DALSUKHBHAI KESHAVLAL v. NATIONAL INSTITUTE OF DESIGN

that they have appointed a retired High Court Judge, Mr. Justice A.D Desai, as the Inquiry Officer and entrusted the departmental inquiry to him. The Inquiry Officer had issued notice to the present petitioners for proceeding with the inquiry, however, instead of appearing before the Inquiry Officer, the petitioners had instituted a Civil Suit being Civil Suit No. 908 of 1988 on 22nd February, 1988 before the City Civil Court at Ahmedabad inter alia praying for permanent injunction against the respondent Institute from acting in furtherance with the departmental inquiry or taking any disciplinary action in pursuance of the charge sheet dated 7th December, 1987. The City Civil Court has granted injunction against the respondent to conduct the departmental inquiry in view of the fact that criminal trial in respect of the very same incident was pending for decision. Now, against the order of injunction passed by the City Civil Court, the respondent-Institute had filed an Appeal from order being A.O No.

217 of 1988 before this Court. However, this Court did not interfere with the interim order passed by the City Civil Court in view of the fact that it was at interlocutory stage. It is clarified in the reply that the criminal trial commenced before the Metropolitan Court at Ahmedabad and on request being made by the respondent Institute, the Government of Gujarat appointed a senior Advocate Shri R.J Trivedi as Special Public Prosecutor of the said case. However, when Mr. Trivedi appeared in the matter, the present petitioners raised an objection and as a result, the Court decided to continue with the trial of the criminal case and asked the Public Prosecutor to hand over all the papers of the case to the learned Special Public Prosecutor Mr.Trivedi. Instead of proceeding with the trial, the petitioners challenged the appointment of Special Public Prosecutor by filing Special Civil Application before this Court wherein this Court granted stay of the proceedings in the criminal case pending final hearing of the writ petition.

The said petition is also pending for final hearing before this Court. It is also pointed out in the reply that in the meanwhile, the petitioners have filed the present petition and this Court has admitted the matter on 21st April, 1988 and granted ad-interim relief staying the operation and implementation of the order dated 18th March, 1988. Thereafter, the petitioners moved a Civil Application No. 1282 of 1988 inter alia praying for 75% of the wages as subsistence allowance. On the said Civil Application, this Court vide order dated 31st August, 1988 gave directions to the respondent Institute to pay 75% of the wages as `subsistence allowance' to the petitioners with effect from 1st March, 1988. Against the said order dated 31st August, 1988, the respondent preferred Letters Patent Appeal No. 348 of 1988 before this Court which was also dismissed vide order dated 8th February, 1990. Accordingly, the respondent has been paying 75% of the wages as `subsistence allowance' to the petitioners.

Respondent, in its reply has pointed out that besides the present petition, there are various disputes pending before various Courts of law. The Civil Suit No.908 of 1988 filed by the petitioners challenging the validity of the departmental inquiry before the City Civil Court is also pending for final hearing. The criminal proceedings before the Metropolitan Magistrate, Court No. 15 against the petitioners is stayed pursuant to the order passed by this Court. The special Civil Application filed by the petitioners challenging the validity of the appointment of Special Public Prosecutor by the State of Gujarat is pending for final hearing and Special Civil Application No. 5510 of 1999 filed by the petitioner no. 1 inter alia praying for retirement benefits is also pending before this Court. The respondent has also pointed out in the reply that during the pendency of the present proceedings, the petitioners no.

3 & 5 gave letter of apology dated 25th July, 1999 and 16th August, 1999 admitting various charges levelled against them and requested the Institute to consider the matter sympathetically and to revoke the suspension order with immediate effect and direct the petitioners no. 3 & 5 to report for duty latest by 1st September, 1999. It is also pointed out by the respondent that in the aforesaid Civil Suit No. 908 of 1988 which is pending, if ultimately the petitioners succeed in that event, the petitioners will get all the consequential benefits, and therefore, this petition is required to be rejected and same should not be entertained. It is pertinent to note that in the present reply, the respondent has not raised contention about the maintainability of the present petition. The respondent has not raised contention specifically to the effect that the respondent Institute is not a `State' or `other authority' within the meaning of Art.

12 of the Constitution of India. Such a contention has also not been raised by the respondent Institute in its reply dated 10th December, 1999. Against the said reply, the petitioner has filed affidavit-in-rejoinder. The said rejoinder has been filed by the petitioner no. 2 on 15th December, 1999. The petitioners in the said rejoinder have pointed out that sometime back, the respondent no. 1 has given a draft letter to the petitioners for being signed by them and based on the said letter, the petitioners were to be reinstated in service and the inquiry proceedings were to be dropped. The said letters have been given to the respondent Institute duly signed by the petitioners, however, the Management wants to settle other issues which were enumerated in the draft settlement points before suspension was revoked. After signing the said letter, the petitioners have received a communication from the respondent on 15th April, 1998 from the Executive Director of the respondent Institute stating that the letters submitted by the petitioners were still under consideration.

The said letters had been signed by the petitioners on 10th of February, 1988; after protracted discussions, however, the Management had gone back on their assurance to revoke suspension because it was not possible for the petitioners to agree to the settlement points on other issues; including the issue of SEWA which were being insisted upon. It is also pointed out by the petitioners that the Apex Court has already rejected Special Leave Petition filed by the respondent Institute against the judgment and order of the Division Bench of this Court the SEWA case. An affidavit-in-reply to the Affidavit dated 23rd December, 1999 has been filed by the respondent-Institute. In the said reply, the respondent has raised contention in paragraph 2 that the present petition is not maintainable inasmuch as the respondent Institute is not a `State' within the meaning of Art. 12 of the Constitution of India and the respondent Institute is a Society registered under the Societies Registration Act and a Trust registered under the Bombay Public Trusts Act, imparting education to the students engaged in the field of research and development in various disciplines of design, and offering consultancy services as a part of education and research.

In the said reply, it is also pointed out that the service conditions of the employees in the Institute are governed by the Model Standing Orders; since there are no certified standing orders. Clause 25 (5) of the Model Standing Orders empowers the respondent Institute to place an employee under suspension, by an order in writing, and a relevant sub-clause (5) (a) of Clause 25 has been incorporated in the said reply. Further, in the said reply, three contentions have been raised viz., that the 2-P settlement has not been registered, and therefore, it has not statutory force. Moreover, in any case, the said settlement does not supersede the provisions of the Model Standing Orders, which has the statutory force. It is also made it clear that the situation at the relevant time was so tense that it was impossible for the Institute to act exactly as per the 2-P settlement as the petitioners were demonstrating in the corridors of the main building of the Institute during the working hours and tried to force the entry into the administrative department of the respondent Institute, and in the process, the petitioners pelted stones breaking glass panes of the administrative department thereby injuring security and administrative personnel available on duty and also physically assaulted the security staff, as a result whereof the security staff and administrative staff sustained grievous injuries.

Therefore, the respondent Institute was not able to act exactly as per the 2-P settlement which ultimately amounts to breach of provisions of said settlement for which an alternative efficacious remedy under the Industrial law is available to the petitioners. The said reply has been filed by the respondent-Institute on 23rd December, 1999. Thereafter, the respondent Institute has filed additional affidavit on 18th January,

2000. In the additional affidavit, it is contended that the respondent Institute is neither a `State' nor `an instrumentality of State' within the meaning of Art. 12 of the Constitution of India. In support of this contention, functions of the respondent Institute have been narrated just to satisfy the test that the respondent Institute is not a `State' or `other authority' within the meaning of Art. 12 of the Constitution of India. Alongwith the said affidavit, memorandum of association has been produced on record. Against that, the petitioners have filed additional Affidavit-in-Reply pointing out that the present petition was filed in the year 1988 and the respondent Institute did not file any Affidavit-in-Reply till December, 1999 i.e. about 11 years, and therefore, respondents cannot be permitted to file counter affidavit after a gap of 11 years and this Court cannot take into consideration such affidavits.

It is also pointed out by the petitioners that after the arguments, such preliminary objections cannot be permitted to be raised viz., that the present petition is not maintainable and/or the respondent Institute is not a `State' or `other instrumentality of the State' within the meaning of Art. 12 of the Constitution. It is also pointed out by the petitioners that the respondent Institute has subjected itself to the writ jurisdiction of this Court in the present petition during past 11 years. Further, the respondent Institute has also submitted itself to the jurisdiction of this Hon'ble Court under Art. 226 of the Constitution in several other writ petitions; one of them being Special Civil Application No. 6443 of 1987. It is also pointed out by the petitioners that in number of petitions, interim orders have been made by this Court for and/or against the Institute. It is also made it clear that not only the interim orders but also at final stage, such orders have been complied with by the Institute from time to time.

Further, such contention about the respondent Institute is not a `State' is an afterthought and wholly frivolous and ought to be rejected on the basis of the conduct of the respondents. It is also pointed out by the petitioners that if such contention could have been raised at the relevant time i.e. in the year 1988 and not after 11 years, then the petitioners might have explored any other remedy available to them instead of waiting for this question to be decided first by this Court. It is contended that yet in the past 11 years, the respondents not only did not raise any such preliminary objection but has not even challenged the interim order passed in the petition, and while challenging the order passed by this Court in Civil Application No. 1282 of 1988 before the Division Bench in LPA the respondent did not raise this preliminary issue which would have gone to the root of the matter. The petitioners have placed reliance upon a decision of the Apex Court in the matter of Ajay Hasia v.

Khalid Mujid, reported in AIR (1981) SC 487 and the respondent Institute has placed reliance upon decision of Apex Court in the case of Re : NCERT, reported in AIR (1992) SC 76. The said rejoinder has been filed by the petitioners on 24th February, 2000. The petitioners have produced, alongwith the said rejoinder, Annual Report of the respondent Institute for the year 1996-97. The petitioners have also produced a copy of the Affidavit-in Reply filed by the respondent Institute in Misc. Civil Application NO. 820 of 1997 in Civil Application No. 1282 of 1988 and also produced Office Memorandum dated 27th September, 1993 dated 14th July, 1995 and 6th September, 1996. The petitioners have also produced Affidavit of the respondent Institute filed in Special Leave Petition No. 7003 of 1998. Thereafter, Affidavit-in-Sur-Rejoinder has been filed by the respondent Institute on 13th March, 2000. In the Sur-Rejoinder, the respondents have raised similar contention about the respondent Institute being not a `State' and `other instrumentality/authority of the State' within the meaning of Art.

12 of the Constitution and the averments have been made to the effect that it is not controlled by the Central Government and the source of income has been pointed out by the respondent Institute. According to the respondent Institute, it is an autonomous institution and has been a catalyst for design in Indian industry. It has its social commitment who help prepare students for rewarding careers in sectors of social need and for the said purpose the respondent Institute is actively involved in design projects, educating design professionals etc. The said functions carried by the respondent Institute are not the government functions. It is also pointed out by the respondent Institute that in Special Civil Application No. 5510 of 1990 filed by one of the petitioners i.e. petitioner No.1, it is averred that the respondent NID is not a department of the Government of India and the Institution has its own Contributory Provident Fund Scheme, Gratuity and medical scheme, etc. unlike those applicable to the Central Government employees who are governed by various CCS Rules.

Alongwith Sur-Rejoinder, the respondent Institute has also produced a copy of Special Civil Application No. 5510 of 1990 filed by the petitioner no. 1. The respondent Institute has also produced a copy of decision given by this Court in Special Civil Application No. 2025 of 1983 dated 1st October, 1991 [Coram : S.M Soni, J.]. The said decision has been produced by the respondent Institute to support its contention that the Institute is not a `State' within the meaning of Art. 12 of the Constitution. The respondent has also produced one letter dated 3rd March, 2000 addressed to petitioner Dalsukbhai Keshavlal wherein the amount of gratuity has been calculated and paid to the said petitioner no. 1, as per the orders passed by this Court in Special Civil Application No. 5510 of

1999. (cid:9)I have heard at length, learned advocate Mr. Mukul Sinha and learned Sr. Advocate Mr. K.S Nanavati for the respective parties. (cid:9)It is undisputed that the petitioner no. 2 alongwith other petitioners was suspended by the respondent-Institute on 30th November, 1987. The said suspension order has been issued by the respondent-Institute wherein it is mentioned that, `you are hereby suspended from NID service, pending inquiry with immediate effect. The chargesheet narrating charges levelled against you for which the suspension order is passed is being sent to you separately. You will be paid subsistence allowance as per the rules applicable to you. Against the suspension order, on 29th December, 1987, the petitioner no. 2 and other petitioners similarly situated, had represented to the respondent-Institute and pointed out that the said order of suspension is ex facie illegal and void since it is in contravention of Clause

4.3 of the 2-P settlement dated 14th December, 1984. As per the said clause, an employee can be placed under suspension only after conducing a preliminary inquiry and after giving an opportunity to the concerned employee to give explanation regarding the proposed action of placing him under suspension. In the present case, the petitioners have been placed under suspension with immediate effect by an order dated 30th November, 1987; without complying with the requirement of aforesaid clause. It is, therefore, clear that no inquiry preliminary or otherwise was conducted and it is a fact that the petitioners have not been given any opportunity to show cause against the proposed action of their suspension. The said representation dated 29th December, 1987 had remained unattended. Now, the 2-p settlment dated 14th December, 1984 was arrived between the respondent-Institute and the office bearers and Managing Committee members of the NID Employees' Association.

The said settlement has been signed by the Management and also by the Office bearers & members of Managing Committee of the Association. When the settlement was signed, at that occasion, Shri Dalsukhbhai Keshavlal was President and Shri S.S Pillai was General Secretary of the Association. Said Shri Dalsukhbhai Keshavlal is petitioner no. 1 and Shri S.S Pillai is petitioner no. 2 in the present writ petition. Therefore, it is undisputed fact that when the settlement was signed, these two petitioners were office bearers of the Association. The relevant item of settlement i.e., item no. 6 is in respect of Service Rules whereunder NID Management and the Association have agreed to the substitution of the existing disciplinary clause in NID service rules [clause no.4] with the disciplinary clause as at Annexure-II. Clause 4.4 (a), 4.4 (B), 4.13 to 4.19 are adopted tentatively and will be finalised after full discussion in the Consultative Committee.

That, any proposals for addition/alteration/modification to the remaining clauses in the Service Rules will be placed before the Consultative Committee for consideration. Annexure-II to the agreement has been annexed to the settlement and it is a part of the settlement. The relevant Service Rule 4.3 reads as under:- `Where a disciplinary proceeding against an employee is contemplated or is pending or where criminal proceedings against him in respect of any offence are under investigation or trial and the Institute authorities are satisfied after prima facie investigation and due opportunity of explanation given to the concerned employee that it is necessary or desirable to place the employee under suspension, he may, by order in writing, be suspended by the competent authority with effect from such date as may be specified in the order. A statement setting out in detail the reasons for such suspension, will also be recorded.' (cid:9) (cid:9)Now, according to the said Service Rules, in case any disciplinary proceedings are required to be initiated against any employee or the same is contemplated, the respondent Institute has to first satisfy itself; after prima facie investigation and due opportunity of explanation given to the concerned employee that it is necessary or desirable to place an employee under suspension, then he may be suspended by the competent authority with effect from such date as may be specified in the said order.

The statement setting out in detail reasons for such suspension shall also be recorded. The said service rule is part and parcel of 2-p settlement dated 14th December, 1984. In Civil Application No. 1282 of 1988 in Special Civil Application No. 1974 of 1988 [i.e., this petition], this Court has passed an order dated 31st August, 1988 wherein it is observed that, `it is on the basis that parallel criminal proceedings is pending. The Management submits that they have no control over the criminal proceedings which is in charge of the State but there is no dispute that the charges in the criminal case and in the departmental enquiry are the same. In that view of the matter, it cannot be said that the delay in enquiry is attributable to the applicants.. The Management is, therefore, bound to pay increased subsistence allowance.' Hence, prayer 6 (A) of C.A came to be granted by this Court. Thereafter, it is also necessary to refer the order passed by the Division Bench of this Court in Letters Patent Appeal No.

348 of 1988 wherein it is observed that, `..it is not disputed that under Rule 4.3 of the rules for disciplinary action for misconduct, the appellants have power to suspend an employee. Rule 4.4 of the said rules provides for subsistence allowance during the period of suspension.' (cid:9)Learned advocate Mr. Sinha appearing for the petitioners has submitted that the suspension order dated 30th November, 1987 is contrary to the service rule no.

4.3. It violates 2-p settlement and before passing the suspension order, no show cause notice was given to the petitioners; no enquiry was initiated against the petitioner and it is a special condition; as per the service rules, which is required to be followed, and the same have not been followed in the present case, therefore, the suspension order is bad and illegal. According to Mr. Sinha, service rules governs suspension and prior to that a prima facie enquiry and to have reasonable opportunity against such enquiry and a reasoned order must have to be passed by the competent authority and the same is required to be recorded as per these service rules. Mr. Sinha submitted that `satisfaction of the competent authority' is not like `subjective satisfaction'. He also submitted that none of the requirements of service rules, including rule 4.3, have been satisfied by the respondent Institute before passing the suspension order against the petitioners.

He further submitted that the contention with respect to respondent Institute not being a `State' within the meaning of Art. 12 of the Constitution cannot be permitted to be raised at a belated stage i.e. after elapse of 11 years. Mr. Sinha argued that initially when the reply was submitted by the respondent-Institute, no such contention was raised, and therefore, such a contention is an afterthought and the same cannot be permitted to be raised before this Court now. In respect to the contention with regard to availability of alternative remedy to the petitioners, Mr. Sinha submitted that once the petition has been admitted by this Court then the question of having alternative remedy does not arise and the same cannot be considered by this Court when the matter has been admitted and had reached the final hearing stage. However, he also made submission that the alternative efficacious remedy which has been suggested by the respondent-Institute is not really effective remedy because to challenge the suspension order under the provisions of Industrial Disputes Act, 1947, Sec.

2 (A) is not available to the petitioners because the said Sec. 2 (A) gives right to the individual employee to challenge his termination, discharge and dismissal by way of raising an industrial dispute before the Conciliation Officer but the petitioners have no right to challenge the `suspension order' by filing a complaint under Sec. 2 (A) before the Conciliation Officer. According to Mr. Sinha, though an individual cannot challenge the suspension order under the provisions of the Act, his Union can sponsor the cause of the workman, and therefore, it is not a clear, effective alternative remedy available to the petitioners, as a matter of right. Mr. Sinha submitted that the settlement is binding to the respondent-Institute and similarly service rules which is part and parcel of the settlement is also binding to the respondent-Institute. He also submitted that various orders, in number of petitions have been issued by this Court and thereby implemented by the respondent Institute and in none of these petitions, such a contention had ever been raised by the respondent-Institute.

He also submitted that the order passed by this Court in Civil Application No. 1282 of 1988 dated 31st August, 1988 was challenge by the respondent-Institute in Letters Patent Appeal No. 348 of 1988 wherein the Division Bench of this Court on 8th February, 1990 decided the issue. Even in the present proceedings, LPA was filed by the respondent Institute and even on that occasion, no such contention has been raised that the respondent-Institute is not a `State' or `other authority' within the meaning of Art. 12 of the Constitution, and therefore, considering the past conduct of the respondent-Institute, such a contention cannot be permitted to be raised in the present petition. He also submitted that now considering the conduct of the respondent-Institute, the respondent-Institute having estoppel from raising very same contention after lapse of 11 years. He also submitted that if suppose initially in the year 1988; before admission of this petition, if such a contention could have been raised by the respondent-Institute, then the petitioners would have definitely considered to have some alternative remedy and decided to approach the Industrial Forum but after lapse of 11 years when the matter has been admitted and the respondent-Institute had remained silent all alone and not raised such a contention and all of a sudden such a contention has been raised, which is an after thought, just to deny the relief to the petitioners, the same cannot be permitted to be raised at this stage.

He also submitted that the question of jurisdiction of this Court is not a pure question of law but it is mix question of fact and law, and therefore, according to his submissions, in the present petition such a contention which has been raised by the respondent-Institute that the writ petition is not maintainable against it cannot be permitted to be raised. Mr. Sinha has relied upon a decision of the Apex Court in case of Ajay Hasiya [Supra]. He also placed reliance upon certain documents at page 149, 150, 161, 171 and 182, 183 of the petition. He submitted that the affidavit filed by the respondent-Institute in Special Leave Petition [Page Nos. 172 and 176 to 199], the respondent-Institute is having public functions and also having a monopoly centre and deep control of the Central Government. It is contended that the Central Government provides entire fund and only a part of the revenue is generated by the respondent-Institute and that part revenue cannot be considered to be a private fund because the same is not provided by any private party but it is also from the Government estate.

Therefore, according to Mr. Sinha, the respondent-Institute satisfies all the tests of being a `State' or `other authority' under Art. 12 of the Constitution and therefore, writ is maintainable. Thus, according to Mr. Sinha when the respondent-Institute is a `State' and it had violated the service rule 4.3, and therefore, the present petition is required to be allowed. (cid:9)On the other hand, learned Sr. Advocate Mr. Nanavati has raised a contention that the respondent-Institute is not a `State' or `other instrumentality of the State' within the meaning of Art. 12 of the Constitution of India. He also raised other contentions that whether suspension order has been passed by the respondent-Institute in terms of the settlement or in term of the service condition or rules or not are required to be considered by this Court. He also submitted that the order of suspension has been passed under the provisions of the Model Standing Orders, and therefore, he relied upon averments made in the affidavit in reply filed by the respondent-Institute at page 71 and 73 of the said reply.

He raised another contention that whether in case of conflict between the Model Standing Orders or Service Rules then in such circumstances which shall prevail. For that, he has placed reliance upon paragraph nos. 6 & 9 of a decision of the Apex Court in case of Western India Match Company Limited v. Workmen, reported in (1974) 3 SCC 330 and pointed out that according to the said decision, in such a case of conflict between the service rules and the standing orders, the standing order definitely shall prevail upon the service rules, and therefore, according to Mr. Nanavati though there is no certified Standing Orders, the standing orders Act of 1946 is applicable to the respondent-Institute, and therefore, the model standing orders are applicable and under the provisions of the said Model Standing orders, clause 25 (5) is applicable to the present facts of the case and respondent-Institute is empowered to suspend any of its employee under the said provisions.

He also submitted that assuming that if the Standing Orders Act is not applicable or Model Standing Orders are not applicable then at the most it is the case of breach of settlement or service rules and after all it was a private settlement and therefore in such a situation, the petitioners are having alternative efficacious remedy to have prosecution for breach of 2-p settlement against the respondent-Institute. He also submitted that it was not a 2-p settlement dated 14th December, 1984 arrived at between the respondent-Institute and the association. He also submitted that such a settlement is not directly within the meaning of Sec. 2 P of the Act and therefore Sec. 18 is not applicable and that such settlement is not binding to the respondent-Institute. He also submitted that for breach of agreement, no petition can lie and it is not a fundamental right which is violated by the respondent-Institute and it is a contractual right and in such circumstances, such a petition cannot lie and petitioners are having alternative efficacious remedy, and therefore, this petition is required to be dismissed.

In support of his arguments, Mr. Nanavati has placed reliance upon decision of the Apex Court in case of Chandramohan Khanna vs. N.C.E.R.T [AIR (1992) SC 76]. He has also placed reliance upon the decision of this Court in the matter of Gujarat State Fertilizers Company Limited [1995 (2) GLH 179] wherein the Division Bench of this Court has held that GSFC is not a `State' or `other Authority' within the meaning of Art. 12 of the Constitution of India. He also submitted that writ may be maintainable, however, the question is necessary to be examined as to whether respondent-Institute is a `State' or not. Now, unless and until the respondent-Institute is declared `State' or `other Authority' within the meaning of Art. 12 of the Constitution, provision of Art. 14 will not apply in absence of such a decision, and therefore, though the writ may be maintainable but Art. 14 is not available to the petitioners, and therefore, validity and legality of suspension order cannot be examined in a writ petition.

He also relied upon page nos. 165, 166, 186 and 187 and pointed out that respondent-Institute is not an arm of the Government. Strengthening his arguments, Mr. Nanavati has also placed reliance upon a decision rendered by the learned Single Judge of this Court in Special Civil Application No. 2025 of 1983 wherein it is held that IFFCO is not a `State' or `other authority' within the meaning of Art. 12 of the Constitution. Mr. Nanavati submitted that the preliminary contention raised by the respondent-Institute that it is not a `State' within the meaning of Art. 12 of the Constitution is required to be examined first and thereafter this Court should go into the merits of the matter. He also submitted that if the respondent-Institute is not declared to be a `State' then the present petition must fail. He also submitted that a criminal case filed by the respondent Institute is pending and even the departmental inquiry is pending and they are getting 75% of the subsistence allowance from the respondent-Institute.

He also submitted that even rule 4.3, if read strictly, then before passing the suspension orders, no preliminary inquiry is necessary and it is a too technical interpretation of Rule 4.3 and even such technical interpretation or technical non compliance would not invalidate the suspension order. Therefore, according to Mr. Nanavati, the respondent Institute is not a `State' or `other authority' and he submitted that the suspension order is legal and valid, and therefore, the present writ petition is required to be dismissed. Countering the submissions made on behalf of the respondent-Institute, Mr. Sinha pointed out that such a contention which has been raised presently by the respondent-Institute is an afterthought and nowhere it was mentioned that the suspension order was issued under the provisions of Model Standing Orders, on the contrary, on two occasions, the respondent-Institute has specifically made it clear that the suspension order has been issued under the Service Rule 4.3 and the Model Standing Orders have not been taken into account.

He relied upon the first line of the oral Order dated 8th February, 1990 made in Letters Patent Appeal No. 348 of 1988 whereby the Division Bench of this Court had observed that, `..It is not disputed that under Rule 4.3 of the rules for disciplinary action for misconduct, the appellants have power to suspend an employee. Rule 4.4 of the said rules provides for subsistence allowance during the period of suspension.' He submitted that if the Model Standing Orders are made applicable, even in that circumstances, there is provision in the Model Standing Orders that in case the service benefits are higher to the employees under the provisions of Service Rules, then in that circumstances, the same shall have to be applied in derogation of the Standing Orders and in such circumstances, the Standing orders cannot have any adverse effect. Therefore, Mr. Sinha submitted that the safe guard which has been provided under the Service Rule

4.3 cannot be ignore when the Standing Orders is not having higher or more benefit to the workman concerned. Mr. Sinha relied upon Sec. 32 of the Standing Orders Act, 1946 and pointed out that when Service Rules are better in comparison to the Standing Orders, then in such circumstances, Service Rules prevail. Now, in the present case, service rules are beneficial, giving higher safe guard against the suspension of any employee, and therefore, the Model Standing Orders, Clause 25 (5) (a) is not applicable to the present case. Mr. Sinha has submitted written submissions before this Court and as against that, respondent Institute has not submitted any written submission. (cid:9)Learned Sr. Advocate Shri K.S Nanavati submitted that the respondent-Institute is established under Clause 3 of the Memorandum of Association which inter alia includes providing service, training and research in the field of design in industry, graphic, arts, architecture, etc., to establish, equip and maintain workshops, laboratories or factories with modern machinery and equipments in order to undertaken scientific and technological research for the production of goods and the optimum exploitation of raw materials and processes, to encourage and improve education of persons who are engaged or are likely to be engaged in the service training and searches, etc.

He submitted that the income and the property of the respondent Institute is to be utilized towards the promotion of its objects and it cannot be disposed of by way of dividends, bonus, etc. Mr. Nanavati submitted that Rule 3 of the Rules & Regulations of the Institute provides for the constitution of the Society, and the affairs of the Institute shall be administrated, directed and controlled in accordance with the said rules and regulations by the governing Council as provided under Rule 26A. The said Governing Council shall consist of Chairman to be nominated by the Central Government and other officials, as provided under Rule 26-B, which includes, Mayor, Chief Secretary, other Government Officials, or a management expert, an outstanding Craftsman, Professionals from Engineering, Technology, Architecture, Fine Arts and/or Mass Media. Mr. Nanavati further submitted that the funds of the respondent-Institute consists of (i) Grants from the Government of India; (ii) Contributions from other sources; (iii) Income from Investments; and (iv) receipts from other sources.

He further submitted that the main objects of the respondent-Institute is imparting education and providing service, training and research in the fields of design. Mr. Nanavati further argued that the government control is confined only to the proper utilization of the grant received by the Institute and it is as such an Autonomous Body. He vehemently argued that the respondent-Institute is not a `State' nor `an instrumentality or agency of the State' within the meaning of Art. 12 of the Constitution of India because there is no element of public service involved in the work performed by the Institute. Mr. Nanavati contended that the respondent-Institute also does not enjoy any monopoly status conferred by the State and there is also no deep and pervasive state control in the day to day functioning of the Institute, and since the respondent-Institute is neither a State nor an instrumentality of the State, no writ can be issued against it.

Further pressing this contention, Mr. Nanavati submitted that the respondent-Institute is free to apply its income and property towards the promotion of its objectives and implementation of the programmes. He submitted that for the year 1996-97, the Institute earned an amount of Rs. 2,54,33,129 through recurring income and received a grant of Rs. 2,71,81,100, and whereas, for the year 1998-99, the recurring income was Rs. 2,42,21,848 and the grant received was Rs. 3,93,35,416. Thus, it was contended that the respondent Institute is not fully financed by the Government. In support of his arguments, Mr. Nanavati has placed reliance upon a decision of the Hon'ble Supreme Court in the matter of Chandramohan Khanna v. NCERT, reported in AIR (1992) SC 76 wherein it is held that, `the State control does not render such bodies as `State' under Art. 12. The State control, however vast and perversive, is not determinative.

The financial contribution by the State is also not conclusive. The combination of State-aid coupled with an unusual degree of control over the management and policies of the Body and rendering of an important public service being the obligatory functions of the State may largely pointed out that the body is a `State'. (cid:9)On the other hand, Mr. Sinha submitted that the reliance placed upon the judgment in the case of Re : NCERT [Supra] is without any substance as the Hon'ble Supreme Court has not laid down any new principle or test to determine whether an authority is `State' within the meaning of Art. 12 of the Constitution and has obviously adopted the test laid down by the Constitution Bench in the case of Ajay Hasia v. Khalid Mujib [Supra]. Mr. Sinha submitted that the case of NCERT can easily be distinguished on the facts from the present case, since evidently, NCERT was not directly carrying out any function of imparting education or conferring any degree or diploma or executing any Government policy.

He contended that NCERT is essentially an organization set up for the purpose of advising the Government as to the syllabus and curriculum of secondary education and for this purpose, NCERT also printed and published books and other reading materials. Thus, according to Mr. Sinha, NCERT had no direct role whatsoever to play in carrying out or executing any Governmental function or function which is akin to Government function. (cid:9)Mr. Sinha further submitted that the respondent-Institute was specifically set up by the Government of India to carry out the governmental function of training and imparting education to create required manpower for the country, to meet its design needs, especially in the field of industrial design. He further submitted that in several affidavits filed by the respondent-Institute before this Court as well as Hon'ble Supreme Court, the Institute has contended that it is set-up by the Government of India to perform the important function of imparting education in design and training the man-power.

Not only that, from the said affidavits, it emerges that the respondent-Institute is very much part and parcel of the Government machinery and that every service condition of the employees, including salary and other benefits are directly controlled by the Government of India and that the respondent Institute cannot deviate in any manner from the Government directions in that regard. Mr. Sinha contended that even the respondent Institute has gone to the extent of saying that even the `subsistence allowance' being paid to the present petitioners is paid only in accordance with the government directions. Mr. Sinha further pointed out that the respondent-Institute has no powers to grant any financial benefit to its employees; either in terms of salary or otherwise, without the specific prior approval of the Government in Ministry of Industry. In this context, Mr. Sinha drew attention of this Court to a copy of the Approval Letter of the Government of India for revising the pay scale of NID employees in the year 1975. He also drew attention of this Court towards the communications of the Government addressed to the Institute with respect to implementation of IVth Pay Commission recommendations and also communication dated

28.7.1977 with regard to duration and timing of lunch break, tea break, etc. in the respondent Institute. Mr. Sinha submitted that the faculty members of the respondent Institute are desirous of receiving the benefits of UGC pay scales from 1994, however, they have not been able to receive the same due to non-approval from the Government. Thus, according to Mr. Sinha, the deep and pervasive control of the Government reaching all the way upto the payment of subsistence allowance to suspended employees is now obviously an admitted fact. He further submitted that from the Memorandum of Association as well as declarations made in the Annual Reports, it can be seen that the Governing Council of the Institute is constituted only by the Central Government officials, and the power to terminate any member of the Governing Council is solely vested with the Government. Mr. Sinha further reiterated that the entire recurring and non-recurring expenditure is paid by the Central Government and the contention that the respondent Institute also makes its own earnings does not in any way make such earnings a private input of finance, particularly when, not a single rupee is contributed by any private party and if at all the Institute makes any earning, it is on the basis of the manpower and assets created out of the government funds.

Mr. Sinha has gone to the extent saying that many statutory Corporations and Government Companies like NDDB, Bharat Petroleum Limited which are run entirely on their own income which is generated from the business in which they are engaged, and these organizations instead of taking any money from the Government, they actually lends money to the Government. In support of this contention Mr. Sinha cited the case of NDDB and reiterated that the said fact does not disqualify such organizations from being a `State' within the meaning of Art. 12 of the Constitution. Thus, Mr. Sinha contended that merely because the respondent-Institute generates revenue by taking up projects or doing consultancy work does not in any manner dilute its character or status as an authority under Art. 12 of the Constitution particularly when the entire infrastructure of the respondent-Institute is created out of the capital expenditure funds granted by the Government.

(cid:9)Carrying further his case, Mr. Sinha submitted that not only that the respondent Institute carry out Government functions but also such functions and programmes have to be specifically cleared and approved by the Government or the Planning Commission before being implemented. Mr. Sinha further urged that the respondent-Institute does enjoy a monopoly status in the field of design, since this is the only national institute, recognized by the Department of Science and Technology of the Government of India to impart education in the field of design, including Industrial Design. Mr. Sinha confirms that no other institution in the country has been given such a status in the field of design education, and in that view of the matter, all these tests which have been laid down by the Supreme Court in the case of Ajay Hasia [Supra] are fully satisfied and the National Institute of Design is a`State' within the meaning of Art.

12 of the Constitution. Distinguishing the pronouncement of the Apex Court in the case NCERT, Mr. Sinha submitted that the respondent-Institute closely resembles organizations like ICAR because it is organizationally and functionally at par with the Physical Research Laboratory; which though being a registered Public Trust, is held to be a `State' by this Court in cause of (Dr) Mukul Sinha v. P.R.L., reported in 1984 GLH (NOC) 9 in para 49 of the said decision. (cid:9)While considering the submissions made by both the learned advocates, it is first of all necessary to consider the Memorandum of Association of the respondent-Institute wherein in Item No. 3, the objects for which the Society is established have been narrated in detail. Item No. 4 is relevant wherein it is provided that, `the Government may appoint one or more persons to review the work and progress of the Society and to hold inquiries into the affairs thereof and to report thereon in such manner as the Government of India may stipulate.

Upon receipt of such report, the Government of India may take such action and issue such directions as it may consider necessary in respect of any of the matters dealt with in the report and the Society will be bound to comply with such directions.' The other relevant provisions in the Memorandum of Association are with respect to Governing Council wherein it is stated that, `the affairs of the Society shall be administrated, directed and controlled, in accordance with the rules and regulations of the Society, by a Governing Council. The Governing Council of the Society shall consists of the following members :- (i) Chairman - To be nominated by the Central Government. (ii) The Mayor, Ahmedabad City. (iii) The Chief Secretary to the Government of Gujarat. (iv) A representative of the Ministry of Industrial Development, Government of India. (v) A representative of the Ministry of Education, Government of India.

(vi) A representative of the Ministry of Finance, Government of India. (vii) Following to be nominated by the Central Government :- (a) A management expert. (b) An outstanding craftsman. (c) Four professionals from Engineering, Technology, Architecture, Fine Arts and Mass Media. (d) A professional representative of small scale industry. (e) Three members to be elected by the Electoral College consisting of persons nominated by companies, firms or individuals contributing Rs. 25,000/= to the Institute's fund. For this purpose, if the contribution from individual units of a group under one management is less than Rs. 25,000/= then the group will be entitled to one vote in the Electoral College. (viii) Four persons to be co-opted by the Governing Council. (ix) Two faculty members to be nominated by the Chairman. (x) The Executive Director of the Institute. Clause 26 (c) provides that, `the Chairman of the Council will be nominated by the Government of India amongs the members of the Council who shall hold this office for such time as may be specified by the Government of India'.

Clause 25 (d) provides that, `in the event of a disagreement between the representative of the Ministry of Finance, Government of India and the Chairman of the Governing Council of NID, on the financial matters beyond the delegated powers of the Ministry/Department of the Government of India, the matter shall be referred to the Minister of the concerned administrative Ministry and the Finance Minister for a decision.' Clause 29 (c) provides that, `the Government of India may terminate the membership of any member or at one and the same time of all members other than the ex-officio members of the Governing Council or the members elected under Rule 26 (b) (vii)(e). Upon such termination, the vacancy shall be filled by the Government of India.' Clause 37 provides that, `the President or the Chairman may refer any question, which in his opinion, is of sufficient importance for the decision of the Government of India and such decision shall be binding on the Society and its Governing Council.

Clause 51 relates to the funds of the Society. The funds of the Society will consist of the following :- (a) Grants made by the Government of India (b) Contributions from other sources (c) Income from investments (d) Receipts of the Society from other sources Clause 55 of the document provides that, `subject to the approval of the Government of India, the Society may alter or extend the purposes for which it is established in accordance with the provisions of the Societies Registration Act, 1860. Whereas, Clause 56 provides for dissolution of the Society wherein it is provided that, `the Society shall not be dissolved without the consent of the Government of India and on such dissolution the assets of the Society shall be dealt with in accordance with the provisions contained in the Societies Registration Act, 1860. Further, in the Annual Report for the Year 1996-97 it is mentioned that, `the National Institute of Design (NID) is internationally recognized as one of the foremost institutions in the field of design education, research and training.

It has been the recipient of several national and international awards since it was established in 1961 as an autonomous institution under the Ministry of Industry, Government of India. NID has been a catalyst for design in Indian Industry, as its graduates are active in all sectors of the economy. Today, the Institute is being called upon to share its experience with new centres of design training being established in India and elsewhere to promote design education in the service of economic development. NID has been recognized as a Scientific and Industrial Research Organization by the Ministry of Science & Technology, Government of India.' Similarly, in the another Annual Report for the year 1997-98 [at page 171 of the petition] it is mentioned that, `National Institute of Design [NID] is internationally recognized as one of the foremost institutions in the field of design education, research and training.

It has been the recipient of several national and international awards since it was established in 1961 as an autonomous institution under the Ministry of Industry, Government of India. NID has been a catalyst for design in Industry Industry, as its graduates are active in all sectors of the economy. Today, the Institute is being called upon to share its experience with new centres of design training being established in India and elsewhere to promote design education in the service of economic development. NID has been recognized as a Scientific and Industrial Research Organization by the Ministry of Science & Technology, Government of India.' It is also pertinent to note that vide Office Memorandum dated 27th September, 1993, 14th July, 1995 and 6th September, 1996 issued by the Joint Secretary to the Government of India, Ministry of Finance, Department of Expenditure wherein the Government has approved the scale of pay of the Central Government which applies to the employees of the respondent-Institute.

(cid:9)Learned counsel Mr. Nanavati has heavily relied upon two decisions in support of his contention that the respondent-Institute is not a `State' or `other instrumentality of the State' within the meaning of Art. 12 of the Constitution of India. One such decision being in the matter of GSFC & Ors. v/s. Association of Officers of GSFC, reported in 1995 (2) GLH 179. In the said decision, the Division Bench of this Court has considered the case of R.D Sethi v. International Airport Authority, AIR [1979] SC 1628 and Ajay Hasia v. Khalid Mujid [Supra] and other relevant decisions on the issue. After considering all decisions and the Memorandum of Association of GSFC, the Division Bench of this Court has come to the conclusion that the Appellant-GSFC is not a `State' or `other authority' under Art. 12 of the Constitution and that all the provisions of Art. 21 are also not attracted. Thereafter, Mr. Nanavati has placed reliance upon a decision in case of Chandra Mohan Khanna v.

National Council of Research & Training & Ors., reported in AIR (1992) SC 76. The relevant observations made in the said decision are reproduced hereunder :- (cid:9)`Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression `State'. A wide enlargement of the meaning must be tempered by a wise limitation. It must not be lost sight of that in the modern concept of welfare State, independent institution, corporation and agency are generally subject to State control. The State control does not render such bodies as `State' under Article

The State control, however, vast and pervasive is not determinative. The financial contribution by the State is also not conclusive. The combination of State aid coupled with an unusual degree of control over the management and policies of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is `State'. If the Government operates behind a corporate veil, carrying out governmental activity and governmental functions of vital public importance, there may be little difficulty in identifying the body as `State' within the meaning of Art. 12. (cid:9)As the activities of the National Council of Educational Research & Training comprising undertaking several kinds of programmes and activities connected with the co-ordination of research extension services and training and dissemination of improved educational techniques, collaboration in the educational programmes and preparation of and publication of books are not wholly related to governmental functions and its Executive Committee can enter into arrangements with Government, public or private organisations or individuals in futherance of the objectives of the implementation of programmes and is free to apply its income and property towards the promotion of its objective and implementation of its programes and government control is confined only to the proper utilization of the grant given by it which is one of the sources of its funds, the organisation is not State within meaning of Art.

10.(cid:9)We find that the same view has been taken by Chinnappa Reddy, J. in a subsequent decision of this court in the U. P. Warehousing Corporation v. Vijay Narain and the observations made by the learned Judge in that case strongly reinforced the view we are taking particularly in the matrix of our constitutional system.

11.(cid:9)We may point out that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation 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 genetical 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.

12.(cid:9)It is also necessary to add that merely because a juristic entity may be an "authority" and therefore "State" within the meaning of Article 12, it may not be elevated to the position of "State" for the purpose of Articles 309, 310 and 311 which find a place in Part XIV. The definition of "State" in Article 12 which includes an "authority" within the territory of India or under the control of the Government of India is limited in its application only to Part III and by virtue of Article 36, to Part IV: it does not extend to the other provisions of the Constitution and hence a juristic entity which may be "State" for the purpose of Parts III and IV would not be so for the purpose of Part XIV or any other provision of the Constitution. That is why the decisions of this Court in S. L. Aggarwal v. Hindustan Steel Ltd. and other cases involving the applicability of Article 311 have no relevance to the issue before us. ' (cid:9) (cid:9)Mr. Sinha has relied upon a decision in the matter of R.D Shetty v. International Airport Authority,