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SCA/1222920/2008 19/ 19 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 12229 of 2008
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JAYESHKUMAR
S PATEL - Petitioner(s)
Versus
KRISHAK
BHARATI COOPERATIVE LTD & 3 - Respondent(s)
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Appearance
:
MR
YATIN OZA WITH MS SONAL R SHAH for
Petitioner(s) : 1,
MR MANISH R BHATT WITH MS MAUNA M BHATT WITH MS
HIRAL PANCHAL for Respondent(s) :
1-4,
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CORAM
:
HONOURABLE
MR.JUSTICE KS JHAVERI
Date
: 29/12/2008
ORAL
ORDER
1. Heard
learned counsel for the respective parties.
2. By
way of this petition, the petitioner has prayed to quash and set
aside the order dated 08.09.2008 passed by the respondent no.1 and
further to direct the respondents to reinstate the petitioner in
service on his original post with all backwages and other incidental
and consequential benefits arising therefrom.
3. The
facts in brief leading to the filing of the present petition could be
set out as under:
3.1 The
petitioner joined the services of the respondent as Assistant
Operator(Production)-Urea on 01.04.1985 on probation period of six
months and was required to enter a contract of three years with
effect from 15.03.1985. The petitioner was also required to sign a
surety bond. At the end of probation, the petitioner was confirmed
in Grade-J with effect from 15.09.1985.
3.2 The
petitioner was thereafter promoted to the post of Operator (Urea) on
09.08.1988 and confirmed with effect from 01.08.1988. He was again
promoted to the post of Chief Operator (Production) vide order dated
18.09.1991. Vide order dated 18.02.2003, he was again promoted to
the post of Senior Engineer, Grade-G and confirmed on the said post
vide order dated 16.01.2004.
3.3 It
is the case of the petitioner that the petitioner was issued a
transfer order on 16.04.2008 to Vishakhapatnam with a view to see
that the petitioner who was the General Secretary of the KRIBHCO
Officers’ Association does not participate in the protest against the
‘control of overtime’ circular issued by the respondents.
3.4 The
petitioner thereafter joined duty at the respondent no.4 office on
28.04.2008, and thereafter proceeded on leave from 03.05.2008 to
18.05.2008. It is the case of the petitioner that due to his
daughter’s upcoming exams he again proceeded on leave from 26.05.2008
to 07.06.2008 and the same was recommended by the respondent no.4 and
forwarded to respondent no.3.
3.5 It
is also the case of the petitioner that while on leave during the
period 26.05.2008 to 07.06.2008, the petitioner fell ill as he was
suffering from acute viral hepatitis and therefore sent a telegram to
the respondent no.3 informing them of his extension of leave.
3.6 On
12.06.2008, the petitioner received a telegram from the respondent
no.4 that his leave application had not been sanctioned and therefore
was asked to report to work immediately. The petitioner immediately
on 13.06.2008 sent a telegram to the respondents no. 3 & 4
informing them that he is sick and is not in a position to travel to
Vishakhapatnam and that therefore he will immediately resume duty on
recovery.
3.7 Pursuant
to the said telegram, the respondent no. 4 vide communication dated
05.07.2008 asked to produce the medical certificate for his alleged
illness and the same was sent by the petitioner. It is the case of
the petitioner that the petitioner was again sent a letter dated
14.08.2008 issued by the Disciplinary Authority stating therein that
since the petitioner had not resumed duty, it would be considered as
unauthorized absence and a second medical opinion is required. The
petitioner was therefore directed to appear before the General
Hospital, Surat on 21.08.2008 for medical examination.
3.8 The
petitioner vide letter dated 21.08.2008 stated that he was genuinely
ill and there was no reason for doubting the medical certificates
produced by him. It was also stated therein that during the said
period, he was also suffering from acute back pain and was admitted
in the hospital from 26.07.2008 to 29.07.2008. The petitioner also
stated therein that under such circumstances it would not be possible
for him to travel to Surat.
3.9 It
is the case of the petitioner that he once again sent all his medical
papers and other relevant records along with letter dated 10.09.2008
to the respondent no.1. Thereafter, on 23.09.2008, the petitioner
received the order dated 08.09.2008 forwarded by the respondent no.4
vide letter dated 17.09.2008 informing the petitioner that his
services have been discharged with immediate effect and one month’s
pay has been sent in lieu of one month’s notice. Being aggrieved by
the said action, the present petition is preferred.
4. Mr.
Yatin Oza, learned Senior Counsel appearing with Ms. Sonal Shah for
the petitioner has submitted that the impugned order dated 08.09.2008
is absolutely illegal and arbitrary inasmuch as the said order no
where states the reason for terminating the services of the
petitioner and that too, without giving any opportunity of hearing or
without giving any substantial reason for bringing an end to 23 years
of unblemished and blot-less service record of the petitioner.
4.1 Mr.
Oza has submitted that the entire order is bad in law even on the
face of it as no charges have been leveled against the petitioner, no
show cause notice has been issued nor any reasons have been assigned
for imposing such a major penalty and therefore requires to be
quashed and set aside.
4.2 Mr.
Oza has further submitted that apart from the order being bad in law,
it also suffers from violation of principles of natural justice. It
is submitted that the petitioner was a permanent employee of the
respondent and had been working for 23 years without any adverse
remark against him.
4.3 Mr.
Oza has further submitted that the petitioner has been victimized at
the hands of the respondent officers which is evident from the fact
that the petitioner was transferred on 16.04.2008 from Surat to
Vishakhapatnam without any reason whatsoever. He has submitted that
the respondent officers were looking for one or other reason so as to
stop the petitioner from exposing the irregularities and corrupt
malpractices of the higher officers of the respondent organization.
4.4 Mr.
Oza, in order to support his submissions has relied upon a decision
of the Apex Court in the case of Pradeep Kumar Biswas vs. Indian
Institute of Chemical Biology & Ors reported in 2002 (5) SCC 111.
5. Mr.
Manish Bhatt, learned Senior Counsel appearing with Ms. Mauna Bhatt
for the respondents has raised a preliminary objection that a writ
petition in the present matter is not maintainable before this Court.
He has submitted that the respondent no.1 is neither a ‘State’ under
Article 12 of the Constitution of India nor is an instrumentality of
State ‘nor other authorities’ nor is a creation of a statute nor
discharges ‘public function’ and as such a writ petition under
Article 226 of the Constitution of India cannot be preferred against
KRIBHCO.
5.1 He
has further submitted that the respondent no.1 is a national level
multi state co-operative society, registered under the Multi-State
Co-operative Society Act, 1984 repealed by Multi-State Co-operative
Societies Act, 2002 (hereinafter referred to as MSCS Act). In view of
the said preliminary objections, Mr. Bhatt has submitted that this
petition is not maintainable before this Court.
5.2 Mr.
Bhatt has also submitted that the respondent no.1 is not a Government
Company as defined in Section 617 of the Companies Act, 1956. He has
contended that KRIBHCO is a purely commercial enterprise consisting
of and created by and for its members. The respondent no.1 has been
constituted primarily for the purpose of carrying on commercial
activities in accordance with the Co-operative principles and to
promote interests of its co-operative members i.e. Co-operative
Societies and other institutions. He has therefore submitted that
the respondent no.1 being a co-operative society and a
non-governmental organization is governed by its own registered
bye-laws.
5.3 Mr.
Bhatt has further submitted that under Section 38(2) of the Act the
final authority of the Society vests in the General Body of the
Society in which the non-government members exceeds the government
members and that even amongst the Board of Directors, there are only
three government nominated directors.
5.4 He
has submitted that section 31(c) of the MSCS Act provides that each
member is entitled to only one vote in the affairs of the respondent
no.1 irrespective of the extent of share holding and that this is a
marked departure from the principles of Company Law.
5.5 The
other contention raised by Mr. Bhatt for the respondents is that
Section 35 of the MSCS Act read with bye-law 8(a) of respondent no.1
authorises the respondent no.1 to retire partially or fully the
equity shares held by Government of India and that pursuant to the
decision of the Board of Directors of respondent no.1, the respondent
no.1 has already taken steps to repatriate the equity shares to the
Government of India. It is submitted that Rs. 60.29 crores out of
Rs. 329 crores of the equity of Government of India held in
respondent no.1 already stands repatriated to the Government of India
as per the Books of Accounts of respondent no.1 closed for financial
year ending March 2006.
5.6 Mr.
Bhatt has submitted that the Government only receives the dividend
just like other shareholders and that the shareholding is not a
determinative factor but only one of the factors which are required
to be considered.
5.7 It
is submitted that the respondent meets all its expenditures from its
own resources and no part of the expenditure is borne or provided for
by the government or audited by the government. The surplus reserve
fund of respondent no.1 as on 31.03.2008 is Rs. 1982.43 crores which
speaks in itself that the respondent no.1 is self sustainable and is
not dependent on any finance from outside including Government of
India.
5.8 The
other contention raised by Mr. Bhatt for the respondents is that
employees are governed by own service rules framed by Board of
Directors of KRIBHCO under section 49(a) of MSCS Act read with bye
law 47. It is submitted that the respondent no.1 is in the business
of manufacture and sale of fertilizer and that it is not a monopoly
ore a statutory function.
6. Mr.
Bhatt in support of his submissions has relied upon various decisions
of the this Court and other high courts wherein it is held that
KRIBHCO is not a State.
R.K.
Mishra & Others vs. Krishak Bharati Cooperative Limited &
Others reported in 2002(3) AD (Delhi) 663.
M/s.
L.K.L Construction Company vs. The General Manager (Prodn.) &
Others
delivered by this Court in SCA 259 of 1994.
S.
Vijayan vs. Krishak Bharati Co-operative Ltd. delivered by this
Court in SCA 1830 of 1986.
Ashok
kumar and Others vs. Union of India and Others with Sunil Shastry
and Others vs. Union of India and Others delivered by Allahabad High
Court in CMWP No. 21772 of 2006.
6.1 Mr.
Bhatt has also relied on some other decisions of other high courts
wherein it has been held that IFFCO is not a state. The same are as
under:
Bihar
State Co-operative Marketing Union Ltd and Another vs. Indian
Farmers Fertilizer Co-operative Ltd. And others delivered by Patna
High Court in Civil Writ Jurisdiction Case No. 7303 of 1993.
Chhitar
Singh vs. The Indian Farmers Fertilizer Co-operative Ltd. And
others delivered by the Jaipur Bench of Rajasthan High Court in
Civil Writ Petition No. 139 of 1986.
Shyam
Lal vs. IFFCO and others delivered by the Allahabad High Court in
Civil Misc. Writ Petition No. 6143 of 1984.
Laxman
Singh vs. Indian Farmers Fertilizer Co-operative Ltd. and others
delivered by Delhi High Court in Civil Writ Petition No. 2024 of
1990.
7. Mr.
Bhatt has submitted that as far as the decision in the case of
Pradeepkumar (supra) is concerned, the Government of India has no
deep and pervasive control which has been supported by the affidavit
in reply dated 25.07.2005 filed by the Government of India in
proceedings before the Delhi High Court.
7.1 Mr.
Bhatt has also drawn the attention of this Court to the letter dated
07.06.1993, Annexure 5 to the petition, wherein the stand taken by
the Union of India is that since IFFCO and KRIBHCO are Cooperative
societies and not PSUs, the dispute within is required to be settled
as per the existing guidelines followed in the respective
organization. He has submitted that therefore it can be understood
that the contention of the petitioner is misconceived and the
petition is not required to be entertained.
8. Mr.
Yatin Oza, though contested the matter on merits, he has subsequently
requested this Court to decide the matter only on the preliminary
issue of maintainability of this writ petition. He has controverted
the preliminary objections raised by the respondent and submitted
that the respondent discharges the functions of the ‘State’ or its
instrumentality and that the Government has a hold over the
respondent organization and has control on the working of the
respondent and the respondent is nearly a projection of the
Government.
8.1 In
order to substantiate the said submission, Mr. Oza has submitted that
perusal of the agreement between two sovereigns i.e. the Union of
India through the respondent society itself establishes the said
fact.
8.2 Mr.
Oza has also submitted that since 1979 onwards the definition of
‘State’ as envisaged under Article 12 of the Constitution has been
expanded to also cover various limbs like the respondent which
carries out public function delegated by the Government, wherein the
Government is behind the veil.
8.3 He
has further submitted that if the bye-laws of the respondent
organization are perused, Clause 7 clearly states that the major
share capital i.e. Around Rs. 445 crores out of the total share
capital of Rs. 500 crores is held by the Government of India and the
Government undertaking corporations.
8.4 He
has submitted that even if the contention in para 7 of the reply is
considered, it is clear that the Government of India, Department of
Fertilizers holds the maximum share capital of the total paid up
share capital of the respondent no.1 to the extent of 67.59% and that
therefore in view of the bye-laws and the financial holding of the
Central Government in the respondent no.1 organization, it clearly
displays that the respondent no.1 is a projection of the Government.
8.5 Mr.
Oza has also submitted that the Board of Directors of the respondent
no.1 mainly consists of government officials/officers who are given
appointment in the respondent no.1 by the Government and with the
approval of the Government of India. He has emphasized on the fact
that the Managing Director of the respondent no.1, in whom the
executive and administrative powers vests and who is the executive
head of the organization is appointed by the Government of India.
8.6 Mr.
Oza has further submitted that the Central Vigilance Commission which
normally monitors and vigils the day-to-day functioning of the
government organizations also monitors the functioning of the
respondent no.1 organization and that the same is evident from the
fact that the complaint sent by the petitioner against some higher
officers of the respondent no.1 department has been entertained by
the Central Vigilance Commission for which a communication dated
13.10.2008 has been sent to the petitioner.
8.7 He
has submitted that all this shows that the Government is also
supervising, monitoring and investigating into the irregularities
committed by any officers of the respondent no.1 and if this be so,
the service conditions of the employees of KRIBHCO are completely
under the control of the Government of India, for which if a
challenge is made in a writ petition, the said writ petition deserves
to be entertained.
9. This
Court has gone through the materials placed on record by each side.
With the consent of the parties, this Court is taking up this matter
only qua consideration of the preliminary issues in the petition.
This Court has also perused the various decisions relied upon by both
the sides in support of their cases. At this point it would be
relevant to go through the decision of this Court in the case of
M/s. L.K.L Construction Company vs. The General Manager (Prodn.) &
Others in SCA 259 of 1994 more
particularly paras 14 and 15 which read as under:
14.
Having given thoughtful and anxious consideration to various
decisions cited by the learned counsel for the parties and
particularly binding decisions of this Court as well as of the
Hon’ble Supreme Court, I find considerable force in the preliminary
objection raised by the learned counsel for the respondents that
KRIBHCO cannot be said to be State within the meaning of
Article 12 of the Constitution of India. Almost in similar
circumstances, GSFC and IFFCO were not held to be State . So
far as IFFCO is ocncerned, the point is concluded by a decision of
this Court in Special Civil Application No. 2025 of 1993. As a
single Judge, I am bound by the said decision. No doubt, the learned
counsel for the petitioners strongly contended that the approach
adopted by the learned single Judge was not in consonance with law
inasmuch as according to them, the learned single Judge has at more
than on e place observed in the judgemnet that the test of control by
the Government is a crucial and decisive factor and a
clinching circumstance in deciding whether the respondent can
be said to be State under Article 12 of the Constitution. It
was also submitted that as held by the Hon’ble Supreme Court in the
case of R.D. Shetty vs. International Airport Authority, Ajay Hasiya
vs. Khalid Mujib, Som Prakash Rekhi vs. Union of India, Central
Inland Water Transport Corporation vs. Brojo Nath Ganguly and M.C.
Mehta vs. Union of India, referred to above, no circumstance can be
said to be a clinching one and no factor can be described as crucial.
It is cumulative effect of all the circumstances that makes an
authority State under Article 12 of the Constitution. In my
opinion, however, the learned single Judge considered all the factors
and circumstances and came to the conclusion that IFFCO cannot be
said to be State within the meaning of Article 12. The learned
counsel for the respondent has prepared a comparative table of
KRIBHCO & IFFCO showing the Constitution of the Board of
Directors, functions, powers and the duties of the Managing Director
as well as the Board of Directors, control by the Government,
functions to the performed by them, financial assistance to those
institutions and other relevant factors. Looking to the constitution
of the authorities, functions to be performed by them, powers to be
exercised, duties to be discharged, as well as the control of the
Government, it is clear that KRIBHCO is established almost on the
same line on which IFFCO is established. The principle laid down in
IFFCO by this Court, therefore, applies with equal force to KRIBHCO
also.
15. Again,
the point is finally concluded by a decision of the Division Bench of
this Court in Letters Patent Appeal No. 375 of 1985. The ratio laid
down by the Division Bench applies with full force to the present
case. In that case, the Division Bench of this Court held that
Gujarat State Fertilizers Co. (GSFC) is not State within the
meaning of Article 12 of the Constitution. The Division Bench
considered various tests laid down by the Hon,ble Supreme Court, and
held that no petition would lie against FSFC. I am in respectful
agreement with the view taken by the Division Bench of this Court and
hold that KRIBHCO cannot be said to be State under Article 12
of the Constitution.
9.1 Mr.
Oza has contended that Clause 7 clearly states that the major share
capital of respondent no.1 corporation i.e. Around Rs. 445 crores out
of the total share capital of Rs. 500 crores is held by the
Government of India and the Government undertaking corporations.
However, as a result of perusal of records, this Court is not keen to
accept the said contention intoto inasmuch as section 31(c) of the
MSCS Act provides that each member is entitled to only one vote in
the affairs of the respondent no.1 irrespective of the extent of
share holding. Further it is required to be noted that Rs. 60.29
crores out of Rs. 329 crores of the equity of Government of India
held in respondent no.1 already stands repatriated to the Government
of India as per the Books of Accounts of respondent no.1 closed for
financial year ending March 2006.
9.2 Further,
it appears that the membership of KRIBHCO is open to persons who are
covered under section 25 of MSCS Act, 2002 read with bye-laws No. 6
of KRIBHCO. In that view of the matter, it cannot be said that the
members of KRIBHCO are mainly Government undertaking. The petitioner
has submitted that the final decision with regard to the employees is
taken by the Government. However, from the records it appears that
any voluntary adoption of instructions of CVC meant for Government
Undertakings/PSUs does not bring the respondent no.1 within the
meaning and scope of Article 12 of the Constitution of India.
9.3 The
power of appointment and removal of the Directors including Chief
Executive Officer of KRIBHCO is vested in the Board of Directors of
KRIBHCO by virtue of Section 49 in MSCS Act and not in the Government
of India as claimed by the petitioner. The respondent no.1 has
voluntarily accepted officers of Government of India on deputation as
CVO of KRIBHCO. It is borne out that the power of appointment of CVO
of KRIBHCO is vested in the Board of Directors of KRIBHCO and not
with the Government of India. The said fact is also borne out from
the letter No. 11015/8/75L&M Vol. IV dated 21.05.2003.
10. It
is also required to be noted that the service conditions of the
employees of KRIBHCO is regulated by its own service rules framed by
KRIBHCO and power to frame service conditions including appointments
and removal of employee of KRIBHCO is vested in the Board of
Directors of KRIBHCO bu virtue of Section 49 of MSCS Act read with
bye-law no. 47 of KRIBHCO and therefore the Government of India or
the Office of CVC has no authority to supervise, monitor or
investigate into an alleged irregularity of an employee of Respondent
no.1.
11. As
a result of hearing and perusal of records, this court is of the
opinion that the most important of all the decisive factors shall be
the questions of society being instrumentality of State and deep and
pervasive control of STATE. Here it has to be kept in mind that the
mere fact that a company or a co-operative society has to respect
certain laws, is to be guided by public officers, would not mean that
they have become instrumentality of the State. The impression of a
welfare state is also in the idea that people are not easily cheated
in the name of investment in a company and when their money is
invested, there is certain amount of trust as well. It is with this
mind possibly that Company law and the Co-operative Societies Act
have been framed. Protection of such interest would not make the
Co-operative Society or Company an instrumentality of the State. The
said issue is also decided by various benches of this Court more
particularly, in the case of M/s. L.K.L Construction Company Ltd.
(supra) as well as S. Vijayan (supra). In that view of the matter,
the petition under Article 226 of the Constitution of India against
KRIBHCO is not maintainable.
12. As
regards the question of deep and pervasive control of the Government
of India, from the materials placed on record, more particularly, the
affidavit of the Government of India dated 25.07.2005 filed as
Annexure-4, it is borne out that the Union of India has no control
in the functioning of the multi state cooperative societies. The
membership and shareholding of the society shows that only one vote
is given to each member of the cooperative society. Though the Union
of India has a financial stake but it has only one vote in the
General Body and as such has no effective or pervasive control of the
society. The finance given by the Government of India is also being
repatriated to the Government by the society in terms of the
amendment carried out in the Multi-state Cooperative Societies Act.
Earlier under the provisions of section 44(4) of the 1984 Act, it was
obligatory on the part of the society to seek prior approval of the
Government for appointment of its Chief Executive and Functional
Directors. However, u/s 51 of the 2002 Act, the Chief Executive
Officer of the Society is to be appointed by the Board and no prior
approval of the Government is necessary.
12.1 A
perusal of the bye-laws, more particularly, bye-law no. 27 of KRIBHCO
provides that the final authority of the society shall vest in the
General Body of the society constituted in accordance with the
bye-laws. Even amongst the Board of Directors, there are only 3
Government nominated Directors.
13. In
that view of the matter, this court is of the opinion that the
respondent society cannot be said to be a State , other
authority or instrument or instrumentality of the State within the
meaning of Article 12 of the Constitution of India and that there is
no deep or pervasive control of the Government in the respondent
Society. Since the petition is not maintainable before this Court,
it is required to be dismissed without expressing any opinion on
merits.
14. In
the result, the petition is dismissed. It is made clear that this
Court has not expressed any opinion on merits about the order dated
08.09.2008 qua the discharge or territorial jurisdiction. The same
shall be decided by the competent authority/court under the law. No
order as to costs.
(K.S.
JHAVERI, J.)
Divya//
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