ORDER
C.V. Ramulu, J.
1. This Writ Petition is filed for issuance of a Mandamus declaring the action of the 1st respondent in terminating the services of the petitioner as illegal and improper and consequently to direct the respondents to reinstate the petitioner into the post of Upper Division Clerk in the National Co-operative Consumer Federation of India Limited (for short 'NCCF').
2. According to the petitioner, he was appointed as a Lower Division Clerk (LDC) in the 1st respondent-organization in the year 1979 and subsequently, he was promoted as Upper Division Clerk (UDC) in the year 1982. In the year 1981, he was posted in the Hyderabad Branch and in 1985 he was given the Incharge of Confiscated Goods Godowns. The nature of work attended to by him was sale of goods and maintenance of stock. He maintained the section from 1985 to 1988. On 30-6-1988 he was posted to another Section and in his place one Veer Singh was posted. At the time of handing over charge, he prepared stock lists as well as shortage lists and handed over the same to his successor -Veer Singh. However, Veer Singh was not prepared to take charge as at that time there was a shortage of stock worth Rs. 14,500/-and the latter insisted that unless and until the shortage was covered, he will not take charge of the section from him. 30-6-1988 was an year ending day and as such, the banks were not functioning. Further, he had to attend to his wife, who was in the hospital and this was explained to the Branch Manager. On the very next day i.e., 1-7-1988 he deposited the amount of Rs. 14,500/- towards shortage of stock with Veer Singh and left to the hospital to attend his ailing wife. While the matter stood thus, after more than an year, the Vigilance Officer came and verified the records and found that the amount deposited by him was not accounted for and as such, recommended to the respondents to take appropriate action against him. Then, he was served with a memo, to which he submitted an explanation stating that shortage of stock amount was paid to Veer Singh and the shortage had occured due to sale of goods in retail. Having not satisfied with the explanation offered by him, he was suspended from service on 6-12-1989. An enquiry was ordered and on the basis of the enquiry report his services were terminated without giving any weight to the evidence, which is in his favour. The 1st respondent has issued proceedings dated 7-6-1994 terminating his services. The appeal filed by him against the said order ended in dismissal. Hence, this Writ Petition.
3. The main thrust of the petitioner is that the shortage amount of Rs. 14,500/- was paid to Veer Singh with the consent of the then Branch Manager; therefore, to the extent of the shortage of stock he had already deposited the amount and it is Veer Singh, who had not deposited the amount and as such, injustice is done to him. There was no mala fide on his part in the occurrence of the shortage as stated above and out of good faith he has paid the shortage amount to his successor Veer Singh with the consent of the then Branch Manager. Therefore, the question of misutilization of the departmental funds for personal use does not arise. Further, Veer Singh himself has prepared the lists of shortage as 'nil'; therefore, the charge of shortage in stocks, after one year, against him is nothing but to safeguard the interested individuals. Hence, the impugned order is motivated and the punishment imposed is disproportionate to that of the misconduct alleged. The respondent-management also has not given any weightage to his past conduct and imposed the major punishment of termination and the same is arbitrary and illegal.
4. A detailed counter-affidavit has been filed on behalf of the respondents denying the allegations made and the contentions raised by the petitioner. At the outset, it is stated that the NCCF dealt with the sale of consumer goods on commission terms to other co-operative societies and render technical guidance to them and as such, does not fall under the purview of 'State' as defined in Article 12 of the Constitution of India. The petitioner ought to have raised industrial dispute by approaching the appropriate Industrial Tribunal or Labour Court. The Writ Petition itself per se is not maintainable and is liable to be rejected on this ground alone. It is further stated that the petitioner handed over the charge to Veer Singh on 30-6-1988 after verification of stock of confiscated goods consequent upon his transfer to another section. Though there was a shortage of Rs. 14,529.40 in the stock, the same was not mentioned in the physical verification statement signed by him. The shortage committed by the petitioner could have been deposited by him either on 30-6-1988 or at any later date convenient to him giving reasons for his difficulty in not depositing the amount in time. The petitioner did not do so and signed a false stock verification statement with a mala fide intention. The petitioner himself admitted that he paid an amount of Rs. 14,500/- to Veer Singh, which itself is a confession to the fact that he indulged in unauthorized dealing. However, it was established in the enquiry that the petitioner paid only a sum of Rs. 5,000/- to Veer Singh, which was not deposited by the latter with the NCCF and the balance amount was also not paid by any of them to the account of NCCF. Therefore, the petitioner was responsible for the same. Thus, the petitioner was placed under suspension on 6-12-1989 and on completion of investigation, the suspension order was revoked on 14-5-1990. However, after conducting a detailed enquiry into the matter, the petitioner's services were terminated with effect from 7-6-1994. Thereafter, the appeal and review petitions filed by the petitioner were considered and rejected by the appropriate authorities on 12-7-1994 and 9-12-1994 respectively. While conducting the enquiry, the required procedure has been followed and ample opportunity was given to the petitioner for defending himself properly. The petitioner signed on a false stock verification statement as on 30-6-1988, which did not indicate any shortage in the stock. This directly reflects on the conduct of the petitioner. Thus, the order of termination of the petitioner from service is neither illegal nor arbitrary nor suffers from violation of principles of natural justice. The Writ Petition is devoid of merits and is liable to be dismissed.
5. On the above pleadings, the following two questions fall for consideration:
(i) Whether the Writ Petition is maintainable and the respondent-Federation is a State within the meaning of Article 12 of the Constitution of India? and
(ii) Whether the termination order passed by the respondent No. 1 dated 7-6-1994, which was confirmed by the appellate as well as reviewing authorities, was valid?
6. With regard to first question, learned counsel for the petitioner submitted that the respondent-Federation is very much a State within the meaning of Article 12 of the Constitution of India, as the total paid up share capital as on 31-3-2001 is Rs. 19.45 crores, which is contributed by various agencies, as under:
Figures in croresof RupeesGovt. of India 16.55State level Co-op. Federations 2.32Large sized Wholesale/Central/Primary Deptt. Consumer stores 0.44National level Apex Co-op.Federations 0.14Total 19.45
The Board of Directors consists of one representative of each State Level Federation, provided the State Federation transacted business worth of at least 15% of its turnover of the items being dealt by NCCF excluding the business of confiscated goods, other items allotted to the State Federations by the respective State Governments under Public Distribution System or under any special obligation during the preceding year before the election of the Board. Further, the Central Government may nominate three persons as Directors. National Co-operative Union of India, National Co-operative Development Corporation and National Agricultural Co-operative Marketing Federation of India Limited can also nominate one person each. Further, there is a Managing Director and five Directors elected by the Wholesale/Central/Primary Department/Primary Stores from amongst themselves. One Director elected by the members from the Union Territories and not more than two eminent Co-operators or Economists or Management Experts co-opted by the Board of Directors. Such co-opted Directors do not have the right of vote or to contest election to any post of office bearers. The election of the Board of Directors is conducted by the Returning Officer appointed by the Central Registrar, Co-operative Societies in accordance with the provisions of the Multi State Cooperative Societies Act, 1984 and the rules made thereunder in the year 1985.
7. The main objectives of the respondent-Federation are to provide supply support to the consumer co-operatives and other distributing agencies for distribution of consumer goods at reasonable and affordable rates besides rendering technical guidance and assistance to the consumer co-operatives. The Federation is also the spokesman of the consumer co-operative movement in the country. The Federation is having its Head Office at New Delhi and Branch Offices all over the country including Ahmedabad, Kolkata, Hyderabad, Jaipur, Lucknow, Mumbai, Srinagar, Patna, Raipur and Ranchi.
8. The following are the summarized working results of the Federation for the year 2000-01.
Commodity Sales (figs. in lakhs of Rs.)
............ Gross Margin
2000-01 1999-00 2000-01 1999-00
Groceries 9917.00 5457.00 187.81 144.99
Gen.Merchandise/Tea 19406.00 15287.00 979.15 766.21
Textiles 681.00 979.00 26.99 40.61
Levy Sugar 6560.00 5960.00 215.25 215.56
Confiscated Goods 2558.00 3319.00 111.42 157.31
Import/Export 1257.00 218.00 75.87 6.03
TOTAL 40379.00 31220.00 1596.49 1330.71
Addl. Misc. Income 66.24 205.96
Total Income 1662.73 1536.67
Expenditure
Establishment expenses 801.37 706.20
Expenses on VRS 14.24 2.45
Administrative expenses 197.76 211.97
Interest 73.98 222.62
Selling and Distribution expenses 77.65 75.28
Other expenses 68.44 27.03
Provisions 19.54 13.14
TOTAL EXPENSES 1252.98 1258.69
NET PROFIT 443.35 277.98
9. Though no reply has been filed for the counter-affidavit filed by the respondents, the counsel for the petitioner argues that the whole business of the respondents is mainly under the direct supervision of the Government of India along with the concerned State Governments. No activity of the federation can be carried out without the prior approval of the Government of India/ State Governments. He further submits that the Government of India holds 16.55 crores share capital out of the total share capital of Rs. 19.45 crores and this itself categorically satisfy the test that to show that a particular company/corporation is a Government company or not, it should hold at lest 50% of the capital. In this case, admittedly, the share capital of the Government of India is more than 75% and as such, the respondent-Federation is a State within the meaning of Article 12 of the Constitution of India.
10. Learned counsel for the respondent while emphasizing that NCCF is not a State within the meaning of Article 12 of the Constitution of India, relied upon a direct judgment on the subject reported in J.S. Arneja v. National Co-op. Consumers Federation of India Ltd., : AIR1995Delhi44 and drawn the attention of this court to various provisions discussed in the said judgment and submitted that the case on hand is squarely covered by the said judgment and as such, NCCF is not a State within the meaning of Article 12 of Constitution. He also drawn the attention of this Court some other rulings, which are not applicable to the facts of this case.
11. On the other hand, Sri J. Kanakaiah, learned counsel for the petitioner, submitted that NCCF is a State within the ambit of Article 12 of Constitution and it satisfies almost all the tests laid down by the apex Court in Ramana Dayaram Shetty v. International Airport Authority of India, : (1979)IILLJ217SC which was followed in several other cases including Ajay Hasia v. Khalid Mujib Sehravardi, : (1981)ILLJ103SC and submitted that about 85% of the share capital of the respondent-Federation in this case is held by the Central Government. He also submitted that there is deep and pervasive control of the Ministry of Consumer affairs, Food and Public Distribution of Government of India over the respondent-Federation. He further submitted that the functions of Federation are to provide supply support to the members co-operative societies, State Governments and their nominated agencies, besides rendering technical guidance and assistance to the consumer co-operatives to improve their commercial guidance and managerial skill. As such, it is an instrumentality of the State and comes within the ambit of 'other authorities' under Article 12 of Constitution.
12. The tests laid down in Ajay Hasia's case (3 supra) 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 towards indicating that 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 the corporation being impregnated with governmental character.
(3) It may also be a relevant factor..... whether the corporation enjoys monopoly status which is 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 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.
13. Learned counsel for the petitioner further relied upon a Full Bench decision of this Court in Sri Konaseema Co-operative Central Bank Ltd. v. N. Seetharama Raju, 1990 (2) ALT 1 = 1990 (1) An.W.R. 675 and drawn the attention of this court to paragraph-51, which reads as under:
'51. Summary:
From the above discussion, the following propositions emerge:--
(i) If a co-operative society can be characterized 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, 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 must 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 the 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 and, for that reason, it will be made to follow the bye-laws.
(ii) Even if a society cannot be characterized 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 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. What is material is the nature of the statutory duty placed upon it, and the Court will enforce such statutory public duty.
(iii) ...............
(iv) ...............
14. Taking inspiration from the above decision, learned counsel contended that the respondent-Federation can be called a State and it would also be 'an authority' within the meaning of Article 12 and for amenable to the jurisdiction of this Court under Article 226 of Constitution and in such situation, the order passed by the Federation against the employee in violation of the bye-laws can be corrected by way of a Writ Petition. This is not because the bye-laws have no force of law, but on the ground that having framed the bye-laws prescribing service conditions of its employees, the society must follow them in the interest of fairness. The respondent-Federation, which is a State, has to act in conformity with Article 14 and for that reason, it will be made to follow the bye-laws.
15. Learned counsel for the petitioner also brought to the notice of this Court the decision in Central Inland Water Transport Corporation Ltd. v. Brojo Nath, : (1986)IILLJ171SC and particularly paragraph 22 thereof in which it was held that the definition in Article 12 is not an explanatory and restrictive definition, but an exhaustive definition in Article 12 is not an explanatory and restrictive definition, but an exhaustive definition, it is the definition of the expression 'the State' and not of the term 'State' or 'States' and it is inserted in the Constitution for the purposes of Parts III and IV thereof. Merely because it has so far not the monopoly of Inland Water Transportation is not sufficient to divest it of its character of an instrumentality or agency of the State. It is nothing but the Government operating behind a corporate veil, carrying out a governmental activity and governmental functions of vital public importance. There can thus be no doubt that the Corporation is 'the State' within the meaning of Article 12 of the Constitution. Relying upon this decision, learned counsel for the petitioner submitted that the case on hand is squarely covered by the above decision and as such, NCCF should be held to be a State within the meaning of Article 12.
16. Learned counsel for the petitioner also drawn the attention of this court to the Judgment in U.P. State Co-op. Land Development Bank Ltd. v. Chandra Bhan Dubey, : (1999)ILLJ633SC and submitted that the said Bank is held to be a statutory body and an authority falling under Article 12 of the Constitution of India and, therefore, it is amenable to writ jurisdiction.
17. Learned counsel for the petitioner further brought to my notice the decision in Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers Association, : (2002)ILLJ1088SC in which, the Apex Court while dealing with the entire case law on the subject, held as follows:
'A careful consideration of the principles contained in case law and the factual details not only found illustrated from the memorandum as well as articles of association of the appellant but enumerated from the day-to-day running of the business and administration of the Company leave no room for any doubt as to the identity of the appellant company being 'other authority' and consequently 'the State' within the meaning of Article 12 of the Constitution of India. The said definition has a specific purpose and that is for Part III of the Constitution, and not for making it a Government or department of the Government itself. This is the inevitable consequence of the 'other authorities' being entities with independent status distinct from the State and this fact alone does not militate against such entities or institutions being agencies or instrumentalities to come under the net of Article 12. The concept of instrumentality or agency of the Government is not to be confined to entities created under or which owe their origin to any particular statute or order, but would really depend upon a combination of one or more of relevant factors, depending upon the essentiality and overwhelming nature of such factors in identifying the real source of governing power, if need be, piercing the corporate veil of the entity concerned.'
18. The said decision was quoted with approval by a Seven-Judge Constitution Bench of the Apex Court in the latest Judgment in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, 2002 (3) SLR 433 in which, Council of Scientific and Industrial Research (CSIR) is held to be an instrumentality of State and amenable to writ jurisdiction.
19. At this stage, learned counsel for the respondents brought to the notice of this court yet other two Judgments - one, of the Madhya Pradesh High Court in Ramu Ram Sahu v. National Co-operative Consumers' Federation of India Limited, : AIR1991MP63 and the other, of the recent decision of Karnataka High Court in Writ Petition No. 28014/1995 (S-DE), dated 3-6-2003 and also a letter dt. 7-8-2003 addressed by the General Manager (P and A) of NCCF to the Branch Manager, Hyderabad wherein the details of the share capital held by Central Government in the NCCF during the years 1993-94 and 1994-95 were mentioned and the share capital is as follows:
Year Co-operative Central GovernmentNon-Redeemable Redeemable1993-94 2,74,20,000/- 2,02,74,000/- 7,20,00,000/-1994-95 2,74,50,000/- 2,02,74,000/- 7,37,50,000/-
20. On the basis of the above figures, learned counsel for the respondent-Federation submitted that the share capital held by the Central Government in the respondent-Federation is about Rs. 2.00 crores out of the total share capital of about Rs. 12.00 crores. He also submitted that when the redeemable and non-redeemable capital is taken into consideration, may be, the Government of India held about Rs. 9.00 crores in the Federation, but the entire share capital is not a non-redeemable one. In fact, major portion i.e., Rs. 7,20,00,000/- is redeemable on which, the Government of India is entitled for periodical interest and the same cannot be treated as a share capital. Strictly speaking, share capital held by the Central Government is only about Rs. 2.00 crores and as such, it is not even 30%. Petitioner has not been able to place the statistics during the relevant time i.e., 1994-95. Thus, neither the share capital held by the Central Government is more than 50% nor is there any deep and pervasive control exercised by the Government of India over the Federation.
21. In Writ Petition No. 28014/1995 (S-DE) (D.G. Katti Shetty v. NCCF), a Division Bench of the Karnataka High Court quoted extensively the decision of the Madhya Pradesh High Court in Ramu Ram Sahu's case and other judgments referred to supra. Further, while dealing with the ratio laid down in Pradeep Kumar Biswas case (8 supra), it was held that 70^% of the funds of CSIR are available from grants made by the Government of India and the funds of CSIR had to be invested only in such manner as prescribed by the Government of India and the Non-Governmental contributions were negligible when compared to the massive Governmental input and in regard to expenditure, the budget estimates of the society are to be prepared by the Government Body keeping in view the Government instructions and the accounts of CSIR to be audited by the Controller and Auditor-General and placed before the table of both Houses of Parliament. Further, while examining the position of Federation, it was found that the supreme authority of the Federation vests in the general body of members and the general body shall consist of one representative of each member admitted under the Bye-laws and each member will have one vote and the general body shall approve the programme of the activities of the Federation. Insofar as Finance is concerned, the Karnataka High Court dealt with bye-law No. 15 of the Federation and found that the authorized share capital was Rs. 20.00 crores consisting of one lakh shares of the value of Rs. 2,000/- each to be subscribed by members. The Government has been holding 10,137 non-redeemable shares in the Federation eversince 1994-95. On the other hand, the non-redeemable shares held by others were 13,725 during the year 1994-95. It was found that the Government was holding redeemable shares, which rose from 36,875 in the year 1994-95 to 72,625 in the year 2001-02. I is significant to note that these are redeemable after 5 years from the date of allotment in 10 equal annual instalments. Therefore, funding by the Government by way of redeemable shares is virtually a loan repayable in 10 instalments by the Federation. Obviously, the value of redeemable shares cannot be taken into account to find out the financial contribution to the share capital of the Federation. Further, it is seen that the Federation has not adopted the rules and regulations of the Government in regard to pay structure, pensionary or service benefits. Service under the Federation is governed by NCCF Employees Service Rules and they can be amended and altered by the Board of Directors and no approval is required from the Government in regard to either amending the bye-laws or implementing its objectives or in prescribing the service conditions of the employees. A cumulative effect of the above clearly shows that the Federation is neither financially nor functionally nor administratively controlled nor dominated by the Central or State Government. NCCF is not accountable to Government and there is no control, muchless all pervasive control by the Government (State/Central). It does not carry on any activity, which is normally associated with Governmental functions. It is thus clear that the Federation does not come within the ambit of Article 12 of the Constitution of India.
22. In Andhra Pradesh Paper Mills Ltd. v. Ch. Seetharamaiah, : (2004)ILLJ22AP (D.B.) a Division Bench of this Court to which I was a party, after an elaborate consideration of the case law on the subject, including the latest judgment of the 7-Judge Constitution Bench of the Supreme Court in Pradeep Kumar Biswas case (8 supra) held that notwithstanding the original and history of the Company and the joint venture agreement between the State and other stake holders, the Company is not different from any other public limited companies and therefore, no Writ of Mandamus lies. In that case, the order of the learned single Judge holding that M/s. Andhra Pradesh Paper Mills Limited is a State under the expression 'other authorities' employed in Article 12 of the Constitution of India was set aside and it was held that the said M/s. Andhra Pradesh Paper Mills Limited is not an 'authority' within the meaning of Article 12 of the Constitution and not amenable to writ jurisdiction.
23. The above decisions rendered by the High Courts of Madhya Pradesh, Delhi and Karnataka hold the field as on to-day. Though the petitioner stated that the Central Government had 85% of share capital in the Federation, but, as stated above, during the relevant period i.e., 1994-95 the share capital of the Government of India was less the 30% of the total share capital. Therefore, the argument of the learned counsel for the petitioner that 85% of share capital was held by the Central Government and there is a deep and pervasive control exercised by the Central Government over the Federation; as such, it is a State under Article 12 of the Constitution, cannot be accepted. Thus, this Court is of the opinion that NCCF is not a State within the meaning of Article 12 of the Constitution and not amenable to writ jurisdiction of this Court under Article 226 of the Constitution of India.
24. In view of the above legal position, I do not propose to express any opinion whatsoever with regard to the legality and validity of the order of termination dated 7-6-1994 passed by the 1st respondent. Hence, there is no necessity to go into the second question. The Writ Petition is devoid of merits and is liable to be dismissed.
25. Accordingly, the Writ Petition is dismissed. However, it is made clear that the petitioner is at liberty to work out his remedies, as available under law, before the appropriate forum. No order as to costs.