MANU/UP/0575/2004 Equivalent Citation: 2004 5 AWC3801, (2004)3UPLBEC2447 IN THE HIGH COURT OF ALLAHABAD Special Appeal Nos.

633, 634, 635, 636, 637, 638, 640, 649, 650, 651, 652, 653, 654, 655, 656, 657, 658, 659, 660, 661, 662, 663, 664, 665, 666, 668, 669, 670, 671, 672, 673, 674, 675, 852, 854, 855, 856, 857 and 906 of 1999 Decided On: 31.05.2004 Appellants: Kisan Sahkari Chini Mills Ltd. and Anr. Vs. Respondent: Rakesh Chandra Gangwar and Ors., Civil Misc. Writ Petition No. 38619 of 1998 Hon'ble Judges/Coram: M. Katju and R.S. Tripathi, JJ. Counsels: For Appellant/Petitioner/Plaintiff: A.K. Misra, S.P. Keserwani and A.K. Singh, Advs. For Respondents/Defendant: Ashok Khare, U.N. Sharma, Advs. andS.C. Subject: Trusts and Societies Acts/Rules/Orders: Uttar Pradesh Co - operative Societies Act, Uttar Pradesh Co - operative 1965; Constitution of India - Article 12, Constitution of India - Article 226; Industrial Disputes Act Cases Referred: Rakesh Chandra Gangwar v. State of U.P. and Ors.;General Manager, Kisan Sahkari Chini Mills Ltd, Sultanpur v. Satrughgn Nishad and Ors., (2004) 1 UPLBEC 7;Anil Kumar Agarwal v. U.P. Stock Exchange Association Ltd., 2004 ALJ 365;Radha Charan Sharma v. U.P. Co-operative Federation, (1982) 1 UPLBEC 89, AIR 1988 All 342;Ram Lakhan Pathak v. District, Assistant Registrar, Co-operative Societies, Kanpur, 1996 (1) ESC 32;Workmen, Kampli Co-operative, Sugar Factory Limited v. The Management of Kampli Sugar Factory Limited, 1994 Lab IC 2074;Co-operative Central Bank Limited v. Additional Industrial Tribunal. Andhra Pradesh, MANU/SC/0611/1969;Sabhajeet Tewari v. Union of India, MANU/SC/0059/1975;Chander Mohan Khanna v. The National Council of Educational Research and Training, MANU/SC/0010/1992, (1991) 4 SCC 578;Ajay Hasia v. Khalid Munir, MANU/SC/0498/1980;Ramanna Dayaram Shetty v. International Airport Authority, AIR 1079 SC 1628;Aley Ahmad Abidi v. District Inspector of Schools, Allahabad, MANU/UP/0141/1977;Praga Tools Corporation v. O.V. Imannual, AIR 1969 SC 1306;Chakradhar Patel v. Samasingha Service Co-operative Society Limited, MANU/OR/0015/1982;Executive Committee of Vaish Dgree College, Shamli v. Laxmi Narain, AIR 1976 SC 888;P. Bhaskaran v. Additional Secretary, Agricultural (Co-operation) Department, MANU/KE/0014/1988;Ram Swamp Gupta v. Madhya Pradesh State Co-operative Marketing Federation Ltd., AIR 1976 Madh Pra 152;Rajasthan State Road Transport Corporation v. Krishnakanth, MANU/SC/0786/1995;Deepak Kumar Biswas v. Director of Public Instructions and Ors., (1987) 2 SCC 252;Shri Anadi Sadguru Shree Muktajee Vandasji Swami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V.R. Rudani and Ors., MANU/SC/0028/1989;Ganapathi National Middle School v. M. Durai Kannan (dead) by learned Counsel for the respondents and Ors., (1996) 6 SCC 464;Sukhdeo Singh v. Bhagat Ram Sardar Singh Raghuwansi, MANU/SC/0667/1975;Steel Authority of India Ltd v. Shri Ambika Mills Ltd. and Ors., (1998) 1 SCC 465;Biman Krishna Bose v. United India Assurance Company Ltd. and Ors., (2001) 6 SCC 477;Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers Association, MANU/SC/0003/2002;Jalaun Producers Cooperative Union Limited v. State of U.P., 1979 ALJ

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

244;Heavy Engineering Mazdoor Union v. State of Bihar, (1969) 3 SCR 995;Satish Nayak v. Cochin Stock Exchange Limited, Enrakulam and Ors., MANU/KE/0064/1995;Sejal Rikeen Dalal v. Stock Exchange, Bombay, AIR 1991 Bom. 30;R. Jagadeesh Kumar v. P. Srinivasan and Ors., AIR 1995 Kar 420;Smt. Veena Ojha v. President, U.P. Stock Exchange Association Ltd., Kanpur and Ors., Writ Petition No., 1043 of 1998;Ganga Saran v. Civil Judge, 1991 (1) AWC 213;Tek Raj Vasands v. Union of India, 1988 (1) SCC 236, AIR 1988 SC 496;Smt. Biran Devi v. Sechu Lal, 2001 (4) AWC, 2659;Gajendra Kumar Sharma v. Genral Manager, (1999) 3 UPLBEC 2452;Carlsbad Co. v. Jagtiani, AIR 1952 Cal. 315;Workmen of Pepsico v. Labour Commissioner, 2000 (3) AWC 1800;Dwarika Nath v. I.T.O., MANU/SC/0166/1965;Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke, (1976) 1 SCC 496;U.P. State Bridge Corporation Ltd. v. U.P. Rajya Setu Nigam S. Karmchari Sangh, (2004) 4 SCC 268;Sri Konaseema Co-operative Central Bank Limited., AIR 1990 Andli Pra 171 Citing Reference:

Mentioned Relied On Disposition: Appeal allowed

40 1

Case Note: Constitution of India - Articles 12 and 226--U. P. Co-operative Societies Act, 1965-Sections 3, 4 and 30A -- Writ petition--Maintainable--Kisan Sahkari Chini Mills Ltd. whether State within meaning of Article 12 and whether amenable to writ jurisdiction?--Held, no--Such Mills manufacture sugar--Performing purely business activity and not any public duty--No averment how co-operative society is State--No details what exactly is kind of deep and pervasive State control over society--And what exactly is share-holding of Government, etc.--Co-operative society cannot be held to be State--Services of petitioners terminated--They had alternative remedy to raise industrial dispute under Industrial Disputes Act--Writ petition should have been dismissed on ground of alternative remedy--Impugned judgment set aside. JUDGMENT M. Katju, J. 1. This bunch of special appeals is directed against the judgment of the learned Single Judge dated 28,5.1999 in Civil Misc. Writ Petition No. 38619 of 1998 Rakesh Chandra Gangwar v. State of U.P. and Ors. connected petitions. 2. We have heard the learned Counsel for the parties and have perused the record. 3. The respondents in these appeals (writ petitioners) have questioned the validity of the orders terminating their services. The learned Single Judge by the impugned judgment has allowed the writ petitions and has quashed the impugned orders. Hence these appeals. 4. A preliminary objection had been raised before the learned Single Judge that the writ petitions were not maintainable as the employers of the writ petitioners were cooperative societies which were not State under Article 12 of the Constitution. The learned Single Judge rejected the preliminary objection and held that there was deep and pervasive state control over the affairs of every cooperative society registered under the UP. Cooperative Societies Act. He further held that the Cooperative Societies were performing duties of a public nature. 5. With great respect to the learned Single Judge we cannot agree that the Cooperative Societies were performing functions of a public nature. The Cooperative Societies were sugar

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

mills which were manufacturing sugar. Thus they were performing a purely business activity and not any public duty. Also, the observation of the learned Single Judge that there is deep and pervasive control by the State over all cooperative societies registered under the Cooperative Societies Act is not based on any material an record. 6. In similar circumstances the Supreme Court in General Manager, Kisan Sahkari Chini Mills Ltd, Sultanpur v. Satrughgn Nishad and Ors. MANU/SC/0795/2003 : (2004) 1 UPLBEC 7, held that the Kisan Sahkari Chini Mills Limited, Sultanpur was not State under Article 12 of the Constitution. In Paragraph 8 of this judgment the , Supreme Court noticed that the U.P. Government held only 50% shares in the mill which was not denied. The membership of the Cooperative Society consisted of the cane growers, other societies, Gram Sabha, State Government, etc' Out of the members of the Committee of Management of the Cooperative Society only l/3rd were nominees of the State Government while 2/3rd were non-Government members. Under the bye-laws of the Society the State Government could riot issue any direction to the mill nor determine its policy, as it was an autonomous body. The Court held that the State had no control at all in the functioning of the mill much less a deep and pervasive one. The Supreme Court further held that the mill was engaged in the manufacture and sale of sugar which does not involve any public function. In our opinion the decision of the Supreme Court squarely applies to the facts of the present case which also relates to Kisan Sahkari Chini Mills . Limited of different areas. 7. A similar view was taken by a Division Bench of this Court in Anil Kumar Agarwal v. U.P. Stock Exchange Association Ltd 2004 ALJ 365: 8. A Full Bench of this Court while considering the issue as to whether a cooperative society is amenable to writ jurisdiction in Radha Charan Sharma v. U.P. Co-operative Federation (1982) 1 UPLBEC 89, considered a catena of judgments of the Supreme Court and other Courts and came to the conclusion that the U.P. Co-operative Federation was not amenable to writ jurisdiction as the bye- laws framed by the cooperative society did not have any statutory force and no rule involving a duty of public nature was violated. 9. In Ram Lakhan Pathak v. District, Assistant Registrar, Co-operative Societies, Kanpur 1996 (1) ESC 32, this Court held that since the conditions of service of the employees, are not governed by any statutory rule or regulation, the co-operative society is not an authority within the meaning of Article 12 of the 'Constitution nor is it an instrumentality of the State nor does it exercise any statutory power or discharge statutory power or statutory/public duties, hence the writ petition was not maintainable against the cd-operative society. 10. A similar view has been taken by the Karnataka High Court in Workmen, Kampli Cooperative, Sugar Factory Limited v. The Management of Kampli Sugar Factory Limited 1994 LabIC 2074, and it has been held that such rights are purely of a private nature and the same cannot be challenged in writ jurisdiction and in spite of the fact that the expression "Government function" may suffer from vagueness and indefiniteness, the activity of manufacturing sugar cannot fall within the ambit of public duty or Governmental function as the production of sugar is being done only with a view to earn profit for the members of the society. 11. In Co-operative Central Bank Limited v. Additional Industrial Tribunal. Andhra Pradesh MANU/SC/0611/1969, the Supreme Court observed that the bye- laws,of a co-operative society framed under the provisions of the Act do not have any force of law as the by-laws contemplated by the act govern the internal management, business or administration of a society and they are only binding upon the persons affected by them. The bye-laws providing for the service conditions of the employees of the society may be binding between the society and its employees in the same manner as conditions of service provided for in a contract between the parties. The Court observed: "The bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law."

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

12. A Constitution Bench of the Supreme Court in Sabhajeet Tewari v. Union of India MANU/SC/0059/1975, took the view that the society does not have a statutory character and it is merely a society incorporated in accordance with the provisions of the Societies Registration Act in spite of the fact that the statute provides for management etc. by the Government of India, the reason being that the Government has no control as it is the governing body which can frame, amend and repeal the bye-laws etc. strictly in accordance with the purposes for which the society has been formed. The said society was found to have its existence independent from the Government and the law relating to corporations. 13. In Chander Mohan Khanna v. The National Council of Educational Research and Training MANU/SC/0010/1992, the Apex Court after considering the law on the subject held that if "the function of the institutions are of public importance and related to the Governmental-functions" it may be treated as a 'State' or State instrumentalities; However, it was further clarified that mere State control does not render such bodies a State under Article 12 nor are the financial contributions by the State conclusive, of the matter. 14. A Full Bench, of Andhra Pradesh High Court in Sri Konaseema Co- operative Central Bank Limited. AIR 1990 AP 171, has held that if the petitioner invokes the writ jurisdiction of the High Court, he must satisfy the Court that he is seeking enforcement of a statutory public duty. Moreover, nomenclature by which the rules, regulations or bye-laws is known, is immaterial. The relevant determining factor is its essential nature which can be determined by applying the test whether the same can be termed as delegated legislation. The Court after examining the various provisions of the Co-operative Societies Act of Andhra Pradesh, came to the conclusion that the bye-laws framed there were framed by a delegatey of the legislature. The Court considered the judgments of the Supreme Court in Ajay Hasia v. Khalid Munir MANU/SC/0498/1980; and Ramanna Dayaram Shetty v. International Airport Authority AIR 1079 SC 1628 and came to conclusion that as the society was not doing Governmental function not was there any pervasive and deep State control the society could not be held to be State within the meaning of Article 12 of the Constitution of India. The public authority must be a body, which has legal authority to determine questions, affecting the statutory rights or obligations of other persons as individuals. Such body must be the creation of the statute and its powers and duties have to be defined by the statute, e.g. legal authorities, statutory undertakings and corporations. When an authority protects only the private rights of its individual members it can not be said to be performing any public duty. 15. However, the Court held that if the duty imposed on a body, whether expressly or by implication was a public duty and the body was exercising public law functions, the decision of that body would be amenable to judicial review. Applying all those tests, the Court examined the nature of the co-operative society involved in that case and came to the following conclusion: "It has no duty towards the public. Its duty is towards its members only. It has no power to take action, or pass any order affecting the rights of the members of the public. The binding nature of its order and action is confined to its members and to its employees. It is neither a statutory body nor governed by a statute. Its functions are also not akin to Governmental functions............................ Even if.......................... it can be characterized as a public body, even so the contract of service between it and the writ petitioner cannot be treated as belonging to public law. It is a pure and simple contract of service, regulating, circumscribing and governing the State relationship.................." The Full Bench summarized the following legal propositions:"(1) If a particular society can, be characterized as a "State within the meaning of Article 12 of the Constitution...............It would also be an "authority" under Article 226 of the Constitution, In such a situation the order passed by the society against its employees in violation of the bye- laws, can be corrected by way of a writ petition...................

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

(2) Even if a society cannot be characterized as a 'State..........even so a writ would sic against it to enforce a statutory public duty which an employee is entitled to enforce against the society..................What is material is the nature of the statutory duty placed upon it, and the Court, will enforce such statutory public duty........................ (3) The bye-laws made by a co-operative society registered under the......................Co-operative Societies Act do not have the force of law. They are in the nature of a contract, the terms of contract between the society and its employees or between the society and its members, as the case may be. Hence, where a society cannot be characterized as a 'State', the service conditions of its employees, governed by bye-laws, cannot be enforced through a writ petition." 16. A Full Bench of this Court in Aley Ahmad Abidi v. District Inspector of Schools, Allahabad MANU/UP/0141/1977, placed reliance upon the judgment of the Supreme Court in Praga Tools Corporation v. O.V. Imannual MANU/SC/0327/1969, wherein it has been held that a writ of mandamus can be issued to a person requiring him to do a particular thing which appertains to his office and is in the nature of his public duty. The Court came to the conclusion that unless there is legal obligation or a duty imposed by a statute, the violation of the same shall not render the person amenable to writ jurisdiction. 17. In Chakradhar Patel v. Samasingha Service Co-operative Society Limited MANU/OR/0015/1982, the Orissa High Court held that the termination of the service of an employee of a society cannot be challenged in writ jurisdiction. While deciding that case, reliance was placed on the judgment of the Supreme Court in Executive Committee of Vaish Dgree College, Shamli v. Laxmi Narain MANU/SC/0052/1979 : AIR 1976 SC 888. 18. Similarly, a Full Bench of Kerala High Court in P. Bhaskaran v. Additional Secretary, Agricultural (Co-operation) Department MANU/KE/0014/1988, held that the co-operative societies are not the creation of the Co-operative Societies Act and they are not statutory bodies. They are merely functioning in accordance with the provisions of the Act. The institutions would have legal existence, even if the Co-operative Societies Act was not in force. There is no deep and pervasive State control, the management is under the effective control of a committee elected by the members of the societies, and thus such societies are not amenable to the writ jurisdiction. 19. A similar view has been taken by the Full Bench of Madhya Pradesh High Court in Ram Swamp Gupta v. Madhya Pradesh State Co-operative Marketing Federation Ltd. MANU/MP/0039/1976. However, it was held that if there is violation of any statutory provision or rule, a writ can be issued in an appropriate case. 20. In Rajasthan State Road Transport Corporation v. Krishnakanth MANU/SC/0786/1995, the Supreme Court has categorically held that where the dispute arises from the general Jaw of contract, i.e. where the reliefs are claimed on the basis of the general law of contract the appropriate forum may be a Civil Court and the appropriate remedy would be a civil suit. 21. In Deepak Kumar Biswas v. Director of Public Instructions & others MANU/SC/0621/1987, the Supreme Court held that even if an education institution receives financial aid from the Government, it would not necessarily be a statutory body because it has not been created by any statute and its existence is not dependent upon any statutory provision. 22. In Shri Anadi Sadguru Shree Muktajee Vandasji Swami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V.R. Rudani and Ors. MANU/SC/0028/1989, the Apex Court held that the powers of the Writ Court are not confined to statutory authorities and insrumentalities of the State, rather it can be issued to any other person or authorities performing public duties. That was a. case where a public trust was running a college and it was directed to pay the revised pay scale to its teachers, as imparting education was held to be performing a public function.

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

23. In Ganapathi National Middle School v. M. Durai Kannan (dead)by learned Counsel for the respondents and Ors. MANU/SC/0723/1996, the Supreme Court held that as the aided private educational institution impart training on behalf of the State, they can be held to be an agency or instrumentality of the State, and therefore if the land is acquired for their purpose on behalf of the State, the same can be held to be a public purpose. 24. In Sukhdeo Singh v. Bhagat Ram Sardar Singh Raghuwansi MANU/SC/0667/1975, the Supreme Court examined a case wherein the service regulations framed by a statutory corporation were found having the force of law. The Supreme Court held that statutory Corporations, like ONGC, LIC and IFFCO under different statutes, are other authorities within the meaning of Article 12 of the Constitution and in case a corporation is owned, managed and could be dissolved by the Government was under complete control of the Government and performing public or statutory duties for the benefit of the public and not private profit, it would amount to acting as an agency of the Government. 25. In Steel Authority of India Ltd v. Shri Ambika Mills Ltd. and Ors. MANU/SC/0857/1998, the Court held that SAII was a department or agency of the Union of India for the reason that the Government of India owned only some of the share capital. 26. In Biman Krishna Bose v. United India Assurance Company Ltd. and Ors. MANU/SC/0948/2001, the Apex Court held that in order to maintain a writ petition against a Company/Association/Society, it is necessary to determine as to whether it falls within the ambit of State authorities and for that purpose, the test is whether it has the trappings of the State. In a case where a Government company had been conferred the right and privilege to carry on business activities to the complete exclusion of others, the Court held that the Company would have the trappings of the State. 27. In Ramanna v. International Airport Authority (supra), the Supreme Court laid down the tests for determining as to when a Corporation can be said to be an instrumentality/agency of the Government. The Court held (vide Paragraphs 14 to 19) that where "the entire share capital of the Corporation is held by the Government or the financial assistance of the State is so much as to meet almost the entire expenditure of the Corporation or the Corporation enjoys monopoly status which is State conferred or State protected or there is existence of deep and pervasive control by the State or the functions of the authority/Corporation are of public importance and closely related to Governmental function or a department of the Government itself has been transferred to a Corporation, then it may fall within the definition of "authority" under Article 12 of the Constitution. 28. In Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers Association MANU/SC/0003/2002, the Supreme Court re-examined the issue and held that if a company is owned by the Government and the State Government has deep and pervasive control over its day to day administration and it is entrusted with a public duty its Directors are nominees of the State Government, or of the financial institutions, or are elected by the concurrence of the State Government, it has to be held to be an authority within the meaning of Article 12 of the Constitution, though it may be a company registered under the provisions of the Companies Act, 1956. 29. Thus, in view of the above, the legal position may be summed up that before an authority body/association is held to be amenable to writ jurisdiction, the Court must record a finding that it can be held to be a State/State agency/instrumentality applying the aforesaid tests laid down by judicial pronouncements i.e. the State must be having pervasive and deep control over its administration: It may be run entirely or substantially on the financial aid of the State, its officers should be appointed by the State or State agencies., it must perform a public duty or it may have a monopolistic character, like that of a State wherein it can be held that the body has the trappings of the State. 30. It follows from the above decisions that a co-operative society may or may not be 'State' under Article 12 of the Constitution, and it has to be examined in respect of each society whether it satisfies the tests laid down by the Supreme Court in the aforesaid decisions to be

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

State under Article 12. 31. Under the U.P. Cooperative Societies Act, 1965 a society registered under that Act becomes a distinct legal entity vide Section 9 of the Act. 32. Section 9 states: "The registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal, and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary' for the purpose for which it was constituted." 33. Under Section 12 of the Act a society can amend its bye-laws. Chapter III of the said Act mention who can be a member of a cooperative society and what are his rights and liabilities. Under Section '26 a person may be admitted as a member of cooperative society subject to the provisions of the Act, rules and the bye-laws. Section 27 states that a cooperative society may by a resolution remove or expel a person from the membership. 34. Section 28 of the Act states: "Subject to the provisions of this Act and the Rules, the final authority of a cooperative society shall vest in the general body of its members in general meeting: Provided that, in such circumstances as may be prescribed, [the final authority shall vest in the delegates of such .members elected in the manner prescribed], and assembled in general meeting and in such case all references in this Act, the rules or the bye-laws to the general body and general meeting shall be deemed to be references to the body consisting of such delegates of members and to the general meeting of such delegates." 35. This Section 28 clearly implies that a cooperative society registered under the Act is autonomous in its function. Under Section 29 the management of cooperative society vest in a Committee of Management constituted in accordance with the Act, Rules and bye-laws. No doubt there is a provision for appointing an administrator under Section 29 (5) and Section 35 (3) of the Act, but that will not imply that the society is State under Article 12 of the Constitution. 36. Under Section 31-A every apex society shall have a Managing Director instead of a Secretary, who shall be a Government servant not below the rank of Class I officer nominated by the State Government However, in our opinion, merely because the Managing Director of the apex society (U.P. Cooperative Sugar Factory Federation Limited) is a Government servant that does not mean that all the cooperative sugar societies are State within Article 12 of the Constitution, Similarly, merely because under Section 34 the State Government can nominate up to two Government servants on the Committee of Management and merely because the State Government in the case of society engaged in the production of sugar can in certain circumstances nominate the Chairman of the Committee of Management who shall be a Government that would also not make the society State under Article 12 of the Constitution. A society has several members and not merely a Chairman and such other members are mostly private persons. State financial aid to a cooperative society also in our opinion does not make the society State within Article 12 of the Constitution unless the financial aid is to such an extent to result in deep and pervasive control of the State Government over the society. In the present case no details have been given, about the extent of this State financial aid and hence we cannot accept the contention of the learned Counsel for the respondents that merely because some financial aid is taken from the Government the society becomes State under Article 12 of the Constitution.

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

37. From the above facts it is evident that the societies in question enjoy considerable autonomy in their functioning. Admission, expulsion or election of members of a society and their respective rights and obligation and functioning fall within the exclusive domain of the society. A society can frame its bye-laws, which do not have any statutory force though they may be binding upon the members. The primary function of a society is to carry on the business manufacture and sale of sugar, which in our opinion is a purely business function and not a function of the State. Merely because a society can be superseded under Section 35 and an administrator appointed that in our opinion itself would not make the society amenable to writ jurisdiction, through no doubt the order appointing an administrator can be challenged in writ jurisdiction. 38. The object of the society is to promote the interest of its members vide Section 4 of the Act. A society is a body corporate having perpetual succession and a common seal with power to hold property to enter into contracts, institute and defend legal proceeding and to do all things necessary for the purpose for which it was constituted vide Section 9. Final authority in the society vests in the general body of the society vide Section 38. 39. Even if the Government has subscribed to some of the share capital of the society the status of the Government is of creditory or share holder and not of a sovereign vide Jalaun Producers Cooperative Union Limited v. State of UP. 1979 ALJ 244. The State may subscribe to the share capital of the society with its consent with entitlement to similar dividend vide Section 44. The liability of the State is limited to the shares purchased by it vide Section 48. Section 58 deals with the disposal of net profits of the society. 40. In Radha Charm Sharma v. U.P. Cooperative Federation AlR 1988 All 342. a Full Bench of this Court held that the U.P. Cooperative Federation was not any authority under Article 12 of the Constitution. Thus even the apex society of which the societies in question are members was not held to be State within Article 12 of the Constitution. It follows that the societies in question can even less be held to be State under Article 12. 41. In Chander Mohan Khanna v. N.C.E.R.T., (1991) 4 SCC 578, the Supreme Court held thatNCERT is not State under Article 12 of the Constitution and the Government control is only for proper utilization of funds . Hence the writ petition was not maintainable. Similarly in Heavy Engineering Mazdoor Union v. State of Bihar MANU/SC/0309/1969, the Supreme Court held that a company incorporated derives its powers and function from arid by virtue of its Memorandum and Articles of Association. The company was a commercial organization and can not be held to be the State under Article 12. 42. In Tekraj Vasandi v. Union of India AIR 1988 SC 496, it was held that its institute of constitutional and parliamentary studies which was registered under the Societies Registration Act was not an instrumentality of the State to come within the purview of Article 12 of the Constitution, although the financial contribution of the Government was substantial. 43. Similarly, even if some of the members of the society were appointed by the State Government that would not change the legal status of the society. This view stand fortified by the Division Bench judgment of the Kerela High Court in Satish Nayak v. Cochin Stock Exchange Limited, Enrakulam and Ors. MANU/KE/0064/1995, wherein a similar dispute arose and the Court held that the respondent was a company registered under the Companies Act and not amenable to writ jurisdiction .While deciding the said case, the High Court referred to and relied upon a large number of judgments of the Hon'ble Apex Court and various High Courts and distinguished the judgment of the Bombay High Court in Sejal Rikeen Dalal v. Stock Exchange, Bombay AIR 1991 Bom 36, wherein the view had been taken that a Stock Exchange is amenable to the jurisdiction of High Court under Article 226 of the Constitution. That was a case arising out of the decision of the stock exchange rejecting the application for transfer of members. While deciding the said case the Bombay High Court placed reliance on the judgment of Shri Anandi Mukta Sadguru (supra) and held that the stock exchange was established to assist, regulate and control dealing in securities and to ensure various dealings and therefore, these were the objects, of public interests and therefore, writ was maintainable; We agree with the view of the Kerala High Court and we respectfully disagree with that of the Bombay High

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

Court. 44. Similarly in R. Jagadeesh Kumar v. P. Srinivasan and Ors. AIR 1995 Kar 420, the Karnataka High Court held that a writ against the stock exchange would not lie for the reason that it does not discharge any public duty/function. The Board only has a duty towards its members and not to the public at large. It is merely a company registered under the Companies Act and the admission or expulsion of its members is to be governed by the resolutions of society. The provisions of the Act, 1956 are only to the extent that the authority concerned can make provisions for carrying on effective functioning of the stock exchange, without taking away the powers of the stock exchange in the matter of internal regulation at all. 45. The Karnataka High Court, while deciding the case also considered the case of the Bombay High Court in Mrs. Sejal Rikeen Dalai (supra); but did not agree that a stock exchange would be a public authority as it was not discharging any public duty. 46. A Division Bench of this Court while deciding Writ Petition No., 1043 of 1998, Smt. Veena Ojha v. President, U.P. Stock Exchange Association Ltd., Kanpur and Ors., decided on 15.1.1998, after considering the judgments of Karnataka, Kerala and Bombay High Court referred to above held as under: "There is force in the objections raised by the respondents that in such a case jurisdiction of this Court under Article 226 of the Constitution of India cannot be invoked." 47. Ordinarily on writ lies against a private body except a writ of habeas corpus vide Praga Tools Corp. v. Imanuel MANU/SC/0327/1969; CM. Khanna v. NCERT MANU/SC/0010/1992; Ganga Saran v. Civil Judge 1991 (1) AWC 213, Teh Raj Vasands v. Union of India MANU/SC/0154/1987, etc. There are no doubt certain exceptions to this rule, but that is the ordinary rule. 48. Article 226(l) of the Constitution states: "Notwithstanding anything in Article 32 every High Court shall have power throughout the territories in relation to which it exercise jurisdiction to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari or any of them, for the enforcement of any of the rights conferred by Part II and for any other perpose." The language of Article 226 is no doubt very wide. It states that a writ can be issued to any person or authority and for enforcement of right conferred by Part III and for any other purpose. However, the aforesaid language in Article 226 cannot be interpreted and understood literally. If we take the language literally it will follow that a writ can be issued to any private person or to settle even private disputes. If we interpret the words 'for any other purpose' literally it will mean that a writ can be issued for any purpose whatsoever, e.g. for deciding private disputes, for grant of divorce, succession certificate etc. Similarly, if we interpret the words "to any person" literally it will mean that a writ can even be issued to private persons. However, this would hot be the correct meaning in view of various decisions of the Supreme Court and of this Court vide Smt. Biran Devi v. Sechu Lal MANU/UP/0455/2001. Gajendra Kumar Sharma v. Genral Manager MANU/UP/1056/1999, Carlsbad Co. v. Jagtiani MANU/WB/0321/1950, etc. 49. The correct interpretation of the aforesaid words in Article 226 is that a writ can ordinarily be issued to a person to whom writs were traditionally issued by British Courts on well established principles. Similarly, the words, "for any other purpose" have to be interpreted in the narrower sense to mean that a writ can be issued for the purpose for which writs were traditionally issued by British Courts on well established principles vide Workmen of Pepsico v. Labour Commissioner MANU/UP/0374/2000. The British Courts did not ordinarily issue writs to

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

private persons except a writ of habeas corpus. 50. No doubt the power to issue writs under Article 226 are wider that those of the British Courts vide Dwarika Nath v. I.T.O. MANU/SC/0166/1965, but they are not so wide as to permit Judges to do anything they like in writ jurisdiction. There are well settled principles governing the exercise of power under Article 226 as laid down in various decisions of the Supreme Court, and these principles have laid down several limitations to the exercise of such power. For instance, ordinarily a writ will not be issued to a private body except a writ of habeas corpus. 51. Sri Ashok Khare, and Shri Aditya Kumar Singh learned Counsel for the respondents in some of the cases submitted that the writ petition in this case was maintainable because disciplinary action against the respondents has been taken in pursuance of the letters of the Managing Director, U.P. Cooperative Sugar Factories Federation Limited, U.P. dated 10.8.1998 and 13.8.1998 addressed to the General Managers of all the Cooperative Sugar Factories in the State. The letter dated 10.8.1998 refers to the circular of the Federation dated 5.8.1998 directing strong action to be taken against employees of the Cooperative Sugar Factories, who were indulging in disruptive activities. 52. We cannot accept this submission. Even assuming that the action against the respondents was taken in pursuance of these letters and circular, a cooperative society is autonomous in its functioning and the aforesaid letters and circular can only be deemed to be advice to the society. Moreover, even without these letters and circular action had to be taken against those who/indulged in disruptive activities, as no organization can function without discipline. 53. In the writ petition there is no mention in any Paragraph giving details as to how it can be said that the Society is State under Article 12 of the Constitution. In fact it is admitted in Paragraph 3 that the society is neither a statutory corporation nor has been created or established by any statute. It is also averred in Paragraph 3 of the writ petition that the society is not engaged in discharging any service whatsoever for the public at large. The society has been constituted as a cooperative sugar factory and registered as a cooperative society under the U.P. Cooperative Societies Act. 1965. It is engaged in the manufacture of sugar. It is alleged in Paragraph 5 of the writ petition that the corpus of the cooperative society has been contributed by the individual members who hold specified shares in the cooperative society. No doubt an averment has been made in Paragraph 5 of the writ petition that according to the information of the petitioner the State Government is also one of the subscribers and its share holding constitutes the majority share holding. However, this is only a bald assertion without giving any details. 54. In the absence of any details in the petition mentioning clearly what exactly is the kind of deep and pervasive State control over the society, what exactly is the shareholding of the Government, etc. it is not possible for us on the pleadings to hold that the cooperative societies of the respondents are State under Article 12 of the Constitution. 55. However, even assuming that the societies were State under Article 12 of the Constitution we are of the opinion that the writ petitions should have been dismissed on the ground of alternative remedy. After all, writ jurisdiction is discretionary jurisdiction, and one of the settled principles is that ordinarily a writ petition should not be entertained if there is an alternative remedy. 56. The respondents were charge-sheeted for going on illegal strike and for committing other misconducts. After enquiry their services were terminated. 57. In our opinion if the writ petitioners were aggrieved their remedy was to raise an industrial dispute under the Industrial Disputes Act and not by filing a writ petition. 58. In Premier Automobiles Ltd. v. Kamlekar Shantaram Wadke MANU/SC/0369/1975, the Supreme Court held that the Industrial Disputes Act is a self contained Code and provides the remedy to an aggrieved workman. This view was followed by the Supreme Court in a very

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli

recent decision in U.P. State Bridge Corporation Ltd. v. U.P. Rajya Setu Nigam S. Karmchari Sangh MANU/SC/0130/2004. In that decision the Supreme Court observed: "We are of the firm opinion that the High Court erred in entertaining the writ petition of the respondent union at all The dispute was an industrial dispute both within the meaning of Industrial Disputes Act, 1947 as well as U.P. Industrial Disputes Act. 1947. The rights and obligations sought to be enforced by the respondent union in the writ petition are those created by the Industrial Disputes Act." 59. Thus the writ petitioners have a clear alternative remedy by way of raising industrial disputes, and this Court should not have entertained the writ petition at all and should have dismissed it on the ground of alternative remedy. 60. For the reasons given above these appeals are allowed. The impugned judgment of the learned Single Judge is set aside.

Manupatra Information Solutions Pvt. Ltd.

2013-02-08

Source : www.manupatra.com Indian Institute of Management Tiruchirappalli