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PETITIONER: CHANDER MOHAN KHANNA

       Vs.

RESPONDENT: NATIONAL COUNCIL OF EDUCATIONAL RESEARCH ANDTRAINING AND ORS

DATE OF JUDGMENT17/09/1991

BENCH: SHETTY, K.J. (J) BENCH: SHETTY, K.J. (J) YOGESHWAR DAYAL (J)

CITATION:  1992 AIR   76            1991 SCR  Supl. (1) 165  1991 SCC  (4) 578        JT 1991 (4)   233  1991 SCALE  (2)773

ACT: Constitution of India:         Art 12-- NCERT whether "State"-- Indicative  indicia and determinative factors -- What are.

HEADNOTE:     In a writ petition challenging the termination of  serv- ices  of the appellant, who was an employee in the  National Council of Educational Research & Training (NCERT), the High Court  upheld the preliminary objection that the writ  peti- tion was not maintainable as NCERT was not an instrumentali- ty or authority within the meaning of Art. 12 of the Consti- tution. Aggrieved, the appellant filed the appeal by special leave to this Court.     On  the  question whether NCERT is  "State"  as  defined under Article 12 of the Constitution, Dismissing the appeal, the Court,     HELD:  1.1. Like all societies, having a  Memorandum  of Association and Rules for internal management, the  National Council  of Educational Research and Training is  a  society registered under the Societies Registration Act. [168 E]     1.2. Having regard to the object, functions, activities, sources  of  funds of NCERT, freedom of application  of  its income and property towards the promotion of its  objectives and implementation of programmes, confinement of  Government control only to proper utilisation of the grant, and largely being  an autonomous body, the institution does not  satisfy the requirements of "State" under Article 12 of the  Consti- tution. [169 G-H; 170A-C; 171 C-D] Tekraj Vasandhi alias K.L. Basandhi v. Union of India [1988] 2 SCR 260, Sabhjit Tewari v. Union of India and Ors., [1975] 1 SCC 485, referred to. 166     Ajay Hasia v. Khalid Mujib Sehravardhi, [1981] 1 SCC 722 P.K.  Ramachandra Iyer v. Union of India, [1984] 2  SCC  141 distinguished.     2. Article 12 should not be stretched so as to bring  in every autonomous body which has some nexus with the  Govern- ment  within  the sweep of the expression  "State".  A  wide enlargement of the meaning must be tempered by a wise  limi- tation.  It  must not be lost sight of that  in  the  modern

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concept of Welfare State; independent institution,  corpora- tion and agency are generally subject to State control.  The State  control does not render such bodies as "State"  under Article 12.     The  State control, however vast and pervasive,  is  not determinative.  The financial contribution by the  State  is also not conclusive. [168 A-B]     3.  The powers, functions, finances and control  of  the government are some of the indicating factors to answer  the question whether a body is "State" or not. These are  merely indicative indicia and are by no means conclusive or clinch- ing  in any case. Each case should be handled with care  and caution. [167 E-G]     Sukhdev  Singh  v. Bhagat Ram, [1975] 1  SCC  421;  R.D. Shetty v. International Airport Authority, [1979]3 SCC  489, and Sore Prakash Rekhi v. Union of India, [1981] 1 SCC  449, referred to.     4.1 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". [168 B-C]     4.2. If the Government operates behind a corporate veil, carrying  out governmental activity and  governmental  func- tions of vital public importance, there may be little diffi- culty in identifying the body as "State", within the meaning of Article 12 of the Constitution. [168 C]       Central  Inland Water Transport Corporation v.  Brojo- nath  Gangoli, [1996] 3 SCC 156, Tekraj Vasandhi alias  K.L. Basandhi v. Union. of India, [1988] 2 SCR 260, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1690 of 1981. 167     From the Judgment and order dated 10.4.1980 of the Delhi High Court in Civil Writ No. 450 of 1971. H.K. Puri for the Appellant. The Judgment of the Court was delivered by     K. JAGANNATHA SHETTY, J. Whether the National Council of Educational  Research  and Training (NCERT)  is  "State"  as defined  under Article 12 of the Constitution ? This is  the only  question that calls for decision in this  appeal.  The appellant  was an employee of the NCERT. This services  were terminated by the Secretary of NCERT. Challenging the termi- nation  he moved the Delhi High Court under Article  226  of the Constitution.The NCERT raised a preliminary objection as to  the maintainability of the writ petition. The  objection was that the NCERT is not amenable to the writ  jurisdiction of  the High Court as it is not an instrumentality or  other authority within the meaning of Article 12 of the  Constitu- tion.  The High Court has upheld the  preliminary  objection and  dismissed the writ petition. The decision of  the  High Court has been challenged in this appeal.     There  are  only general principles but  not  exhaustive test  to determine whether a body is an  instrumentality  or agency of the Government. Even in general principles,  there is  no  cut and dried formula which  would  provide  correct division of bodies into those which are instrumentalities or agencies  of  the Government and those which  are  not.  The powers,  functions, finances and control of  the  Government are  some of the indicating factors to answer  the  question whether  a body is "State" or not. Each case should be  han-

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dled  with care and caution. Where the financial  assistance from the State is so much as to meet almost entire  expendi- ture of the institution, or the share capital of the  corpo- ration is completely held by the Government, it would afford some  indication of the body being impregnated with  govern- mental  character.  It may be a relevant factor if  the  in- stitution or the corporation enjoys monopoly status which is State  conferred or State protected. Existence of  deep  and pervasive  State  control may afford an indication.  If  the functions  of the institution are of public  importance  and related to governmental functions, it would also be a  rele- vant factor. These are merely indicative indicia and are  by no  means  conclusive or clinching in any ease  See  Sukhdev Singh v. Bhagat Ram, [1975] 1 SCC 421; R.D. Shetty v. Inter- national  Airport Authority, [1979]3 SCC 489; Ajay Hasia  v. Khalid  Mujib Sehravardhi, [1981]1 SCC 722 and  Som  Prakash Rekhi v. Union of India, [1981]1 SCC 449. 168     Article  12  should not be stretched so as to  bring  in every autonomous body which has some nexus with the  Govern- ment within the sweep of expression "State". A wide enlarge- ment  of the meaning must be tempered by a wise  limitation. It  must not be lost sight of that in the modern concept  of Welfare  State;  independent  institution,  corporation  and agency  are  generally subject to State control.  The  State control does not render such bodies as "State" under Article 12.  The State control, however, 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  Govern- ment operates behind a corporate veil, carrying out  govern- mental  activity and governmental functions of vital  public importance,  there may be little difficulty  in  identifying the body as "State" within the meaning of Article 12 of  the Constitution. See: P.K. Ramachandra lyer v. Union of  India, [1984]2  SCC 141 Central Inland Water Transport  Corporation v.  Brojonath Gangoli, [1986] 3 SCC 156 and Tekraj  Vasandhi alias K.L. Basandhi v. Union of India, [1988]2 SCR 260.     The  NCERT is a society registered under  the  Societies Registration Act. Like all societies, it has a Memorandum of Association. It has Rules for internal management. The  High Court has elaborately examined the Memorandum of Association and the rules of the NCERT. The relevant part of the discus- sion by the High Court is as follows:               "The  NCERT  is governed by  a  Memorandum  of               Association subscribed to by seven officers of               the  Government  of India on  6.6.1961.  Under               clause  3.1 of the Memorandum  of  Association               the  object  of the Council is to  assist  and               advise  the Ministry of Education  and  Social               Welfare in the implementation of its  policies               and major programmes in the field of education               particularly  school education.  Under  clause               3.2 the Council is empowered for the  realisa-               tion  of  the above  objectives  to  undertake               several  kinds  of programmes  and  activities               which include coordination or research, exten-               sion  services and training, dissemination  of               improved educational techniques and  practices               in   schools,  collaboration  in   educational               programmes, distribution of ideas and informa-               tion,  preparation and publication  of  books,

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             materials,  periodicals and  other  literature               and  allied  activities. Under  clause  5  the               income  and property of the Council is  to  be               applied towards the promotion of its ob-               169               jects  and  cannot be disposed of  by  way  of               dividends,  bonus etc. But under this  clause,               the  Council is free to apply the  income  and               property towards its objectives in such manner               as  it  may think fit. It is  subject  to  the               limitations placed by the Government of  India               in this regard only in respect of the expendi-               ture  of grants made by the Government.  Under               clause 6  the Government of India could review               the work and progress of the Council and  take               appropriate  action  to  give  effect  to  the               reports  received on enquiries.  In  addition,               the Government could at any time issue  direc-               tions  to the Council on important matters  of               policy and programmes." Rule 3 of the Rules of               the  Council provides for Constitution of  the               Council  which  consists  mainly  of   various               Government  officials  but also  includes  the               Chairman of the University Grants  Commission,               four  Vice Chancellors and a number  of  nomi-               nees,  four from school teachers  and  several               others.  Rule 7 enables the Government to  fix               the  period of appointment of the members  and               to extend it from time to time. The  council’s               affairs are conducted by the Executive Commit-               tee whose constitution is outlined in Rule 23.               This includes various Government servants  but               it also includes four educationists and  three               Professors and Heads of Departments who may be               nominated  by the President. Rule 37  provides               that if there is any difference of opinion the               view of the majority will prevail subject to a               veto  which could be exercised by the  Govern-               ment of India within a month. It also  enables               the  President to refer any question  for  the               decision  of the Government. Rule  40  enables               the  Executive  Committee to frame  and  amend               Regulations  not inconsistent with the  rules.               Rule  42 empowers the Executive  Committee  to               enter  into  arrangements.  with   Government,               public or private organisations or individuals               in furtherance of its objectives and implemen-               tation  of  its programmes. Rule  57  provides               that the funds of the council shall consist of               (i) grants made by Government; (ii)  contribu-               tion from other sources; (iii) Income from the               assets  of the Council; and (iv)  Receipts  of               the Council from other sources."     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 , 170 research  extension services and training, dissemination  of improved educational techniques, collaboration in the educa- tional programmes. It also undertakes preparation and publi- cation  of books, materials, periodicals and  other  litera-

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ture. 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  organisa- tions  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  promo- tion of its objectives and implementation of the programmes. The Government control is confined only to the proper utili- sation of the grant. The NCERT is thus largely an autonomous body.     Almost  a similar case was considered by this  Court  in Tekraj  Vasandhi  alias K.L. Basandhi v.  Union  of   India, [1988]2 SCR 260. This Court was required to determine wheth- er the Institute of Constitutional and Parliamentary Studies (ICPS) was State under Article 12. The ICPS was a registered society financed mostly by the Central Government and partly by gifts and donations from Indian and foreign agencies. The first  President of the society was the then Speaker of  the Lok  Sabha. Out of the five vice- presidents three were  the then  central ministers; the other two were the  then  Chief Justice  of India and the Attorney General. The  objects  of the  society were to provide for constitutional and  parlia- mentary  studies,  promotion of research  in  constitutional law, setting up of legislative research and reference  serv- ice for the benefit of legislators, organisation of training programmes  in matters of parliamentary interest and  impor- tance  and  publication of a journal. The Court  found  that ICPS was born as a voluntary organisation. It found  further that though the annual financial contribution from the State was  substantial,  it was entitled to receive aid  from  the public  and  in  fact  received  contributions  from   other sources.  Its  objects were not  governmental  business.  As regards the argument that the government exercised pervasive control over ICPS, the Court said:               "In  a Welfare State  .................   Gov-               ernmental control is very pervasive and touch-               es    all    aspects    of    social    exist-               ence   ...........   A broad  picture  of  the               matter  has to be taken and a discerning  mind               has  to be applied keeping the  realities  and               human  experiences  in view so as to  reach  a               reasonable conclusion." In the light of all these factors it has held that ICPS  was not "State". 171     In the present case, the High Court has relied upon  the Constitution Bench decision of this Court in Sabhjit  Tewari v.  Union of India and Ors., [1975] 1 SCC 485. There it  was held that the Council of Scientific and Industrial  Research (CSIR),  which was sponsored and controlled by  the  Central Government  and registered under the Societies  Registration Act  was not "State" within the meaning of Article  12.  But this decision has been distinguished and watered down in the subsequent decisions particularly in Ajay Hasia and Ramchan- dra lyer cases (supra).     Counsel  for  the  appellant strongly  relied  upon  the decision in P.K Ramchandra lyer case   where this Court held that  Indian  Council for Agricultural Research  (ICAR)  was "State" under Article 12. But it may be noted that ICAR  was originally an attached office of the Government of India and its  position  was not altered when it was registered  as  a

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society. That case, therefore is clearly distinguishable.     In  our opinion, the case on hand, having regard to  the indications to which we have called attention earlier,  does not satisfy the requirements of "State" under Article 12  of the  Constitution. We, therefore, agree with the  conclusion of  the  High Court and dismiss the appeal. In  the  circum- stances of the case, we make no order as to costs.  R.P.                                         Appeal    dis- missed. 172