Ajay Hasia & Ors. v. Khalid Mujib Sehravadi & Ors.

CITATION1981 AIR 487
COURTSupreme Court of India
JUDGES/CORAMChief Justice Y.V. Chandrachud, Justice P.N. Bhagwati, Justice V.R. Krishna Iyer, Justice Syed MurtazaFazalali and Justice A.D. Koshal
DATE OF JUDGEMENT13.11.1980

Introduction

The writ petitions under Article 32 of the Constitution challenged the validity of the admissions made to the Regional Engineering College, Srinagar for the academic year 1979-80. The Regional Engineering College, Srinagar (hereinafter referred to as the College) was one of the fifteen Engineering Colleges in the country sponsored by the Government of India. The College was established and its administration and management were carried on by a Society registered under the Jammu and Kashmir Registration of Societies Act, 1898. The Memorandum of Association of the Society in Clause 3 set out the objects for which the Society was incorporated and they included amongst other things establishment of the college with a view to providing instruction and research in such branches of engineering and technology as the college may think fit and for the advancement of learning and knowledge in such branches.

Facts

The facts of the case are as follows: Petitioners applied for admission to the B.E. Course of engineering and appeared in the written test and viva voce test. When the admissions were announced, the petitioners found that though they had obtained very good marks in the qualifying examination, they had not been able to secure admission to the college because the marks awarded to them at the viva voce examination were very low and candidates who had much less marks at the qualifying examination, had succeeded in obtaining very high marks at the viva voce examination and thereby managed to secure admission in preference to the petitioners.

Petitioners filed writ petition challenging the validity of the admissions made to the college contending that the society adopted an arbitrary procedure for selecting candidates for admission to the college, which resulted in denial of equality to the petitioners in the matter of admission and was violative of Article 14 of the Constitution of India. Respondent contended that the impugned college was run by society which was not a corporation created by a statute but was a society registered under 1898 Act and it was therefore not an ‘authority’ within the meaning of Article 12 of the Constitution and no writ petition could be maintained against it.

Also Read  State of Orissa v. Ram Bahadur Thapa

Issues

The main issue in the case was: Whether or not a society registered under the Societies Registration Act was an ‘authority’ falling within definition of ‘State’ in Article 12 of the Constitution and procedure adopted by society for selecting candidates for admission to the college was arbitrary.

Summary of court decision and judgment

The Hon’ble Supreme Court held that with regard to the Memorandum of Association and the Rules of the Society, the respondent college was a State within the meaning of Article 12 of the Constitution. The composition of the Society was dominated by the representatives appointed by the Central Government and the Governments of Jammu & Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Government. The money required for running the college were provided entirely by the Central Government and the Government of Jammu & Kashmir and even if any other money was to be received by the Society, it could be done only with the approval of the State and the Central Governments. The Rules to be made by the Society were also required to have the prior approval of the State and the Central Governments. The State Government and by reason of the provision for approval, the Central Government also, had full control of the working of the Society. Hence, the Society was an instrumentality or agency of the State and the Central Governments and it was an ‘authority’ within the meaning of Article 12 of the Constitution.

Analysis

As far as India is concerned, the genesis of the emergence of corporations as instrumentalities or agencies of Government is to be found in the Government of India Resolution on Industrial Policy dated 6th April, 1948 where it was stated inter alia that “management of State enterprises will as a rule be through the medium of public corporation under the statutory control of the Central Government who will assume such powers as may be necessary to ensure this.” It was in pursuance of the policy envisaged in this and subsequent resolutions on Industrial policy that corporations were created by Government for setting up and management of public enterprises and carrying out other public functions. Ordinarily these functions could have been carried out by Government departmentally through its service personnel but the instrumentality or agency of the corporation was resorted to in these cases having regard to the nature of the task to be performed. The corporations acting as instrumentality or agency of Government would obviously be subject to the same limitations in the field of constitutional and administrative law as Government itself, though in the eye of the law, they would be distinct and independent legal entities. If Government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through instrumentality or agency of corporations should equally be subject to the same limitations.

Also Read  Glenmark Pharmaceuticals Ltd. v. Curetech Skincare & Ors.

By way of the present case, the Supreme Court laid down the following tests to adjudge whether a body is an instrumentality of the government or not:

  • If the entire share capital of the body is held by the government, it goes a long way towards indicating that the body is an instrumentality of the government.
  • Where the financial assistance given by the government is so large as to meet almost entire expenditure of the body, it may indicate that the body is impregnated with governmental character.
  • It is relevant factor-if the body enjoys monopoly status which is conferred or protected by the state.
  • Existence of deep and pervasive state control may afford an indication that the body is a state instrumentality.
  • If the functions performed by the body are of public importance and closely related to governmental functions, it is a relevant factor to treat the body as an instrumentality of the government.

Conclusion

It is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government Company or a company formed under the Companies Act, 1956 or it may be a society registered under the Societies Registration Act, 1860 or any other similar statute.

Whatever be its genetic origin, it would be an “authority” within the meaning of Article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in the light of the relevant factors. The concept of instrumentality or agency of the Government is not limited to a corporation created by a statute but is equally applicable to a company or society and in a given case it would have to be decided, on a consideration of the relevant factors, whether the company or society is an instrumentality or agency of the Government so as to come within the meaning of the expression “authority” in Article 12.

Also Read  Cosmosteels Private Ltd. v. Jairam Das Gupta & Ors.

Leave a comment