obvious and as far as Article 12 is concerned, has been so held by this Court. The words “State” and “authority” used in Article 12 therefore remain, to use the words of Cardozo, among “the great generalities of the Constitution” the content of which has been and continues to be supplied by Courts from time to time.

8. But before considering the decisions it must be emphasized that the significance of Article 12 lies in the fact that it occurs in Part III of the Constitution, which deals with fundamental rights. The various articles in Part III have placed responsibilities and obligations on the “State” vis-a-vis the individual to ensure Constitutional protection of the individual's rights against the State, including the right to equality under Article 14 and equality of opportunity in matters of public employment under Article 16 and most importantly, the right to enforce all or any of these fundamental rights against the “State” as defined in Article 12 either under Article 32 by this Court or under Article 226 by the High Courts by issuance of Writs or Directions or Orders.

9. The range and scope of Article 14 and consequently Article 16 have been widened by a process of judicial interpretation so that the right to equality now not only means the right not to be discriminated against but also protection against any arbitrary or irrational act of the State. It has been said that (SCC p. 38, para 85) “Articles 14 & 16 strike at arbitrariness in State action and ensure fairness and equality of treatment.”

10. Keeping pace with this broad approach to the Concept of Equality under Articles 14 & 16, Courts have whenever possible, sought to curb an arbitrary exercise of power against individuals by “centres of power” and there was correspondingly an expansion in the judicial definition of “State” in Article 12.”

40. Their Lordships then referred to series of Judgments on the issue and the enlarging concept of ‘State’ under Article 12 of the Constitution. The legal conclusion would be in Paragraph 40 of the Reports-SCC as follows:

“40. The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question 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.”

41. The next case, I would refer, is the Judgment of the Apex Court in the case of G. Bassi Reddy v. Interntional Crops Research Institute (ICRI), AIR 2003 SC 1764 : (2003) 4 SCC 225. This was an Appeal by an Employee against the Judgment of the Andhra Pradesh High Court dismissing the Writ Petition as not maintainable. The Apex Court affirmed the Judgment of the High Court holding that ICRI was not ‘State’ within the meaning of Article 12 as it was an international organization sponsored by various countries not wholly under the control of the Central Government. It was a no profit no loss organization. It was then argued and negatived by the Court that it was performing public duties. Court was of the view that the public duties performed by the international organization were not duties of the Indian Government and, therefore, even in terms of Article 226, no Mandamus could issue. Apex Court through Justice Ruma Pal did not accept the applicability of the Judgment of Pradeep Kumar Biswas (supra).

42. The next decision would be the case of Virendra Kumar Srivastava v. Uttar Pradesh Karamchari Kalyan Nigam, AIR 2005 SC 411 : (2005) 1 SCC 149. In this case service of an Employee in one of the stores of the Nigam (Corporation) was terminated and was challenged before Allahabad High Court, which dismissed the writ as not maintainable on the ground that the Nigam (Corporation) was an independent corporated entity. This was disapproved by the Apex Court while allowing the Appeal. The Apex Court held that though it was an independent Corporation, it was formed by the Government. It was financed by the Government, controlled by the Government and was for Government Employees. Thus, for all purposes it was its adjunct for Governmental purpose and, therefore, was a ‘State’ within meaning of Article 12 of the Constitution and Writ was, thus, maintainable before the High Court.

43. Next I may refer to the well-known case of Zee Tele Films Limited v. Union of India, AIR 2005 SC 2677 : (2005) 4 SCC 649. This is a Constitution Bench Judgment with split decision by majority of 3:2. It was on basis of a Writ Petition filed against alleged arbitrary actions of Board of Cricket Control of India contending that B.C.C.I was ‘State’ within meaning of Article 12 of the Constitution. Court dismissed the Writ Petition filed under Article 32 holding that as C.C.I was not created by any Statute nor was it financed by State, nor controlled or managed by State. It was an autonomous body and not performing any Governmental function. It could not be treated a ‘State’ for the purposes of Article 12 of the Constitution. But the majority held that as the Board does discharge some duties like selection of an Indian Cricket team, controlling the activities of the players and others involved in the game of cricket, these activities can be said to be akin to public duties or State functions and if there is any violation of any Constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a Petition under Article 32, but that does not mean that violator of such right would go scot-free. The aggrieved party can always seek a remedy under the ordinary course of law or by way of a Writ Petition under Article 226 of the Constitution, which is much wider than Article (Paragraph 31 of the Reports-AIR). For the said purpose, the Constitution Bench relied with affirmance on what was stated in the case of Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust (supra). Thus, a clear distinction was drawn between Article 32 & Article 226 of the Constitution.

44. The next decision to be noticed is the case of S.S Rana v. Registrar, Cooperative Societies, (2006) 11 SCC 634. There Writ Petition was filed by the Branch Manager of Kangra Central Cooperative Bank Ltd. He was dismissed by the Board of Directors of the Cooperative. He filed the Writ Petition in the Himachal Pradesh High Court at Shimla contending that Cooperative was ‘State’ within the meaning of Article 12 relying on the case of Pradeep Kumar Biswas (supra). The High Court dismissed the Writ Petition and the Apex Court was of the view that the Cooperative was registered under the appropriate Cooperative law. It was neither financed by the Government nor controlled by the Government. It had its independent Board of Directors and it was not performing any public function. It matters little that in between an Administrator had been appointed because the Administrator passed no orders. On this issue they distinguished the judgment of the Apex Court in the case of Gayatri De v. Mousumi Cooperative Housing Society Ltd., AIR 2004 SC 2271 : (2004) 5 SCC 90, to which decision I shall refer a bit later and which decision is of some consequence upon this case.

45. I must now refer to the Judgment of the Apex Court in the case of Ramesh Ahulwalia v. State of Punjab, (2012) 12 SCC 331. Appellant before the Apex Court was an Administrative Officer in D.A.V Public School, Lawrence Road, Amritsar. He was removed from service by the D.A.V Public School authorities. He challenged it in a Writ Petition before Punjab and Haryana High Court, which dismissed his Writ Petition holding that the institution was purely Unaided Private Educational Institution and no writ would lie. It was an Application under Article 226. The Apex Court on Appeal held that the D.A.V Public School was performing public functions of providing education to children in their institution throughout India and as such following what was said in the case of Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust (supra), it was held that the Writ Petition was maintainable. It may be noted that this was not a case of “State” under Article 12 but of an authority performing public function and thus amenable to Writ jurisdiction under Article 226. This is what their Lordships said in Paragraph 14 of the reports SCC as follows:

“14. In view of the law laid down in the aforementioned Judgments of this Court, the Judgment of the learned Single Judge as also the Division Bench of the High Court cannot be sustained on the proposition that the Writ Petition would not be maintainable merely because the Respondent-Institution is a purely Unaided Private Educational Institution. The Appellant had specifically taken the plea that the Respondents perform public functions i.e providing education to children in their institutions throughout India.”

46. Then I may refer to a very recent decision of the in the case of Jatya Pal Singh v. Union of India, 2013 (2) LLN 545 (SC) : (2013) 6 SCC 452. Here the question was whether Videsh Sanchar Nigam Ltd./Tata Communication Ltd. were ‘State’ within the meaning of Article 12. The Apex Court rejected this plea holding that VSNL as re-constituted or for that matter Tata Communication Ltd., were not ‘State’. There was no substantial finance or control of Government in them. It was then contended that they were performing public functions i.e offering telecommunication services. This was rejected on the ground that they were commercial services being provided not only by them but also by other commercial organizations on equal terms. There was no State monopoly in such services any more.

47. Thus, from the plethora of case laws on the subject as to when an authority or person would become a “State” within the meaning of Article 12 of the Constitution, briefly, though not exhaustively, the following principles and rationale are deducible:

(i) The authority created by a Statute under control of Government, hence a statutory corporate entity; and/or

(ii) Even a body corporate as distinct from statutory Corporation could be “State”, if there was a deep and pervasive control of the Government; and/or

(iii) Independent body corporate formed by the Government to perform Governmental duties or duties of public nature for Government; and/or

(iv) Authority functioning as an instrumentality or agency of Government, the functionality test; and/or

(v) Unusual degree of control of Government and rendering public service; and/or

(vi) Authority works as an adjunct of and for the purpose of Government and Governmental purposes and/or public function; and/or

(vii) Authority performing monopolistic functions reserved by State; and/or

(viii) Cumulative effect of various relevant facets have to be seen and not one stray facet; and/or

(ix) The authority may itself not be State, but a person therein is controlled by and supervised by the State/Government, then he becomes a “State” because of the control.

48. In fairness to Amicus Curiae Shri Abhay Singh, Senior Advocate, I must notice one pointed argument. He stated that ‘State’ as contemplated under Article 12 is a concept, which works or performs duty, Governmental in nature. This is exemplified by cases noted above. He rightly pointed out that when a person being an officer of Government is appointed or a person appointed by Statutory Authority to act under his authority and supervision/superintendence such a person would be State representative and ‘State’ under Article 12. The distinction between public function and private function would be of no consequence in such a case.

49. The other important issue, which is apparent from the decisions noted above, is that even though an authority or a body may not be ‘State’ for the purposes of Article 12 and, thus, not amenable to Writ jurisdiction of the Apex Court under Article 32, yet it could be amenable to Writ jurisdiction of the High Court under Article 226 of the Constitution, whose scope and jurisdiction is much wider.

50. One of the facets where the High Court could exercise its Writ jurisdiction under Article 226 against an authority, which is not ‘State’ within the meaning of Article 12, is where the authority or person performs duties akin to public duties or public functions even though independent of a Government.

51. Thus, seen and applying all the tests I have no manner of doubt that Dehri Cooperative Development & Cane Marketing Union Limited, a Cooperative registered under the Bihar & Orissa Cooperative Societies Act, 1935, by itself cannot be deemed to be ‘State’ within the meaning of Article 12 of the Constitution. It has no State funding. It has independent Board of Management though the Chairman is ex-officio Sub-Divisional Officer, but he is only one in the Board of Management, which Board of Management is elected by different private Cooperatives. It performs no public function.

52. Here I may refer to a Division Bench Judgment of this Court in the case of Harendra Narain Banker v. The State of Bihar, 1985 PLJR 1078. The question was whether Bihar State Cooperative Marketing Union Limited (BISCOMAUN) is an instrumentality or agency of the State and consequently amenable to Writ jurisdiction. Court analyzed the provisions and the constitution of BISCOMAUN. It held that even though almost 99% of the share holding was of the State Government, its Managing Director being appointed by the Government being a Government Employee, its Apex Managing Committee and its Chairman being all elected by other Cooperatives, as such in the Apex Managing Committee, the Government had hardly any say. It was not performing any public duty or public function for and on behalf of the Government. Thus, the cumulative effect was no deep and pervasive control nor public duty or public function and as such it was not ‘State’ or State instrumentality or agency and Writ Petition was not maintainable. In view of the Judgments of the Apex Court as noticed above, the view taken by this Court in that case cannot be doubted.

53. But the situation drastically changes when in exercise of power either under Sections 41(1), 41(3) or Section 41(5) of the Bihar & Orissa Cooperative Societies Act, 1935 as it then stood, the Managing Committee is either suspended, superseded or dissolved by the Registrar of Cooperatives, Bihar and either a Special Officer is appointed or an Administrator is appointed replacing the Managing Committee of the Cooperative.

54. Firstly when power is exercised under Section 41(1) of the Act, as it then stood, the Special Officer has to be a Government servant and this power is exercised in cases where in respect of the registered Society, economic interest of the Government is apparently clear. Thus, in such a situation not only the economic interest of the Government is present and admitted but the entire responsibility of Managing Committee and all decisions that could be taken by it vest in a Government servant, are naturally controlled by the Government. Thus, in addition to economic interest, there automatically becomes a case of deep and pervasive control even though for a limited period.

55. Then when power is exercised under Section 41(2) or 41(3) of the Act and an Administrator is appointed during the period when the Managing Committee of the Cooperative is superseded, the Administrator is under control of Registrar under Section 41(7). Similarly when under Section 41(5) an Administrator is appointed by the Registrar dissolving the Managing Committee, the Administrator is bound by the directions issued by the Registrar in terms of Section 47(5) and as such the entire administration of the Cooperative comes under the superintendence of the Registrar, who is a Statutory Authority. This, in my view, makes the powers and functions exercised by the Special Officer or the Administrator, as the case may be, amenable to Writ jurisdiction under Article 226 of the Constitution notwithstanding the Cooperative by itself not being ‘State’ within the meaning of Article 12 of the Constitution. The Special Officer or the Administrator, as the case may be, during the suspension or supersession of the Cooperative works under direct authority of the State and controlled by the State exercising all powers and functions of the Managing Committee. He is State for the purposes of Article 12 of the Constitution.

56. There is no gainsaying that whenever a Government Officer is appointed as an Administrator or a Special Officer replacing the Managing Committee by nature of the person being Government Officer, he does not cease to be so when acting in such capacity. He continues to be a Government servant and, thus, “State” directly being part of executive State within the meaning of Article 12 of the Constitution.

57. In my view, the situation will not change even if the Administrator so appointed is not a Government servant for he is still appointed by State acting through the Registrar, Cooperative Societies and is to work directly under his control and superintendence under Section 41(7) and as such he becomes a “Statutory Authority” himself.

58. Here I may now appropriately deal with direct decision of the Apex Court on this issue, which is the case of Gayatri De (supra). In this case, the Appellant filed a Writ Petition before the Calcutta High Court for cancellation of letters issued by the Special Officer of the Society, by which letter transfer of interest in a particular flat was refused and the flat was re-allotted to some one else. It may be noted that the Cooperative Society was registered under the provisions of the West Bengal Cooperative Societies Act for building and allotting private residential flats to private owners. It was a purely private Cooperative Society. The Division Bench of the High Court dismissed the Writ as not maintainable. The matter came to the Apex Court. On behalf of the Appellant, it was urged as noticed in Paragraph 15 of the Reports-AIR that the Writ Petition was maintainable since the Order impugned was passed by the Special Officer appointed by the High Court under the provisions of the Act and as such he was a Statutory Officer and, therefore, regarded as Public Authority. On the other hand, the Writ Petition was opposed on the ground of maintainability stating that the Society is not ‘State’ or even its agency or instrumentality within the meaning of Article 12 of the Constitution. The Society was regulated and governed by the provisions of the Act and was devoid of any element of public law. Remedy in the form of Mandamus was not available. Writ Petition was not maintainable (Paragraph 17 of the Reports-AIR). Reliance was placed on a Full Bench Judgment of the High Court of Madras in the case of P. Kannan v. The Director of Handlooms and Textiles, Madras, 1991 (2) LW 409 : 1989 (1) LLJ 588. A Full Bench of the Madras High Court in the said Judgment had, inter alia, held that if the Cooperative Society was not ‘State’ and if a Special Officer was appointed during period of supersession, it would not make any change and no writ would lie. The Apex Court in case of Gayatri De (supra) clearly held in Paragraph 53 of the Reports-AIR:

“53. We have, in paragraphs supra, considered the Judgments for and against on the question of maintainability of Writ Petition. The Judgment cited by the learned Senior Counsel appearing for the Respondents are distinguishable on facts and on law. Those cases are not cases covered by the appointment of a Special Officer to manage the administration of the Society and its affairs. In the instant case, the Special Officer was appointed by the High Court to discharge the functions of the Society, therefore, he should be regarded as a Public Authority and hence, the Writ Petition is maintainable.”

(emphasis supplied)

59. In fairness to learned Principal Additional Advocate General Shri Lalit Kishore, I must notice that in nutshell what he submitted was that the Cooperative not being ‘State’ within the meaning of Article 12 of the Constitution, the action of the Special Officer/Administrator, who was merely a regulator, could only be judged under Article 226 is not correct and would lead to undesirable result. What he actually intends to submit is that if Special Officer/Administrator is not covered under Article 12, then Part III rights cannot be invoked. That would mean, Article 14 could not be invoked against his Orders. Thus, according to him, the Special Officer, who is necessarily a Government servant or an Administrator, who has to act under superintendence and authority of the Registrar, can go berserk and can act arbitrarily, which cannot be checked because Article 14 is not available. Such a situation cannot be visualized because, in my opinion, no statutory functionary much less a Government servant acting as a Special Officer or Administrator can be permitted to act arbitrarily. A statutory functionary and his actions being ‘State’ by virtue of Article 12 would attract Part-III Rights and obligations.

60. In the instant case (Gayatri De), the Special Officer was appointed by the High Court to discharge functions of the Society. He was an Advocate of the Court. He was held to be discharging statutory functions and thus, a Statutory Officer. Therefore, he was regarded as a Public Authority and hence, the Writ Petition was held to be maintainable. The Appeal was consequently allowed by the Apex Court.

61. The Judgment in the case of Gayatri De (supra) squarely applies to the present case. Thus, there cannot be any escape from the situation and it must be held that the Administrator in such a situation is ‘State’ for Article 12 and Writ Petition against his actions is maintainable even though the Cooperative by itself is not “State”.

62. Here I may point out why I have been referring to the distinction as between the relative scope of Article 32 and that of Article 226. An authority if it is “State” for the purposes of Article 12 will automatically be amenable to Writ jurisdiction of the High Court under Article 226 being Public Authority i.e, “any authority” but the vice versa may not be true. Not all “any authority” under Article 226 would be “State” under Article 12. Thus not all persons to whom writ could be issued under Article 226 would be amenable to Writ Petition under Article 32 as they may not be “State” The classic example as set out earlier is the case of Shri Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust (supra) and Zee Tele Films Ltd. (supra).

63. Here what we have to see is who appoints the Administrator and who controls him and under what power he is appointed. The Administrator is appointed under statutory powers by Statutory Authority and is controlled also by Statutory Authority. He is thus a statutory functionary.

64. Here I may also consider the extreme submission on behalf of Shri Lalit Kishore and Sri Bindhyachal Singh that he (Administrator) not being “State” under Article 12 his actions cannot be judged vis-a-vis Part III of the Constitution. In my view, even if this was to be accepted, even then he would be a Public Authority. Being a Public Authority, he will be exercising public functions. Can a public functionary run amuck or act arbitrarily. The emphatic answer is no even if Article 14 is not to apply. This is based on Principles of Administrative Law. As distinct from Constitution Law, Administrative Law deals with inter play between “Organs of Administration and that of individuals”. Organs of Administration would mean State or public functionary. They would include private individuals exercising public functions/duties. They have defined duties. They are governed by what we know as the Doctrine of ultra virus. Their actions, if found to be arbitrary, discriminatory or beyond their authority would be ultra virus their very charter and character of their office. Thus, such actions would be in conflict with their public duties of good governance and as such ultra virus. Surely a Writ Petition under Article 226 would lie to correct such errors. Seen from this perspective also, a Writ Petition under Article 226 is maintainable even under such circumstances.

65. The two Judgments of this Court, correctness of which have been doubted and this reference necessitated, are the case of Nand Kishore Rai (supra), a Division Bench Judgment and the Full Bench Judgment in the case of Rajendra Prasad Sah (supra). In the case of Nand Kishore Rai (supra), the Division Bench was dealing with the Order of Termination passed by the Deputy Commissioner-cum-Special Officer of Deoghar-Jamtara Central Cooperative Bank Limited. The question arose whether Writ Petition was maintainable. The Division Bench clearly held that the case of Harendra Narain Banker (supra), in which case Division Bench had held that no Writ would lie against a Cooperative, would have no application because here the Managing Committee of the Cooperative had been superseded and Special Officer had been appointed by the Registrar to manage the affairs of the Society. Division Bench held that the Special Officer has to be held to be an authority within the meaning of Article 12 of the Constitution, who shall be amenable to Writ jurisdiction of this Court. Thus, what the Court held was that the action of the Special Officer was amenable to Writ jurisdiction, the Special Officer being authority within the meaning of Article 12. In other words, the Cooperative remains outside the purview of Article 12. This dictum is consistent with the case of Gayatri De (supra) and as such the law decided in Nand Kishore Rai (supra) was correctly decided on the facts of that case. Now I may deal with the case of Rajendra Prasad Sah (supra), which is a Full Bench decision of this Court. This case arose out of dismissal of the Writ Petitioner from the services of BISCOMAUN. A reference in that case to the Full Bench was necessitated because of two conflicting Judgments of this Court. Both cases dealt with action taken by the Administrator during the period the Managing Committee was dissolved. In one Judgment, it was held that as the order was in violation of Principle of Natural Justice and passed by the Administrator, the action was unsustainable and invalid being arbitrary but in the other case it was held that removal was for a reasonable cause within the meaning of Section 26 of the Shops and Establishment Act and Principle of Natural Justice has no Application. In the former Division Bench, it was clearly held that there was violation of Articles 14 & 16 of the Constitution, but in the latter it was held to be not applicable. The Full Bench relying upon the Division Bench Judgment in the case of Nand Kishore Rai (supra) held that during the period of supersession, the Administrator being authority under Article 12, his action was subject to Articles 14 & 16 of the Constitution and accordingly, held that the latter Division Bench did not lay down the correct law and approved the view taken in the case of Nand Kishore Rai (supra).

66. Again this view of the Full Bench in case of Rajendra Prasad Sah (supra) is consistent with the latter view of the Apex Court in the case of Gayatri De (supra).

67. That being so. I would answer the reference in the following terms:

(i) Even though the nature of a private Cooperative, which is otherwise not State within meaning of Article 12 of the Constitution, it does not change by appointment of a Special Officer or an Administrator making Cooperative a State' within the meaning of Article 12, but the very fact of appointment of Special Officer or Administrator in terms of Sections 41(1), 41(2), 41(3) or Section 41(5) makes the Special Officer/Administrator an Authority under Article 12 of the Constitution, thus, amenable to Writ jurisdiction and his action has to be consistent with Part-III Rights of the Constitution being a Statutory Authority. If such officer is a Government servant then he is “State” per se.

(ii) The Division Bench Judgment of this Court in case of Nand Kishore Rai (supra) and the Full Bench Judgment of this Court in case of Rajendra Prasad Sah (supra) are correct and do not require reconsideration.

68. Reference is answered accordingly and the cases are remitted to the Division Bench accordingly.

Ramesh Kumar Datta, J.:—

69. I agree.

Samrendra Pratap Singh, J.:—

70. I agree.

Jyoti Saran, J.:—

71. I agree with the view taken by Hon'ble Mr. Justice Navaniti Prasad Singh.

Ashwani Kumar Singh, J.:—

72. I had the privilege of going through the Judgment of Brother Navaniti Prasad Singh, J., and, I so much agree with the bottom line of the Judgment that under the circumstances of the present case the Administrator appointed under Sections 41, 41(2), 41(3) or 41(5) of the Bihar Cooperative Societies Act, 1935 (hereinafter referred to as “the Act”) would be a “Public Authority” and that in view of Section 41(7) of the Act, the actions of the Administrator so appointed under Section 41(1), 41(2), 41(3) or 41(5) of the Act would be amenable to the Writ jurisdiction of the High Court under Article 226 of the Constitution of India (hereinafter referred to as “the Constitution”).

73. However, having gone through the erudite opinion of Brother Navaniti Prasad Singh, J., with utmost respect I am not persuaded by the proposition as has been elucidated that the very fact of appointment of Special Officer or Administrator in terms of Sections 41(1), 41(2), 41(3) or Section 41(5) would make the Special Officer/Administrator an “authority” and hence a “State” under Article 12 of the Constitution. I am also not persuaded to agree with the proposition that if such officer is a Government servant then he is “State” per se. I am further of the view that the Administrator appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act, irrespective of the controls exercised by the Registrar, Cooperatives under Section 41(7) of the Act, lacks the attributes of a “State” in terms of Article 12 of the Constitution and, as such, I am not persuaded to hold that an Administrator appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act, is “the State” under Article 12 of the Constitution and my reasons follow hereunder.

74. Article 12 of the Constitution reads as under:

“Article 12. In this Part, unless the context otherwise requires, “the 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.”

75. Article 12 of the Constitution has been provided exclusively for purposes of Part-III of the Constitution which embodies the rights which are fundamental and the definition of “the State” is confined to and for purposes of Part-III of the Constitution and would have no applicability with regard to Articles 309, 310 & 311 of the Constitution which find place in Part-XIV of the Constitution. It is axiomatic that merely because an institution/organization is held to be a “State” under Article 12 of the Constitution, the employees of the said institution/organization do not become entitled to protection of Articles 309, 310 & 311 of the Constitution.

76. ‘The Government of India’ ‘the Parliament of Indian’, ‘Government of each of the States’, ‘Legislature of each of the States’, as provided under Article 12 are “State” within the meaning of Article 12 of the Constitution and those phrases never posed any problem as they are definite and identifiable institution with defined contours of authority, organization, hierarchy, etc.

77. It is the phrase ‘other authorities’, in Article 12 of the Constitution, which has vexed the Courts and its growth over the years has led to near unanimity amongst the courts with regard to parameters for defining ‘other authorities’.

78. Prior to the Judgment of Rajasthan Electricity Board v. Mohan Lal, AIR 1967 SC 1857, the phrase ‘other authorities’ was considered to be such authorities which were ejusdem generis i.e, the phrase ‘other authorities’ meant only such authorities which were exercising Governmental and sovereign functions. The important Judgments in this regard are University of Madras v. Santa Bai, AIR 1954 Mad. 67; Devdas v. Karnataka Engineering College, AIR 1954 Mad. 426; and Kishan Gopal Ram Chandra Sharma v. Punjab University, AIR 1966 Pun. 34. The aforesaid delineation of law with regard to ‘other authority’ being ejusdem generis was overruled by the Apex Court in Rajasthan Electricity Board v. Mohan Lal (Supra). The majority Judgment in Rajasthan Electricity Board case laid down a wider test with regard to ‘other authorities’ by stating that such authorities would fall within the meaning of ‘other authorities’ which have been invested with statutory power to issue binding directions to the parties, the disobedience of which would entail penal consequences or it has the several powers to make rules and regulations having force of law. Even this expansive definition was not expansive enough.

79. The potential of the phrase ‘other authorities’ was re-visited, subsequently, by a Constitution Bench of the Apex Court in Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, 1975 (1) LLN 366 (SC) : AIR 1975 SC 1331. The majority in the said case considered the relevant provisions of the three Acts creating Oil and Natural Gas Commission, the Life Insurance Corporation and the Industrial Finance Corporation and following the test laid down in Rajasthan Electricity Board case (supra) held that three organizations were “State” within the meaning of Article 12 of the Constitution though the Employees were not Employees of the Union or State but as the statutory bodies had a statutory status, the Employees were “intitled to declaration of being in employment when their dismissal and removal was in contravention of statutory provisions.” In the same Judgment of Sukhdev Singh (supra), Justice Mathew adopted a completely ingenious approach and laid down the foundations which has over the period led to a far more liberal and inclusive interpretation of ‘other authorities’ thereby subjecting a vast array of statutory and non-statutory organizations within the gaze of Constitutional Judicial Review.

80. Justice Mathew in case of Sukhdev Singh (supra) alluded to the multiplication of the task of the Government with the advent of welfare state leading to ‘Development of a policy of Public Administration through separate Corporations which would operate largely according to business principles and be separately accountable’. These public corporations, as per him, became the third arm of the Government who were established normally by Parliament and were charged with the duty of carrying out specified Governmental functions and were subject to control by the Executive. While the corporations remained juristically independent entity not directly responsible to the Parliament, he emphasized that “the Constitution was framed on the theory that limitation should exist on the exercise of power by the State” He further emphasised “the Constitution therefore, should, wherever possible, be so construed as to apply to arbitrary Application of power against individuals by centres of power”. He advocated “the governing power wherever located must be subject to the fundamental Constitutional limitations. The need to subject the power centres to the control of Constitution require an expansion of the concept of the State action.” He relied on historical trend in America of judicial decisions to bring more and more activity within the reach of the limitations of the Constitution. In doing so, he laid down the test of “agencies or instrumentalities of the State” and for determining whether an organization and institution would qualify for being an agency or instrumentality he laid down various tests which have since been considered, adopted, approved and elaborated in catena of decisions including R.D Shetty v. International Airport Authority of India, 1981 (1) LLN 270 (SC) : AIR 1979 SC 1628 and Ajay Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487.

81. The Hon'ble Supreme Court was, once again, called upon to test the various indicia relating to “agencies or instrumentalities of State”- propounded by Justice Mathew in the case of Sukhdev Singh (supra) and adopted and elaborated in the case of R.D Shetty (supra) and Ajay Hasia (supra) by a Constitution Bench of Seven Judges in the case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111. While affirming the aforesaid tests formulated in the case of Ajay Hasia (supra), the majority Judgment laid down that the indicia laid down by Justice Mathew in the case of Sukhdeo Singh (supra) and subsequently adopted and expanded in Ajay Hasia (supra) - for determining whether a body was an “instrumentality or agency of the State”- are not rigid set of principles and to quote: “The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex-hypothesi, be considered to be a State within the meaning of Article 12 of the Constitution. The question 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 and must be pervasive.

(Underlining mine for emphasis)

82. Here, it is of relevance to note that Article 12 of the Constitution speaks of ‘other authorities’ “within the territory of India or under the control of Government of India”, while Article 226 of the Constitution so far as relevant for the present case reads as under:

“Article 226. (1) Notwithstanding anything in article every High Court shall have powers, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.

(2) The power conferred by Clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.

… … …”

83. Apparently, while defining “State”, Article 12 speaks of “other authorities” whereas Article 226 speaks of the jurisdiction of the High Courts with regard to its power of judicial review and its authority to issue Writs, Directions or Orders to any Government, any Authority or to any person.

84. I am of the view that the phrase “other authorities” in Article 12 is markedly distinct from “any authority” as covered by Article 226 of the Constitution.

85. I am of the firm view that the word “other” preceding the word “authorities” in Article 12 of the Constitution is of significance while determining the nature of “other authorities” covered by Article 12 of the Constitution. Before further dwelling on the issue, I must emphasize that I am conscious of the fact that the Concept of ejusdem generis as had been propounded in the case of University of Madras v. Santa Bai (supra) and other cases was overruled by the Apex Court in Rajasthan Electricity Board case (supra) but the concept that was being considered by the Apex Court was with reference to the nature of function/activities of the body for being considered as “other authorities” and thus a “State” and it was in this context that the Apex Court was of the view that for consideration of a body to be an “other authority” under Article it need not only be considered on the touchstone of exercising Sovereign functions as that inheres in the other Sovereign authorities described in Article 12 viz, Government of India, Parliament of India, Governments and Legislatures of the State, etc.

86. I am of the view that the phrase “other authorities” described in Article 12 though may not discharge functions ejusdem generis as the other Sovereign authorities and they may not even answer the organizational character of the Sovereign bodies - as has been described in Article 12, yet they need to be bodies with formal structure or could be juristic persons in the nature of “Corporation Sole” or ‘Corporation Aggregated’ - carrying the attributes of a structured organization with aggregation of individuals having horizontal and vertical hierarchy. I am of the view that the Public Authority appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act also does not answer the features of a ‘Corporation Sole’.

87. A ‘Corporation Sole’ is a legal entity consisting of single incorporated office occupied by a Single Authority which is unlike ‘Corporation Aggregated’ - which consists of Board of Directors to run the administration of the corporation and may have owners or owners in the nature of stake holders. The concept of ‘Corporation Sole’ has ecclesiastical origins as a means of orderly transfer of ecclesiastical properties with specific purpose to keep the title within the denomination or religious society. Under the Church, the estate of the Church was titled to the office of the ‘Corporation Sole’ and not to an individual which facilitated the orderly transfer of ecclesiastical properties. The concept of ‘Corporation Sole’ helped to reduce the complexity of the organization with one single office representing the entire organization and to which the organization was identified. The Concept of ‘Corporation Sole’ was subsequently imported for secular application and the concept has been formalized in varying forms in different countries with varied structures. The ‘Corporation Sole’ is a body politic having perpetual succession and examples of “Corporation Sole”, in India are to be found in the offices of Comptroller & Auditor General of India, Post-Master General, the Public Trustees, the President of India, etc. The bottom line of either of the organization i.e, the ‘Corporation Sole’ or ‘Corporation Aggregate’ is that the same has to have a body consisting of a structure incorporating a hierarchy and an organization for carrying out its activities.

88. In my view, a ‘Public Authority’, which has been appointed to govern a Cooperative Society-which otherwise does not qualify to be a “State” and is for all purposes a private body and which neither is an “instrumentality or agency of the ‘State’ nor does it carry out a “public function” does not qualify to be a “State” in terms of Article 12 of the Constitution especially when, in his capacity as the Administrator, and as “Public Authority”, is not identifiable with the organization as such and both stand apart from each other.

89. It is relevant to consider the fact that all the indicias that have been laid down for test, right from Sukhdev Singh's case to Pradeep Kumar Biswas's case - have emphasized that for being a “State” under Article 12 the “Public Authority” need to be a body in the nature of either ‘Corporation Sole’ or “Corporation Aggregate” or a body having a formal structure carrying out public functions in their capacity as “instrumentality or agency” of the State. Though, none of the Judgment specifically state so yet the indicias indicate that it is not the individual authority but it is the body or the organization that alone can qualify as “State” under Article 12 of the Constitution. It is here that the distinction between the “other authorities” under Article 12 and “any authority” as described in Article 226 of the Constitution, lies. The “Public Authority” though may not be covered by Article 12 of the Constitution, not being a “State” for it does not have the character of either a “Corporation Sole” or ‘Corporation Aggregate’, or any other form of juristic body or having a formal structure, it may still be within the reach of Article 226 of the Constitution and the High Court would be competent to issue Writs, Directions or Orders even if it is not in violation of Part-III of the Constitution and is in violation of any law governing the discharge of its functions.

90. At this stage, I would like to add that even in case of Gayatri De v. Mousumi Cooperative Housing Society Ltd., (2004) 5 SCC 90, the Apex Court has not held the Special Officer appointed by the High Court to discharge the functions of the society “State” in terms of Article 12 of the Constitution. The Apex Court, in the said Judgment, has held the Special Officer a “Public Authority” amenable to the Writ jurisdiction of the High Court. I think it apt to quote here Paragraph Nos. 47 & 55 of the said Judgment for better appreciation of the issue involved in the present case which read as under:

“47. The Appellant herein filed a Writ Petition in question in the nature of mandamus commanding the Respondent therein not to give effect to the Letter dated 1.11.1988 issued by the Special Officer of the Society and to forbear from acting on the basis thereof and pursuant thereto. Thus it is seen that since the subject-matter of the Writ Petition is the Order passed by the Special Officer in discharging of his statutory functions, the Writ Petition is maintainable in law. The Special Officer is appointed under the provisions of the Act and as such he is a statutory officer and, therefore, he should be regarded as a Public Authority. Apart from that, Article 226 of the Constitution is not confined to issue of writ only to a Public Authority, the bar extends also to issue directions to any person. In our opinion, in a case where the cooperative society is under the control of a Special Officer, a writ would lie.

55. We have, in paragraphs supra, considered the Judgments for and against on the question of maintainability of Writ Petition. The Judgments cited by the learned Senior Counsel appearing for the Respondents are distinguishable on facts and on law. Those cases are not cases covered by the appointment of a Special Officer to manage the administration of the Society and its affairs. In the instant case, the Special Officer was appointed by the High Court to discharge the functions of the Society, therefore, he should be regarded as a Public Authority and hence, the Writ Petition is maintainable.”

91. I am further of the view that a ‘Public Authority’ appointed in terms of Sections 41(1), 41(2), 41(3) or 41(5) of the Act-specially where the organization as such is a private body and is not “State” cannot be declared to be a “State” in terms of Article 12 of the Constitution yet such authority would not be beyond the ambit of Article 226 of the Constitution.

92. I am fortified, in my view, by the observations of Justice Mathew in Sukhdev Singh's case (supra) indicating the indicias relevant for holding a body to be “agency or instrumentality of the State”. The tests led by Justice Mathew in Sukhdev Singh's case were elaborated in the case of R.D Shetty v. International Airport Authority of India (supra) and were re-formulated in Ajay Hasia v. Khalid Mujib Sehravardi case (supra). In Ajay Hasia's case, the tests were culled out and summarized and the tests were further approved in the case of Pradeep Kumar Biswas (supra) wherein it approved that the genesis of the Corporation was immaterial for the Concept of Instrumentality or Agency and was not limited to a Corporation created by statute but is equally applicable to a company or a society-depending upon it fulfilling the indicias described in Ajay Hasia's case. The Apex Court quoted the indicias with approval in Pradeep Kumar Biswas's case in Para 27 which read as under:

“27. Ramana was noted and quoted with approval in extenso and the tests propounded for determining as to when a corporation can be said to be an instrumentality or agency of the Government therein were culled out and summarised as follows: (SCC p. 737, para 9)

“(1) One thing is clear that 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 (SCC p. 507, 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. (SCC p. 508, para 15)

(3) It may also be a relevant 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)”

93. I am of the view that even the indicias indicated above, and which have found approval of the Apex Court, shows that even the tests that have been laid down inhere in themselves that “other authorities” in the nature of “State” under Article 12 of the Constitution are bodies/institutions/juristic or artificial persons and not sole natural persons discharging role of ‘Public Authority’- in the nature of authority appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act - and do not partake the character of the body over which they preside. If the Cooperative Society which is essentially a private body and does not partake even a semblance of the character of the “State” in terms of Article 12 of the Constitution, then the ‘Public Authority’ presiding over the same would not be a “State”.

94. However, while saying so, I fully agree with the opinion of Brother Navaniti Prasad Singh, J. that the ‘Public Authority’ as appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act even if he not being “State” under Article 12, his actions and powers would still be within the reach of Judicial Review of High Court in exercise of powers under Article 226 of the Constitution. The contrary argument advanced by Mr. Lalit Kishore, learned Principal Additional Advocate General and Mr. Bindhyachal Singh, learned counsel for the Appellant that the Concept of Arbitrariness developed and formally established as an ingredient of Article 14 of the Constitution cannot be used to test the vires of the actions of the ‘Public Authority’ amounts to over-simplification and negation of the historical ‘development of judicial review of administrative actions’ under Administrative Law as distinct from the Constitutional Law.

95. While the Constitutional Law, in its simplistic form, is defined as set off laws dealing with the structure, organization, power and functions of the Legislature, the Executive and the Judiciary. As distinct from Constitutional Law the Administrative Law deals with interplay between “organs of administration and that of individual”.

96. The Constitutional Law and the Administrative Law have “deep, intimate and abiding relationship” and as De Smith in his book Judicial Review says that while “Constitution shapes Administrative Law and in turn it is shaped by”. In India, it cannot be denied that in the prevailing Parliamentary system of governance and a written Constitution, the Fundamental rights have deep impact on the Concept of Administrative Law but it remains un-refuted that Administrative Law has gained a distinct and identifiable animated personality of its own and has been an effective tool of establishing ‘Rule of law’.

97. The Administrative Law has been defined by HWR Wade “as the law relating to control of Governmental power” — as the first approximation to a definition. He states - “The primary purpose of Administrative Law, therefore, is to keep the powers of Government within their legal bounds, so as to protect the citizen against their abuse. The powerful engines of authority must be prevented from running amok. ‘Abuse’, it should be made clear, carries no necessary innuendo of malice or bad faith. Government Department may misunderstand their legal position as easily as may other people, and the law which they have to administer is frequently complex and uncertain. Abuse is therefore inevitable, and it is all the more necessary that the law should provide means to check it. It is a common occurrence that a Minister's order is set aside by the Court as unlawful, that a compulsory purchase order has to be quashed or that the decision of a Planning Authority is declared to be irregular and void. The Courts are constantly occupied with cases of this kind which are nothing more than the practical application of the rule of law, meaning that the Government must have legal warrant for what it does and that if it acts unlawfully the citizen has an effective legal remedy. On this elementary foundation has been erected an intricate and sophisticated structure of rules, which are basically Judge-made rules of common law.” As a second approximation to a definition - HWR Wade says - Administrative Law may be said to be the body of general principles which govern the exercise of powers and duties by Public Authority.

98. The essence of Administrative Law lies in Judge made doctrines which apply right across the board and which therefore set legal standards of conduct for Public Authority generally. Wade says - “the simple proposition that a Public Authority may not act outside its powers (ultra vires) may firstly be called the Central Principles of Administrative Law. The juristic basis of judicial review is the doctrine of ultra vires. To a large extent the Courts have developed the subject by extending and refining this principle ……………”

99. The Courts have held that any act which was in excess of powers (ultra vires) was described as outside jurisdiction. The growth of Concept of ultra vires was tagged to the ingenuity of the Court deciding the validity of exercise of powers and with it the ‘Doctrine of ultra vires’ was stretched to mean - “almost anything they wish by finding implied limitation in Acts of Parliament, as they do when they hold that the exercise of statutory power to revoke a license is void unless done in accordance with the Principles of Natural Justice” (Wade in his book Administrative Law - 8th edition)

100. As the concept of ‘ultra vires’ grew it gained more artificiality and Courts developed - in absence of any written law - certain inherent rules of law and procedure regulating the exercise of powers. The Courts attributed intention to Legislature - in absence of any such restriction or where discretion had been given to the Executive to effectuate law - that in giving powers it never intended to authorize abuse or authorize that the executive act in bad faith or unreasonably or on no evidence. In absence of express provision Courts set out to find implied terms or condition in the Act - a violation of which entailed condemnation of ultra vires - to prevent abuse of power and controlling the organs of Administration vis-a-vis the individual. As Wade describes - “Into this bed of Procrustes, accordingly, must be fitted not only the more obvious cases of inconsistency with statute, such as failure to follow expressly prescribed procedure, irregular delegation, and breach of jurisdictional conditions: but also the more sophisticated types of mal-practice, such as unreasonableness, irrelevant considerations, improper motives, breach of Natural Justice and, most recently, mere error of law. If an Act empowers a minister to act as he thinks fit in some matter, the Court will read into the Act conditions requiring him to act within the bounds of reasonableness, to take account of relevant but not of irrelevant considerations, to conform to the implicit policy of the Act, and to give a fair hearing to any one prejudicially affected. These are examples of the many grounds on which the Court will invalidate improper action. Some how they must be forced into the mould of the ultra-vires doctrine, for unless that can be done the Court will be powerless”.

101. It was evident that the Courts were fashioning independent principles of “good administration” independent of specific Parliamentary or Legislative intent - like adherence to ‘Rule of law’, principles of ‘lawfulness’, ‘fairness’, ‘non-arbitrariness’ ‘reasonableness’, etc. De Smith in his book ‘Judicial Review’ states that “a more firmer ground for judicial review was the insistence of Courts, of the Public Authority, was to abide by the necessary requirements of modern democracy and one of which was - the Rule of Law. He describes ‘Rule of Law’ as incorporating varied values - which have long being validated by judicial pronouncements - “such as the requirements that laws as enacted by Parliament be faithfully executed by officials; that orders of Courts should be obeyed; that individuals wishing to enforce the law should have reasonable access to the Courts; that no person should be condemned unheard; that decisions should be communicated before they are enforced, and that power should not be arbitrarily exercised. In addition, the rule of law embraces some internal qualities of all public law: that it should be certain, that is, ascertainable in advance so as to be predictable and not retrospective in its operation; and that it be applied equally, without unjustifiable differentiation.” Wade in his book Administrative Law (8th edition) says - “The rule of law has a number of different meanings and corollaries. Its primary meaning is that everything must be done according to law. Applied to the powers of the Government, this requires that every Government Authority which does some act which would otherwise be wrong (such as taking a man's land) or which infringes a man's liberty (as by refusing him planning permission), must be able to justify its action as authorized by law - and in nearly every case this will mean authorized directly or indirectly by Act of Parliament. Every act of Governmental power, i.e every act which affects the legal rights, duties or liberties of any person, must be shown to have strictly legal pedigree. …………………. The secondary meaning of Rule of Law, therefore, is that Government should be conducted within a framework of recognized Rules and principles which restrict discretionary power. ………. Many of the Rules of Administrative Law are rules for restricting the wide powers which Acts of Parliament confer very freely on Ministers and other Authorities ……… An essential part of the Rule of Law, accordingly, is a system of rules for preventing the abuse of discretionary power. Intensive Government of modern kind cannot be carried on without a great deal of discretionary power; ………… the Rule of Law requires that the Courts should prevent its abuse, and for this purpose they have performed may notable exploits, reading between the lines of the statutes and developing general doctrines for keeping executive power within proper guidelines, both as to substance and as to procedure”. Wade further says, with regard to the Concept of Rule of Law - as tools of judicial review, that the core of the said doctrine centres upon “legality, regularity and fairness, always with emphasis on rejection of arbitrary power.” He quotes Lord Griffiths statement in R. v. Horseferry Road Magistrates' Court ex p. Bennett, 1994 (1) AC 42, “the Judiciary accept a responsibility for the maintenance of the Rule of Law that embraces a willingness to oversee executive action and to refuse to countenance behavior that threatens either basic human rights or the Rule of Law.”

102. De Smith's Judicial Review says- “the English Law now recognizes three main “grounds” of judicial review, known as “procedural propriety” “rationality” and “legality” These grounds are not isolated requirements of a discrete area of law; they refer to and attempt to impose upon all decision-makers standards that are inherent in a democracy to the degree of participation which democracy requires. Rationality seeks the accuracy of decisions and prohibits arbitrariness and excessive burdens being imposed on individuals. The ground of legality involves the application both of the sovereignty of Parliament and the Rule of Law, by requiring Parliament's will to be respected and official action to be congruent with legislative purpose.”

103. These cardinal principles of Doctrine of ‘ultra-vires’; rule of law'; ‘good administration’; etc. in Administrative Law with its contents of ‘fairness of procedure’; ‘lawfulness’; reasonableness'; ‘non-arbitrariness’; adherence to ‘Rules of Natural Justice’ has found resonance in the Indian Legal Jurisprudence and have been consistently insisted upon by the Courts in India. The Courts in India have adopted and expanded the Concept of ‘good administration’, ‘rule of law’, ‘Doctrine of ultra-vires’ as well as the ‘Rules of procedural propriety, ‘rationality’ and ‘legality’.

104. In Madhav Rao Scindia v. Union of India, AIR 1971 SC 530, a Constitution Bench of Eleven-Judges of the Hon'ble Supreme Court held “…………the foundation of our Constitution is firmly laid in the Rule of Law and no instrumentality of the Union, not even the President as the head of the Executive, is invested with Arbitrary Authority. “The Bench further held - “To accede to the claim that the jurisdiction of the Court is barred in respect of whatever the executive asserts is valid is plainly to subvert the Rule of Law”. The Bench further held - “Rule of law is the bedrock of our Constitution. Paramountcy is the very antithesis of rule of law”.

105. It is in the growth of Administrative Law and its recognition in legal jurisprudence, is embedded the idea of “fairness in the administrative action” and that “it should be free from vice of arbitrariness”. The Supreme Court in case of Vinod Kumar v. State of Haryana, 2013 (5) LLN 6 (SC) : 2013 (13) SCALE 161, have said that the Administrative action should be free from vice of arbitrariness and have considered the various parameters of judicial review of Administrative action. Several principles with regard to Administrative Law can be culled out from the said Judgment which includes-duty to act fairly; non-arbitrariness in Administrative action; decision to conform to the purpose of the enabling provisions; Doctrine of ultra vires; to act in good faith; not to pass orders on extraneous consideration. There are several other Principles of Administrative Law which are axiomatic and form part of the Indian legal lexicon and which are not being gone into in this Judgment as they are not relevant for the present purpose.

106. In this regard, I think it apt to quote here Paragraph 18 of the aforesaid Judgment in case of Vinod Kumar (surpa) which reads as under:

“18. The matter can be looked into from another angle as well. In those cases where Courts are concerned with the judicial review of the administrative action, the parameters within which administrative action can be reviewed by the Courts are well settled. No doubt, the scope of judicial review is limited and the Courts do not go into the merits of the decision taken by the Administrative Authorities but are concerned with the decision making process. Interference with the order of the Administrative Authority is permissible when it is found to be irrational, unreasonable or there is procedural impropriety. However, where reasonable conduct is expected, the criterion of reasonableness rests upon the person challenging the validity of the acts. It is also trite that while exercising limited power of judicial review on the grounds mentioned above, the Court can examine whether administrative decisions in exercise of powers, even if conferred in subjective terms are made in good faith and on relevant considerations. The courts inquire whether a reasonable man could have come to the decision in question without misdirecting himself on the law or facts in a material respect (See: M.A Rasheed v. The State of Kerala, (1974) 2 SCC 687). The decision of the Administrative Authority must be related to the purpose of the enabling provisions of Rules or Statutes, as the case may be. If they are manifestly unjust or outrageous or directed to an unauthorized end, such decisions can be set aside as arbitrary and unreasonable. Likewise, when action taken is ultra vires, such action/decision has no legal basis and can be set aside on that ground. When there are Rules framed delineating the powers of the authority as well as the procedure to be followed while exercising those powers, the authority has to act within the limits defined by those Rules. A repository of power acts ultra vires either when he acts in excess of his power in this narrow sense or when he abuses his power by acting in bad faith or for an inadmissible purpose or on irrelevant grounds or without regard to relevant considerations or with gross unreasonableness. This was so explained in Shri Sitaram Sugar Co. Ltd. v. Union of India, (1990) 3 SCC 223 in the following manner:

“A repository of power acts ultra vires either when he acts in excess of his power in the narrow sense or when he abuses his power by acting in bad faith or for an inadmissible purpose or on irrelevant grounds or without regard to relevant considerations or with gross unreasonableness. See Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, 1948 (1) K.B 223. In the words of Lord Macnaghten in Westminister Corporation v. London and North Western Railway, 1905 AC 426:

“……It is well settled that a public body invested with statutory powers such as those conferred upon the Corporation must take care not to exceed or abuse its powers. It must keep within the limits of the authority committed to it. It must act in good faith. And, it must act reasonably. The last proposition is involved in the second, if not in the first…………”

In Barium Chemicals Ltd. v. The Company Law Board, 1966 Supp. SCR 311, this Court states:

“………Even if (the statutory order) is passed in good faith and with the best of intention to further the purpose of the legislation which confers the powers, since the Authority has to act in accordance with and within the limits of that legislation, its order can also be challenged if it is beyond those limits or is passed on grounds extraneous to the legislation or if there are no grounds at all for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. In any one of these situations it can well be said that the authority did not honestly form its opinion or that in forming it, it did not apply its mind to the relevant facts.”

In Renusagar, AIR 1988 SC 1737, Mukharji, J., as he then was, states:

“The exercise of power whether legislative or administrative will be set aside if there is manifest error in the exercise of the power is manifestly arbitrary. Similarly, if the power has been exercised on a non-consideration or non-application of mind to relevant factors the exercise of power will be regarded as manifestly erroneous. If a power (whether legislative or administrative) is exercised on the basis of facts which do not exist and which are patently erroneous, such exercise of power will stand vitiated”.

The true position, therefore, is that any act of the repository of power, whether legislative or administrative or quasi-judicial, is open to challenge if it is in conflict with the Constitution or the governing Act or the general principles of the law of the land or it is so arbitrary or unreasonable that no fair minded authority could ever have made it.”

107. The principal tools of Administrative Law viz., duty to act fairly; non-arbitrariness in administrative actions; duty to act in good faith; reasonableness have found recognition in Part-III of the Constitution of India. Part III of the Constitution of India is not the pro-genitor of the aforesaid concepts but a mere recognition of the same. Thus, Article 14, being part of the fundamental rights, only recognizes their existence. Recognition of this is to be found in Paragraph 20 of the Constitution Bench Judgment of the Hon'ble Apex Court in M. Nagraj v. Union of India, (2006) 8 SCC 212, which reads as follows:

“20. ……… It is a fallacy to regard fundamental rights as a gift from the State to its citizens. Individuals possess basic human rights independently of any Constitution by reason of the basic fact that they are members of the human race. These fundamental rights are important as they possess intrinsic value. Part III of the Constitution does not confer fundamental rights. It confirms their existence and gives them protection. Its purpose is to withdraw certain subjects from the area of political controversy to place them beyond the reach of majorities and officials and to establish them as legal principles to be applied by the Courts. Every right has a content. Every foundational value is put in Part III as a fundamental right as it has intrinsic value. The converse does not apply. A right becomes a fundamental right because it has foundational value. Apart from the principles, one has also to see the structure of the article in which the fundamental value is incorporated. Fundamental right is a limitation on the power of the State. A Constitution, and in particular that of it which protects and which entrenches fundamental rights and freedoms to which all persons in the State are to be entitled is to be given a generous and purposive construction. ……………”

(Underlining mine for emphasis)

108. Thus, it is evident and I am of the considered opinion that Article 14 is not the sole repository of the Concept of ‘non-arbitrariness’ and ‘non-arbitrariness’ has been a tool of judicial review with regard to exercise of powers by organs of administration since time immemorial. All ‘public authorities’ and their exercise of power has to be tested on the anvil of, amongst other Principles of Administrative Law, of non-arbitrariness and one does not need the crutches of Article 14 to test the legality/propriety of the order or exercise of powers by a ‘Public Authority’

109. The argument advanced by Sri Lalit Kishore, learned Principal Additional Advocate General and Mr. Bindhyachal Singh, learned Counsel for the Appellant that the Administrator/Special Officer not being “State” under Article 12 his actions cannot be judged viz-a-viz Part III of the Constitution is devoid of any merit. Their contention that in absence of declaration of “Public Authority” as “State” and testing their actions on the foil of Article 14, the High Court cannot exercise the power of Judicial review under Article 226 of the Constitution is fit to be rejected. To say that Article 14 of the Constitution is the sole repository would amount to cribbing and cabining the Administrative Law within narrow confines and would amount to undermining the sterling role played by Administrative Law in confining the Executive, in exercise of its powers, within the limits of rule of law, good administration, non-arbitrariness, fairness in action, etc.

110. I am, thus, of the view that a Public Authority exercising public function can be reigned, even in absence of being declared as “State” by exercise of powers of Constitutional Review provided to the High Courts under Article 226 of the Constitution of India and as has also been laid out in the judgment of Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649. Striking down arbitrary actions in grant of tenders the Supreme Court in the case of R.D Shetty (supra) resorted to Rules of Administrative Law as well as Article 14 of the Constitution of India and held that on either of the parameters the award of tender did not satisfy the standards and norms. It was with reference to the rigours of Administrative Law to hold the Executive Authority to the standards it professes that the famous quote of Mr. Justice Frankfurter in Viteralli v. Seton, 359 U.S 535 : 3 L.Ed 1012, was referred to by the Court - “he that takes the procedural sword shall perish with the sword.”

111. It is, thus, evident that in face of arbitrary, unreasonable, unfair action of any Public Authority the Courts are not helpless and it has been emphasized by the Apex Court that the Courts would rely upon the dynamism of the law to carve out tools and reliefs so that no action which violates the settled norms of rule of law and good governance and which affect the rights of the citizens would be allowed to escape the wrath of judicial review. The effort should be to ever expand the scope of Constitutional powers of the Courts to bring within the reach of Article 226 of the Constitution all such actions of the Public Authority which violate the basic template of injustice and misuse of authority or violation of rule of law.

112. On the basis of the discussions made, hereinabove, I do agree with Mr. Bindhyachal Singh, learned Counsel for the Appellant and Mr. Lalit Kishore, learned Senior Advocate-cum-Principal Additional Advocate General for the State to the extent of their submission that the Cooperative by itself being a private Cooperative would not be “State” within the meaning ascribed to it under Article 12 of the Constitution merely because of appointment of an Administrator for a temporary period while the Cooperative is under supersession. I further agree with their contention that the Administrator appointed under Sections 41(1), 41(2), 41(3) or 41(5) of the Act, irrespective of the controls exercised by the Registrar-Cooperatives under Section 41(7) of the Act would not have the attributes of “State” in terms of Article 12 of the Constitution. However, they are not correct in their submission that under the circumstances mentioned above, the actions and powers of Administrator would be beyond the ambit of Article 226 of the Constitution.

113. For the reasons recorded, hereinabove, I am also not persuaded by the contention advanced by Mr. Abhay Singh, learned Senior Counsel-cum-Amicus Curiae that when a person being an officer of Government is appointed or a person appointed by Statutory Authority to act under his authority and supervision/superintendence, such a person would be State representative and, thus, would be “State” under Article 12 of the Constitution.

114. To conclude, I would answer the reference in the following terms:

(a) In absence of the duly elected Managing Committee of the Society, appointment of a Government Servant as an Administrator or Special Officer under Sections 41(1), 41(2), 41(3) or 41(5) of the Act is a mere fortuitous circumstance which has no effect upon the constitution or the functions of the Society. If, having regard to its constitution and its functions, the Society is not an “instrumentality of the State” or is not a “State” within the meaning of Article 12 of the Constitution, it does not become “instrumentality of the “State” or “State” merely because the Administrator or Special Officer happens to be a Government servant.

(b) The ‘Public Authority’ appointed as Administrator or Special Officer in terms of Sections 41(1), 41(2), 41(3) or 41(5) of the Act, where the Society itself is not a “State” or “Instrumentality of State” such authority would not be an “authority” within the meaning of Article 12 of the Constitution. However, his actions and powers would still be within the reach of judicial review of High Court in exercise of powers under Article 226 of the Constitution on the anvil of all the codified and un-codified Principles of Administrative Law including his actions/exercise of powers to be free from the vice of arbitrariness.

(c) For the reasons stated afore, the principle laid down by a Division Bench of this Court in the case of Nand Kishore Rai v. State of Bihar, 1988 PLJR 1065, wherein, it has been held that when the Managing Committee of a Cooperative Society has been superseded and a Special Officer has been appointed by the Registrar to manage the affairs of such Society, the Special Officer has to be held to be an authority within the meaning of Article 12 of the Constitution, being not a correct view, is overruled. Accordingly, the approval of the aforesaid view of the Division Bench in the case of Nand Kishore Rai (supra) by the Full Bench of this Court in the case of Rajendra Prasad Sah v. State of Bihar, 2000 (4) PLJR 273, also stands overruled.