This article contains a brief note for the leading case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111, which is a part of the paper “Leading Cases” for the Supreme Court Advocate on Record Examination.
In 1972, Sabhajit Tewary, a Junior Stenographer with the Council of Scientific and Industrial Research (CSIR) had filed a writ petition under Article 32 of the Constitution claiming parity of remuneration with the Stenographers who were newly recruited to CSIR, on the basis of Article 14 of the Constitution. A Constitution Bench of 5 Judges of the Supreme Court in Sabhajit Tewary v. Union of India, (1975) 1 SCC 485 : (1975) 3 SCR 616 : AIR 1975 SC 1329, denied him the benefit of Article 14 holding that the writ petition was not maintainable against CSIR as it was not an “authority” within the meaning of Article 12 of the Constitution.
The present case arose out of a writ application filed by the appellants in the Calcutta High Court challenging the termination of their services by Respondent No. 1 which is a unit of CSIR. Their request for an interim order was refused by the High Court on the prima facie view that in view of the Supreme Court’s decision in the above Sabhajit Tewary v. Union of India, (1975) 1 SCC 485, to the effect that CSIR was not “State” within the meaning of Article 12 of the Constitution, the writ petition itself was not maintainable. The appellants then approached the Supreme Court. A two-Judge Bench of the Supreme Court took the view that the decision in the aforesaid Sabhajit Tewary case required reconsideration in view of subsequent decisions of the Supreme Court decisions in respect of several other institutes of similar nature set up by the Union of India, and, therefore, the matter came to be referred to the present Constitution Bench of 7-Judges.
The questions involved in this case were: (i) whether CSIR was a State within the meaning of Article 12, and (ii) if yes, whether the Supreme Court should reverse the decision to the contrary in the above Sabhajit Tewary case, which had stood for over a quarter century.
The Supreme Court answered both the questions in the affirmative by a majority of 5 Judges while 2 Judges delivered the minority decision.
The majority decision held, inter alia, as under:
- The Constitution has to an extent defined the word “State” in Article 12 itself as including “the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India”. An “inclusive” definition is generally not exhaustive. The words “State” and “authority” used in Article 12 therefore remain among “the great generalities of the Constitution” the content of which has been and continues to be supplied by courts from time to time.
- The range and scope of Article 14 and Article 16 have been widened by a process of judicial interpretation so that the right to equality now not only means the right not to be discriminated against but also protection against any arbitrary or irrational act of the State.
- Keeping pace with this broad approach to the concept of equality under Articles 14 and 16, courts have sought to curb an arbitrary exercise of power against individuals by “centres of power”, and there was correspondingly an expansion in the judicial definition of “State” in Article 12.
- The significance of Article 12 lies in the fact that it occurs in Part III of the Constitution which deals with fundamental rights. The various articles in Part III have placed responsibilities and obligations on the “State” vis-à-vis the individual to ensure constitutional protection of the individual’s rights against the State, including the right to equality under Article 14 and equality of opportunity in matters of public employment under Article 16 and most importantly, the right to enforce all or any of these fundamental rights against the “State” as defined in Article 12 either under Article 32 or under Article 226.
- Initially the definition of State was treated as exhaustive and confined to the authorities or those which could be read ejusdem generis with the authorities mentioned in the definition of Article 12 itself.
- The next stage was reached when the definition of “State” came to be understood with reference to the remedies available against it. Thus, a statutory corporation, with regulations framed by such corporation pursuant to statutory powers was considered a State, and the public duty was limited to those which were created by statute.
- After referring to several decisions on this issue, the majority held that the tests formulated in Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722, are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be – whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State.
- CSIR was “created” by the Government to carry on in an organized manner what was being done earlier by the Department of Commerce of the Central Government. In fact the two research bodies which were part of the Department of Commerce have since been subsumed in CSIR.
- The objects which have been incorporated in the memorandum of association of CSIR manifestly demonstrate that CSIR was set up in the national interest to further the economic welfare of the society by fostering planned industrial development in the country. Such a function is fundamental to the governance of the country.
- CSIR was and continues to be a non-profit-making organization and according to clause 4 of CSIR’s memorandum of association, all its income and property, however derived shall be applied only “towards the promotion of those objects subject nevertheless in respect of the expenditure to such limitations as the Government of India may from time to time impose”.
- From the Rules and Regulations, 1999 of CSIR, the dominant role played by the Government of India in the Governing Body of CSIR is evident. The Director General who is ex officio Secretary of the Society is appointed by the Government of India [Rule 2(iii)]. Furthermore, the members of the Governing Body who are not there ex officio are nominated by the President and their membership can also be terminated by him and the Prime Minister is the ex officio President of CSIR.
- The control of the Government in CSIR is ubiquitous. The Governing Body is required to administer, direct and control the affairs and funds of the Society and, under Rule 43, has authority “to exercise all the powers of the Society subject nevertheless in respect of expenditure to such limitations as the Government of India may from time to time impose”. The Governing Body also has the power to frame, amend or repeal the bye-laws of CSIR but only with the sanction of the Government of India. Bye-law 44 had provided “any alteration in the bye-laws shall require the prior approval of the Governor-General-in-Council”. Under Rule 41, the President may review/amend/vary any of the decisions of the Governing Body and pass such orders as considered necessary which would be binding on the Governing Body. Moreover, decisions of the President on questions referred by the Chairman are binding on the Governing Body. Under this Rule the subjugation of the Governing Body to the will of the Central Government is complete.
- Under Bye-laws 12, 15, 14 and 19 various service rules and orders, pay scales and reservation rules applicable to the government servants are applicable to the employees of CSIR. Moreover, CSIR cannot lay down or change the terms and conditions of service of its employees and any alteration in the bye-laws can be carried out only with the approval of the Government of India (Bye-law 20).
- The present financial position of CSIR is that at least 70% of the funds of CSIR are available from grants made by the Government of India. Under Bye-law 6, funds of the Society may be invested only in such manner as prescribed by the Government of India. The non-governmental contributions are a pittance compared to the massive governmental input.
- As regards expenditure, under Bye-law 1 the budget estimates of the Society are to be prepared by the Governing Body keeping in view the government instructions. Moreover, Bye-law 69 requires the accounts of CSIR to be audited by the Comptroller and Auditor-General and placed before the table of both Houses of Parliament.
- Unlike other registered societies governed by Section 14 of the Societies Registration Act, 1860, on the winding up or dissolution of CSIR, any property remaining after payment of all debts shall have to be dealt with “in such manner as the Government of India may determine”.
- CSIR is therefore both historically and in its present operation subject to the financial control of the Government of India. The assets and funds of CSIR though nominally owned by the Society are in the ultimate analysis owned by the Government.
- Hence, from whichever perspective the facts are considered, there can be no doubt that the conclusion reached in Sabhajit Tewary case was erroneous. If the decision of Sabhajit Tewary had sought to lay down as a legal principle that a society registered under the Societies Act or a company incorporated under the Companies Act is, by that reason alone, excluded from the concept of State under Article 12, it is a principle which has long since been discredited.
- On 31-10-1986, under Section 14(2) of the Administrative Tribunals Act, 1985, the Central Government specified 17-11-1986 as the date on and from which the provisions of Section 14(3) of the 1985 Act would apply to CSIR “being the Society owned and controlled by Government”. Therefore, the notification serves in removing any residual doubt as to the nature of CSIR and decisively concludes the issues in the present case, against it.
- Since on a re-examination of the question, the Supreme Court has come to the conclusion that the decision in Sabhajit Tewary case was plainly erroneous, it is the duty of the Supreme Court to say so and not perpetuate the mistake. Sabhajit Tewary decision must be and is in the circumstances overruled.
Hence, it was held by the majority opinion of 5 judges that CSIR is a “state” within the meaning of Article 12 of the Constitution. The 2 dissenting judges, however, gave contrary minority opinion.