Full Judgment Text
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PETITIONER:
CHANDER MOHAN KHANNA
Vs.
RESPONDENT:
NATIONAL COUNCIL OF EDUCATIONAL RESEARCH ANDTRAINING AND ORS
DATE OF JUDGMENT17/09/1991
BENCH:
SHETTY, K.J. (J)
BENCH:
SHETTY, K.J. (J)
YOGESHWAR DAYAL (J)
CITATION:
1992 AIR 76 1991 SCR Supl. (1) 165
1991 SCC (4) 578 JT 1991 (4) 233
1991 SCALE (2)773
ACT:
Constitution of India:
Art 12-- NCERT whether "State"-- Indicative indicia
and determinative factors -- What are.
HEADNOTE:
In a writ petition challenging the termination of serv-
ices of the appellant, who was an employee in the National
Council of Educational Research & Training (NCERT), the High
Court upheld the preliminary objection that the writ peti-
tion was not maintainable as NCERT was not an instrumentali-
ty or authority within the meaning of Art. 12 of the Consti-
tution. Aggrieved, the appellant filed the appeal by special
leave to this Court.
On the question whether NCERT is "State" as defined
under Article 12 of the Constitution,
Dismissing the appeal, the Court,
HELD: 1.1. Like all societies, having a Memorandum of
Association and Rules for internal management, the National
Council of Educational Research and Training is a society
registered under the Societies Registration Act. [168 E]
1.2. Having regard to the object, functions, activities,
sources of funds of NCERT, freedom of application of its
income and property towards the promotion of its objectives
and implementation of programmes, confinement of Government
control only to proper utilisation of the grant, and largely
being an autonomous body, the institution does not satisfy
the requirements of "State" under Article 12 of the Consti-
tution. [169 G-H; 170A-C; 171 C-D]
Tekraj Vasandhi alias K.L. Basandhi v. Union of India [1988]
2 SCR 260, Sabhjit Tewari v. Union of India and Ors., [1975]
1 SCC 485, referred to.
166
Ajay Hasia v. Khalid Mujib Sehravardhi, [1981] 1 SCC 722
P.K. Ramachandra Iyer v. Union of India, [1984] 2 SCC 141
distinguished.
2. Article 12 should not be stretched so as to bring in
every autonomous body which has some nexus with the Govern-
ment within the sweep of the expression "State". A wide
enlargement of the meaning must be tempered by a wise limi-
tation. It must not be lost sight of that in the modern
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concept of Welfare State; independent institution, corpora-
tion and agency are generally subject to State control. The
State control does not render such bodies as "State" under
Article 12.
The State control, however vast and pervasive, is not
determinative. The financial contribution by the State is
also not conclusive. [168 A-B]
3. The powers, functions, finances and control of the
government are some of the indicating factors to answer the
question whether a body is "State" or not. These are merely
indicative indicia and are by no means conclusive or clinch-
ing in any case. Each case should be handled with care and
caution. [167 E-G]
Sukhdev Singh v. Bhagat Ram, [1975] 1 SCC 421; R.D.
Shetty v. International Airport Authority, [1979]3 SCC 489,
and Sore Prakash Rekhi v. Union of India, [1981] 1 SCC 449,
referred to.
4.1 The combination of State aid coupled with an unusual
degree of control over the management and policies of the
body, and rendering of an important public service being the
obligatory functions of the State may largely point out that
the body is "State". [168 B-C]
4.2. If the Government operates behind a corporate veil,
carrying out governmental activity and governmental func-
tions of vital public importance, there may be little diffi-
culty in identifying the body as "State", within the meaning
of Article 12 of the Constitution. [168 C]
Central Inland Water Transport Corporation v. Brojo-
nath Gangoli, [1996] 3 SCC 156, Tekraj Vasandhi alias K.L.
Basandhi v. Union. of India, [1988] 2 SCR 260, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1690 of
1981.
167
From the Judgment and order dated 10.4.1980 of the Delhi
High Court in Civil Writ No. 450 of 1971.
H.K. Puri for the Appellant.
The Judgment of the Court was delivered by
K. JAGANNATHA SHETTY, J. Whether the National Council of
Educational Research and Training (NCERT) is "State" as
defined under Article 12 of the Constitution ? This is the
only question that calls for decision in this appeal. The
appellant was an employee of the NCERT. This services were
terminated by the Secretary of NCERT. Challenging the termi-
nation he moved the Delhi High Court under Article 226 of
the Constitution.The NCERT raised a preliminary objection as
to the maintainability of the writ petition. The objection
was that the NCERT is not amenable to the writ jurisdiction
of the High Court as it is not an instrumentality or other
authority within the meaning of Article 12 of the Constitu-
tion. The High Court has upheld the preliminary objection
and dismissed the writ petition. The decision of the High
Court has been challenged in this appeal.
There are only general principles but not exhaustive
test to determine whether a body is an instrumentality or
agency of the Government. Even in general principles, there
is no cut and dried formula which would provide correct
division of bodies into those which are instrumentalities or
agencies of the Government and those which are not. The
powers, functions, finances and control of the Government
are some of the indicating factors to answer the question
whether a body is "State" or not. Each case should be han-
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dled with care and caution. Where the financial assistance
from the State is so much as to meet almost entire expendi-
ture of the institution, or the share capital of the corpo-
ration is completely held by the Government, it would afford
some indication of the body being impregnated with govern-
mental character. It may be a relevant factor if the in-
stitution or the corporation enjoys monopoly status which is
State conferred or State protected. Existence of deep and
pervasive State control may afford an indication. If the
functions of the institution are of public importance and
related to governmental functions, it would also be a rele-
vant factor. These are merely indicative indicia and are by
no means conclusive or clinching in any ease See Sukhdev
Singh v. Bhagat Ram, [1975] 1 SCC 421; R.D. Shetty v. Inter-
national Airport Authority, [1979]3 SCC 489; Ajay Hasia v.
Khalid Mujib Sehravardhi, [1981]1 SCC 722 and Som Prakash
Rekhi v. Union of India, [1981]1 SCC 449.
168
Article 12 should not be stretched so as to bring in
every autonomous body which has some nexus with the Govern-
ment within the sweep of expression "State". A wide enlarge-
ment of the meaning must be tempered by a wise limitation.
It must not be lost sight of that in the modern concept of
Welfare State; independent institution, corporation and
agency are generally subject to State control. The State
control does not render such bodies as "State" under Article
12. The State control, however, vast and pervasive is not
determinative. The financial contribution by the State is
also not conclusive. The combination of State aid coupled
with an unusual degree of control over the management and
policies of the body, and rendering of an important public
service being the obligatory functions of the State may
largely point out that the body is "State". If the Govern-
ment operates behind a corporate veil, carrying out govern-
mental activity and governmental functions of vital public
importance, there may be little difficulty in identifying
the body as "State" within the meaning of Article 12 of the
Constitution. See: P.K. Ramachandra lyer v. Union of India,
[1984]2 SCC 141 Central Inland Water Transport Corporation
v. Brojonath Gangoli, [1986] 3 SCC 156 and Tekraj Vasandhi
alias K.L. Basandhi v. Union of India, [1988]2 SCR 260.
The NCERT is a society registered under the Societies
Registration Act. Like all societies, it has a Memorandum of
Association. It has Rules for internal management. The High
Court has elaborately examined the Memorandum of Association
and the rules of the NCERT. The relevant part of the discus-
sion by the High Court is as follows:
"The NCERT is governed by a Memorandum of
Association subscribed to by seven officers of
the Government of India on 6.6.1961. Under
clause 3.1 of the Memorandum of Association
the object of the Council is to assist and
advise the Ministry of Education and Social
Welfare in the implementation of its policies
and major programmes in the field of education
particularly school education. Under clause
3.2 the Council is empowered for the realisa-
tion of the above objectives to undertake
several kinds of programmes and activities
which include coordination or research, exten-
sion services and training, dissemination of
improved educational techniques and practices
in schools, collaboration in educational
programmes, distribution of ideas and informa-
tion, preparation and publication of books,
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materials, periodicals and other literature
and allied activities. Under clause 5 the
income and property of the Council is to be
applied towards the promotion of its ob-
169
jects and cannot be disposed of by way of
dividends, bonus etc. But under this clause,
the Council is free to apply the income and
property towards its objectives in such manner
as it may think fit. It is subject to the
limitations placed by the Government of India
in this regard only in respect of the expendi-
ture of grants made by the Government. Under
clause 6 the Government of India could review
the work and progress of the Council and take
appropriate action to give effect to the
reports received on enquiries. In addition,
the Government could at any time issue direc-
tions to the Council on important matters of
policy and programmes." Rule 3 of the Rules of
the Council provides for Constitution of the
Council which consists mainly of various
Government officials but also includes the
Chairman of the University Grants Commission,
four Vice Chancellors and a number of nomi-
nees, four from school teachers and several
others. Rule 7 enables the Government to fix
the period of appointment of the members and
to extend it from time to time. The council’s
affairs are conducted by the Executive Commit-
tee whose constitution is outlined in Rule 23.
This includes various Government servants but
it also includes four educationists and three
Professors and Heads of Departments who may be
nominated by the President. Rule 37 provides
that if there is any difference of opinion the
view of the majority will prevail subject to a
veto which could be exercised by the Govern-
ment of India within a month. It also enables
the President to refer any question for the
decision of the Government. Rule 40 enables
the Executive Committee to frame and amend
Regulations not inconsistent with the rules.
Rule 42 empowers the Executive Committee to
enter into arrangements. with Government,
public or private organisations or individuals
in furtherance of its objectives and implemen-
tation of its programmes. Rule 57 provides
that the funds of the council shall consist of
(i) grants made by Government; (ii) contribu-
tion from other sources; (iii) Income from the
assets of the Council; and (iv) Receipts of
the Council from other sources."
The object of the NCERT as seen from the above analysis
is to assist and advise the Ministry of Education and Social
Welfare in the implementation of the Governmental policies
and major programmes in the field of education particularly
school education. The NCERT undertakes several kinds of
programmes and activities connected with the coordination of
,
170
research extension services and training, dissemination of
improved educational techniques, collaboration in the educa-
tional programmes. It also undertakes preparation and publi-
cation of books, materials, periodicals and other litera-
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ture. These activities are not wholly related to Government
functions. The affairs of the NCERT are conducted by the
Executive Committee comprising of Government servants and
educationists. The Executive Committee would enter into
arrangements with Government, public or private organisa-
tions or individuals in furtherance of the objectives for
implementation of programmes. The funds of the NCERT consist
of: (i) grants made by the Government, (ii) contribution
from other sources and (iii) income from its own assets. It
is free to apply its income and property towards the promo-
tion of its objectives and implementation of the programmes.
The Government control is confined only to the proper utili-
sation of the grant. The NCERT is thus largely an autonomous
body.
Almost a similar case was considered by this Court in
Tekraj Vasandhi alias K.L. Basandhi v. Union of India,
[1988]2 SCR 260. This Court was required to determine wheth-
er the Institute of Constitutional and Parliamentary Studies
(ICPS) was State under Article 12. The ICPS was a registered
society financed mostly by the Central Government and partly
by gifts and donations from Indian and foreign agencies. The
first President of the society was the then Speaker of the
Lok Sabha. Out of the five vice- presidents three were the
then central ministers; the other two were the then Chief
Justice of India and the Attorney General. The objects of
the society were to provide for constitutional and parlia-
mentary studies, promotion of research in constitutional
law, setting up of legislative research and reference serv-
ice for the benefit of legislators, organisation of training
programmes in matters of parliamentary interest and impor-
tance and publication of a journal. The Court found that
ICPS was born as a voluntary organisation. It found further
that though the annual financial contribution from the State
was substantial, it was entitled to receive aid from the
public and in fact received contributions from other
sources. Its objects were not governmental business. As
regards the argument that the government exercised pervasive
control over ICPS, the Court said:
"In a Welfare State ................. Gov-
ernmental control is very pervasive and touch-
es all aspects of social exist-
ence ........... A broad picture of the
matter has to be taken and a discerning mind
has to be applied keeping the realities and
human experiences in view so as to reach a
reasonable conclusion."
In the light of all these factors it has held that ICPS was
not "State".
171
In the present case, the High Court has relied upon the
Constitution Bench decision of this Court in Sabhjit Tewari
v. Union of India and Ors., [1975] 1 SCC 485. There it was
held that the Council of Scientific and Industrial Research
(CSIR), which was sponsored and controlled by the Central
Government and registered under the Societies Registration
Act was not "State" within the meaning of Article 12. But
this decision has been distinguished and watered down in the
subsequent decisions particularly in Ajay Hasia and Ramchan-
dra lyer cases (supra).
Counsel for the appellant strongly relied upon the
decision in P.K Ramchandra lyer case where this Court held
that Indian Council for Agricultural Research (ICAR) was
"State" under Article 12. But it may be noted that ICAR was
originally an attached office of the Government of India and
its position was not altered when it was registered as a
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society. That case, therefore is clearly distinguishable.
In our opinion, the case on hand, having regard to the
indications to which we have called attention earlier, does
not satisfy the requirements of "State" under Article 12 of
the Constitution. We, therefore, agree with the conclusion
of the High Court and dismiss the appeal. In the circum-
stances of the case, we make no order as to costs.
R.P. Appeal dis-
missed.
172