ORDER
MOHD. SHAMIM, J.
1. The petitioner through the present writ petition wants this Court to quash the termination order dated 14-9-1990 whereby his services were terminated by the respondents.
2. The submissions of the petitioner are that Maruti udyog Ltd., respondent No. I (hereinafter referred to as respondent) is a Government company as defined in Seetioni517 of the Companies Act, 1956. It was incorporated on 24th November, 1981 and became a 'deemed public company' under Section 43A(i) of the Companies Act, 1956 w.e.f. 24th January, 1983. The Joint Venture agreement and the license agreement were signed with Suzuki Motor Company oil 2-10082. The Equity participation in between Government of India (hereinafter referred to as respondent No. 2 for the sake of brevity) and the Suzuki Motor Company is in the ratio of 60 : 40. Respondent No.. I is completely under the control of respondent No. 2 under the Ministry of Industry which is managed by a Chairman, under the superintendence and control of Board of Directors who are appointed by the Central Government and are removable by it. It is this veil behind which the Central Government operates through the instrumentality of the respondent No. 1. The activities which are being carried on by the respondent No. I of manufacture of the motor vehicles are of vital national importance. In the above circumstances, respondent No. I is a State being an authority within the territory of India and under the control of the Government of India within the meaning of Article 12 of the Constitution of India.
3. The petitioner further submits that he is a B.E. (Mechanical). He has specialised in automobile engineering. The petitioner was selected for the post of General Manager (Marketing & Sales) on 7-5-1985. The petitioner was a permanent employee of respondent No. 1. One of the conditions of the appointment of the petitioner, i.e., condition No. 6, was that the service of the petitioner would be terminable by a three months' notice without assigning any reason. The services of the petitioner were terminated under the said term, i.e., term No. 6, without any rhyme or reason through a letter No. GUGN/P-PS/ PP-1249966, dated 14-9-1990. The said termination order is void and illegal inasmuch as it is in contravention of the provisions of the Article 14 of the Constitution of India, clause No. 6 in the letter of appointment is opposed to public policy. As such it is void under Section 23 of the Indian Contract Act. The aforesaid termination order is arbitrary, discriminatory, vocative of the principle of natural justice of audi alteram partem inasmuch as it is not only infringes Article 14 but also Articles 19(1)(2) and 21 of the Constitution of India. It has thus been prayed that the impugned order of termination of the services of the petitioner dated 14-9-1990 be set aside and quashed. The petitioner be reinstated as the General Manager of the respondent No. 1. The petitioner is also granted full back wages from 15th December, 1990 onwards till the reinstatement.
4. The respondents put in appearance and contested inter alias on the following grounds: that the respondent No. I is a private limited company incorporated under the Companies Act, 1956 and continues to be so despite its being deemed public limited company under Section 43A of the Companies Act, 1956. It is a Joint Venture company of the Government of India and Suzuki Motor Company, Japan. There was a joint venture agreement dated 2nd October, 1982 in between the above said company and Suzuki Motor Corporation. Suzuki Motor Company under the said Agreement has subscribed 40% of the Share Capital of the respondent No. 1. Furthermore, as per the said joint venture agreement all major policy decisions with respect to the management and operation of the respondent No. I are to be made in consultation with and with the concurrence of Suzuki Co., respondent No I has also entered into an agreement with Consortium of Banks led by Diachi Kansyo and Fiji Banks, Japan and with Orient Leasing Company, Japan and Morgan Grenfell & Co. Ltd. for financing the loan of J. Yen 5 billion and US Dollars 40 million. It is thus evident from above that Government of India is not the only source of financing the respondent No. I as in the case of Government Companies with 100% shares held by the Government. Moreover, Suzuki Motor Company has a right to nominate Directors on the Board of the respondent No. 1. The respondent No. I thus by no stretch of imagination can be called an instrumentality or agency of the State. The petition is false and frivolous. It is liable to be dismissed.
5. Learned Counsel for the petitioner Mr. Mukul Rohtagi has vehemently contended that the respondent No. I is an authority under the control of Government of India and is as such a State within the parameters of Article 12 of the Constitution of India. A term of contract such as this Court is concerned with the present case, i.e. clause 6 of the appointment letter dated 7-5-1985 whereby the services of the petitioner could be terminated on three months notice given on either side or payment of salary in lieu thereof was vitiated by the inequality of the bargaining power in between the parties. The petitioner was admittedly an employee of the respondents, who was an employer. Respondent No. I was in a position to have thousands and one employees like the petitioner within no time. However, this was not the case with the petitioner. It was a hard nut to crack for him to find out a job. The term, i.e., clause 6 was void under Section 23 of the Indian Contract Act being against the public policy. The impugned action of the respondent No. I being an instrumentality of the State should have been in conformity with the provisions of Article 14 of the Constitution of India. It should not be arbitrary and discriminatory, Principles of Natural Justice have now come to be recognised as being part of the constitutional guarantees contained in Article 14 of the Constitution. A violation thereof results in arbitrariness which is the same as discrimination. Where discrimination is the result of State action, an arbitrary and discriminatory action is vocative of the principles of natural justice of audi alteram partem.
6. Mr. Dawan, counsel for the respondents, on the other hand urged that the present writ petition is not maintainable inasmuch as the respondent No. I is not an instrumentality of the State under Article 12 of the Constitution of India. According to him as such no writ can be directed against respondent No. 1.
7. It is manifest from the respective contentions canvassed above that the most pertinent question and whereon hinges the fate of the present petition is as to whether respondent No. I is an authority under the control of Government of India and as such an instrumentality within the domain of Article 12 of the Constitution of India.
8 The above question came up for decision before their Lordships of the Supreme Court in a case entitled Ajay Pasia v. Khalid Mujib Sehravardi as : (1981)ILLJ103SC wherein their Lordships cited with approval the observations in their own earlier judgment reported in R. D. Shetty v. The International Airport Authority of India, : (1979)IILLJ217SC . When does such a corporation become an instrumentality or agency of Government? Is the holding of the entire share capital of the Corporation by Government enough or is it necessary that in addition there should be a certain amount of direct control exercised by Government and, if so, what should be the nature of such control? Should the functions which the corporation is charged to carry out possesses any particular characteristic or feature or is the nature of the functions immaterial? Now, 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. But, as is quite often the case, a corporation established by Statute may have no shares or shareholders, in which case it would be a relevant factor to consider whether the administration is in the hands of a Board of Directors appointed by Government though this consideration also may not be determinative, because even where the Directors are appointed by government, they may be completely free from governmental control in the discharge of their functions. What then are the tests to determine whether a corporation established by statute or incorporated under law is an instrumentality or agency of Government. It is not possible to formulate an inclusive or exhaustive test which would adequately answer this question. There is no cut and dried formula, which would provide the correct division of corporation into those which are instrumentalities or agencies of Government and those which are not.'
9. Their Lordships after considering the entire case law laid down the following principles in order to determine as to whether a particular corporation is an instrumentality or agency of Government within the meaning of Article 12 of the Constitution of India in the above said case : (1981)ILLJ103SC (supra):
(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 financial assistance of the State is so much as to meet the almost entire expenditure of the corporation it would afford same 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 the State conferred or State protected;
(4) Existence of 'deep and pervasive State control' may afford an indication that the corporation is a State agency or instrumentality;
(5) If the functions of the corporation 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 a 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.
With the above background, let us now see as to whether the respondent No. I is an instrumentality or agency of the State?
10. Mr. Rohtagi, counsel for the petitioner has strenuously argued that the respondent No. I is an authority within the territory of India and is completely under the control of the Government of India. Learned Counsel in support of his arguments has led us through the Memorandum of Association. He has in this connection drawn our attention to the objects for which the company is established. Seriall No. 13 of the said objects provides 'To act as instrument of the policy of the Central Government subject to such directives as may be issued by the President from time to time with a view to exercising control over the strategic areas of economy '......... The object mentioned Seriall No. 17 lays down, 'To sell, improve, manage, develop,lease mortgage, dispose of, turn to account, or otherwise deal with all or any part of the property and rights of the company subject to the approval of the Central Government'.
11. Learned Counsel has then led us through the Articles of Association. Article 29(a) envisages, 'A share may be transferred by a member or other person entitled to transfer only to a person approved by the President'.
12. Learned Counsel has then contended that there can be increase, reduction and alteration of the share capital only with the approval of the President of India.
13. Article 63(l) deals then with the right of President to appoint any person as his representative.
14. The learned Counsel on the basis of the above has urged that it is evident from above that there is deep and all pervasive control of the Government on the above said company so much so that one of the objects of the respondent No. I is to act as instrumentality of the policy of the Central Government. That shows and proves beyond any shadow of doubt that the respondent No. I is an instrumentality or agency of the Government. It is in fact a veil behind which the Government is acting. So what the Court is required to do is to pierce the said veil in order to find out what is behind that. The argument of the learned Counsel, no doubt, an ingenious one but can be brushed aside with anon. It is well established that there cannot be any cut and dried formula in order to find out as to whether a particular corporation is a State. There cannot be any hard and fast rule and .exhaustive test to determine the fact as to whether a corporation is an instrumentality or agency of the State. The above fact is to be determined on the totality of the circumstances and not on the principle of pick and choose.
15. The petitioner has stated in para 2 of his petition that the Equity participation in between Government of India and Suzuki Motor Co. is in the ratio of 60: 40. Thus there is no dispute with regard to the fact that asubstantial number of shares in the respondent-company is owned by Suzuki Motor Company. The petitioner has then referred to the Joint Venture Agreement which was entered into on 2-10-1982 in between the said company and the Suzuki Motor Company by the President of India and Suzuki Motor Company. The said Joint Venture Agreement provides that all major policy decisions with respect to the management and operation of the respondent No. I shall be made the consultation and concurrence of Suzuki Motor Co. The said Joint Venture Agreement also defines as to what would be the major policy decisions. It lays down -
(i) Commencement of any business other than the manufacture, assembly and sale of the Motor Vehicles and Parts covered by the Joint Venture Agreement or ceasing to carry on the same;
(ii) Any material change in production or manufacture, assembly and sale of motor vehicles and parts for the initial 5 years;
(iii) Establishment of long range business objects;
(iv) Any capital expenditure;
(v) Total turnover to be employed by the respondent;
(vi) Sales price of motor-vehicles and parts;
(vii) Approval of annual financial statements of the respondents; and
(viii) Disposal of profits, retained earnings and other surpluses.'
It is amply clear from the above that the respondent No. I cannot take any major policy decision without prior approval of the Suzuki Motor Company. They are bound to obtain their concurrence before taking any steps in the direction of the major policy decisions. Furthermore, Suzuki Motor Company has also got a right to nominate Directors on the Board of Directors of the respondent. At present there are two such Directors on the Board of the respondent No. I and one of them is a foreigner who is working as Joint Managing Director. Hence, it would be fallacious to argue that there is all pervasive control of Government of India over the management of respondent No. 1.
16. This brings us to the point as to whether the financial assistance of the State is so much as to meet the entire requirement of the respondent No. 1. Admittedly, this is not so in the instant case. It is manifest from above that 40% shares are held by Suzuki Motor Company. Besides that respondent No. I has entered into an agreement with Consortium of Banks led by Diachi-Kangyo and Fiji Hanks, Japan, and with OrientLeasing Company, Japan and Morgan Grandfoll & Co. Ltd. for financing a loan of J. Yen 5 billion and US Dollars 45 million respectively. This is quite clear from a letter dated 24-2-1988 from Suzuki Motor Company to the respondent No. 1. Thus the Government of India is not the only source of financing the respondent No. 1.
17. The respondent No. I admittedly deals in the manufacture, sale of the motor vehicles. It does not enjoy any monopoly status in the said field as there are so many other companies who also manufacture automobiles and sell them. This is not the case of the petitioner that any department of the Government has been transferred to the respondent No. 1 so as to convert it into the instrumentality or the agency of the State. The manufacture of motor vehicles by the respondent No.1 which compete with the vehicles manufactured by other companies under the private sector can by no stretch of imagination be called an act of State.
18. In the circumstances mentioned above we conclude that the respondent No. I is not an instrumentality of the Government within the ambit of Article 12 of the Constitution of India. We are fully fortified in our above view by the observations of the Kerala High Court as reported in K. M. Thomas v. Cochin Refineries Ltd., : (1982)IILLJ233Ker . We are tempted here to cite a few lines from the said judgment. It was observed, 'that Government has only a bare majority and not the entirety of the share capital of the Company, i.e., Cochin Refineries Ltd. A substantial part of the share capital thereof belongs to a foreign company. There is no material to show that exclusive or unusual financial assistance has been given by the Government. The Board of Directors has practically full control over the management of the affairs of the Company. The fact that five out of nine Directors are Government nominees is not sufficient to say that Government has exclusive or unusual control over the management etc. This conclusion is valid even taking into consideration certain reservations regarding approval of' Central Government. For that matter the foreign company has power of veto in regard to capital expenditure in excess of specified limits. Presence of nominees of a foreign company in the Board is a significant circumstance. It cannot be said that there is deep and pervasive State control. Of course company may enjoy monopoly status since it is dealing with precious commodities like petroleum and petroleum products and the like and such an activity as of public importance, viewed in the light of importance of these commodities in the life of the Nation.................... The totality of the circumstances mentioned above is not sufficient to show that 'Voice is that of the Government or hands are of the Government' or that 'an agent or surrogate of State, in fact, owned by the State, in truth controlled by State and in effect an incarnation of the State'.
19. It is abundantly clear from the fact of the said case that in that case the Cochin Refineries enjoyed a monopoly status since it was dealing with precious commodities like petroleum and petroleum products. It is further evidenced from the above that the activities of the said company were of vital importance to the nation. However, even then the Kerala High Court held that the said company was not an agency of the State keeping in view the totality of the circumstances. In the present case we have already observed above the respondent No. I does not enjoy a monopoly status; the activities of the company, i.e., sale and the manufacture of the Motor-Vehicles is not of vital importance to the country inasmuch as there are various other companies who also deal in the sale and the manufacture of the motor vehicles. Consequently, the respondent No. I can by no stretch of imagination be called an instrumentality of State.
20. Learned Counsel for the petitioner Mr. Mukul Rohtagi has then led us through a case as reported in Ashok Kumar Mittal v. Maruti Udyog Ltd., : [1986]1SCR585 . The petitioner in the said case challenged the allotment of Maruti Vehicles out of manufacturer's quota of 5%. The Hon'ble Supreme Court entertained the said writ petition and laid down the guidelines for the allotment of the said vehicles. Learned Counsel on the basis of the said authority has contended that the said authority shows beyond army iota of doubt that the respondent No. I is an instrumentality or an agency of the State. Had it not been so the said writ petition would have been flunk to the winds on this short ground alone. The contention of the learned Counsel we feel does not hold any water. A careful scrutiny of the said judgment reveals that this point as to whether the respondent No. I is an instrumentality or agency of the State or not was not pressed before the Supreme Court. This point was neither raised nor argued, nor adjudicated upon by the Hon'ble Supreme Court. Hence, it would be, too much to argue on the basis of the said judgment that it was held by the Hon'ble Supreme Court impliedly that respondent No. I was an instrumentality of the State.
21. We are of the view, for a decision to operate as a precedent on a particular point, the said point must be in issue in between the parties. It must have been raised, heard and adjudicated upon in accordance with the relevant law applicable to the said point. If it was rendered per incuriam, i.e., in ingrates of a statute in that eventuality it would not have a binding force. We are supported in our view by the observations of Hon'ble Supreme Court as reported in (JT (1991) 3 268 in case State of U.P. v. M / s. Synthetics & Chemicals Ltd. Their Lordships in the said judgment approved their own decision in Municipal Corporation of Delhi v. Gurnam Kaur, : AIR1989SC38 , 'Precedent sub silentio and without argument are of no moment. The courts thus have taken recourse to this principle for relieving from injustice perpetrated by unjust precedents . .............. Any declaration or conclusion arrived without application of mind or preceded without any reason cannot be deemed to be declaration or law or authority of a general nature binding as precedent. Restraint in dissenting or overruling is for sake of stability and uniformity but rigidly beyond reasonable limits is inimical to the growth of law'.
22. In view of the above discussion we are of the view that the Maruti Udyog Ltd. not being an authority within the meaning of Article 12, the present writ petition is not maintainable and as such is liable to be dismissed. The same is hereby dismissed with costs.
WAD, J.
23. I agree with Mohd. Shamim, J. that the writ petition is not maintainable. However, I would like to add a few words to clarify the new perspective.
24. Cases similar to Maruti Udyog Ltd. stand apart from the normal run cases of public corporations. Their main stay is the technology transfer, importation of foreign capital in terms of equity, participation and loans which the foreign collaborator is able to bring. The new economic realities have forced us to substantially liberate the economy from licensing, controls and restrictions on capital inflow from aborad. Foreign companies are now being invited in a big way to invest in India and to transfer technology. Raising foreign equity participation to 51% is one such step. Foreign investors could prefer to collaborate with public corporations because they require Government guarantees to protect their interest. Proper territorial, location, means of communication and transport, peaceful atmosphere for running an industry and assurance of repatriation of profits are some such protections. If they pay handsome remunerations and perquisites to their employees, they would also expect stringent work culture and discipline from the employees.
25. Will it be in the public interest and in the interest of economy to subject such foreign collaborators to the rigor of Article 14 by calling these joint ventures as instrumentality of State? Their Memorandum of Articles of Association may have been worded, as usual, in favor of the Government. But the collaboration agreements may leave substantial economic and management control with foreign collaborators. The collaborator may, in fact, enjoy deep and pervasive control. This precisely has happened with Maruti.
26. All the decisions on instrumentality of State starting with Airport Authority are in the context of municipal universe of discourse. None is concerned with a public corporation involved in predominant foreign collaboration. thereforee, a new judicial perception is the need of the hour. The reason why Courts have imposed severe judicial review on public corporations is excessive bureaucratisation and conversion of the economic instruments into Government Departments.
27. The new industrial policy envisages a major thrust in streamlining the public sector into viable and profitable economic undertakings. High degree of discretion and delegation will have to be conferred on the decision making authorities of such authorities. In matter of employment, productivity would be a bench mark not merely social security.
28. The checks and controls on arbitrary actions is now tending to be more mechanical and routine. All discretionary actions are not necessarily arbitrary. Each type of administration, including judicial administration, has its peculiar objectives. In military administration, the discretionary powers are necessary for maintenance of discipline. In the economic undertakings, it is manifest in optimum profitability. This practical perception is distinctly illustrated by Supreme Court judgment in Escorts case. (L.I.C. v. Escorts Ltd., : 1986(8)ECC189 ).
The Supreme Court observed :
'.... We do not construe Article 14 as a charter for judicial review of State actions and calling upon the State to account for its action in its manifold activities.
'... The Court will not debate academic matter or concern itself with intricacies of trade and commerce. (Emphasis not supplied)
'.... When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder ......'
29. These observations are more apposite in a case where a Government company heavily depends upon foreign collaboration for technology, capital, international loans and avenues of export.
30. I agree with brother Mohd. Shamim that the case nearest to Maruti Ltd. is K. M Thomas v. Cochin Refineries Ltd., : (1982)IILLJ233Ker .
31. I hold that Maruti Udyog Ltd. is not instrumentality of State or an 'authority' for the purposes of Article 12 of the Constitution. Even if it is an instrumentality of State, the Court should not subject it to the rigor of Article 14 of the Constitution so as to adjudicate on the grievance of the petitioner. The Writ Petition is not maintainable. Dismissed.
For the reasons stated above, we hold that the Writ Petition is not maintainable and is dismissed. There shall be no orders as to costs.
32. Petition dismissed.