79

AJAY RASIA ETC. A

v.

KHALID MUJIB SEHRA VARDI & ORS. ETC.

November 13, 1980

[Y. V. CHANDRACHUD, C.J., P. N. BHAGWATI, V. R. KRISHNA IYER, 8

s. MURTAZA FAZAL ALI AND A. D. KosHAL, JJ.]

Adn1ission to Engineering College-Jammu & Kashmir Regional Engineer­

ing College, Srinagar, registered as a society under the Jam1nu & Kashmir

Registration

of Societies Act, 1898-Whether a

"State" under Article 12 of the

Constitution and amenable to writ jurisdiction.

Viva voce

test-Interview of each of

thr candidates fa,Ning only two or

three minutes asking formal questions relating to the candidates parentage and

residence and without any relevance to the subject for which marks were allo-

c

cated, whether arbitrary-Allocation of 113 of the total marks required for the

qr1alifying examination for the viva voce-Whcther bad, unreasonable and

arbitrary-Whether prescribing different admission procedures for candidates

belonging to tlie State of Jammu & Kashmir and candidates belonging to other D

States is violative of the Equality Clause under Article 14.

Dismissing the writ petitions, the Court

HELD: (!). Having regard to the Me.norandum of Association and the

Rules of the Society, the respondent college is a State within the meaning of

Article 12. The composition of the Society is dominated by the representatives

appointed

by the Central Government and the Governments of Jammu &

Kashmir,

Punjab, Rajasthan and Uttar Pradesh with the approval of the Central

Government. The monies required

for running the

College are provided entirely

by the Central Government and the Government of Jamrnu & Kashmir and

even if any other monies are to be received by the Society, it can be done only

v.ith the approval of the State and the Central Governments. The Rules to be

made

by the Society are also required to have the prior approval of the State

and the Central Governments and the accounts of the Society have also to be

submitted to both

the Governments for their scrutiny and

satisfaction. The

Society is also to comply \vith all such directions as may be issued by the State

Government with the approval of the Central Government in respect of any

matters dealt with in the report of the Reviewing Committee. The control of

the State and the Central Governments is indeed so deep and pervasive that no

immovable property of the Society can be disposed of in any manner without

the approval of both the Governments. The State and the Central Govern­

ments. have even the power to appoint any other person or persons to be

members of the Society and any member of the Society otlier than a member

representing the State

or the Central Government can be removed from the

membership of the Society by the

State Government with the approve! of !he

Central Government. The Board of Governors, which is incharge of general

superintendence, direction and control of the affairs of the Society and of its

income and property

is

ailso largely controlled by nominies of the State and the

Central Governments. The State Government and by reason of the provision

for epproval, the Central Government also thus have full control of the work-

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SUPREME COURT REPORTS [1981] 2 S.C.R.

ing of the Society and therefore, the Society is merely a projection of the State

and the Central Governments. The voice is that of the State and the Centro1

Governments. The Society is an instrun1ent'ality or the agency of the State

and the Central Governments and it is an "authority" within the meaning of

Article 12. If the Society is, an "authority" and, therefore, the "State" within

the meaning of Article 12, it must follow that it is subject to the constitutional

obligation under Article 14. [99F-H, 100 K-FJ

(2) The expressi0n "other authorities' in Article 12 must be given an

interpretation where constitutional fundamentals vital to the maintenance of

human rights are at stake, functional realism and not facial cosmetics must be

the diagnostic tool, for constitutional law must seek the substance and not the

form. The Government may act through the instrumentality or agency of

juridical persons to carry

out its functions, since, with the advent of the welfare

State its new task have increased manifold. [90B-D]

It is, undoubtedly, true that the corp0ration is a distinct juristic entity with

a corporate structure of its own and it carries

on its functions on business

principles with a certain amount of autonomy which

is necessary as well as

useful from the point of view of effective business management, but behind the

formal ownership which

is

cast in the corporate mould, the reality is very much

the deeply pervasive presence of the Government. It

is

really the Government

\'hich acts through the instrumentality

or agency of t'he corporation and the

juristic

veil of corporate personality worn for the purpose of convenience of

management and administration cannot be allowed

to obliterate the

true nature

cf the reality behind which is the Government. It is clear that if a corporation

is an instrumentality or agency of the Government, it must be subject to the

same limitations

in the field of constitutional law

os the Government itself,

though in

the eye of the

la.w it would be a distinct and independent legal entity.

H the Government acting through its officers is subject to certain constitutional

limit'ations, it must follow a fortiorari that the Government acting through the

instrumentality

or agency of a

corporation should equally be subject to the

same limitations.

If such a corporation were to be free from the basic obliga­

tion to obey the Fundamental Rights, it would lead to considerable erosion

of

the efficiency of the Fundamental Rights, for in that event the Government

would be enabled

to override the Fundamental Rights by adopting the strata­gem of carrying out its functions through the instrumentality or agency of a

corporation, while retaining control over it. The Fundamental Rights would

then

be reduced to little more than an idle dream or a promise of

unreality.

[91B-FJ

The Courts should be anxious to enlarge the scope and width of the Funda­

mental Rights by bringing within their sweep every authority which i• an

instrumentality or agency of the Government or through the corporate perso­

nality of which the Government is acting, so as to subject the Government in

all its myriad activities, whether t'hrough natural persons or through corporate

entities, to the basic oblig6tion of the Fundamental Rights. The constitutional

philosophy

of a democratic socialist republic requires the Government to under­take a multitude of socio..economic operations and the Government, having

regard

to the practical advantages of functioning through the legal device of e. corporation, embarks on myriad commercial and economic activities by

resorting to the instrumentality or agency of a corporation, but this contrivance

of ca1Tying on such activities through a corporation cannot exonerate the

Gov<:rnment from implicit obedience to the Fundamental Rights. To use the

AJAY RASIA V. KHALID MUJIB 81

corporate methodology is not to liberate the Government from its basic obliga- A

tion to respect the Fundamental Rights and not to override them. The mantle

of a corporation may be adopted in order to free the Government from the

inevitable constraints of red-tapism and slow motion but

by doing

so, the

Government cannot be allowed to play truant with the basic human rights,

otherwise it would be the easiest thing for the government to assign to a plum-

lity of corporations almost every State business such as Post and Telegraph,

TV, Radio, Rail, Road and

Telephones-in short every economic activity-and B

·

thereby cheat the people of India out of the Fundamental Rights guaranteed to

them. That would be a mockery of the Constitution and nothing short of

treachery and breach of faith with the people of India, because though appa-

rently the corporation will be carrying out these functions, it will in truth and

reality be the Government which will be controlling the corporation and carry-

ing out these functions through the instrumentality or agency of the corporation.

Courts cannot by a

process of judicial construction allow the

Fundemental C

Rights to be rendered futile and meaningless and thereby wipe out Chapter Ill

from the Constitution. That would be contrary to the constitutional faith of

the post-Menaka Gandhi era. It is the Fundamental Rights which along with

the Directive Principles constitute the life force of the Constitution and they

must be quickened into effective action by meaningful and purposive interpreta·

tion.

If a corporation is found to be a mere agency or surrogate of the

Government,

"in fact owned by the Government, in truth controlled by the D

government and in effect an incarnation of the government,

11

the court must not

allow the enforcement of Fundamental Rights

to be

frustrated by taking the

view that it is not the government ·and, therefore, not subject to the constitu·

tional limitations. Therefore, where a corporation

is an instrumentality or

agency of the Government, it is an authority within the meaning of Article 12

end, hence, subject to the same basic obligation to obey the Fundamental

Rights

as the government. [91G-H, 92A-G] E

R. D. Shetty v. The International Airport Authority of India & Ors., [1979]

1 S.C.R. 1042 and U.P. Warehousing Corporation v. Vijay Narain, [1980] 3

S.C.C. 459, followed.

< '

(3) The test for determining as to when a corporation can be s8.id to be

en instrumentality or agency of Government may be culled out from the judg­

ment in the International Airport Authority's case. They 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 realised 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 enlarge­

ment of the meaning must be tempered by a wise limitation. The relevant

tests gathered from the decision in the International Airport· Authority's case

may be summarised as : (i) "One thing is clear that if the entire share capital

of the corporation is held by Government it would go a long woy towards indi·

eating that the Corporation is an instrumentality or agency of Government:

(ii) 'Where the financial assistance

of the

State is so much as to meet almoot

entire expenditure of the corporation

1 it would afford some indication of the

'orporation

be.ing impregnated with governmental character.' (iii) 'It

may also

be a relevant factor ......... whether the corporation enjoys monopoly status

which is the State conferred or State protected.' (iv) 'Existence of 'deep and

pervasive State control may afford an indication that the Corporation is a state

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82 SUPREME COURT REPORTS [1981 J 2 S.C.R.

agency or instrumentality.' (v) 'If the functions of the corporation of public

importance and closely related to governmental functions,

it would be a

rele

4

vant factor in classifying the corporation an instrumentality or agency of

Government.' (vi) 'Specifically, if a department of Government is transferrer!

to a corporation, it would be a strong factor supportive of this inference" of

the corporation being an instrumentality or agency of Governmenr." [96F-H,

97A-D]

Ir is immaterial for this purpose whether the corporation is created by a

statute or

under

0 statute. The test is \vhether it is an instrumentaJit'y or agency

of the Government and· not as to how it is created. The enquir}' has to be not

as to how the juristic person is born but why it has been brought into existence.

The corporation may be a statutory corporat'ion created by a statute or it may

be a Government company or a company formed under the Companies Actt

1956 or it may be a society registered under the Societies Registration Act, 1860

or any other similar statute. Whatever be its genetical origin, it \Vould be an

"authority" within the meaning of Article 12 if it is an instrumentality or

agency of the Government and that would have to be decided on a proper

assessment of the facts in the light of the relevant factors. The concept of

instrumentality or agency of the Governn1ent is not Jimited to a corporation

created by a statute but

is

equally applicable to a company er society nnd in

a given case it would have t'o be decided, on a considefation of the relevant

factors, 'vhether the company or society is an instrumentality or agency of the

Government

so

Gs to come within the meaning of the expression "authority" in

Article

12. [97F-H, 98A-BJ

( 4) Merely because a juristic entity may be an

11

authority" and, therefore,.

"State," within the meaning of Article 12, it miay not be elevated to the position

of "State" for the purpose of Articles 309, 310 and 311 which find a place

in Part XIV. The definition of "State" in Article 12 which includes an

''authority" within the territory of India or under the control of the Govern­

ment of India is limited in its application only to Part III and by virtue­

of Article 36, to Part IV and it does not extend to the other provisions of the

Constiiution and, hence, a juristic entity which may be "State'" for the purpose

of Parts III and IV would not be so for the purpose of Part XIV or any other

provision of the Constitution.

[98B-D]

S. L. Aggarwal v. Hindustan Steel Ltd.,

[1970] 3 S.C.R 365; Sabha;it

Tewary v. Union of India & Ors., [1975] 3, S.C.R .. 616 and Sukhdev Singh v.

Bhagat Ram. [1975] 3 S.C.R. 619, explained and distinguished.

(5) Article

14 must not be identified with 'the doctrine of classification.

What Article

14 strikes at is arbitrariness because any action that is

arbitrary~

must necessarily involve negation of equality. The doctrine of classification

which

is evolved by the courts is not para-phrase of Article 14 nor is it the

objective and end of that Article.

It is merely a judicial formula for determin­

ing whether the legislative

or executive action in question is arbitrary

and

therefore constituting denial of equality. If the classification is not reasonable

and does not satisfy the two conditions, namely,

(1) that the classification is

founded on an inteIJigible differentkt and (2)

that differentia has a rational

relation

to the object sought to be achieved by the impugned legislative or

executive action, the impugned legislative or executive action,

·ould pfr1inly

be arbitrary and the guarantee of equality under Article 14 \Vould be breached.

Where.v£r, therefore, there is arbitrariness in State action whether it be of the

AJAY HASIA V. KHALID MUJIB 83

legislaiure or of the executive or of an "authority" under Article 12, Article A.

14 immediately springs into action and strikes down such State action. In fact,

the concept of reasonableness and non-arbitrariness pervades the entire consti·

tutional scheme and is a golden thread which runs through the whole of the

fabric of the Constitution. [lOOG, 102D·F]

E. P. Royappa v. State of Tamil Nadu, [1974] 2 S.C.R. 348; Maneka Gandhi

v. Union of India, [1978] 2 S.C.R. 621 and R. D. Shetty v. The International B~

Airport Authority of India, & Ors., [1979] 1 S.C.R. 1042, applied.

(6) The procedure adopted

by the respondent

Society cannot be regarded

as arbitrary merely because it refused to take into account the marks obtained

by the candidates at the qualifying examination bur chose to regulate the

admissions by relying on the entrance test. The entrance test facilitates the

assessment

of the comparative talent of the condidates by application of a

c·

uniforril standard and is always preferable to evaluation of .::on1parative merit

on the basis of marks obtained at the qualifying examination, when the qualifyM

ing examination is held by two or more different authorities, because lack of

uniformity

is bound to creep into the assessment of candidates by different

authorities with different

n1odes of examination.

[103AMB, D-F]

(7) 'The oral interview test is undoubtedly not a very satisfactory test for I)

assessing and evaluating the capacity and calibre of candidates, but in the

absence of any better test for measuring personal charo.cteristics and traits, the

oral interview test must, at the present stage, be regarded as not irrational or

irrelevant though

it is subjective and based on first impression, its result

is,

influenced by many uncertain fo.ctors and it is capable of abuse. In the matter

of admission to college or even in the matter of public employment, the oral

interview test

as presently held should not be relied upon as an exclusive test, E.

but it may be resorted to only as an additional or supplementary test and,

moreover,

grel;lt care must be taken to see that persons who are appointed

to conduct the oral interview

t'est are men of high integrity, calibre and

quaJift­

cation. [106C-E]

R. Chitra Lckha and Others v. State of Mysore and Others, [1964] 6 S.C.R.

368, followed. II'

(8) Having regard to the drawbacks rand deficiencies in the oral interview

test and the conditions prevailing in t'he country, particularly when there i~

d~terioration in moral values and corruption and nepotism are very much on

the increase,

a11ocation of

Q high percentage of marks for the oral intervie

1

N

a.s compared to the marks allocated for the \Vritt'en test, is not free from the

Yice of arbitrariness. The allocation of as high a percentage as 33 1/ 3 of the

total marks for oral interview suffers from the vice of arbitrariness. [I 07 A-D]

The court, however, to avoid immense hardship being caused to those

students in whose case the validity of the selection cannot otherwise be quesM

tioned und who have nearly completed three semesters and taking into consiM

demtion the fact that even if the petitioners are ultimately found to be deserving

of selection

on the application of the proper test, it would not be possible to

restore them to the position as if they were admitted for the academic year

1979-80, which has run out long since

declined to set aside the selection made.

The Court 'Nas, however, of the view that under the existing circumstances.

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84 SUPREME COURT REPORTS [1981] 2 S.C.R.

A allocation of more than 15% of the total marks for the oral interview would

be arbitrary and unreasonable. [107G-H, 108A-FJ

A. Peeriakaruppan v. State of Tamil Nadu, [1971] 2 S.C.R. 430; Miss Nishi

Meghu y. State of lammu & Kashmir & Ors., [1980] 3 S.C.R. p. 1253, applied.

(9) There can be no doubt that if the interview did not last for more thar.

R two or three minutes on an average and the questions asked had no bearing on

the factors required to

be taken into account the oral interview test would be

viriated, because it

would. be impossible in such an interview to assess the merit

of a candidate with reference

to these factors. Here the absence of

proper

affidavit by the members of the committee to the contrary leads to the only

conclusion that the selection made on the

basis. of such test must be held to be

arbitrary. However,

if the marks aJlocated for the oral interview do not exceed

C 15%

of the total marks and the candidates are properly interviewed and rele­

vant questions are asked with a view to assessing their suitability with reference

10 the factors required to be taken into consideration, the oral interview test

\'ould satisfy the criterion of reasonableness and non-arbitrariness. Further it

would be desirable if the interview

of the candidates is tape-recorded, for in

that event there will

be contemporaneous evidence to show what

\Vere ~be

questions asked to the candidates by the interviewing committee and what were

O the answers given and that will eliminate ~ lot of unnecessary controYersy be­

sides acting as a check on the possible arbitrariness of the interviewing com­

mittee. [109A-B, D-E, F-H]

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ORIGINAL JURISDICTION : Writ Petition Nos. 1304, 1262, 1119,

1118, 1574-75, 1373-74, 1244-45, 1230, 1494-97, 1566-67, 1143,

1440, 1586, 1420-23, 1441-43, 1389, 1144, 1461, 1437-39, 1431,

1268, 1145, 1263

and 1331 of 1979.

(Under Article 32 of the Constitution)

Anil Dev Singh, Lalit Kumar Gupta, Subhash

Pandey

and S. K. Sabharwal for the Petitioners in

1437-39, 1262, 1497, 1586, 1230 and 1263 of 1979.

Sharma, W.Ps.

C. P.

1389,

Y. S. Chitale, P. N. Duda, V. K. Pandita, R. Sarish and E. C.

AgarwaTa for the Petitioners in W.P. Nos. 1241-43, 1495-96, 1566-

67, 1423, 1143-44,1118-19,1494, 1145 and

1331 of 1979.

S. K. Bisiaria for the Petitioner

in W.P. 1461/79.

Rishi Kesh and B. Datta for the Petitioner in W.Ps. 1373-74, 1304

and 1431;79.

Y. S. Chitale, D. N. T1ku, E. C. Agarwala, M. Mudgal, Ashok

Kaui and Vineet Kumar for the Petitio"ners in W.Ps. 1244-45, 1420-22

and 1440 /79.

S. S. Khanduja for the Petitioners in W.Ps. 1268, 1574-75/79.

S. N. Kacker and Altaf Ahmed for the appearing Respondents.

.'r

AJAY HASIA v. KHALID MUJIB (Bhagwati, J.) 85

The Judgment of the Court was delivered by

BHAGWATI, J. These writ petitions under Article 32 of the

Constitution challenge the validity of the admissions made to the

~egional Engiheering College, Srinagar for the academic year 1979-80.

The Regional Engineering College, Srinagar (hereinafter referred

to

as the College) is one of the fifteen Engineering Colleges in the

country sponsored

by the Government of India. The College is

e;ta­

blished and its administration and management are carried on by a

Society registered under the Jammu and Kashmir Registration of

Societiecs Act, 1898. The Memorandum of Association of the Society

in c;ause 3

sets out the objects for which the Society is

incorporanw

and they include amongst other things establishment of the college,

with a view to providing instruction and research in such branches of

engih,~ering and technology as the college may think fit and for the

advancement

of learning and knowledge in such branches. Vide

sub­

clause (i). The Society is empowered by clause 3 sub-clause (ii) of

the Memorandum

of

Associatioo to make rules for the conduct of the

affairs of the Society and to add to, amend, vary or rescind them from

time to time with the approval of the Government of Jammu and

Kashmir State (hereinafter referred to

as the State

Gover'nment) and

the Central Government. Clause 3 sub-clause (iii) of the Memora­

ndum

of Association confers power on the Society to acquire and hold

property in

the name

of the State Government. Sub-clause (v) of

clause 3

of the Memorandum of Association contemplates that monies

for running the college would

be provided by the State and Central

Governments and sub-clause (vi)

requiv~ the Society to deposit all

monies credited to its fund in such banks or to invest them in such

manner

as the Society may, with the approval of the State Government

decide. The accounts

of the

Society as certified by a duly appointed

auditor are mandatorily required by sub-clause (ix) of clause 3 of

the Memorandum of Association to be forwarded annually to the

State and Central Governments. Clause 6 of the Memorandum of

Association empowers the State Government to appoint one or more

persons

to review the working and progress of the

Society, or the

college

and to hold inquiries into the affairs thereof and to make a

report and

on receipt of any such report, the S.tate Government has

power,

with the

approval of the Central Government, to take· such

action and issue such directions

as it may consider necessary in respect

of any

of the matters dealt with in the

rep<irt and the Society or the

College,

as the case may be, is bound to comply with such directions .

. There

is a provision made in clause 7 of the Memorandum of

Asso­

ciation that ih case the Society or the college is not functioning pro­

porly, the State Government will have the power to take over the

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SUPREME COURT REPORTS [1981] 2 S.C.R.

administration and assets of the college with the prior approval of

the Central Government. The founding member~ of the Society are

enumerated

in clause 9

ol the Memorandum of Association and they

are the Chairman

to be appointed by the

State Government with the

approval

of the Central Government, two representatives of the

State

Government, one representative of the Central Government, two repre­

sentatives

of the All India Council for Technical Education to be

nominated

by the northern Regional Committee, one representative of

the University

of Jammu and Kashmir, one non-official representative

of each of the

Punjab, Rajasthan, U.P. and Jammu and Kashmir

States to be appointed by the respective Governments in consultation

with the Central Government and the Principal

who shall also be the

the

ex-officio

Secretary.

The Rules of the Society ar.e also important as they throw light

on the nature of the Society. Rule 3 clause (i) reiterates the com­

position of the Society

as set out in clause 9 of the Memorandum of

Association and clause

(ii) of that Rule provides that the

State and

the Central Govenunents may

by mutual consultation at any time

appoint any other person or persons

to' be member or members of the

society. Rule 6 vests the general superintendence, direction and

control of

the affairs and its income and property in the governing

body of the

Society which is called the Board of Governors. Rnle 7

lays down

the constitution of the Board of Governors by providing that

it shall consist of the Chief Minister of the

State Government as Chair­

man and

the following as members : Three nominees of the

State

Government, fhree nominees of the Central Government, one repre­

sentative

of the All India Council for Technical Education,

Vice­

Chancellor of the University of Jammu1 and Kashmir, two industrialists/

technologists

in the region to be nominated by the

State Government,

one nominee of the Indian Institute of Technology in the region, one

nominee

of the University Grants Commission two representatives o'f

the Faculty of the College and the Principal of the college as

ex-officio

member-Sec1etary. The State Government is empowered by rule 10

to remove any member of the Society other than a member represent­

ing the State or Central Government from the membership of the Society

with the approval of the Central Government. Clause (iv) of Rule

15 confers power on the Board to make bye-laws for admission of

students to various courses and clause (xiv) of that Rule empowers

the Board to delegate to a committee or to the Chairman

such of its

powers for the conduct

of its business as it may deem fit, sub­

ject to the condition that

the action taken by the committee of .

the Chairman shall be reported for confirmation at

the next meet­

ing of the Board. Clause (xv) of Rule

15 provides that the Board

shall.

.,

..

AJAY HASIA v. KHALID MUJIB (Bhagwati, J.) 87

bmre power to consider and pass resolution on the annual report, the A

annual accounts

and other financial estimates of !he college, but the

annual report and

the annual accounts together with the resolution

11assed thereon are required to be submitted to the State and the

Central Governments. The

Society is

empowered by Rule 24, clause

(i) to alter, exteud or abridge

any purpose or purposes for which it is

established, subject to the prior approval of the

State and the Central B

·Governments and clause (ii)

of Rule 24 provides that the Rnles may

be altered by a Resolution passed by a

majotity of 2/3rd of the

members present at the meeting

of the

Society, but such alteration.

shall be

with the approval of the

State and the Cenrtal

Governments.

Pursuant to clause (iv) of Rule 15

of the

Rules, the Board of

Governors laid down the procedure

for admission of students to

various courses

in the

colleg~ by a Resolution dated 4th June, 1974.

We are not directly concerned

with the admission procedure laid down

by this Resolution

save and except that under this Resolution admis­

sions to the candidates belonging to the State of Jammn and Kashmir

were to be given on the basis of comparative merit to be determined

by holding a written entrance test and a

viva voce examination and

the marks allocated for

the written test in the subjects of English,

Physics, Chemistry and Mathematics

were

100, while for viva voce

examination, the marks allocated were 50 divided as follows : (i)

General Knowedge and Awareness-15; (ii) Broad understanding

of

Specific Phenomenon-15; (iii) Extra-curricular activities-IO

and (iv) General Personality

Trait-10, making up i:n the aggre­

gate-SO. The admissions to the college were governed by the pro­

cedure laid down in this Resolution until the academic year 1979-

80, when the procedure was slightly changed and it was decided that

out of 250 seats, which were available for admission, 50% of the seats

shall be reserved for candidates belonging to the Jammu & Kashmir

State and the remaining 50% for candidates belonging to other States

including 15 seats reserved for certain categories of students. So far

as

the seats reserved for candidates belonging to

States other than

Jammu & Kashmir were concerned, certain reservations were made for

caudidates belonging to

Scheduled Castes and Scheduled Tribes and

sons and wards of defence personnel killed or disabled during hostilities

and

it was provided that

"inter se merit will be determined on the basis

of marks secured in the subjects of English, Physics, Chemistry and

Mathematics only". The provision made with regard to seats reserved

for candidates belonging to Jammu & Kashmir State was that "apart

from 2 seats reserved for the sons and daughters of the permanent

college employees, reservations shall b~ made in accetrdance with tht;

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88 SUPREME COURT REPORTS [1981] 2 S.C.R.

A Orders of Jammu and Kashmir Government for admsision to technical

institutions and the seats shall be

filled up on the

basis of comparative

merit as determined under the following scheme, both for seats to be

filled on open merit and for reserved seats in each category separately;

(1) marks for written

test-100 and (2) marks for viva voce examina­

tion-50, marking up in the aggregate-150. It was not mentioned

expressly that the marks for the written test shall

be in the subjects

of Physics, English, Chemistry and Mathematics nor

were the factors

to be taken into account in the viva voce examination and the

allo­

cation of marks for such factors indicated specifically in the admis­

sion procedure laid

down for the academic year

1979-80, but we

were told and this was not disputed on behalf of the petitioners in

any

of the writ petitions, that the subjects in which the written test

was

held were English, Physics, Chemistry and Mathematics and the

marks at the viva voce examination were allocated under the same

four heads and in the same manner

as

in, the case of admissions under

the procedure laid

down in the Resolution dated 4th June, 1974.

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In or about April 1979, the college issued a notice inviting

applications for admission to the first semester of the B.E. course

in

various branches of engineering and the notice set out the above

admission procedure to be followed in granting admissions. for the

academic year 1979-80. The petitioners in the

writ petitions before

us applied for

admission to the first semester of the B.E. course in one

or the other branch of engineering and they appeared in

the

written

test which was held on 16th and 17th June, 1979. The petitioners

were thereafter required

to appear before a Committee consisting of

three persons for viva voce test and they were interviewed by

the

Committee. The case of the petitioners was that the interview of each

of them did not last for more than 2 or 3 minutes per candidate on

an average and the only questions which were asked to them were

formal questions relating to their parentage and residence and hardly

any question

was asked which

would be relevant to any of the tour

factors for which marks were allocated at the viva voce examination.

When the admissions were announced, the petitioners found that

though they had obtained very

good marks in the

qualifying examhm­

tion, they had not been able to secure admission to the college

because the marks awarded to them at the viva voce examination were

very low and candidates who had much less marks at the qualifying

examination, had succeeded in obtaining very

high marks at the viva

voce examination and thereby managed to secure admission in prefe­

rence to

the' petitioners. The petitioners

filed before us a chart show­

ing by way of comparison the marks: obtained by the petitioners on the

one hand and some of the successful candidates on the other at the

qualifying examination, in the written test and at the viva

voce exami-

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AJAY HASIA v. KHALID MUJJB (Bhagwati, J.) 89

nation. This chart shows beyond doubt that the successful candidates

whose marks are given in the chart

had

obtained fairly low mark~ at

the qualifying examination as also in the written test, but they had

been able to score over the petitioners only on account of very high

marks obtained

by them at the viva voce examination. The

petitioners

feeling aggrieved by this mode of selection filed the present writ

petitions challenging the validity of the admissions made to the college

on various grounds. Some of these grounds stand concluded by the

recent decision

of this Court in Miss Nishi Maghu v.

State vi Jammu

& Kashmir & Ors.(

1

) and they were therefore not pressed before us.

Of the other grounds, only one was canvassed before us and we shall

examine

it in some detail.

But before

we proceed to consider the merits of this ground of

challenge,

we must dispose of a preliminary objection raised on behalf

of the respondents against the maintainability of the writ petition.

The respondents contended that the college

is run by society which

is not a corporation created by a slatute but is a society registered under

the Jammu

& Kashmir Societies Registration Act, 1898 and it is there­

fore not an 'authority' within the meaning of Art. 12 of the Consti­

tution and no writ petition can be maintained against it, nor can any

complaint be made that it

has acted arbitrarily in

the matter of grunt­

ing admissions and violated the equality clause of the Constitution.

Now it

is obvious that the only ground on which the validity of the

admissions to the college can be assailed

is that the society adopted

an

arbitrary procedure for selecting candidates for admission to the college

and this resulted in denial of equality to the petitioners in the matter

of admission violative of Art. 14 of the Constitution.

It would appear

that prima facie protection against infraction of Art. 14

is available

only against

the State and complaint of arbitrariness and denial of

equality can therefore be sustained against the society only if the

society can be shown

to be

State for the purpose of Art. 14. Now

'State' is defined in Art. 12 tQ,include inter a/ia the Government of

India and the Government 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 and the question therefore is whether the Society

can be said to be 'State' within the meaning of this definition. Obviously

the Society cannot be equated with the Government of India or the

Government of any State nor can it be said to be a local authority and

therefore, it must come within the expression "other authorities" if it

is to fall within the definition of 'State'. That immediately leads us to

a consideration of the question as to what are the "other authorities"

contemplated in the definition of 'State' in Art. 13.

(I) [1980] 3 SCR p. 1253.

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90 SUPREME COURT REPORTS [J 98 lj 2 S.C.R.

While considering this question it is necessary to bear in mind ihat

an authority falling within the expression "other authorities" is, by

reason of its inclusion within the definition of 'State' in Article 12,

subject to the same constitutional limitations as the Government and

is equally bound by the basic obligation to obey the constitutional man­

date of the Fundamental Rights enshrined in

Part III of the

Constim­

tion. We must therefore give such an interpretation to the expression

"other authorities" as will not stultify the operation and reach of the

fundamental rights by enabling the Government to its obligation in

relation to the Fundamental Rights by setting up an authonty to act

as its instrumentality or agency for carrying out its functions. Whe1.1e

constitutional fundamentals vital to the maintenance of human rights

are at stake, functional realism and not facial cosmetics must be the

diagnostic tool, for constitutional law must seek the substance and not

the form. Now

it is obvious that the Government may act thrnugh

the

instrumentality or agency of natural persons or it may employ the

instrumentality or agency of juridical persons to carry out its functions.

In the early days when the Government had limited functions, it could

operate effectively through natural persons constituting its civil

service and they were found adequate to discharge governmental

functions which were of traditional vintage. But as the tasks

of

the

Government multiplied with the advent of the welfare State, it began

to be increasingly felt that the frame work of civil service was not

sufficient to handle the new tasks which were often specialised and

highly technical in character and which called for flexibility of approach

and quick decision making. The inadequacy of the civil sc:rvice to

deal with these new problems came to be realised and it became

necessary to forge a new instrumentality

or administrative device for

handling these new problems.

It was in these circumstances and with

a view to supplying this administrative need that the corporation

came

into being as the third arm of the Government and over the years it

has been increasingly utilised by the Government for selling up and

running public enterprises and carrying out other publio functions.

Today with increasing assumption by the Government of commercial

ventures and economic projects, the corporation has become an effec­

tive legal contrivance in the hands of the Government for carrying out

its activities, for it is found that this legal facility of corporate instru­

ment provides considerable flexibility and elasticity and facilitates

proper and efficient management with professional skills and

on busi­

ness principles and it is blissfully free from "departmental rigidity,

slow motion procedure and hierarchy of officers". The Government in

many of its commercial ventures and public enterprises is resorting

to more and more frequently to this resourceful legal contrivance of

a corporation because

it has many practical

advantage~ and at th~

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AJAY HASIA v. KHALID MUJIB (Bhagwati, J.) 91

same time does not involve the slightest diminution in its ownership

and control of the undertaking. In such cases "the true owner is the

State, the real operator is the State and the effective controllorate is

the State and accountability for its actions to the community and

to Parliament is of the State." n is undoubtedly true that the corpora­

tion is a distinct juristic entity with a corporate structure of its own

and it carries on its functions on business principles with a certain

amount of autonomy which is necessary as well as useful from the

point of view of effective business management, but behind the formal

ownership which is cast in the corporate mould, the reality is very

much the deeply pervasive presence of the Government. It is really

the Government which acts through the instrumentality or agency of

th<> corporation and the juristic veil of corporate personality worn for

the purpose of convenience of management and administration cannot

be allowed to obliterate the true nature of the reality behind which is

the Government. Now it is obvious that if a corporation is an instru­

mentality or agency of the Government, it must be subject to the same

limitations in the field of constitutional law as the Government itself,

though. in the eye of the law it would be a distinct and independent

legal entity. If the Government acting through its officers is subject

to certain constitutional limitations, it must follow a fortiorari that the

Government acting through the instrumentality or agency of a corpo­

ration shoukl equally be subject to the same limitations. If such a

corporation were to be free from the basic obligation to obey the

Fundamental Rights, it would lead to considerable erosion of the

efficiency of the Fundamental Rights, for in that event the Govern­

ment would be enabled to over-ride the Fundamental Rights by

adopting the stratagem of carrying ont its functions through the instru­

mentality or agency of a corporation, while retaining control over it.

The Fundamental Rights would then be reduced to little more than an

idle dream or a promise of unreality. It must be remembered that the

Fundamental Rights are constitutional guarantees given to the people

of India and are not merely paper hopes or fleeting promises and so

long as they find a place in the Constitution, they should not be allow­

ed to be emasculated in their application by a narrow and constricted

judicial interpretation. The courts should be anxious to enlarge the

scope and width of the Fundamental Rights by bringing within their

sweep every authority which is an instrumentality or agency of the

Government or through the corporate personality of which the Gov­

ernment is acting, so as to subject the Government in all its myriad

activities, whether through natural persons or through corporate

entities, to the basic obligation of the Fundamental Rights. The

constitutional philosophy of a democratic socialist republic requires

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92 SUPREME COURT REPORTS [1981] 2 S.C.R.

the Government fo undertake a multitude of socio-economic opera­

tions and lhe Government, having regard to the practical advantages

of functioning through the legal device of a corporation, embarks on

myriad commercial and economic activities by resorting to the instru­

mentality or agency of a corporation, but this contrivance

of carry­

ing on such activities through

a corporation cannot exonerate the

Government from implicit obedience to the Fundamenlal Rights. To

use. the corporate methodology is not to liberate the Government from

its basic obligation to respect lhe Fundamental Rights and not to oveHide them. The mantle of a corporation may be adopted in order

to free the Government from the inevitable constraints

of red-lapism

and

slow

molion but by doing so, the Government cannot be allowed

to play truant with the basic hnman rights. Otherwise it would be the

easiest thing for the government to assign to a plurality

of corporalions

almost every State business such

as Post and Telegraph,

TV and

Radio, Rail Road and Telephones-in short every .economic activity­

and \hereby cheat the people of India out of the Fundamental Rights

guaranteed to them. That would be a mockery of the Constitution and

nething short

of treachery and breach of faith with the people of India,

because, though apparently the corporation will be carrying out these

functions, it

will in truth and reality be the Government which will be

controlling the corporation and carrying out these functions through

\he instrumenlality or agency of the corporation. We cannot by a

process. of judicial construction allow the Fundamental Rights to be

rendered futile and meaningless and thereby

wipe out Chapter III

from the Constitution. That would be contrary

to· the constitutional

faith of the post-Menaka Gandhi era.

It is the Fundamental Rights

which along with the Directive Principles constitule

th~ life force of

the Constitution and they must be quickened into effective action by

meaningful and purposive interpretation.

If a corporation is found to

be a mere agency or surrogate

of the Government,

"in fact owned by

the Government, in truth controlled by the government and in effect

an incarnation

of the

government," the court must not allow the

enforcement of Fundamental Rights to

be frustrated by taking the

view that it is not the government and therefore not subject to the

constitutional limitations. We are clearly of the view that where a

corporation

is an instrrnnentality or agency of the government, it must

be

held to be an 'authority' within the meaning of Art. 12 and hence

5ubject to the same basic obligation to obey the Fundamental Rights

as lhe government.

H We may point out that this very question as to when a corporation

can be regarded as an 'authority' within the meaning of Art. 12 arose

for consideration before this Court

in R. D.

Shelly v. The International

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AJAY HASIA v. KHALID MUJJB (Bhagwati, J.)

93

Airport Authority of India & Ores. (

1

) There, in a unanimous judg­

ment of three Judges delivered by one of us (Bhagwati, J) this Court

pointed out :

"So far as India is concerned, the genesis. of the

emergen.ce of corporations as inslrumentalities or agencies of

Government is to be found in the Government of India

Resolution on Industrial Policy dated 6th April, 1948 where

it was stated

inter alia that

"management of State enterprises

will

as a rule be through the medium of public corporation

under the statutory control

of the Central Government who

will assume such powers

as may be necessary to ensure

this."

It was in pursuance of the policy envisaged in this and sub­

sequent resolutions

on Industrial policy that corporations

were created by Government for setting up and manage­

ment of public enterprises and carrying out other public

functions. Ordinarily these functions could have been car­

ried out by Government departmentally through its service

personnel but the instrumentality

or agency of the corpora­

tion

was resorted to in these cases having regard to the

nature of the task

to be performed. The corporations acting

as instrumentality

or agency of Government would obviously

be subject to the same limitations in the field of constitutional

and administrative law as Government itself, though in the

eye of the law, they

woukl be distinct and independent

legal entities. If Government acting through its officers is

subject to certain constitutional and public law limitations,

it must follow a fortiori that Government acting through

instrumentality

or agency of corporations should equally be

subject

to the same

limitations."

The Court then addressed itself to the question as to how to determine

whether a corporation

is acting

a9 an instrumentality or agency of the

Government and dealing with that question, observed :

"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 con­

trolled by Government not only in its policy making but

also in carrying out the functions entrusted to it by the law

establishing it or by the Charter of its incorporation, there

can be no doubt that

it would be an instrumentality or

agency of Government. But

o!Pinarily where a corporation

(I) [1979] I S.C.R. 1042.

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94 SUPRHIE COURT REPORTS (1981] 2 S.C.R.

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

lilw is managed by a

board of directors or committee of management in accord­

ance with the provisions of the statute under which it is in•

corporated. When does such a corporation become an

instrumentality or agency of Government? Is the holding

of the entire share capital of the Corporation by Govern­

ment enough or

is it necessary that in addition there should

be a certain amount of direct control exercised by Govern­

ment and, if so what should

be tl1e nature of such con­

trol ?

Should the functions which the Corporation is

charged to carry out possess any particnlar characteristic or

feature,

or is the

nature of the functions immaterial? Now,

one thing

is clear that if the entire share capital of the cor­

poration is held by Government, it would go a

Jong way

towards indicating that the corporation

is an instrumental­

ity or agency of Government. But,

as is quite often the

case, a corporation established by statute may have no

shares

or shareholders, in which case it would be a

rele­

vant 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 Govern­

ment, they may

be completely free from governmental con­

trol

in the discharge of their functions. What then are

tests to determine whether a corporation established by

statute or incorporated under law is an instrumentality

or

agency of Government ? It is not possible to formulate an

inclusive or exhaustive test which would adequately answer

this question. There is

no cut and dried formula, which

would provide the correct division of corporations into those

which are instrumentalities or agencies of Government and

those which are

not."

The Court then proceeded to indicate the different tests, apart from

ownership of the entire share capital :

" ........ if extensive and unusual financial assistance is

H given and the purpose of the Goverument in giving snch assis­

tance coincides with the purpose for which the corporation

is expected to use the assistance and such purpose is of

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AJAY !!ASIA v. KHALID MUJIB (Bliagwati, J.)

public character, it may be a relevant circumstance support­

ing an inference that the corporation is an instrumentality

or agency of Government. . . . . . . . . . It may therefore be

possible to say that where the financial assistance of the

State is so much as to meet almost entire expendiutre

of the corporation, it would afford some indication of the

corporation being impregnated with governmental character

. . . . . . . . . . But a finding

of

State financial support plus

an unusual degree of control over the management and

policies might lead one to characterise an operation as State

action-Vide Sukhdev v. Bhagatram [1975] 3 SCR 619 at

658. So also the existence of deep and pervasive State con­

trol may afford an indication that the Corporation

is a

State

agency or instrumentality. It may also be a relevant factor

to consider whether the corporation enjoys monopoly status

which is State conferred or State protected. There can be

little doubt that State conferred or State protected mono­

poly status would be highly relevant in assessing the aggre­

gate weight of the corporation's ties to the State."

"There is also another factor which may be regarded

as having a bearing on this issue and it

is whether the

operation of the corporation

is an important public function.

It has been held in the

United States in a number of cases

that the concept of private action must yield to a conception

ofl State action where public functions are being perform­

ed. Vide Arthur S. Miller : "The Constitutional Law of

the Security State" ( 10 Stanford Law Review 620 at

664) ."

"It may be noted that besides the so-called tra<;litional

functions, the modern state operates as multitude of public

enterprises and discharges a host of other public functions.

If the functions

o~ the corporation are of public importance

and closely related to governmental functions, it would be

a relevant factor in classifying the corporation

as an

instru­

mentality or agency of Government. This is precisely

what

was pointed out by Mathew, J., in Sukhdev v.

Bhagatram (supra) where the learned Judge said that "institutions engaged in matters of high pnblic interest of

performing public functions are by virtue of the nature of

!he functions performed government agencies. Activities

which are too fundamental to the society are by definition

too important not to be considered government

functions."

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SUPREME COURT REPORTS [1981] 2 S.C.R.

A The court however proceeded to point out with reference to the last

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functional test :

" .......... the decisions shc:iw that even this test of public

or governmental character of the function i§ not easy of

application and does not invariably lead to the correct

inference because the range of governmental activity is broad

and varied and merely because an activity may be such

as may legitimately be carried on by Governmen.t, it does

not mean that a corporation, which is otherwise a private

entity, would be an instrumentality or agency of Govern­

ment by reason of carrying on such activity. In fact, it is

difficult to distinguish between governmental functions and

non-governmental functions. Perhaps the distinction bet­

ween governmental and non-governmental functions is not

valid any more in a social welfare State where the laissez

faire is an outmoded concept and Herbert Spencer's social

statics has no place. The contrast is rather between govern-

mental activities which are private and private activities

which are governmental. [Mathew, J. Sukhdev v. Bhagatram

(supra) at p. 652]. But the public nature of the function,

if impregnated with governmental character or "tied or

entwined with Government" or fortified by some other

additional factor, may render the corporation an instru­

mentality or agency of Government. Specifically, if a de­

partment of Government is transferred to a corporation, it

would be a strong factor supportive of the inference."

These observations of the court in the International Airport Authority's

case (supra) have our full approval.

The tests for determining as to when a corporation can be said

to be a instrumentality or agency of Government may now be call­

ed out from the judgment in the International Airport Authority's case.

These tests are not conclusive or clinching, but they are merely indi­

cative indicia which have to be used with care nnd caution, because

while stressing the necessity of a wide meaning to be placed on the

expression "other authorities", it must be realised that it should not

be stretched so far as to bring in every autonomous body which

J1as some nexus with the Government within the sweep of the ex­

pression. A wide e_nlargement of the meaning must be tempered by

a \\;ise limitation. We may summarise the relevant tests gathered

from the decision in the Intemational Airport Authority'� 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

r

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AJAY BASIA v. KHALID MUJIB (Bhagwati, J.)

way towards indicating that the corporation is an instru­

mentality or agency of Government."

(2) "Where the financial assistance of the State is so

much as to meet almost entire expenditure al' the corpora­

tion, 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 con­

ferred 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 im­

portance and closely related to governmental functions, it

would be a relevant factor in classifying the corporation as

an instrumentality or agency of Government."

(6) "Specifically, if a department of 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."

97

If on a consideration of these relevant factors it is found that the

corporation is an instrumentality or agency of government, it would,

as pointed out in the International Airpirt Authority's case, be an

'authority' and, therefore, 'State' within the meaning of the expression

in Article 12.

We find that the same view has been taken by Chinnappa Reddy,

J. in a subsequent decision of this court in the U. P. Warehousing

Corporation v. Vijay Narain(') and the observations made by the

learnei;l Judge in that case strongly reinforced the view we arn taking

particularly in the matrix of our constitutional system.

We may point out that it is immaterial for this purpose whether the

corporation is created by a statute or under a statute. The test is

whether it is an instrumentality or agency of the Government and not

as to how it is created. The inquiry has to be not as to how the

juristic person is born hut why it has been brought into existence. The

corporation may be a statutory corporation created by a statute or it

may be a Government Company or a company formed under the Com­

papies Act, 1956 or it may be a society registered under the Societies

Registration Act, 1860 or any other similar statute. Whatever be its

genetical origin, it would be an "authority" within the meaning of Article

12 if it is an instrumentality or agency of the Government and that would

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98 SUPREME COURT REPORTS (1981] 2 S.C.R.

have to be decided on a proper assessment of the facts in the light of

the relevant factors. The concept of instrumentality or agency of the

Government

is not limited to a corporation created by a statute but is

equally applicable to a company or society and in a given case it

would have

to be decided, on a consideration of the relevant factors,

whether the company or society

is an instrumentality or agency of the

Government

so as to come within the meaning o'f the expression

"authority" in Article 12.

It is also necessary to add that merely because a juristic entity may

be an "authority" and therefore "State" within the meaning of Article

12, it may not be elevated to the position of "State" for the purpose

of Articles 309, 310 and 311 which find a place in Part XIV. The

definition of "State" in Article 12 which includes an "authority" with­

in the territory of India or under the control of the Government of

India

is limited in its application only to Part III and by virtue of

Article 36, to Part IV : it does not extend to the other provisions of

the Constitution and hence a juristic entity which may be

"State" for

the purpose of Parts III and IV would not be so for the purpose of

Part XIV or any other provision of the Constitution. That is why the

decisions of this Court

in

S. L. Aggarwal v. Hindustan Steel Ltd.(1)

and other cases involving the applicability of Article 311 have no rele­

vance to the issue before us.

The learned counsel appearing on behalf of the respondents Nos. 6

to

8, however, relied strongly on the decision in

Sabhajit Tewary v.

Union of India & Ors(') and contended that this decision laid down

in

no uncertain terms that a society registered under the Societies

Regis­

tration Act, 1860 can never be regarded as an "authority" within the

meaning

of Article 12. This being

. a decision given by a Bench of

live Judges of this Court is undoubtedly binding upon us but we do

not think it lays down any such proposition

as is contended on behalf

of the respondents. The question which arose in this case

was as to

whether the Council

of Scientific and Industrial Research which was

juridjfa1ly a society registered under the Societies Registration Act,

1860 was an "authority" within the meaning of Article 12. The test

which the Court applied for determining this question was the same

as the one laid down in the International Airport Authority's case and

approved by

us, namely, whether the Council was an instrumentality or

agency of the Government. The Court implicitly assented to the

pro­

position that if the Council were an agency of the Government, it would

undoubtedly be an "authority". But, having regard to the various

(1) [1970] 3 S.C.R. 365.

(2) [1975] 3 S.C.R. 616.

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AJAY HASIA v. KHALID MUJIIl (Bhagwati, J.) 99

features enumerated in the judgment, the Court held that the Council A

was not an agency of the Government and hence could not be regard-

ed as an "authority". The Court did not rest its conclusion on the

ground that the Council

was a society registered under the Societies

Registration Act, 1860, but proceeded to consider various other

features

of the Council for arriving at the conclusion that it was not

an agency of the Government and therefore not an

"authority". This B

would

have been totally unnecessary if the view of the

Court were

that a

society registered under the Societies Registration Act can

never

be an

"authority" within the meaning of Article 12.

The decision in Sukhdev Singh v. Bhagat Ram (1975) 3 SCR 619

was also strongly relied upon ·by the learned counsel for respqndents

Nos. 6 to 8 but we fail to see how this decision can assist the respon­

dents

in repelling the reasoning in the International Airport Autho­

rity's case or contending that a company or society formed under

a

statute can never come within the meaning of the expression "autho­

rity" in Article 12. That was a case relating to three juristic bodies,

namely, the Oil and Natural Gas Commission, the Industrial Finance

Corporation and the Life Insurance Corporation and the question

was whether they were "State" under Article 12. Each of these

three juristic bodies was a corporation created by a statute and the

Court by majority held that they were "authorities" and therefore

"State" within the meaning of Article 12. The Court in this case was

not concem~d with the question whether a company or society

formed

under a statute can be an

"authority" or not and this decision

does not therefore contain anything

which might even remotely

suggest that such a company or society can never be an

"authority".

On the contrary, the thrust of the logic in the decision, far from

being restrictive,

applies to all juristic persons alike, irrespective

whether

they are created by a statute or formed under a statute.

c

D

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F

It is in the light of this discussion that we must now proceed to

examine whether the Society in the present case is an "authority"

falling within the definition of "State" in Article 12. Is it an instru­

mentality or

agency of the Government'? The answer must obvious-G

ly be in the affirmative if we have regard to the Memorandum

Cif

Association and the Rules of the Society. The composition of the

Society is dominated by the representatives appointed by the Cetitfal

Government and the Governments of Jammu & Kashmir, Punjab,

Rajasthan and Uttar Pradesh with the approval of the Central Gov­

ernment. The monies required for running the college are provided H

entirely

by the Central Government and the Government of Jammu .& Kashmir and even if any other monies are to• be received by the

A

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100 SUPREME COURT REPORTS [1981] 2 S.C.R. Society, it can be done only with the approval of the State and the

Central Governments. The Rules to be made by the Society are slsci

required to have the prior approval of the State and the Central Gov­

ernments and the accounts of the Society have also to be submitted to

both the Governments for their scrutiny and satisfaction. The Society

is also to comply with all such directions as may be issued by the State

Government with the approval of the Central Government in respect

of any matters dealt with in the report of the Reviewing Committee.

The control of the State and the Central Governments is indeed so

deep and pervasive that no immovable property of the Society can

be disposed of in any manner without the approval of both the Govern"

ments. The State and the Central Govermnents have even the power

to appoint any other person or persons to be members of the Society

and any member of the Society other than a member representing the

State or the Central Government can be removed from the member­

ship of the Society by the State Government with the approval of the

Central Government. The Board of Governors, which is in charge

of general superintendence, direction and control of the affairs of

Society and of its income and property is also largely controlled

by

nominies .of the State and the Central Governments. It will thus be

seen that the State Government and by reason of the provision for

approval, the Central Government also, have full control of the

working of the Society and it would not be incorrect to say that the

E Society is merely a projection of the State and the Central Govern­

ments and to use the words of Ray, C.J. in Sukhdev Singh's case

(supra), the voice is that of the State and the Central Governments

and the bands are also of the State and the Central Governments. We

must, therefpre, hold that the Society is an instrumentality or agency

of the State and the Central Governn1•::'nts and it is an 'authority'

F

within the meaning of Art. 12.

G

H

If the Society is an "authority" and therefore "State" within the

meaning of Article 12, it must follow that it is subject to the consti­

tutional obligation under Article 14. The true scope and ambit of

Article 14 has been the subject matter of numerous decisions and it

is not necessary to make any detailed reference '.° them. It is suffi­

cient to state that the content and reach of Article 14 must not be

confused with the doctrine of classification. Unfortunately, in the

early stages of the evolution of our constitutional law, Article 14 ca.me

to be identified with the doctrine of classification because the view

taken was that that Article forbids discrimination and there would

be no discrimination where the classification making the differentia

fulfils two-conditions, namely, (i) that the. classification is foun.ded

on an intelligible differentia which distinsnishes persons or things

;

1

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A.JAY HASJA v. KHALID MU.JIB (Bhagwati, J.) 101

that nre grouped together from others left out of the group; and

(ii) that that differentia has a rational relation to the object sought

to be achieved by. the impugned legislative or executive action. It

was for the first time in E.P. Royappa v, State of Tamil Nad!t(I)

that this Court laid bare a new dimension of Article 14 and pointed

out that that Article has highly activist magnitude and it embodies a

guarantee against arbitrariness. This Court speaking through one of

us (Bhagwati, J.) said :

"The basic principle which therefore informs both

Articles 14 and 16 is equality and inhibition against discri­

mination. Now, what is the content and reach of this great

equalising principle ? It is a founding faith, to use the

words of Bose, J., "a way of life", and it must not be sub­

jected to a narrow pedantic or lexicographic approach. We

cannot countenance any attempt to truncate its all-embrac­

ing scope and meaning, for to do so would be to violate

its activist magnitude. Equality is a dynamic concept with

many aspects and dimensions and it cannot be "cribbled,

cabined and confined" within traditional and doctrinaire

limits. From a positivistic point of view, equality is anti­

thetic to arbitrariness. In fact, equality and arbitrariness

are sworn enemies; one belongs to the rule of law in a

republic while the other, to the whim and caprice of an

absolute monarch. Where an act is arbitrary it is implicit

in it that it is unequal both according to political logic and

constitutional law and is therefore violative of Art. 14,

and if it affects any mat.t_er relating to public employment, it

is also violative of Art. 16. Articles 14 and 16 strike at

arbitrariness in State action and ensure fairness and equality

of treatment."

This vital and dynamic aspect which was till then lying latent and

submerged in the few simple but pregnant words of Article 14 was

explored and brought to light in Royappa's case and it was re­

affirmed and elaborated by this Court in Maneka Gandhi v. Union

of India(') where this Court again speaking through one of us (Bhag­

wati, J,) observed :

"Now the question immediately arises as to what is the

requirement of Article 14 : what is the content and reach

of the great equalising principle enunCiated in this article ?

There can be no doubt that it is a founding faith of the

(I) [1974] 2 S.C.R. 348.

(2) [1978] 2 S.C.R. 621.

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102 SUPREME COURT REPORTS [1981] 2 S.C.R.

Constitution. It is indeed the pillar on which rests securely

the foundation of our democratic republic. And, therefore,

it must not be subjected to a narrow, pedantic

or lexicogra­

phic approach. No attempt sliould be made to truncate

its all-embracing scope and meaning for, to do so would

be

to violate its activist magnitude. Equality is a dynamic

concept with many aspects and

dimens_ions and it cannot be

imprisoned within traditional and doctrinaire limits

..... .

. . . . . . . . Article

14 strikes at arbitrariness in

State action

arid ensures fairness and equality of treatment. The

principle of reasonableness, which legally

as well as phi­

losophically,

is an essential element of equality or non­

arbitrariness pervades Article 14 like a brooding omni­

presence."

This was again reiterated by this Court in lnt~rnational Airport Auth­

ority's case (supra) at page 1042 of the Report. It must therefore

now be taken to be well settled that what Article 14 strikes at

is

arbitrariness because any action that is arbitrary, must necessarily

involve negation of equality. The doctrine of classification which

is

evolved by the courts is not para-phrase of Article 14 nor is it the

objective and end of that Article.

It is merely a

judicial formula for

determining whether the legislative or executive action in question is

arbitrary and therefore constituting denial of equality.

If the classi­

fication

is not reasonable and does not satisfy the two conditions .

referred to above, the impugned legislative

or executive action would

plainly be arbitrary and the guarantee of

equality under Article 14

would be breached. Wherever therefore there

is arbitrariness in

State action whether it be of

the legislature or of the executive or of

an "authority" under Article 12, Article 14 immediately springs into

action and strikes down such State action. In fact, the concept of

reasonableness and non-arbitrariness pervades the entire constitutional

scheme and

is a golden thread which runs through the whole of the

fabric of the Constitution.

·

We may now turn to the merits of the controversy between the

parties. Though several contentions were urged in the writ petitions,

challenging the validity of the admisisons made to the college, they

were not all pressed before

us and the principal contention that was

advanced was that the society acted arbitrarily in the matter of grant­

ing of admissions, first by ignoring

the marks obtained by the candi­

dates at the qualifying examination; secondly by relying on

viva voce

examination as a test for determining comparative merit of the candi­

dates; thirdly

by allocating as many as

50 marks for the viva voce

examination as against 100 marks allocated for the written test and

,

AJAY IIASIA v. KHALID MUJIB (Bhagwati, J.) 103

lastly, by holding superficial interviews lasting only 2 or 3 minutes on

an average and-asking questions which had no relevance to assess­

ment of the suitability of the candidates with reference to the four

factors required to be considered at the

viva voce examination. Now

so far as the challenge on the first count

is concerned, we do not think

it

is at all well-founded. It is difficult to appreciate how a procedure

for admission which does not take into account the marks obtained

at the qualifying examination, but prefers to test the comparative

merit of the candidates by insisting on an entrance examination can

ever

be said to be arbitrary. It has been pointed o'ut in the counter

affidavit

filed by H. L. Chowdhury on behalf of the college that there

are two universities on two different dates and the examination by the

Board of Secondary Education for Jammu is also held

on a different

date than the examination by the

Board of Secondary Education for

Kashmir and the results of these examinations are not always declared

before the admissions to the college can be decided. The College

being the only institution for education in engineering courses in the

State of

J ammn & Kashmir has to cater to the

needs of both the

regions and it has, therefore, found it necessary and expedient

to

regulate admissions by holding an entrance test, so that the admission

process may not be held up on account of late declaration of results

of the qualifying examination in either of the two regions. The

ent­

rance test also facilitates the assessment of the comparative talent of

A

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the candidates by application of a uniform standard and is always E

preferable to evaluation of comparative merit on the basis of marks

obtained at the qualifying examination, when the qualifying examina-

tion is held

by two or more different authorites, because lack of

uniformity is bound to creep into the assessment of candidates by

different authorities with different modes of examination.

We would

not, therefore, regard the procedure adopted by the society

as arbit-

II'

rary merely because it refused to take into account the marks obtain-

ed by the candidates at the qualifying examination, but chose to

regulate the admissions by relying on the entrance test.

The second ground of challenge questioned the validity of

viva

voce examination as a permissible test for selection of candidates for G

admission to a college. The contention of the petitioners under this

ground of challenge

was that viva voce examination does not afford

a proper criterion for assessment of the suitability: of the candidates

for admission and it

is a highly subjective and impressionistic test

where the result

is likely to be influenced by many uncertain and

im­

ponderable factors such as predelictions and prejudices of the inter-H

viewers, his attitudes and approaches, his pre-conceived notions and

idiosyncrasies and it is also capable of abuse because it leaves scope

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104 SUPREME COURT REPORTS (1981] 2 S.C.R.

for discrimination, manipulation and nepotism which can remain

undetected nnder the cover of an interview and moreover

it is not

possible to assess the capacity and calibre of a candidate in the course

of an interview lasting only for a

few minutes and, therefore, selec­

tions made on the basis of oral interview must be regarded as

arbit­

rary and hence voilative of Art. 14. Now this criticism cannot be

said to be wholly unfounded and it reflects a point of view which has

certainly some validity.

We may quote the following passage from

the book on

"Public Administration in Theory and Practice" by M. P.

Sharma which voices a far and balanced criticism of the oral interview

method

"The oral test of the interview has been much criticised

on the ground of its subjectivity and uncertainty. Differ­

ent interviews have their own notions of good personality.

Far some, it consists more in attractive physical appearance

and dress rather than anything else, and with them the breezy

and shiny type of candidate scores highly while the rough

uncut diamonds may

go unappreciated. The atmosphere of

the interview

is artificial and prevents some candidates from

appearing at their best. Its duration

is short, the few ques­

tions

of the hit-or-miss type, which are put, may fail to re­

veal the real worth of the candidate.

It has been said that

Gad takes a whole life time to judge a man's worth while

interviewers have to do it in a quarter of an hour. Even at

it's best, the common sort of interview reveals but the

superficial aspects of the candidate's personality like appear­

ance, speaking power, and general address. Deeper traits of

leadership, tact, forcefulness, etc.

go

largely undetected. The

Interview is often in the nature of desullory conversation.

Marking differs greatly from examiner to examiner.

An anal¥sis of the interview results show that the marks award­

ed to candidates who competed more than once for the

same service vary surprisingly. All this shows that there

is a great clement of chance in the interview test. This be­

comes a serious matter when the marks assigned to oral

test constitute a high proportion of the total marks in the

competition.

01 Glenn Stahl points out in his book on "Public Personnel Adminis­

tration" that there are three disadvantages from which the oral test

II method suffers, namely, "{1) the difficulty of developing valid and

reliable oral tests; (2) the difficulty of securing a reviewable record

on an oral test; and

(3) public suspicion of the oral test as a channel

•

...

AJAY IIASIA v. KIIALID MUJl1' (Bhagwati, J.) 105

for the exertion of political influence" and we may add, other corrupt, A

nepotistic

or extraneous considerations. The learned author then

proceeds to add in a highly perceptive and critical passage :

"The oral examination has failed in the past in direct

proportion to the extent

of its misuse. It is a delicate inst_r:ument and, in inexpert hands, a dangerous one. The

first condition

of its successful use is the full recognition

of its limitations.

One of the most P.rolific sources of error

in the oral

has been the failure on the part of examiners to

understand the nature of evidence and to discrimina.te

between that which

_was relevant, material and reliable and

that

which was not. It also must be remembered tll'at the

best oral interview provides opportunity for analysis of

only a very small part of a person's total behaviour.

Gene­

ralizations from a single interview regarding an individual's

total personality pattern -have been proved repeatedly to be

wrong."

But, despite all this cnt1c1sm, the oral interview method continues

to

be very much in vogue as a supplementary test for assessing the

suitability of candidates wherever test of personal traits

is considered

essential. Its relevance

as a test for determining suitability based

on personal

cl:raracteristics has been recognised in a number of deci­

sions

of this Court which are binding upon us. In the first case on

the point

which came before this Court, namely, R.

Chitra Lekha

and Others

v. State of Mysore and Others(') this Court pointed out :

"In the field of education there are diver_gent views as

regards the mode of testing the capacity and calibre of stu­

dents

in the matter of admissions to colleges. Orthodox edu­

cationists stand

by the marks obtained by a student in the

annual examination. The modem trend of opinion insists

upon other additional tests, such as interview, performance

in extra-curricular activities, personality test, psychiatric

tests

e\c. Obviously we are not in a position to judge which

method

is preferable or which test is the correc:t one .....

.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The scheme of selec­

tion, however, perf~t it may be on paper, may be abused

in practice. That it

is capable of abuse is not a ground for

quashing it.

So long as the order lays down relevant objec­

tive criteria and entrusts the business of selection to quali-

(1) [1964] 6

S.C.R. 368.

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106 SUPREME COURT REPORTS (198!] 2 S.C.R.

A lied persons, this Court cannot obviously have any say in

the matter.

B

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and on this view refused

to hold the oral interview test as irrelevant

or arbitrary. It was also pointed out by this Court in A. Peeriakaruppan

v. State of Tamil Nadu & Ors:(')

"In most cases, the first impression need not necessarily

be the past impression, but under the existing conditions,

we are unable to accede

to the .contentions of the petitioners

that the system of interview

as in vogue in

this• country is so

defective as to make

it

useless."

It is therefore not possible. to accept the contentions of the

petitioners that the oral interview test is so defective that selecting

candidates for admission on the basis of oral interview in addition to

written test must be regarded

as arbitrary. The oral interview test is

undoubtedly not a very satisfactory test for assessing

and evaluating

the capacity and calibre

of candidates, but in the absence of any better

test for measuring personal characteristics and traits, the oral interview

test must,

at the present stage, be regarded as not irrational or irrele­

vant though it is snbjective and based on first impression, its result

is influenced

by many uncertain factors and it is capable of abuse.

We would, however, like

to point out that in the matter of admission

to college or even in the matter of public employment, the oral inter­

view test

as presently held should not be relied upon as an exclusive

test, but

it may be resorted to only as an additional or supplementary

test and, moreover, great care must be taken

to see that persons who

are appointed to conduct

the oral interview test are men of high inte-

grity, calibre and qualification.

·

So far as the third ground of challenge is concerned, we do not

think it can be dismissed

as unsubstantial. The argument of the

petitioners under this head of challenge was that even if oral interview

may

be regarded in principle as a valid test for selection of candidates

for admission to a college, it was in the present case arbitrary and

unreasonable since the marks allocated for the oral interview were very

much on the higher side as compared with the marks allocated for

the

written test. The marks allocated for

~ oral interview were 50 as

against 100 allocated for the written test, so that the mark. allocated

for the oral interview carne to 3 3 1 /3 % of the total number of marks

taken into account for the purpose of making the selection. This,

contended the petitioners, was beyond all reasonable proportion and

rendered the selection of the candidates arbitrary and violative of the

equality clause of

the Constitution. Now there can be no doubt that,

(!) [1971] 2 S.C.R.

430.

•

•

AJAY HASIA v. KHALID MUJIB (Bhagwati, !.) 107

having regard to the drawbacks and deficiencies in the oral interview

test and the conditions prevailing in the country, particularly when

there

is deterioration in

moral values and corruption and nepotism are

ve1y much on the increase, allocation of a high percentage of marks

for the oral interview as compared to the marks allocated for the

written test, cannot be accepted by the Court as free frorn the vice of

arbitrariness.

It may be pointed out that even in Peeriakaruppan's

case

(supra), where 75 marks out of a total of 275 marks were allo­

cated for the oral interview, this Court observed that the marks allo­

cated for interview were on the highside. This Court also observed

in

Miss

Nishi Maghu's case (supra): "Reserving 50 marks for inter­

view out of a total of 150 ... does seem excessive, especially when

the time spent

was not more than 4 minutes on each

candidate". There

can be no doubt that allocating

33 1/3 of the total marks for oral

interview

is

plainJy arbitrary and unreasonable. It is significant to

note that even for selection of candidates for the Indian Administra­

tive Service, the Indian Foreign Service and the Indian Police Service,

where the personality of the candidate and

his

perso!J.al characteristics

and traits are extremely relevant for the purpose of se]ection, the marks

allocated for oral interview are 250 as against 1800 marks for the

written examination, constituting only 12.2% of the total marks taken

into consideration for the purpose of making the selection.

We must,

therefore, regard the allocation of

as high a percentage as 33 1/3 of

the total marks for the oral interview as infecting the admission pro­

cedure with the vice of arbitrariness and selection of candidates made

on the basis of such admission procedure cannot be sustained. But

we do not think we would be justified iri the exercise of our discretion

in setting aside the selections made for the academic year

1979-80

after the lapse of a period of about 18 months, since to do so woul~

be to cause immense hardship to those students in whose case the

validity of the selection cannot otherwise be questioned and who have

nearly completed three semesters and, moreover, even

if the petitioners

are ultimately found to be deserving of selection on

Jhe application of

the proper test, it would not be possible to restore

them! to the position as if they were admitted for the academic year 1979-80, which has run

out long since.

It is true there is an allegation of mala fides against

the Committee which interviewed the candidates and

we may concede

that

if this

allegation were established, we might have been inclined to

interfere with the selections even after the lapse of a period of 18

months, because the writ petitions were

filed as early as

October­

November, 1979 and merely because the Court could not take-up the

hearing of the writ petitions for such a long time should be no ground

for denying relief to the petitioners, if they are otherwise so entitled.

But we do

not think that on the material placed before us we call

8-1281 SCI/80

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108 SUPREME COURT REPORTS (1981] 2 S.C.R.

sustain the allegation of mala fides against the: Committee. It is true,

and this

is a rather disturbing feature of the present cases, that a large

number of successful candidates succeeded in obtaining admission to

the college

by virtue of very high marks obtained by them at the viva

voce examination tilted the balance in

their favour, though _the marks

secured by

them at the qualifying examination were much less

than

those obtaiued by the petitioners and even in the written test, they had

fared much

worse than the petitioners. It is clear from the chart

sub­

mitted to us on behalf of the petitioners that the marks awarded at the

interview are by and large in inverse proportion to the marks obtained

by the candidates at the qualifying examination and are

also, in a

large number of cases, not commensurate with the marks obtained in

the written test. The chart does create a strong suspicion in our mind

that the marks awarded at the viva voce examination might have

been

manipulated with a view to favouring the candidates who ultimately

came to be selected, but suspicion cannot take the place

of proof

and

we cannot

hold the plea of mala fides to be established. We

need much more cogent material before we can hold that the Com­

mittee deliberately manipulated the marks at the viva voce examination

with a

view to favouring certain candidates as aganist the petitioners.

We

cannot, however, fail to mention that this is a matter which

required to

be looked into very carefully and not

only the State Gov­

ernment, but also the Central Government which is equally responsible

for the proper running of the colI~ge, must take care to see that proper

persons are appointed on the interviewing committees and there

is no

executive interference with their decision-making process.

We may also

caution the authorities that though, in the present

case, for reasons

which

we have already given, we are not interfering with the selection

for the academic year

1979-80, the selections made for the subsequent

academic years would run the risk of invalidation

if such a high

per·

centage of marks is allocated for the oral interview. We are of the

view that, under the existing circumstances, allocation of more than

15 % of the total marks for the oral interview would be arbitrary and

unreasonable and would be liable to be struck down

as constitutionally

invalid.

The petitioners, arguing under the last ground of challenge, urged

that the oral interview

as conducted in the present case was a mere

pretence or farce,

as it did not

last for more than 2 or 3 minutes per

candidate on an average and the questions which were asked were

formal questions relating to parentage and residence of the candidate

and hardly any question was asked which bad relevance to assessment

of the suitability

of the candidate with reference to any of the four

factors required to be considered by the Committee. When the time

spent on each candidate

was not more 2 or 3 minutes on an average,

•

)

t.

AJAY RASIA v. KHALID MUJIB (Bhagwati, J.) I 09

contended the petitioners, how could the suitability of the candidate

be assessed on a consideration of the relevant factors by holding such

an interview and how could the Committee possibly judge the merit

of the candidate with reference to these factors when no questions

bearing on these factors were asked to the candidate. Now there can

be

no doubt that if the interview did not take more than 2 or 3 minutes

on an average and the questions asked had no bearing on the factors

required to be taken into account, the oral interview test would be

vitiated, because it would

be impossible in such an interview to assess

the merit of a candidate with reference to these factors. This allega-

¥ tion of the petitioners has been denied in the affidavit in reply filed by

H.

L. Chowdhury on behalf of the college and it

ha~ been stated that

each candidate

was interviewed for 6 to 8 minutes and

"only the rele­

vant questions on the aforesaid subjects were asked". If this state­

ment of H. L. Chowdhury is correct, we cannot find much fault with

the oral interview test held by the Committee. But

we do not think

we can act on this

staten;ient made by H. L. Chowdhury, because there

is nothing to show that he was present at the interviews and none of

the three Committee members has come forward

to make an affidavit

denying the allegation of the petitioners and stating that each candidate

was interviewed for 6 to 8 minutes and only relevant questions

were asked. We must therefore, proceed on the basis that

the inter­

view of each candidate did not last for more than 2

or 3 minutes on

an average and hardly any questions were asked having bearing on the

relevant factors.

If that be so, the oral interview test must be held

to be vitiated and the selection made on the basis of such test must be

held to be arbitrary.

We are, however, not inclined for reasons

already given, to set aside the selection made for the academic year

1979-80, though we may caution the State Government and the

Society that for the future academic years, selections may be made on

-the basis of observation made by us in this judgment lest they might

liln the risk of being struck down. We may point out that, in our

opinion,

if the marks allocated for the oral interview do not exceed

15 % of the total marks and the candidates are properly interviewed

and relevant questions are asked with a view to assessing their suitabi­

lity with reference to the factors

require<J to be taken into consideration,

t11e oral interview test would satisfy the criterion of reasonableness and

non-arbitrariness. We think that it would also be desirable if the

interview

of the candidates is

tape-recorded, for in that event there will

be contemporaneous evidence to show what were the questions asked

to the candidates

by the interviewing committee and what were the

answers given and that will eliminate a lot of unnecessary controversy

besides

acting as a check on the possible arbitrariness of the interview­

ing committee.

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110 SUPREME COURT REPORTS [1981) 2 S.C.R.

A We may point out that the State Government, the Society and the t

College have agreed before us that the best fifty students, out of those

who applied for admission for the academic year 1_979-80 and who •

have failed to secure admission so far, will be granted admission for

the academic year 1981-82 and· the seats allocated to them will be in

addition

to the normal intake of students in the College. We order

B accordingly.

c

Subject to the above direction, the writ petitions are dismissed, but

having regard to the facts and circumstances of the present cases,

we think that a fair order of costs would be that each party should bear

and pay its own costs of the writ petitions. -'"'-

S. R. Petitions dismissed.