Pradeep Goswami v. Union of India & Anr

ORDER •;,••• ' ' %'V: V-

16.08;2017-" CM No. 28078/2017 (for e^^emption) •' >' Exernptionallowedsubjectto alljustexceptions. " / Applicationstandsdisposed:bf. W.P.rb Nos. 6645/2017 and 6745/2017 • 1; These two petitionshave been filed'primarilyseekingreliefagainst the National Agricultural CooperativeMaketing Limited(NAFED); The learnedcounsel.forthe respondentNo.2 has raised apreliminaryobjectionon the maintainabilityofthe petitionsin view ofthe ,.clear-determinatjonby the, Division Bench of this Court in the caseSof, NationalAgriculturalCo-op^tiveMarketingFederationofIndiaLtd. v. Nafed Processed Food Cooperative Marketing Federation df India Employees Union and Ors 2001 (58) 2)/?/ 79P wherein this Court has Signed By:RAM DATT Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. •yA'' •W--eonclusiyelyheldthatthe Nafedisnot a State:withinthe meaningofArticle,; 12 of the Constitution of India and as'such, the writ petitions under Article 226 of the Constitution of Iridiashail nOt be maintainable., -

¶2It is'the submission of the,learned counsel for the'petitioner that much , - ' water has. flown after the judgment rendered by the Division Bench -in'. Wflrfortfl/AgricuituraiCd-operaUveMarketingFederationof India Ltd. (suprah Accordingto him, the statusoftheNafedhasundergonea change, v' He wOuldVrely upon the averments in the writ petition (W.P.(C) No.. \ , 6645/2017)at pa^es 10 to 13. He wouldalsorelyuponthejudgmentsofthe '• ^SupremeCourt in the case,reportedas (2003) 10 SCC 733 FederalBani^ • ; Lid. V. SagarThomasandOrs and2W5 (13)SCALEDr. JanetJeyapaulv, SRMUniversity.& Ors. iri supportofhis conteniioT^. ^ \ . 3. ' J am afraidthat the ayermentsmade,in the writ petitionand also the.,-., relianceplaced-bythe learnedcounselfor the petitioners,on the judgiiients-ofFederalBdiikLtd. (supra)amdDr. JanetJeyapaul(supra)v^quUnotbe ^" ofanyhelp,to the petitionersHerein,inasmuchas the DivisionBench,ofthis :. Court mrntionalAgricuUur(dCo-oper<Uke:M«^^ /HdioL<rf. hasfon considerationoftheBye.tew^oftheNaM ^ • pdms7to 14beanieto thefollowingconclusion. ., . ; "7. It is essential to know the constitutionof the Societyfor finding an answer to this question. NAFED is a co-operative Societyregisteredunderthe BombayCo-operativeSocietiesAct as extended to Delhi. Later it was deemed to be registered as a Co-operativeSociety under the Delhi Co-operativeSocieties Act, 1973. It being a Multi-Unit Cooperative Society it is deemed to be registeredas a CooperativeSociety under the MultiState Co-operativeSocietiesAct, 1984 in view ofSection 3(g) ofthis Act. The secondscheduleofthis Act containsa list of National Level Co-operative Societies. The name of petitionerfigures at item no.4 in this list. It has its own buy^ laws as per which it manages its affairs. It is createdfor the benefitand welfareofits members. The entireshare capitalof the Societyis held by Members, Co-operativeSocieties,andno share capital is vested with the Governmentof India. In the counteraffidavitfiled by the appellantin the appealit has,been asserted that the. Society does not receive any financial I assistance or subsidyfrom the Governmentand it runs its own business on commercial principles, raising 'its own funds/resources, and obtaining loans from financial institutions/commercial banks on commercial terms. NAFED does not enjoyany monopolystatus in its business.Some times export of certain commoditieslike nigerseed, onions etc. are canalised through NAFED. According to the Buy-laws the Board of Directors is the authority responsible for the management, administration, business and functioning of •-1 NAFED. The Board ofDirectors is elected in accordance with the Bye-Laws and, out of 42 Directors, only three are governmentnomineeswho do not have special or veto powers in the management ofthe society i.e. NAFED. . 8. On the basis ofaforesaidstructure in constitutionofNAFED it cannot be , treated as "State" or other authority or instrumentalityor agencyof the "State"within the meaningof Article 12 ofthe ConstitutionofIndia.

¶9The respondents could not dispute the factual position containedin the bye-lawsofNAFEDas speltout above. Infact respondentsadmitthat the managementofNAFED vests in the BoardofDirectorselectedfrom amongstthe representativesof the State owned,cooperativesmarketingFederationsand other member societies with three representatives from the GovernmentofIndia and one eachfrom NationalCooperative Union of India, National Cooperative' Development Corporation,NationalCooperativeConsumerFederationLtd., BharatKrishikSamaj and State Bank ofIndia. However, they ' emphasise that out of 44 Directors, ten are Indian AdministrativeService officers and two are Provincial Civil Service officers representingGovernmentof India and state ownedFederations.Supportis also soughtto be takenfrom the fact thatNAFEDhas been entrustedwith the implementationof Market Intervention Scheme in respect of perishables (onions/potatoesetc.) and spices like blackpepper, chillies,as wellasthefact that GovernmentofIndiahas also canalisedthe i export.of onion and higer seed through NAFED. But these - wouldnot be sufficientconsiderationsto lead to afindingthat NAFED us a "State" under Article 12 of the Constitution of India.

¶10There are number'of judgments of various High Courts wherebysuch co-operativesocietiesare held not to be "State" or other authority within the meaning of Article 12. of the Constitution:Learned counselfor the appellant referred to the followingjudgments in this behalf:- i. J.S. Arneja versus NCCF. : a. S.S.Dharioaversus Municipal Corporation ofDelhi. • lii. Ajmer Singh versus The Registrar, CooperativeSocieties, Punjab. . iv. Pritham Singh Gill versus State ofPunjab.. V. R.R. Sahu versus NCCF. vi. Bana Bihari Tripathi versus Registrar of Cooperative Societies. ~ vii. Sri Kona Seema Cooperative Central Bank versus N. Sitarama Raju reported in AIR 1990 AP 171. . . 11. Thejudgment in the case ofJ.S. Arneja (supra) is rendered by a Division Bench ofthis very Court. - {

¶12In Ajay Hasia VersusKhalidMujib, the Apex Courtculled out six criteria as laid down in the judgment of Ramana , Dayaram Shetty Versus the International Airport Authorityof India & Ors. to determine whether a concern\ is an instrumentality or agency ofthe State. These are thefollowing:- -7 ' 1. "One thing is clear that if the entire share capital of the corporationis held by Governmentit would go a long way : " , , ' \ towardsindicatingthat the corporationis an instrumentalityor agency ofGovernment." '

¶2"Where thefinancial assistanceof the State is so much as to meet almost entire expenditureof the corporation, it would r-afford some indica:tionof the corporationbeing impregnated withgovernmental character." , 3^ "Itmay also be a relevantfactor .....whether the corporation enjoys monopolystatus which,is the State conferredor State ^ . protected."

¶4"Existenceof " deep andpervasiveState controlmay afford an indication that the Corporation is a State agency or instrumentality:"

¶5"Ifthefunctionsofthe corporationofpublicimportanceand closelyrelatedto governnientalfunctions,itwouldbe a relevant ' factor in classifyingthe corporationas an instrumentalityor • agency ofGovernment." . -6: "Specifically,if a departmentof Govt. is transferred to a -corporation, it would be a strong factor supportive of this inference" of the corporation. being an instrumentality or , ' agency ofGovernment."^ • -

¶13These tests still hold thefield. The decisionof the Supreme Court in AjdyHasia (supra) and later M.C.Mehtaversus Union of India reiterate the same position. It followsfrorri^ this that, name does not matter. Thefact that an authority is a Company registered under the Companies Act or under' the Societies Registration Act or 'aState Cooperative Societies Act',alone will , - not be determinative. Each case will turn on its own peculiar facts. What normally matters is the facts surrounding the constitution, functioning, control and management of a society. ' Control will include financial control. Keeping these aspects in ^ view a Full Bench ofthis Court held the Indra Gandhi National _ Centre for Arts as a "State" within the meaning ofArticle 12 of . the Constitution ofIndia, in Sanghi Technologies Private Ltd. versus Union ofIndia . In Sri Kona seema Cooperative Central Bank Ltd. versus N.S.Raju reported in 1990 A.P.I71, a Full Bench of the Andhra Pradesh High Court found that a Bank registered under the Cooperative Societies Act was not discharging any functions ofpublic importance or which could - ' be said to be governmental. It was held not to be a "State".. Similarly, after examining dll relevant facts the National - Consumers; Cooperative Federation, was held to be not a "State" in Ramu Ram Sahni versus N.C.C.F. reported in 1991 M.P. 63'. This Court also held NCCF not to be a "State" for purposes ofArticle 12 ofthe Constitution ofIndia in J.S. Arneja (supra). - • : , V , ,

¶14NAFED does riot meet any of the criteria laid down by the . Supreme Court which have been noted above. Admittedly, the , Government is not holding any share capital ofNAFED. It also cannot be said that any financial assistance is provided by the , Government which meets almost all the entire' expenditure of > NAFED. There is no state control, much less "deep and ' pervasive" state control. Moreover by no stretch of imagination it can be said that functions of NAFED are closely related tb governmentalfunctions. One may also refer to thejudgment of the Supreme Court in the case of Chander Mohan Khanna/ Versus NCERT .. While holding NCERT as not "State" or _ "instrumentality" or an "agehcy" of the State, following pertinent observations were made by the Supreme Court: "3. Article 12 should not be stretched so as to bring in every autonomous body'which has some nexus with the government within the s weep ofthe expression "State"..A wide enlargement of the meaning must be tempered by a wise limitation. It must riot be lost sight of that in the modern concept of WelfareState, independent-institution,corporation and agency are generally subject to State control. The State control doesnot render such bodies as "State" under Article 12. The State control, however I. y vast and pervasive is not determinative. The financial . contribution by the State is also not conclusive. The combination of State aid coupled with an unusual degree 'of control over the management and policies of the body, and ' rendering of an important public service being the obligatory functions of the State may largely point out that the body, is "State". If the government operates behind a corporate veil, carrying out governmental activity and governmentalfunctions of vital public importance, there may be little dijficulty in .. identifying the body as "State" within, of Article 12 of the r - 1 - ^• I ; .•" . ' Constitution. ''^ ; •• i « A • o. " '4.' - That apart,.assumingthat,the respondentNaifed is not a l^tate within -the meaningof Artible 12 of the Constitutionof India;the questiony/^ould , - arise I > idia. The-answer in that • ; regard must be Tey' Jf the respondent'Nd.2'isdischargingany"pubHc,duty . - ' or^a poisitiye obH^ of-a-pubhc n^^ ahd/oi; the Te?p6nd^ntNo.2'is' . ' : : . -undera liabilityto .dischargeany functionunder any statuteto compel itto' ' , 3 ' perform such statutoryfiinction. The writ petitionshave been filed byfthe^ V , , ; / petitionefsrchallengingtheir transfer/teriiiinatidnrespectively. . v - ' , ~ i 5. , It is not-the case of the petitioners that the impugned action of the . •. ' ; Fespondeht;No.2/isin yioktiqn pf any;provisions;of ^^ StatutQ^^^^^ .,^4. -Rules of a\Society'registered;under the iSocieties.RegistratipnAct are not •,; ' ' : , statutory in, ,V . Gbnstitufionof India. If that be sOi in the absenceofany public law elembnt- ^ ^ > in the.reliefss6ughV%the petitionersand alsdkeepingin view^thejudgment>- , > ''''^1' ofthe Com inKKSaxena v. J[Cip_(2015)4see,^^6^^ . ^ , V r - para 49, the Supreme Court has held as under, the petitions shah not.bey. " - -;;maii^tairiable.'^ 'r-.- ' '"S ' - '%9. .Thereis'yetanotherverysignifipantaspectwhichneMs to: / ; t •, be highlightedat thisjuncture.Even ifa bodyperformingpublic duty is amenableto writjurisdiction,all its decisionsare not subjectto judicialreview, as alreadypointedout above. Only those decisions which have public element,therein can-be judiciallyreviewedunderwritjurisdiction.In The Praga tools , , Corporation v. Shri C.A. Imaniial & Ors.[ll], as already discussedabove, this Courtheld that the action challengeddid , not have public element and writ of mandamus could not be issuedas the actionwas essentiallyofa private character. That wa^ a case where the concerned employee was seeking reinstatement to an office."

¶6I also note, this Courthas dismissedtwo writ petitionsagainstNafed •on the same-ground being W.P.(C) No, 5000/2015 Donald Masih v. NationalAgriculturalCooperativeMarketingFederationofIndia Ltd. (Nafed) and W.P'(C) No. 8295/2015SunilRawat v. NationalAgricultural CooperativeMarketingFederationofIndia Ltd. The writ petitions are dismissed. The petitionersare at Uberty to approach appropriateforum, '' . ' • seekingredressaloftheirgrievancein accordancewithlaw. No costs. CM No. 27645/2017 in W.P.rO 6645/2017 (for stay) CM No. 28077/2017 in W.P.rCYNo. 6745/2017 (for stay) Dismissed as infructuous." k-i V. KAMESWAR RAO, J AUGUST 16, 2017/flA:

• ^ • / : 1 . • •:$^i9.&20/. •>. • • •• \ . • V ' v.v, * IN THE HIGH COURT OF 1)ELHI At NEW DELHI ^+ W.P.(C)6645'/^^ ' + ' W;F.(Gj6745/2017;CMNos.,28077-28078/^^ ' ' ', ; : RAJPALMITTAL ; ' • : PRADEEPGOSWAMI, ' , .....Petitioners. • r . Xhrough: >Mr.;B;.S.ChawdhaiyandM^ ^ • '• ;Gosw^i,'Advs; ~ "..;V •'/'versus '' ' UNIONOF INDIA&,ANR. .....Respondents •-I ; . ; ; , Through:, Mr. Kayindra.G^^^ • a- • • • y. HON'BLE MR; JUSTICE V. KAMESWAR RAO • • • •: