It must be said before saying anything else that the Full Bench of the Bombay High Court comprising of Justice MS Sonak, Justice Dama Seshadri Naidu and Justice Bharati H Dangre on March 5, 2021 in a latest, learned, laudable and landmark judgment titled Mr Vassudev Madkaikar and others vs. State of Goa and others in Writ Petition No. 92 of 2021 (Filing) has clearly, cogently and convincingly held that the Goa State Cooperative Bank Ltd. is not a ‘State’ nor does it fall within the ambit of ‘any other authority’ for the purposes of Article 12. It certainly deserves mentioning that the Bench also made it a point to observe that the said Bank does not discharge any public functions which would warrant issuance of a writ in the nature of mandamus. Very rightly so!
To start with, the ball is set rolling in para 1 of this notable judgment authored by Justice Bharati H Dangare wherein it is put forth that, “The cleavage of opinions between the two sets of perspectives on the issue as to whether a ‘Goa State Cooperative Bank’ is a ‘State’ within the meaning of Article 12 and whether the said Bank is discharging any public function, so as to render it amenable to the writ jurisdiction of this Court under Article 226 is the issue placed for consideration of this Full Bench.
The two division benches of this Court, in Ganesh Morto Naik v/s. Goa State Co-operative Bank Ltd., (1991) SCC OnLine Bom 211 and in another case of Surendra J. Kalangutkar v/s. Goa State Cooperative Bank Ltd., (2016) SCC OnLIne Bom 2587 ruled that the Goa State Cooperative Bank Ltd. (hereinafter referred to as GSCB) is a ‘State’ for the purpose of Article 12 and that since it is discharging public functions, it is amenable to writ jurisdiction under Article 226 of the Constitution of India. On the other hand, the judgment delivered at Aurangabad, in case of Shri Suresh Bhanudas Shinde & Anr v/s. State of Maharashtra & Ors Writ Petition No. 334 of 2018 has taken a contradictory view, when confronted with the issue whether the District Cooperative Bank Ltd. is a ‘State’, in the backdrop of the grievances raised by one of its employees and held that the said Bank is not a ‘State’ within the meaning of Article 12 and even the exercise of writ jurisdiction was refused since the contractual terms between the employer and employee were held to be not subjected to any control of the State Government. Relegating the petitioner to avail other remedies available under the law, the writ petition was dismissed. Running parallel to the said view is the decision of the Full Bench of this Court in Shamrao Vithal Co-operative Bank Limited v/s. Padubidri Pattabhiram Bhat AIR (1993) BOM 91, which ruled that Multi State Co-operative Bank registered under the Maharashtra State Cooperative Societies Act, 1984 is not a ‘State’ within the meaning of Article 12, though it is governed by the Banking Regulations Act, 1949 and it performs public functions.”
Be it noted, the Full Bench then observes in para 3 that, “The question for our consideration, in light of the reference order can be precisely and accurately framed as under:
i) Whether Goa State Cooperative Bank Ltd. is a ‘State’ or any instrumentality thereof, for the purposes of Article 12 of the Constitution of India.
ii) In case GSCB is not a ‘State’ within the meaning of Article 12, whether it performs any public functions, which would warrant issuance of writ in the nature of mandamus in discharge of its performance of the public functions.”
It is worth noting that it is then observed in para 25 that, “In order to deal with the submission, we deem it expedient to decipher the scheme of the enactment, which clothed the GSCB with the status of the State Cooperative Bank and the Land Development Bank.
A need was felt for establishment of a national level institution for providing credit for the promotion of agriculture, small scale industries, cottage and village industries, handicrafts and other allied economic activities in rural areas with a view to promote integrated rural development and securing its prosperity, which gave birth to establishment of a development bank to be known as NABARD. It was established as an apex organization with respect to all matters in the field of credit in rural areas and aimed to serve as a re-financing institution for extending credit for promotion of activities in the said field. The Bank was endowed with a function to provide re-finance to various banks for their term lending operations for the purposes of agriculture and rural development.
Perusal of the scheme underlying the statute would reveal that a particular Cooperative Society in a State with an object of financing of other cooperative societies is entitled to be categorised as State Cooperative Bank and also the State Land Development Bank if a Cooperative Society has its primary object of providing long term finance for agricultural development. The proviso appended to both the clauses, i.e. Section 2(u) and (v) lead to an inference that where such principal society or particular land development bank is not in existence in a State, the State Government may declare any State Cooperative Society carrying on business in that State to function as a State Land Development Bank to provide long terms loans for declare it as a State Cooperative Bank. Another contingency when such exercise can be undertaken is when the State feels that in addition to such particular society in a State, it is expedient to declare one or more Cooperative Society to be State Cooperative Bank within the meaning of Section 2(u) or to be the State Land Development Bank within the meaning of Section 2(v). Merely because GSCB has received recognition under the Act, it cannot be said that it enjoy complete monopoly in the field.
Being declared as a State Cooperative Bank certain benefits are conferred on it by virtue of Chapter 6 of the Act, in particular as conferred under Section 21 and 25. The State Cooperative Banks alongwith the regional rural banks or any other financial institutions approved by the RBI are entitled for re-finance, loans and advances from the National Bank, but by virtue of subsection 3 of section 21, the National Bank may in its discretion grant a loan or advance to a State Cooperative Bank if the loan or advance is fully guaranteed for repayment of principal and interest by the Government and also in case of a State Cooperative Bank which is a scheduled bank, if the loan or advance is secured either by a bill of exchange or promissory note executed by the Central Cooperative bank and assigned in favour of the State Cooperative Bank instead of the loan being advanced against security of stocks, funds as contemplated under sub-section 2. Further, in respect of other investment credit for promoting agriculture and rural development, the National Bank may provide financial assistance to a State Land Development Bank or a State Cooperative Bank or a Scheduled Bank or any other financial institution and reschedule the payment of such loans and advances. The scheme incorporated under the NABARD Act, 1981 itself would divulge that barring section 21, the State Land Development Bank or State Cooperative Bank is entitled for financial assistance alongwith other schedule bank or financial institutions approved by RBI and therefore it looses its unique character as far as the NABARD Act is concerned barring the provision mentioned above. The peculiar character of the Bank as has been attempted to be projected on a higher pedestal than any other society registered under the Cooperative Societies Act thus fail to impress us and has to be brushed aside as a hollow claim, since the GSCB is neither established under a State legislation nor its entire Share Capital is held by the State. Thus, the mere status conferred on it under the NABARD Act and that it is empowered to provide long term finance for agricultural development, which will ultimately benefit the farmer of the State in our considered opinion, is not sufficient and it do not satisfy the test of it being a functionality of the State attracting the expression “Other Authorities” within the meaning of Article 12 nor does this feature enable it to be an instrumentality or agency of the State Government.
The State focus paper of NABARD on which attempt is made to bank upon is not of much relevance as it merely reflect the bank working in the State of Goa and as to how security schemes have landed support to banking and it also speak of the inspection of the bank by NABARD by virtue of Section 35 of section 6 of Banking Regulations Act, 1949, pursuant to which the GSCB is inspected by NABARD every year.”
Adding more to it, the Bench then also goes on to make it amply clear in para 26 that, “Emphasis on the bye-laws of the GSCB also do not render any support urging us to take a view that GSCB is a State, for more than one reason. The Bank has framed its bye-laws by invoking the power conferred on it as a Cooperative Society under Section 10A of the Goa Cooperative Societies Act, 2001. Pertinent to note that the GSCB is recognized as an Apex Cooperative Bank within the meaning of Section 2a of the Act, making it the Federal Cooperative Bank having jurisdiction over whole of the State of Goa and recognized as such by the State Government for the said purpose.
Being registered as a Cooperative Society, it is empowered to frame bye-laws in accordance with the provisions of the Goa State Cooperative Act, 2001 and the Rules made thereunder. Sub-section 2 of Section 10A enumerate the matters on which the bye-laws can be made. Section 12 of the Act empower the Registrar to call upon the Society to amend the bye-laws if it is necessary or desirable in interest of the Society and if there is a failure to effect such an amendment of the bye-laws, he is empowered to register such amendment himself and the bye-law shall stand deemed to be amended.”
What’s more, the Full Bench then also elucidates in para 33 stating that, “A strong reliance on the judgment of the Apex Court in case of U.P State Cooperative Land Development Bank Ltd. V/s. Chandra Bhan Dubey & Ors 37 is also not of any succour to the petitioners, since the facts clearly distinguish the said decision. In the said case the Bank came to be constituted under a statute, U.P. Cooperative Societies Act as well as under the U.P. Cooperative Land Development Bank Act. Section 122 of the Act gave the State authority for recruitment, training and disciplinary control of the employees of the Cooperative Societies and also an authority to frame regulations regarding recruitment, terms of conditions of service, pay etc. The State Government thus constituted the U.P. Cooperative Institutional Service Board with the approval of the Government it published certain regulations which govern the service conditions of the employees. It was the only State Land Development Bank in the whole State of U.P and the Registrar of the Cooperative Societies of the State was entrusted with the functions of securing fulfillment of obligations of the Bank to the holders of the debentures. Further, the State Government has constituted guarantee fund under the Act for meeting likely losses and the Finance Department maintains the said fund. The Government officers were sent on deputation by the State to the bank on the post of Managing Director and Chief General Manager. Holding that the State exercised all pervasive control over the Bank, the U.P. Cooperative Land Development Bank was held to be ‘State’. This is not the situation before us when we deal with GSCB. Ltd. Applying the aforesaid parameters to determine whether the bank is an instrumentality or agency of the State, it has failed to make up to any of the characteristics which would clothe it with a status of ‘authority’ so as to fall within the meaning of expression “other authorities” under Article 12. It has no statutory flavour, i.e. it is neither a creation of a statute nor clothed with any statutory power, enabling it to take the shape of an authority. It does not discharge such functions as are governmental or closely associated or being fundamental to the life of people and discharge public function. The bank do not have deep and pervasive control or the brooding presence of the State Government so as to satisfy the test of instrumentality or agency of the State. This leaves the bank with an independent legal existence flowing from its status as a registered society and a cooperative society under the GSCB Society Act. However, it fails to cross the impediments of the aforesaid parameters laid down by the apex court before it attained the status of a State or instrumentality of the State under Article 12 of the Constitution.”
Truth be told, the Full Bench then observes in para 34 that, “On answering the issue (1) in the negative, we now turn to the second question under reference, when GSCB is not a State or an instrumentality of a State under Article 12 of the Constitution, whether a writ would lie against it, in discharge of performance of any public functions.
Please read concluding on thedailyguardian.com.
The fulcrum of the arguments, staking the claim that a writ would lie, is based on the judgment of the Apex Court being Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust & Others v/s. V. R. Rudani & Others. (1989) 2 SCC 691 and U.P State Cooperative Land Development Bank Ltd. V/s. Chandra Bhan Dubey & Ors (1999) 1 SCC 741. The decision in Andi Mukta was delivered on peculiar facts, being a writ petition filed by teachers of a Trust whose services were terminated by the institution which was affiliated to the University and governed by ordinance, casting certain obligations which it owed to the petitioner. The ratio flowing from the said judgment could be culled out to indicate that no writ would like against the private body except where it has some obligation to discharge duty which is statutory or of public character. The said decision delivered in the light of the facts where the management of the college was a Trust registered under the Bombay Public Trust Act and the issue was whether the writ petition is maintainable under 226 of the Constitution and whether the Court would issue writ of mandamus to the management, compelling it to pay the terminal benefits and arrears of salaries. Taking note, that the Trust was managing the affiliated college, which is admissible to grant-in-aid and that is how the Government played a major role in the control, management and working of educational institutions, it was held that the aided institution like the Government institution was discharging public functions, by imparting education to the students. The activities being closely supervised by the University authorities, employment in such institutions being not devoid of any public character and the service conditions of the academic staff was held to be not purely of a private character. On noting the existence of the relationship between the staff and the management resulting into a right/duty relationship,, the Apex Court held that a mandamus cannot be refused to the aggrieved party. However, it was clarified that if the rights are purely of private character or if the management of the college is purely a private body, with no public duty endowed, no mandamus will lie. These two exceptions carved out for issuance of a writ in the nature of mandamus being a private character and no public duty being discharged.”
It cannot be glossed over that it is then stated in para 39 that, “In our determination of the aforesaid issue we are also guided by the view taken by one of us (Mr. Justice Dama Seshadri Naidu), as a Judge of the High Court of Kerala at Ernakulum in the case of Bindu K. B v/s. State of Kerala and Others delivered on 09.10.2014 Writ Petition (C) No. 22233 of 2014 dated 09.10.2014. An employee of the Socio Economic Unit Foundation, Thiruvananthapuram -respondent no.2 on being placed under suspension and called upon to submit explanation to the charges framed against him invoked the writ jurisdiction of the High Court. The writ petition was opposed on the ground of maintainability and that is how the issue of maintainability was exhaustively examined. After a detailed analysis of the scheme flowing through the 2 important agencies, the submission of the petitioner that the 2nd respondent, his employer is an accredited agency and a unit of a local self government it is mandatory to approach it in the matter of conservation and sanitation though not subjected to any statutory or supervisory control of governmental agency nor was it in receipt of any aid from the Government was specifically noted. After making reference to the several decisions holding the field and expressively quoting paragraphs 36 and 37 of Binny Ltd (supra) and also on examination of the decisions of the coordinated benches and adopting the principle of stare decisis, the 2nd respondent Society registered under the Travancore-Cochin, Literary Scientific & Charitable Societies Registration Act of 1955 was held to be not a ‘State’. Further, dealing with the relationship between the employer and the petitioner-the employee, it is held as under:-
‘58. Though, the submission of the learned counsel for the petitioner, in the first blush, appears attractive, I am afraid it cannot stand the legal scrutiny. In Roshan Lal Tandon v. Union of India, AIR 1967 SC 1889, a Constitution Bench of the Supreme Court has observed that the origin of Government service is contractual; there is an offer and acceptance in every case, but once appointed to his post or office the Government servant acquires a status and his rights and obligations are no longer determined by consent of both parties, but by statute or statutory rules which may be framed and altered unilaterally by the Government. In other words, the legal position of a Government servant is more one of status than of contract. It is further observed that the hall-mark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties. In fact, under these circumstances, the recourse to public law remedy comes into picture. It is, by any reckoning, fallacious to contend that there is no element of contract in public service.
59. In the present instance, whatever the nomenclature given to the service conditions governing the employees of the 2nd respondent, they are not statutory in nature. In other words Ext. P6 service rules have not been framed under any statute, to say the least. Thus the dichotomy sought to be introduced by the learned counsel for the petitioner that the service rules framed and applied, without actually entering into individual contracts with the employees, are of public nature cannot be sustained.’
The conclusive indication is in the ultimate paragraph; ‘In the facts and circumstances, this Court holds that the 2nd respondent does not answer the description of a State, an agency or any instrumentality of State or that of any other authority. Despite the fact that as an accredited agent to the Government it discharges duties of public nature, a mere service dispute in terms of Ext.P6 non-statutory service rules does not give the necessary wherewithal to the petitioner to take recourse to Article 226 of Constitution of India. Accordingly the writ petition is dismissed at the threshold as not maintainable, but leaving it open for the petitioner to explore other legally permissible methods of grievance redressal.’”
Finally and far most importantly, the Full Bench then rightly holds in para 40 that, “It is trite position of law that the power of the High Court conferred under Article 226 of the Constitution to issue writs, for enforcement of any of the rights conferred by Part III of the Constitution and for any other purpose can be directed to any person or authority. But it is well understood that a mandamus would lie to secure the performance of a public or statutory duty in the performance of which, the person who seek such a writ has a sufficient legal interest. The writ, in form of a command directing particular act to be done would lie against a nature of public duty, though the person or authority on whom the statutory duty is imposed need not be a public official or an official body. A writ in the nature of mandamus would also lie against a private body, but only when such body performs any public function. The commercial business of banking, though is a function of public importance is not a public function and this position, succinctly flow from the decision of the Apex Court in case of Federal Bank Ltd. (supra). Merely because the Reserved Bank of India prescribe the banking policy for the sound economic growth and any particular bank function under the Banking Regulation Act, a private company carrying on business or commercial activity of banking do not conclusively establish that it discharge any public function or public duty. The Regulations are to be ranked not more than regulatory measures and if there is a failure to adhere to the said regulations, certain consequences are visited, is also not an indication to categorize the functioning as public duty. Similarly, merely because an organisation carries on function of public importance which are akin to or closely related to government functions, it would be no reason to hold that it discharge public functions.
Another important aspect which has to be borne in mind is that a writ can be issued for the discharge of only that public function if at all a body performs a public function and not any other function performed by it in the course of its business. Even if a body is performing public duty and amenable to writ jurisdiction, as a necessary sequel, all its decisions are not subject to judicial review but only those decisions which have public element therein can be judicially reviewed in exercise of writ jurisdiction. A fine line needs to be drawn between the contract of service by bearing its connection to the nature of contract and a contract of personnel service cannot be enforced with the exception when the employee is a public servant working under the Union of India or State, or an employee who is employed by any authority which is recognised as ‘State’ within the meaning of Article 12 and when such an employee fall within the ambit of “workman” within the meaning of Section 2(s) of the Industrial Dispute Act, 1947. There cannot be any dispute that writ is maintainable under Article 226 of Constitution of India even against a private management for enforcing the ‘public duty’ cast upon them, but it cannot be said that the same is available also for enforcing the terms and conditions of service in every situation. With the said observations, the Accountant who had knocked the doors of the Court who was aggrieved by issuance of a chargesheet by the Socio-Economic Unique Foundation, a private Society without any government control, and which was held to be not answering the description of a State, an agency or instrumentality of State or that of any other authority, it was held that though acting as a accredited agent to the Government it discharges duties of public nature, mere service dispute in terms of non-statutory service rules does not permit the petitioner to take recourse to Article 226 of the Constitution of India. In light of the aforesaid discussion on the two issues formulated by us in the primorial part of this judgment, we answer the same as under:
1) The Goa State Cooperative Bank Ltd is not a ‘State’ or an instrumentality thereof nor does it fall within the ambit of ‘Any other authority’ for the purposes of Article 12 of Constitution of India.
2) The GSCB does not discharge any public functions, which would warrant issuance of writ in the nature of mandamus in discharge of its performance of public functions. The questions being decided as aforesaid, we direct the Writ Petition to be placed before the appropriate Bench for its consideration.
The questions being decided as aforesaid, we direct the Writ Petition to be placed before the appropriate Bench for its consideration.”
In a nutshell, we thus see that the Bombay High Court effectively, elegantly and eloquently addresses both the questions and superbly answers them after according rational reasons for the same along with relevant case laws! In an 85-page judgment, the Full Bench of Bombay High Court has taken great pains to explain each and every aspect along with relevant case laws and we have dealt with only the most relevant part here. This brief, brilliant, bold and balanced judgment is like the key that has unlocked the lock and answered both the questions posed with consummate ease! It goes without saying: “There is nothing more that remains to be said”!
Sanjeev Sirohi, Advocate,