C/SCA/2552/2014
CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 2552 of 2014
For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Sd/­
Sd/­
=============================================
1.
Whether Reporters of Local Papers may be allowed to see the judgment ?
Yes
2.
To be referred to the Reporter or not ?
Yes
3.
Whether their Lordships wish to see the fair copy of the judgment ?
No
4.
Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
No
5.
Whether it is to be circulated to the civil judge ?
No
=============================================
BHAVNAGAR DISTRICT COOPERATIVE BANK LTD & 1....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
=============================================
Appearance:
MR BS PATEL, ADVOCATE for the Petitioner(s) No. 1 ­ 2
MR DHAWAN JAYSWAL, ASSTT. GOVERNMENT PLEADER for the Respondent(s) No. 1
MR PERCY KAVINA, SR. ADVOCATE with MR BIREN A VAISHNAV, ADVOCATE for Respondent No. 2
NOTICE SERVED BY DS for the Respondent(s) No. 3
=============================================
CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE R.P.DHOLARIA
Date : 10/04/2014
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH)
Leave to amend is granted.
[1.0] RULE. Shri Dhawan Jayswal, learned Assistant Government Page 1 of 43
C/SCA/2552/2014
CAV JUDGMENT
Pleader waives service of notice of Rule on behalf of respondent Nos.1 and 3 and Shri Biren Vaishnav, learned advocate waives service of notice of Rule on behalf of respondent No.2. In the facts and circumstances of the case and with the consent of learned advocate appearing on behalf of respective parties, heard learned advocate appearing on behalf of respective parties for final hearing today. [2.0] By way of this petition under Article 226 of the Constitution of India, petitioners have prayed for an appropriate writ, direction and order quashing and setting aside the order dated 03.09.2013 (Annexure­A to the petition) passed by respondent No.2 – Chief Electoral Officer, Gujarat State [hereinafter referred to as “CEO, Gujarat State”], by which the petitioner is requested to furnish the information regarding the staff of Bhavnagar District Cooperative Bank and all other organizations/branches under the administrative control working in Districts to the concerned District Election Officer so that the staff of the petitioner – cooperative bank and the staff working under the different branches in the District can be requisitioned under section 159(2) of the Representation of People Act, 1951 [hereinafter referred to as “Act, 1951”] and to make the staff available to the District Election Officer for purpose of election duty in connection with the ensuing general elections of Lok Sabha, 2014. It appears that the said order has been issued by the CEO, Gujarat State in purported exercise of powers under Section 159(2) of the Act, 1951. The petitioner has also prayed for an appropriate writ, direction, order challenging the order passed by the concerned respondents/respondent No.3/District Election Officer of requisitioning the vehicles of the petitioner No.1 Bank. However, in view of the subsequent decision of this Court rendered in Special Page 2 of 43
C/SCA/2552/2014
CAV JUDGMENT
Civil Application No.3864/2014 and other allied matters and in view of the subsequent development, Shri B.S. Patel, learned advocate appearing on behalf of the petitioners does not press the present petition challenging the requisition order of vehicles of the petitioner No.1 Bank and has stated at the Bar that present petition be restricted to challenging the impugned order dated 03.09.2013 passed by the CEO, Gujarat State, at annexure­A to the petition. [3.0] That the petitioner No.1 is a District Cooperative Bank having various branches in the District Bhavnagar, as such registered under the provisions of the Gujarat Cooperative Societies Act, 1961 [hereinafter referred to as “Act, 1961”] and the petitioner No.2 is the General Manager of the petitioner No.1 Bank.
[3.1] That by impugned order dated 03.09.2013 and in purported exercise of powers under Section 159(2) of the Act, 1951, the respondent No.2 – CEO, Gujarat State has called upon the petitioners to furnish the information regarding the staff of the District Cooperative Bank and all the organizations/branches under its administrative control working in the districts to the concerned District Election Officer, whatever the information is called for by the concerned District Election Officer and to make the staff available to the District Election Officer for purpose of election duty in connection with ensuing general elections in Lok Sabha, 2014. It is also ordered that the concerned District Education Officer shall make available to the Returning Officers within respective districts such staff as may be necessary for the purpose of any duty in connection with the election. It appears that the aforesaid order is issued by the CEO, Gujarat State in purported exercise of powers under Section 159(2) of the Act, 1951 and treating the petitioner No.1 District Cooperative Bank/organization as one of the Page 3 of 43
C/SCA/2552/2014
CAV JUDGMENT
authorities covered under Section 159(2) of the Act, 1951. [3.2] Feeling aggrieved and dissatisfied with the impugned order dated 03.09.2013 issued/passed by the CEO, Gujarat State by which the staff of the petitioner No.1 Bank is sought to be requisitioned under Section 159(2) of the Act, 1951 for purpose of election duty in connection with the ensuing general elections of Lok Sabha, 2014 and treating the petitioner No.1 District Cooperative Bank registered under the Act, 1961 as one of the authorities covered under Section 159(2) of the Act, 1951. [4.0] Shri B.S. Patel, learned advocate appearing on behalf of the petitioners has vehemently submitted that the respondent No.2 – CEO, Gujarat State has materially erred in treating the petitioner No.1 District Cooperative Bank as authority covered under Section 159(2) of the Act, 1951 and consequently passing an order requisitioning the staff of the petitioner No.1 Bank working at the headquarters and other branches in the district for purpose of election duty in connection with the ensuing general elections to Lok Sabha, 2014. It is submitted that as such petitioner No.1 Bank cannot be said to be an authority covered under Section 159(2) of the Act, 1951. [4.1] It is submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that as such the petitioner No.1 Bank is registered under the provisions of the Act, 1961 and is running its business after obtaining license under the Banking Regulation Act, 1949. It is submitted that therefore as such the petitioner No.1 District Cooperative Bank cannot be said to be an institution, concern or undertaking established by or under the Central, Provincial or State Act. Page 4 of 43
C/SCA/2552/2014
CAV JUDGMENT
[4.2] It is further submitted that petitioner No.1 Bank has got no finance from the State as well as the Central Government. It is submitted that final authority in petitioner No.1 Bank is general body of the Bank under Section 73 of the Act, 1961. It is further submitted that Board of Directors are elected by the members and government nominates only one director under Section 80 of the Act, 1961. It is submitted that therefore the petitioner No.1 Bank cannot be sad to be an institution, concern or undertaking controlled or financed wholly or substantially by funds provided directly or indirectly, by the Central Government or a State Government. [4.3] Relying upon the debate by the Constituent Assembly of India before framing of Article 324 of the Constitution of India, it is submitted that the intention of the Constituent Assembly indisputably seems to be as follows:
1. The Constituent Assembly wanted to create the commission for election which is independent from all the executives.
2. That the Election Commission was required to be armed with sufficient staff, but only on the ground that it would burden the public exchequer and the staff will have to remain idle for number of days, it was decided that the Election Commission can have staff from the Government i.e. State and Central Government who are under His Excellency The President of India and His Excellency The Governor of State. It is submitted that it was also noted by the Constituent Assembly that Assembly does not want to create kingdom within kingdom. It is submitted that thereafter Article 324 of the Constitution of India has come into force. It is submitted that as per Article Page 5 of 43
C/SCA/2552/2014
CAV JUDGMENT
324(6) of the Constitution of India, the President or the Governor of a State, shall when so requested by the Election Commissioner, make available to the Election Commission or to Regional Commissioner such staff as may be necessary for the discharge of the functions conferred on the Election Commission by clause (1). It is submitted that therefore source of power of the Election Commission flows from Article 324 of the Constitution of India, which gives powers to the Election Commission for making request to the President of India or Governor of a State for providing such staff as may be necessary. [4.4] Shri Patel, learned advocate appearing on behalf of the petitioners has submitted that the petitioner No.1 Bank cannot be said to be a local authority or university established or incorporated by or under a Central, Provincial or State Act or even a government company as defined under Section 617 of the Companies Act, 1956. Shri Patel, learned advocate appearing on behalf of the petitioners has submitted that according to the Election Commission, the petitioner No.1 District Cooperative Bank would fall under Section 159(2)(iv) of the Act, 1951. It is submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that prior to the amendment in Section 159 of the Act, 1951, it provided that every local authority in a State shall, when so requested by a Regional Commissioner appointed under clause (4) of Article 324 of the Constitution of India or the Chief Electoral Officer of the State, make available to any Returning Officer such staff as may be necessary for the purpose of any duty in connection with the election. It is submitted that aforesaid unamended section of the Act, 1951 came to be considered and interpreted by the Hon’ble Supreme Court in the decision in the case of Election Commission of India v. State Bank of India Staff Association Local Head Page 6 of 43
C/SCA/2552/2014
CAV JUDGMENT
Office Unit, Patna and Ors. reported in 1995 Supp.(2) SCC 13. It is submitted that in the aforesaid decision, on considering Articles 324(4) and 324(6) of the Constitution of India and section 159 of the Act, 1951 as is stood, it is observed and held that the words “such staff” in clause (6) of Article 324 can only mean that the staff which is under the control of the President or the Governor concerned and not any staff over which they do not exercise control. It is submitted that it is further observed and held that it could mean only that staff on which the President or the Governor, as the case may be, would be in a position to exercise disciplinary powers. It is submitted that it is further observed and held that on a requisition made by the Election Commission, the services of those government servants who are appointed to public services and posts under the Central or State Government will have to be made available for the purpose of election. It is submitted that in the aforesaid decision the Hon’ble Supreme Court has clearly observed that while applying the provisions of Section 159 of the Act, 1951, the source of power flows from Article 324(6) of the Constitution of India. It is submitted that in the aforesaid case the Hon’ble Supreme Court has quashed and set aside the order of District Election Officer requisitioning the services of the employees of the State Bank of India for election duty. Relying upon the aforesaid decision of the Hon’ble Supreme Court in the case of State Bank of India Staff Association Local Head Office Unit, Patna and Ors. (Supra), it is submitted that petitioner No.1 District Cooperative Bank who is registered under the provisions of Act, 1961 and its staff cannot be said to be either under the President of India or under the Governor of State. It is submitted that therefore by no stretch of imagination it can be said that the petitioner No.1 Bank / organization falls under any of the categories mentioned in Section 159(2)(iv) of the Act, 1951. Page 7 of 43
C/SCA/2552/2014
CAV JUDGMENT
[4.5] Shri B.S. Patel, learned advocate appearing on behalf of the petitioners has also relied upon the decision of the Hon’ble Supreme Court in the case of Thalappalam Ser. Co­op. Bank Ltd. and Ors. v. State of Kerala and Ors. reported in 2013 (3) GLH 591 in support of his submission that as held by the Hon’ble Supreme Court in the said decision, cooperative society is not a State within the meaning of Article 12 of the Constitution of India or “body controlled” by the appropriate Government. It is further submitted that it is also observed and held that a cooperative society registered under Act, 1961 cannot be said to be “substantially financed” by the State or the Centre. [4.6] It is further submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that as the petitioner No.1 Bank is established and registered under the provisions of the Act, 1961, it cannot be said to be an institution, concern or undertaking which is established by or under a Central, Provincial or State Act. It is submitted that merely because the petitioner No.1 District Cooperative Bank is required to obtain the license and as such has obtained the license to do the business, under the provisions of the Banking Regulation Act, petitioner No.1 District Cooperative Bank cannot be said to be an institution, concern or undertaking which is established by or under a Central, Provincial or State Act. Shri Patel, learned advocate has submitted that similarly situated words have been interpreted by the Hon’ble Supreme Court in the case of Dalco Engineering Private Limited v. Satish Prabhakar Padhye and Ors. reported in (2010)4 SCC 378 where the Hon’ble Supreme Court has held that the key word in expression is “established” which precedes “by or under”. Relying upon the aforesaid decision of the Hon’ble Supreme Court more particularly the observations made in paras 21 to 25 of the aforesaid decision, it is vehemently Page 8 of 43
C/SCA/2552/2014
CAV JUDGMENT
submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that petitioner No.1 District Cooperative Bank, which is registered under the provisions of Act, 1961 cannot be said to be an institution, concern or undertaking which is established by or under a Central, Provincial or State Act as provided under Section 159(2)(iv) of the Act, 1951. [4.7] It is further submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that while considering true interpretation of Section 159 of the Act, 1951, even the intention of legislature can be culled out from other provisions of Section 159 of the Act, 1951. It is submitted that in Section 159(2)(iii), there is a reference of government company as defined in Section 617 of the Companies Act, 1956 only. It is submitted that therefore any other company which is registered under the Companies Act, 1956 are not covered but only the government company is covered. Making above submissions and relying upon above decisions, it is requested to allow the present special civil application and hold that the respondent No.2 – CEO, Gujarat State and/or its subordinates as no jurisdiction and/or authority to requisition the staff of the petitioner No.1 District Cooperative Bank for the election duty.
[5.0] Present petition is opposed by Shri Percy Kavina, learned Counsel appearing with Shri Biren Vaishnav, learned advocate appearing on behalf of the respondent No.2 – CEO, Gujarat State. It is vehemently submitted by Shri Kavina, learned Counsel appearing on behalf of CEO, Gujarat State that the impugned order challenged by the petitioner Bank, requisitioning its staff passed under Section 159(2) of the Act, 1951 is just and proper as the petitioner No.1 Bank is an institution established by or under the Page 9 of 43
C/SCA/2552/2014
CAV JUDGMENT
State Act i.e. Act, 1961. [5.1] It is submitted that the cooperative society but for a license granted in exercise of powers under the Reserve Bank of India by Section 22(1) read with Section 56(o) of the Banking Regulation Act, 1949, to it to carry out banking business would not have been able to function as a bank. It is submitted that therefore the society is an institution established under the Act, 1961 and is enable to carry out its day to day activities by virtue of license granted to it under the Banking Regulation Act, 1949 and therefore, falls within the purview of Section 159 of the Act, 1951.
[5.2] It is further submitted by Shri Kavina, learned Counsel that powers vested under Section 159 of the Act, 1951 are so vested in exercise of powers under Article 324 of the Constitution of India and the context and the meaning of the phrase “by or established under the Act” has to be interpreted with the widest possible amplitude and not in a restricted manner. It is submitted that powers under Section 159 of the Act, 1951 have been exercised for the purposes of carrying out to carry the mandate under Article 324 i.e. to conduct elections and therefore, the petitioner’s purported infraction of its right has to be viewed with circumspection. It is submitted that rights of the bank and/or its employees have to yield to larger public interest. In support of his above submissions, Shri Kavina, learned Counsel has relied upon the decision of the Hon’ble Supreme Court in the case of Rajendra Chingaravelu v. R.K. Mishra, Additional Commissioner of Income Tax and Ors. reported in (2010)1 SCC 457 (Para 16). [5.3] It is further submitted by Shri Kavina, learned Counsel appearing on behalf of the CEO, Gujarat State that the Bhavnagar Page 10 of 43
C/SCA/2552/2014
CAV JUDGMENT
District Cooperative Bank is a cooperative society and is, therefore, properly designated as incorporated “under” a statute. It is submitted that but for its incorporation under the Act, 1961, it could not have been brought into existence. It is submitted that the phrase “by or under the Act” has to be read disjunctively and the interpretation of the petitioner that as the Bank is not created or incorporated “by” an Act cannot stand to reason as, but for the operation of the Act, 1961, it would not have existed and therefore, it owes its existence to the Act and only by virtue of registration under the statute does the Bank have its own identity. In support of his above submissions, Shri Kavina, learned Counsel appearing on behalf of the respondent No.2 has relied upon the decision of the Madras High Court in the case of G. Narayanaswamy Naidu v. C. Krishnamurthi and Anr. reported in AIR 1958 Madras 343. It is submitted that as such the decision of the Madras High Court in the case of G. Narayanaswamy Naidu (Supra) though has been subsequently over­ruled by the Hon’ble Supreme Court, however, on other points/grounds and not with respect to the aforesaid observations. It is submitted that therefore the observations made by the Madras High Court in the aforesaid decision made in paras 45 and 46 still stand and is required to be considered by this Court. [5.4] It is further submitted by Shri Kavina, learned Counsel appearing on behalf of the respondent No.2 that the provision of Section 159 of the Act, 1951 states that the institution, concern, undertaking etc. must be established “by or under the Act”. However, the phrase “by” an Act, or “under the Act” in the context of section would need to be read disjunctively. It is submitted that merely because the petitioner is not established “by” an Act, would not take it away from the purview of section. It is submitted that “under the Act” is to be read to mean as the Bank’s existence and its Page 11 of 43
C/SCA/2552/2014
CAV JUDGMENT
functions are enabled by the powers given to it under the Act, 1961 and therefore, as the bye­laws governing its day to day functions are framed under the Rule making power of the Act, 1961, the petitioner society enable to act and exist only by virtue of being under the purview of Act, 1961 and the powers have been vested to act under the bye­laws framed under the Act. In support of his above submissions, Shri Kavina, learned Counsel appearing on behalf of respondent No.2 has heavily relied upon the decision of the Hon’ble Supreme Court in the case of Dr. Indramani Pyarelal Gupta and Ors. v. W.R. Natu and Ors. reported in AIR 1963 SC 274 (Paras 14, 15 and 16). It is submitted that aforesaid is a 5 Judges Bench judgment and the same has quoted the judgment of the Madras High Court in the case of G. Narayanaswamy Naidu (Supra) with approval. It is submitted that therefore the ratio of Madras High Court can be said to be held to have been implicitly approved by the Hon’ble Supreme Court. [5.5] It is submitted that extensive reading of the bye­laws would show that government has control over the society inasmuch as the society has to work for the control of Registrar of Cooperative Societies and even on the Board of Bank, a representative is nominated as a Director etc.
[5.6] It is further submitted by Shri Kavina, learned Counsel appearing on behalf of respondent No.2 that even Section 159 of the Act, 1951 has undergone a substantial change and the comparison of the unamended section with that of the amended one shows that the institution, concern etc. are not only restricted to those being synonymous to “local authorities”. It is submitted that broad and purposive interpretation of the words used in the amended provisions warrant inclusion of the petitioner Bank Page 12 of 43
C/SCA/2552/2014
CAV JUDGMENT
and/or a District Cooperative Bank like the petitioner. [5.7] Now, so far as the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Thalappalam Ser. Co­op. Bank Ltd. (Supra) by the learned advocate appearing on behalf of the petitioners and the reliance placed on the definition of “public authority” under the Right to Information Act is concerned, it is submitted by Shri Kavina, learned Counsel appearing on behalf of respondent No.2 that the definition of the “public authority” under the RTI Act is incomparable with a definition under sub­Section (b) of Section 159 of the Act, 1951. It is submitted that meaning of “public authority” as can be read means a body or an institution constituted “by or under” the Constitution; “by” any other law made by Parliament or State legislature whereas the definition under the Act, 1951 is much wider as it uses the phraseology “by or under the Act”. It is submitted that even otherwise the context of the amendment “public authority” under the RTI Act cannot be imported into and read in the context of the definition under the Act, 1951 as the purposes of the Act and the fields that they operate are distinct and different and therefore, reliance placed on the decision of the Hon’ble Supreme Court in the case of Thalappalam Ser. Co­op. Bank Ltd. (Supra) by the learned advocate appearing on behalf of the petitioners is out of context vis­a­vis the present controversy is concerned. [5.8] It is further submitted by Shri Kavina, learned Counsel appearing on behalf of the respondent No.2 that even the reliance placed on the decision of the Hon’ble Supreme Court in the case of Dalco Engineering Private Limited (Supra) is also out of context. It is submitted that the case on hand before the Hon’ble Supreme Court related to an enforcement of a personal right under the Page 13 of 43
C/SCA/2552/2014
CAV JUDGMENT
Disabilities Act and the Hon’ble Supreme Court was interpreting the definition in the context of government companies / corporations versus private companies/corporations and therefore, no support can be taken from the said decision/judgment. It is submitted that the interpretation put by the petitioner is a narrow one basing itself on a right based approach. It is submitted that in the present case the Court may rather apply a duty based test the true meaning of these words. [5.9] It is further submitted by Shri Kavina, learned Counsel appearing on behalf of the respondent No.2 that as such by sparing the staff by the petitioner No.1 cooperative bank, it is not going to cause any hardship to the bank and/or its staff. It is submitted that apprehension voiced in the petition that bank will suffer as staff will have to be called for training purpose and therefore, some branches will have to be closed is an apprehension that is misconceived as training sessions were scheduled on Sunday and the duties that are to be assigned are on a polling day, which otherwise is a holiday and therefore, it would not be detrimental to the bank’s interest. Making above submissions and relying upon above decisions it is requested to dismiss the present petition on merits as well as looking to the larger public interest. [6.0] In reply to the submission made by Shri Kavina, learned Counsel appearing on behalf of respondent No.2 that as the petitioner No.1 Bank is required to obtain the license under the Banking Regulation Act and obtain the license from the Reserve Bank of India, as the petitioner No.1 Bank would be under the control of the Reserve Bank of India and therefore, the petitioner No.1 Bank can be said to be an institution “by or under” the Page 14 of 43
C/SCA/2552/2014
CAV JUDGMENT
establishment of the Central/State Act is concerned, Shri B.S. Patel, learned advocate appearing on behalf of the petitioners has heavily relied upon the decision of the Hon’ble Supreme Court in the case of Federal Bank Ltd. v. Sagar Thomas and Others reported in (2003)10 SCC 733.
[6.1] Now, so far as the submission on behalf of the respondent that there is a shortage of staff and/or more staff is required for the election duty which would be in the larger public interest, it is submitted by Shri Patel, learned advocate appearing on behalf of the petitioners that a similar submission came to be considered by the Hon’ble Supreme Court in the case of State Bank of India Staff Association Local Head Office Unit, Patna and Ors. (Supra) and it is observed and held that may be, to conduct the elections many polling stations are set up. Consequently, the services of many persons may be required. May be, the Election Commission may draw the minimum staff from the banks to ensure that the banking business is not disrupted but the question here is of power and not discretion. If there is power it may be exercised with circumspection and minimum staff may be requisitioned but if there is no power the question of the mode of its exercise will not arise at all. It is a question of existence of power and not the manner of its exercise.
Making above submissions, it is requested to allow the present special civil application and grant the relief as prayed for. [7.0] Heard learned advocate appearing on behalf of respective parties at length. A short but an interesting question of law which is posed for consideration of this Court is whether the petitioner No.1 District Cooperative Bank registered under the provisions of the Act, 1961 Page 15 of 43
C/SCA/2552/2014
CAV JUDGMENT
having a license by the Reserve Bank of India under the Banking Regulation Act can be said to be the authority falling under Section 159 of the Act, 1951 more particularly Section 159(2)(iv) of the Act, 1951 and consequently the Election Commission has any authority and/or power in purported exercise of powers under Section 159 of the Act, 1951 to requisition the staff of the petitioner No.1 District Cooperative Bank for the election duty?
[7.1] It is an admitted position that petitioner No.1 District Cooperative Bank is as such registered under the provisions of the Act, 1961 and the entire control vests in the general body of the Bank. It does not appear that the State has any financial control over the petitioner No.1 Bank. The Board of Directors are elected by its members and as per Section 80 of the Act, 1961, there shall be only one government nominee as a Director in the Board. The license under the Banking Regulation Act, 1949 is required to be obtained by the petitioner No.1 Bank from the Reserve Bank of India only with a view to do the banking business. Therefore, the first question which is required to be considered is whether the petitioner No.1 District Cooperative Bank can be said to be an institution, concern or undertaking which is controlled, or financed wholly or substantially by funds provided, directly or indirectly by the Central Government or a State Government? [7.2] Somewhat similar question came to be considered by the Hon’ble Supreme Court in the case of Thalappalam Ser. Co­op. Bank Ltd. (Supra). In the case before the Hon’ble Supreme Court, the Court was considering the cooperative society registered or deemed to be registered under the Cooperative Societies Act, which are not owned, controlled or substantially financed by the State or Central Government or firm established or constituted by law made Page 16 of 43
C/SCA/2552/2014
CAV JUDGMENT
by parliament or State legislature vis­a­vis the expression “public authority” as defined under Section 2(h) of the RTI Act. Section 2(h) of the RTI Act which defines “public authority” reads as under:
“public authority” means any authority or body or institution of self­government established or constituted—
(a) (b) (c) (d) by or under the Constitution;
by any other law made by Parliament;
by any other law made by State Legislature;
by notification issued or order made by the appropriate Government, and includes any—
(i) body owned, controlled or substantially financed;
(ii) non­Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government” While considering the question whether the cooperative societies registered or deemed to be registered under the Act, 1961, will fall within the expression “State” within the meaning of Article 12 of the Constitution of India, the Hon’ble Supreme Court considered its earlier decision in the case of Executive Committee of Vaish Degree College, Shami and Ors. v. Lakshmi Narain and Ors. reported in (1976)2 SCC 58 more particularly para 10 which reads as under:
“14. This Court in Executive Committee of Vaish Degree College, Shamli and Others v. Lakshmi Narain and Others (1976) 2 SCC 58, while dealing with the status of the Executive Committee of a Degree College registered under the Co­operative Societies Act, held as follows:
“10………It seems to us that before an institution can be a statutory body it must be created by or under the statute and owe its existence to a statute. This must be the primary thing which has got to be established. Here a distinction must be made between an institution which is not created by or under a statute Page 17 of 43
C/SCA/2552/2014
CAV JUDGMENT
but is governed by certain statutory provisions for the proper maintenance and administration of the institution. There have been a number of institutions which though not created by or under any statute have adopted certain statutory provisions, but that by itself is not, in our opinion, sufficient to clothe the institution with a statutory character……….”
After considering the aforesaid decision the Hon’ble Supreme Court in para 15 has observed and held as under:
“15. We can, therefore, draw a clear distinction between a body which is created by a Statute and a body which, after having come into existence, is governed in accordance with the provisions of a Statute. Societies, with which we are concerned, fall under the later category that is governed by the Societies Act and are not statutory bodies, but only body corporate within the meaning of Section 9 of the Kerala Co­
operative Societies Act having perpetual succession and common seal and hence have the power to hold property, enter into contract, institute and defend suites and other legal proceedings and to do all things necessary for the purpose, for which it was constituted. Section 27 of the Societies Act categorically states that the final authority of a society vests in the general body of its members and every society is managed by the managing committee constituted in terms of the bye­laws as provided under Section 28 of the Societies Act. Final authority so far as such types of Societies are concerned, as Statute says, is the general body and not the Registrar of Cooperative Societies or State Government.”
[7.2.1]In the said decision the Hon’ble Supreme Court also considered its decision in the case of Federal Bank Ltd. v. Sagar Thomas and Others reported in (2003)10 SCC 733 more particularly para 32, which reads as under:
“32. Merely because Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due Page 18 of 43
C/SCA/2552/2014
CAV JUDGMENT
regard to the interests of the depositors etc. as provided under Section 5(c)(a) of the Banking Regulation Act does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty. These are all regulatory measures applicable to those carrying on commercial activity in banking and these companies are to act according to these provisions failing which certain consequences follow as indicated in the Act itself. As to the provision regarding acquisition of a banking company by the Government, it may be pointed out that any private property can be acquired by the Government in public interest. It is now a judicially accepted norm that private interest has to give way to the public interest. If a private property is acquired in public interest it does not mean that the party whose property is acquired is performing or discharging any function or duty of public character though it would be so for the acquiring authority.”
[7.2.2]Thereafter, considering the decision of the Hon’ble Supreme Court in the case of S.S. Rana v. Registrar, Cooperative Societies and Anr. reported in (2006)11 SCC 634 it is observed and held in para 17 as under:
“17. Societies are, of course, subject to the control of the statutory authorities like Registrar, Joint Registrar, the Government, etc. but cannot be said that the State exercises any direct or indirect control over the affairs of the society which is deep and all pervasive. Supervisory or general regulation under the statute over the co­operative societies, which are body corporate does not render activities of the body so regulated as subject to such control of the State so as to bring it within the meaning of the “State” or instrumentality of the State. Above principle has been approved by this Court in S.S. Rana v. Registrar, Co­operative Societies and another (2006) 11 SCC 634. In that case this Court was dealing with the maintainability of the writ petition against the Kangra Central Co­operative Society Bank Limited, a society registered under the provisions of the Himachal Pradesh Co­operative Societies Act, 1968. After examining various provisions of the H.P. Co­operative Societies Act this Court held as follows:
Page 19 of 43
C/SCA/2552/2014
CAV JUDGMENT
“9. It is not in dispute that the Society has not been constituted under an Act. Its functions like any other cooperative society are mainly regulated in terms of the provisions of the Act, except as provided in the bye­laws of the Society. The State has no say in the functions of the Society. Membership, acquisition of shares and all other matters are governed by the bye­laws framed under the Act. The terms and conditions of an officer of the cooperative society, indisputably, are governed by the Rules. Rule 56, to which reference has been made by Mr Vijay Kumar, does not contain any provision in terms whereof any legal right as such is conferred upon an officer of the Society.
10. It has not been shown before us that the State exercises any direct or indirect control over the affairs of the Society for deep and pervasive control. The State furthermore is not the majority shareholder. The State has the power only to nominate one Director. It cannot, thus, be said that the State exercises any functional control over the affairs of the Society in the sense that the majority Directors are nominated by the State. For arriving at the conclusion that the State has a deep and pervasive control over the Society, several other relevant questions are required to be considered, namely, (1) How was the Society created? (2) Whether it enjoys any monopoly character? (3) Do the functions of the Society partake to statutory functions or public functions? and (4) Can it be characterised as public authority?
11. Respondent 2, the Society does not answer any of the aforementioned tests. In the case of a non­statutory society, the control thereover would mean that the same satisfies the tests laid down by this Court in Ajay Hasia v. Khalid Mujib Sehravardi. [See Zuroastrian Coop. Housing Society Ltd. v. Distt. Registrar, Coop. Societies (Urban).]
12. It is well settled that general regulations under an Act, like the Companies Act or the Cooperative Societies Act, would not render the activities of a company or a society as subject to control of the State. Such control in terms of the provisions of the Act are meant to ensure Page 20 of 43
C/SCA/2552/2014
CAV JUDGMENT
proper functioning of the society and the State or statutory authorities would have nothing to do with its day­to­day functions.”
[7.2.3]In the said decision the Hon’ble Supreme Court also had an occasion to consider the word “controlled” by the appropriate government and the word “substantially financed” and in paras 31 to 38 it is observed and held as under:
“31. The RTI Act, therefore, deals with bodies which are owned, controlled or substantially financed, directly or indirectly, by funds provided by the appropriate government and also non­government organizations substantially financed, directly or indirectly, by funds provided by the appropriate government, in the event of which they may fall within the definition of Section 2(h)(d)(i) or (ii) respectively. As already pointed out, a body, institution or an organization, which is neither a State within the meaning of Article 12 of the Constitution or instrumentalities, may still answer the definition of public authority under Section 2(h)d (i) or (ii).
(a) Body owned by the appropriate government – A body owned by the appropriate government clearly falls under Section 2(h)(d)(i) of the Act. A body owned, means to have a good legal title to it having the ultimate control over the affairs of that body, ownership takes in its fold control, finance etc. Further discussion of this concept is unnecessary because, admittedly, the societies in question are not owned by the appropriate government.
(b) Body Controlled by the Appropriate Government
A body which is controlled by the appropriate government can fall under the definition of public authority under Section 2h(d)(i). Let us examine the meaning of the expression “controlled” in the context of RTI Act and not in the context of the expression “controlled” judicially interpreted while examining the scope of the expression “State” under Article 12 of the Constitution or in the context of maintainability of a Page 21 of 43
C/SCA/2552/2014
CAV JUDGMENT
writ against a body or authority under Article 226 of the Constitution of India. The word “control” or “controlled” has not been defined in the RTI Act, and hence, we have to understand the scope of the expression ‘controlled’ in the context of the words which exist prior and subsequent i.e. “body owned” and “substantially financed” respectively. The meaning of the word “control” has come up for consideration in several cases before this Court in different contexts. In State of West Bengal and another v. Nripendra Nath Bagchi, AIR 1966 SC 447 while interpreting the scope of Article 235 of the Constitution of India, which confers control by the High Court over District Courts, this Court held that the word “control” includes the power to take disciplinary action and all other incidental or consequential steps to effectuate this end and made the following observations :
“The word ‘control’, as we have seen, was used for the first time in the Constitution and it is accompanied by the word ‘vest’ which is a strong word. It shows that the High Court is made the sole custodian of the control over the judiciary. Control, therefore, is not merely the power to arrange the day to day working of the court but contemplates disciplinary jurisdiction over the presiding Judge.... In our judgment, the control which is vested in the High Court is a complete control subject only to the power of the Governor in the matter of appointment (including dismissal and removal) and posting and promotion of District Judges. Within the exercise of the control vested in the High Court, the High Court can hold enquiries, impose punishments other than dismissal or removal, ...”
32. The above position has been reiterated by this Court in Chief Justice of Andhra Pradesh and others v. L.V.A. Dixitulu and others (1979) 2 SCC 34. In Corporation of the City of Nagpur Civil Lines, Nagpur and another v. Ramchandra and others (1981) 2 SCC 714, while interpreting the provisions of Section 59(3) of the City of Nagpur Corporation Act, 1948, this Court held as follows :
“4. It is thus now settled by this Court that the term Page 22 of 43
C/SCA/2552/2014
CAV JUDGMENT
“control” is of a very wide connotation and amplitude and includes a large variety of powers which are incidental or consequential to achieve the powers­ vested in the authority concerned…….”
33. The word “control” is also sometimes used synonyms with superintendence, management or authority to direct, restrict or regulate by a superior authority in exercise of its supervisory power. This Court in The Shamrao Vithal Co­operative Bank Ltd. v. Kasargode Pandhuranga Mallya (1972) 4 SCC 600, held that the word “control” does not comprehend within itself the adjudication of a claim made by a co­operative society against its members. The meaning of the word “control” has also been considered by this Court in State of Mysore v. Allum Karibasappa & Ors. (1974) 2 SCC 498, while interpreting Section 54 of the Mysore Cooperative Societies Act, 1959 and Court held that the word “control” suggests check, restraint or influence and intended to regulate and hold in check and restraint from action. The expression “control” again came up for consideration before this Court in Madan Mohan Choudhary v. State of Bihar & Ors. (1999)3 SCC 396, in the context of Article 235 of the Constitution and the Court held that the expression “control” includes disciplinary control, transfer, promotion, confirmation, including transfer of a District Judge or recall of a District Judge posted on ex­cadre post or on deputation or on administrative post etc. so also premature and compulsory retirement. Reference may also be made to few other judgments of this Court reported in Gauhati High Court and another v. Kuladhar Phukan and another (2002) 4 SCC 524, State of Haryana v. Inder Prakash Anand HCS and others (1976) 2 SCC 977, High Court of Judicature for Rajasthan v. Ramesh Chand Paliwal and Another (1998) 3 SCC 72, Kanhaiya Lal Omar v. R.K. Trivedi and others (1985) 4 SCC 628, TMA Pai Foundation and others v. State of Karnataka (2002) 8 SCC 481, Ram Singh and others v. Union Territory, Chandigarh and others (2004) 1 SCC 126, etc.
34. We are of the opinion that when we test the meaning of expression “controlled” which figures in between the words “body owned” and “substantially financed”, the control by the appropriate government must be a control of a substantial nature. The mere ‘supervision’ or ‘regulation’ as such by a statute or otherwise of a body would not make Page 23 of 43
C/SCA/2552/2014
CAV JUDGMENT
that body a “public authority” within the meaning of Section 2(h)(d)(i) of the RTI Act. In other words just like a body owned or body substantially financed by the appropriate government, the control of the body by the appropriate government would also be substantial and not merely supervisory or regulatory. Powers exercised by the Registrar of Cooperative Societies and others under the Cooperative Societies Act are only regulatory or supervisory in nature, which will not amount to dominating or interfering with the management or affairs of the society so as to be controlled. Management and control are statutorily conferred on the Management Committee or the Board of Directors of the Society by the respective Cooperative Societies Act and not on the authorities under the Co­operative Societies Act.
35. We are, therefore, of the view that the word “controlled” used in Section 2(h)(d)(i) of the Act has to be understood in the context in which it has been used vis­a­vis a body owned or substantially financed by the appropriate government, that is the control of the body is of such a degree which amounts to substantial control over the management and affairs of the body.
SUBSTANTIALLY FINANCED
36. The words “substantially financed” have been used in Sections 2(h)(d)(i) & (ii), while defining the expression public authority as well as in Section 2(a) of the Act, while defining the expression “appropriate Government”. A body can be substantially financed, directly or indirectly by funds provided by the appropriate Government. The expression “substantially financed”, as such, has not been defined under the Act. “Substantial” means “in a substantial manner so as to be substantial”. In Palser v. Grimling (1948) 1 All ER 1, 11 (HL), while interpreting the provisions of Section 10(1) of the Rent and Mortgage Interest Restrictions Act, 1923, the House of Lords held that “substantial” is not the same as “not unsubstantial” i.e. just enough to avoid the de minimis principle. The word “substantial” literally means solid, massive etc. Legislature has used the expression “substantially financed” in Sections 2(h)(d)(i) and (ii) indicating that the degree of financing must be actual, existing, positive and real to a substantial extent, not moderate, ordinary, tolerable Page 24 of 43
C/SCA/2552/2014
CAV JUDGMENT
etc.
37. We often use the expressions “questions of law” and “substantial questions of law” and explain that any question of law affecting the right of parties would not by itself be a substantial question of law. In Black's Law Dictionary (6th Edn.), the word 'substantial' is defined as ‘of real worth and importance; of considerable value; valuable. Belonging to substance; actually existing; real: not seeming or imaginary; not illusive; solid; true; veritable. Something worthwhile as distinguished from something without value or merely nominal. Synonymous with material.' The word 'substantially' has been defined to mean 'essentially; without material qualification; in the main; in substance; materially.' In the Shorter Oxford English Dictionary (5th Edn.), the word 'substantial' means 'of ample or considerable amount of size; sizeable, fairly large; having solid worth or value, of real significance; sold; weighty; important, worthwhile; of an act, measure etc. having force or effect, effective, thorough.' The word 'substantially' has been defined to mean 'in substance; as a substantial thing or being; essentially, intrinsically.' Therefore the word 'substantial' is not synonymous with 'dominant' or 'majority'. It is closer to 'material' or 'important' or 'of considerable value.' 'Substantially' is closer to 'essentially'. Both words can signify varying degrees depending on the context.
38. Merely providing subsidiaries, grants, exemptions, privileges etc., as such, cannot be said to be providing funding to a substantial extent, unless the record shows that the funding was so substantial to the body which practically runs by such funding and but for such funding, it would struggle to exist. The State may also float many schemes generally for the betterment and welfare of the cooperative sector like deposit guarantee scheme, scheme of assistance from NABARD etc., but those facilities or assistance cannot be termed as “substantially financed” by the State Government to bring the body within the fold of “public authority” under Section 2(h)(d)(i) of the Act. But, there are instances, where private educational institutions getting ninety five per cent grant­in­aid from the appropriate government, may answer the definition of public authority under Section 2(h)(d)(i).”
Page 25 of 43
C/SCA/2552/2014
CAV JUDGMENT
Considering the aforesaid observations and the law laid down by the Hon’ble Supreme Court in the case of Thalappalam Ser. Co­
op. Bank Ltd. (Supra) and applying the same to the facts of the case on hand more particularly with respect to petitioner No.1 District Cooperative Bank registered under the Act, 1961, having a license under the Banking Regulation Act only for the purpose of running the business of banking and the provisions of the Act, 1961 vis­a­vis provisions of Section 159 of the Act, 1951 more particularly Section 159(2)(iv) of the Act, 1951, it cannot be said that respondent No.1 District Cooperative Bank is an institution, establishment or concern which is controlled or financed wholly or substantially by funds provided directly or indirectly, by the Central Government or a State Government. [7.3] Now, next question which is posed for consideration of this Court is whether the petitioner No.1 District Cooperative Bank registered under the Act, 1961 and having obtained the license from the Reserve Bank of India under the provisions of the Banking Regulation Act to do the business of banking can be said to be an institution, concern or undertaking which is established by or under a Central, Provincial or State Act and another question which is posed for consideration of this Court is whether in purported exercise of powers under Section 159 of the Act, 1951, the Election Commission has any power and/or authority to requisition the staff of the cooperative bank/District Cooperative Bank like the petitioner No.1 for the election duty?
[7.3.1]While considering the aforesaid questions the source and power of the Election Commission to requisition the staff is required to be considered first. It appears and as such it is not disputed by the learned Counsel appearing on behalf of respondent Page 26 of 43
C/SCA/2552/2014
CAV JUDGMENT
No.2 that as such power to requisition the staff by the Election Commission for the election duty flows from Article 324(6) of the Constitution of India. Article 324(6) of the Constitution of India reads as under:
“324. Superintendence, direction and control of elections to be vested in an Election Commission (1) ....
(2) ....
(3) ....
(4) ....
(5) ....
(6) The President, or the Governor 275[***] of a State, shall when so requested by the Election Commissioner, make available to the Election Commission or to a Regional Commissioner such staff as may be necessary for the discharge of the functions conferred on the Election Commission by Cl.
(1).”
[7.3.2]Now, therefore, while exercising the powers under Section 159 of the Act, 1951 which basically flows from Article 324(6) of the Constitution of India, the object and purpose of Article 324(6) of the Constitution is required to be borne in mind. Article 324(6) came to be interpreted by the Hon’ble Supreme Court in the case of State Bank of India Staff Association Local Head Office Unit, Patna and Ors. (Supra) and in paras 2 to 6, the Hon’ble Supreme Court observed as under: “2. The Election Commission of India is the appellant in both the appeals. Article 324 of the Constitution vests in the Election Commission the power of superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State.
3. Clause (6) of Article 324 reads as under :
“(6) The President, or the Governor of a State, shall, when so requested by the Election Commission, make Page 27 of 43
C/SCA/2552/2014
CAV JUDGMENT
available to the Election Commission or to a Regional Commissioner such staff as may be necessary for the discharge of the functions conferred on the Election Commission by clause (1)”
4. Article 327 enables Parliament to make provision with respect to all matters relating to, or connected with, elections to either House of the Legislature of a State including the preparation of electoral rolls, the delimitation of constituencies and all other matters necessary for securing the due constitution of such House or Houses.
5. In exercise of the power vested in the Parliament under these Articles it enacted the Representation of the People Act, 1950 and the Representation of the People Act, 1951 (hereinafter referred to as 'the 1950 and 1951 Acts', respectively). The 1950 Act provides for the allocation of seats and the delimitation of constituencies for the purpose of elections to the House of People and the Legislatures of the States, the qualifications of voters at such elections, the preparation of electoral rolls and the matters connected therewith. The 1951 Act provides for the conduct of elections to the Houses of Parliament and to the House or Houses of the Legislature of each State, the qualifications and disqualification's for membership of those Houses, the corrupt practices and other offences at or in connection with such elections. Section 26 of 1951 Act enables a District Election Officer to appoint a Presiding Officer for each polling station. Section 159 of the said Act reads as follows :
“159. Staff of every local authority to be made available for election work. ( Every local authority in a State shall, when so requested by a Regional Commissioner appointed under clause (4) of Article 324 or the Chief Electoral Officer of the State, make available to any returning officer such staff as may be necessary for the performance of any duties in connection with an election."
6. From a concept is of the above provisions it seems clear to us that on the request of the Election Commission the President or the Governor of the State must make available to the Election Commission such Staff as may be necessary for the discharge of functions conferred on the Election Commission Page 28 of 43
C/SCA/2552/2014
CAV JUDGMENT
under clause (1) of Article 324. In view of clause (6) of Article 324 the President or the Governor of the State when requested will make available to the Election Commission the services of such staff as may be necessary for the discharge of the functions conferred on the Election Commission. By this, it is meant that the persons whose services may be placed at the disposal of the Election Commission must be persons who are either employees of the Central Government or of the State Government. Again in view of Section 159 extracted above when a requisition is made by the Regional Commissioner, the local authority shall make available its staff for the purpose of duties in connection with an election.”
In the case before the Hon’ble Supreme Court the staff of the State Bank of India was sought to be requisitioned by the Election Commission in exercise of powers under Section 159 of the Act, 1951 and the same was challenged before the Patna High Court and the Patna High Court quashed the communication issued by the District Election Officer / District Magistrate, Patna requisitioning the staff of State Bank of India for election duty and the Hon’ble Supreme Court was considering the appeal against the aforesaid decision of the Patna High Court and while considering the aforesaid issue/question whether in exercise of powers under Section 159 of the Act, 1951, the Election Commission can requisition the staff of the State Bank of India for election duty or not, the Hon’ble Supreme Court in paras 18 to 23 has observed and held as under: “18. Now, we come to Article 324. It will be useful to extract the following clauses of the said Articlewhich have a bearing on the issues involved:
“324. Superintendence, direction and control of elections to be vested in an Election Commission ­ (1) The Superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of President and Vice­President Page 29 of 43
C/SCA/2552/2014
CAV JUDGMENT
held under this Constitution shall be vested in a Commission (referred to in this Constitution as the Election Commission).
xxx xxx xxx xxx
324(4) Before each general election to the House of the People and to the Legislative Assembly of each State, and before the first general election and thereafter before each biennial election to the Legislative Council of each State having such Council, the President may also appoint after consultation with the Election Commission such Regional Commissioners as he may consider necessary to assist the Election Commission in the performance of the functions conferred on the Commission by clause (1).”
19. We have already extracted clause (6) of Article 324 which empowers the Election Commission to request the President, or the Governor of the concerned State to make available such staff as may be necessary for it to carry out its duty under clause (1). Such a provision was necessary for the obvious reason that since the Election Commission has to hold elections at intervals it is not required to maintain a huge staff at considerable expense to the exchequer and therefore the power to seek on request such staff as is necessary came to be engrafted in the Constitution itself.
20. We assume that the powers of the Election Commission under Article 324 are plenary. Therefore, the Election Commission may issue any direction in the matter of conduct of elections. But the question is, in the grab of conduct of elections, can the Election Commission usurp the power not vested in it?This will depend on the understanding of clause (6) of Article 324. For the conduct of elections when the Election Commission makes a request to the President or the Governor to make available the staff they are obliged to provide the services. What is the meaning of 'such staff? According to Mr. Dushyant Dave we should refer to Article 310 which talks of a member of Civil Service (in contradistinction to Defence Service of the Union or the State), holding office during the pleasure (Durante bene placito) of President or the Governor. Obviously 'such staff' can only mean that staff which is under the control of the President or the concerned Governor and not any staff over which they do not excercise control. It could mean only the staff on which the President or the Governor, as the case may be, would be in a position to Page 30 of 43
C/SCA/2552/2014
CAV JUDGMENT
excercise disciplinary powers should they refuse the President's or Governor's directive. Although the Constitution­makers did not say the Union or the State Governments but only the President or the Governor, it is obvious they would have to act consistently with Articles 74(1) and 163(1), respectively. Therefore, on a request by the Election Commission the services of those Government servants who are appointed to public services and posts under the Central or state Governments will have to be made available for the purpose of election. When the Constitution came into force the services of these officers were readily available. Of course, there were also local authorities and the services of the employees of the local authorities were also available. That is why Section 159 of the 1951 Act provides that on request from the Regional Commissioner or the Chief Electoral Officer of the State the local authority of the State shall make available to any Returning Officer such staff as may be necessary to carry out the duties in connection with an election.
21. It is important to note that their services came to be made available as Returning Officers and Assistant Returning Officers under Sections 21 and 22 of the 1951 Act introduced by Amendment Act 47 of 1966. Barring the services of these officers does the Election Commission have power to requisition the services of any other person? The argument of the appellant is based on several sections of the 1950 and 1951 Acts. We have referred to the relevant provisions of the two Acts hereinbefore.
22.Merely because the provisions of the two Acts require that they must be officers of Government or local authority, unlike in the case of officers falling under Section 27 of the 1951 Act, it does not, in our opinion, follow that the services of the officers of the State Bank of India could be requisitioned. Section 26 of the 1951 Act is not a source of power at all. It does not, in any manner, enable the Election Commission to draft in the services of officers other than officers of Government and local authority. To draw inspiration from these sections to support an argument that the services of any person could be drafted for the purpose of election is untenable. May be, to conduct the elections many polling stations are set up. Consequently, the services of many persons may be required. May be, the Election Commission may draw the minimum staff from the banks to ensure that the banking Page 31 of 43
C/SCA/2552/2014
CAV JUDGMENT
business is not disrupted but the question here is of power and not discretion.If there is power it may be exercised with circumspection and minimum staff may be requisitioned but if there is no power the question of the mode of its excercise will not arise at all. It is a question of existence of power and not the manner of its excercise.
23. Article 324 does not enable the Election Commission to exercise untrammelled powers. The Election Commission must trace its power either to the Constitution or the law made under Article 327 or Article 328.Otherwise as was held by this Court Digvijay Mote's case, (1993 AIR SCW 2895) (Supra) (in which one of us, Mohan J., was a party) it would become an imperium in imperio which no one is under our constitutional order.”
From the aforesaid decision what is emerging is that as held by the Hon’ble Supreme Court and in exercise of powers under Section 159 of the Act, 1951 which flows from Article 324(6) of the Constitution of India, the Election Commission can requisition only such staff which is under the control of President or the Governor concerned and not any staff over which they do not exercise any control and only that staff over which the President or Governor, as the case may be, would be in a position to exercise disciplinary powers, can be requisitioned for election duty. It is further observed by the Hon’ble Supreme Court in the said decision that if there is no power the question of the mode of its exercise will not arise at all. It is observed that it is a question of existence of power and not the manner of its exercise.
[7.4] Now, whether the petitioner No.1 District Cooperative Bank which is registered under the provisions of Act, 1961 and governed by the provisions of the Act, 1961, who has obtained the bank license from the Reserve Bank of India under the provisions of the Banking Regulation Act can be said to be an institution, concern or undertaking which is established by or under a Central or Page 32 of 43
C/SCA/2552/2014
CAV JUDGMENT
Provincial State Act?
Identical question came to be considered by the Hon’ble Supreme Court in the case of Dalco Engineering Pvt. Ltd. (Supra). In the case on hand the Hon’ble Supreme Court was considering the term “establishment” employed in Section 47 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 defined in Section 2(k) of the said Act which reads as under:
“10. The term “establishment” employed in Section 47 is defined in Section 2(k) of the Act as follows:
“2. Definitions.­ In this Act, unless the context otherwise requires,­
*
*
*
(k). ‘establishment’ means a corporation established by or under a Central, Provincial or State Act, or an authority or a body owned or controlled or aided by the Government or a local authority or a government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956) and inclues Departments of a Government;” In paras 16 to 23, the Hon’ble Supreme Court has observed and held as under: “16. The words "a Corporation established by or under a Central, Provincial or State Act" is a standard term used in several enactments to denote a statutory corporation established or brought into existence by or under statute. For example, it is used in sub­clause (b) of Clause Twelfth of Section 21 of the Indian Penal Code (`IPC' for short) and Section 2(c)(iii) of the Prevention of Corruption Act, 1988 (`PC Act' for short). Both these statutes provide that a person in the service of a `Corporation established by or under a Central, Provincial or State Act' is a public servant. 17. The Prevention of Damage to Public Property Act, 1984 defines `public property' as meaning any property owned by, or in the possession of, or under the control of (i) the Central Government (ii) any state government; or (iii) any Page 33 of 43
C/SCA/2552/2014
CAV JUDGMENT
local authority; or (iv) any corporation established by, or under, a Central, Provincial or State Act; or (v) any company as defined in Section 617 of the Companies Act, 1956; or (vi) any institution, concern or undertaking which the Central Government may, by notification in the Official Gazette, specify in that behalf provided that the Central Government shall not specify any institution, concern or undertaking under that sub­clause unless such institution, concern or undertaking is financed wholly or substantially by funds provided directly or indirectly by the Central Government or by one or more State Governments, or partly by the Central Government and partly by one or more State Governments. Thus the term is always used to denote certain categories of authorities which are `State' as contrasted from non­statutory companies which do not fall under the ambit of `State'.
18. The meaning of the term ‘corporation’ came up for consideration in S. S. Dhanoa vs. MCD with reference to section 21 IPC. This Court held: (SCC pp.437­38, paras 7­10)
“7. ...Clause Twelfth does not use the words "body corporate", and the question is whether the expression "corporation" contained therein, taken in collocation of the words "established by or under a Central, Provincial or State Act" would bring within its sweep a cooperative society. Indubitably, the Cooperative Store Limited is not a corporation established by a Central or State Act. The crux of the matter is whether the word ‘under’ occurring in Clause Twelfth of Section 21 of the Indian Penal Code makes a difference. Does the mere act of incorporation of a body or society under a Central or a State Act make it a corporation within the meaning of Clause Twelfth of Section 21. In our opinion, the expression ‘corporation' must, in the context, mean a corporation created by the Legislature and not a body or society brought into existence by an act of a group of individuals. A cooperative society is, therefore, not a corporation established by or under an Act of the Central or State Legislature.
8. A corporation is an artificial being created by law having a legal entity entirely separate and distinct from the individuals who compose it with the capacity of Page 34 of 43
C/SCA/2552/2014
CAV JUDGMENT
continuous existence and succession, notwithstanding changes in its membership. ........ The term 'corporation' is, therefore, wide enough to include private corporations. But, in the context of Clause Twelfth of Section 21 of the Indian Penal Code, the expression 'corporation' must be given a narrow legal connotation.
9. Corporation, in its widest sense, may mean any association of individuals entitled to act as an individual. But that certainly is not the sense in which it is used here. Corporation established by or under an Act of Legislature can only mean a body corporate which owes its existence, and not merely its corporate status, to the Act. For example, a Municipality, a Zilla Parishad or a Gram Panchayat owes its existence and status to an Act of Legislature. On the other hand, an association of persons constituting themselves into a Company under the Companies Act or a Society under the Societies Registration Act owes its existence not to the Act of Legislature but to acts of parties though, it may owe its status as a body corporate to an Act of Legislature.
10. There is a distinction between a corporation established by or under an Act and a body incorporated under an Act. The distinction was brought out by this Court in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi & Ors ­ (1975) 1 SCC 421. It was observed :
‘25. ...A company incorporated under the Companies Act is not created by the Companies Act but comes into existence in accordance with the provisions of the Act.
There is thus a well­marked distinction between a body created by a statute and a body which, after coming into existence, is governed in accordance with the provisions of a statute."
(emphasis supplied)
19. In Vaish Degree College v. Lakshmi Narain this Court explained the position further: (SCC p. 65, paa 10)
“In other words the position seems to be that the Page 35 of 43
C/SCA/2552/2014
CAV JUDGMENT
institution concerned must owe its very existence to a statute which would be the fountainhead of its powers. The question in such case to be asked is, if there is no statute, would the institution have any legal existence. If the answer is in the negative, then undoubtedly it is a statutory body, but if the institution has a separate existence of its own without any reference to the statute concerned but is merely governed by the statutory provisions it cannot be said to be a statutory body."
[emphasis supplied]
20. A “company” is not “established” under the Companies Act. An incorporated company does not `owe' its existence to the Companies Act. An incorporated company is formed by the act of any seven or more persons (or two or more persons for a private company) associated for any lawful purpose subscribing their names to a Memorandum of Association and by complying with the requirements of the Companies Act in respect of registration. Therefore, a `company' is incorporated and registered under the Companies Act and not established under the Companies Act. Per contra, the Companies Act itself establishes the National Company Law Tribunal and National Company Law Appellate Tribunal, and those two statutory authorities owe their existence to the Companies Act.
21. Where the definition of “establishment” uses the term “a corporation” established by or under an Act', the emphasis should be on the word “established” in addition to the words “by or under”. The word “established” refers to coming into existence by virtue of an enactment. It does not refer to a company, which, when it comes into existence, is governed in accordance with the provisions of the Companies Act. But then, what is the difference between `established by a central Act' and “established under a central Act'?
22. The difference is best explained by some illustrations. A corporation is established by an Act, where the Act itself establishes the corporation. For example, Section 3 of State Bank of India Act, 1955 provides that a Bank to be called the State Bank of India shall be constituted to carry on the business of banking. Section 3 of Life Insurance Corporation Act, 1956 provides that with effect from such date as the Page 36 of 43
C/SCA/2552/2014
CAV JUDGMENT
Central Government may by notification in the Official Gazette appoint, there shall be established a corporation called the Life Insurance Corporation of India. State Bank of India and Life Insurance Corporation of India are two examples of corporations established by "a Central Act". 23. We may next refer to the State Financial Corporation Act, 1951 which provides for establishment of various Financial Corporations under that Act. Section 3 of that Act relates to establishment of State Financial Corporations and provides that the State Government may, by notification in the Official Gazette establish a Financial Corporation for the State under such name as may be specified in the notification and such Financial Corporation shall be a body corporate by the name notified. Thus, a State Financial Corporation is established under a central Act. Therefore, when the words "by and under an Act" are preceded by the words “established”, it is clear that the reference is to a corporation established, that it is brought into existence, by an Act or under an Act. In short, the term refers to a statutory corporation as contrasted from a non­statutory corporation incorporated or registered under the Companies Act.”
As observed hereinabove in the case of Federal Bank Limited (Supra), the Hon’ble Supreme Court has observed that merely because the Reserve Bank of India lays the banking policy in the interest of the banking system or in the interest of monetary stability or sound economic growth having due regard to the interest of the depositors etc., as provided under Section 5(c)(a) of the Banking Regulation Act, it does not mean that the private companies carrying on the business or commercial activity of banking, discharge any public function or public duty. It is held that the aforesaid are all regulatory measures applicable to those carrying on commercial activity in banking and they are to act according to the said provisions failing which certain consequences follow as indicated in the Act itself.
Page 37 of 43
C/SCA/2552/2014
CAV JUDGMENT
[7.5] Now, so far as the reliance placed upon the above decision of the Madras High Court in the case of G. Narayanaswamy Naidu (Supra) by the learned Counsel appearing on behalf of the respondents more particularly paras 45 and 46 in support of his submission that the word “by or under law” is required to be read disjunctively and the phrase “by an Act” or “under the Act” in the context of Section 159 of the Act, 1951 would need to be read disjunctively is concerned, in view of the decision of the Hon’ble Supreme Court in the case of Dalco Engineering Pvt. Ltd. (Supra) and the observations made by the Hon’ble Supreme Court in the aforesaid decision reproduced hereinabove and the subsequent decision of the Hon’ble Supreme Court in the case of Manohar Nathusao Samarth v. Marotrao and Ors. reported in AIR 1979 SC 1084 by which the decision of the Madras High Court came to be over­ruled, the aforesaid decision would not be of any assistance to the respondents. [7.6] As observed by us hereinabove, the decision of the Hon’ble Supreme Court in the case of Dalco Engineering Pvt. Ltd. (Supra) would be squarely applicable with respect to the phrases used “by an Act” or “under the Act” in Section 159 of the Act, 1951. Even the reliance placed upon the decision of the Hon’ble Supreme Court in the case of Dr. Indramani Pyarelal Gupta (Supra) by the learned Counsel appearing on behalf of the respondent No.2 would not be applicable to the facts of the case on hand and/or the said shall not be of any assistance to the respondents while interpreting the phrase “by an Act” or “under the Act”.
Page 38 of 43
C/SCA/2552/2014
CAV JUDGMENT
[7.7] Therefore, from the aforesaid decisions of the Hon’ble Supreme Court as well as above discussion it emerges that the petitioner No.1 District Cooperative Bank which is registered under the provisions of the Act, 1961 and has only obtained the license to do the banking business from the Reserve Bank of India under the provisions of the Banking Regulation Act cannot be said to be institution, concern or undertaking controlled or financed wholly or substantially by funds provided directly or indirectly, by the Central Government or a State Government and thereby cannot be said to be an establishment and therefore, cannot be said to be an authority covered under Section 159(2) of the Act, 1951 and therefore, in purported exercise of powers under Section 159(2) of the Act, 1951, the respondents more particularly respondent No.2 / Election Commission has no authority and/or power to requisition the staff of the petitioner No.1 District Cooperative Bank and/or staff working in its different branches, for the purpose of election duty. [7.8] Now, so far as the submission on behalf of the respondents that the staff is required for election duty by the Election Commission to perform its constitutional duties and there may be a shortage of staff and in the larger public interest not to grant any relief as prayed in the present petition is concerned, the Hon’ble Supreme Court in the case of State Bank of India Staff Association Local Head Office Unit, Patna and Ors. (Supra) has specifically observed and held in paras 22 and 23 as under: 22.Merely because the provisions of the two Acts require that they must be officers of Government or local authority, Page 39 of 43
C/SCA/2552/2014
CAV JUDGMENT
unlike in the case of officers falling under Section 27 of the 1951 Act, it does not, in our opinion, follow that the services of the officers of the State Bank of India could be requisitioned. Section 26 of the 1951 Act is not a source of power at all. It does not, in any manner, enable the Election Commission to draft in the services of officers other than officers of Government and local authority. To draw inspiration from these sections to support an argument that the services of any person could be drafted for the purpose of election is untenable. May be, to conduct the elections many polling stations are set up. Consequently, the services of many persons may be required. May be, the Election Commission may draw the minimum staff from the banks to ensure that the banking business is not disrupted but the question here is of power and not discretion. If there is power it may be exercised with circumspection and minimum staff may be requisitioned but if there is no power the question of the mode of its exercise will not arise at all. It is a question of existence of power and not the manner of its exercise.
23. Article 324 does not enable the Election Commission to exercise untrammelled powers. The Election Commission must trace its power either to the Constitution or the law made under Article 327 or Article 328.Otherwise as was held by this Court Digvijay Mote's case, (1993 AIR SCW 2895) (Supra) (in which one of us, Mohan J., was a party) it would become an imperium in imperio which no one is under our constitutional order.”
[7.9] As stated hereinabove, the powers under Section 159 of the Act, 1951 flows from Article 324(6) of the Constitution of India, which is considered hereinabove. Even while amending Section 159 of the Act, 1951, in section159(2)(iii) of the Act, 1951, it is mentioned that a government company is defined in Section 617 of the Companies Act, 1956. It is required to be noted that prior to the amendment in Section 159 of the Act, 1951, the “authorities” were not clarified. Unamended Section 159 reads as under: “159. Staff of every local authority to be made available for election work.­ Every local authority in a State shall, when so Page 40 of 43
C/SCA/2552/2014
CAV JUDGMENT
requested by a Regional Commissioner appointed under clause (4) of Article 324 or the Chief Electoral Officer of the State, make available to any returning officer such staff as may be necessary for the performance of any duties in connection with an election.”
That thereafter Section 159 of the Act, 1951 has been amended and the amendment of Section 159 reads as under:
159. Staff of certain authorities to be made available for election work
(1) The authorities specified in sub­section (2) shall, when so requested by a Regional Commissioner appointed under clause (4) of article 324 or the Chief Electoral Officer of the State, more available to any returning officer such staff as may be necessary for the performance of any duties in connection with an election.
(2) The following shall be the authorities for the purposes of sub­section (1), namely:­
(i)
every local authority;
(ii) every university established or incorporated by or under a Central, Provincial or State Act, (iii) a Government company as defined in section 617 of the Companies Act, 1956;
(iv) any other institution, concern or undertaking which is established by or under a Central, Provincial or State Act or which is controlled, or financed wholly or substantially by funds provided, directly or indirectly, by the Central Government or a State Government.]
Therefore, on fair reading of section 159 of the Act, 1951 read with Article 324(6) of the Constitution of India, it cannot be said that a District cooperative Bank registered under the Act, 1961 would fall in any of the category mentioned in Section 159(2) of the Act, 1951.
[8.0] In view of the above and though we agree that the Election Commission would require the staff for election duty which would Page 41 of 43
C/SCA/2552/2014
CAV JUDGMENT
be in the larger public interest however, when it is found that the Election Commission lacks total authority and/or power to requisition the staff of the petitioner No.1 Bank, we have no other alternative but to allow the present special civil application and grant the relief as prayed for.
[9.0] In view of the above and for the reasons stated above, the present Special Civil Application succeeds. Impugned communication/order dated 03.09.2013 (Annexure­A to the petition) issued by respondent No.2 – Chief Electoral Officer, Gujarat State, to requisition the staff of the petitioner No.1 Bank from its head office and the branches in the District is held to be illegal and contrary to the provisions of Section 159 of the Act, 1951 and it is held that the respondents more particularly respondent No.2 – Chief Electoral Officer, Gujarat State and/or its subordinates in the District have no authority to requisition the staff of the petitioner No.1 District Cooperative Bank for election duty in purported exercise of powers under Section 159 of the Act, 1951. Consequently, the impugned order dated 03.09.2013 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent. In the facts and circumstances of the case, there shall be no order as to costs. Sd/­ (M.R. SHAH, J.) Sd/­ (R.P. DHOLARIA, J.) FURTHER ORDER
After pronouncement of the judgment, Shri Kavina, learned Counsel for the respondent No.2 has requested to stay the present judgment and order so as to enable the respondents to approach Page 42 of 43
C/SCA/2552/2014
CAV JUDGMENT
the higher forum. The same is opposed by Shri B.S. Patel, learned advocate for the petitioners. It is submitted that if the judgment and order passed by this Court is stayed, in that case, petition would become infructuous. For the foregoing reasons, as we have specifically held that respondent Nos.2 & 3, more particularly, respondent No.2 Chief Electoral Officer has no authority to requisition the staff of the petitioner No.1 Cooperative Bank and considering the fact that if the present judgment and order is stayed, in that case, respondent will be permitted to requisition the staff which is held to be illegal and without authority and as such even the present petition may become infructuous. Hence, prayer of Shri Kavina, learned Counsel for the respondent No.2 is rejected. Sd/­ (M.R. SHAH, J.) Sd/­ (R.P. DHOLARIA, J.) Ajay
Page 43 of 43