Arvinder Goyal vs State of Punjab and Others

Rajesh Bindal, J.—Three writ petitions bearing CWP Nos. 6729, 8721 and 10021 of 2012, have been filed by the employees working with

the Punjab Alkalies & Chemicals Limited (for short, ''the Company'').

Facts of CWP No. 6729 of 2012

The petitioner herein has impugned the order dated 10.4.2012 vide which his services have been terminated. The petitioner joined service with the

respondent-Company on 15.7.1998 as Deputy Manager (Purchase) and was confirmed on the post. The termination of services of the petitioner

has been challenged inter-alia on the allegations of malafide and without issuing any charge-sheet or show cause notice referring to a clause in the

appointment letter in terms of which services of an employee can be terminated merely by giving one month''s notice or one month''s salary in lieu

thereof.

Facts of CWP No. 8721 of 2012

The petitioner herein is working as Senior General Manager (Projects) since 1993. He has impugned his transfer as Senior General Manager

(Electrical) at the plant of the company at Naya Nangal. The preliminary issue sought to be raised by the petitioner impugning his transfer is that he

is an Engineering Graduate. He has been working in Commercial, Projects and Materials and Administration, etc. He is not an expert in Electrical

side. He has been made to work and report to a person who has been appointed recently in the Company. His selection was made by a

Committee of which the petitioner was one of the members. This is 7th transfer of the petitioner in last 11 months.

Facts of CWP No. 10021 of 2012

The petitioner herein has challenged his transfer from Head office Chandigarh to Naya Nangal, IT Department alleging malafide and raising a

grievance that as a result of his transfer, he was humiliated and made to work under his juniors, who were given undue promotions, though had

been appointed after the petitioner.

As the petitioners in the present writ petitions impugned the action taken by the respondent-Company, a preliminary objection was raised by

counsel for the respondent-Company regarding maintainability of the writ petitions claiming that the respondent-Company cannot be termed as a

State or any other authority amenable to writ jurisdiction of this court.

Arguments

Before proceeding to deal with the issue on merits, arguments on the maintainability of the writ petitions were heard.

Mr. Amar Vivek, learned counsel for the petitioner submitted that the respondent-Company is an instrumentality of the State and is an authority

within the meaning of Article 12 of the Constitution of India. The Company has been promoted by the Punjab State Industrial Development

Corporation (for short, ''the PSIDC'') which is 100% owned company of the State of Punjab.

The Principal Secretary of Industrial Department, who is ex-officio Chairman of the Company, is maternal uncle of Naveen Chopra, General

Manager (Marketing) of respondent-Company, against whom certain allegations have been levelled.

Out of nine members of the Board of Directors, seven are either the employees of the State Government or are the nominees from Industrial

Development Bank of India or Industrial Financial Corporation of India.

Elaborating the contentions, while referring to the documents placed on record, learned counsel for the petitioner submitted that all through the

Chairman and Managing Director of the Company had been an IAS officer serving in the State of Punjab, majority of other directors are the IAS

officers or nominees from the Industrial Development Bank of India or the Industrial Financial Corporation of India. All senior officers in the

Company are posted by the State of Punjab. In fact, the Company is a subsidiary of the PSIDC.

Learned counsel for the petitioner further referred to document (Annexure P-27 in CWP No. 8721 of 2012), whereby the Government sought

to dis-invest 44.26% share holdings of PSIDC in the Company. It was clearly mentioned therein that the Company has been promoted by PSIDC

which is wholly owned by the State. It is one of the largest manufacturer of casting soda in India. The plant is located at Naya Nangal with access

of power from Bhakra Nangal Dam and water from Satluj River.

Learned counsel for the petitioner further referred to document (Annexure P-28 in CWP No. 8721 of 2012), where a copy of the Voluntary

Retirement Scheme framed by the Government was forwarded to the company. Along with the same, minutes of the meeting of the Core Group of

officers on disinvestment held on 13.1.2003 was also sent. The aforesaid meeting was attended by the Managing Director of the Company as a

special invitee in addition to Managing Directors of other public sector units.

In the voluntary retirement scheme, a clause at Sr. No. 10(ix) was referred to, in terms whereof any employee seeking voluntary retirement

under the scheme shall not be eligible for re-employment in Punjab Government or any other public sector unit of Punjab Government or its

subsidiary.

A letter was written by Managing Director of the company to the Chairman-cum-Managing Director of Punjab State Power Corporation

Limited seeking exemption from the regulatory measures for consumption of power by industrial units. The same was granted to the Company

referring to the telephonic discussion of the two officers treating the same to be a Government company.

Vide letter dated 27.1.2011, the Punjab State Transmission Corporation Limited, exempted the Company from deposit of security being a

Government owned company.

Vide letter dated 16.5.2011, after taking over, the Minister In-charge asked all the heads of Public Sector Units/Bodies to make their

presentations before him. The Managing Director of the respondent-Company was also asked to be present.

The meeting was held under the Chairmanship of the then Chief Secretary, Punjab, on 8.6.2011, to consider measures for sustainable

operations of the Company and its long term survival. It was submitted that the Chief Secretary is otherwise directly not concerned with the

Company. One of the decisions taken in the aforesaid meeting was that the State Government shall stand guarantor to the extent of loan of Rs. 80

crores to be raised by the Company.

It was further submitted that presently all the Directors are either serving or retired Government officers, who have been nominated by the

Government. On several occasions the Government has been appointing even the political persons such as the MLAs, as Vice-Chairman of the

company. Even on the website, the Company has been termed as a Public Sector Undertaking.

Learned counsel for the petitioner further submitted that in addition to the aforesaid facts, another important aspect is that initially when the unit

was set up, the State Government acquired the land for the purpose and allotted it to the Company at confessional rates. The National Fertilizers

Limited, Nangal has given about 33 acres of land on 50 years of lease basis to the Company and PNFC jointly to build their housing colonies and

common facilities. In Chandigarh as well, the Company has been allotted a plot on preferential basis at the rates meant for public sector institutions

by the Chandigarh Administration. Many officers of the State Government or PSIDC are transferred to the Company on deputation basis. A

decision with regard to conversion of part of the loan into equity was taken in a meeting held under the Chairmanship of the then Chief Minister of

Punjab.

Learned counsel for the petitioner further submitted that the Vigilance Department of the State conducts inquiries against the officers of the

Company.

While concluding his arguments, learned counsel for the petitioner submitted that the activities of the Company in the manner in which these are

carried out have not to be seen in isolation. Its collective and cumulative effect is to be considered in the present case. The manner in which the

important decisions are being taken shows that the Company is controlled by the officers who are either posted in PSIDC or are the State

functionaries. The Chairman and the Managing Director of the Company are the State cadre IAS officers. The postings of the Chairman, Managing

Director or other nominees in the Company is as per the will of the Government. All though the Company is claiming to be a public sector unit for

claiming benefits. The State Government is guaranteeing the loan raised by the Company. All these factors clearly establish that the Company is

amenable to writ jurisdiction. Even principle of estoppel is also applicable as the Company cannot be permitted to blow not and cold at the same

breath and take the pleas whatever suit them on different occasions.

In support of his arguments, learned counsel for the petitioner placed reliance upon Central Inland Water Transport Corporation Limited and

Another Vs. Brojo Nath Ganguly and Another, Sanghi Technologies Pvt. Ltd. Vs. Union of India and Others, ; Pradeep Kumar Biswas and

Others Vs. Indian Institute of Chemical Biology and Others, , and District Red Cross Society, Sirsa v. Radha Kishan Rajpal 2005 (1) SCT 41.

On the other hand, learned counsel for the respondent-Company submitted that by no stretch of imagination the Company can be termed as a

State or any other authority amenable to writ jurisdiction. The Company is duly incorporated under the Companies Act, 1956 (for short, ''the

Act''). Only 44.26% of its shares are held by PSIDC, 37.35% are held by general public and some part is owned by the financial institutions. The

Government does not hold any equity directly in the Company. The Board of Directors is constituted as per the provisions of the Act. At present

there are nine Directors of which three are nominated by PSIDC, two by the landing institutions and four by the share holders. The working of the

Company is carried out in terms of its Memorandum and Articles of Association. Merely because some of the actions taken by the Company are

guided by the PSIDC, which is one of the major share holder and 100% Government owned, will not make the Company as such a Government

owned Company. The officers are appointed by the Government considering the fact that these are to be posted in jointly promoted projects.

Learned counsel for the respondent-Company further submitted that the Company was a wholly owned company floated by the PSIDC in the

year 1983. However, later on its holding was reduced. The land for the Company was acquired in terms of provisions of the Land Acquisition Act,

1894. The voluntary retirement scheme was prepared by the Government for employees of public sector undertakings and copy thereof was

merely forwarded to the Company for its guidance. The Government stood guarantor for the loan raised by the Company for the reason that it is

wholly owned company held 44% share in the Company, hence, its investment was to be secured. PSIDC had promoted many other companies.

This cannot lead to a conclusion that all such companies would be amenable to writ jurisdiction. Merely mentioning as a public sector unit or a

Government company and seeking concession on the basis thereof will not be sufficient to hold the Company as a State amenable to writ

jurisdiction, as all relevant factors have to be considered.

In support of his arguments, learned counsel for the respondent-Company placed reliance upon Tekraj Vasandi alias K.L. Basandhi Vs. Union

of India (UOI) and Others, The Mysore Paper Mills Ltd. Vs. The Mysore Paper Mills Officers'' Association and Another, G. Basi Reddy Vs.

International Crops Research Instt. and Another, General Manager, Kisan Sahkari Chini Mills Ltd., Sultanpur, U.P. Vs. Satrughan Nishad and

Others, and Lt. Governor of Delhi and Others Vs. V.K. Sodhi and Others,

Heard learned counsel for the parties and perused the relevant referred record.

In Pradeep Kumar Biswas''s case (supra), Hon''ble the Supreme Court noted with approval the tests laid down in earlier judgment of Hon''ble

the Supreme Court in Ramana Dayaram Shetty Vs. International Airport Authority of India and Others, , which are as follows:

(1) One thing is clear that if the entire share capital of the Corporation is held by Government, it would go a long way towards indicating that the

Corporation is an instrumentality or agency of Government.

(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the Corporation, it would afford some indication

of the Corporation being impregnated with Governmental character.

(3) It may also be a relevant factor.... whether the Corporation enjoys monopoly status which is State conferred or State protected.

(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality.

(5) If the functions of the Corporation are of public importance and closely related to Government functions, it would be a relevant factor in

classifying the corporation as an instrumentality or agency of Government.

(6) Specifically, 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.

If the case of the petitioner is considered on the tests laid down aforesaid, it can safely be opined that the same does not fall in any of the tests,

as laid down at Sr. Nos. (1) to (3), (5) and (6), as entire share capital of the Company is not held by the government; entire expenditure of the

Company is not met with financial assistance from the State; the Company is not enjoying monopoly status, which is either State conferred or State

protected; functions of the Company are not of public importance and closely related to governmental functions as it is merely a commercial

establishment and none of the departments of the Government has been transferred to the Company.

Now the issue remains as to whether the respondent-Company satisfies the test, namely, ""existence of deep and pervasive State control may

afford an indication that the corporation is a State agency or instrumentality"".

It is not in dispute in the present case that PSIDC holds 44.26% of share holdings in the respondent-Company. 37.35% shares are held by

general public and balance is owned by financial institutions. The Board of Directors of the Company has been constituted in terms of the

provisions of the Act, applicable for any public limited company. At present, out of nine Directors, three have been nominated by PSIDC, two by

lending institutions and four by the share holders. Merely because some of the Directors are government servants will not lead to the conclusion

that the Company, in which their services have been transferred, will amount to be a State or any other authority amenable to writ jurisdiction.

There is no day-to-day control of the Government or even the PSIDC in the working of the Company as it is managed by its own Board of

Directors or the employees employed by it independently.

The issues such as bar on the employees of the Company seeking voluntary retirement for being not eligible for re-employment in the State

Government, seeking certain exemptions from regulatory measures for consumption of power by industrial units; exemption from security deposit;

holding of meeting by the Minister In-charge or the Chief Secretary requiring the Managing Directors of the respondent-Company to be present

there or grant of land on lease hold basis to the respondent-Company will not be the factors sufficient to hold that the Government has deep and

pervasive control in the Company.

In Pradeep Kumar Biswas''s case (supra), Hon''ble the Supreme Court considered the issue as to whether the Central Scientific and Industrial

Research (for short, ''CSIR'') can be held to be a State or any other authority amenable to writ jurisdiction. The Regulations of CSIR provide that

Prime Minister shall be the ex-officio President of the Society and the Minister-in-Charge of the Ministry or Department dealing with the Council of

Scientific and Industrial Research shall be the ex-officio Vice President of the Society and Minister Incharge of Finance and Industrial shall be one

of the members. The members of the Governing Body, who were not there ex-officio, are nominated by the President of the Society and their

membership could be terminated as well. The Governing Body is required to administer, direct and control the affairs and funds of the Society. The

employees thereof are governed by Central Civil Services (Classification, Control and Appeal) Rules and the Central Civil Services (Conduct)

Rules. The initial capital of the Society of Rs. 10,00,000/- was made available by the Central Government. At present, 70% of the funds available

with CSIR are made available by way of grant by the Government of India, however, some part is generated from charges by rendering research

and development work. Apart from internal audit, the accounts of CSIR are required to be audited by the Controller and Auditor General and

placed before both the Houses of Parliament. Even under the aforesaid circumstances, Hon''ble the Supreme Court opined that CSIR is not a

State within the meaning of Article 12 of the Constitution of India.

In V.K. Sodhi''s case (supra), Hon''ble the Supreme Court, while following the judgment in Pradeep Kumar Biswas''s case (supra), held that

State Council of Education Research and Training, which was constituted to assist the State Government in the matter of promoting education

within the State of Delhi, was not a State amenable to writ jurisdiction, though it was fully financed by the Government as after the funds were

allotted the Government had no role to play in their administration or in the working of the Council or the finances granted.

In view of my aforesaid discussion, it cannot be held that the respondent-Company is a State amenable to writ jurisdiction, hence, the writ

petitions will not be maintainable. Accordingly, the petitions are dismissed being not maintainable.