Judgment:
Gokal Chand Mital, C.J.
(1) The petitioner who was appointed as Manager (Industries and Export) in the National Co-Operative Consumers Federation of India Limited (hereinafter referred to as 'N.C.C.F.'). joined on 22nd January, 1976. His services were terminated on 23.2.1985. The petitioner has challenged that the order terminating his services is wholly arbitrary and manifestly erroneous.
(2) Brief facts which are necessary to dispose of this writ petition are recapitulated as under:-
(3) The petitioner who was appointed as Manager (Industries and Export) in the 'N.C.C.F.', joined on 22nd January, 1976, in the pay-scale of Rs. 1100-1600, which was subsequently raised to Rs. 1500-2000.
(4) The petitioner was promoted as Chief Manager from 19th March, 1983 in the pay- scale of Rs. 1925-2450 (since revised as Rs. 2070-2745) and has been continuing till date in the same pay-scale. The petitioner has all along been working in the Head Office.
(5) The petitioner's services were terminated by the impugned order dated 23.2.1985. He was given the letter of termination in sealed cover on 25th February, 1985 when he came to his office The envelope also contained cheque dated 23.2.1985 of the amounts towards his salary and allowances for three months, Along with the order, in lieu of notice. The only reason given in the termination order was that the services of the petitioner are no longer required by 'N.C.C.F.'
(6) The petitioner submitted that the impugned order is vocative of the principles of natural justice as the petitioner was at no stage informed of any allegations against him or even asked to explain anything before issuance of the impugned order. For that the impugned order is ultra virus the Service Rules of the respondent N.C.C.F. This court issued notice to the respondents on 3rd August, 185.
(7) In pursuance of the notice, reply affidavit on behalf of respondent no. I was filed. In the reply, thrash hold objection has been taken by the respondents that respondent no. 1 is neither''State' nor an 'Authority' nor 'Instrumentality' of the State within Article 12 of the Constitution of India The writ petition filed by the petitioner was not maintainable, and the same was liable to be dismissed on this short ground.
(8) It has been further submitted in the reply, that the relationship between the petitioner and respondent no. I is purely contractual. Both the parties entered into a contract whereby the petitioner agreed to serve and respondent no. I agreed to avail of his personal services. The relationship is governed by the terms of the contract which includes the various Staff Regulations framed from time to time. In the letter of appointment dated 9.7.1978, issued to the petitioner, it is clearly laid down that his appointment was subject to rules and regulations framed and amended from time to time by the Federation. It is further mentioned in the reply that services of an employee can be terminated by giving him three months notice or pay in lieu thereof. In the regulation, there is a clause which is known as 'termination simpliciter'. It is further mentioned that the case of the petitioner was considered by respondent no. 1 and his service were terminated under Staff regulation no. 16(vi) and the petitioner was given three months salary in lieu thereof. The order of termination does not cast any stigma, doubt or aspersion on the past conduct of the petitioner. The termination order ex-facie shows that power under Staff regulation no. 16(vi) has been invoked.
(9) The petitioner filed rejoinder to the counter-affidavit filed by respondent no. 1 and the petitioner reiterated the averments mentioned in the writ petition that his termination was illegal and unconstitutional and deserves to be quashed by this court.
(10) Before we deal with this matter whether termination of the petitioner was illegal and unconstitutional and against the rules and regulations of the respondent no 1, we deem it appropriate to deal with the thrash hold objection of respondent no. 1.
(11) Mr. V.P. Singh, learned counsel appearing for respondent no. 1 submitted that respondent no. 1 is not State, Authority or instrumentality of the State within the meaning of Article 12 of the Constitution, and is not amenable to the writ issue Indian of this court under Article 226 of the Constitution, and consequently, the writ petition filed by the petitioner against the respondent being totally devoid of merit is liable to be rejected.
(12) Mr. V.P. Singh, learned counsel appearing for respondent no. 1 has drawn our attention to bye-laws framed by respondent no. 1. According to respondent no. 1, these bye- laws are meant for internal governance and management of the first respondent and do not have any force of law. He has mentioned that the share capital of the society as on 31.3.1985 is in the following manner:-
'(A)Central Govt. . Rs.2,02,74,000.00 State Govt Rs. Nil Member Co-operative Rs. 2,70,30,0(X).00 Societies National Co-operative Rs. 2,00,000.00 Rs.4,75,04,000.00 (b) The gross turnover of the business of Respondent No. 1 in the last two years is as under:- 1982-83 Rs. 140.72crorcs 1983-84 Rs. 157.16crorcs
(subject to audit):
(13) He has further mentioned that respondent no.1 does not receive any financial assistance or subsidy from its commercial operation from Government of India. It runs its own business on commercial principles by raising its own funds, resources and obtaining loans from financial institutions like banks. To strengthen his arguments, he has also drawn our attention to two loan agreements dated 18.8.1983 and 17.10.84, Exhibit Ii, with United Commercial Bank, Nehru Place, New Delhi and Delhi State Co-Operative Bank Ltd., New Delhi respectively In the reply, it is further submitted that respondent no. 1 receives the subsidy towards expenses and its consultancy and promotional sale which works for development of consumer co-operation programme in the country which is not connected with the commercial activities of respondent no. 1. The total subsidy received, comes to less than 5 % of the total expenditure. Respondent no. 1 does not enjoy any monopoly status in this business
(14) Learned counsel further submitted that the Central Govt. or any State Govt. does not exercise any control whatsoever over the administration and functioning of the first respondent. According to its bye-laws, the Board of Directors is the authority responsible for the management, administration, business and functioning of the first respondent. The Board is elected in accordance with the Bye-laws. At present there are 38 members of the Board of Directors and out of them only three are nominees of Government of India.
(15) The respondent no. I is a society which was sponsored by Co-operatives leaders, interested in the welfare of Consumers. Its functions, thereforee, are to ensure availability of consumer goods at reasonable prices to the masses. The functioning of respondent no. 1 is neither controlled nor directly related to the Government.
(16) The respondent no, 1 is an independent body functioning according to its Bye- laws. It is neither controlled nor is it a department of the Government of India.
(17) It is further submitted that a co-operative society is not created by a statute but only registered under a Statute and hence it is not amenable to the writ jursdiction. It is further submitted that the profits of respondent no. 1 are distributed by way of dividends amongst its members. No money out of its profits is given to the Government in any share whatsoever.
(18) The question whether National Co-operative Cunsumer Federation of India is a State within the meaning of Article 12 of the Constitution has been adjudicated by a learned Single Judge of this Court. The judgment is reported D.C. Kapoor v. A.K. Aggrwal and others Labour and Industrial Cases 1989 Page 940. The Court in this case came to the conclusion that while taking into consideration all the relevant factors namely, the manner of appointment of the chief executive, the nomination of three directors on the board of the respondent the National Co-operative Consumer Federation of India, the extent of investment of the Government in the share capital of the respondent the manner in which the lists are prepared for appointment to the managerial posts as envisaged by Section 50 of the Multi State Co-operative Societies Act 1984, and lastly, the power given to the Central Government under Section 47 of the Act, the conclusion according to the learned Single Judge is irresistible that National Co-operative Consumer Federation of India is a State within the meaning of Article 12 of the Constitution.
(19) The Division Bench of the Madhya Pradesh High Court in Ramu Ram Sahu Vs . National Co-operative Consumer's Federation of India. : AIR1991MP63 , came to the conclusion that in view of the tests and guidelines lid down by various decision and in the perspective of the Act of 184 and the bye-laws of the Nccf, some bold features can be found to come to the conclusion that it is not a State. The object mentioned in the preamble to the Multi- State Co-operative Societies Act, 1984 is 'An Act to consolidate and amend the law relating to co-operative societies with objects not confined to one State and serving the interests of members in more than one State'. The Bye-laws, as per Section 9(2)(a) have to be consistent with the provisions of the Act or Rules. Section 19 of Act read with bye-laws 4 relate to membership. Apart from other factors like Funds, Share capital the monopoly position is not conferred on the N.C.C.F. and its associates, but the objects are quite clear that those bodies, though they have entered the commercial field, have to compete with other private enterprises, if they are to succeed. Merely because the organisation, in the allocation, is put in the Administrative control of a particular Ministry, that alone would not turn the N.C.C.F. into a Department of the Ministry.
(20) The N.C.C.F. was registered in the year 1955 as a Co-operative society under the provisions of the Bombay, a Co-operative Societies Act 1925 as extended to Delhi The Act was repealed by virtue of Section 8 of the Delhi Co-operative Societies Act, 1972 which came in force on 2nd April, 1973. The respondent continued to be governed by this Act and after 16th September, 1985 by the provisions of the Multi-State Co-operative Societies Act, 1984.
(21) Mr. V.P.Singh, learned counsel appearing for the respondent submitted that onus to prove that the respondent is an instrumentality of the State heavily lies on the petitioner. The petitioner has singularly failed to discharge this onus in the writ petition filed by the petitioner Only one line averment has been made to this effect that in terms of law laid down by the Supreme Court of India, respondent No. 1 is a State within the meaning of Article 12 of the Constitution and consequently amenable to the jurisdiction of this Court. There is no other averment in the writ petition.
(22) Prima facie a Co-operative Society is a voluntary body formed by the members for the economic welfare of its members. Nobody can use its nomenclature (Co-operative) as it is prescribed by Section 36 of the Delhi Act.
(23) The Constitution Bench of the Supreme Court in Ajay Hasia Vs . Khulid Mujeeb' : (1981)ILLJ103SC , has laid down the tests for determining whether a corporation can be said to be an instrumentality or agency of the State. The Court summarised the relevant tests for coming to the conclusion whether the respondent is a State within the meaning of Article 12 of the Constitution? These tests are reproduced as under:-
'(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 the State conferred or State protected.' (4) 'Existence of 'deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.' (5) 'If the functions of the corporation of public importance are 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'.
(24) If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, if would as pointed out in the International Airport Authority's case,be an 'authority' and, thereforee. 'State' within the meaning of the expression in Article 12.'
(25) Thereafter the Supreme Court and various High Courts have examined the question whether a co-operative society is a State or not in various judgments. In Ajmer Singh Vs . The Registrar .Co-operative Societies, Punjab, Chandigarh and others , the question fell for consideration of the Court was whether a society registered under the Punjab Co-operative Societies Act, 1961 is amenable to the writ jurisdiction under Article 226 of the Constitution. The Court came to the conclusion that only to the limited extent of the challenge to annexure P-2 as being vocative of the provisions of Section 26(ID) of the Act the writ would be maintainable against respondents Nos. 1 to 4 and 6. The appeal against the order of dismissal was rejected by the administration.
(26) Learned counsel for the petitioner cited another judgment of the Punjab and Haryana High Court, Pritam Singh Gill Vs . Stole of Punjab and others. , in which the question arose, whether a society registered under the Punjab Co-operative Societies Act, which is in essence an instrumentality or agency of the State and would become amenable to the writ jurisdiction under the provisions of the Article 226 of the Constitution of India. The Court held that where a society registered under the Punjab Co-operative Societies Act is in essence instrumentality or agency of the State or it would become amenable to writ jurisdiction under the provisions of Article 226 of the Constitution of India in the same manner as the State itself. The Court further held that the Punjab co-operative Land Mortgage Bank is not an instrumentality or a agency of the State.
(27) A similar question came up for consideration before the Full Bench of the Kerala High Court in P.Bhaskran and others Vs . Additional Secretary' , Agricultural (Co-operation) Department. : (1988)IILLJ307Ker , pertaining to the Kerala Co-operative Societies Act, 1989. In this case the Court held that the Co-operative Societies are not created by the Cooperative Societies Act and they are not statutory bodies. They are only functioning in accordance with the provisions of the Act. These institutions would have legal existence even if the Co-operative Societies Act is not in force. Moreover, the Government has no shares in the Co-operative Societies. There is no deep and pervasive state control. The management of the societies does not vest in the Government or in the representatives of the Government Bank. The management is under the effective control of a committee elected by the members of the societies. The statutory regulation or restriction in the functioning of the societies is not 'an imprint of State under Article 12.' Hence no writ will lie against a Co-operative society governed by the Kerala Co-operative Societies Act.
(28) A Full Bench of the Orissa High Cort in Banabihari Tripathy Vs . Registrar of Cooperative Societies and another, : AIR1989Ori31 , has also answered this qestion. The Court answered that a society registered under the Co-operative Societies Act is not an authority under Article 12 of the Constitution nor is amenable to writ jurisdiction
(29) In a significant decision the Full Bench of the Andhra Pradesh High Court, in Sri Konaseema Co-operative Central Bank Ltd. Amalpuram v. N.Seetharama Raju, Air 1990 A.P. 171, laid down that the bye-laws made by a co-operative society registered under the Andhra Pradesh Co-operative Societies Act do not have the force of law. They are in the nature of contract, terms of contract, between the Society and its employees, or between the Society and its members, as the case may be. Hence, where a Society can not be characterised as a 'State', the service conditions of its employees, governed by bye-laws, can not be enforced through a writ petition. However, in the matter of termination of service of the employees of a co-operative society. Section 47 of the A.P. Shops and Establishments Act provides a certain pretection, and since the said protection is based upon public policy, it will be enforced, in an appropriate case, by this Court under Art. 226 of the Constitution Ordinarily, of course, an employee has to follow the remedies provided by the A.P. Shops and Establishments Act; but, in an appropriate case, this Court will interfere under Article 226, if the violation of a statutory public duty is established. It is immaterial which Act or Rule casts such a statutory public duty.
(30) In Harender Narain Banker v. The State of Bihar and Others- 1986 (2) Slr 256 the Court has held that Bihar State Co-operative Societies Limited is not an instrumentality or Agency of the State.
(31) In S.S. Dhanoa Vs . Municipal Corporation Delhi and others. : 1981CriLJ871 , the Court while describing the Municipal Corporation of Delhi Act held that the term 'corporation' is wide enough to include private corporations. But in the context of Clause (12) of Section 21 of the Penal Code, the expression 'corporation' must be given a narrow legal connotation, and means corporation created by the Legislature and not a body or society brought into existence by an act of group of individuals. A co-operative society is not a statutory body because it is not created by a statute. It is a body created by an act of a group of individuals in accordance with the provisions of a statute A co-operative society is, thereforee, not a corporation established by or under an Act of the Central or State Legislature. A government employee working on deputation in a co-operative society can. by no stretch of imagination be said to be employed in connection with the affairs of the Union within the meaning of Section 197 Code of Criminal Procedure.
(32) Another judgment was cited by the learned counsel for the respondent demonstrating that the Super Bazar which is one of the biggest consumer stores in India is not a State within the meaning of Article 12 of the Constitution. The Central Government holds 97% shares in the Super Bazar. The Board was also nominated by the government. The Super Bazars are held and managed by the societies and not by the Central Government. It is not a statutory body because it was not created by a statute. The learned counsel submitted that if the Super Bazar is held not to be a State, then by no stretch of imagination the respondent can be said to be a State because the share holding of the Government is only 46% and there is absolutely no control of the Government over the appointments of the Board of Directors or the functioning of the Board of Directors except the fact that Government appoints three Directors who do not have any special powers including the powers to veto decisions of the Board itself.
(33) The learned counsel cited Tekraj Vasndi Alias K.L. Bsandhi Vs . Union of India and others : (1988)ILLJ341SC in which the Court has held:-
'IN a welfare state..........Government control is very pervasive and touches all aspects of social existence......a broad picture of the matter has to betaken and a discerning mind has to be applied keeping the realities and human experience in view so as to reach a reasonable conclusion.'
(34) In the light of the above observations it was held that the institution was not a Stale within the meaning of Article 12 of the constitution.
(35) Mr. Mukul Rohtagi and Mr Sandeep Sethi, appearing for the petitioner made elaborate and detailed submissions and made serious endeavor to demonstrate that respondent No. 1 is an instrumentality of the State within the meaning of Article 12 of the Constitution. The learned counsel relied on leading judgments R.D. Shetty v. International Airport Authority of India reported as 1979 3 SCC 48 and Ajay Hasia Vs . Khalid Mujeeb' : (1981)ILLJ103SC .
(36) The learned counsel submitted that the Central Government had 76.6% share of the respondent No 1. This is based on the statement of Hon'ble Minister of Civil Supplies made in Rajya Sabha on 1st March, 1993. According to the learned counsel for the respondent the share capital of the Central Government would be relevant on the date when the termination order was passed.
(37) Learned counsel made references to various provisions of the Multi-State Co- operative Societies Act,1984 and particularly drew the attention of this Court to Sections 41, 44, 47, 48, 50, 59, 67, 68, 69, 101 and Item 5 of the Second Schedule for the ready reference. These sections are reproduced as under:-
'41.(L)Where the Central Government or a State Government has subscribed to the share capital of a multi-state co-operative society or has guaranteed the repayment of principal and payment of interest on debentures issued by a multi-State co-operative society or has guaranteed the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society, the Central Government or the State Government in this behalf, as the case may be, or any person authorised by the Central Government or the State Government, shall have the right to nominate on the board such number of persons as may be prescribed. (2) The bye-laws of a multi-State co-operative society may provide for the nomination of persons in excess of the limits prescribed under sub- section (1). (3) A person nominated under this section shall hold office during the pleasure of the Government by which he has been so nominated.'
'44.(1) There shall be a Chief Executive, by whatever designation called, of every multi-State co-operative society, to be appointed by the board and he shall be a full-time employee of such multi-State co-operative society. (2) The Chief Executive shall be a member of the board and of the Executive Committee and such other committees or sub-committees as may be constituted under sub-section (1) of section 46. (3) The functional directors in national co-operative societies shall also be members of the board. (4) Where the Central Government has subscribed to the extent of more than one-half of the, share capital of a national co-operative society, it shall be obligatory on such a society to seek prior approval of the Central Government to the appointment of Chief Executive and the functional directors.'
'47.If the Central Government is satisfied that in the public interest or for the purposes of securing proper implementation of co-operative production and other developmental programmes approved or under takes by the Central Government or to secure proper management of the business of the multi-State co-operative societies generally or for preventing the affairs of the multi Stale co-operative society, being conducted in a manner detrimental to the interests of the members, any depositors or creditors thereof, it is necessary to issue directions to any class of multi-State co-operative societies generally or to any Multi-State co-operative society or societies in particular, the Central Government may issue directions to them or to it, from time to time, and all such multi- State co-operative societies or the society concerned, as the case may be, shall be bound to comply with such directions.
'48.(1) If in the opinion of the Central Registrar the board of any multi- State co-operative society is persistently making default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or has committed ny act which is prejudicial to the interests of the society or its members, or has omitted or failed to comply with any directions given to it under section 47 or that there is a stalemate in the constitution or functions of the borad, the Central Registrar may, after giving the board an opportunity to state its objections, if any, and considering the objections, if received, by order in writing, remove the board and appoint one' or more administrators, who need not be members of the society, to manage the affairs of the society for such period not exceeding one year. as may be specified in the order, which period may, t the discretion of the Central Registrar, be extended from time to time: so, however, that the aggregate period does not exceed two years. (2) The Central Registrar may fix such remuneration for the administrators, as he may think fit and the remuneration shall be paid out of the funds of the multi-State co-operative society. (3) The administrator shall, subject to the control of the Central Registrar nd to such instructions as he may from time to time give have power to exercise all any of the functions of the board or of any officer of the multi-state co-operative society and take all such actions as may be required in the interests of the society. (4) Save as otherwise provided in sub-section (5), the administrator shall, before the expiry of his term of office, arrange for the constitution of a new board in accordance with the bye-laws of the multi State co-operative society. (5) If at any time during the period the administrator is in office, the Central Registrar considers it necessary or expedient so to do, he may, by order in writing giving reasons thereforee, direct the administrator to arrange for the constitution of a new board for such multi-State cooperative society in accordance with the bye-laws of such society and immediately on the constitution of such board, the administrator shall hand over the management of such society to such newly constituted board and cease to function. (6) Where a multi Stale co-operative society is indebted to any financial institution, the Central Registrar shall, before taking any action, under sub-section (1) in respect of that society,consult the financial institution. (7) Notwithstanding anything contained in this Act, the Central Registrar shall, in the case of a co-operative bank, if so required in writing by the Reserve Bank in the public interest or for preventing the affairs of the co-operative bank being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of a co-operative bank, pass an order for the supersession of the board of that co-operative bank and for the appointment .of any administrator thereforee for such period or periods not exceeding five years in the aggregate as may from time to time be specified by the Reserve Bank'
'50.The Central Government shall:- (a) constitute a body of persons in the manner prescribed for the prepration of a list of persons eligible for appointment to the posts of Chief Executives and other managerial posts in national co-operative societies, the maximum pay scale of which exceeds such amount as may be prescribed; (b) make rules for regulating the recruitment, remuneration, allowances and other conditions of service of officers and other employees of national co-operative societies.'
'59.Notwithstanding anything contained in any law for the time being in force, the Central Government or a State Government may, with a view to promoting co-operative movement.- (a) subscribe to the share capital of a multi-State co-operative society; (b) give loans or make advances to a multi-State co-operative society; (c) guarantee the repayment of principal and payment of interest on debentures issued by multi-State co-operative. (d) guarantee the repayment of share capital of a multi-State co-operative society and dividends thereon at such rates as may be specified by the Central Government or the State Government; (e) guarantee the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society; (f) give financial assistance in any other form, including subsidies, to any multi-State co-operative society.'
'67.(1) The Central Registrar shall audit, or cause to be audited by a person authorised by him by general or speicial order in writing in this behalf, the accounts of every multi-State co-operative society at least once in a year. (2) The audit under - sub-section ( 1 ) shall include an examination of overdue debts, if any, the verification of the cash balance and securities, and a valuation of the assets and liabilities of the multi-State co-operative society. (3) The person auditing the accounts of a multi-State co-operative society shall have free access to the books, accounts, papers, vouchers, stock and other property of such society and shall be allowed to verify its cash balance and securities. (4) The directors, managers, administrators and other officers of the multi-State co-operative society shall furnish to the person auditing the accounts of the society all such information as to its transactions and working as such person may require. (5) The Central Registrar or the person authorised by him under sub-section (1) to audit the accounts of a multi-State co-operative society shall have power, where necessary. (a) to summon at the time of the audit any officer, agent, servant or member of the society, past or present, who, he has reason to believe can give valuable information in regard to transections of the society or the management of its affairs; and (b) to require the production of any book or document relating to the affairs of, or any cash or securities belonging to, the society by any officer, agent, servant, or member of the society in possession of such books, documents, cash or securities and in the event of serious irregularities discovered during audit, to take them into custody. (6) If at the time of audit the accounts Of a multi-State co-operative society are not complete, the Central Registrar or the person authorised by him under sub-section (1) to audit may cause the accounts to be written up at the expense of the society. (7) Audit fee, if any. due from any multi-State co-operative society shall be determined by the Central Registrar and shall be recoverable in the same manner as is provided in section 89.
'68.(1) The Central Registrar, or any person authorised by him by general or special order in writing in this behalf, may inspect a multi-State co-operative society. (2) (a) For the purpose of inspection under sub-section (1), the Central Registrar or the person authorised by him under that sub-section shall at all times have access to all books, accounts, papers, vouchers, securitics, stock and other property of that society and may, in the event of serious irregularities discovered during inspection, take them into custody and shall have power to verify the cash balance of the society and subject to the general or special order of the Central Registrar to call a meeting of the society where such general meeting is, in his opinion, necessary. (b) Every officer or member of a multi-State co-operative society shall furnish such information with regard to the working of the society as the Central Registrar making such inspection may require. (3) A copy of the report of inspection under this section shall be communicated to the multi-State co-operative society within a period of three months from the date of completion of such inspection.
69.(1) The Central Registrar may, of his own motion or on the application of a majority of the members of the board or of not less than one-third of the members, hold an inquiry or direct some person authorised by him by order in writing in this behalf to hold an inquiry into (he constitution, working and financial condition of a multi-State co-operative society. (2) The Central Registrar or the person authorised by him under sub-section (1) shall have the following powers, namely:- (a) he shall at all reasonable limes have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the multi-State co-operative society and may summon any person in possession or responsible for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same, at any place specified by him; (b) he may, notwithstanding any rule or bye-law specifying the period of notice for a general meeting of the multi-State co-operative society require the officers of the society to call a general meeting of the society by giving notice of not less than seven days at such time and place and headquarters of the society to consider such matters, as may be directed by him; and where the officers of the society refuse or fail to call such a meeting, he shall have power to call it himself. (c) he may summon any person who is reasonably believed by him to have any knowledge of the affairs of the multi-State co-operative society to appear before him at any place or at the headquarters of the society or any branch thereof and may examine such persons on oath. (3) Any meeting called under clause (b) of sub-section (2) shall have all the powers of a general meeting of the society called under the bye-laws of the society and its proceedings shall be regulated by such bye-laws. (4) The Central Registrar shall, within a period of three months of the date of receipt of the report, communicate a brief summary of the report of the inquiry to the multi-State co-operative society, the financial institutions, if any, to which the society is affiliated, and to the person or authority, if any, at whose instance the inquiry is made.'
'101No suit shall be instituted against a multi-State co-operative society or any of its officers in respect of any act touching the constitution, management or the business of the society until the expiration of ninety days next after notice in writing has been delivered to the Central Registrar or left at his office, slating the cause of action, the name. description nd place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left.'
Item 5 of the Second Schedule
'5.National co-operative Consumers' Federation of India Limited, New Delhi'
(38) According to the learned counsel for the petitioner cumulative reading of these sections leads to an irresistible conclusion that respondent No. 1 is an instrumentality of the state within the meaning of Article 12 of the Constitution. The learned counsel for the petitioner referred to letter dated 25th August, 1992 of the Ministry of Civil Supplies wherein it is stated that the respondent/federation is working under the control of Ministry of Civil Supplies, Consumer and Public Distribution. Learned counsel has also made reference to the show cause notice dated 14th July, 1986 of Central Registrar wherein in para2 it is stated that the NCCF Act comes within the administrative jurisdiction and supervision of the Department of Civil Supplies. He further mentioned that the respondent/federation is subject to audit by the Comptroller and Auditor General of India as per the order of the Ministry of Food and Civil Supplies. That audit report was submitted to the President of India under Article 151 of the Constitution.
(39) Learned counsel for the petitioner also submitted that the Multi-State Co-operative Societies Act was retrospective in operation by virtue of Section 103 and placed reliance on the following judgemts:-
(40) 'SHYABUDDINSAH Mohidinsb Akki Vs . Gadag-Belgeri Municipal Borough and others : [1955]1SCR1268 . Mohanll Jain. Vs . His Highness Mahraja Shri Sawai Man Singhji : [1962]1SCR702 . K.C. Mukerjee v. Mt.Ramratan Kuer and others, 136 PC 49, Mst. Rafigucnnessa and others Vs . Lal Bahadur Chetri and others : [1964]6SCR876 . Mithilesh Kumari and another Vs . Prem behri Khare : [1989]177ITR97(SC) .
(41) Learned counsel for the petitioner heavily relied on a judgment of this Court reported as D.C. Kapoor Vs A.K. Aggarwal (supra) by Kirpal, J. of this court where respondent/federation was held to be a Stale within the meaning of Article 12 of the Constitution of India.
(42) Learned counsel for the petitioner has also cited A.M. Ahamed and Co. Madras and others Vs . Union of India and others : AIR1982Mad247 where the federation namely National Agricultural Co-operative Federations of India constituted under the same Act was held to be a State.
(43) Reference has been made to the judgment of the learned Single Judge of Punjab and Haryana High Court in Kuldip Singh v. The Presiding Officer. Labour Court Patiala and others. 1987 1 SLR 112, where Punjab State Co-operative Supply and Marketing Federation Limited held to be a State within the meaning of Article 12 of the Constitution of India.
(44) Similarly another Single Bench of the Punjab and Haryana High Court in G.S. Chawla v. The State of Haryana and others 1987 48 SLR 371 held the Haryana State Co-operative Supply and Marketing Federation as a State.
(45) A similar view was taken by another Single Bench of the same Punjab and Haryana High Court in R.S. Goyal v. State of Punjab and others 1989 (3) SLR 259.
(46) Mr. Sethi, learned counsel for the petitioner cited Som Prakash Rekhi v. Union of India and another . The Court has laid down five features to show that Bharat Petroleum Corporation Limited is a State within the meaning of Article 12 of the Constitution of India. These features are set down as under:-
'(I)financial resources of the State being the chief funding source; (ii) functional character being governmental in essence, (iii) plenary control residing in Government; (iv) prior history of the same activity having been carried on by Government and made over to the new body and; (v) some element of authority or command. Whether the legal person is a corporation created by a statute, as distinguished from under a statue, is not an important criterion although it may bean indicium.'
(47) In Master Vibhu Kapoor Vs . Council of Indian School Certificate Examination and another : AIR1985Delhi142 , a Full Bench of this Court held that the first respondent is discharging the public function of imparting education, as contemplated by Article 41 of the Constitution. This. however, it could do even in its private capacity without being regarded as an authority within the meaning of Article 226 of the Constitution. As declared by the first respondent in the priced publication referred to earlier, it has entered into an arrangement with the Government to enable it to discharge its public function of importing education and thereby has not only received the authority or concession or privilege to conduct public examination but has been statutorily recognised by Section 2(s) of the Delhi Education Act as a body of persons or a society recognised and authorised by the Government to discharge the public function or the governmental function of importing education The rules and regulations of the first respondent read earlier show governmental supervision, if not control. Two of the members of the society are to be nominated by the Government which, at its choice, may either be full members or assessors. The Director of Education/Public Instruction (or his deputy) of the State in which a school affiliated to the first respondent exists is a member of the society. So not only functionally but also structurally the first respondent is deeply impregnated with Governmental character and is admittedly discharging a public function. If such an organisation is not to be regarded as as authority on the basis of the rule enunciated in Ajay Hasia's case, which other can. It was, thereforee, held tht the first respondent is an authority within the meaning of the term as used in Article 226 of the Constitution. It is a limb of the government in discharging the public function of imparting education and, thereforee, a petition under Article 226 of the Constitution for issue of a writ of certiorari or mandamus or both was held to be maintainable.
(48) Counsel for the petitioner has also drawn our attention to para 4 at page 490 in the case reported as Ajay Hasia etc., Vs . Khalid Mujib Sehravardi and others, : (1981)ILLJ103SC . This will primarily demonstrate that the State must have functional right over all bodies performing different functions within the scope of Article 12 of the Constitution.
(49) Learned counsel for the petitioner has also cited this decision to show that there are tests formulated by several cases of the Supreme Court to find out whether an institution is a 'State'. There cannot indeed be a strait jacket formula. It is not necessary that all the tests should be satisfied for reach ing the conclusion either for or against holding an institution to be a 'State'. In given case some of the features may emerge so boldly and prominently that a second view may not be possible. There may yet be other cases where the matter would be on the border line and it would be difficult to take one view or the other outright.
(50) Mr. Sethi. learned counsel for the petitioner, has also cited the following judgments:-
1.B.R.Ramabhadriah Vs . Secretary, Food and Agricultural Department, Andhra Pradesh and others : (1981)IILLJ263SC . Ravi Khanna v. Union of India. Air 1991 Del 291. 3. Director of School Education , Madras and others v. V. Gnararaj and another : AIR1992Mad124 .
(51) It demonstrates that the Court can lake subsequent facts into consideration to do justice. But in the instant case subsequent facts to demonstrate that share capital of the Central Government has increased was not really relevant because share capital of the respondent No. 1 has to be seen at the time when the order of termination was pssed. thereforee, in the context of this case, we do not propose to deal with the authorities in detail for a simple reason that in the facts of the present case it is not relevant.
(52) We have heard learned counsel for the parties and carefully perused the judgments cited by the learned counsel for the parties.
(53) In Ramu Ram Shu (supra), a Division Bench of Madhya Pradesh High Court, while dealing with the N.C.C. Federation of India, laid down some important features to demonstrate that the respondent N.C.C. Federation of India is not a 'State' within the meaning of Article 12. We are in agreement with the conclusions arrived at in the said judgment of the Division Bench and those conclusions are reproduced:
(54) 'FIRST: The object mentioned in he Multi-State Co-operative Societies Act, 1984 (ct No. 51 of 1984) is 'An Act to consolidate and amend the law relating to co-operative societies with objects not confined to one State and serving the interests of members in more than one State'. The Bye-laws, as per S. 9(2)(a) have to be consistent with the provisions of the Act of Rules. Bye-law No.3 of the N.C.C.F. enumerates in (i) to (xiv) activities of which a passing reference has been made by us in para 3 (supra). For brevity, we may add, that the objects include, creation and promotion of the formation of cadres of employees for the N.C.C.F and member institutions, securing from the Government or other sources requisite facilities, assistance and financial aid both for itself and member institution, holding of seminars, conferences, meetings and to undertake publicity, propaganda and similar other activities that may help the development of consumers co-operative movement; co-ordinate the working of its member institutions, etc.
(55) SECONDLY: Section 19 of the Multi-State Co-operative Societies Act, 1984 read with Bye-law 4 relate to Membership. It is a long list (a) to (h) and the Government of India or State Government (under the Act) could be its members. That membership extends to various categories listed in Bye-law No.4 and includes Nafed or other National level cooperative organisations. The membership is very broad-based.
(56) THIRDLY: Funding: According to Bye-law 15, these could be raised by issuing shares, taking loans and advances from Government and other agencies, deposits from members, donations, grants, subscriptions and contributions, advertisements, etc., admission fees. Thus, there are multifarious sources.
(57) FOURTHLY: Share Capital:The authorised share capital Bye-law 16(l) shall be Rs. 10 crores consisting of 50,000.00 shares of Rs. 2,0001- each to be subscribed by members, Pausing here, the Delhi decision, 1989 Lab Ic 940 where, it seems, parties placed materials showed, that the Central Government as member contributed 45 per cent of capital, yet, the fact is that the remaining major share capital of 55 per cent was from other sources, such as State Federations, member Co-operative Societies, Apex bodies/NAFED.
(58) FIFTHLY; The functioning under bye-laws 19 (a) the Supreme authority of the Federation is vested in the General Body of Members' clause (b) refers to the Composition of this body. Thus, there is one nominee of each member institution, but only one nominee of the Government of India, besides nominees of other legal entities. Clause (c) entitled every delegate/nominee/representative to exercise only one vote. Clause (f) refers to the purpose, namely, approval of the programme of the activities of the federation prepared by the Board of Directors, election of the member to board of Directors other than nominated members and consideration of audit report and annul report, etc. Bye-law 21 refers to duties and power's of the General Meeting Bye-law 24 refers to the Board of Directors, which consists of at least 10 members, as described therein, and only 3 nominees of the Government of India. But it does not show that the Government will have majority. Bye-law 27(i) to (xxiv) refer to various powers of the Board, which includes framing of regulation, of regulation, recruitment, promotion etc. Then there is Executive Committee in Bye-law 29 besides Business Committees. The powers and duties of the Managing Director are found in Bye-laws 34 and 35. The internal audit and check are arranged by the Board of Directors. The corresponding provisions about membership, voting. Board of Directors powers of the Board, nomination by the Central Government and State Government, may be seen in Sections 19,22,32,41 and 42 of the Act, 1984, Section 47 of that Act provides that the Central Government in public interest or for the purpose of securing proper implementation, etc. may make directions, which shall be complied with by those Multi-State Cooperative Societies. Pausing here it may be mentioned that the Government has also a financial stake in the running of those institutions and may also give grants, loans and subscription in the share capital and such powers are not unusual Under Section 50, the Central Government constitutes a body of persons in the manner prescribed for the preparation of a list of persons eligible for appointment to the post of Chief Executives and other Managerial posts in those societies, the maximum pay-scales of which exceed such amount as may be prescribed. Clause (b) thereof refers to the regulations of recruitment and remuneration of such officers This, in essence, the functioning of the N.C.C.F is footed in democratic set up. It will not be out of place to mention here that the co-operative movement, in spite of promotional policies and incentive barring a few Slates like Maharashtra, has not caught with the progress and that is why Government encouragement is necessary. Looking to the sorry state of affairs in many co-operative societies as is the experience. The Financial control and supervision also appear to be essential in gradients in public interest As regards the contention that at present the post of the Managing Director is manned by an I.A.S officer and there is an Administrator but such are said to be the temporary phases of an institute. They arise temporarily for certain periods. There may be managerial difficulties at high posts and that is why the officers, who have expertise, could be taken on deputation.
(59) SIXTHLY; The monopoly position is not conferred on the N.C.C.F. and its associates, but the objects are quite clear, as referred earlier, and those bodies, though they have entered the commercial Field, have to compete with other private enterprises, if they are to succeed. Merely because the organisation, in the allocation, is put in the Administrative control of a particular Ministry, that alone would not turn the N.C.C.F. into a Department of the Ministry. Looking to all these facts, we respectfully disagree with the views taken in the Delhi decision.'
(60) On consideration of all the relevant factors, the conclusion is irresistible that the respondent N.C.C.F. is neither an 'Instrumentality' nor an 'agency' of the State, within the meaning of Article 12 of the Constitution. In view of our aforesaid conclusion, the D.C. Kapoor's judgment (supra) of this court is overruled. The writ petition is accordingly dismissed. However, In the facts and circumstances of this case, parties are directed to bear their own costs.