Article 12 status does not make a co-operative society part of government for salary liability.

A co-operative society registered under the Assam Co-operative Societies Act remains a separate juristic entity, and Article 12 status alone does not convert it into the State Government or make its employees holders of civil posts. The Court clarified that Section 43, which permits financial assistance, is discretionary and does not create a continuing legal obligation on the State to pay salaries, arrears, or other liabilities of the society. It also distinguished Kapila Hingorani, noting that those observations arose from exceptional interim facts and do not establish a general rule of government liability for salaries of employees of public bodies.

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Issues: Whether a co-operative society, even if amenable to treatment as State under Article 12, can be treated as the State Government so as to fasten liability on the Government to pay the salaries and arrears of its employees and to continue grant-in-aid for that purpose.

Analysis: A society registered under the Assam Co-operative Societies Act, 1949 is a separate juristic entity. Even assuming that the society is an instrumentality of State within Article 12, that status does not convert it into the State Government or make its employees holders of civil posts under the Government. The power under Section 43 of the Assam Co-operative Societies Act, 1949 to grant financial assistance is permissive and does not create a continuing legal obligation on the State to fund salaries or meet all liabilities of the society. The Court also held that the observations in Kapila Hingorani were made in interim proceedings on exceptional facts and did not lay down a general rule that the Government is liable to pay salaries of employees of public sector undertakings or similar bodies.

Conclusion: The Government is not legally liable to pay the salaries or arrears of the employees of the co-operative society merely because it had earlier extended grant-in-aid or exercised control over the society.

Ratio Decidendi: State control or Article 12 status of a co-operative society does not make the society part of the Government, and a permissive power to grant financial assistance does not create a legal duty on the State to fund the salaries of the society's employees.

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