ORDER Jeevan Reddy, J.
1. The issue before the Full Bench is whether a writ petition lies against a Co-operative Society, and if it doe's, in what circumstances? Context is the enforcement of bye-laws governing service conditions of employees.
2. In P. S. Naidu v. Chittoor District Co,-operative Central Bank, (1977) 2 APLJ (HC) 282 : (1978 Lab IC 528), a Division Bench of this Court held that an order of punishment made by a Society against its employee cannot be questioned by the latter by way of writ petition. The Bench pointed out "as far as this Court is concerned, it has uniformly taken the view that a writ petition does not lie against a co-operative society especially when it relates to matters concerning the Society and its employees. In C. V. Narasimha Naidu v. Chittoor District Co-operative Bank Ltd., (1971)2 APLJ (SN) 16 ("W.P. No. 3788/1970 dated 7-6-1971"), one of us (Kuppuswami, J.) following the decision of a Division Bench of this (Madras?) Court in Lakshmaiah v. Sri Perumbadur T.C.M. Society, ; held that an order under Article 226 of the Constitution cannot be issued to quash the proceedings of a co-operative society The Bench noted that there appears to be a difference of opinion between the various High Courts in the country on that question, and observed "we would however prefer to rest our decision on the ground that what the petitioner is seeking to ensure is a purely contractual right, and in substance his case is that there has been a wrongful interference with his conditions of service by the stoppage of three increments. As the Supreme Court pointed out in Kulchindar Singh v. Hardayal Singh Brar, , where a petitioner is seeking to enforce a contract, he cannot invoke the jurisdiction under Article 226 by-passing the normal channels of civil litigation. Even in W.P. No. 3788 of 1970 dated 7-6-1971 : (reported in (1971) 2 APLJ (SN) 16), another ground for dismissing the writ petition was that in terminating the services of its own employees, the Cooperative Society cannot be said to be acting in the discharge of a public duty. In considering whether a particular body is an institution amenable to jurisdiction under Art. 226, it was observed that it is to be ascertained whether the particular act com-
plained of is one which was done in discharge of a public duty. A statutory body entrusted generally with the performance of a public duty may still, perform several acts which cannot be considered to be public functions like entering into a contract for the purchase of goods or other property. While doing so, it is not discharging a public function. Similarly it was held that termination of services is one connected only with the contract of employment. A fortiori in this case, the stoppage of increments cannot be regarded to be a public function, but is only one connected with the contract ".
3. Similar view was taken by a learned single Judge in Ranga Reddy v. Co-operative Electricity Supply Society Ltd., 1977 Andh LT 172 : (AIR 1977 NOC 232).
4. In V. Narasinga Rao v. Prudential Cooperative Urban Bank, (198.9) 1 Ahdh LT 300 : 0989 Lab It 1971), a Division Bench comprising two of us (Jeevan Reddy and Syed Shah Mohammed Quadri, JJ.) examined this question. That was a case where an employee of the Prudential Co-operative Urban Bank was dismissed by the Bank in pursuance of a disciplinary enquiry, which Order was challenged by way of a writ petition. The writ petition was referred to a Division Bench by a learned single Judge in view of the Bench decision in P. S. Naidu v. Chittoor District Co-operative Central Bank, (1977) 2 APLJ (HC) 282: (1978 Lab IC 528) and the decision in Ranga Reddy v. Co-operative Electric Supply Society Ltd., 1977 Andh LT 172 : (AIR 1977 NOC 232). It would be appropriate to notice the propositions flowing from the decision in Narasinga Rao (1989 Lab IC 1971) (Andh Pra) they are :
(i) The question whether a writ petition lies against a co-operative society or not, has to be examined in the light of the language employed in Article 226, which empowers this Court "to issue to any person or authority including in appropriate cases any Government directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto, and certi-orari or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose". The expressions 'person' or 'authority' have not been defined in the Constitution. The definition of person in the General Clauses Act is of little help in determining its meaning and scope. The expression 'authorities' occurs in the definition of 'State' contained in Article 12 of the Constitution, but even that does not throw any light on the meaning of the expression 'authority'. There ought to be several authorities failing outside the definition of 'State' but amenable to writ jurisdiction under Article 226.
(ii) Applying the tests evolved by the Supreme Court in Ramana Dayaram Shetty, , and other decisions, if it can be held that a particular Society can be characterised as 'State', a writ would lie against it. It was observed: "So far as the authorities which fall within the definition of 'State' in Art. 12 are concerned, it is admitted on all hands that they are amenable to writ jurisdiction of this Court ". And again, "if a co-operative society in a given case can be held to be a 'State', a writ would lie against it". On an examination of the relevant material, however, it held that the Society concerned therein cannot be characterised as a 'State'.
(iii) The Society concerned therein cannot also be characterised as an 'authority' within the meaning of Art. 226, applying the definition of the expression 'authority' approved by the Supreme Court in Rajasthan State Electricity Board case, .
(iv) A writ can undoubtedly issue against a co-operative society on the basis that it is a 'person' within the meaning of Art. 226, as held by P. A. Choudary, J, in Gattaiah, (1981) 1 APLJ (HC) 280 : (1981 Lab IC 942), whose decision was affirmed by a Division Bench in Writ Appeal No. 16/1981 dated 4-12-1981*. But this can be done only where the petitioner is seeking enforcement of a statutory public duty. No such duty was sought to be enforced in the case before it.
(v) Though the technical rules evolved in U.K. in the matter of these high prerogative writs do not shackle the High Courts in India while acting under Art. 226, the broad principles governing the same in English law must yet be kept in mind, as observed by Supreme Court. The writ is a public law remedy.',
(vi) The Supreme Court has held in Cooperative Central Bank Ltd. v. Industrial Tribunal, Hyderabad, , that bye-laws of a society do not have the force of law.
(vii) The principle of the decision of the Court of Appeal in Regina v. Criminal Injuries Compensation Board, Ex parte Lain, (1967) 2 QB 867, too cannot help the petitioner (therein) in maintaining the said writ petition, since the Society was not performing a public function akin to governmental function.
5. In Ratanlal Koul v. Jammu & Kashmir Bank Ltd., (1989) 3 Andh LT 177, one of us (M. Jagannadha Rao, J.) held that an order of dismissal of an employee by Jammu and Kashmir Bank a company incorporated under the Companies Act is amenable to writ jurisdiction, inasmuch as the Bank, is a 'State' within the meaning of Art. 12 of the Constitution. The learned Judge referred to various decisions of the Supreme Court and this Court, including V. Narasinga Rao, (1989) 1 Andh LT 300 : (1989 Lab IC 1971).
6. In A.P.D.D. Co-operative Federation v. Milk Producers' Co-operative Union Ltd., (1989) 2 APLJ (HC) 455, however, a learned single Judge, M. N. Rao, J., criticized the judgment in Narasinga Rao, (1989) 1 Andh LT 300 : (1989 Lab IC 1971) (Andh Pra), as laying down "apparently inexplicable and incongruous propositions". After an elaborate examination of the case law, the learned Judge enunciated three propositions in the following words:
"(i) a statutory duty enjoined on a cooperative society can be enforced by a writ of mandamus even if the society is not an authority under Art. 12;
(ii) if a co-operative society is funded by the State in full or substantial measure and the governmental control is deep and pervasive, it falls within the ambit of Art. 12 of the Constitution and, therefore, its actions can be questioned by a writ of ceniorari;
(iii) since every bye-law of a co-operative society falling under Article 12 is comprehended by the inclusive definition of 'law' under Art. 13(3)(a), it being void to the extent of its inconsistency with the provisions of Part III of the Constitution, this Court cannot decline to grant judicial review by a writ of certiorari against such a society on the sole ground that the relief claimed by the petitioner is founded on breach of bye-laws."
the learned Judge held further that the decision of the Supreme Court in Co-operative Central Bank, and its subsequent decision in B.K. Garad v. Nasik Merchant's Co-operative Bank Ltd., (where too it was held that bye-laws of a Society are not statutory), "cannot be considered as binding precedents for the proposition that breach of bye-laws of a cooperative society falling within the ambit of Art. 12 are outside the purview of judicial review under Art, 226". The learned Judge observed : "as already noticed, those two decisions did not consider the law laid down by larger Benches. For the same reason, the decision of the Division Bench in Narasinga Rao's case (1989 Lab IC 1971) (Andh Pra) (supra) cannot be understood as laying down the proposition that breach of bye-laws does not give a valid cause of action for interference under Art. 226, even if the respondent is an 'authority' under Art. 12 ". The decisions of the larger Benches of Supreme Court, referred to in the above extract, according to the learned Judge, are the decisions in Rashid Ahmed v. Municipal Board, Kairana, and Mohd. Yasin v. Town Area Committee, . We shall refer to these decisions at a later point of time. It is this decision of the learned single Judge in A.P.D.D. Co-operative Federation, (1989) 2 APLJ (HC) 455, that has led to this reference to Full Bench.
7. The respondent in W.A. No. 69 /1986 (writ petitioner) is challenging the termination of his service by the appellant (a cooperative Bank, registered under the A. P. Co-operative Societies Act) on the ground that it is contrary to bye-laws of the appellant-Society. Learned single Judge has upheld the ground and quashed the order. At the commencement of hearing, we indicated the following two propositions as beyond dispute. We asked the counsel to address themselves on other questions. The two propositions beyond dispute are:
(i) If a particular Co-operative Society can be characterised as 'State' within the meaning of Art. 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be an 'authority' within the meaning, and for the purpose, of Art. 226 of the Constitution. In such a situation, an order passed by the Society against its employee in violation of the bye-laws can be corrected by way of a writ petition. This is not because the bye-laws have the force of law, but on the ground that, having framed the bye-laws prescribing their service conditions, the Society must follow them in the interest of fairness. It cannot be left to the sweet will and pleasure of such Society to follow, or not to follow the bye-laws in a given case. If it is so left to its will and pleasure, it may choose to follow the bye-laws in one case and to ignore them altogether in another case; yet in another case it may choose to follow the bye-laws partly. This would undoubtedly lead to arbitrary and discriminatory results, violative of Art. 14 of the Constitution. Once a Society is characterised as 'State' within the meaning of Art. 12, it has to act in conformity with Art. 14, and the other Articles in Part III of the Constitution. This principle has been recognised in several decisions of this Court. In W.P. Nos. 106 and 107 of 1983 dated 8-11-1983, (1983) 2 Andh LT (SN) 98 (2) : (1984 Lab IC NOC 49), one of us (Jeevan Reddy, J.), dealing with the enforceability of non-statutory conditions of service obtaining under a Company, which was held to be a 'State' within the meaning of Art. 12, stated the rule thus:
"Where a Corporation, Company, or Society is held to be a 'State' within the meaning of Art. 12, it is governed by Parts III and IV of the Constitution. Such an entity has to act and operate consistent with, and subject to the limitations contained in these Parts. Among other obligations, it has to abide by Art. 14, which is held to be antithesis of arbitrariness, and which obliges the State to act reasonably in all its dealings. Now, if a Corporation frames certain Rules/Regulations/Bye-laws, governing a disciplinary enquiry and prescribing the procedure which has to be followed while holding such an enquiry, it has to follow them in all cases. It cannot claim any discretion or choice in the matter of following such Rules. Such a course, if permitted, would be inherently discriminatory. The Corporation would follow the Rules in one case, but not in the other. It will follow such of the Rules as it thinks convenient, but not the others. This will be purely arbitrary and capricious, besides being unreasonable. This will result in unequal treatment being meted out to similarly situated persons. The Court cannot say that because such Rules are not statutory, it will not enforce them. It is not really a question of enforceability of those Rules. The question is whether, by not following the Rules, or by violating the Rules framed by itself, the Corporation is not violating the fundamental rights of its employees, or other affected persons? The Court must hold these Corporations bound by their own Rules and Regulations, and must insist upon their following the Rules and Regulations. In the absence of Rules and Regulations, the Corporation has to act fairly, and where it has to act consistent with such principles. In such a situation it cannot be argued that the Court is in effect enforcing Rules and Regulations which do not have the force of law. As I have said, the question is not one of enforcing the Rules and Regulations, but one of ensuring the observance and protection of the fundamental rights of the affected persons ".
Same principle was applied in M.V. Subhanna v. S. P. Nellon, (1986) APLJ (HC) 61, though in a different context. Applying this principle, it was held that this Court would enforce obedience to the orders of the A. P. Administrative Tribunal created under Cl. (3) of Art. 37I-D. The Supreme Court too has affirmed this principle in B. S. Minhas v.
Indian Statistical Institute, . It said:
"In view of the pronouncement of this Court on the point it must be held to be obligatory on the part of respondent No. 1 to follow the bye-laws, if the bye-laws have been framed for the conduct of its affairs, to avoid arbitrariness. Respondent No. 1 cannot, therefore, escape the liability for not following the procedure prescribed by bye-law 2.
Compliance with this bye-law also seems to be necessary in the name of fair-play."
(ii) Even if a particular Society cannot be characterised as a 'State' within the meaning of Art. 12 of the Constitution, even so a writ would lie against it to enforce a statutory public duty which a person is entitled to enforce. In such a situation, it is unnecessary to go into the question whether the Society is a 'person' or an 'authority', within the meaning of Art. 226. What is material is the nature of the statutory duty placed upon it. This is the principle affirmed in Gattaiah, (1981) 1 APLJ (HC) 280: (1981 Lab 1C 942), affirmed by the Bench in Writ Appeal No. 16/1981.
8. We shall now proceed to deal with the questions upon which there has been a difference of opinion. The first such question is:
Whether the bye-laws framed by a Cooperative Society have the force of law?
9. The power to make law belongs to the Legislature and other persons and authorities, empowered by the Constitution. (We are not concerned herein with the other sources of law, namely, the custom or usage having the force of law, Personal Law laid down in Texts, or Judge-made law). Besides the Parliament and the Legislatures, the Constitution has empowered the President and Governor to make laws in certain situations. Some of the examples are: the power to issue Ordinances, conferred upon the President and Governor (Arts. 123 and 213); power to make Rules governing service conditions (proviso to Art. 309); Governor's power to make laws with respect to scheduled areas (Schedules V and VI), and the power to issue statutory orders conferred upon the President or other authorities under various provisions of the Constitution, like Cls. (1) and (3) of Art. 371-D. The main organ empowered to make laws is, of course, the Legislature whether at the Centre or in the States. It is the prerogative of the Legislature and Legislature alone either to enact the law itself, or to delegate that function to a person or authority so long as it does not delegate its essential legislative function. The law made by such delegate is called delegated legislation. The delegate may be a Government, University, Corporation, local authority, or even an individual. Several enactments in India, particularly those creating statutory Corporations, empower both the Government and the Corporation to make Rules/ Regulations to carry out the purposes of the enactment. Very often local authorities, like Municipal Corporations, are empowered to issue, what are called 'Bye-laws', governing various matters specified and to carry out generally the purposes of the Act. What is material, however, is not the name given to it, but its essential nature. The test is whether it is made by a delegate of the Legislature, Applying this test, it is difficult to say that bye-laws constitute delegated legislation. Section 130 of the A. P. Co-operative Societies Act confers the rule-making power upon the Government to carry out all, or any of the purposes of the Act. The Rules so made are a species of delegated legislation. But, bye-laws are not. They cannot be equated to Rules. The bye-laws have to be framed and submitted by a Society at the time of its registration; it is a condition of registration. All that the Act says is that, before registering a Society, the Registrar should be satisfied that "the proposed bye-laws are not contrary to the provisions of the Act and the Rules"; (vide S.7(1)(d . Section 16 provides for the manner in which the bye-laws of a Society can be amended. It says that an amendment to the bye-laws of a Society shall not be valid unless it is approved by the Registrar. Power is also conferred upon the Registrar to direct the amendment of a bye-law, and in case of default or refusal of the society, he can himself amend such bye-laws in the manner indicated by him. These bye-laws can by no stretch of imagination be characterised as delegated legislation.
10. Apart from the above theoretical discussion, the Supreme Court has specifically rules, in the case of A. P. Co-operative Societies Act itself, that the bye-laws made by a Society do not have the force of law. In Co-operative Central Bank Ltd. v. Industrial Tribunal, Hyderabad, , the supreme Court had this to say (at p. 252 of AIR):
"We are unable to accept the submission that the bye-laws of a co-operative society framed in pursuance of the provisions of the Act can be held to be law or to have the force of law. It has no doubt been held that, if a statute gives power to a Government or other authority to make rules, the rules so framed have the force of statute and are to be deemed to be incorporated as a part of the statute. That principle, however, does not apply to bye-laws of the nature that a co-operative society is empowered by the Act to make. The bye-laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute. In respect of bye-laws laying down conditions of service of the employees of a society, the bye-laws would be binding between the society and the employees just in the same manner as conditions of service laid down by contract between the parties. In fact, after such bye-laws laying down the conditions of service are made and any person enters the employment of a society those conditions of service will have to be treated as conditions accepted by the employee when entering the service and will thus bind him like conditions of service specifically forming part of the contract of service. The bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law "
11. The decision in Co-operative Central Bank was followed by the Supreme Court in B. K. Garad v. Nasik Merchants' Co-operative Bank Ltd., . It was held (at pp. 198-199 of AIR):
"Section 73-B (of Maharashtra Co-operative Societies Act) provides a legislative mandate. Rule 61 has a status of subsidiary legislation or delegated legislation. Bye-law of a co-operative society can at best have the status of an Article of Association of a company governed by the Companies Act, 1956 and as held by this Court in Cooperative Central Bank Ltd., v. Add). Industrial Tribunal, Andhra Pradesh the bye-laws of a co-operative society framed in pursuance of the provision of the relevant Act cannot be held to be law or to have the force of law. They are neither statutory in character nor they have statutory flavour so as to be raised to the status of law".
In our opinion, there cannot be a clearer exposition of law. No doubt, both these decisions are rendered by Division Benches comprising three Judges each.
12. Now, let us examine whether these decisions can be said to be not binding, on the ground that while laying down the aforesaid principle, the two Division Benches have failed to note the earlier decisions of larger Benches, as pointed out by the learned single Judge in A.P.D.D.C. Federation (1989) 2 APLJ (HC) 455. The earlier decisions which, according to the learned single Judge, laid down a contrary proposition, are Rashid Ahmed v. Municipal Board, Kairana and Mohd. Yasin v. Town Area Committee . We have carefully gone through the decision in Rashid Ahmed v. Municipal Board. There is no discussion in this decision with respect to the nature of the bye-laws made by the Municipal Board. Nor is there any discussion, whether they have the force of law. (The bye-laws considered therein were made under Section 298 of the U.P. Municipalities Act, 1916 and as we shall presently demonstrate, constituted delegated legislation. Neither party contended that they do not have force of law. Indeed, such a contention could not have been raised, since, being delegated legislation, they did have force of law. So far as the decision goes, all it did was to declare that the restrictions placed by certain bye-laws were more than reasonable restrictions contemplated by Art. 19(6), and therefore void under Art. 13(1) of the Constitution. The learned single Judge has quoted the following two sentences from the said judgment:
"These certainly are more than reasonable restrictions on the petitioners as are contemplated by Clause (6) of Article 19. This being the position the bye-laws would be void under Art. 13(1) of the Constitution".
In our opinion, the said two sentences cannot be read as amounting to a decision that the bye-laws even where they do not constitute delegated legislation have the force of law, nor can the subsequent decisions of the Supreme Court be faulted on the ground that they failed to take note of the said two sentences.
13. Now coming to Mohd. Yasin v. Town Area Committee , this again was a case where the Court was considering the question whether certain bye-laws made by the Town Area Committee, Jalalabad, (under the U.P. Municipalities Act, 1916) offended the fundamental right guaranteed by Art. 19(1)(g) of the Constitution and not saved by Clause (6) thereof. The argument of the petitioner therein was that the bye-laws had the effect of prohibiting him completely from carrying on any business. Upholding the said contention, the following observations were made (which are relied upon by the learned single Judge in A.P.D.D.C. Federation (1989-2 APLJ (HC) 455) as running counter to the principle of the decisions in Co-operative Central Bank and B. K. Garad :
"In our opinion, the bye-laws which impose a charge on the wholesale dealer in the shape of the prescribed fee, irrespective of any use or occupation by him of immovable property vested in or entrusted to the management of the Town Area Committee including any public street, are obviously ultra vires the powers of the respondent Committee and, therefore, the bye-laws cannot be said to constitute a valid law which alone may, under Article 19(6) of the Constitution, impose a restriction on the right conferred by Art. 19 (1)(g). In the absence of any valid law authorising it, such illegal imposition must undoubtedly operate as an illegal restraint and must infringe the unfettered right of the wholesale dealer to carry on his occupation, trade or business which is guaranteed to him by Article 19(1)(g) of our Constitution".
With great respect to the learned single Judge, we are unable to read the above observations as laying down the proposition that bye-laws do have the force of law, irrespective of the manner in which, and the authority under which they are made. The Supreme Court said in the first instance that the impugned bye-laws were ultra vires the rule-making power of the Town Area Committee and, accordingly, observed that the bye-laws cannot, therefore, be said to constitute valid law, within the meaning of Article 19(6) of the Constitution. From this it does not follow that the Supreme Court laid down that bye-laws, by whomsoever made and under whatsoever enactment, have the force of law. In this decision too, the question whether the bye-laws have the force of law was neither raised, nor considered.
14. In this connection, it is important to remember that the Bye-laws considered in these two cases were not the bye-laws made by a Co-operative Society much less under a Cooperative Societies Act. Though called "Bye-Laws", they constituted delegated legislation, having been made in exercise of the power conferred by Section 298 of the U.P. Municipalities Act, 1916. Section 296 of the Act empowered the Provincial Government to make Rules; Section 297 empowered the Municipal Board to frame Regulations, and Section 298 empowered the Municipal Board to frame Bye-laws. All of them are species of delegated legislation, also called subordinate legislation. In so far as material, the three Sections read as follows:
"296 (1) The State Government shall make rules consistent with this Act in respect of the matters described in Sections 95, 127, 153, and 235.
(2) The State Government may make rules consistent with this Act ".
"297( 1) A board may, by special resolution, make regulations consistent with this Act, or with any rule under Section 296, or regulation under sub-section (2) made by the State Government, as to all or any of the following matters:
XX XX XX XX XX (2) Provided that the State Government may, if it thinks fit, make regulations consistent with this Act in respect of any of the matters specified in clauses (d) and (h) to (n) of sub-section (1), and any regulations so made shall have the effect of rescinding any regulation made by the Board under the said sub-section in respect of the same matter or inconsistent therewith "
"298(1) A board by special resolution may, and where required by the State Government shall, make bye-laws applicable to the whole or any part of the municipality, consistent with this Act and with any rule, for the purpose of promoting or maintaining the health, safety and convenience of the inhabitant of the municipality and for the furtherance of municipal Administration under this Act.
(2) In particular, and without prejudice to the generality of the power conferred by subsection (1), the board of a municipality, wherever situated, may in the exercise of the said power, make any bye-law described in List I below, and the board of a municipality, wholly, or in part, situated in hilly tract may further make, in the exercise of the said power, any bye-law described in List II below".
15. Indeed, in Dy. Commissioner, Kheri v. President; Notified Area Committee AIR 1949 All 683, it was held that the bye-laws so made have the force of law.
16. We are, therefore, of the firm opinion that the decisions of the Supreme Court in Co-operative Central Bank and B.K. Garad cannot be said to have been wrongly decided on the ground nor can they be ignored on the ground that they did not take note of the earlier decisions in Rashid Ahmed and Mohd. Yasin . Co-operative Central Bank was decided under the A.P. Co-operative Societies Act. It expressly lays down, after a good amount of discussion, that bye-laws framed by a cooperative society as contemplated by the Act do not have the force of law. This decision was specifically referred to, and followed in the later decision in B.K. Garad v. Nasik Merchants' Co-operative Bank Ltd. . The earlier cases neither arose under the Co-operative Societies Act, nor did they deal with the said question. The bye-laws considered in those cases are qualitatively different as explained hereinbefore, and bear no similarity to the bye-laws of a Co-operative Society under the A.P. Act, It would, therefore, not be right to infer a contradiction between the said earlier decisions and the two later decisions, or to hold that the subsequent decisions do not represent good law and need not be followed by this Court.
17. The learned single Judge further relied upon the definition of 'law' in sub-clause (a) of Clause (3) of Article 13 in support of his proposition that the bye-laws made by a co-operative society do have the force of law. Clauses (1) to (3) of Art. 13 read as follows:
"13. Laws inconsistent with or in derogation of the fundamental rights:
(1) All laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
(2) The State shall not make any law which takes away or abridges the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void.
(3) In this article, unless the context otherwise requires,
(a) 'law' includes any Ordinance, order, bye-law, rule, regulation, notification, custom or usage having in the territory of India the force of law;
(b) 'laws in force' includes laws passed or made by a Legislature or other competent authority in the territory of India before the commencement of this Constitution and not previously repealed, notwithstanding that any such law or any part thereof may not be then in operation either at all or in particular areas ".
The object behind Art. 13(2) is plain. The 'State', as defined in Art. 12, shall not make any law, whether called Ordinance, rule, bye-law, order, or regulation, which takes away, or abridges the fundamental rights conferred by Part III. This does not mean that it can make a rule, bye-law or regulation, not having the force of law, but which takes away or abridges the fundamental rights. The latter cannot stand on a better footing than the former. It is for the above purpose that the definition of 'law' was put in clause (3)(a) in expansive terms. Now, the definition of 'State' in Art. 12 expressly includes local authorities. By the date of commencement of the Constitution, bye-laws made by local authorities, like Municipal authorities, was a well-recognized and well-established practice. Although called 'bye-laws', they constituted, and do constitute, delegated legislation. We must emphasize again that it is not the label that matters, but the true nature of it the source. Indeed, it has been repeatedly held that a rule or instruction, which does not have the force of law, is not 'law' as defined in Article 13(3)(a). Suffice it to refer to two decisions of Supreme Court. In D. Bhuvan Mohan Patnaik v. State of A.P., , the Court held (at p. 2097 of AIR):
" The installation of the high-voltage wires lacks a statutory basis and seems to have been devised on the strength of departmental instructions. Such instructions are neither 'law' within the meaning of Art. 13(3)(a) nor are they "procedure established by law" within the meaning of Article 21 of the Constitution. Therefore, if the petitioners are right in their contention that the mechanism constitutes an infringement of any of the fundamental rights available to them, they would be entitled to the relief sought by them that the mechanism be dismantled. The State has not justified the installation of the mechanism on the basis of a 'law' or a 'procedure established by law' ".
18. In Dwarka Nath v. Bihar State AIR 1959 SC 249, the Court was considering whether Art. 182 of the Bihar Education Code is 'law' within the meaning of Art. 31(1) of the Constitution. If it were law, then the deprivation of property provided thereby, could not have been complained of as being violative of Art. 31(1), since the deprivation in such a case would be by authority of law, within the meaning of Art. 31(1). Dealing with the said aspect, the Supreme Court had this to say (at p. 253 of AIR):
"As already indicated, proceeding on the assumption that the land and the building of the school, are vested in the petitioners as the Managing Committee of the school, have the petitioners been divested of their rights by authority of law, under Art. 31(1) of the Constitution? If the amended Art. 182 of the Code, extracted above, is law within the meaning of the article aforesaid of the Constitution, the petitioners cannot have any just complaint if they have been or are being deprived of those properties, because it is clear that the petitioners are holding the properties not in their individual absolute rights but only as trustees, for the purposes of the school. They have the properties vested in them because they are the Managing Committee. If they have been divested of those rights by the authority of law, this petition under Art. 32 of the Constitution must stand dismissed. If, on the other hand, the amended Art. 182 of the Education Code, is not law within the meaning of Art. 13 of the Constitution, then the petitioners cannot be deprived of their right to hold the properties as trustees, by a mere fiat of the officials of the Government of Bihar. Though, in the affidavits sworn on behalf of the respondents, it was claimed that the provisions of the Bihar Education Code, had the force of law, it has been conceded by the learned Solicitor-General, appearing on behalf of the respondents, that he could not justify that contention. The preface to the latest edition (7th Edition) printed in 1957, of the Bihar Education Code (1944), contains the following statement by the then Director of Public Instruction, Bihar:
"The Bihar Education Code is compiled in the office of the Director of Public Instruction, Bihar, and is issued under his authority. Those articles, below which no reference to higher authority is cited, Have the same authority as circular and other orders of the Director".
It is clear, therefore, from the portion of the preface extracted above, that Art. 182 of the Code has no greater sanction than an administrative order or rule, and is not based on any statutory authority or other authority which could give it the force of law. Naturally, therefore, the learned Solicitor-General, with his usual fairness, conceded that the article relied upon by the respondents as having the force of law, has no such force, and could not, therefore, deprive the petitioners of their rights in the properties aforesaid ".
19. Under clauses (2) to (6) of Art. 19, it has been repeatedly held that the 'law' contemplated therein is statutory law or an instrument/order/notification having the force of law, but not those not having the force of law. We do not think it necessary to cite decisions in support of this proposition.
20. Seervai in his treatise "Constitutional Law of India", elaborates the said definition in the following words:
"Article 13(3)(a) defines 'law' very widely by inclusive definition. It does not expressly include a law enacted by the Legislature, for such an enactment is obviously law. The definition of law includes : (i) an Ordinance, because it is made in the exercise of the legislative powers of the Executive; (ii) an order, bye-law, rule, regulation, and notification having the force of law, because ordinarily they form the category of sub-ordinate delegated legislation and are not enacted by the Legislature; (iii) custom or usage having the force of law, because they are not enacted law at all. This extended definition appears to have been given the law in order to forestall a possible contention that 'law' can only mean law enacted by the Legislature ". (See p. 237 Vol. I).
It, therefore, cannot be said that merely because Art. 13(3)(a) includes bye-laws within the definition of 'law', a bye-law made by a co-operated society governed by A.P. Cooperative Societies Act is law, or has the force of law.
21. Municipalities and Grarm Pancha-yats, it may be noted, are illustrations of local-self government. Co-operative Societies, on the other hand, represent a collective cooperative effort of a group of persons to improve their economic well-being. A cooperative society stands no comparison to Municipalities and Gram Panchayats. The bye-laws made by a local authority bind all the persons within its area, whereas the bye-laws of a Society bind only its members and its employees. The former is law. The latter is only a contract. We have already referred to the nature of bye-laws made under the U.P. Municipalities Act. A few more illustrations nearer home would suffice. The position obtaining under the Madras District Municipalities Act was the same. Sections 303 and 306 of the Madras Act correspond to Sections 296 and 298 of the U.P. Act. In our own State, position is no different. Section 330 of the A. P. Municipalities Act confers power upon the ' Municipal Council to make bye-laws to carry out the purposes of the Act. The language of Section 330 is akin to the language of Section 326, which confers power upon the Government to make Rules. Section 326(1) reads:
"(1) The Government may by notification in A. P. Gazette make rules for carrying on all or any of the purposes of this Act".
Section 330, in so far as it is relevant, reads:
"The Council may make bye-laws not inconsistent with this Act or with any other law, to provide -
(i) for all matters expressly required or allowed by this Act to be provided for
XX XX XX XX XX (12(a) for the regulation of building
(iii) in general for securing cleanliness, safety and order and good Government and well being of the Municipality and for carrying out all the purposes of this Act ".
22. Section 331 confers upon the Council the power to give retrospective effect to bye-laws made with regard to certain specified matters. Sections 332 and 333, of course, provide for the manner of making bye-laws and their approval by the Government, when alone they become effective. Sections 585 and 586 of the Hyderabad Municipal Corporation Act, 1955, correspond to Sections 330 and 331 of A.P. Municipalities Act. (In this connection, it may be noted that Regulations which the statutory Corporations are empowered to make under various enactments, like Road Transport Corporations Act and Air Corporations Act also require that the Regulations should not be inconsistent with the Rules made under the Act, and further that they must be made with the previous approval of the Central Government. That does not affect their nature or legal effect. For example, see Section 45(3) of Air Corporations Act, Section 49(1) of L.I.C. Act, Section 42(1) of Warehousing Corporations Act, and so on.
23. The learned single Judge in A.P.-D.D.C. Federation (1989-2 APLJ (HC) 455) also relied upon two other later decisions of the Supreme Court in Central Inland Water Transport Corporation Ltd. v. Brojo Nath (wherein the Central Inland Water Transport Corporation Ltd. a Government of India Undertaking, was held to be 'State' within the meaning of Article 12, and therefore subject to the discipline of Art. 14), and B. S. Minhas v. Indian Statistical Institute . In both cases, the authority was held to be a 'State'. The observations quoted from the latter decision only go to show that having made the bye-law, the Indian Statistical Institute was bound to follow them so as to avoid arbitrariness. In this case too, it was held that Indian Statistical Institute was an "authority" and, therefore, it was observed that it should follow the bye-laws made by it prescribing the procedure for appointment, inasmuch as not following the same would violate Article 14. None of these cases can be said to law down a proposition contrary to the express enunciation in Co-operative Central Bank and B.K. Garad .
24. In any event, once there was a decision of the Supreme Court under the very Act with which we are concerned herein, judicial discipline demands that we should follow it, unless there is another decision of the Supreme Court directly in conflict with it. No such conflict can even be suggested between the two earlier cases relating to Municipal Bye-Laws, and the case in Co-operative Central Bank.
25. For the above reasons, we hold that the bye-laws of a Co-operative Society governed by the A.P. Co-operative Societies Act, do not have the force of law, as held by the Supreme Court in Co-operative Central Bank. This is so even where the Society which made them is characterized as a 'State' within the meaning of Article 12. This does not however mean that, where a particular cooperative society can be characterized as a 'State', it is not bound to follow those bye-laws. We have already indicated hereinbefore that such society must follow its bye-laws, and it would be compelled to follow such bye-laws by way of a writ petition, so as to ensure fair and equal treatment the mandate of Article 14.
Whether the appellant in W.A. No.69/ 1986 (Sree Konaseema Co-operative Central Bank, which merged with Kakinada District Co-operative Central Bank on 31-3-1987) is a 'State' within the meaning of Art. 12?
26. That a co-operative society can also be an 'authority' within the meaning of Article 12 and therefore a 'State', is beyond dispute. The tests for determining whether a particular Society or Company is an agency or instrumentality of the State, so that it can be characterized as an 'authority' within the meaning of Art. 12, have been enunciated in Ramana Dayaram Shetty and affirmed in Ajay Hasia v. Khalid Mujib . They are the following (at p. 496 of AIR) :
"(1) One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towards indicating that the corporation is an instru-
mentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.
(3) It may also be a relevant factor
whether the corporation enjoys monopoly status which is the State conferred or State protected.
(4) Existence of "deep and pervasive State control" may afford an indication that the Corporation is a State agency or instrumentality.
(5) If the functions of the corporation of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.
(6) "Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference" of the corporation being an instrumentality or agency of Government ".
It is, however, emphasized that a Corporation to be characterized as an instrumentality or agency of State need not satisfy all the six tests. While it is nowhere stated that satisfaction of even one of the six tests would suffice, the Supreme Court has refused to specify how many of them should be satisfied in a given case. It is left to be determined in each case, having regard to the totality of the circumstances.
27. Of the six tests indicated above, tests 2, 3 and 6 are inapplicable in the present case, and may be dealt with in the first instance to clear the ground.
(2) There is no financial assistance of the State, much less is it of such an extent as to meet almost all the expenditure of the Corporation. The Government's contribution is only in the shape of share capital to a small extent, as we shall presently indicate. Some loans may also have been given to the appellant-Bank either by the Government, or by other public financial institutions, but particulars of such loans are not furnished. Be that as it may, giving loans is not financial assistance contemplated by second test. It means a grant as in the case of educational institutions. Grant is distinet from loan. What is given to educational institutions is not a loan, but a grant, and that is why decided cases treat the educational institutions as a category apart. We do not, of course, rule out the possibility of a society in receipt of a grant from the Government; but, the appellant-Society is not one such.
(3) The appellant-Bank also does not enjoy a monopoly status which is conferred, or protected by the State, It is not suggested that the societies to which loans are given by the appellant-Bank are precluded from receiving loans from any other source.
(6) The sixth test too is inapplicable, inasmuch as this is not a case where the business, carried on by appellant-Bank was previously carried on by a department of the Government, nor is it a case where the work of a department of the Government is transferred to the appellant-society.
28. We now proceed to examine whether the other three tests, namely, 1, 4 and 5 are satisfied in this case.
(1) Government's contribution to the share-capital:
According to the information furnished by Sri K. Srinivasa Murthy, learned counsel for the appellant-Bank, the Government's shareholding in the Kakinada District Co-operative Central Bank is in the following proportion:
Total paid-up share capital as on 30-6-1987: Rs. 693.33 Lakhs out of which the State Government held shares worth 79.10 Lakhs.
Total paid-up share capital as on 30-6-1988: Rs. 689.35 Lakhs out of which the Government's share-holding was 78.40 Lakhs.
(The position in December 1988 is practically the same).
It is thus clear that the Government's shareholding is in the region of 10%, which can be said to be negligible. There is another aspect to this test which is emphasised by a Division Bench of the Patna High Court in H. N. Banker v. State of Bihar (1986) 2 Serv LR256 ; (1985 Lab IC 1807). It is pointed out in the said decision that even though the Government owns a substantial number of shares of a co-operative society, still it would be having only one vote, just like an individual share holder, holding one share. Accordingly, it is pointed out, the importance given to shareholding in the first test enunciated by the Supreme Court, loses much of its significance in the case of a co-operative society. The said test has been evolved, says the Bench, keeping in mind the normal run of companies/ corporations registered under the Companies Act, where share-holding carries with it the power of control and management of the company, and it is for that reason, they said, satisfaction of this test goes a long way in establishing that the body is an agency or instrumentality of the State. So far as our Act is concerned, the position is practically the same. Section 25(1) says that, subject to such Rules as may be made in this behalf, every member shall have one vote in the affairs of the society and shall exercise his vote in person, and not by proxy. The proviso to Section 25(2) says specifically that no nominee of the Government or representative of the financing Bank shall be entitled to participate in or vote at any election. Moreover, Section 33(1) provides that where the Government has subscribed to the share-capital of a society, or guaranteed the repayment of principal and payment of interest on debentures issues by a society, or has guaranteed the repayment of principal and payment of interest on loans and advances to the society, the Government shall have the right to nominate to the committee of such Society not more than three persons as members, or one-third of the total number of members of the committee, whichever is less. Thus, even in a case where the Government's shareholding is 95%, its representation on the committee of the society cannot exceed one-third of the total number of members of the committee. So far as the General Body is concerned, it has only one vote. This does not, however, mean that the first test evolved by the Supreme Court has no relevance, or has no weight in the case of a co-operative society;
the Government's representatives, though in minority in the committee, may yet carry great weight, consistent with the largeness of the interest they represent. All that we say is that, such large share-holding does not have the same importance as, say, in the case of a company incorporated under the Companies Act. A substantial holding of share capital in a society by the Government would hot by itself go a long way towards indicating that such society is an instrumentality or agency of the State.
(4) Deep and pervasive State control:
Now, what does deep and pervasive State control mean? Does every legislative regulation constitute State control, or does State control mean only the control vesting in the executive, either under a statute or under the constitution (including Memorandum) and bye-laws (including Articles) of the body. This question becomes relevant whenever the Court proceeds to examine whether a company (incorporated under the Companies Act) or a Society (whether registered under the Societies Registration Act or Co-operative Societies Act) can be characterized as a 'State' within the meaning of Art. 12? (In case of statutory Corporations, created by legislative Acts, normally to perform statutory public functions, such a question may not arise, since by their very nature and constitution, they are liable to be characterized as 'State' see test No. 3 at page 136 of B. Satyanarayana v. State (FB). Our considered view is that in case of non-statutory Corporations/ Companies and Societies, etc. State control means the control vesting in the Government or its officers either by the statute or by the constitution/Memorandum of Association/ bye-laws/Articles of Association of the Society or Company concerned. Take for example, the Companies Act. It regulates the incorporation, working and winding up of the company in elaborate detail. Governmental authorities are vested with various powers to ensure observance of, and compliance with the regulatory provisions. But all this is designed not to vest control (over the Company) in the Government but to ensure the proper working of the company the main object being protecting the interest and rights of share-holders, investing public, employees and others having dealings with the company. On a consideration of the provisions of the Companies Act, it is not possible to say that the control vested by the Act in the Government/Company Law Board and Registrar is deep and pervasive control, within the meaning of fourth test aforementioned. But, when we come to examine the provisions of the A.P. Co-operative Societies Act, it emerges that the control vested in the Government and Registrar over the societies is deeper and qualitatively different. We shall refer to some of those provisions:
(i) Section 4(2) confers upon the Registrar the power to issue binding directions from time to time "in the interest of the cooperative movement, or public interest, or in order to prevent the affairs of the society from being conducted in a manner detrimental to the interest of the members or depositors, or creditors thereof.
(ii) Section 15 confers upon the Registrar the power to divide a society into more than one society, or to amalgamate two or more societies into one society, if in his opinion such a course is necessary "in the interest of societies or of the co-operative movement".
(iii) Section 15-A confers upon the Registrar the power to amalgamate or merge any society with another such society, or to divide a society and/or to restrict, or transfer the area of operation of the society, or Jo liquidate a society, if in his opinion such a course is necessary for ensuring economic viability of the concerned society, or to avoid overlapping or conflict of jurisdiction of societies, Or even "for securing proper management of a society". Such a step can be taken also in the interest of co-operative movement in general, or for any other reason in public interest.
(iv) Section 16(5) confers upon the Registrar the power to amend the bye-laws of a society if he thinks it necessary or desirable in the interest of such society, or of the cooperative movement.
(v) Under Section 31 read with Rule 22, the election to the committee of a co-operative society (except in the case of certain categories of small societies) is conducted by a government official. In many cases, elections have been postponed by the Government and Special Officers appointed under Section 32(7) to manage the affairs of the society though such a course has been frowned upon by this Court.
(vi) Section 34 empowers the Registrar to supersede the committee of a society if, in his opinion, "the committee is not functioning properly, or wilfully disobeys or fails to comply wilfully with any lawful order or direction issued by the Registrar under this Act or the Rules".
(vii) Section 45 prescribes the mode in which the net profits of a society are to be distributed. It is not open to the society to distribute the entire net profit by way of dividends. Section 46 controls and prescribes the manner of investment of funds also. Section 47(2) prohibits a society from granting a loan to any person other than a member.
(viii) Section 59 empowers the Registrar to direct the committee of a society to suspend, pending investigation, any paid-officer or servant of the society if, in his opinion, there is prima facie evidence against such person.
(ix) Section 60 empowers the Registrar to direct any member of the committee to make good to the society the amount misappropriated by him, or reimburse the society for the loss caused by his wilful negligence.
(x) Sections 70, 71, and 74 empower the Registrar to recover any amount due to a society from its members as also other amounts specified in those Sections, as if they are arrears of land-revenue. Similarly, Section 101 empowers the Registrar to recover any loan due to an Agricultural Development Bank from its members as if it is arrears of land-revenue. Section 102 empowers the Collector also to make similar recoveries in certain situations.
(xi) Section 116-A confers upon the Registrar the power to constitute a common cadre in respect of certain posts in Cooperative Banks, A.P. Co-operative Dairy Development Federation, Spinning Mills, and sugar factories. The Registrar is also empowered to prescribe the conditions of service of such cadres. Section 116-B empowers the Government to give binding directions to societies to reserve posts in favour of weaker sections of society. Under Section 116-C the staffing pattern, qualifications, pay scales, etc. of the employees of a society must receive prior approval of the Registrar before they become effective.
(xii) Section 131 empowers the Government to issue such orders or directions, either generally or in any particular matter, as it may consider necessary, to the Registrar of Cooperative Societies. The Registrar is bound to give effect to such orders and report back to the Government.
29. The aforesaid control vested in the Government and the Registrar, particularly the power to divide, amalgamate or merge the societies, power to conduct elections to the committee (disabling the Society to conduct such an election itself), power to supersede the committee, power to recover amounts due to the societies as arrears of land-revenue, power to provide common cadres for the employees of several independent societie, as also the extensive power to give binding directions vested in both the Government and the Registrar not only in the interest of shareholders, depositors and creditors, but also in the interest of public and of co-operative movement, is liable to be characterized as deep and pervasive control, within the meaning of the fourth test aforesaid. It must be noted that in this particular Writ Appeal, the society concerned is a Co-operative Central Bank, which is included within the categories of Societies, included in Section 116-A. (5) Whether the functions of the Society are of public importance and closely related to governmental functions?
30. This test, it is generally recognized, is too general to be precise. As has been pointed out by the Supreme Court in Ramana Dayaram Shetty , today the expression "governmental function" is a vague and indefinite description. In a welfare society like ours, it is difficult to draw the demarcating line between governmental and non-govern mental functions. Similarly, it is equally difficult to say with precision, which is a function of public importance, and which is not. If imparting education is a function of public importance, growing foodgrains, distribution of foodgrains, production and distribution of goods essential to society (industrial activity and commerce), providing housing, consumer goods and services essential to life and well being of society are all equally public functions. This inherent weakness in this test is bound to tell upon its importance.
31. Be that as it may, we find from the bye-laws of the appellant-Bank that its dealings are confined to its members and its membership consists of member-societies, Government, or a few nominal members. In response to our specific and repeated queries, it has been stated by counsel for both the parties that the operations of the appellant-Bank are actually confined to its members only. The appellant would not advance loan to a non-member-whoever he is. The appellant-Bank's main object is to raise funds to finance its members. It has its own funds. It is entitled to raise loans from Scheduled Banks and other agencies. Its members also make deposits with it. It is this amount, coupled with the rural credit provided by the central agencies, that is provided to its members. The main function of this Bank we are told is to provide credit out of its funds to Agricultural Credit societies which, in turn, provide the same to their members. The State provides credits to agriculturists mainly with a view to save them from the exploitation and harassment by money-lenders, and also to promote agricultural production and, in that sense, it is a function of public importance. But so does every other financial institution and Bank which provides credits to Industry, Commerce, Communications, and other bodies providing various services to the society. More important, according to the fifth test evolved by the Supreme Court, not only the functions of a Corporation should be of public importance, but they must also be closely related to governmental functions. Inasmuch as the operation of the appellant-
Bank is not confined to State funds, and also because it cannot be termed as an agency created by the State for distributing the rural credit provided by it, it cannot be said that it satisfies this test. As stated above, the appellant-Bank has its own funds, and the credit provided by central agencies is only a part of it. We may in this connection refer to what Bhagwati, J. said in Ramana v. I.A. Authority of India . After pointing out that the distinction between governmental and non-governmental functions is no longer valid in the present day social welfare State, the learned Judge observed (at p. 1641 of AIR):
"The contrast is rather between governmental activities which are private and private activities which are governmental. (Mathew, J. in Sukhdev v. Bhagatram at p. 1355 of ). But the public nature of the function, if impregnated with governmental character or 'tied or entwined with Government' or fortified by some other additional factors, may render the corporation an instrumentality or agency of Government. Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference "
32. In the circumstances, it is not possible to say that the appellant-Bank/Society satisfies the fifth test enunciated by the Supreme Court.
33. For the above reasons, the appellant-Society cannot be characterized as a 'State' within the meaning of Article 12.
34. There is yet another aspect which is academic in nature but must be mentioned in the interest of clarity. It is this : Even if for some reason it can be held that the appellant-Society is an 'authority' within the meaning of Art. 12, it does not follow therefrom that every activity of it's is amenable to writ jurisdiction. Even in the case of a Government, a writ petition does not lie to enforce a non-statutory contractual obligation. Similarly, even in the case of a society, which is a 'State' within the meaning of Art. 12, a writ does not lie to enforce a contractual obligation. In Co-operative Central Bank the Supreme Court has speci-
fically said that the bye-laws providing service conditions of the employees of a society are nothing more than a contract of service. This distinction was indeed pointed out by Kuppu-swami, J. in P. S. Naidu (1977) 2 APLJ (HC) 282 : (1978 Lab IC 528). It has also been emphasized by the Supreme Court in M. C. Mehta V. Union of India . In paragraph 29 of the said judgment, it is observed:
"The learned counsel for Shriram stressed the inappositeness of the doctrine of State-action in the Indian context because, according to him, once an authority is brought within the purview of Art. 12, it is State for all intents and purposes and the functional dichotomy in America where certain activities of the same authority may be characterized as State action and others as private action cannot be applied here in India. But so far as this argument is concerned, we must demur to it and point out that it is not correct to say that in India once a corporation is deemed to be 'authority', it would be subject to the constitutional limitation of fundamental rights in the performance of all its functions and that the appellation of 'authority' would stick to such corporation, irrespective of the functional context ".
35. Thus, bye-laws which merely constitute terms of contract between a Society and its employees do not have, or do not gain the force of law even where such Society can be characterized as 'State', within the meaning of Art. 12. But this aspect is of mere academic importance, since we have held (see the undisputed proposition 1, above) that where a particular Society can be characterized as 'State', within the meaning of Article 12, the Court will compel such Society to follow its bye-laws in the interest of fairness, i.e., Article 14.
Whether a writ petition lies to enforce the terms of a non-statutory contract?
36. This discussion has become necessary in view of the contention urged by the respondent (writ-petitioner) to the effect that, even if the bye-laws of the appellant-Society are held not to have the force of law and it is held that they constitute merely terms of contract of employment between the Society and the writ petitioner, even so a writ petition lies to enforce the terms of such contract. It is argued that the appellant-Society is a public body and, therefore, it is amenable to a writ of mandamus, as well as a writ of certiorari. It is not possible to agree with the contention.
37. The basic feature of mandamus and certiorari is that they are public law remedies and are not available to enforce private law rights. Though the strict technical rules governing these writs in English law are not applicable in India, yet the broad principles underlying the said writs have to be kept in mind by this Court while exercising the power under Art. 226. Not keeping the said distinction in mind would obliterate the distinction between a writ petition and a suit; there will be chaos. As pointed out by a Constitution Bench of the Supreme Court in T. C. Basappa v. T. Nagappa though the power of the High Court under Art. 226 need not be constricted by the technical rules applicable to these prerogative writs in English law, it is yet necessary to "keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law". Similarly, it was pointed out in Dwaraka v. I.T.O., that "Article 226 is couched in comprehensive phraseology and it ex facie confers a wide power on the High Court to reach injustice wherever it is found. A wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be used, was designedly used by the Constitution. But this does not mean that the High Court can function arbitrarily under this Article. There are some limitations implicit in the Article, and the others may be evolved to direct the Article through defined channels ". The object behind Art. 226 was to strengthen the then existing judicial system, to make it more effective and not to dispense with, duplicate, or replicate the existing system. It was not to supplant the existing judicial system, but to confer an additional power in the service of people and Constitution that this extraordinary power was created. It is for this reason that notwithstanding the wide language of Art. 226, Courts have been observing certain self-imposed restrictions upon this power. One of the well accepted limitations upon the exercise of this power is that it is not available to enforce the terms of a contract, i.e a contract which is not statutory in nature. This is so even if one of the contracting parties is the State, a Government, or other local authority. This is the principle affirmed by Supreme Court in a large number of cases, some of which are Radhakrishna Agarwal v. State of Bihar AIR 1977 SC 1496; State of Punjab v. Balbir Singh AIR 1977 SC 1717; Bihar E.G.F. Co-operative Society v. Sipahi Singh Lekhraj v. Deputy Custodian, Bombay ; Har Shankar v. Deputy E & T Commissioner. , and finally L.I.C. of India v. Escorts Ltd. . In Escort's case, an argument was urged that inasmuch as the Life Insurance Corporation was an instrumentality of the State, it is debarred by Article 14 from acting arbitrarily. It is obligatory upon the Corporation, it was contended, to disclose the reasons for its action complained of, viz., its requisition to call an Extraordinary General Meeting of the Company for the purpose of moving a resolution to remove some Directors and appoint others in their place. This argument was opposed by the learned Attorney-General for the State, contending that actions of the State or an instrumentality of the State which do not properly belong to the field of public law but belong to the field of private law, are not subject to judicial review. Dealing with the said contentions, the Court observed:
"While we do find considerable force in the contention of the learned Attorney-General it may not be necessary for us to enter into any lengthy discussion of the topic, as we shall presently see. We also desire to warn ourselves against readily referring to English cases on questions of Constitutional law Administrative Law and Public Law as the law in India in these branches has forced ahead of the law in England, guided as we are by our Constitution and uninhibited as we are by the technical rules which have hampered the development of the English law. While we do not for a moment doubt that every action of the State or an instrumentality of the State must be informed by reason and that, in appropriate cases actions uninformed by reason may be questioned as arbitrary in proceedings under Art. 226 or Art. 32 of the Constitution, we do not construe Art. 14 as a charter for judicial review of State actions and to call upon the State to account for its actions in its manifold activities by stating reason for such actions.
For example, if the action of the State is political or sovereign in character, the Court will keep away from it. the Court will not debate academic matters or concern itself with the intricacies of trade and commerce. If the action of the State is related to contractual obligation or obligations arising out of the contract the Court may not ordinarily examine it unless the action has some public law character attached to it. Broadly speaking, the Court will examine actions of State if they pertain to the public law domain and refrain from examining them if they pertain to the private law field. The difficulty will lie in demarcating the frontier between the public law domain and the private law field. It is impossible to draw the line with precision and we do not want to attempt it. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the action and a host of other relevant circumstances. When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such a shareholder, there is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the Company, like any other shareholder "
Distinction between 'public law' and 'private law':
Difficult as this distinction is and incapable of precise demarcation, it is yet necessary to keep the broad distinction in mind. Lord Denning in his book "The Closing Chapter" has this to say on the subject:
"The first thing to notice is that public law is confined to 'public authorities'. What are 'public authorities'? There is only one avenue of Approach. It is by asking, in the words of Section 31(2)(b) of the Supreme Court Act 1981 : What is the 'nature of the persons and bodies against whom relief may be granted by such orders', that is, by mandamus, prohibition or certiorari?
These are divided into two main categories:
First, the persons or bodies who have legal authority to determine questions affecting the common law or statutory rights or obligations of other persons as individuals. That is the formula stated by Lord Justice Atkin in R. v. Electricity Commissioners, ex parte London Electricity Joint Committee Co., (1920) Ltd, (1924) 1 KB 171/205 as broadened by Lord Diplock in O'Reitly v. Mackman (1982)3, WLR 1096/1104).
Second, the persons or bodies who are entrusted by Parliament with functions, powers and duties which involve the making of decisions of a public nature To which I would add the words of Lord Goddard, C.J. in R. v. National Joint Council for Dental Technicians, ex parte Neate (1953) 1 QB 704/707):
"The bodies to which in modern times the remedies of these prerogative writs have been applied have all been statutory bodies on whom Parliament has conferred statutory powers and duties which, when exercised, may lead to the detriment of subjects who may have to submit to their jurisdiction".
But those categories are not exhaustive. The courts can extend them to any other person or body of a public nature exercising public duties which it is desirable to control by the remedy of judicial review.
There are many cases which give guidance, but I will just give some illustrations.
Every body which is created by statute and whose powers and duties are defined by statute is a 'public authority'. So Government departments, local authorities, police authorities, and statutory undertakings and corporations, are all 'public authorities'. So are members of a statutory tribunal or inquiry, and the board of visitors of a prison. The Criminal Injuries Compensation Board is a public authority. So also, I suggest, is a university incorporated by Royal charter; and the managers of a State School. So is the Boundary Commission : and the Committee of Lloyd's.
But a limited liability company incorporated under the Companies Acts is not a 'public authority'; (see Tozer v. National Greyhound Racing Club Ltd. (1983) Times, 16 May). Nor is an unincorporated association like the Jockey Club ".
(See pp. 122 to 124)
38. Sir Harry Woolf, a Lord Justice of Court of Appeal, points out the distinction in the following words:
"I regard public law as being the system which enforces the proper performance by public bodies of the duties which they owe to the public. I regard private law as being the system which protects the private rights of private individuals or the private rights of public bodies. The critical distinction arises out of the fact that it is the public as a whole, or in the case of local government the public in the locality, who are the beneficiaries of what is protected by public law and it is the individuals or bodies entitled to the rights who are the beneficiaries of the protection provided by private law ".
(see page 221 of his Article "Public Law Private Law : Why the Divide? A personal View (published in "Public Law" Summer :
(1986)").
The learned Law Lord stated further in the same Article, at page 223:
"While public law deals only with public bodies, this does not mean that the activities of public bodies are nevergoverned by private law. Like public figures, at least in theory, public bodies are entitled to have a private life. There have been suggestions that in the commercial field public bodies should adopt different and higher ethical standards than private individuals, but this is not yet required as a matter of law and in relation to purely commercial transactions the same law is applicable, whether or not a public duty is involved. Prima facie, the same is true in relation to employment. The servant employed by a public body ordinarily has the same private rights as any other servant ".
The position may, however, be different pointed out the learned Law Lord if such relationship is circumscribed by a statutory provision.
39. In this context, it would be appropriate to refer to two important English decisions, where a public duty was implied even in the absence of a statutory provisions. They are R. v. Criminal Injuries Compensation Board, ex parte Lain (1967) 2 All ER 770, and R. v. Panel on take-overs (1987) 1 AH ER 564. In Criminal Injuries Compensation Board, the relevant facts are the following: In the year 1964 the Government of Great Britian announced a Scheme in both Houses of Parliament providing for compensation to victims of violence and persons injured while assisting the police. It was a non-statutory scheme under which compensation was to be paid ex gratia. The scheme was to be administered by a Board, who were to be provided with money through a grant-in-aid, out of which payment would be made when the Board was satisfied that the compensation was justified. The widow of a Police Constable who was shot in the face by a suspect whom he was about to question, and who subsequently shot himself, applied to the Board for compensation. The Board awarded compensation, but made certain deductions, which was questioned by way of certiorari. The first question before the Court was "whether the Board are a body of persons amenable to the supervisory jurisdiction of this Court?". For the Board reliance was placed upon the well-known words of Atkin, L.J., in R. v. Electricity Commissioners (1924) 1 KB 171, at p. 205 to the effect that the body of persons to be amenable to writ jurisdiction must have the legal authority to determine questions affecting the rights of subjects and who are under a duty to act judicially. The Court held that the said words of Atkin. L. J., were not supposed to be exhaustive of the situation where a certiorari may issue, and pointed out that the Board, though not set up under a statute, is set up by the executive Government, i.e., under the prerogative, and that its acts are no less lawful on that account. The Court observed:
"Indeed, the writ of certiorari has been issued not only to courts set up by statutes but also to courts whose authority was derived, inter alia, from the prerogative. Once the jurisdiction is extended, as it clearly has been, to tribunals as opposed to courts, there is no reason why the remedy by way of certiorari cannot be invoked to a body of persons set up under the prerogative. Moreover, the Board, though set up under the prerogative and not by statute, had in fact the recognition of Parliament in debate and Parliament provided the money to satisfy the Board's awards ".
It was further observed :
"We have, as it seems to me, reached the position when the ambit of certiorari can be said to cover every case in which a body of persons, of a public as opposed to a purely private or domestic character, has to determine matters affecting subjects provided always that it has a duty to act judicially. Looked at in this way, the Board in my judgment comes fairly and squarely within the jurisdiction of this Court. The Board are, as counsel for the Board said, "a servant of the Crown, charged by the Crown, by executive instructions, with the duty of distributing the bounty of the Crown". The Board are clearly, therefore, performing public duties. Moreover, the Board are quite clearly under a duty to act judicially".
The same idea was put forward by Diplock, L.J., in his separate opinion, where he said : "If new tribunals are established by acts of Government, the supervisory jurisdiction of the High Court extends to them if they possess the essential characteristics on which the subjection of inferior tribunals to the supervisory control of the High Court is based ". Ashworth, J., justified the issue of certiorari in that case on the following basis:
"They (Board) were set up by the executive after the proposal to set them up had been debated in both Houses of Parliament, and the money needed to satisfy their awards is drawn from sums provided by Parliament. It can therefore be said that their existence and their functions have at least been recognized by Parliament, which to my mind has a twofold consequence : in the first place it negatives any notion that the Board are a private tribunal, and secondly it confers on the Board what I may call a public or official character. The number of applications for compensation and the amounts awarded by the Board alike show how greatly the general public are affected by the functioning of the Board ".
40. This decision has since been followed and applied in several English decisions. It would suffice to refer to R. v. Panel on Takeovers and Mergers, ex parte Datafin (1987) 1 AH ER 564. The Panel on Take-overs and Mergers was a self-regulating unincorporated association which devised and operated the City Code on Take-overs and Mergers prescribing a Code of Conduct to be observed in the take-overs of listed public companies. The panel had no direct statutory, prerogative or common law powers, nor were its powers based solely on consensus; its acts were supported and sustained by certain statutory powers and penalties introduced after the inception of the Panel. A decision of the panel was sought to be questioned by way of certiorari. One of the objections of the respondents was that the supervisory jurisdiction of the Court was confined to bodies whose power was derived solely from legislation or the exercise of the prerogative, and that the power of judicial review did not extend to a body such as the Panel on Takeovers. Overruling this objection, it was held that in determining whether the decisions of a particular body were subject to judicial review, the Court was not confined to considering the source of that body's powers and duties, but could also look to their nature. Accordingly, if the duty imposed on a body, whether expressly or by implication, was a public duty and the body was exercising public law functions, the Court had jurisdiction to entertain an application for judicial review of that body's decisions. It was held -that, having regard to the wide-ranging nature and importance of the matters covered by the City Code on Take-overs and Mergers and to the public consequences of non-compliance with the Code, the Panel on Takeovers and Mergers was performing a public duty when prescribing and administering the Code and its rules and was subject to public law remedies. Accordingly, it was held that an application for judicial review would lie in an appropriate case. The approach to be adopted in such cases, it was stated by Sir John Donaldson, M.R., is "to recognize the realities of executive power". This is what the learned Master of Rolls stated :
"In fact, given its novelty, the panel fits surprisingly well into the format which this court had in mind in R. v. Criminal Injuries Compensation Board (1967-2 QB 867). It is without doubt performing a public duty and an important one. This is clear from the expressed willingness of the Secretary of State for Trade and Industry to limit legislation in the field of take-overs and mergers and to use the panel as the centrepiece of his regulation of that market. The rights of citizens are indirectly affected by its decisions, some, but by no means all of whom, may in a technical sense be said to have assented to this situation, e.g., the members of the Stock Exchange. At least in its determination of whether there has been a breach of the Code, it has a duty to act judicially and it asserts that its raison d'etre is to do equity between one shareholder and another. Its source of power is only partly based on moral persuarion and the assent of institutions and their members, the bottom line being the statutory powers exercised by the Department of Trade and Industries and the Bank of England. In this context I should be very disappointed if the courts could not recognize the realities of executive power and allowed their vision to be clouded by the subtlety and sometimes complexity of the way in which it can be exerted ".
This rule was reiterated in yet another decision of the Court of Appeal in R. v. Panel on Take-overs and Mergers, ex parte Guinness, (1989) 1 All ER 509. This was indeed the approach indicated by Mathew, J. in Sukhdev v. Bhagatram, , when the learned Judge spoke of "the governing power, wherever located" being subjected to "fundamental constitutional limitations". The learned Judge felt that "the need to subject the power centres to the control of the Constitution requires an expansion of the concept of State action". (See para 93 at p. 1352).
41. Applying the above test, the appellant-Society herein cannot be called a public body. It has no duty towards public. Its duty is towards its members only. It has no power to take any action, or pass any order affecting the rights of the members of public. The binding nature of its orders and actions is confined to its members, and to its employees. It is neither a. statutory body nor are its relations with its employees governed by a statute. Its functions are also not akin to governmental functions. Nor is it a case where it can be said that the reality behind the Society is the executive power of the State. Moreover, even if for some distant reason it can be characterised as a public body, even so the contract of service between it and the writ petitioner cannot be treated as belonging to 'public law' field. It is a pure and simple contract of service, and there is no statutory provision regulating, circumscribing, and governing the said relationship excepting Section 47 of the A. P. Shops and Establishments Act, 1988, which imposes certain restrictions in the matter of termination of service of the employees of a co-operative society. This aspect we shall consider presently.
42. Substantial reliance is placed upon two recent decisions of the Supreme Court as charting out a new path. It is submitted that the decisions in Anadi Mukta Sadguru S.M.V.S.J.M.S. Trust v. V. R. Rudani, (hereinafter referred to as "Rudani"), and Dwarkadas Marfatia & Sons v. Board of Trustees, Bombay Port, (hereinafter referred to as "Bombay Port Trust"), clearly lay down that a mandamus is available even to enforce a non-statutory contract, like a contract of service.
We do not think either of the decisions lays down any such proposition. We shall first take up Rudani.
43. In Rudani , the claim of the teachers against the educational institution was for terminal benefits and arrears of salary payable. They were not seeking reinstatement in service. The Division Bench distinguished the earlier decisions in Vaish Degree College v. Lakshmi Narain, AIR 1976 SC 888, and Deepak Kumar Biswas v. Director of Public Instruction, , as cases where the relief of reinstatement was sought. Having pointed out the said distinction, Jagannatha Shetty, J. speaking for the Bench, observed (at p. 1611 of AIR):
"If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to Mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied "
The learned Judge then referred to the fact that the appellant-educational institution was in receipt of Government aid. Such aid, it was pointed out, plays a major role in the control, maintenance and working of educational institutions; the function performed by the institution was public in nature; its activities were closely supervised by the University authorities, who had the power to determine the service conditions of the academic staff as well in short, all the indicia of a 'State' were present there. In the light of those facts, it was concluded (at p. 1611 of AIR):
"The service conditions of the academic staff are, therefore, not purely of a private character. It has super-added protection by University decisions creating a legal right-duty relationship between the staff and the management. When there is existence of this relationship, mandamus cannot be refused to the aggrieved party "
The learned Judge then discussed the development of law relating to mandamus in England, and referred to the fact that Art. 226 is much wider in its amplitude, as explained by Subba Rao, J. in Dwarkanath v. I.T.O., . The learned Judge observed that the term 'authority' employed in Art. 226 must receive a liberal meaning unlike the term in Article 12. Reference was then made to Praga Tools Corporation v. C. V. Imanual, , where it was held, inter alia, that "a mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities". Thereafter, in paragraph 21 the learned Judge stated thus which is the sheet-anchor of the petitioner's contention in this behalf:
"Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, Professor De Smith states: "To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract"; (Judicial Review of Administrative Act, 4th Ed. p. 540). We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into watertight compartment. It should remain flexible to meet the requirements of variable circumstances, Mandamus is a very wide remedy which must be easily available to reach injustice wherever it is found. Technicalities should not come in the way of granting that relief under Art. 226. We, therefore, reject the contention urged for the appellants on the maintainability of the writ petition "
In particular, reliance is upon the extract from De Smith, where it is stated that a duty enforceable by mandamus can arise even from a contract. We find that the two sentences from De Smith extracted in the above paragraph, are drawn from an old English decision, viz., Ex parte Napier, (1852) 18 QB 692 (re-printed in English Reports 118, at p. 261). Sir Charles James Napier was an Officer commanding certain land forces of Her Majesty and of the East India Company, then serving in Scinde (India). Certain booty was seized in the course of their operations and Sir Napier claimed a share therein. The Company paid him a particular amount, but subsequently sought to deduct a part of it from his salary on.the ground that there was excess payment. Thereupon, Sir Napier took out a motion for a rule against East India Company to show cause why a mandamus should not issue to pay to him the amount deducted from his salary. The question was, whether a mandamus can issue? The question was posed in the following words:
"The, first question to be considered is, whether, if his pay had been withheld from him without any reason being assigned, there is any jurisdiction in this Court to order by mandamus the arrears which he claims to be paid to him by the East India Company. If there be not, we cannot entertain the question whether the East India Company were justified in making the deduction."
Lord Campbell, C.J., answered the question in the following words :
"The applicant must make put that there is a legal obligation on the East India Company to pay him the sum he demands, and that he has no remedy to recover it by action. The latter point becomes material only when the former has been established for the existence of a legal right or obligation is the foundation of every writ of mandamus. But it seems to us that the attempt to show that there was any obligation on the East India Company, which the law will enforce, to pay any sum of money to Sir Charles Napier, either as Commander of the Queen's forces or as Commander of the native troops, has entirely failed. A legal obligation, which is the proper substratum of a mandamus, can only arise from common law, from statute, or from contract. Of course, the obligation here contended for cannot arise from the common law, and is not rested on contract. We have therefore to see whether there be any enactment of the Legislature by which it can be supported "
Ultimately they held that there was no such enactment and, accordingly, dismissed the motion. In our opinion, the sentence extraded in De Smith should not be read in isolation but along side the first sentence of the paragraph. It contemplates a contract which gives rise to legal obligations, and which cannot be enforced in an ordinary Court of law. It is unimaginable that in 1851, . an English Chief Justice would have said that an ordinary non-statutory contract can be enforced by way of a mandamus.
44. The second decision cited by De Smith in support of the above statement is R v. Secretary of State for War, (1891) 2 QB 326 (at p. 335). In this case it was hejd by the Court of Appeal that a mandamus will not lie against the Secretary of State for War to compel him to carry out the terms of a Royal warrant regulating pay and retiring allowances of the officers and soldiers of the Army, inasmuch as no legal duty in relation to such officers and soldiers is imposed upon the Secretary of State either by statute or by common law. In the course of the judgment reference is made to the decision in Ex parte Napier (1852-18 QB 692), but even so it was held that a mandamus does not lie in that case.
45. We are, therefore, of the opinion that paragraph 21 in Rudani cannot be understood as laying down a general proposition that a mandamus lies to enforce a non-statutory contract. Indeed, in paragraph 14 it was affirmed that, if the rights sought to be enforced are purely of private character, no mandamus can issue. It was also observed that where there is no public duty imposed upon a body, a mandamus would not lie. The statement in paragraph 21 must, therefore, be read consistent with what is stated in paragraph 14, and if the judgment is read as a whole and consistent with the decisions specifically referred to, and affirmed therein, it only means that for a mandamus to issue, there must be a public duty. All that was stated was that such public duty need not necessarily be imposed by a statute; it can be imposed by common law, custom, or even a statutory contract. This aspect has already been dealt with by us in para ( ) supra.
46. Now coming to Bombay Port Trust case , it stands as a category apart on its facts. Firstly, it was a case of Bombay Port Trust which is, undoubtedly, a public authority/public body. Exemption was granted to it from the operation of Bombay Rents, Hotel and Lodging House Rates Control Act, 1947: Affirming the principle enunciated by Chagfa, C.J. in Rampratap Jaidayal v. Dominion of India, , the Supreme Court held that exemption granted to a public body from the operation of the said Bombay Act is with the object that it would not act as a private landlord, but would act in public interest. This was treated as an implied condition of exemption. It was, therefore, held that the Port Trust is under a public duty to act fairly, and not as a private landlord. Moreover, since it is a 'State' within the meaning of Art. 12, it is subject to the discipline of Art. 14. For these twin reasons, it. was held, the actions/orders of the Port Trust, if violative of Art. 14, are amenable to writ jurisdiction. The observations made in paragraph 27 must be read as a whole. One single sentence cannot be taken out of context and construed as constituting a major departure from the established position. A reading of the judgment discloses its constant refrain 'where any special right or privilege is granted to any public or statutory body on the presumption that it must act in certain manner, such bodies must make good such presumption while acting by virtue of such privileges. Judicial review to oversee if such bodies are so acting is permissible'.
47. While on this subject, it is necessary to remind ourselves of certain basic truisms. It would be reasonable to assume that the Supreme Court where it proposes to depart from an established line of authority and an established legal position would not do so without even referring to its earlier decisions. It would not be reasonable on the part of the High Court to say that the Supreme Court would effect a radical departure from an established position without even referring to its earlier decisions, particularly where such position is established by decisions of larger Benches. Even if there are any words which do not strictly fit into the established legal position, it would be more reasonable to read them consistent with the well-established legal position than to infer a conflict, or to say on that basis that the previous law stands overruled. In the interest of certainty of law and judicial discipline, we ought to construe the several, decisions of the Supreme Court as constituting motifs of a harmonious pattern. After all, judgments ought not to be read as statutes; they are authority for what they decide. A word here or a word there, should not be made a basis for infering inconsistency or conflict of opinion. Law does not develop in a casual manner. It develops by conscious, considered steps.
The impact of Section 47 of A. P. Shops and Establishments Act, 1988 (Sec. 40 of A. P. Shops and Establishments Act, 1966):
48. A co-operative society may be an industry if it satisfies the requirements of the definition of 'industry' in S. 2(j) of the Industrial Disputes Act. In such a situation, the provisions of Chapters V-A and V-B will apply, and certain protection would be available to the employees in the matter of termination. Since some of the provisions' of the said Chapters are based upon public policy, they will be enforced by way of a writ of mandamus, in case they are violated.
49. Apart from the Industrial Disputes Act, the A. P. Shops and Establishments Act also applies to a co-operative society. The definition of 'commericial establishment' in Section 2(5) of the Shops and Establishments Act includes "an establishment under the management and control of a co-operative society". Section 77 of the Act expressly declares: "Notwithstanding anything in the Andhra Pradesh Co-operative Societies Act, 1964, the provisions of this Act shall apply to the co-operative societies". (The A. P. Shops and Establishments Act too has received the assent of the President). Section 47 of the Act provides a certain protection to employees of shops and establishments governed by the Act, in the matter of termination of their service. According to sub-section (1), "no employer shall, without a reasonable cause, terminate the service of an employee who has been in his employment continuously for a period of not less than six months, without giving such employee at least one month's notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment continuously for the period of not less than one year, a service compensation amounting to fifteen days average wages for each year of continuous employment". It further requires that every order of termination shall be in writing, and that copy of such termination order shall be furnished to the Inspector having jurisdiction over the area within three days of such termination. It is provided by sub-section (2) that "the services of an employee shall not also be terminated for misconduct except for such acts or omission and in such manner as may be prescribed ". The Rules framed under the Act prescribe the acts and omissions which constitute misconduct, and the procedure to be followed while terminating the service of an employee; (see Rules 19 and 20 framed under the 1966 Act, and continued under the new Act).
50. It would be evident that these statutory restrictions are placed upon the employer's power of termination not only in the interest of employees, but also in public interest. It follows, therefore, that where the mandatory requirements of Section 47 are not complied with, this Court may, in appropriate cases, interfere by way of a writ petition, and quash the termination. In several cases, the Supreme Court and this Court have quashed termination where it was effected in violation of Section 25-F of the Industrial Disputes Act. Section 47(1) also provides certain similar restrictions, and the law would be the same in this behalf as well. This does not mean that in every case where S. 47 is violated, this Court would automatically interfere. It must be remembered that the Act provides for remedies in case of violation of the said provisions. Ordinarily, the parties ought to pursue the remedies provided by the Act and the Rules; but, in appropriate cases this Court can also interfere, notwithstanding that the employee has not chosen to avail of the remedies provided by the statute. In which cases, and in what circumstances would this Court interfere should be left to its judgment and discretion, to be exercised having regard to the facts of a given case.
51. Summary:
From the above discussion the following proposition's emerge :
(i) If a particular co-operative society can I be characterised as a 'State within the mean-j ing of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be an 'authority' within the meaning, and for the purpose, of Art. 226 of the Constitution. In such a situation, an order passed by a Society against its employee in violation of the bye-laws, can be corrected by way of a writ petition. This is not because the bye-laws have the force of law, but on the ground that having framed the bye-laws prescribing the service conditions of its employees, the Society must follow them, in the interest of fairness. If it is left to the sweet will and pleasure of the Society either to follow or not to follow the bye-laws, it would be inherently arbitrary and may very likely give rise to discriminatory treatment. A society, which is a 'State', has to act in conformity with Art. 14 and, for that reason, it will be made to follow the bye-laws.
(ii) Even if a Society cannot be characterised as a 'State' within the meaning of Art. 12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the Society. In such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person', or an 'authority', within the meaning of Art. 226 of the Constitution. What is material is the nature of the statutory duty placed upon it, and the Court will enforce such, statutory public duty.
(iii) The bye-laws made by a co-operative society registered under the A. P. Co-operative Societies Act do not have the force of law. They are in the nature of contract, terms of contract, between the Society and its employees, or between the Society and its members, as the case may be. Hence, where a Society cannot be characterised as a 'State', the service conditions of its employees, governed by bye-laws, cannot be enforced through a writ petition. However, in the matter of termination of service of the em ployees of a co-operative society, S. 47 of the A. P. Shops and Establishments Act provides a certain protection, and since the said pro tection is based upon public policy, it will be enforced, in an appropriate case, by this Court under Art. 226 of the Constitution.
Ordinarily, of course, an employee has to follow the remedies provided by the A. P. Shops and Establishments Act; but, in an appropriate case, this Court will interfere under Art. 226, if the violation of a statutory public duty is established. It is immaterial which Act or Rule casts such a statutory public duty.
(iv) Mandamus, certiorari, and prohibition are public law remedies. They are not available to enforce private law rights. Every act'of a society which may be a 'State' within the meaning of Art. 12, does not necessarily belong to public, law field. A society, which is a 'State', may have its private law rights just like a Government. A contractual obligations, which is not statutory, cannot be enforced by way of a writ petition under Art. 226 of the Constitution. Prior to entering into contract, however, Art. 14 operates, as explained by the Supreme Court in E.E. & C. Ltd. v. State of West Bengal, , and Rarnana Dayaram Shetty, .
Applying the above principles, let us now examine the facts in these cases.
W.A. No. 69/1986:
52. The respondent herein (writ petitioner) was. appointed on 18-11-1983 by the President of the appellant-Bank. His services were terminated by an order dated 27-6-1984. The order of termination says that the writ petitioner (respondent) was appointed by the President "without following the procedure suggested by the Registrar of Co-operative Societies in the matter of notifying vacancies in the dailies and selection by Ad hoc Committee after examination of the academic and training qualifications and tests required, etc. ", and recites further: "Whereas it is now decided by the Management to set right all the irregular appointents made without reference to the procedure prescribed by the Registrar of Co-operative Societes, the services of Sri Seetarama Raju working as Manager temporarily are terminated with effect from 27-6-1984, A.M.". There is no denying the fact that while terminating the service of the writ petitioner, the appellant-Bank has not complied with the requirements of Section 40 of the A. P. Shops and Establishments Act, 1966, which was the provision then in force. Since the writ petitioner had put in more than six months' service, he was entitled to one month's notice in writing, or wages in lieu thereof. But, the appellant-Bank's case is that the said provision has no application to the writ petitioner inasmuch as his very appointment was irregular. It is contended that his appointment by the President without following the prescribed procedure was invalid, and for putting an end to such invalid appointment, S. 40 has no application. In our opinion, the matter requires due investigation by the authority constituted under the Act, and ought not to be pronounced upon by this Court in a writ petition, It is, accordingly, directed that if the respondent herein (writ petitioner) files an appeal before the appellate authority within two months from today, against the order of termination dated 27-6-1984, the same shall be entertained by the authority without raising objection on the ground of limitation, and shall be disposed of according to law. It is brought to our notice that in pursuance of the order of the learned single Judge dated 6-11-1985, the writ petitioner has been reinstated in service on 20-11-1985 and he is continuing in service. It is directed that pending the appeal aforementioned, the writ petitioner (respondent herein) shall be continued in service. His continuance in service shall, however, depend upon the result of the said appeal.
Writ Appeal is allowed in the above terms. No costs.
W.P. No. 13286/1988:
53. In the year 1984 the Chittoor Dist. Co-operative Central Bank Ltd., called for applications for appointment to the post of Manager. The petitioner says, as many as 350 candidates including himself applied and that, they were made to undergo a written test. Interviews were also notified to be held on 13-10-1984, but they were postponed, and since then nothing is heard of the said appointment. Meanwhile, it is complained, in the year 1988 the 4th respondent has been appointed to the said post, though the said person had never appeard in the written test held in 1984. This, it is complained, is denial of legitimate rights of the petitioner. It is not even alleged in the writ petition that the respondent-Bank is a 'State' within the meaning of Art. 12, nor is it mentioned how the present writ petition is maintanable against the respondent. In the counter-affidavit filed by the 4th respondent it is stated that he has nothing to do with the 1984 interviews, that he is a physically handicapped person, and that in pursuance of the reservation of 3% provided in favour of physically handicapped persons under G.O.Ms. No. 1034, G.A.D., dt. 1-8-1966 he was appointed to the said post. According to him, the said post is reserved for physically handicapped persons. In this state of pleadings, and in the absence of any rights in the petitioner to compel the respondent-Bank to make an appointment in pursuance of the written test held by it, the writ petition must fail.
The writ petition is, accordingly, dismissed.
No costs.
W.P. No.1780/1989:
54. This writ petition is filed by the Secretary of Nellore Co-operative House Building Society, against the order dt. 30-1-1989 made by the President of the Society, placing him under suspension pending enquiry into his conduct and behaviour. The -allegation is that he had furnished false information with respect to the conduct of the General Body Meeting, which false information had resulted in action being taken against the Committee of the Society by the Co-operative authorities. In the writ petition it is not stated as to why the respondent-Society ought to be treated as 'State' within the meaning of Art. 12, nor is it stated as to how a writ petition is maintainable against the respondent. It is also not brought to our notice that the A.P. Shops and Establishments Act provides any protection in the matter of suspension pending enquiry. In the circumstances, no interference is possible by this Court with the order of suspension pending enquiry. It is, however, open to the writ petitioner to approach the Co-operative authorities against the order of suspension. Under sub-rules (3) and (4) of Rule 72 of the A.P. Co-operative Societies Rules, 1964, the Registrar has got the overall supervisory jurisdiction and Control over the service conditions of the Secretaries. Even otherwise, under S. 4(2) of the Act, the Registrar has got power to give appropriate directions in the interest of co-operative movement, public interest, or in order to prevent the affairs, of the society from being conducted in a manner detrimental to the interest of the members, depositors, and creditors. This power is wide enough to give appropriate directions even in a service matter, if such course is found expedient in the interest of factors mentioned in S.4(2). The enquiry, however, shall be concluded expeditiously.
55. The writ petition is, accordingly, dismissed with the above observations. No costs.
56. Order accordingly.