In the Supreme Court of India Case No. 1981 AIR 487, 1981 SCR (2) 79 Petitioner Ajay Hasia etc. Respondent Khalid Mujib Sehravardi & Ors. Date of Judgment 13th November 1980 Bench N. Bhgwati Jutice, Y. V. Chandrachud, Justice, Krishna Iyer, Justice S. Murtaz, Jutice A D Koshal, Justice.
Political Background- According to Article 12 of the Constitution of India, the term State denotes the union and state governments, the Parliament and state legislature and all local or other authorities within the territory of India or under the control of the Indian government.
Over the years, the following bodies, which have been vested with the power to make laws and have been created by the Constitution of India, have also been included within the ambit of a state. President of India and Governors with executive powers, LIC, ONGC etc. were included within the ambit of Article 12 of the Constitution of India. Thus, mere regulatory power of the goverment over any statutory or non statutory body is not enough for it to be deemed as a state. The concerned body has to be financially, functionally and administrative and pervasively controlled by the government.
Judicial Background- Judiciary has interpreted various bodies under Article 12 of the Constitution. Judiciary has innterpreted these bodies with the help of various other constitutionl provisions like Artilce 14, Artilce 32. Various tests have been laiddown in different landmark cases to deicide whether any body falls under Article 12. Article 12 plays a very important role to decide the liability of that body as a state. Therefore, Judiciary has always taken various tests to decide the status and liability of impugned body.
1. The Regional Engineering College, Srinagar is one of the fifteen Engineering College in the country sponsored by the Government of India. The College is estalished and its administration and managemnt are carried on by a society registered under the Jammu and Kashmir Registration of societies Act, 1898.
2. The Petitioner in this case challenged the procedure of admission in the Regional Engineering college. The admission process was that they were two tests conducted one was a written exam and the other was a viva test. The viva test of the Petitioner lasted only for 2 or 3 minutes where formal where formal relating to their parentage, residence were and no questions relating to the subject.
3. When the admission were announced, the Petitioner found that though they had obtained very good marks in the qualifying examination, they had not been able to secure admission to the college because the marks awarded to them at the viva examination were very low and candidates who had much less marks at the qualifying examination, had succeeded in obtaining very high marks at the viva examination and thereby managed to secure admission in preferences to the Petitioners.
4. The Petitioner thus filed a writ Petition under Article 32 of the Constitution against the college and challenging the validity of the admissions on various grounds. One of the grounds for admission was that their right to equality under Article 14 of the Constitution was violated.
1. Whether the impugned college falls within the ambit of Article 12 of the Constitution.
2. Whether this criteria for admission violates Article 14 of the Constitution.
1. As per subclause V of Clause 3 of Memorandum of Association contemplates that the monies for running the college would be provided by the State and Central Government and sub clause vi of Clause 3 says the Society to deposit all onies credited to its fund in such banks or to invest them in such manner as the Society may, with the approval of the State Goverment decide.
2. Clause 6 of Memorandum of Association empowers the State and Central government to appoint one or more persons to review the working and progress of the society, or the college and to hold inquiries into he affairs thereof and to make a report.
3. Clause 7 of the Memorandum of Association says that in case College and Society is not functioning properly, the State Government will have the power to take over the administration and assests of the College with the prior approval of the Central Government.
4. Sub Clause (2) of Clause 9 of the Memorandum of Association provides that the State and the Central Government may bu mutual consultation at any time appoint any other person or persons to be member or members of the society.
Therefore, the said College comes within the ambit of Article 12 of the Constitution.
1. The Respondent contended that the college is run by society which is not a corporation breated by a statue but is a society registered under Jammu and Kashmir Societies Act, 1898 and it is therefore, not an authority within the meaning of Art. 12 of the Constitution and no writ petition can be maintained against it nor can any complaint be made that it has acted arbitrarily in the matter of granting admissions and violated the equality clause of the Constitution.
The Petitioners filed before us a chart showing by way of comparison the marks obtained by the Petitioner on the one hand and some of the successful candidates on otherat the examination, in the written test and at the viva voce examination. This chart shows beyond doubt that the successful candidates whose marks are given in the chart had obtained fairly low marks at the qualifying examination as also in the written test, but they had been able to score over the Petitioners only on account of very high marks obtained by them at the viva voce examnation. The Petitioner feeling aggreived by this mode of selection filed the present writ petition challenging the validity of the admission made to the college on various grounds. Some of these grouns stand concluded by the recent decision of this court in Miss Nishi Maghu v. State of Jammu and Kashmir & Ors. and they were therefore not pressed before us.
Before deciding the issue of Article 12, it is necessary to bear in mind that whether an authority falling within the expression “other authoritites”. In the early days when the Government had limited functions, it could operate effective through natural persons constituting its civil services and they were found adequate to discharge government functions which were of traditional vintage. But as the tasks of the frame work of civil services were not sufficient to handle the tasks of the Government multiplied with the dvent of the welfare State, it began increasingly felt that the frame work of civil servic was not sufficient to handle the new tasks which were often specialised and highly technical in character and which called for flexiblilty of approach and quick decision making. It is undoubtedly true that the corporation is a distinct juristic entity with a corporate structure of its own and it carries on its functions on business principles with a certain amount of autonomy which is necessary as well as useful from the point of view of effective business management, but behind the formal ownership which is cast in the corporate mould, the reality is very much the deeply pervasive presence of the Government. It is really the Government which acts through the instrumentality or agency of the corporation and the juristic veil of corporate personality worn for the purpose of convenience of management and administration cannot be allowed to obliterate the true nature of the reality behind which is the Government. If a corporation is found to be a mere agency or surrogate of the Government, “in fact owned by the Government, in truth controlled by the government and in effect an incarnation of the government,” the court must not allow the enforcement of Fundamental Rights to be frustrated by taking the view that it is not the government and therefore not subject to the constitutional limitations. We are clearly of the view that where a corporation is an instrumentality or agency of the government, it must be held to be an ‘authority’ within the meaning of Art. 12 and hence subject to the same basic obligation to obey the Fundamental Rights as the government.
The observation of the Court in the International Airport Authority’s case have our full approval. These test to determine whether any corporation can be said to be a instrumentality or agency of Government but these are not conclusive or clinching, but they are merely indicative. Testes are as follows-
1. One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way toward indicating assistance of the state is so much as to meet almost entire expenditure of the corporation is an instrumentality or agency of Government.
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 corporation being impregnated with governmental character.
3. It may also be relevant factor whether the corporation enjoys monopoly status which is the State conferred or State protected.
4. “Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.
5. “If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying as an instrumentality or agency of Government”.
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. If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, it wold as pointed out in the International Airport Authority’s case, be an ‘authority’ and therefore, ‘State’ within the meaning of the expression in Article 12.
We find that the same view has been taken by Chinnappa Reddy, J. In a subsequent decision of this court in the U.P. Warehousing Corporation v. Vijay Narain and the observation made by the learned Judge in the case strongly reinforce the view we are taking particularly in the matrix of our constitutional system.
The learned counsel appearing on behalf of the respondent no. 6 to 8, relied strongly on the decision in Sabhajit Tewary v. Union of India & Ors. and contended that this decision on laid down in no uncertain terms that a society registered under the Societies Registration Act, 1860 can never be regarded as an ‘authority’ under Article 12. This being a decision given by a Bench of five Judges of this court is undoubtedly binding upon us but we do not think it lays down any such proposition as is contended on behalf of the respondents. The test which the Court applied for determining this question was the same as the one laid down in the International Airport Authority’s case and approved by us, namely, whether the Council was an instrumentality or agency of the Government. The Court did not rest its conclusion on the ground that the Council was a society registered under the Societies Registration Act, 1860, but proceeded to consider various other features of the Council for arriving at the conclusion that it was not an agency of the Government and therefore not an “authority”. This would have been totally unnecessary if the view of the Court were that a society registered under the Societies Registration Act can never be an “authority” within the meaning of Article 12.
The Government of Kashmir satisfied all the six provisions of the tests and had complete control over the working of the college, the society was the agency of the government. Petition was held to be dismissed by the Hon’ble Bench.