IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 29/09/2006
CORAM
THE HONBLE MR.AJIT PRAKASH SHAH, CHIEF JUSTICE
THE HONBLE MR. JUSTICE P.K.MISRA
THE HONBLE MR. JUSTICE D.MURUGESAN
THE HONBLE MRS. JUSTICE PRABHA SRIDEVAN
THE HONBLE MR. JUSTICE M.JAICHANDREN
Writ Appeal No.1573 of 1998
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K.Marappan ..Appellant
Vs.
1. The Deputy Registrar of Co-operative Societies,
Namakkal Circle,
Namakkal - 636 001.
2. The Special Officer,
Vattur Co-operative Agricultural Bank,
Vattur Post,
Tiruchengode Taluk,
Salem District. ..Respondents
PRAYER: Appeal filed under Clause - 15 of the Letters Patent against
the order of the learned single passed in W.P.No.1245 of 1989 dated 12.02.1998.
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For Appellant :: Mr.N.G.R.Prasad
For M/s.Row & Reddy
For Respondent -1 :: Mr.R.Viduthalai,
Advocate General
assisted by Mr.G.Sankaran, A.G.P.
For Respondent - 2 :: Mr.T.Senthilnathan
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J U D G M E N T
THE HONBLE THE CHIEF JUSTICE
A five-Judge Bench of this Court in M.Thanikkachalam v. Madhuranthagam Agricultural Co-operative Society, 2000 (4) CTC 556:2001 (1) LLJ 285, has held that no writ will lie against a co-operative society, since it is not an instrumentality of the State within the meaning of Article 12 of the Constitution of India.
2. While hearing the present writ appeal filed against the order of the learned single Judge dismissing the writ petition against a co-operative society, the Division Bench {Markandey Katju, C.J. (as he then was) and F.M.I.K.J.} doubting the five-Judge Bench decision, by order dated 9.8.2005, referred the following question to be decided by a Larger Bench.
” Whether the decision of the five-Judge Bench of this Court in M.Thanikkachalam v. Madhuranthakam Agricultural Co-operative Society, 2000 (4) CTC 556 : 2001 WLR 1, holding that no Writ will lie against a co-operative society is correct in law?”
Pursuant to the said order, the above question was referred to a Full Bench consisting of three Judges. The Full Bench took the view that it will be open only for a Bench of coequal strength to express an opinion doubting the correctness of the view taken by the earlier Bench of coequal strength, whereupon the matter may be placed for hearing before the Bench consisting of a quorum larger than the one which pronounced the decision laying down the law, the correctness of which is doubted. Consequently, the matter has been placed before this five-Judge Bench.
3. Before considering the question referred to the Bench, it will be useful to refer to the decision of M.Thanikkachalam’s case (cited supra). It is seen from paragraph-11 of the aforesaid judgment that in view of difference of opinion, a Larger Bench was constituted to answer the question put forth as to whether the decision in R.Thamilarasan, etc. v. Director of Handlooms and Textiles, Madras and others, 1989 (1) LLJ 588, which got the seal of approval of two Full Benches of this Court required reconsideration. After considering the contentions raised by the counsel, earlier decisions of this Court, as well as the Supreme Court, the five-Judge Bench concluded thus: – (LLJ p.301)
” However, we can attempt a broad classification of cases where this Court can invoke the powers under Article 226. For Mandamus to be issued to direct a person to do some particular thing, it should appertain to his office and should be in the nature of public duty. The person or the authority on whom the statutory duty is imposed, need to be a public official or an official body (vide Praga Tools Corporation vs. Immanuel, AIR 1969 SC 1306 : 1969 (1) SCC 585: 1969 (2) LLJ 7499). If there is contravention of the principles of natural justice, which is required as per the statute and not followed, however, as pointed out by the Constitution Bench of the Supreme Court in Nagendra Nath v. Commissioner of Hills Division, AIR 1958 SC 398, the rules of natural justice vary with the varying constitutions of statutory bodies and the rules prescribed by the Act under which they function. The question whether or not any rules of natural justice had been contravened should be decided not under any pre-conceived notions, but in the light of the statutory provisions. Where no such provision which could be said to have been contravened by a Tribunal is brought to the notice of the Court, it is no ground for interference either under Article 226 or 227 simply because the Tribunal had viewed the matter in a light which is not acceptable to the Court. A duty to act fairly can be interpreted as meaning duty to observe certain aspects of rules and natural justice. Sometimes duty to act fairly can also be sustained without providing for an oral hearing. It will depend upon the nature of the interest to be affected, the circumstances in which a power is exercised and the nature of sanctions involved therein (vide Erusian Equipment and Chemicals v. State of West Bengal, AIR 1975 SC 266: 1975(1) SCC 70). When power has been exercised mala fide, arbitrarily or in absolute disregard to constitutionalism, the Court would intervene (vide Swaran Singh v. State of Uttar Pradesh, 1969 (3) SCC 384). The monstrosity of the situation as stated or other exceptional circumstances may cry for the timely judicial interdict or mandate vide Rohtas Industries. If the terms of Contract and Employment Service Rules detrimental to the employees are found to be unconscionable, unfair, unreasonable, against public policy and public interest and against principle of distributive justice in the context of Parts III and IV of the Constitution, it would be violative of Article 14 of the Constitution (vide Central Inland Water Transport Corporation v. Brojo Nath Ganguly, AIR 1986 SC 1571 : 1986(3) SCC 156 : 1986 (2) LLJ 171), can be instances.
61. It is also to be noted that this Court while exercising power under Article 226 of the Constitution, which is discretionary in nature, is a Court not being a Court of Appeal, more so, when alternative remedy is available under a particular statute, and when the Act and the Rules provide for so many safety measures, and when the discretionary power of this Court under Article 226 remains in tact, we do not want to substitute our view that the Writ Petition against Co-operative Societies is maintainable in the garb of efficacious remedy as a matter of course, as discussed above. Unless the petitioner is able to show some special circumstances, and the fact that the Authorities concerned while passing orders have failed to perform their duties imposed by the statute, as discussed, and for the reasons mentioned above, we approve the decisions of Two Full Benches that no Writ Petition is maintainable against a Co-operative Society. The same needs no re-consideration. Writ Petition against a Co-operative Society is not maintainable. However, as stated each case depends upon the facts and circumstances of its own. So, to decide the question of maintainability, the learned single Judge will consider and decide the cases on maintainability in the light of the observations made by us in this judgment. We answer the reference accordingly.”
It is clear from the above conclusion that the five-Judge Bench approved the earlier decisions of two Full Benches that no writ petition is maintainable as against a co-operative society. The five-Judge Bench has held that the same needs no reconsideration and reiterated that no writ will lie against a co-operative society.
4. In the referring order Katju, C.J. (as he then was) speaking for the Bench has observed that there can be two kinds of co-operative societies – one which can be regarded as an instrumentality of the State within the meaning of Article 12 of the Constitution, and the other which is not an instrumentality of the State within the scope of Article 12 of the Constitution. While a writ will lie against a co-operative society falling under the first category, no writ will lie against a co-operative society, which falls under the second category. Whether a co-operative society is an instrumentality of the State under Article 12 of the Constitution or not will depend upon the various tests laid down by the Supreme Court in various decisions, e.g whether there is deep and pervasive control of the Government, extent of the shareholding of the Government, etc. It cannot be laid down as a universal proposition, that no writ can ever lie against a co-operative society. It will depend on the nature of the society and various other factors. Reliance was placed upon the decision of the seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Technology, (2002) 5 SCC 111 and certain other Supreme Court decisions.
5. Thus, the question which falls for our consideration is as to whether a co-operative society registered under the Tamil Nadu Co-operative Soceities Act, 1983 (hereinafter for the sake of brevity referred to as the ‘Act’) is a private body or falls within the definition of the State or local or other authorities under the control of the Government. A body or organisation which is an instrumentality or agency of the State or a company owned and controlled by the State are all included in the expression the State. If it is found that the co-operative society falls within the latter category, there cannot be any hurdle in holding that such a body or organisation would undoubtedly be amenable to the writ jurisdiction under Article 226 of the Constitution. On the other hand, if it is found that the co-operative society is a private body, in that event it may have to be examined whether a writ petition would be maintainable or not and the extent to which such powers can be exercised.
6. The appellant in Writ Appeal (writ petitioner) challenges the action of demoting him from the rank of Manager to the rank of Clerk by the respondent-society (a Co-operative Agricultural Bank). Learned counsel appearing for the appellant Mr.N.G.R.Prasad contended that applying the tests evolved by the Supreme Court in Pradeep Kumar Biswas Vs. Indian Institute of Chemical Technology (cited supra) a co-operative society, particularly, a Schedule ‘B’ society registered under the Act can be characterised as a State within the meaning of Article – 12 of the Constitution, it would also be an authority within the meaning and for the purpose of Article 226 of the Constitution. In such a situation, an order passed by the co-operative society against its employee can be corrected by way of a writ petition.
7. In Pradeep Kumar Biswas vs. Indian Institute of Chemical Technology (supra) the majority judgment considered a catena of decisions on the point and it has been observed in paragraph-25 of the judgment (SCC p.129) that –
“the tests propounded by Mathew, J. in Sukhdev Singh were elaborated in Ramana and were reformulated two years later by a Constitution Bench in Ajay Hasia. What may have been technically characterised as obiter dicta in Sukhdev Singh and Ramana (since in both cases the ‘authority’ in fact involved was a statutory corporation), formed the ratio decidendi of Ajay Hasia.”
Thereafter, the Court has extracted paragraph-11, at pp 737-38 of the case of Ajay Hasia, as follows: –
” The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute, but is equally applicable to a company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression ‘authority’ in Article-12.”
It is then observed that Ramana’s case noted with approval in Ajay Hasia, and quoted the tests laid down in the case of Ajay Hasia at p.737 in para 9, which reads as follows: (SCC pp.130-31, para-27)
” (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.
(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)”.
The Court observed in paragraph-31 as follows: – (SCC pp.131-32)
” 31. The tests to determine whether a body falls within the definition of State in Article 12 laid down in Ramana with the Constitution Bench imprimatur in Ajay Hasia form the keystone of the subsequent jurisprudential superstructure judicially crafted on the subject which is apparent from a chronological consideration of the authorities cited.”
After considering a number of decisions, it has been observed in para 40 of Pradeep Kumar Biswas as follows: – (SCC p.134)
” 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 hypothesis, 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.”
8. In the light of the above decision in the case of Pradeep Kumar Biswas, a writ can be issued against a co-operative society, if it is an authority within the meaning of Article – 12, and therefore, a State is beyond dispute. The question as to whether a co-operative society registered under the Tamil Nadu Co-operative Societies Act (a Co-operative Agricultural Bank in the present case) can be said to be an agency or instrumentality of the State is required to be determined by applying the tests laid down in Ajay Hasia’s case, which have been approved in Pradeep Kumar Biswas’s case. Of the six tests indicated, tests 2, 3 and 6 are clearly inapplicable in the present case, and may be dealt with in the first instance to clear the ground.
Ajay Hasia Test No.2
There is no financial assistance of the State, much less it is of such extent as to meet almost all the expenditure of the society. Learned Advocate General stated that the State Government’s contribution is only in the shape of share capital to a small extent, and it is the policy of the State not to grant financial assistance to co-operative societies registered under the Act. Some loans may also have been given to the respondent Bank either by the Government or by the other public financial institution, but particulars of such loans are not furnished. Be that as it may, giving loans is not financial assistance contemplated by the second test. Of course, one cannot rule out the possibility of the society in receipt of grant from the Government, but the respondent Bank is not one such.
Ajay Hasia Test No.3
No material is placed before us to show that the co-operative societies registered under the Act enjoy any monopoly status. The respondent Bank does not enjoy a monopoly status which is conferred, or protected by the State. It is not suggested that the societies to which loans are given by the respondent Bank are precluded from receiving loans from any other sources.
Ajay Hasia Test No.6
The sixth test too is inapplicable, inasmuch as this is not a case where the business carried on by respondent Bank was previously carried on by a department of the Government nor is it a case where the work of a department is transferred to the respondent.
9. We shall now proceed to examine whether the other three tests namely, 1, 4 & 5 are satisfied in this case.
Ajay Hasia Test No.1
According to the learned Advocate General the Government shareholding in the co-operative societies is ordinarily not more than 10%, which can be said to be negligible. There is another aspect to this test, which is emphasised by a Division Bench of the Patna High Court in H.N.Banker v. State of Bihar, (1986) 2 Serv.LR 256. It is pointed out in the said decision that even though the Government owns a substantial number of shares of a co-operative society, still it would be having only one vote, just like an individual share holder, holding one share. Accordingly, it is pointed out that the importance given to shareholding in the first test enunciated by the Supreme Court loses much of its significance in the case of a co-operative society. The said test has been evolved keeping in mind the normal run of companies/corporations registered under the Companies Act, where shareholding carries with it the power of control and management of the company, and it is for that reason, the Court said that a satisfaction of this test goes a long way in establishing that the body is an agency or instrumentality of the State. So far as our Act is concerned, the position is practically the same. Section 26(1) says that no member of a co-operative society shall have more than one vote in the affairs of the society. Section 33(4)(a) provides that the State may, in the public interest, nominate the entire board including the president and vice-president of certain types of societies mentioned therein, if the State has taken not less than two-thirds share or given financial or other assistance to the extent of not less than two-thirds of the loans, advances and deposits received by the society. However, the society in question is not the type, which is mentioned in Section 33(4) (a).
Ajay Hasia Test No.4
Learned counsel for the appellant strenuously argued that the provisions of the Tamil Nadu Co-operative Societies Act clearly show the deep and pervasive control in the Government and Registrar over the societies. We shall refer to some of those provisions.
Section 12 of the Act confers power on the Registrar to amend the bye-laws of the society, if he is satisfied that for the purpose of altering the area of operation of a registered society or for the purpose of improving the services rendered by it or for any other purpose not specified in the rules, an amendment of the bye-laws is necessary.
Section 14 confers power upon the Registrar to divide the society into one or more societies or to amalgamate two or more societies into one society, if such course is necessary in the interest of societies or of the co-operative movement or for the purpose of proper management of the society.
Under Section 33(4)(a), the Registrar may nominate the entire Board and under Section 33(b)(ii) the Registrar may nominate one-third of the Board. Under sub-section (7) the Government has power to appoint Managing Director to every apex society, every scheduled society and any other societies as may be notified by the Government.
Section 34(6)confers power on the Registrar to pass suo motu order of removal from membership and under Section 35 (1) the Registrar can remove any such member, who is holding certain financial interests as mentioned in Section 35.
Under Section 68 Investment of Funds has to be made only with the approval of the Registrar and Section 72 prescribes the mode in which net profits of the society are to be distributed. It is not open to the society to distribute the entire net profit by way of dividends.
Section 73 empowers the Registrar to make appointment of paid officers and servants, subejct to Sections 74, 75, 76 and 77.
Under Section 75 the State Government has the power to constitute common cadre of service in (i) scheduled co-operative societies, (ii) primary societies affiliated thereunder, (iii) co-operative sugar mills, co-operative spinning mills, co-operative tea factories, and other registered societies prescribed and (iv) such other class/category of societies in which Government has taken shares or given financial or other assistance. Under Section 75(3) Co-operative Department headed by Joint Registrar shall exercise power of recruitment, appointment, transfer and disciplinary control in relation to common cadre service. Any employee in common cadre aggrieved by an order may submit appeal to Registrar/State as the case may be. Section 76 confers power on the Registrar to suspend the paid officer.
Under Section 88, the Registrar may cause supersession of Board and appoint Special Officer to perform the duties of the Board.
Under Section 88(2) the Special Officer shall be subject to the control of the Registrar.
Section 181 contains power of Registrar to give directions in public interest.
The question is what does deep and pervasive State control mean. In case of non-statutory corporations/companies and societies, etc., State control would mean the control vesting in the Government or its officers either by the statute or by the Constitution/Memorandum of Association/Bye-Laws/Articles of Association of the society or company concerned. Take for example, the Companies Act. It regulates the incorporation, working and winding up of the companies in elaborate detail. Government authorities are vested with various powers to ensure observance of, and compliance with the regulatatory provisions. But all this is designed not to vest control (over the company) in the Government, but to ensure the proper working of the company, the main object being protecting the interests and rights of shareholders, investing public, employees and other having dealings with the company. Every legislative regulation cannot constitute State control. The power vested in the Government and the Registrar, as aforesaid, is of regulatory in nature and designed to protect the interest of the shareholders, depositors and creditors, in the interest of public and co-operative movement, and cannot be characterised as deep and pervasive control within the meaning of the 4th test laid down in Ajay Hasia’s case. The management of every registered society is vested in a Board constituted in accordance with the provisions of the Act, the Rules and the Bye-laws. The Bye-laws made by the society as held by the Supreme Court do not have the force of law (See Co-operative Central Bank Limited Vs. Industrial Tribunal, Hyderabad, AIR 1970 SC 245 and B.K.Garad Vs. Nasik Merchants Co-operative Bank Limited, AIR 1984 SC 192). They are in the nature of contract, terms of contract, between the society and its employees or between society and its members, as the case may be.
Ajay Hasia Test No.5
Whether the functions of the society are of public importance and closely related to governmental functions? There is no dispute that the dealings of the co-operative societies are mostly confined to its members and its membership consists of member societies, Government or individual members. It is not disputed before us that the operations of the respondent Bank are actually confined to its members only. The respondent Bank would not advance loan to a non-member whoever he is. The respondent Bank’s main object is to raise funds to finance its members. It has its own funds. It is entitled to raise loans from scheduled banks and other agencies. Its members also make deposits with it. As per Ajay Hasia test evolved by the Supreme Court, not only the functions of a corporation should be of public importance, but they must also be closely related to governmental functions. Inasmuch as the operation of the respondent Bank is not confined to State funds, and also because it cannot be termed as an agency created by the State for distributing the funds provided by it, it cannot be said that it satisfies this test. As stated above, the respondent Bank has its own funds. In this connection, we may refer to what Bhagwati, J. (as he then was) said in Ramana Vs. I.A.Authoirty of India, AIR 1979 SC 1628. After pointing out that the distinction between governmental and non-governmental functions is no longer valid in the present day social welfare State, the learned Judge observed:-
“The contrast is rather between governmental activities which are private and private activities which are governmental (Mathew, J. In Sukhdev V. Bhagatram at p.1355 of AIR 1975 SC 1331). But the public nature of the function, if impregnated with the governmental character or ‘tied or entwined with Government’ or fortified by some other additional factors, may render the corporation an instrumentality or agency of Government. Specifically, if a department of Government is transferred to a Corporation, it would be a strong factor supportive of this inference…..”
Therefore, it is not possible to say that the respondent Bank/Society satisfies the 5th test enunciated by the Supreme Court.
10. For the above reasons, the respondent Bank cannot be characterised as a State within the meaning of Article 12 of the Constitution. Even if it may be assumed that one or the other test as provided in the case of Ajay Hasia may be attracted, that by itself would not be sufficient to hold that it is an agency of the State carrying on the functions of public nature. As held in Pradeep Kumar Biswas case the tests formulated in Ajay Hasia are not rigid set of principles so that if a body falls within any one of them it must ex hypothesis, be considered to be a State within the meaning of Article 12 of the Constitution.
11. Learned counsel appearing for the appellant referred to the decision in U.P.State Co-operative Land Development Bank Limited v. Chandra Bhan Dubey, (1970) 3 SCC 677. He submitted that the Supreme Court has held that the U.P. State Land Development Bank which is registered under the U.P. Co-operative Societies Act is a State within the meaning of Article 12 of the Constitution. We may examine the position as involved in that case in some detail. The U.P.State Co-operative Land Development Bank is a registered society under the provisions of the U.P.Co-operative Societies Act. While holding it to be an instrumentality of the State, the Court took note of the fact that though registered as a co-operative society, it was constituted under the provisions of the U.P.Co-operative Land Development Bank Act, 1964. The Managing Director and the Chief General Manager of the Bank are officials of the State, who are at the helm of the affairs of the Bank. The service rules for the employees and the officers of the Bank were framed by the State Government in exercise of the powers under Section 30 of the U.P. State Co-operative Land Development Act, 1964. The rules are called the U.P.Co-operative Land Development Bank Rules, 1971, which laid down the conditions of service of the employees. The Institutional Service Boards constituted under Section 122 of the U.P Co-operative Societies Act has also framed service rules according to which dismissal of an employee can be ordered only after its approval by the Institutional Service Board. U.P.State Co-operative Land Development Bank Limited is the only bank constituted under the provisions of the U.P.Co-operative Land Development Bank Act and there cannot be any other State-level land development bank for the whole of the State. Apart from the fact that the Bank had exclusive jurisdiction over the whole of the State of Uttar Pradesh, the other land development banks could also be made members of U.P State Co-operative Land Development Bank, in any number, as the Registrar of the Co-operative Societies may deem it necessary. It is further found that the Registrar of the Cooperative Societies, U.P is the trustee for the purpose of securing the fulfillment of the obligations of the State Land Development Bank to the holder of debentures issued by the Board of Directors. The Board of Directors are entitled to issue debentures from time to time with the previous sanction of the State Government and the trustee, against the unconditional guarantee by the State Government for the repayment in full of the principal and interest therein, or on the security of mortgages, charges or hypothecations etc. The State Government constitutes a Guarantee Fund under Section 9 of the Act for the purpose of meeting the losses that might accrue on account of loans advanced by the land development banks. The Guarantee Fund is maintained by the Finance Department of the State Government. On the basis of the facts noted above, the Court took the view that U.P.State Co-operative Land Development Bank Limited, though registered as a cooperative society, is instrumentality of the State and its employees have a statutory protection under the statutory rules. It is quite apparent that the decision in the case of U.P State Co-operative Land Development Bank Limited would in no way be applicable to the case in hand. The participation and control of the State in the whole activity of U.P.Land Development Bank Limited is all pervasive. Its officers head the institution. U.P. Land Development Bank is constituted as the only State-level bank in the State. Under the statutory provision there cannot be any other land development bank at the State level. The Government guarantees repayment in the event of losses suffered by the Bank and with the approval of the State, the Bank may also issue debentures. To cap it all, the service conditions of the employees are governed by the statutory rules.
12. A reference was also made by the learned counsel for the appellant to the decision of the Supreme Court in Anadi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R.Rudam, (1989) 2 SCC 691. It has been held in the above said case that the college in question which was managed by a trust registered under the Bombay Trusts Act was amenable to writ jurisdiction and a direction could be issued to the institution to make the payment of arrears of salary and other benefits to the teacher. It is, further, held that if a private body discharges a public duty it would be amenable to writ jurisdiction. Paragrpah 17 of the judgment has been particularly referred to, which reads as under: – (SCC p.699)
” There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty. The ‘public authority’ for them means every body which is created by statute – and whose powers and duties are defined by statute. So government departments, local authorities, police authorities, and statutory undertakings and corporations, are all ‘public authorities’. But there is no such limitation for our High Courts to issue the writ ‘in the nature of mandamus’. Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226, writs can be issued to ‘any person or authority’. It can be issued ‘for the enforcement of any of the fundamental rights and for any other purpose.”
It is pertinent to note the observations made in the latter part of paragraphs-19 & 20, where it has been observed: – (SCC p.700)
” Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of government into a vast country like India functioning under a federal structure.
20. 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. …. 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 a person or authority to the affected party.”
We may also refer to paragraph 15 of the above judgment wherein it has been observed that if the rights are purely of a private character, no mandamus can be issued. It is further observed that if the management of the college were purely a private body with no public duty, mandamus would not lie. But it has been held that the college run by a private trust was affiliated to the university to which public money was paid as government aid. It was then observed: – (SCC p.698)
” Public money paid as government aid plays a major role in the control, maintenance and working of educational institutions. The aided institutions like government institutions discharge public function by way of imparting education to students. They are subject to the rules and regulations of the affiliating university. Their activities are closely supervised by the university authorities. Employment in such institutions, therefore, is not devoid of any public character. So are the service conditions of the academic staff….. The service conditions of the academic staff are, therefore, not purely of a private character. It has superadded protection by university decisions creating a legal right-duty relationship between the staff and the management. When there are existence of this relationship, mandamus cannot be refused to the aggrieved party.”
In paragraph 12 it has been held that no writ would issue where dismissal was not in violation of any statutory provision. No reinstatement could be ordered.
13. In Federal Bank Limited Vs. Sagar Thomas, (2003) 10 SCC 733, the Supreme Court explained and distinguished the decision in Anadi Muktas case (cited supra). In that case, the 1st respondent who was working as a Branch Manager in the appellant Bank was chargesheeted and ultimately awarded punishment of dismissal. The 1st respondent challenged his dismissal by filing a writ petition before the High Court. A preliminary objection to the maintainability of the writ petition was taken by the appellant Bank saying that it is a private bank and not a State or its agency or instrumentality within the meaning of Article 12 of the Constitution, hence, a writ petition under Article 226 of the Constitution was not maintainable against it. The learned single Judge, however, found that the Federal Bank performs a public duty, and as such it comes under the definition of other authority within the meaning of Article 12, and as such the writ petition was maintainable. Aggrieved by the aforesaid judgment of the learned single Judge, the appellant preferred a writ appeal. The said writ appeal was dismissed providing that the learned single Judge shall decide the writ petition on merits. The question which fell for consideration before the Supreme Court on appeal was as to whether the appellant Bank is a private body or falls within the definition of the State or local or other authorities under the control of the Government within the meaning of Article 12. Allowing the appeal, the Court held that a private company carrying on banking business as a Scheduled Bank, cannot be termed as an institution or a company carrying on any statutory or public duty. Mere regulatory provisions to ensure that commercial activity carried on by private bodies work within a discipline, neither confer any status upon the company nor put any obligation upon it which may be enforced through issuance of a writ under Article 226. It was merely a case of disciplinary action being taken against its employee by the appellant Bank. The respondent was not trying to enforce any statutory duty on the part of the Bank. The termination of service, therefore, cannot be challenged by the respondent by filing a writ petition under Article 226. The decision in Anadi Muktas case was distinguished as in that case the writ petition was held to be maintainable, since the teacher whose services were terminated by the institution was affiliated to the university and was governed by the ordinances, casting certain obligations which it owed to the petitioner. The Court also elaborately discussed the six factors which have been enumerated in the case of Ajay Hasia and held that such private companies would normally not be amenable to the writ jurisdiction under Article 226 of the Constitution. But in certain circumstances a writ may issue to such private bodies or persons, as there may be statutory provisions which need to be complied with by all concerned, including the private companies. For example, there are certain legislations like the Industrial Disputes Act, the Minimum Wages Act, the Factories Act or for maintaining proper environment, say the Air (Prevention and Control of Pollution) Act, 1981 or the Water (Prevention and Control of Pollution) Act, 1974, etc., or statutes of the like nature which fasten certain duties and responsibilities statutorily upon such private bodies which they are bound to comply with. If they violate such statutory provisions a writ may certainly be issued for compliance with those provisions. For instance, if a private employer dispenses with the services of its employee in violation of the provisions contained under the Industrial Disputes Act, in innumerable cases the High Court interfered and has issued writ to the private bodies and the companies in that regard. But, the difficulty in issuing a writ may arise where there may not be any non-compliance with or violation of any statutory provision by the private body. In that event, the writ may not be issued at all. Other remedies as may be available, may have to be resorted to.
14. Learned counsel for the appellant also drew our attention to the decision of the Supreme Court in Administrator K.S.K.V.Samiti Ltd. v. Sarnam Singh, (1997) 11 SCC 144. In that case the respondent was appointed as a Secretary of a society. Disciplinary proceedings were initiated against him by the District Assistant Registrar, Co-operative Societies and the Additional District Co-operative Officer was appointed as the Enquiry Officer, as required by the provisions of the U.P. Co-operative Societies Act, 1965. The society at the behest of the District Assistant Registrar passed an order of removal from service. A writ petition was filed in the Allahabad High Court by the respondent challenging his removal from service. An objection was taken by the appellant to the maintainability of the writ petition on the ground that it did not lie against the co-operative society. The High Court referred to the relevant provisions of the U.P.Co-operative Societies Act and rejected the objection. The order of removal from service was quashed but it was left open to the co-operative society to take fresh action and complete the enquiry proceedings against the respondent-employee, in accordance with law. In appeal the Supreme Court noted that the action of removal of the respondent from service was taken by the society in accordance with the opinion of the Registrar, in terms of Section 38(1) of the U.P. Co-operative Societies Act. Section 38 provides for removal of an officer of a cooperative society which includes Secretary of the Society. By an amendment made subsequently in Section 98 an order passed under sub-section (1) of Section 38 for removal of an officer from the office held by him or to disqualify him from holding any office has also been made appelable. The scheme of the enactment clearly shows that the order of removal from service of Secretary of a co-operative society made under sub-section (1) of Section 38 by the Society or that under sub-section (2) of Section 38 is statutory in nature. For this reason, it was held that such an order is amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution. The Court made it clear that the decision is confined only to the maintainability of the writ petition by a Secretary of a co-operative society who has been removed from service in the manner provided in the statute.
15. Next, a reference was made by the learned counsel for the appellant to the decision of the Supreme Court in A.Umarani Vs. Registrar, Co-operative Societies, (2004) 7 SCC 112, where S.B.Sinha, J. speaking for the Bench observed as follows: – (SCC p.129)
” Although we do not intend to express any opinion as to whether the cooperative society is a State within the meaning of Article 12 of the Constitution of India, but it is beyond any cavil of doubt that the writ petition will be maintainable when the action of the cooperative society is violative of mandatory statutory provisions. In this case, except the nodal centre functions and supervisions of the cooperative society, the State has no administrative control over its day-to-day affairs. The State has not created any post nor could it do so on its own. The State has not borne any part of the financial burden. It was, therefore, impermissible for the State to direct regularisation of the services of the employees of the cooperative societies. Such an order cannot be upheld also on the ground that the employees allegedly served the cooperative societies for a long time.”
Thus, the question as to whether the co-operative Society is a State within the meaning of Article 12 of the Constitution was expressly kept open.
16. Learned counsel for the appellant also drew our attention to the decision of the Full Bench of the Andhra Pradesh High Court in Sri Konaseema Co-op. Central Bank Limited Vs. N.Seetharama Raju, AIR 1990 AP 171. The question before the Full Bench was whether a Co-operative Central Bank registered under the A.P. Co-operative Societies Act is a State within the meaning of Article 12 of the Constitution. The Bench held that the control vested in the Government and the Registrar, particularly, the power to divide, amalgamate or merge the societies, power to conduct elections to the Committee (disabling the society to conduct such election itself), power to supersede the Committee, power to recover amounts due to the society as arrears of land-revenue, power to provide common cadres for the employees of several independent societies, as also the extensive power to give binding directions vested in both the Government and the Registrar, not only in the interest of shareholders, depositors and creditors, but also in the interest of the public and of co-operative movement, is liable to be characterised as deep and pervasive control, within the meaning of the 4th test in Ajay Hasias case. The Bench, however, noted that the appellant Banks main object was to raise funds to finance its members and functions of Bank were not of public importance and closely related to governmental functions, and therefore, it cannot be characterised as a State within the meaning of Article 12. The Bench held that if in a given case a particular co-operative society can be characterised as a State within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf) it would also be an authority within the meaning, and for the purpose of Article 226 of the Constitution. In such a situation, an order passed by a society against its employee in violation of the bye-laws can be corrected by way of a writ petition. This is not because the bye-laws have the force of law, but on the ground that having framed the bye-laws prescribing the service conditions of its employees the society has to follow them in the interest of fairness. If it is left to the sweet will and pleasure of the society either to follow or not to follow bye-laws, it would be inherently arbitrary and may very likely give rise to discriminatory treatment. A society which is a State, has to act in conformity with Article 14 of the Constitution and for that reason it would be made to follow bye-laws. The Bench also held that the bye-laws made by a so-operative society do not have the force of law, and hence, where a society cannot be characterized as a State the service conditions of its employees governed by bye-laws cannot be enforced through a writ petition. The Bench further held that even if a society cannot be characterised as a State within the meaning of Article 12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against a society. In such a case, it is unnecessary to go into the question whether the society is being treated as a person or an authority within the meaning of Article 12 of the Constitution. What is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory duty.
17. Learned Advocate General mainly placed reliance on a recent decision of a two-Judge Bench of the Supreme Court in Supriyo Basu Vs. W.B.Housing Board, (2005) 6 SCC 289 where Arijit Pasayat, J. speaking for the Bench observed as follows (SCC p. 291):-
It is undisputed that the respondent society is a co-operative society constituted on agreement between members thereof who had agreed to abide by the provisions of the West Bengal Co-operative Societies Act, 1983, the Rules framed thereunder or the bye-laws framed by the society. The society is undisputedly not a department of the State and is also not a creature of a statute but merely governed by a statute. Only if it is established that a mandatory provision of a statute has been violated, could a writ petition be maintainable. Before a party can complain of an infringement of his fundamental right to hold property, he must establish that he has title to that property and if his title itself is in dispute and is the subject-matter of adjudication in proceedings legally constituted, he cannot put forward any claim based on the title until as a result of that enquiry he is able to establish his title. It is only thereafter that the question whether the rights in or to that property have been improperly or illegally infringed could arise. The dispute so noted by the High Court essentially related to the claims of two rival group of private individuals in relation to common car parking spaces. The learned single Judge gave certain directions, which even touched upon the legality of the sale deeds. It was not open to be dealt with in a writ petition. As observed by this Court in U.P.State Co-op. Land Development Bank Ltd. Vs. Chandra Bhan Dubey, (1999) 1 SCC 741 in relation to the question whether a writ petition would lie against a co-operative society the question to be considered is what is the nature of the statutory duty placed on it and the Court is to enforce such statutory public duty. The question as to entitlement of the members was to be discussed in the annual general body meeting. The writ petitioners could not have questioned the decision of the society to discuss the matter in the annual general body meeting. We, therefore, find no merit in this appeal. The society is free to convene a general body meeting and to discuss the rival claims regarding entitlement.
18. Learned Advocate General next placed reliance on the decision of the Supreme Court in Zee Telefilms Limited Vs. Union of India, (2005) 4 SCC 649 where the question was whether the Cricket Control Board of India is a State within the meaning of Article 12. It was held that applying the principles laid down by the seven-Judge Bench in Pradeep Kumar Biswas Case it would be clear that the facts established do not cumulatively show that the Board is financially, functionally or administratively dominated by or is under the control of the Government. Thus the little control that the Government may be said to have on the Board is not pervasive in nature. Such limited control is purely regulatory control and nothing more. Assuming for arguments sake that some of the functions do partake the nature of public duties or State actions, they being in a very limited area of the activities of the Board, would not fall within the parameters laid down in Pradeep Kumar Biswas case. Even otherwise assuming that there is some element of public duty involved in the discharge of the Boards functions, even then, as per the judgment in Pradeep Kumar Biswas case, that by itself would not suffice for bringing the Board within the net of other authorities for the purpose of Article 12.
19. Learned Advocate General also placed reliance on the decision in G.Bassi Reddy Vs. International Crops Research Institute, (2003) 4 SCC 225. The question involved in that case was whether a writ petition would lie against ICRISAT which was set up as a non-profitable research and training centre by the Consultative Group of International Agricultural Research is a State or other authority within the meaning of Article 12. Applying the test in Pradeep Kumar Biswas Case, it was held that ICRISAT is not a State or other authority as defined in Article 12 of the Constitution. The following observations of the Bench is pertinent to note:- (SCC p.237)
Para – 27: It is true that a writ under Article 226 also lies against a person for any other purpose. The power of the High Court to issue such a writ to any person can only mean the power to issue such a writ to any person to whom, according to the well-established principles, a writ lay. That a writ may issue to an appropriate person for the enforcement of any of the rights conferred by Part III is clear enough from the language used. But the words and for any other purpose must mean for any other purpose for which any of the writs mentioned would, according to well-established principles issue.
Para – 28: A writ under Article 226 can lie against a person if it is a statutory body or performs a public function or discharges a public or statutory duty (Praga Tools Corpn. Vs. C.A. Imanual, (1969) 1 SCC 585; Shri Anadi Mukta Sadguru Trust Vs. V.R.Rudani, (1989) 2 SCC 691 and VST Industries Ltd. Vs. Workers Union,(2001) 1 SCC 298). ICRISAT has not been set up by a statute nor are its activities statutorily controlled. Although, it is not easy to define what a public function or public duty is, it can reasonably be said that such functions are similar to or closely related to those performable by the State in its sovereign capacity. The primary activity of ICRISAT is to conduct research and training programmes in the sphere of agriculture purely on a voluntary basis. A service voluntarily undertaken cannot be said to be a public duty. Besides ICRISAT has a role which extends beyond the territorial boundaries of India and its activities are designed to benefit people from all over the world. While the Indian public may be the beneficiary of the activities of the Institute, it certainly cannot be said that ICRISAT owes a duty to the Indian public to provide research and training facilities. In Praga Tools Corpn. Vs. C.V.Imanual (supra) this Court construed Article 226 to hold that the High Court could issue a writ of mandamus to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. The Court also held that: SCC p.589. para 6)
An application for mandamus will not lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute. (See Sohan Lal Vs. Union of India, AIR 1957 SC 529).
Thus, even though a Writ under Article 226 of the Constitution can lie against a person if it performs a public function or discharges a public or statutory duty, no application for mandamus will lie for an order of reinstatement to an office which is essentially of a private character nor can such an application be maintained to secure performance of obligations owed by a company/society towards its employees or to resolve any private dispute.
20. Lastly, we may deal with the submission of the learned counsel for the appellant that a Special Officer has been appointed to the respondent Bank and a Special Officer being a statutory functionary a writ would lie against him under Article 226 of the Constitution. In support of this submission reliance was placed on the decision of the Supreme Court in Gayatri De Vs. Mousumi Co-operative Housing Society Ltd., (2004) 5 SCC 90. It is necessary to consider the facts in that case in some detail. The respondent society constructed a multi-storeyed building on the land sold by the appellants father. The society issued two share certificates in favour of the appellants father, and a flat on the 5th floor of the multi-storeyed building was allotted to him. The Secretary of the society made demands of payments for the flat in question. Series of correspondences went on and appellants father took time to clear all the dues. In the meantime, some trouble arose which hampered the progress of the construction work of the said society and several litigations cropped up. Therefore, the High court appointed a Special Officer under the provisions of the W.B. Co-operative Societies Act, 1983. The Special Officer intimated that the High Court had authorised him to take immediate steps to continue the construction work and also to consider the question of allotment. The appellants father became ill and could not take any further steps regarding his own flat, and there was neither any demand for money nor any communication regarding his liability in respect of the said flat from the society during his lifetime. The appellant wrote to the Special Officer intimating him of the demise of his father and mentioning therein that his father did not leave any nominee for the flat. It was also mentioned therein that they were taking such action under the Act and the laws to get their fathers interest transferred to one out of all brothers and sisters, and since, some of them were outside Calcutta and even outside India, it was likely to take time. The Special Officer, however, rejected the request of the appellant stating that in accordance with the provisions of the Act and the Rules made thereunder and the bye-laws of the society, a claim for transfer of interest was required to be made within a stipulated time and as no claim for transfer of the interest of the appellants father had been made in time, the flat in question was already reallotted and the society would make payment of the amounts made after deduction in accordance with law. Challenging the action of the Special Officer, the appellant field a writ petition before the High Court, which came to be allowed by the learned single Judge. But, the Division Bench in appeal reversed the judgment. The Supreme Court allowing the appeal held that Section 87 of the W.B. Co-operative Societies Act deals with a members right of ownership and sub section (3) of the said Section makes it abundantly clear that a plot of land or a house or an apartment in a multi-storeyed building shall constitute a heritable and transferable immovable property within the meaning of any law for the time being in force provided that notwithstanding anything contained in any other law for the time being in force, such heritable and transferable immovable property shall not be partitioned or subdivided for any purpose whatsoever. In terms of the Act and the Rules, especially in the light of Sections 87(3), 80(1)(b) and (c) and 82(b) the heirs of a deceased person are entitled to inherit the flat allotted to the deceased. The flat in question was allotted to the father of the appellant who died thereafter and as a consequence thereof, the heirs of the said deceased became owners and would be entitled to the estate, and as a result, to the said flat with the proportionate interest in the land. Section 80(1)(b) and (c) clearly indicate that while disposing of the deceased members share or interest the preferential claim always goes to the heirs and legal representatives of the deceased member in absence of any nominee. Moreover, transfer of shares or interest can be made only by a society and not by the legal heirs. It is an obligation of the society to transfer the share or interest of the deceased member within the stipulated period referred to in Section 80 of the Act. The appellant being one of the heirs of the deceased member was and still is entitled to succeed to the estate of the deceased member as per the mandatory provisions of the statutes and that being so, the right, title and interest of the deceased member in the apartment of the society devolves upon his heirs. In this background and also in view of the fact that the Special Officer was appointed by the High Court under the provisions of the Act and as such he is a Statutory Officer, and therefore, he should be regarded as a public authority and since, the subject matter of the writ petition is the order passed by such a Special Officer in the discharge of his statutory functions, the writ petition was entertained in that case. Appointment of a Special Officer in the place of governing body or his discharging the functions of such governing body will not make a co-operative society a State within the meaning of Article 12 of the Constitution or a statutory body. It is only when the order is passed by a Special Officer in discharging of his statutory public duty, a Writ can be issued under Article 226 of the Constitution of India.
21. From the above discussion, the following propositions emerge:-
(i) If a particular co-operative society can be characterised as a State within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be an authority within the meaning and for the purpose of Article 226 of the Constitution. In such a situation, an order passed by a society in violation of the bye-laws can be corrected by way of writ petition.
(ii) Applying the tests in Ajay Hasia it is held that the respondent society carrying on banking business cannot be termed as an instrumentality of the State within the meaning of Article 12 of the Constitution.
(iii) Even if a society cannot be characterised as a State within the meaning of Article 12 of the Constitution, even so a writ would lie against it to enforce a statutory public duty cast upon the society. In such a case, it is unnecessary to go into the question whether the society is being treated as a person or an authority within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably said that such functions are similar to or closely related to those performable by the State in its sovereign capacity.
(iv) A society, which is not a State would not normally be amenable to the writ jurisdiction under Article 226 of the Constitution, but in certain circumstances, a writ may issue to such private bodies or persons as there may be statutory provisions which need to be complied with by all concerned including societies. If they violate such statutory provisions a writ would be issued for compliance of those provisions.
(v) Where a Special Officer is appointed in respect of a co-operative society which cannot be characterised as a State a writ would lie when the case falls under Clauses (iii) and (iv) above.
(vi) The bye-laws made by a co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of law. Hence, where a society cannot be characterised as a State, the service conditions of its employees governed by its bye-laws cannot be enforced through a writ petition.
(vii) In the absence of special circumstances, the Court will not ordinarily exercise power under Article 226 of the Constitution of India when the Act provides for an alternative remedy.
(viii) The decision in M.Thanikkachalam v. Madhuranthagam Agricultural Co-operative Society, 2000 (4) CTC 556 is no longer good law, in view of the decision of the seven-Judge Bench of the Supreme Court in Pradeep Kumar Biswas case and the other decisions referred to here before.
The reference is answered accordingly. Registry is directed to place the paper before the appropriate bench for its disposal.
pv/sm
[SANT 8347]
