TaxTMI 
TaxTMI 
2010 (4) TMI 606
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.... (c )by any other law made by State Legislature; (d )by notification issued or order made by the appropriate Government, and includes any- (i )body owned, controlled or substantially financed; (ii )non-Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government;" 3. Section 2(h) of the Act consists of two parts. The first part states that public authority means any authority or body or institution of self-government established or constituted by or under the Constitution, by any enactment made by the Parliament or the State Legislature or by a notification issued or order made by the appropriate Government. The second part starts from the word 'includes' and states the term 'public authority' includes bodies which are owned, controlled or substantially financed directly or indirectly by funds provided by the appropriate Government and non-Government organizations substantially financed directly or indirectly by the funds provided by the appropriate Government. Interpreting the second part of the definition and whether conditions (a) to ( d) apply, S. Ravindra Bhat, J. in his judgment dated 7th January, 2010 in....
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....stantial financing. The second class, i.e., non-Government organization, by its description, is such as cannot be "constituted" or "established" by or under a statute, or notification. 46. The term "non-Government organization" has not been used in the Act. It is a commonly accepted expression. Apparently, the expression was used the first time, in the definition of "International NGO" (INGO) in Resolution 288 (X) of ECOSOC on February 27, 1950 as "any international organization that is not founded by an international treaty". According to Wikipedia http://en.wikipedia.org/wiki/Nongovernmental_organization..accessed on 28-12-2009 @19:52 hrs.) '...Non-Government Organization (NGO) is a term that has become widely accepted as referring to a legally constituted, non-Government organization created by natural or legal persons with no participation or representation of any Government. In the cases in which NGOs are funded totally or partially by Governments, the NGO maintains its non-Government status and excludes Government representatives from membership in the organization. Unlike the term inter-governmental organization, "non-Government organization" is a term in general use b....
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....felt need of a section of the public, or to secure larger societal goals. To the extent of such funding, indeed, the organization may be a tool, or vehicle for the executive Government's policy fulfilment plan. This view, about coverage of the enactment, without any limitation, so long as there is public financing,...." [Emphasis supplied] 5. I have referred the second part of section 2(h) of the Act and the aforesaid judgment, as these are relevant to the present case and give an indication of the legislative intent while defining the term 'public authority'. It is obvious that the term 'public authority' has been given a broad and wide meaning not only to include bodies which are owned, controlled or substantially financed directly or indirectly by the Government but even non-Government organizations, which are substantially financed directly or indirectly by the Government. The idea, purpose and objective behind the beneficial legislation is to make information available to citizens in respect of organizations, which take benefit and advantage by utilizing substantial public funds. This ensures that the citizens can ask for and get information and know on how public funds are....
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....ities falling within the definition by referring to "other authorities" within the territory of India which cannot obviously be read as ejusdem generis with either the Government and the Legislatures or local authorities. The words are of wide amplitude and capable of comprehending every authority created under a statute and functioning within the territory of India or under the control of the Government of India. There is no characterisation of the nature of the 'authority' in this residuary clause and consequently it must include every type of authority set up under a statute for the purpose of administering laws enacted by the Parliament or by the State including those vested with the duty to make decisions in order to implement those laws." In K.S. Ramamurthi Reddiar v. Chief Commissioner, Pondicherry, this Court, dealing with Article 12, held: "Further, all local or other authorities within the territory of India include all authorities within the territory of India whether under the control of the Government of India or the Governments of various States and even autonomous authorities which may not be under the control of the Government at all." These decisions of the Court s....
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....ined to secure performance of obligations owed by a company towards its workmen or to resolve any private dispute. (See Sohan Lal v. Union of India). In Regina v. Industrial Court mandamus was refused against the Industrial Court though set up under the Industrial Courts Act, 1919 on the ground that the reference for arbitration made to it by a Minister was not one under the Act but a private reference. "This Court has never exercised a general power" said Bruce, J. in R. v. Lawisham Union "to enforce the performance of their statutory duties by public bodies on the application of anybody who chooses to apply for a mandamus. It has always required that the applicant for a mandamus should have a legal and a specific right to enforce the performance of those duties". Therefore, the condition precedent for the issue of mandamus is that there is in one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus is, in form, a command directed to a person, corporation or an inferior Tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty....
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....n 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 genetically 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." 10. Section 2(h) of the Act does refer to the manner of establishment or constitution in conditions (a) to (d) but condition ( d) expands the term to include establishment or constitution by a notification or order by an appropriate Government. Legislative enactment is not nec....
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....ally, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government.' (SCC p. 510, para 18) If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of Government, it would, as pointed out in the International Airport Authority case, be an "authority" and, therefore, 'State' within the meaning of the expression in Article 12." 12. Conflict between Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi [1975] 1 SCC 421 and Sabhajit Tewary v. Union of India [1975] 1 SCC 485 was examined by seven Judges of the Supreme Court in the case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology [2002] 5 SCC 111. The majority judgment approved of the tests specified in the case of Ajay Hasia ( supra) and has observed as under : "31. The tests to determine whether a body falls within the definition of "State" in Article 12 laid down in Ramana with the Constitution Bench imprimatur in Ajay Hasia form the keystone of the subsequent jurisprudential superstructure judicially crafted on the subject whi....
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....m public functions in the form of adjudicatory services (such as those of the criminal and civil Courts and Tribunal system). They also do so if they regulate commercial and professional activities to ensure compliance with proper standards. For all these purposes, a range of legal and administrative techniques may be deployed, including rule making, adjudication (and other forms of dispute resolution); inspection; and licensing. Public functions need not be the exclusive domain of the State. Charities, self-regulatory organisations and other nominally private institutions (such as Universities, the Stock Exchange, Lloyd's of London, Churches) may in reality also perform some types of public function. As Sir John Donaldson, M.R. urged, it is important for the courts to 'recognise the realities of executive power' and not allow 'their vision to be clouded by the subtlety and sometimes complexity of the way in which it can be exerted'. Non-Governmental bodies such as these are just as capable of abusing their powers as is Government." 14. The aforesaid passage quoted above specifically holds that stock exchanges perform public functions. Power of judicial review under Article 2....
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....s spoken of collectively, usually associated for a common purpose, joined in a certain cause or united by some common tie or occupation, as, legislative body, the body of clergy; a body corporate." 'Authority' or 'institution of self-government' are sub-species and can be included in the term 'body'. The terms 'authority' or 'institution of self-government' are restrictive/narrower than the term 'body'. Nature and type of the activity undertaken by a 'body' is not of primary concern or importance. The term 'body' is extremely wide and unless a purposive interpretation is given, keeping in mind the legislative intention, the said term will include within its scope every and all kind of organization or concerns of two or more persons performing purely private functions. The petitioner is correct in their contention that all private bodies are not 'public authorities'. The petitioner is also correct that the words "establish or constituted" and (a) to (d) of section 2( h) do not curtail and restrict the definition of 'public authority' to exclude all private bodies like private companies or societies of private nature. These, it was rightly stated, can be established by an order or no....
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....ature and type of activity and functions undertaken by the organisation are inconsequential and immaterial. If a body satisfies requirements of clause (i) or (ii), conditions ( a) to (d) need not be satisfied. Thus, when second part of section 2(h) applies, satisfaction of conditions mentioned in (a) to ( d) need not be examined. 18. Learned counsel for the petitioner laid considerable emphasis on the words "established" and "constituted" and the requirements specified in (a ) to (d) of part one of the section 2(h). It was stated that the term "established" means initial establishment or creation of authority, body or institution of self-government by or under the Constitution, by an enactment made by the Parliament or State Legislature or by a notification or order issued by the appropriate Government. The word "constituted" it was submitted refers to constitution of a body with appointment of members as in the Central Co-ordination Committee by a notification under section 3(1) Persons with Disability (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995. 19. The words 'established and constituted' used in section 2(h) of the Act have to be interprete....
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.... or institution of self-government' but subsequently an enactment, order or notification can result in its constitution as an 'authority' or 'institution of self-government' which was not in existence till the enactment, notification or order was made. An organisation in existence can be 'constituted' or 'established' as an 'authority' or 'institution of self-government' by a subsequent enactment or order/notification. A private company upon its incorporation or registration does not become an 'authority or institution of self-government' as defined above under section 2(h) of the Act, but by a subsequent enactment or order/notification issued can become an 'authority or institution of self-government'. Thus, subsequent enactment, order or notification may have the effect of establishing or constituting an 'authority or institution of self-government'. The word "constituted", has to be liberally interpreted to include cases where an organization or a body is already set up but by virtue of a notification or order passed by appropriate Government or statutory enactment is conferred and given status of an 'authority' or an 'institution of self-government'. The words 'established' or ....
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....irectly or indirectly by funds of appropriate Government. 24. The term 'appropriate Government' has been defined in section 2(a) of the Act to mean :- "2. (a) "appropriate Government" means in relation to a public authority which is established, constituted, owned, controlled or substantially financed by funds provided directly or indirectly- (i )by the Central Government or the Union Territory administration, the Central Government; (ii )by the State Government, the State Government;" 25. The said definition clause has been enacted in view of two separate apex appellate bodies under the enactment, viz., the Central Information Commission and the State Information Commission. Appropriate Government can mean Central Government or State Government as the case may be. These two terms have been defined in section 3(8) and (60) of the General Clauses Act, 1897 in relation to anything done or to be done after the commencement of the Constitution to mean the President or the Governor, etc., as the case may be. The terms 'Central Government' and 'State Government' have to understood in light to Article 77 or 166 of the Constitution. It refers to the Executive power of the St....
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....transactions in the securities within the meaning of the Securities Contracts (Regulations) Act, 1956 and the Rules made thereunder. 5. To frame and enforce Rules, Bye-laws, and Regulations regulating the mode and manner, the conditions subject to which the business on the Stock Exchange shall be transacted and the rules of conduct of the members of the Exchange, including all aspects relating to membership, trading, settlement, constitution of committees, delegation of authority and general diverse matters pertaining to the Exchange and also including code of conduct and business ethics for the members and from time to time, to amend or alter such rules, bye-laws and regulations or any of them and to make any new amended or additional rules, bye-laws or regulations for the purpose aforesaid. 6. To settle disputes and to decide all questions of trading methods, practices, usage, custom or courtesy in the conduct of trade and business at the National Stock Exchange. 7. To fix, charge, recover, receive security deposits, admission fee, fund subscriptions, subscription form members of the exchange or the company in terms of the Articles of Association and rules and bye-laws o....
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....ceeding three as the Central Government may nominate in this behalf; and (iv)the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. (3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the stock exchange is situate, and such recognition shall have effect as from the date of its publication in the Gazette of India. (4) No application for the grant of recognition shall be refused except after giving an opportunity to the stock exchange concerned to be heard in the matter; and the reasons for such refusal shall be communicated to the stock exchange in writing. (5) No rules of a recognised stock exchange relating to any of the matters specified in sub-section (2) of section 3 shall be amended except with the approval of the Central Government." 29. Once a body or an institution has got its recognition/registration under the Securities Act, it can operate and function as a stock exchange and perform the said public functions. Registration or recognition....
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....isfied, is not correct. The term "appropriate Government" has been defined in section 2(a) and the reason for incorporating the said term in section 2(h) has been explained above. The object and purpose of using the term "appropriate Government" is to clarify the appellate avenue before whom appeals will lie. It cannot be read to water down and read down the scope of the expression "public authority" as defined in section 2(h) of the Act. Central Government or the State Government refers to the Executive power of the State and will include their manifestations in various forms. The term "Central Government" and "State Govern- ment" have to be read and interpreted broadly and not in a restrictive manner. 32. Under section 4(3) of the Securities Act, an order of registration/recognition is to be passed by the Central Government. Under section 29A of the Securities Act, Central Government has been authorized to delegate their powers to SEBI. In the present case, SEBI has granted recognition/registration to the petitioner as a delegate and as authorised to act on behalf of the Central Government. The recognition granted is, therefore, treated as granted by the Central Government its....
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....shall be entered into and enforced as between members; (iii)the representation of the Central Government on each of the Stock Exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and (iv)the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. 19. Recognition of the Stock Exchange under the section is required to be published in the Gazette of India. The rules of the recognized stock exchanges can be amended only upon approval of the Central Government. Section 5 provides for withdrawal of recognition. Section 6 empowers the Central Government to call for periodical returns or direct enquiries to be made. Section 7 provides for annual reports to be furnished to the Central Government. Section 10, however, also empowers the Central Government to make or amend bye-laws of recognized stock exchange. Section 11 empowers the Central Government to supersede governing body of a recognized Stock Exchange. Section 12 empowers the Central Government to suspend business of recognized Stock Exchanges. Section 13 empowers the Central Government to ....
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....cale 353, the Delhi Stock Exchange itself has given out that it is being considered to be "other authorities" within the meaning of Article 12 of the Constitution of India. 22. Admittedly, its main source of revenue is from listing fees received from the listed companies. Its power to list companies flows from a statute. In doing so, it exercises a quasi-judicial function and appeal lies against its order refusing to list companies." 35. The Delhi High Court also made reference to the Securities and Exchange Board of India Act, 1992 ('SEBI Act', for short) and has held that the said enactment support assertion that Central Government has deep and all pervasive control on the functioning of the stock exchanges. Referring to the said enactment, it has been observed :- "28. Following are some of the important sections of SEBI Act which support the assertion that Central Government has deep and all pervasive close control on the functioning of all RSEs (Recognised Stock Exchanges) :- (1)Preamble of the SEBI Act which inter alia reads, "An Act to provide for the establishment of a Board to protect the interest of investors in securities and to promote the development of and ....