S.K. Mal Lodha, J.
1. This appeal under Section 18 of the Rajasthan High Court Ordinance, 1949 is directed against the Judgment dated August 19, 1982 of the learned single Judge of this Court by which he allowed the writ petition filed by the respondent without any order as to costs.
2. The appellants and respondeat were non-petitioner and petitioner before the learned single Judge and they will be referred is such herein.
3. The petitioner was holding the post of Junior Accountant with non petitioner No. 1, the Rajasthan Co-operative Dairy Fedsration Ltd. (herein after referred to as the Federation) in its Jodhpur Dairy Unit. By order (Anx. 2) dated June 3, 1981 the petitioner's services were, terminated with immediate affect and he was asked to hand over charge to one Shri Om Dutt. It is alleged that this order came to the notice of the petitioner on June 6, 1981. The order (Anx 2) (typed copy Anx. 3) filed by the petitioner runs as follows:
Since you are holding a responsible post and you are directly assisting the Accounts Officer Rajasthan Cooperative Dairy Federation Ltd. Unit, Jodhpur Dairy. As you are very well aware that the Rajasthan Cooperative Dairy Federation is directly dealing in sale and distribution of milk with the public.
As you are aware that few days back a confidential audit report was leaked out and it was published in the Rajasthan Patrika dated in 19.5.1981 which adversely effected the prestige, the goodwill and adversely effect the efficiency of the Rajasthan Cooperative Dairy Federation in the eyes of public.
Today on 3rd June, 1981, Shri H.K. Gupta Accounts Officer after holding the preliminary enquiry, he reported to me that you with Sarva Shri Prabhu Singh and Bhanwar Dan took away the note sheet and other vouchers relating to freight and cartege. I have perused the preliminary enquiry report and I agrees with the said report.
I have lost the confidence in you and now it is not possible to hold the departmental enquiry on the facts given above. Tnereafter, I dispense with departmental enquiry to be conducted on the facts given above against you.
It is not possible for ms to retain you in the service of the Rajasthan Cooperative Dairy Federation Unit Jodhpur Dairy even for a day. Therefore, your services are terminated with immediate effect. You are, hereby, asked to handover your charge to San Om Datt Purohit and you can collect your dues after submitting the no dues certificate.
Sd/-General Manager.
The petitioner has also filed the photostat copy of the office note (Anx.4) dated June 3,1981 of the Special Auditor to show that what is stated in the order so far as the happening during the course of preliminary enquiry is concerned is wrong. The petitioner claims himself to be a 'workman' within the meaning of Section 2(i) of the Industrial Employement (Sending Orders) Act 1946(No. XX of 1946) (hereinafter referred to be the Act,) as the duties which he is discharging are clerical in nature. The order (Anx. 2) was, challenged by the petitioner by filing a writ petition on various grounds on June 8, 1981 praying therein that the order (Anx. 2) dated June 3, 1981 may be declared illegal and may be quashed and the appellants (who Were non-petitioners) may be directed not to give effect to it, Certain other consequential reliefs were also sought in the writ petition. A reply contesting the writ petition was filed on behalf of the non-petitioners. Alongwith the reply, documents Ex. R 1 to Ex. Rule 8 were filed. The petitioner filed rejoinder to the reply alongwith documents Anx-5 to Anx. 7. The learned' single Judge has recorded the following findings:
(1) that appellant No. 1 (the Federation) is the authority under the control of the Government and so it is 'the State' within the meaning of Article 12 of the Constitution;
(2) that alternative remedy by moving the Government for redress under the Industrial Disputes Act, 1947 (for short 'the Act of 1947) is no bar to the maintainability of the writ petition;
(3) that the orders Anx.2 dated June 3, 1981 is against the principles of natural justice and ail lelevant provisions which provide for a domestic enquiry.
In view of the findings aforesaid, the learned single Judg2 by his order dated August 19,1982 allowed the writ petition and quashed the order Anx.2 dated June?, 1981 and ordered that the petitioner would be re-instated and it will be open to the non-petitioners to take any action against him for the alleged misconduct according to law. The not-petitioner have filed this appeal questioning the correctness of the order dated August 19,1982 of the learned single Judge.
4. We have heard Mr. D.K. Parihar, learned Counsel for the appellants and Mr. M. Mridul, learned Counsel for the respondent.
5. Mr. D.K. Parihar, learned Counsel for the appellants in the first instance argued that the learned Judge has erred in holding that the Federation is 'other authority' under the control of the Government and thus it is 'the State' within the meaning of Article 12 of the Constitution. It was submitted that since it is an 'authority' under the control of the Government, it is not 'the State' and, therefore, the writ petition filed by the non-petitioner (respondent) was not maintainable. This is strongly opposed by the learned Counsel for the respondent and he supported the order of the learned single Judge in this regard.
6. Article 12 of the Constitution reads as under:
12. Definition. In this part, unless the context otherwise requires, ' 'the State' includes the Government and the Legislature of each of the Siate and all local or other authorities within the territory of India or under the control of the Government of India.
Article 226 of the Constitution runs as follows:
226. Power of High Courts to issue certain writs. (1) Notwithstanding anything in Article 32 every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate casese any Government, within those territories directions, orders or writs including in the nature of habeas corpus, mandamus, prohibitio, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by part III and for any other purpose.
Learned counsel for the appellants referred to Bye-law 21.1 of the Rajasthan Cooperative Dairy Federation Ltd., Jaipur (for short 'the Bye-Laws' herein) which deals with powers of the Board. It runs as under:
21. Power of the Board
21.1 The entire administration, management and control of the Federation shall vest in the Board. The Board shall have an exercise all such powers and enter into all such agreement. Sake as such arrangements, take al) such proceedings, and do acts and things as may be necessary and proper for efficient management of the Federation for carrying out the objects of the Federation and for securing and furthering its interests, subject to the provisions of the Act, Rules and Bye Laws,
On the basis of Bye-law 21., it was contended by the learned Counsel for the appellants; that entire administration, management and control of the Federation vest in the Board and, as such, the Board is only respo stole for the efficient management of the Federation for carrying out the object of the Federation and thus it is not an authority under control of the Government. He referred to Sukhdevsingh v. Bhagatsingh : (1975)ILLJ399SC , Ramens v. I.A. Authority of India , Satish Kumar v. Punjab Co-op Bank Ltd. , Pritamsingh Gill v. State of Punjab .
7. In Sukhdevsingh Case : (1975)ILLJ399SC Article 12, 14, 16 and 226 of the Constitution were considered by their Lordships of the Supreme Court and it was held that the Rules and Regulations framed by the Oil and Natural Gas Commission, Life Insurance Corporation and the Industrial Finance Corporation have the force of law and that the employees of these statutory Provisions and further statutary body have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravantion of statutory provision and further that these employees are no servants of the Union of the State. It was also held that these statutory bodies authorized within the meaning of Article 12 of the Constitution and the employees of these statutory corporations are entitled to claim protection of Article 14 and 16. After following Rajasthan State Electricity Boards Jaipur v. Mohanlal : (1968)ILLJ257SC it was observed as under:
The expression 'other authorities' in Article 12 has been held by this Court it. the Rajasthnn Electricity Board's case to be wide enough to included within it every authority created by a statute & functioning within the territory of India, or under the control of the Government of India.
In Ramand's case, it was observed as under:
A corporation may be created in one of two ways. It may be either established by statute or incorporated under a law such as the Companies Act, 1956 or the Societies Registration Act 1860 Where a Corporation is wholly controlled by Government in its policy making but also in carrying out the function entrusted to it by the law establishing it or by by the Charter or its incorporation, there can be no doubt that ix would be an instmumentality or agency of Government. But ordinary where a corporation is established by statute, it is autonomous in its working subject only to a provision, often times made, that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters So also a corporation incorporated under the law is managed by a Board of director or committee of management in accordance with the provisions of the statute under which it is incorporated. 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 Dature of such control? Should the functions which the corporation is charged to carry out possess any particular characteristic or feature, or is the nature of the function immaterial? How, 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 to a case a corporation established by statute may have no shares or share holders. 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. That 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 ill-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.
The rule laid down in Ramana's case : (1979)IILLJ217SC was approved in Ajai Hasia v. Khalid Mujib : (1981)ILLJ103SC and has been summarised as under:
The tests for determining as to when a Corporation can be said to be an instrumantality or agency of Government may now be called out from the judgment in the International Airport Authority's case : (1979)IILLJ217SC . These tests are not conclusive or clinching but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression 'other authorities' it must be realized that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Government with the sweep of the expression. A wide enlargement of the meaning must be tempered by a wise limitation. We may summarise the relevant tests gathered from the decision in the International Airport Authority's case, 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 the State conferred or State protected:
(4). Existence of 'deep and prevasive 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 Government functions it would be a relavent factor in classifying the Corporation as an instrumentality or agency of Government;
(6). Specially, 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.
If on a consideration of these relevant factors it is found that the Corporation is an instrumentaliy or agency of Government, it would, as pointed out in the International Airport Authority's case, be an 'authority' and, therefore, a 'State' within the meaning of Article 12.
Before a Full Bench of the Punjab & Harayana High Court in Pritamsingh's case , the question arose whether a Society registered under the Punjab Cooperative Soceities Act, which in essence is an instrumentality or agency of the State, would become amenable to the writ jurisdiction under the provisions of Article 226 of the Constitution of India?. After considering the relevant provisions of the Punjab Cooperative Societies Act and Ajia Hasis's case : (1981)ILLJ103SC , it was held that the Punjab State Cooperative Land Mortgage Bank is not an instrumentality or agency of the State, and consequently, it cannot be deemed to be an authority within the meaning of Article 12 and as such, is not amenable to the writ of certiorari under Article 226.
8. In Vallabhchand Mehta v. Rajasthan Cooperative Dairy Federation Ltd. and Ors. 1981 WLN (UC) 341. the question arose before the learned Single Judge was whether the Sangh is an instrumentality or agency of the Government or not, would depend on the question as to whether the Sangh is an authority under the control of the Government. The learned Judge after noticing the observation made by the Lordships of the Supreme Court in Sam Prakash Rakhi v. Union of India held that the Sangh is an instrumentality or agency or an authority under the control of the Government and so is a 'state' within the meaning of Article 12 of the Constitution. The observations considered by the learned Judge are these:
A study of Sukhdev's case : (1975)ILLJ399SC (a) Constitution Bench decision of this Court) yields the clear result that the preponderent considerations for pronouncing an entity as State, agency or instrumentality are (1) financial resources of the State being the chief funding source. (2) functional character being Governmental in essence, (3) Plenary control residing in Government, (4) prior history of the same activity having been carried on by Government and made over to the new body and (5) some element of authority or command. Whether the legal person is a corporation created by a statute, as distinguished from under a statute, is not an important criterion although it may be an indicium. Applying the constellation of criteria collected by us from Airport Authority : (1979)IILLJ217SC , on a cummunative basis, to the given case, there is enough materia) to hold that the Bharat Petroleum Corporation is 'State' the the enlarged meaning of Article 12. The Common sense signification of the express on 'Other authorities under the control of the Government of India' is plain and there is no reason to make exclusions on sophisticated grounds such as that the legal person must be a statutory corporation, roust have power to make laws, must be created by and not under a statute and so on. The jurisprudence of Third World countries cannot afford the luxury against which Salmond cavilled, Salmond, Jurisprudence, 10th Edn. p. 51.
Partly through the methods of its historical development, and partly through the influence of that love of subtlety which has always been besetting sin of the legal mind, our law is filled with needless distinction which add enormously to its bulk and nothing to its value, while they render a great part of it unintelligible to any but the expert.
In the light of the tests laid down in the aforesaid decisions of the Supreme Court, we proceed to determine whether the Federation is an authority under the control of the Government within the meaning of Article 12 of the Constitution?.
Para 8 of the writ petition is as follows -
8. That the respondent Federation is a Cooperative Society registered under the Rajasthan Cooperative Socities Act, which has been constituted for the purpose of serving public purposes. The present Board of Directors of the Federation is entirely nominated by the Government of Rajasthan by virtue of the powers conferred upon it by Bye-law No. 13 of the Bye-laws of the Federation. Even otherwise, bye-law No 16.1 entitles of the State Government to nominate 6 of the 12 of the Bjard of Directors. One of the Directors is to be nominated by the Central Government. As per bye-law 161(b), the Chairman is to be nominated by the Government as also the Managing Director who is nominated by virtue of bye-law No. 24 1. The finances of the Federation are principally those coming from the Government way of aid and loans. To all intents and purposes, therefore, the Fedaration is a State within the meaning of Article 12 of the Constitution of India.
In reply to this, it was stated in the reply to the writ position by the non-petitioners (appellan's) as under:
8. That the 'para No. 8 is denied. The Respondent No. 2 is an Industry having its monopolise business in regard to sale and distribution of milk and its products. The Respondents have their own sources of the income from the sale and distribution of the milk and its products. The day to day management and the policies to run the establishment is managed by the Respondents. The State Government has no power to intervene in the affairs of the Respondents, Thus the Respondent No. 1 cannot be said to be State within the meaning of Article 12 of the Constitution of India.
Para 4.4 of Bye-law 4 is as follows:
4.4 To formulate and implement dairy development schemes, as may be directed by the Government.
Para 8.1 of the Bye-law 8 reads as under:
8.1 The membership of the Federation shall be open to:
(a) Go-operative Milk Union
(b) State Government
(c) Central Government
(d) any other co-oprerative institution, financial institution or State undertaking.
Para 16.1 and 16.3 of the Bye-law 16 is as under:
16.1. The business of the Federation shall be carried out and managed by a Board of Directors which will be constituted as hereunder except as provided in bye-law 16.3.
(a)Five Directors of member milk Unions, to be elected every year from amongst the Chairman of member Unions.
(b) Three Directors, of when one shall be Chairman, to be nominated by the Government.
(c) One Director to be nominated by the Central Government.
(d) One representative of financing institutions to be nominated by the Government.
(e) One Dairy Expert to be appointed by the Govt.
(f) Managing Director.
16.3. Notwithstanding anything contained in byelaws, the first Board of Directors, including the Chairman, after the registration of the Federation shall be nominated by the Government for a period of 3 years. The Government may extend the term of the nominated for a period not exceeding 2 years. The nominated is Board shall continue to function till the new Board is constituted as provided in the Rules and in these byelaws.
Para 24.1 of the Bye-law 24 is as under;
24.1. The Managing Director of the Federation shall be appointed by the Government. He shall be the Chief Executive Officer of the Federation and shall be responsible for the sound and efficient management of the Federation.
From the above referred Bye-laws, the following facts emerge:
(1) that the principal financier of the Federation is the State Government;
(2) that Directors are nominated by the State Govt. and out of them one is Chairman;
(3) that one Director is nominated by the Central Government;
(4) that the Board of Directors including the Chairman are nominated by the Government after the registration of the Federation for a period of 3 years and the Government has been empowered to extend their term not exceeding to 2 years; and
(5) that the Managing Director is the Chief Executive Officer of the Federation and he is appointed by the State Government.
The tests laid down in Ramana's case AIR 1979 SC 1928 Som Prakash Rakhfs case (8) and Ajai Hasia's case (6) are satisfied. We hold that the Federation falls wilhin the ambit of Article 12 of the Constitution and as such, amenable to writ jurisdiction under Article 226 of the Constitution. The learned Single Judge was right when he held that the Federation is the 'authority' under the control of the Government and so is 'State' within the meaning of Article 12 of the Constitution. The first contention raised by the learned Counsel for the appellant is, therefore, rejected.
9. It was next contended by the learned Counsel for the appellants that the learned single Judge committed an error when he held that the order Anx. 2 has been passed in violation of the principles of natural justice & relevant provisions of law which provide for a domestic enquiry. He submitted that Anx. 2 is an order of termination simpliciter and this order could be passed in view of item No. 8 of the Schedule appended to the Act read with Clause 17 of the Industrial Employment (Standing Orders) Central Rules, 1946 Section 2(g) of the Act defines 'standing orders' as rules relating to matters set out in the Schedule. Section 3(2) of the Act says that the provisions shall be made in such draft for every matter set out in the Schedule which may be applicable to the industrial establishment, and where Model Standing Orders have been prescribed shall be, so far as it practicable in conformity with such model. The Schedule appended to the Act provides for matters to be provided in Standing Orders under the Act. Item No. 8 of the Schedule appended to the Act is as follows:
8. Termination of employment, and the notice thereof to be given by employer and workmen.
It exercise of the powers conferred by Section 15 of the Act, the State Government made the Rajasthan Industrial Employment (Standing Orders) Rules, 1963 (Rules of 1963' hereinafter) for regulating standing orders to industrial employments in Rajasthan. Rule 18 of the Rules of 1963 deals with disciplinary action for misconduct.
10. Mr. D.K. Parihar, learned Counsel for the appellant placed reliance on U.I.C. Paper Mills v. Presiding Officer (9) wherein it was opined by a learned Single Judge of Allahabad High Court that it is open to the Company to choose to terminate the service of a workman in accordance with its Standing Orders and it may not think fit to proceed against him for an alleged misconduct. While doing so, Nagpur Electric Light and Power Co. v. Shreepathi Rao 1958 LLJ 9 was followed. In that case, the order of the management was an order of termination and not of dismissal. The workman was paid his salary in lieu of notice which would not have been paid, had the management intended to inflict the punishment for misconduct. The procedural requirements of its Standing Orders were followed. The order also stated the reasons for the termination of the service. Under these circumstances, it was held that the Management acted under its Standing Order relating to termination of service and not under Standing Order relating to dismissal for misconduct and, therefore, the order of Management did not suffer from any invalidity.
11. In the instant case, it is clear from the order Aoex.2 that the acts of the misconduct were stated in the order and the General Manager decided that it is not just for him to retain the petitioner in service even for a day as he had lost confidence in the petitioner and further that it was not possible to hold an enquiry. He, therefore, terminated the services of the petitioner with immediate effect Mis. U.I.C. Paper Mill's case (9) is of no assistance to the learned Counsel for the appellant. In the case on hand, before terminating the services of the petitioner on the ground of misconduct procedure provided under Rule 18 of the Rules of 1969 was not followed. Even the minimum requirement of affording an opportunity of being heard or showing cause was not observed. There was breach of the principles of natural justice. The learned Single Judge was, therefore, right in holding that the services of the petitioner were terminated without proper enquiry in violation of the principles of natural justice.
12. The third point raised by Mr. D.K Parihar learned Counsel for the appellant is that the learned Judge went wrong in holding that the petitioner should be reinstated in service According to the learned Counsel as the services of the petitioners were terminated on the ground of loss of confidence, the direction of reinstatement of the petitioner was illegal. On the other hand, Mr. M. Mridul, submitted that in the facts & circumstances of the case, the direction for re-instatement was rightly given.
The Supreme Court in Ruby General Insurance Co. v. Chopra held that the normal rule is that in cases of invalid orders of dismissal, industrial adjudication would direct reinstatement of a dismissed employee though industrial adjudication may not regard a wrongful dismissal as one amounting to termination of service resulting only in right to damages as under the law of master and servant and would ordinarily direct reinstatement, it can refuse to order reinstatement when such a course is not fair, proper is inexpedient depending upon the facts and circumstances of each case. It would be useful except the following from para 7 of the report:
The Regional Manager might well feel that if the respondent was capable of collecting evidence against the company he might in future collect perhaps evidence of a more dangerous and harmful nature. Obviously, if he cannot repose confidence in the respondent, if reinstated, he cannot make any use of his service as a stenographer. In the circumstances, we think that the tribunal ought not to have directed his reinstatement despite its conclusion that the termination of his services was wrongfully made, but ought to have awarded suitable compensation instead.
It may be stated that in that case, respondent had merely served for a year and that it was not too difficult for competent stenographers to obtain suitable employment, and, therefore, the Supreme Court gave direction to the Company to pay to him compensation enquivalent to one year's salary at the rate of Rs. 307/- per month. It was only in the peculiar facts and circumstances of the case that the direction of reinstatement was set aside by the Supreme Court. In Penitela Tea Estate v. Workmen 1971 (4) LIC 1235, it was 1 observed:
The question whether on setting aside the wrongful dismissal of a workmen he should be reinstate;! or directed to be paid compensation is a matter within the judicial discretion of the Labour Court or the Tribunal, dealing with the industrial dispute, the general rule in the absence of any special circumstances being of reinstatement. In exercising this discretion, fair play towards the employee on the one hand and interest of the employer including considerations of discipline in the establishment, on the other, require to be duly safeguarded. This is necessary in the interest both of security of tenure of the employee and of smooth and harmonious working of the establishment. Legitimate interests of both. of them have to be kept in vie v if the order is expected to promote the desired objective of industrial peace and maximum possible production. The past record of the employer, the nature of the alleged conduct for which action was taken against him, the grounds on which the order of the employer is set aside, the nature of the duties performed by the employee concerned and the nature of the industrial establishment are some of the broad relevent factors which require lo be taken in consideration. The factors just stated are merely illustrative and it is not possible to exhaustively enumerate them. Each case has to be decided on its own facts and no hard and fast rule can be laid down to cover generally all conceivable contigencies. Proper balance has to be maintained between the conflicting claims of the employer and the employee without jeopardising the larger interests of in dustrial peace and progress. In Hindustan Steel Ltd.' case, : (1970)ILLJ228SC this Court substituted the order of reinstatement by an order of payment of compensation on the ground that the police report and the security officer's recommendation to the Company showed that it was not desirable for reasons of security to reinstate the employee.
A similar question arose In Delhi Transport Corp. v. Sh. Ram Kumar 1982 (1) LLN 302 wherein it was observed as under:
The ipso dixit of the management that if has lost confidence in the workmen is not a mantra that it can be used at managament's pleasure to deny the normal relief of reinstatement to a workman, even when the dismissal has been found to be unjustified. The plea of loss of confidence must have some rational relation to the fact that the employee had misused his position of trust and rendered it undesirable to retain him in service. Loss of confidence in the integrity of an employee should be substantiated by cogent evidence before the Labour Court. If a workman is entitled as a general rule to be reinstated after his wrongful dismissal is set aside and on the facts it is not possible to find cogent material on which the establishment can genuinely be considered to have lost confidence in the integrity of the workman, he is entitled to be reinstated.
The aforesaid decisions of the Supreme Court and the Delhi High Court afford useful guide for determining the question of reinstatement of the petitioner. In this case, no enquiry was held against the petitioner. Misconduct has not been established before passing the order Anx. 2. When the order of termination has been Set aside, reinstatement is normal remedy as there are no special circumstances to deny the same. There is no infirmity in the order of the learned single Judge.
14. No other point survives for our considerate in this appeal.
15. There is no merit in this appeal. It is, according, dismissed.
16. Learned counsel appearing for the appellant orally prayed for grant of certificate to appeal to the Supreme Court. In our opinion, the case does not involve any substantial question, of Law of general importance which needs to be decided by the Supreme Court. The Prayer for grant of certificate is refused.