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CASE NO.:

Appeal (civil) 3272 of 2003

PETITIONER:

LT. GOVERNOR OF DELHI & ORS

RESPONDENT:

V.K. SODHI & ORS

DATE OF JUDGMENT: 14/08/2007

BENCH:

P.K. BALASUBRAMANYAN & P.P. NAOLEKAR

JUDGMENT:

J U D G M E N T

[with C.A. No. 8132 of 2003]

P.K. BALASUBRAMANYAN, J.

1. In this appeal, the challenge is to the decision

of the Delhi High Court holding that the State Council of

Education, Research and Training ('SCERT' for short) is

a State within the meaning of Article 12 of the

Constitution of India and the conclusion that the

Lieutenant Governor of Delhi, SCERT and others are

bound to implement the policy decision of SCERT as

reflected in Regulation 67 framed by it as also the

Advanced Career Promotion Scheme. But a caveat was

entered that those who have not been absorbed, cannot

be given the benefit of the decision unless they are

absorbed permanently in SCERT. The writ petition was

allowed on the above terms with costs.

2. We may notice that the writ petition was not

allowed as prayed for nor was a mandamus as such

issued to the respondents. The prayer in the writ

petition was for the issue of a writ of mandamus or any

other suitable writ, order or direction to the respondents

to extend the benefits of pension, gratuity and general

provident fund on retirement in favour of the writ

petitioners, to provide facilities of loan, advances for

betterment of career, status and life in terms of housing

loan, car loan, computer loan etc. in favour of the writ

petitioners and also to extend the benefits of the same

pay and allowances in favour of the writ petitioners as

are admissible to the academic staff of National Council

of Educational, Research and Training ('NCERT' for

short) at par or to pass any other order or direction as

may be deemed fit and proper. It may be noticed that

Regulation 67 of SCERT Rules and Regulations which

provided that the terms and tenure of service of the

academic staff at the Council shall remain the same as

available for the academic staff of NCERT was amended

by notification dated 7.12.1999 retrospectively to the

effect that the terms and tenure of service of academic

and other staff of the Council should remain the same as

available for the academic and other staff of the

Directorate of Education, G.N.C.T. of Delhi with such

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modifications that may be specifically adopted by the

Executive Committee from time to time. This

amendment was not challenged in the writ petitions in

the context of the prayers in the writ petition. But in the

context, it is clear that the High Court has issued a

direction to SCERT to implement Regulation 67 as it

stood prior to its amendment in respect of a class of

employees and to implement certain resolutions adopted

by the Governing Committee of SCERT. We may

incidentally notice and it is the common case, that the

unamended Regulation 67 had never been implemented

in SCERT in respect of any of its employees and there is

no case of any discrimination in the implementation of

that Regulation.

3. While allowing the writ petition, the High Court

negatived the plea of SCERT that it was merely a society

registered under the Societies Registration Act and it was

not a State within the meaning of Article 12 of the

Constitution of India. The High Court also overruled the

plea of SCERT that it mainly relied on the grant by the

Government for the purpose of achieving the objects with

which the society was formed and without the sanction

or approval of the State Government, it was not in a

position to spend any part of the grant by way of

additional benefits to its employees. It is feeling

aggrieved by the decision thus rendered by the High

Court that this Appeal has been filed.

4. We may notice here that the High Court held

that the decision by this Court in Chander Mohan

Khanna Vs. N.C.E.R.T. & ors.[(1991) 4 S.C.C. 578]

could not govern the case of SCERT in view of the

decision in Pradeep Kumar Biswas Vs. Indian Institute

of Chemical Biology & ors. [(2002) 5 S.C.C. 111] and in

that view, it was held that the Society was a State and

that the amendment of the Regulation would not affect

the employees who had joined SCERT prior to the date of

the amendment.

5. It is argued on behalf of the appellants that the

High Court was clearly in error in not properly examining

the question whether SCERT was a State or other

authority within the meaning of Article 12 of the

Constitution of India even going by the principle laid

down in Pradeep Kumar Biswas's case (supra). It was

further submitted that the High Court has given no

reasons for holding that the decision in Chander Mohan

Khanna could not be applied to the case in view of the

position emerging from the bye-laws of both the

societies. It was submitted that going by the tests laid

down, SCERT was a society registered under the

Societies Registration Act, which was a master of its

affairs and which was not subservient to the Government

and that the Government did not have effective or

pervasive control over the working of the society which

was governed by a Committee constituted by its bye-laws

and the mere fact that the Government was making

available grants to SCERT and SCERT was entrusted

with the looking after of a facet of education, which was

part of the duty of the State and the existence of some ex

officio members in the Committee are not sufficient to

uphold the plea that SCERT was a State especially since

in Pradeep Kumar Biswas case, the decision in

Chander Mohan Khanna had not been overruled and

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only one aspect relied on in Chander Mohan Khanna

decision had been found to be not sustainable. The

respondents, on the other hand, contend that the larger

bench in Pradeep Kumar Biswas's case had specifically

overruled Sabhajit Tewary's case [(1975) 1 S.C.C. 485]

and this meant that the decision in Chander Mohan

Khanna was no more good law and the High Court was

right in its conclusion on that basis. It is further

submitted that going by the tests laid down by this Court

in various decisions, it has to be held that SCERT was a

State or other authority within the meaning of Article 12

of the Constitution in view of the financial control the

State Government had over the Society and the other

circumstances relied on by the High Court. Thus, it was

submitted that the High Court was justified in directing

the implementation of Regulation 67 as it stood in

respect of the writ petitioners.

6. On merits, it was contended on behalf of the

appellants that the High Court was in error in ignoring

the financial implications for the society while issuing

the direction and that the court is not entitled to ignore

the financial constraints of a society like SCERT while

called upon to issue a direction to it to incur additional

expenditure, eating up a major portion of the grant that

is made available to it by the Government. It is

submitted that if a major portion of the grant is utilized

for salaries and allowances and other benefits to the

employees, the very object with which the society was

formed would be defeated and certainly, a court is bound

to consider that aspect while issuing directions for

incurring of financial liability. It is also pointed out that

Regulation 67 had been amended with retrospective

effect and the same was not in challenge before the High

Court and there was no justification in the High Court

holding that the non existant Regulation 67 as it existed

prior to the amendment, should be implemented in

respect of the writ petitioners.

7. These submissions are sought to be met by the

respondents by contending that the employees were

entitled to benefit on the principle of 'equal pay for equal

work', that the original Regulation 67 applied to

employees who were in service prior to its amendment

and that the High Court was right in holding that the

retrospective amendment of Regulation 67 could not

affect the employees who were in place before the date of

the amendment. Learned counsel further submitted that

the direction issued by the High Court was only to direct

SCERT to implement its own resolutions without waiting

for governmental clearance for their implementation and

considering that SCERT was an autonomous body, the

direction in that behalf was justified. It was thus

submitted that the appeal was liable to be dismissed.

8. Civil Appeal No. 8132 of 2003 is filed by

SCERT challenging a direction subsequently issued by

the High Court in another writ petition following the

decision of the Division Bench giving rise to Civil Appeal

No. 3272 of 2003. The fate of this Appeal depends upon

the decision in Civil Appeal No. 3272 of 2003 and no

separate discussion of the facts therein is needed.

9. As the decisions of this Court show, there is no

simple litmus test, to determine whether an entity is a

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State or other authority within the meaning of Article 12

of the Constitution of India. What is clear from the

decisions is that the various facets of the foundation and

the working of the entity would be relevant in

determining the question in the context of the duties

entrusted to it or taken up by it for performance. It is in

that context that in the latest larger Bench decision in

Pradeep Kumar Biswas (supra), the majority summed

up the position in paragraph 40 thus:-

"The picture that ultimately emerges is that

the tests formulated in Ajay Hasia are not a

rigid set of principles so that if a body falls

within any one of them it must, ex

hypothesi, be considered to be a State

within the meaning of Article 12. The

question in each case would be \026 whether in

the light of the cumulative facts as

established, the body is financially,

functionally and administratively dominated

by or under the control of the Government.

Such control must be particular to the body

in question and must be pervasive. If this

is found then the body is a State within

Article 12. On the other hand, when the

control is merely regulatory whether under

statute or otherwise, it would not serve to

make the body a State."

What therefore falls for consideration is whether in the

context of the functions entrusted to it, the rules and

bye-laws that govern it and the financial position enjoyed

by it, SCERT can be said to be financially, functionally

and administratively dominated by or under the control

of the Government.

10. It is in this context that the decision in

Chander Mohan Khanna (supra) assumes importance.

It appears to be common case that SCERT and NCERT

are organizations parallel in nature and the High Court

has also recorded:

"It is accepted that the third respondent

(SCERT) was formed basically on the same

lines as NCERT."

This Court in Chander Mohan Khanna (supra) on

discussing the relevant provisions of the Memorandum of

Association and the Rules of NCERT came to the

conclusion that NCERT was not a State or other

authority within the meaning of Article 12 of the

Constitution of India. This Court after quoting from the

decision of the High Court regarding the relevant Rules

of NCERT stated:

"The object of the NCERT as seen from the

above analysis is to assist and advise the

Ministry of Education and Social Welfare in the

implementation of the Governmental policies

and major programmes in the field of

education particularly school education. The

NCERT undertakes several kinds of

programmes and activities connected with the

coordination of research extension services and

training, dissemination of improved

educational techniques, collaboration in the

educational programmes. It also undertakes

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preparation and publication of books,

materials, periodicals and other literature.

These activities are not wholly related to

Government functions. The affairs of the

NCERT are conducted by the Executive

Committee comprising of Government servants

and educationists. The Executive Committee

would enter into arrangements with

Government, public or private organisations or

individuals in furtherance of the objectives for

implementation of programmes. The funds of

the NCERT consist of: (i) grants made by the

Government, (ii) contribution from other

sources and (iii) income from its own assets. It

is free to apply its income and property

towards the promotion of its objectives and

implementation of the programmes. The

Government control is confined only to the

proper utilisation of the grant. The NCERT is

thus largely an autonomous body."

Their Lordships concluded that in their Lordships'

opinion having regard to the indications to which they

had called attention earlier, NCERT did not qualify as a

State under Article 12 of the Constitution of India. The

provisions of the Memorandum of Association and the

bye-laws of SCERT are more or less the same as that of

NCERT. Whereas NCERT was to assist the National

Government in the matter of coordinating education,

SCERT was to assist the State Government in the matter

of promoting education within the State of Delhi. It is

also governed by an Executive Committee. The income

and property of the Council however derived has to be

applied towards the promotion of the objectives set forth

in the Memorandum of Association. The membership of

the Council included ex officio the Lieutenant Governor

of Delhi, the Executive Councilor (Education) of Delhi

Administration and various educational authorities. The

Executive Committee was to be the main authority of the

Council and it was entitled to create or constitute other

authorities for carrying out the objectives. The affairs of

the Committee shall be administered subject to the rules

and orders of the Council by an Executive Committee

which was to consist of various officers of the Delhi

Administration. The Committee had the power, with the

previous approval of the Council, to frame Regulations

including Regulations regarding terms and tenure of

appointments, emoluments, allowances, rules of

discipline and other conditions of service of the officers

and the staff of the Council. The Council was to be fully

financed by the Government and the funds of the

Council was to consist of grants made by the

Administration of Delhi/Delhi State and Government of

India for the furtherance of the objects of the Council,

contributions from other sources, income from assets

and publication of the Council and receipt of the Council

from other sources. The accounts had to be audited

annually by Chartered Accountants and to be approved

by the Annual General Meeting of the Council. The State

Government had no role to play on the administration of

the Council or in the working of the Council or over its

finances, once the grant was made.

11. The two elements, one, of a function of the

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State, namely, the coordinating of education and the

other, of the Council being dependant on the funding by

the State, satisfied two of the tests indicated by the

decisions of this Court. But, at the same time, from that

alone it could not be assumed that SCERT is a State. It

has to be noted that though finance is made available by

the State, in the matter of administration of that finance,

the Council is supreme. The administration is also

completely with the Council. There is no governmental

interference or control either financially, functionally or

administratively, in the working of the Council. These

were the aspects taken note of in Chander Mohan

Khanna (supra) to come to the conclusion that NCERT is

not a State or other authority within the meaning of

Article 12 of the Constitution of India. No doubt, in

Chander Mohan Khanna (supra), the Bench noted that

the fact that education was a State function could not

make any difference. This part of the reasoning in

Chander Mohan Khanna (supra) case has been

specifically disapproved by the majority in Pradeep

Kumar Biswas (supra). The majority noted that the

objects of forming Indian Institute of Chemical Biology

was with the view of entrusting it with a function that is

fundamental to the governance of the country and

quoted with approval the following passage in Rajasthan

SEB Vs. Mohan Lal [(1967) 3 S.C.R. 377]:

"The State, as defined in Article 12, is thus

comprehended to include bodies created for

the purpose of promoting the educational

and economic interests of the people."

The majority then stated:

"We are in respectful agreement with this

statement of the law. The observations

to the contrary in Chander Mohan

Khanna V. NCERT relied on by the

learned Attorney-General in this context,

do not represent the correct legal

position."

12. But, it may be noticed that in conclusion, the

majority only overruled the decision in Sabhajit Tewary

(supra) and did not say anything further regarding the

decision in Chander Mohan Khanna (supra).

13. We also find substantial differences in the two

set ups. Sabhajit Tewary (supra), after referring to the

rules of the Council of Scientific and Industrial Research

which was registered under the Societies Registration

Act, concluded that it was not a State within the

meaning of Article 12 of the Constitution. While

overruling the said decision, the majority in Pradeep

Kumar Biswas (supra) took the view that the dominant

role played by the Government of India in the governing

body and the ubiquitous control of the Government in

the Council and the complete subjugation of the

Governing Body to the will of the Central Government,

the inability of the Council to lay down or change the

terms and conditions of service of its employees and the

inability to alter any bye-law without the approval of the

Government of India and the owning by the Central

Government of the assets and funds of the Council

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though normally owned by the society, all indicated that

there was effective and pervasive control over the

functioning of the Council and since it was also

entrusted with a Governmental function, the justifiable

conclusion was that it was a State within the meaning of

Article 12 of the Constitution. The majority also noticed

that on a winding up of that Council, the entire assets

were to vest in the Central Government and that was

also a relevant indication. Their Lordships in the

majority also specifically overruled as a legal principle

that a Society registered under the Societies Registration

Act or a company incorporated under the Companies

Act, is by that reason alone excluded from the concept of

State under Article 12 of the Constitution. In the case of

SCERT, in addition to the operational autonomy of the

Executive Committee, it could also amend its bye-laws

subject to the provisions of the Delhi Societies

Registration Act though with the previous concurrence of

the Government of Delhi and that the proceedings of the

Council are to be made available by the Secretary for

inspection of the Registrar of Societies as per the

provisions of the Societies Registration Act. The records

and proceedings of the Council have also to be made

available for inspection by the Registrar of Societies. In

the case of dissolution of SCERT, the liabilities and

assets are to be taken over at book value by the

Government of Delhi which had to appoint a liquidator

for completing the dissolution of the Body. The creditors'

loans and other liabilities of SCERT shall have preference

and bear a first charge on the assets of the Council at

the time of dissolution. This is not an unconditional

vesting of the assets on dissolution with the

Government. It is also provided that the provisions of

the Societies Registration Act, 1860 had to be complied

with in the matter of filing list of office-bearers every year

with the Registrar and the carrying out of the

amendments in accordance with the procedure laid down

in the Act of 1860 and the dissolution being in terms of

Sections 13 and 14 of the Societies Registration Act,

1860 and making all the provisions of the Societies

Registration Act applicable to the Society. These

provisions, in our view, indicate that SCERT is

subservient to the provisions of the Societies Registration

Act rather than to the State Government and that the

intention was to keep SCERT as an independent body

and the role of the State Government cannot be

compared to that of the Central Government in the case

of Council of Scientific and Industrial Research.

14. As we understand it, even going by paragraph

40 of the judgment in Pradeep Kumar Biswas (supra),

which we have quoted above, we have to consider the

cumulative effect of all the facts available in the case. So

considered, we are inclined to hold that SCERT is not a

State or other authority within the meaning of Article 12

of the Constitution of India. As we see it, the High Court

has not independently discussed the relevant rules

governing the functioning and administration of SCERT.

It has proceeded on the basis that in the face of Pradeep

Kumar Biswas (supra) decision, the decision in Chander

Mohan Khanna (supra) must be taken to be overruled

and no further discussion of the question is necessary.

But, in our view, even going by Pradeep Kumar Biswas

(supra), each case has to be considered with reference to

the facts available for determining whether the body

concerned is a State or other authority within the

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meaning of Article 12 of the Constitution of India. So

considered, we find that the Government does not have

deep and pervasive control over the working of SCERT.

It does not have financial control in the sense that once

the finances are made available to it, the administration

of those finances is left to SCERT and there is no further

governmental control. In this situation, we accept the

submission on behalf of the appellants and hold that

SCERT is not a State or other authority within the

meaning of Article 12 of the Constitution of India. After

all, the very formation of an independent society under

the Societies Registration Act would also suggest that the

intention was not to make the body a mere appendage of

the State. We reverse the finding of the High Court on

this aspect.

15. Once we hold that SCERT is not a State or

other authority within the meaning of Article 12 of the

Constitution of India, we do not find ourselves persuaded

to issue any such direction as sought for by the writ

petitioners (the respondents herein). In fact, it becomes

unnecessary to go into the question of validity of the

amendment of Regulation 67, the effect of the uniform

non implementation of Regulation 67 as it stood earlier,

and the effect of the absence of a challenge in the writ

petition to the amendment to the Regulation itself. It is

also not necessary to go into the question whether

SCERT should seek the permission of the Government

for incurring additional expenditure in terms of service

benefits to its employees.

16. It appears to us that in the case of bodies like

SCERT, the court cannot ignore the financial

implications of implementing the directions that it is

called upon to issue. The object of SCERT is laudable

and it has to coordinate and promote education in the

State. Its resources are limited and the main income is

by way of grant from the State Government. When

SCERT pleads that it cannot spend the whole of the

grant or a major portion of the grant in paying salaries

and emoluments to its employees and if it does so, that

may tend to frustrate the very object with which the

society was formed, it is an argument that has to be

considered weighty by a court called upon to exercise

jurisdiction under Article 226 of the Constitution of

India. A court cannot issue a direction which would

tend to frustrate the very object with which a society like

SCERT is formed or a body like SCERT is created. After

all, there may be a point of time in a welfare State where

the right of the employees must be subservient to the

right of the society. In the matter of education, surely,

the interests of the society at large should prevail and

issue of any direction that may endanger such interests

must be done with extreme caution and only after

careful deliberation.

17. In our view that SCERT is not a State or other

authority within the meaning of Article 12 of the

Constitution and normally not amenable to the

jurisdiction of the High Court under Article 226 of the

Constitution of India, we do not find it necessary to

pursue further, these other aspects. Suffice it to say,

that the direction issued by the High Court cannot be

sustained.

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18. In the result, both the appeals are allowed and

the directions issued by the High Court are set aside and

the writ petitions filed by the writ petitioners are

dismissed. In the circumstances, the parties are

directed to suffer their respective costs.