2002 (4) TMI 890 - SC - Indian Laws

CSIR's governance and government control under Article 12 challenged, mandamus refused after finding it not 'State'

The dominant issue was whether the Council for Scientific and Industrial Research (CSIR) qualifies as 'State' under Art. 12, so as to attract a writ of ... State within the meaning of Article 12 - instrumentality or agency of the Government - tests in Ajay Hasia / Ramana for identifying State action - piercing corporate veil / brooding presence of Government - overruling of precedent - effect of notification under Administrative Tribunals Act, 1985State within the meaning of Article 12 - tests in Ajay Hasia / Ramana for identifying State action - instrumentality or agency of the Government - Whether the Council of Scientific and Industrial Research (CSIR) is 'the State' within the meaning of Article 12 of the Constitution - HELD THAT: - Applying the indicia evolved in Ajay Hasia and Ramana (financial, functional and administrative dominance, deep and pervasive control, public importance of functions, transfer of governmental departments, and cumulative effect of relevant factors), the Court concluded that the definition of 'State' under Article 12 must be applied on the cumulative appraisal of facts and not by formalistic reliance on the mode of incorporation. Having examined CSIR's genesis, objects, composition of governing body, rules, financial dependence on Government, government presence in management, control over bye-laws and expenditure and auditing, and the historical purpose of its creation to carry out national research functions, the majority found that CSIR falls within the enlarged meaning of 'State' under Article 12 and is amenable to writ jurisdiction for enforcement of fundamental rights. The Court emphasized that mere regulatory control or patronage is insufficient; rather the Government's control must be particular and pervasive so as to show that the entity is an instrumentality or agency of the State. On the facts, the majority held that CSIR meets that test and is therefore 'State' under Article 12. [Paras 50, 53, 54, 55, 56]CSIR is 'the State' within the meaning of Article 12.Overruling of precedent - Sabhajit Tewary v. Union of India - Whether the prior five-Judge decision in Sabhajit Tewary should be continued or overruled - HELD THAT: - The majority examined the reasoning and factual basis of Sabhajit Tewary and the subsequent development of jurisprudence (Sukhdev Singh, Ramana, Ajay Hasia, Som Prakash Rekhi and later decisions). It held that Sabhajit Tewary was limited to its facts and that subsequent authoritative decisions had substantially eroded its reasoning. Since Sabhajit Tewary had been shown to be plainly erroneous on the correct application of the tests for Article 12 and produced a denial of fundamental-rights protection in cases where the expanded tests would require inclusion, the majority held that Sabhajit Tewary must be overruled. The Court also noted that a later notification under the Administrative Tribunals Act, 1985 corroborates the factual stance that CSIR is owned and controlled by Government and removes residual doubt. [Paras 59, 60, 61, 63, 64]Sabhajit Tewary is overruled.Effect of notification under Administrative Tribunals Act, 1985 - Legal consequence of the Central Government notification (31.10.1986) under Section 14(2) of the Administrative Tribunals Act, 1985 in relation to CSIR's character - HELD THAT: - The majority held that the 1986 notification, which specified CSIR as a society 'owned and controlled by Government' for the purpose of applicability of the Administrative Tribunals Act, could not have been issued unless CSIR was amenable to writ jurisdiction under Article 12. Reading Article 323A and Section 14 together, the Court concluded that the notification confirms the factual position that CSIR is an entity owned and controlled by Government and therefore reinforces the conclusion that CSIR is amenable to constitutional remedies (and shifts certain service disputes to administrative tribunals). The majority rejected the contention that the notification was merely directory or inconclusive, treating it as a decisive factual pointer supporting their conclusion. [Paras 60, 61, 62, 63]The notification corroborates and decisively supports the conclusion that CSIR is owned and controlled by Government and amenable to Article 12.Remand - Disposition of the appellants' proceedings consequent upon the determination that CSIR is 'State' - HELD THAT: - Having reached the conclusion that CSIR is within Article 12 and that Sabhajit Tewary is overruled, the majority directed that the matter be remitted to the appropriate Bench for adjudication in the light of the present decision. This is a procedural direction to enable the appellants' substantive claims to be considered afresh under the correct constitutional approach. [Paras 64]Matter remitted to the appropriate Bench to be dealt with in the light of the decision.Final Conclusion: By a majority the Court held that the Council of Scientific and Industrial Research (CSIR) is 'the State' within Article 12, overruled the decision in Sabhajit Tewary as confined to its facts and inconsistent with subsequent authoritative tests, treated the 1986 Administrative Tribunals Act notification as corroborative, and remitted the appellants' matter to the appropriate Bench for consideration in light of this conclusion. Issues: (i) Whether the Council of Scientific and Industrial Research (CSIR) is 'the State' within the meaning of Article 12 of the Constitution of India; (ii) Whether the earlier decision in Sabhajit Tewary v. Union of India should be overruled in light of subsequent authorities and the facts relating to CSIR.Analysis: The Court reviewed the constitutional scope of 'the State' in Article 12, the purpose of Part III, and the jurisprudential development from Rajasthan Electricity Board, Sukhdev Singh, Ramana (International Airport Authority), Ajay Hasia and subsequent cases. The analysis applied the established indicia/tests (ownership/financial dependence, monopoly/functional importance, deep and pervasive control, transfer of a government department) and emphasised that the determination depends on the cumulative effect of relevant facts rather than any single rigid test. The majority examined CSIR's origin, objects, management, rules and bylaws, the composition and control of its Governing Body, applicability of Central service rules to its employees, budgetary dependence on Government grants (noting substantial governmental funding and CAG audit/Parliamentary oversight), power of the President of CSIR (Prime Minister ex officio) to review Governing Body decisions, and the 1986 notification under Section 14(2) of the Administrative Tribunals Act. On balance, the majority concluded that CSIR functions as an instrumentality or agency of the Government and falls within the enlarged meaning of 'the State' under Article 12; further, the Court held that Sabhajit Tewary was factually and doctrinally distinguishable and its limited ratio had been eroded by subsequent authorities, and therefore it was open to be overruled insofar as it denied Article 12 coverage to CSIR.Conclusion: The majority holds that CSIR is 'the State' within the meaning of Article 12; Sabhajit Tewary is overruled as regards its application to CSIR; the matter is remitted to the appropriate Bench for further disposal in accordance with this decision. This outcome is in favour of the Appellant.