* THE HON'BLE THE ACTING CHIEF JUSTICE BILAL NAZKI AND * THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION NOs. 5563 AND 13933 OF 2007 %Dated 31.12.2007 W.P.No.5563 of 2007: Between: # Dr.P.Sitapati Rao ……….. PETITIONER $ Institution of Lokayukta, Andhra Pradesh, Hyderabad rep. by its Registrar ………… RESPONDENT ! Counsel for Petitioner : Sri. Sr. S.R.Ashok ^ Counsel for Respondent : Sri.M.V.S.Suresh Kumar < GIST: > HEAD NOTE: ? Cases referred [1] AIR 1988 SC 1369 2AIR 1974 SC 1863 3(2002) 5 SCC 111 42004(2) ALT 663 5(2004)5 SCC 263 6(1976) 1 SCC 11 7(1990)1 SCC 589 8AIR 1967 SC 884 9AIR 1981 SC 53 10AIR 1984 SC 161 11AIR 1965 SC 360 12AIR 1977 SC 1677 13(1997) 11 SCC 650 142004(5) SCC 263 THE HON'BLE THE ACTING CHIEFJUSTICE BILAL NAZKI AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NOs. 5563 AND 13933 OF 2007 COMMON ORDER: (The Hon'ble Sri Justice Ramesh Ranganathan) Dr. P. Sitapati Rao, hitherto the Additional Director General (Irrigation), National Academy of Construction and Ex-officio Advisor, Irrigation & Command Area Development Department of the Government of A.P. has filed these two writ petitions. In W.P. No. 5563 of 2007, the order of the Honourable Lokayukta dated 05.03.2007 in holding him to be a “pubic servant”, both under Section 2(k)(iii) and 2(k)(V)(4) of the A.P. Lok Ayukta and Upa-Lok Ayukta Act, 1983, (hereinafter referred to as Act 11 of 1983), and as amenable to the jurisdiction of the Lokayukta, is under challenge. In W.P. No. 13933 of 2007, the provisions of Section 10 of the A.P. Lokayukta and Upa Lokayukta Act, 1983, (hereinafter referred to as “Act 11 of 1983”), is under challenge, in so far as it empowered the Lokayukta to suo motu conduct an investigation and to adjudicate issues, as ultravires Article 14 of the Constitution of India. The petitioner also seeks to have the order passed by the Lokayukta, in C.M.P. Nos. 5 and 6 in Complaint No.890/2005/B1 dated 25.6.2007, set aside. In C.M.P. No. 5, the petitioner had requested the Lokayukta to cause an enquiry into the reasons why phone calls were made from the Registry and the interest of the individual in getting the proceedings of the Lokayukta published in newspapers. In C.M.P. No. 6, the petitioner sought transfer of Complaint No.890/2005/B1 from the file of the Hon’ble Lokayukta to the file of the Hon’ble Upa Lokayukta. Since Sri S.R. Ashok, Learned Senior Counsel appearing on behalf of the petitioner, has fairly stated that the petitioner was not pressing Writ Petition No. 13933 of 2007, it is not necessary for us to examine either the vires of Section 10 of Act 11 of 1983 or the orders passed by the Lokayukta in C.M.P. Nos. 5 and 6, in Complaint No.890/2005/B1, dated 25.6.2007. W.P. No. 13933 of 2007 is dismissed as not pressed. Even in W.P. No. 5563 of 2007, Sri S.R. Ashok, Learned Senior Counsel, has confined his submissions, on the validity of the order of the Lokayukta dated 5.3.2007, to the limited extent that the petitioner was held to be a “public servant”. Learned Senior Counsel seeks adjudication only on the question whether the petitioner was, during the relevant period, a public servant within the meaning of either Section 2(k)(iii) or Section 2(k) (v)(4) of Act 11 of 1983, for, according to him, it is only if the petitioner is held as such would he be amenable to the jurisdiction of the Lokayukta. Learned Senior Counsel would request that the other questions raised in this writ petition be left open. Since our decision is invited only on the question whether the petitioner is a “Public Servant”, either under Section 2(k)(iii) or 2(k)(v)(4) of Act 11 of 1983, it is wholly unnecessary for us to examine any of the other questions raised in this writ petition. Elaborate submissions were made by Sri S.R. Ashok, learned Senior Counsel ably assisted by Sri O. Manohar Reddy, learned Counsel for the petitioner. Sri M.V.S. Suresh, learned Standing Counsel for the Institution of the Lok-Ayukta, made a detailed reference to the order under challenge and to several G.Os and other proceedings in support of his submission that the order of the Lok-Ayukta was valid and did not necessitate interference in proceedings under Article 226 of the Constitution of India. IS THE NATIONAL ACADEMY OF CONSTRUCTION, OF WHICH THE PETITIONER WAS THE ADDITIONAL DIRECTOR GENERAL (IRRIGATION), A SOCIETY WHICH IS SUBJECT TO THE CONTROL OF THE STATE GOVERNMENT: Section 2(k) of Act 11 of 1983 defines “public servant” to mean a person falling under any of the descriptions mentioned thereunder. Under clause (v)(4) thereof, every director, in respect of any society registered under the A.P. (Telangana Area) Public Societies Registration Act, 1350 F and subject to the control of the Government, is also a “public servant”. Section 2(e) of Act 11 of 1983 defines “Government” to mean the State Government. It is not in dispute that the petitioner as the Additional Director General of the National Academy of Construction falls within the description of “director” and, as the National Academy of Construction was registered as a society under the A.P. (Telangana Area) Public Societies Registration Act, 1350 Fasli, vide Registration No. 4844 of 1998, dated 24.09.1998, he is a director of a society. The question to be answered is whether the petitioner is a director of a society subject to the control of the State Government. To answer this question we must first examine whether the National Academy of Construction is a society which is subject to the control of the State Government. It is true that the National Academy of Construction (hereinafter referred to as the Academy) is an independent legal entity and is not a department of the Government. It must however be borne in mind that the words “subject to” or “under” do not connote complete control in the sense of being owned by the State Government, and to construe it as such, the words “subject to” will have to be substituted by the words “of”. The words “subject to” cannot be taken to have the same meaning as the word “of” which may bring in the notion of ownership. Had that been the intention of the legislature there is no cogent reason why the word “of” was not used in place of the words “subject to”. The concept of subjugation can be relevant only when there are two entities one of which may be subject to the control of the other. While a department of the government strictly speaking is a part of the government, a society registered under the A.P. (Telangana Area) Public Societies Registration Act, is a separate legal entity, and is not a government department. The mere fact that the National Academy of Construction is a distinct legal entity, and is not a department of the government, cannot, by itself, be a circumstance from which it may be deduced that it cannot be a society subject to the control of the State Government. (C.V. Raman Vs. Management of Bank of India[1]). The word “control”, used in clause v(4) of Section 2(k) suggests check, restraint or influence. Control is intended to regulate and hold in check and restrain from action. (State of Mysore Vs. Allum Karibasauppa[2]). A society would be subject to the control of the State Government if it is under the influence of the State Government or the State Government has the power to regulate its affairs and exercise check on it. Though decisions in cases dealing with Article 12 of the Constitution of India cannot be made the basis to hold that the National Academy of Construction is a society subject to the control of the State Government, it cannot be gainsaid that the salient principles which have been laid down in those cases with regard to the authorities having a separate legal entity, and exercising autonomy in certain spheres, will certainly be useful in determining whether the National Academy of Construction is a Society subject to the control of the State Government. (C.V. Raman1). I n Pradeepkumar Biswas Vs. Institute of Chemical Biology[3], the question which fell for consideration before a seven judge bench of the Supreme Court was whether the Council of Scientific and Industrial Research (CSIR) was a State within the meaning of Article 12 of the Constitution of India and the Supreme Court observed: “…….The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be — whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State………” (emphasis supplied) It is contended on behalf of the petitioner that the National Academy of Construction is a private society not subject to the control of the State Government, that the bye-laws of the society clearly show that the governing body of the society was the supreme authority and any decision taken by it was not subject to any review by the Government nor did the government have any control, the mere fact that the Chief Minister was the Chairman did not by itself make the society one subject to the control of the State Government, that there was no financial contribution from the Government and the entire finance of the society was from contributions from contractors, that the members of the Board of the governing body exercised independent power and, merely because the governing body had persons from government departments, an inference could not be drawn that the Government was exercising its influence over the functioning of the Society. The judgment of the Supreme Court, in Pradeep Kumar Biswas3, is sought to be distinguished on the ground that, in the said case, the Minister had the power to review the decisions taken by the governing body of the society whereas in the present case there was no power of review conferred on the Chief Minister. It is further contended that the G.Os, issued by the Government, with regards contributions, showed that the same were issued at the request of the association of the contractors, that the provisions of Section 28 only empowered the government to place such terms and conditions on the society which were mutually agreed upon and that no such conditions had been imposed by the Government on this Society. It is further contended that, since the Society was not under the control of the government, the mere fact that the petitioner was its Additional Director General did not make him a “public servant”. The Hon’ble Lokayukta relied on the judgment of the Supreme Court, in Pradeepkumar Biswas3, to hold that the tests to be satisfied, for a society to be subject to the control of the Government, was whether the National Academy of Construction was financially, functionally and administratively dominated by the State Government. The factual details, based on which the honourable Lok-Ayukta has concluded that the State Government exercised financial, functional and administrative dominance over the Academy, are not disputed before us. What is under challenge is the conclusions drawn by him from these facts. The Honourable Lokayukta noted that the National Academy of Construction, (hereinafter referred to as the “Academy”),was created by the State Government with the main object of promoting education, training, research etc., at all levels in construction and allied industries without any profit motive, that the first governing body was constituted by the State Government in G.O.Ms.No.108 dated 20.6.1998, that the Chief Minister of the Government of A.P. was the ex-Officio Chairman of the Academy as also its governing body, that, as ex-Officio Chairman, the Chief Minister had the power to preside over all governing and general body meetings, that the ex-Officio Chairman had also the power to nominate any member to conduct general body meetings in his absence, that as ex-Officio Chairman the Hon’ble Chief Minister had the power to fill up any vacancy that may arise in the governing body, that he had the power to nominate certain number of members to the governing body, that he had the power to appoint the Director General of the Academy who was to be a Member Secretary and that the General Body, over which he presided, had the power to consider and make decisions relating to the objects, administration, finances of the academy and to regulate the finances of the academy. The Hon’ble Lokayukta held that the rules and regulations of the academy gave a dominant role to the Chief Minister who was the ex-Officio Chairman over the administration and financial affairs of the academy, that the present governing body consisted of several heads of government departments and corporations and it was evident that the Government of A.P. was in a position to dominate or influence the administration of the academy and the mere fact that the rules of the academy did not specify the administrative control of the government was of no consequence. The Hon’ble Lokayukta rejected the contention advanced on behalf of the petitioner that the powers exercised by the Chief Minister was in his capacity as the Chairman of the Academy and not as the Chief Minister of the State and held that, given the fact that the Chairman of the Governing Body was the Chief Minister and the Governing Body consisted of several heads of government departments and government corporations, subjugation of the governing body to the will of the State Government was evident. On the question of financial control, the Hon’ble Lokayukta held that the bulk of the initial funding came from government departments and government corporations who had joined as the patron members as per the directions of the government, that the recurring income of the Academy i.e., contribution from contractors was also because of the mandatory intervention of the government by issuing two G.Os. directing the departments and corporations to collect contributions from the contractors by inserting appropriate clauses in the work agreements, and, but for such mandatory intervention of the Government, contributions from the contractors could not have been collected and passed on to the Academy. He held that the governing body was dominated by, and was under the influence of, the State Government which regulated the expenditure of the Academy. In this context it is useful to note that the State Government issued G.O.Ms. No. 92 dated 19.05.1998 for mobilization of funds for the Academy. The said G.O. notes that the Engineering-in- Chief, Roads & Buildings department of the State Government, vide letter dated 30.03.1998, had informed that the Builders’ Association of India, Andhra Pradesh Centre was requested to discuss about the contribution of 0.50% of the contract value for establishing the Institute of Construction Technology of India at Hyderabad, (later called the National Academy of Construction), for utilizing the amount in construction of buildings and for meeting the expenditure in running the Institute, that the Builders’ Association of India, vide letter dated 13.02.1998, had informed that the issue was discussed in their meeting and that the members had agreed to contribute 0.25% of the contract value and had sent proposals to the Government for inclusion of this condition in all Orders of Contracts. Under the said G.O, the Government decided to permit the Executive Engineers to conclude supplemental agreements with the contractors, for works under execution and to be entrusted in future, to deduct 0.25%. The Engineering-in-Chief was requested to issue necessary instructions to all concerned and ensure that the funds were collected and remitted to the Institute. In G.O.Ms. No. 103 dated 16.06.1998, the Government approved the scheme of starting the National Academy of Construction and granted an extent of Ac.167.30 in Sy. Nos. 5/2 to 5/23 at Izzatnagar Village, Lingampaly Mandal, Ranga Reddy District to the Academy free of cost. The Government also accorded approval for its departments and Corporations becoming patrons of the Academy by contributing Rs.30.00 lakhs each. The G.O. refers to five Government Corporations and four Government departments and they were requested to send Demand Drafts for Rs.30.00 lakhs each in favour of the to the Engineering-in-Chief, R&B department. The Engineering-in-Chief, R&B department was requested to take immediate action for establishing the National Academy of Construction at Hyderabad. The Secretary to the Government, Revenue department, was requested to identify and alienate to the A.P. State Housing Corporation Limited suitable land in Ranga Reddy District in lieu of the land which belonged to the A.P. State Housing Corporation having been allotted to the National Academy of Construction. In G.O.Ms. No. 61 dated 11.04.2000 the Government noted that, in the 6th Governing Board Meeting of the National Academy of Construction held on 29.12.1999, it was resolved to recover 0.25% from the contractors’ gross bills as contribution to the National Academy of Construction by including it as a condition in the tender documents and agreement forms, thus making such contributions mandatory. The Government, after careful consideration and examination of the matter, directed that all its departments, as well as Corporations under their administrative control, should include the said condition in the tender documents and agreement forms so as to collect 0.25% from the contractors’ gross bills as their contribution to the National Academy of Construction thus making such contribution mandatory. This condition was required to be included in the tender documents and agreement forms from 01.04.2000 onwards. In G.O.Ms. No. 159 dated 30.10.2004, the Government noted that the Builders’ Association of India, in their meeting held with the Honourable Ministers of Panchayat Raj, Irrigation, Roads & Buildings and Commercial Taxes on 30.08.2004 regarding streamlining the tender procedure for timely completion of works, had agreed that, in the interest of the State, they had no objection to their contribution of 0.25% being apportioned. After careful examination, the Government ordered that the present 0.25% contribution from the Contractors continue and be divided between Chief Minister’s Relief Fund and the National Academy of Construction in the ratio of 0.15% and 0.10% respectively with immediate effect. Sri S.R. Ashok, Learned Senior Counsel, would however contend that the mere fact that the Government had given land free of cost would not make the Society one subject to the control of the State Government. He would refer to the fact that several private companies had been allotted land by the Government, from time to time. According to the Learned Senior Counsel, if allotment of land was the only criteria, then these private companies must also be held to be subject to the control of the State Government. It is evident that, not only was the National Academy of Construction allotted an extent of Ac. 167.30 of land free of cost for establishing the Academy, but the initial contribution of Rs.2.7 crores also came by way of contributions as patron members from five Government corporations and four departments of the State Government and that periodical contributions, of an extent of 0.25% of the Gross bills of contractors, was as a result of such a stipulation in all contracts in which either the State Government or Government Corporations were a party. The financial control exercised by the State Government over the National Academy of Construction is overwhelming. On the question of functional control, the Lokayukta held that, since the governing body of the Academy was dominated by and was under the influence of the Government, it was futile to contend that the Government had no functional control over the affairs of the Academy. He further held that, besides these factors which gave administrative, financial and functional domination or influence of the state government over the affairs of the Academy, Section 28 of the A.P. Societies Registration Act, 2001 gave power to the State Government to control the affairs of the Academy, that under Section 28, when the government was a member of a society, or was wholly or substantially financing the society, it could control the affairs of the society unilaterally, in the absence of mutual agreement, by issuing a specific policy notification and since the government was a member of the Academy, this statutory provision again gave the State Government control over the affairs of the Academy. The Honourable Lokayukta rejected the contention that the control, which the State Government could exercise under Section 28 of Act 35 of 2001 was only at the inception and not thereafter. He held that the State Government could exercise control under Section 28 during the existence of the society at any time. Section 28 of the A.P. Societies Registration Act, 2001, (hereinafter referred to as Act 35 of 2001), relates to Societies financed by the Government and, thereunder, where a Government is a member or is wholly or substantially financing a society, it may place such terms and conditions on the society as are mutually agreed upon or through specific public policy notified by the Government for this purpose. It is evident from G.O.Ms. No. 103 dated 16.06.1998 that five Government Corporations and four Government departments became the patron members of the Academy contributing Rs.30.00 lakhs each. These four Government departments are (a) Transport, Roads and Buildings; (b) Department of Irrigation and Command Area Development; (c) Department of Panchayat Raj and Rural Development and (d) Department of Municipal Administration and Urban Development. It is also evident from G.O.Ms. No. 103 dated 16.06.1998 that the Government had granted an extent of Ac.167.30 of land free of cost to the National Academy. In addition to Rs.2.7 crores, contributed as patron members by five Government Corporations and four Government departments, G.O.Ms. No. 92 dated 19.05.1998, G.O.Ms. No. 61 dated 11.04.2000 and G.O.Ms. No. 159 dated 30.10.2004 reveal the extent of financial contribution made to the Academy as a result of the stipulation, directed to be made by the Government, in the contracts to which either the State Government or Government Corporations were a party. It is not in doubt, therefore, that the State Government is substantially financing the National Academy of Construction. While there is no evidence on record to show that terms and conditions had been mutually agreed upon between the Government and the Academy, the Government, vide G.O.Ms. No. 108 dated 20.06.1998, had notified the public policy underlying the purpose for which the Academy had been established as also details of the governing body of the Academy to be under the Chairmanship of the Chief Minister of Andhra Pradesh, Ex-officio. There is nothing in the language of Section 28 of Act 35 of 2001 to support the contention that the power conferred thereunder on the Government, to issue public policy notifications and thereby place terms and conditions on the society, can be exercised only at the inception when the Academy was established and not thereafter. The statutory power, which the Government has under Section 28 of the Act 35 of 2001, can be exercised at any time. The power conferred on the Government under Section 28 is unfettered and is circumscribed only by the provisions of Act 35 of 2001 and not by any rules which the Academy may have made for its internal management. That the Government has the power under Section 28 of Act 35 of 2001 to issue public policy notifications to the Academy, in view of its being a member of the Academy, and substantially financing it, would also go to show that the National Academy of Construction is a society subject to the control of the State Government. The Hon’ble Lokayukta held that, since the Academy was a registered society subject to the control of the State, the petitioner, who was working as the Additional Director General in the