R. Eucharista vs State of Tamil Nadu and Others

The petitioner first entered services in the Industries and Commerce Department as a lower division clerk on 20th June, 1955, In 1956 she

became a probationer in the same department. With effect from 18-12-1958 she was promoted as an Assistant. Her service were then regularised

with effect from 1-9-198O and her rank in the seniority list was fixed at No. 381. She, therefore, made representation to the Government

requesting that her services should be regularised with effect from 19-12-1958 and her rank in the seniority should be suitably modified.

In or about 1965, the Tamil Nadu Small Industries Corporation (hereinafter called the Corporation) was incorporated to take over the control

of the various small scale units under the Industries Department and the entire staff working in the different units were transferred en masse on

deputation basis to the Corporation. As a result the petitioner also became an Assistant in the Corporation. While so, the Corporation was

considering the promotion of respondents 4 to 8 as Superintendents. Therefore, on 21-4-1971 the petitioner made a representation to the second

respondent, the Director of Industries and Commerce and the third respondent, the Managing Director of the Corporation apprise them of the fact

that she had made a representation to the Government regarding the revision of her seniority and that, therefore, as and when final orders were

passed by the Government her seniority should be revised by the third respondent. On 19-3-1973 the petitioner was promoted as Superintendent.

On 15-10-74 and 16-1-1975 the third respondent drew up a panel of names for promotion as Selection Grade Superintendent. The petitioner''s

name was not included in the list, whereas the names of respondents 4 to 8 were included. Subsequently, on 2-5-1975 the second respondent

passed orders in favour of the petitioner regularising her services in the post of Assistant in the Industries and Commerce Department with effect

from 19-12-1958 and placed her seniority between ranks 211 and 212 as 211A. However, instead of restoring her seniority on the basis of the

Government order dated 11-3-1975 and the proceedings dated 2-5-1975 of the second respondent, the third respondent informed the petitioner

that her promotion to the post of Selection Grade Superintendent would be considered at the appropriate time and as per the practice prevailing in

the Corporation. Against the order of the third respondent, the petitioner filed an appeal to the Chairman of the Board of Directors of the

Corporation 5-7-1975. During the pendency of the appeal the third respondent promoted her as Selection Grade Superintendent on 19-2-1976

and reverted her again as Superintendent on 21-4-1976. By a further memo dated 30-4-1976 the third respondent informed the petitioner that the

panel drawn up on 15-10-1974 and 16-1-1975 for Selection Grade Superintendent could not be revised to restore her seniority. The petitioner

then took up the matter in appeal to the first respondent. The first respondent by proceedings dated 22-6-1977 directed the second respondent to

include the petitioner''s name in the panel of Superintendent approved by the second respondent on 5-1-1967 with a copy marked to the third

respondent. In spite of this on 20-5-1977 the third respondent informed the petitioner that her request to include her name in the list of Selection

Grade Superintendents drawn up on 15-10-1974 and 16-1-1975 could not be complied with for want of two years actual service in the post of

Superintendent. In these circumstances, the petitioner has filed this writ petition for the issue of a certiorarified mandamus to quash the order dated

20-5-1977 passed by the third respondent, the Managing Director of the Corporation and to direct him to revise her seniority by promoting her to

the post of Selection Grade Superintendent by including her name in the panel drawn on 15-10-1974 and 16-1-1975 as per order passed by the

first respondent on 26-2-1977.

The third respondent has filed a counter-affidavit stating that the Corporation is not amenable to the writ jurisdiction of this Court under Art. 226

of the Constitution of India. Further, according to the rules framed by the Corporation an individual should put in a minimum of two years of actual

service in the category of Superintendent to be eligible to he promoted to the post of Selection Grade Superintendent. The petitioner having been

promoted as Superintendent only on 19-3-1973 her name could not be included in the list prepared on 15-10-1974 and 16-1-1975, and

consequently the petitioner is not entitled to any relief.

The first question that arises for consideration is whether the third respondent-Corporation will fall within the meaning of the expression ""other

authorities"" under Art. 12 of the Constitution of India, and whether it will be amenable to the writ jurisdiction of this Court under Art. 226 of the

Constitution of India.

The principles of the tests to be applied to consider whether an authority can be said to be ""other authority"" as mentioned under Art. 12 of the

Constitution of India has been elaborately considered recently by the Supreme Court in Ramana Dayaram Shetty Vs. International Airport

Authority of India and Others, . In paragraph 13 of the judgment it is observed as follows : ""The Corporations acting as instrumentality or agency

of Government would obviously be subject to the same limitations in the field of constitutional and administrative law as Government itself, though

in the eye of the law, they would be distinct and independent legal entities. If Government acting through its officers is subject to certain

constitutional and public law limitations, it must follow a fortiorari that Government acting through the instrumentality or agency of corporations

should equally be subject to the same limitations. But the question is how to determine whether a corporation is acting as instrumentality or agency

of Government. It is a question not entirely free from difficulty"". In paragraph 14 it is observed as follows : ""A corporation may be created in one of

two ways. It may be either established by statute or incorporated under a law such as the Companies Act, 1956 or the Societies Registration Act,

1860. Where a corporation is wholly controlled by Government not only in its policy-making but also in carrying out the functions entrusted to it by

the law establishing it or by the charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government. But

ordinarily where a Corporation is established by statute, it is autonomous, in its working, subject only to a provision, often times made, that it shall

be bound by any directions that may be issued from time to time by Government in respect of policy matters. So also a Corporation incorporated

under law is managed by a Board of Directors or committees of management in accordance with the provisions of the statute under which it is

incorporated. When does such a corporation become an instrumentality or agency of Government ? Is the holding of the entire share capital of the

corporation by Government enough or is it necessary that in addition, there should be a certain amount of direct control exercised by Government

and, if so, what should be the nature of such control ? Should the functions which the corporation is charged to carry out possess any particular

characteristic or feature, or is the nature of the functions immaterial ? Now, one thing is clear that if the entire share capital of the corporation is

held by Government, it would to a long way towards indicating that the corporation is an instrumentality or agency of Government. But, as is quite

often the case, the corporation established by statute may have no shares or share-holders, in which case it would be a relevant factor to consider

whether the administration is in the hands of a board of directors appointed by Government, though this consideration also may not be

determinative, because even where the directors re-appointed by Government, they may be completely free from Governmental control in the

discharge of their functions. What then are the tests to determine whether a corporation established by statute or incorporated under law is an

instrumentality or agency of Government ? It is not possible to formulate an all inclusive or exhaustive test which would adequately answer this

question. There is no cut and dried formula which would provide the correct division of corporations into those which are instrumentalities or

agencies of Government and those which are not"". In para 16 it is observed as follows : ""It may be noted that besides the so-called traditional

functions, the modern State operates a multitude of public enterprises and discharges host of other public functions. If the functions of the

corporation are of public importance and closely related to Governmental functions, it would be a relevant factor in classifying the corporation as

an instrumentality or agency of Government"" In para 20 it is observed as follows : ""Now, obviously where a corporation is an instrumentality or

agency of Government, it would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as

Government. The rule inhibiting arbitrary action by Government which we have discussed above must apply equally where such corporation is

dealing with the public, whether by way of giving jobs or entering into contracts or otherwise, and it cannot act arbitrarily and enter into relationship

with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test or reason and relevance.

The principles laid down by the Supreme Court in the above case have been followed by a Bench of this Court in W.A. No. 434 of 1978

(General Manager, United India Fire and General Insurance Company Limited, H.O.Bombay v. A. A. Nathan and another, wherein it was held

that the United India Fire and General Insurance Company Ltd. is ""other authority"" within the meaning of Art. 12 of the Constitution of India.

In Managing Director, Uttar Pradesh Warehousing Corporation and Another Vs. Vijay Narayan Vajpayee, , the Supreme Court has held that

the U.P. Warehousing Corporation established under the State Ware-housing Corporation Act would be amenable to the writ jurisdiction under

Art. 226 of the Constitution of India. In paragraph 12 Sarkaria J., has observed as follows : ""Mathew, J, in his separate but concurring judgment,

pointed out how the concept of the State has undergone drastic changes in recent years. A State is an abstract antiquity and can act only through

the instrumentality or agency of natural or juridical persons. With the advent of a welfare State the framework of civil service, administration

became increasingly insufficient for handling the new tasks which were often of a specialised and highly technical character. For this reason, a

policy of public administration through separate corporations which would operate largely according to business principles and be separately

accountable, was evolved. Such public corporations constituted under enactments, became a third arm of the Government. The employees of

public corporation are not civil servants. In so far a public corporation fulfil public tasks on behalf of Government they are public authorities, and as

such, subject to control by Government. The public corporation being a creation of the State is subject to the constitutional limitation as the State

itself ?

Per Chinnappa Reddy,, J., in his concurring judgment has observed as follows : ""I find it very difficult indeed to discover any distinction on

principle between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality

of the Government or a corporation set up under statute or incorporated but wholly owned by the Government. It is a self evident and trite to say

that the function of the State has long since ceased to be confined to the preservation of the public peace, the exaction of taxes and the defence of

its frontiers. It is now the function of the State to secure ""social economic and political justice"" to preserve liberty, thought, expression belief, faith

and worship and to ensure ""equality of status and of opportunity"". That is the proclamation of the people in the preamble to the Constitution. The

desire to obtain these objectives has necessarily resulted in intense Governmental activity in manifold ways. Legislative and executive activity have

reached very far and have touched very many aspects of a citizen''s life. The Government directly or through the corporations set up by it or

owned by it now owns or manages a large number of industries and institutions. It is the biggest builder in the country mammoth and minor

irrigation projects, heavy and light engineering projects, projects of various kinds are undertaken by the Government. The Government is also the

biggest trader in the country. The State and the multitudinous agencies and Corporation set up by them are the principal purchasers of produce and

the products of our country and they control a vast and complex machinery of distribution. The Government, its agencies and instrumentalities,

corporations set up by the Government under statute and corporations incorporated under the Companies Act but owned by the Government have

thus become the biggest employers in the country. There is no good reason why if Government is bound to observe the equality clauses of the

Constitution in the matter of employment and in its dealings with the employees the corporation set up or owned by the Government should not be

equally bound and which instead such corporations could become citadels of patronage and arbitrary action.

It is not disputed that the Corporation was incorporated to take over some of the functions performed by the Department of Industrial and

Commerce. The corporations has been incorporated under the Companies Act, 1956. It is also not disputed that the Corporation is fully owned

by the State of Tamil Nadu. All the shares are held by the State. Under Art. 72 of the Articles of association, the directors of the Corporation shall

be appointed only by the Government. The Government shall be entitled from time to time to remove any director from the office and appoint

another in the vacancy. The remuneration of the directors shall be determined by the Government. The power to appoint a Managing Director or

Managing Directors of the Corporation rests with the Government. It is for the Government to fix the remuneration of the Managing Director.

Under Art. 88 of the Articles of Association the Government have the power to appoint a Chairman and a Vice-Chairman to the Board, for a

period to be determined by them. Article 93 of the Articles of Association provides that the Chairman shall reserve for the approval of the

Government any proposals or decisions of the Board regarding the increasing or reducing the issued capital of the Corporation, granting by the

Corporation of a loan or the giving of a guarantee or any other financial assistance to any persons or concern, winding up of the company and any

other matter which in the opinion of the Chairman be of such importance as to be reserved for the approval of the Government and in such cases

no action shall be taken by the Corporation until the approval of the Government is obtained. Under Art. 94 of the Articles of Association, the

Government may from time to time issue such directives or instructions as they may think fit in regard to the finance and the conduct of the business

and affairs of the Corporation and the directors shall duly comply with and give effect to such directives or instructions. It is, therefore, clear that

the Corporation apart from being fully owned by the Government of Tamil Nadu, is subject to complete control by the Government not only in the

matter of appointment of Chairman, Vice-Chairman and Directors and their removal, but also in the matter of the finances and the conduct of the

business and affairs of the Corporation. I, therefore, over-rule the preliminary objection of the third respondent that the Corporation is not ""other

authority"", within the meaning of Art. 12 of the Constitution and is, therefore, not amenable to the writ jurisdiction.

The next question for consideration is whether the petitioner is entitled to have her name included in the panel of Selection Grade

Superintendents drawn on 15-10-1974 and 16-1-1975. In the Government order dated 11-3-1975 the Government have regularised the services

of the petitioner in the post of assistant with effect from 19-12-1958. Pursuant to the said order the Director of Industries and Commerce by his

proceedings dated 2-5-1975 refixed the seniority of the petitioner as assistant and placed her between D. Nageswaran, No. 211 and K.

Sitharaman, No. 212, and her rank is given as No. 211(A). Naturally, therefore, when these assistants were transferred to the services of the

Corporation, the inter se seniority should be on the basis of the rank held by them while they were in the service of the Department of Industries

and Commerce. It was not contended before me on behalf of the Corporation that the Corporation refixed the seniority of the staff absorbed into

its services on the basis of any regulations framed by the Corporation. It is seen from proceedings No. 119134/EGI/72 dated 20-10-1073 of the

third respondent that the Government had requested the Corporation to frame the necessary regulations relating to the service conditions of the

staff in such a way as not to prejudicially affect the interests of the Government staff to be absorbed into its service and taken steps to absorb

permanently the Government staff transferred to it. Clause (i) of paragraph 4 of the said proceedings reads as follows : ""The seniority of persons

with a regular footing in the Department of Industries and Commerce as on 1-12-1965 should be determined in the same order of ranking as

assigned by the Tamil Nadu Public Service Commission or a competent authority. The said proceedings further shows that list of employees of the

Corporation in various cadres had been prepared in accordance with the resolution passed by the Board. It is further found as follows : ""The lists

of seniority are treated as provisional for the following reasons : (1) They include the name of certain persons in respect of whom orders

regularising their services in the respective categories or posts in their parent department are awaited and the final position can be confirmed only

on receipt of orders of Government or competent authority in the cases. (2) The seniority of certain Government servants on deputation to be

absorbed in the Corporation as included in the lists is based on the tentative seniority communicated by the Department of Industries and

Commerce in anticipation of approval by Government and in certain other cases on the basis of the approval given provisionally by the competent

authority in the parent department and the seniority of these persons if and when fixed by Government or revised suo motu or on appeal by

Government or by any competent authority in the parent department, as the case may be, such fixation or revision will have to be honoured and

appropriate revisions made by the Corporation. (3) The lists include the names of Government servants on depression who have opted to serve in

the Corporation as on 15-8-1972, the probable date of absorption of these Government servants in the Corporation and the retention of their

names in the lists is subject to acceptance of their option by Government and their consequential absorption in the Corporation. In the event of any

revision in the orders of Government in the matter of exercise of option by Government servants on deputation, resulting in the exclusion of the

names of any persons included in the lists or inclusion of names of any other parents who are Government servants to be absorbed in the services

of the Corporation, consequential modifications will have to be made to the lists. (4) The lists are subject to revision before confirmation on the

basis of any representation supported by facts from the employees concerned with reference to any non-observance of the principles enunciated

by Board as referred to in para 4 above, in their cases"". From the above it is seen that though the Corporation prepared a list of seniority the list

was only tentative and the list was liable for modification as and when Government refixed the seniority on the representations made by the

employees concerned. In the normal course on the basis of the revised seniority the petitioner should have been placed in the panel of

Superintendents in accordance with her seniority in the grade of assistant. However, on 30-6-1975 the third respondent passed an order saying

that ""the practice in TANSI hitherto has been to consider the case of such of those dates of regularisation have been advanced with retrospective

effect and place their names below the persons in the panel, who are acting in the respective posts then if otherwise found suitable. On the same

analogy, the case of Selvi R. Eucharista, for promotion as Selection Grade Superintendent will be considered at the appropriate time"". There is no

justification at all for this order of the third respondent. The principles of seniority accepted in proceedings dated 20-10-73 clearly stated that the

seniority list would be modified as and when the Government revised the seniority of any particular employee on the basis of an appeal or

representation made by him or her. Further the said proceedings recognised the fact that the Corporation should frame the regulations relating to

service conditions of the staff in such a way as not to prejudically affect the interests of the Government staff to be absorbed into its service.

Therefore, the petitioner''s position not in any way be prejudiced by any such alleged practice which the Corporation might have followed. If as

ultimately found by the Government by its order dated 11-3-1975 the petitioner''s rank has to be placed in the list of seniority at No. 211(A) the

petitioner should have been given the benefit of the same in the grade of Superintendent and in the matter of promotion as Selection Grade

Superintendent. As a matter of fact, in the communication in G.O.Ms. No. 280, dated 26-2-1977 the Government have directed that the name of

the petitioner should be included in the panel of Superintendents approved by the Director of Industries and Commerce on 5-1-1967 and the

Director of Industries and Commerce has been requested to include the name of the petitioner in the panel of Superintendents approved on 5-1-

1967. Accordingly, the Director of Industries and Commerce has regularised the services of the petitioner as Superintendent with effect from 1-

12-1967. The order further states that the petitioner would take her ranking in the seniority list of Superintendents below Raghavan and above

Samuel. In the order dated 20-5-77 which is impugned in this writ petition it is stated that the petitioner''s name has been included in the panel of

Superintendents in 1967 based on the revision of her seniority in the post of assistant because she was eligible for promotion to the post of

Superintendent on that date. It is further stated thus : ""But her request for including her name in the panel of Selection Grade Superintendent drawn

on 15-10-1974 in TANSI cannot be complied with as she was not eligible for promotion as Selection Grade Superintendent on 15-10-1974 due

to want of two years actual service in the post of Superintendent. She was not eligible for promotion to the post of Selection Grade Superintendent

even when the next panel of Selection Grade Superintendent was drawn on 16-1-75"". It is further stated that she will be the next person to be

considered for promotion as a non-technical officer when she become eligible for that post after the completion of her actual service of five years

period as Superintendent. From the above it is seen that the reason for not promoting the petitioner as Selection Grade Superintendent is that the

petitioner has not acted as a Superintendent for a period of two years. No properly framed rules or regulations have been placed before me to

show that a person should be physically acting as a Superintendent for a period of ten years before he or she could be promoted as a Selection

Grade Superintendent, or that one should have put in five years of actual service, in the post of Superintendent for promotion as a non-technical

officer. In the counter affidavit filed by respondents 7 and 8 it is stated that tentative rules and regulations have been framed and they have been

sent for approval by the Government. Thus, no such rule or regulation has come into force in the Corporation. Until the rules or regulations framed

by the Corporation come into force, it cannot be said that such rule or regulation is binding on the petitioner. If the petitioner''s services as an

Assistant had been recognised with effect from 19-12-1958 even in the very beginning she would have become eligible to be promoted as a

Superintendent long prior to 1973 and she would have been eligible to be included in the panel for Selection Grade Superintendent drawn on 15-

10-1974. However, her services were regularised with effect from 19-12-1958 and her position in the seniority list was revised only on 11-3-

1975. The petitioner cannot be prejudiced by a reason of the mistake committed by the authorities concerned in not regularising her services with

effect from 19-12-1958 and the inordinate delay in setting right that mistake. Therefore, the petitioner is entitled to have her name included in the

panel for Selection Grade Superintendents drawn on 15-10-1974. In the circumstances, the impugned order of the third respondent dated 20-5-

1977 is quashed and a direction will issue to the third respondent to include the petitioner''s name in the panel of Selection Grade Superintendent

drawn on 15-10-1974, in accordance with her revised seniority in the post of assistant.

The third respondent will examine the question as to the consequential benefits to which the petitioner will be entitled and pass appropriate

orders. The Writ Petition is allowed but under the circumstances without costs.