* THE HON'BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE AND * THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION No:2741 OF 2009 % 18.09.2009 Between;- # Ahmed Ehtesham Kawkab, S/o Mr. Ahmed Aziz, Aged about 25 years, Occupation: Advocate, Resident of: Patel nagar, Amberpet, Hyderabad- 500 013. ….. Petitioner Vs. $ The Government of India, Ministry of Commerce & Industry (Department of Commerce), New Delhi, represented by its Secretary and four others. … Respondents. ! Counsel for the Petitioner: Sri D. Prakash Reddy ^ Counsel for the Respondent Nos.1 to 4: Sri A. Rajasekhar Reddy, Assistant Solicitor General ^ Counsel for the Respondent No.5: Sri Sri S.R. Ashok < Gist: >Head Note ? Citations: [1] 2001 (7) SCC 231 2 AIR 1965 SC 491 3 JT 2009 (7) SC 601 4 AIR 1973 SC 1138 5 AIR 1967 SC 884 6 AIR 1984 SC 161 7 AIR 1981 SC 53 8 2006(2) SCJ 207) 9 AIR 1956 Patna 398 (DB 10 AIR 1967 SC 1889 11 AIR 1987 SC 1933 12 AIR 1970 Patna 163) (DB) 13 1950 (1) Law Reports (King’s Bench Division) page 18 14 2002(5) SCC 111 15 2003 (2) SCC 455 16 (1964) 2 All ER 627 17 (1963) 1 SCR 1) 18 1958 SCR 360 19 1976 (1) SCC 77 20 (1983) 2 SCC 235 21 (2002) 4 SCC 539 22 AIR 1957 SC 832 23 (1955) AC 696 (HL) 24 AIR 1989 SC 836 25 AIR 1990 SC 1741 26 AIR1966 SC 1678 27 (1984) (2) SCC 500 28 (2001) 8 SCC 61 29 (2003) 5 SCC 134 30 (2005) 10 SCC 437) 31 2004 (11) SCC 625 32 2001 (4) SCC 534 33 (2001) 5 SCC 407 34 (2001) 8 SCC 540 35 (1986) (4) SCC 746 36 AIR 1992 SC 96 37 (2001) 4 SCC 139 38 (2001) 3 SCC 735 39 AIR 1952 SC 369 40 (AIR) 1954 SC 92) 41 AIR 1969 SC 1048 42 (1989) 1 SCC 724 43 AIR 1979 SC 1049 44 (1981) 4 SCC 173 45 (1988) 2 SCC 293 46 AIR 1962 SC 159 47 1987 Supp SCC 350 48 (1991) 1 SCC 86 49 (2003) 4 SCC 712 50 (2007) 7 SCC 555 51 (1978) 3 All ER 52 (1992) 4 SCC 711 53 1950 SCR 435 54 Vol.128 (2006) DLT 337 55 AIR 1968 SC 1495 56 1988 Supplement SCC 127 57 2006(11) SCC 731 58 (2001) 4 SCC 734) 59 (1976) 1 SCC 671 60 1973 (1) S.L.R. 1042 61 AIR 1961 AP 250 (APHC DB) 62 (1993) 2 SCC 703 63 AIR 1975 Delhi 66 (FB) 64 AIR 1982 Delhi 83 S.C 65 (Judgment in W.P.(C). No. 161/2009 dated 13-01-2009) THE HON'BLE SRI ANIL R. DAVE, THE CHIEF JUSTICE AND THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN WRIT PETITION NO: 2741 of 2009 ORDER: (THE HON'BLE SRI JUSTICE RAMESH RANGANATHAN ) Is the Director, Software Technology Parks of India (STPI), Hyderabad, (a Society registered under the Societies Registration Act, 1860), an officer of the Central Government not below the rank of Deputy Secretary? It is only if he is, would he be eligible, under Section 11(1) of the Special Economic Zones Act, 2005 (S.E.Z. Act), to be appointed as a Development Commissioner of one or more Special Economic Zones. The petitioner herein seeks a writ of quo warranto to quash and set aside the order of the first respondent, as published in the Gazette of India dated 12.11.2007, appointing the 5th respondent as the Development Commissioner of thirty Special Economic Zones in Andhra Pradesh. Facts, in brief, are that the Government of India, by resolution dated 18.12.1986, announced its policy on software export, software development and training. The resolution provided for an inter- ministerial standing committee to function as an effective instrument for single point clearance and for coordination of all cases of software development and export. Thereafter, on 5.6.1991, STPI was registered as a Society under the Societies Registration Act, 1860. The Inter-Ministerial Standing Committee, constituted by the Department of Industrial Development, Ministry of Industry, Government of India issued notification dated 22.2.1992 delegating specific powers of the Committee to the jurisdictional Directors of STPI. Pursuant to the aforementioned resolution dated 18.12.1986 the Central Government, in exercise of its powers under Section 3(1) of the Foreign Trade (Development and Regulation) Act, 1992, (Act 22 of 1992), notified a Scheme on 22.3.1994 called the “Software Technology Parks (STP) Scheme”. This 100% export oriented Scheme, for undertaking software development, was to be administered by the Department of Electronics through the Directors of the respective STPIs. By virtue of the said notification dated 22.3.1994, Directors of STPI were conferred the powers of Development Commissioner in respect of software related imports and exports. The Central Government issued notification dated 10.8.2000 appointing Directors of various STPIs, including the Director, STPI Hyderabad, as Designated officers for implementing the STP schemes. The Central Government issued notification dated 30.1.2006 appointing Designated officers, (including the Directors of STPI), to exercise powers of adjudication under Section 13 read with Section 11 of Act 22 of 1992. Under the impugned notification the Central Government, in purported exercise of its powers under Section 11 (1) of the S.E.Z. Act, appointed the Director, STPI, Hyderabad to be the Development Commissioner of thirty Special Economic Zones. As the petitioner seeks a Writ of Quo warranto it is necessary, at the outset, to examine its scope. A writ of quo warranto is a writ which lies against the person who, according to the relator, is not entitled to hold an office of a public nature and is only a usurper of the office. It is the person, against whom the writ of quo warranto is directed, who is required to show by what authority he is entitled to hold the office. The challenge can be made on various grounds including on grounds that the possessor of the office does not fulfill the required qualifications or suffers from any disqualification, which debars him from holding such office. (B.R. Kapur v. State of Tamilnadu[1]). Quo warranto proceedings afford a judicial enquiry in which the person, holding an independent substantive public office or franchise, is called upon to show by what right he holds the said office or franchise. If the inquiry leads to the finding that the holder of the office has no valid title to it, issue of a writ of quo waranto ousts him from that office. The procedure of quo warranto confers jurisdiction and authority on the judiciary to control executive action in the matter of making appointment to public offices against the relevant statutory provisions. These proceedings tend to protect the public from usurpers of public office and, if the jurisdiction of the Court to issue a writ of quo warranto is properly invoked, the usurper can be ousted. Before a citizen can claim a writ of quo warranto he must satisfy the Court, inter alia, that the office in question is a public office and is held by an usurper without legal authority, and that necessarily leads to the enquiry as to whether appointment of the alleged usurper has been made in accordance with law or not. (University of Mysore v. Govinda Rao[2]). A writ of quo warranto can be issued when the holder of a public office has been appointed in violation of constitutional or statutory provisions. Quo warranto proceedings afford a judicial remedy for removal of the usurper, from the office which he holds without title, by a judicial order. The proceedings give a weapon to control the executive from making appointments to a public office against the law. (N. Kannadasan v S. Ajoy Khose[3]). If there is any complaint about appointment of an officer, who is not eligible under the statute/statutory rules to be appointed, the proper remedy is to make an application for the issue of a writ of quo warranto. (Mir Ghulam Hussain v. The Union of India[4]). The power conferred on the Central Government, under Section 11(1) of the SEZ Act, is to appoint any of its officers, not below the rank of Deputy Secretary to the Government of India, as a Development Commissioner. The question which necessitates examination is whether the 5th respondent is an officer of the Central Government not below the rank of a Deputy Secretary. Sri D. Prakash Reddy, learned Senior Counsel appearing on behalf of the petitioner, would submit that the 5th respondent was not an officer of the Central Government let alone one not below the rank of Deputy Secretary to the Government of India, that his appointment as Development Commissioner of SEZ was illegal as he did not possess the qualifications prescribed under Section 11 (1) of SEZ Act, 2005, that, while Central Government officers are recruited by the Union Public Service Commission and their postings are through the Department of Personnel and Training, Directors of STPI were employees of STPI, (a Society), having been appointed as its Director on contract basis for a period of three years, they drew salary from the Society, their conditions of service were such as were stipulated under the Rules and Regulations of the Society and that appointment of the 5th respondent as Development Commissioner of S.E.Z, an office of substantive character, was usurpation of public office by a person not qualified under the Statute. On the other hand Sri S.R. Ashok, Learned Senior Counsel appearing for the fifth respondent, would submit that the Central Government had created STPI to carry out governmental functions and had assigned the Directors of STPI the task of acting as “its officers”, that appointment of Directors of STPI as Development Commissioners of SEZ was a sequel to, and a reiteration of, their previous appointment to the Software Technology Parks and Electronics and Hardware Technology Parks from 1994 onwards, that STPI had adopted various statutory rules namely the Central Civil Services (Classification, Control and Appeal) Rules, the Central Civil Services (Conduct) Rules, the General Financial Rules etc., that the conditions of service of Directors of STPI were at par with Central Government employees, that Directors of STPI were pubic servants under the Vigilance Manual of the Government of India and that they were covered by the Central Vigilance Commission (CVC), the Comptroller and Auditor General of India (CAG) and under the Right to Information Act (RTI Act). Sri A. Rajasekhar Reddy, Learned Assistant Solicitor General, would submit that the words “its officers”, in Section 11 (1) of the SEZ Act, meant officers belonging to the Central Government, that Development Commissioners of SEZ were required to report to the Ministry of Commerce, Government of India, that, for all actions taken as Development Commissioners of SEZ, they were accountable to the Department of Commerce, that their personnel matters were governed by the Department of Information Technology, that the sole objective of creating STPI was to have a pool of “its officers” who could support and nurture the IT Industry to grow and establish unassailable leadership in the global context, that STPI was created and controlled by the Central Government, that the 5th respondent was in the pay scale of Rs.16,400-20,000 (pre-revised) which was higher than the pay scale of Rs.12,000-16,500/-(pre-revised) of the Deputy Secretary, Government of India and the 5th respondent was above the rank of Deputy Secretary to the Government of India. Section 11(1) of the SEZ Act uses the words “Its officers” with reference to the Central Government. The word “Its” means possessive or genitive of “it”. The words “Its Officers” in Section 11(1) would, therefore, mean officers of, or belonging to, the Central Government. To be eligible, for appointment as a Development Commissioner of a Special Economic Zone, a person must satisfy the twin conditions stipulated in Section 11(1) of the SEZ Act. He should be (a) an officer of the Central Government; and (b) not below the rank of Deputy Secretary to the Government of India. The 5th respondent was an employee of STPI society before his appointment as Development Commissioner of SEZ. Can such a person be held also to be an officer of the Government of India? Several tests have been laid down to determine when a person can be said to be an officer of the Central Government. There is a relationship of master and servant between the State and a person said to be holding a post under it. The existence of this relationship is indicated by the State's right to select and appoint the holder of the post, its right to suspend and dismiss him, the right to terminate the employment, the right to take other disciplinary action, the right to prescribe the conditions of service and the nature of duties to be performed by the employee, the right to control the manner and method of his doing the work, the right to issue directions, the right to determine the source from which wages or salary are paid and the payment by it of his wages or remuneration. (State of Assam v. Kanak Chandra Dutta[5]; State of Gujarat v. Raman Lal Keshav Lal Soni[6], Mohanlal Kedia Mathuradas v. S.D. Munshaw[7]; Union Public Service Commission v. Girish Jayanti Lal Vaghela[8]). The Office or post must not only be under the control of the State, it must also be open to the State to abolish the post and regulate the conditions of service of the officer. (Lachmi v. Military Secretary to the Government of Bihar[9]). In view of the Constitutional Provisions, such as Articles 309 and 311, the position of a Government servant is different from a private employment. (Girish Jayanti Lal Vaghela8). Once appointed to his post or office, the Government servant acquires a status and his rights and obligations, including his emoluments, are determined by the Statute or Statutory rules or rules made under Article 309 of the Constitution, which may be made and altered unilaterally by the Government. The legal position of a Government servant, and the legal relationship between the Government and its servant, is more one of status than of contract. The hall-mark of status is the attachment to a legal relationship of rights and duties imposed by the public law and not by mere agreement of the parties. (Roshan Lal Tandon v. Union of India[10]; Girish Jayanti Lal Vaghela8) As the 5th respondent is an employee of STPI, (a society registered under the Societies Registration Act), there exists no master and servant relationship between the Central Government and himself. It is not even the case of the 5th respondent that the Central Government has the right to select and appoint the Director of STPI or that it has the right to terminate his services. The right to control the manner and method of work being done by the Director of STPI lies with the Governing Council of S.T.P.I and its Chairman and Vice Chairman. The salary and emoluments of the Director is paid by the Society. The Central Government has no power to take any disciplinary action against the 5th respondent as Director of S.T.P.I since such a power is conferred only on the Society. Similarly the right to prescribe the conditions of service of, and the nature of duties to be performed by, the 5th respondent as a Director lies only with S.T.P.I. The right to issue directions to him etc., are all exercised by the Society and not by the Central Government. Adoption of the C.C.S. (C.C.A) Rules, and other rules applicable to Central Government employees, by the Society makes such rules the rules of the Society. It does not make employees of the Society employees/officers of the Central Government. Nowhere is it suggested by the fifth respondent that the rules governing his service conditions, as a Director of S.T.P.I, Hyderabad, are those made under Article 309 of the Constitution of India. The 5th respondent is also not entitled for protection under Article 311 of the Constitution of India. The legal relationship between the 5th respondent and STPI is purely contractual and is not in the nature of status. There is no master and servant relationship between the Central Government and the 5th respondent. Further, Section 11 (1) of the Special Economic Zones Act, 2005 stipulates that, in order to be eligible to be appointed to the post of Development Commissioner of a SEZ, the officer of the Central Government should not be below the rank of a Deputy Secretary. Merely because the pay scales of the Director of STPI is higher than that of a Deputy Secretary to the Government of India does not make him an officer of the Central Government higher in the rank than a Deputy Secretary. The word “rank”, in its ordinary sense, means grade or status. (N.C. Dalwadi v. State of Gujarat[11]; P. Ramanatha Aiyer, The Law Lexicon reprint Edition-2002). An employee of a Society cannot be equated either with the grade or the status of an officer of the Central Government. If pay scales were to be the sole criterion for deciding equivalence in rank, nothing prevented Parliament from using the words “drawing a pay scale not lower than that of a Deputy Secretary to the Government of India” instead of the words “not lower in rank than that of a Deputy Secretary to the Government of India.” We are satisfied that a Director of STPI is neither an officer of the Central Government nor is he an officer not below the rank of a Deputy Secretary to the Government of India. IS S.T.P.I. UNDER THE PERVASIVE CONTROL OF THE CENTRAL GOVERNMENT? IF SO, WOULD THAT MAKE DIRECTORS OF STPI OFFICERS OF THE CENTRAL GOVERNMENT NOT BELOW THE RANK OF DEPUTY SECRETARY TO THE GOVERNMENT OF INDIA? Sri S.R. Ashok, Learned Senior Counsel appearing for the fifth respondent, would submit that the word “Officer” meant a person holding a public post, that the post of Chief Executive Officer of STPI was a public post and he was, therefore, an Officer, that STPI, (a single window for regulating, finalizing and guiding entrepreneurs, both with regards exports and imports), was an extended arm of the Central Government, that the Directors of STPI fell within the ambit of the words “its Officers” as used in Section 11(1) of the SEZ Act and could not be understood as “officers appointed by the Central Government”. He would submit that there was no warrant for construing the expression “its officers”, in Section 11 of the SEZ Act, narrowly so as to cover only persons recruited through the Public Service Commission and borne on the cadre of the Union Government, that, as the expression ‘its officers’ was a wide expression which encompassed within its purview officers under the pervasive control of the Central Government and officers in the extended arm of the Government, the impugned notification could not be faulted, that, viewed from any angle, Directors of STPI were, indeed, officers of the Central Government or atleast officers of the extended arm of the Central government. A perusal of the Employment Notice No. STPI/HQ/2A/2007, which forms part of the record placed before this Court, shows that STPI had invited applications from eligible candidates for appointment to several posts including that of Directors, that the prescribed source of recruitment was either by direct recruitment or transfer (absorption) and that officers of the Central Government were also eligible to be appointed by transfer (absorption) as Directors of STPI. It is, however, not in dispute that the fifth respondent was appointed as a Director by direct recruitment and not by transfer as an officer of the Central Government. As the 5th respondent was appointed by STPI, (a Society registered under the Societies Registration Act), he is an employee of the said Society. Clause 9 of the Memorandum of Association of STPI prescribes the functions and powers of the Governing Council and, under Clause 9.1 (d), the Council shall lay down rules regulating recruitment, disciplinary matters, promotion and delegation of powers for appointment to various posts, conditions of service of staff etc., subject to the approval of the Government of India, wherever necessary. Clause 10 relates to the status of STPI which, under clause 10(i), shall be a Society under the Societies Registration Act. Clause 15.4 provides that the Director shall be the technical and administrative head of the Technology Park and shall be responsible for its efficient functioning. Under Clause 15.6, the Director shall exercise such powers and functions and perform such duties as may be assigned to him by the Director General with the approval of the Governing Council. Clause 20 provides that all the provisions under all the Sections of the Societies Registration Act, 1860, as applicable to the Union Territory of Delhi, shall apply to the Society. A society, registered under the Societies Registration Act, 1860, is not a body corporate or a corporation having a distinct legal entity from the members constituting it in the sense of a company incorporated under the Indian Companies Act or a Society registered under the Cooperative Societies Act, yet it has its own identity, personality or entity which, for all purposes, is not identical with that of the members constituting it. A Society, when registered, comes into existence as a registered Society and has properties of its own. Although legal title in the properties may vest in the trustees or the Board of Governors yet the equitable title vests in the Society. (K.C. Thomas v. R.L. Gadeock[12]). Such a Society is independent of the Central Government even if it has been established by the latter. On the legal status of statutory corporations, Denning L.J, in Tamlin v. Hannaford[13], opined:- “…………….In the eye of the law, the corporation is its own master and is answerable as fully as any other person or corporation. It is not the Crown and has none of the immunities or privileges of the Crown. Its servants are not civil servants, and its property is not Crown property. It is as much bound by Acts of Parliament as any other subject of the King. It is, of course, a public authority and its purposes, no doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government…………..” (emphasis supplied). Accepting the submission that S.T.P.I is financially, functionally and administratively dominated by, or is under the pervasive control of, the Central Government, would merely bring it within the ambit of “State” under Article 12 of the Constitution of India. (Pradeep Kumar Biswas v. Indian Institute of Chemical Biology[14]). It would neither make it a department of the Government of India nor would employees of such a society become officers of the Central Government. Even if STPI is covered by the Central Vigilance Commission, or the Comptroller and Auditor General or even under the Right to Information Act, that would neither make S.T.P.I a department of the Central Government, nor its employees officers of the latter. CONFERMENT OF POWERS OF ADJUDICATION ON DIRECTORS OF STPI UNDER ACT 22 OF 1992: Sri S.R. Ashok, Learned Senior Counsel, would then submit that the legal frame-work for establishment of STPI is provided under Act 22 of 1992, that, as Designated Officers of the Department of Information Technology, Directors of STPI were authorized to exercise adjudicatory powers under Section 13 read with 11 of Act 22 of 1992, that they were given such powers from the year 2006, that the post of Development Commissioner under the EXIM policy was a post created in the cadre of the Government of India, that Development Commissioners under the said Act were appointed by way of rules made under Article 309 of the Constitution, that they were officers of the Central Government in matters pertaining to export and import of goods, that the powers of Development Commissioner were conferred on Chief Executives of STPI by the notification issued by the Government of India dated 22.3.1994, that Directors of STPI were discharging the functions of Development Commissioner in IT related export oriented units and they should, therefore, be considered to be “Officers of the Central Government” at