Statutory corporations and service regulations: state instrumentality status and binding force of law can invalidate dismissals.

Statutory corporations created by law and controlled in material respects by government were treated as instrumentalities or agencies of the State and therefore as authorities within Article 12. The Court further held that regulations framed under the enabling statutes were made under statutory power, bound the corporation and its employees, and were not merely contractual terms. Dismissal or removal made in breach of such mandatory regulations was ultra vires and liable to be set aside, with consequential declaratory relief including continuance in service where appropriate.

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Issues: (i) whether the statutory corporations in question were authorities within the meaning of Article 12 of the Constitution; (ii) whether the regulations framed under the enabling statutes had the force of law so as to render dismissals or removals made in breach of them void and support a declaration of continuance in service.

Issue (i): whether the statutory corporations in question were authorities within the meaning of Article 12 of the Constitution

Analysis: The Court examined the structure, control, funding, powers, and public functions of the corporations. It noted that they were created by statute, controlled by the Central Government in material respects, subject to governmental directions and audit, and entrusted with public functions of national importance. The majority treated these features as showing that the corporations were instrumentalities or agencies of the State rather than ordinary commercial bodies. The dissenting view emphasised separate juristic personality and the absence of sovereign power sufficient to bring them within Article 12.

Conclusion: The corporations were held to be authorities within the meaning of Article 12.

Issue (ii): whether the regulations framed under the enabling statutes had the force of law so as to render dismissals or removals made in breach of them void and support a declaration of continuance in service

Analysis: The majority held that the regulations were made under statutory powers, were binding on the corporations, their officers, and their employees, and were not mere contractual terms. Because the employment was governed by statutory regulations and not by an ordinary private contract, action taken in violation of the mandatory regulations was ultra vires and liable to be declared void. The dissent rejected the view that such regulations, especially those dealing with service conditions, had the force of law, and considered breach of them to give rise only to contractual remedies.

Conclusion: The regulations were held to have the force of law, and dismissal or removal in breach of them was liable to be set aside with consequential declaratory relief.

Final Conclusion: The decision affirms that statutory public corporations functioning as government instrumentalities are subject to constitutional limitations and that service rules made under their parent statutes are legally binding, so that employees dismissed contrary to those rules may obtain judicial relief beyond mere damages.

Ratio Decidendi: A statutory corporation created and controlled as an instrumentality of government, and empowered to make binding regulations under the statute, is an authority under Article 12; regulations made under such statutory power have the force of law and their breach renders the impugned action void.

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