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CASE ANALYSIS ON AJAY HASIA Etc. V. KHALID MUJIB SEHRAVARDI & Ors

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CASE ANALYSIS ON AJAY HASIA Etc. V. KHALID MUJIB
SEHRAVARDI & Ors.
Ajay Hasia Etc.
V.
Khalid Mujib Sehravardi & Ors.
[1981 AIR 487], [1981 SCR (2) 79]

In the Supreme Court of India

Petitioner: Ajay Hasia
Respondent: Khalid Mujib Sehravardi & Ors.
Important Statute: Constitution of India
Date of Judgment: 13 November, 1980
Bench: Justice Y.V. Chandrachud, Justice P.N. Bhagwati, Justice
Krishnaiyer, Justice Syed Murtaza, Justice A.D. Koshal.
Relevant citation: [1981 SCC (1) 722]
 ABSTARCT
The Part III of Indian Constitution safeguarded the protection of fundamental rights to its
citizen. Fundamental Rights can be claimed against the State and so the definition of what
constitutes State is very much essential. This case is a flagship case in the history of Indian
Constitution and the judgment passed in considered as a landmark judgment in the history of
constitutional law and its approach. This case explains the legal parameters when a body falls
within the scope of Article 12 of Indian Constitution. It clarifies the concept that merely if a
body have statutory power it would not be enough to classify it as a state. It would be State
only when the government has a deep and pervasive control over the authority/body and the
body is completely dependent on the government for its operations.

INTRODUCTION

The writ petitions under Article 32 of the Constitution challenged the validity of the admissions
made to the Regional Engineering College, Srinagar for the academic year 1979-80. The
Regional Engineering College, Srinagar (hereinafter referred to as the College) was one of the
fifteen Engineering Colleges in the country sponsored by the Government of India. The College
was established and its administration and management were carried on by a Society registered
under the Jammu and Kashmir Registration of Societies Act, 1898. The Memorandum of
Association of the Society in Clause 3 set out the objects for which the Society was
incorporated and they included amongst other things establishment of the college with a view
to providing instruction and research in such branches of engineering and technology as the
college may think fit and for the advancement of learning and knowledge in such branches.
 FACTS OF THE CASE
The facts of the case are as follows:

o The college through a notice invited application for the B.E Course in various branches
of Engineering.
o Petitioner applied for admission in the college. There were 2 sets of test conducted,
written and viva voce.
o The petitioner had secured good marks in the written test but awarded poor marks in
the viva voce, for that reason he didn’t clarify the admission test.
o The Viva test was conducted of 2-3 minutes for the petitioner. In which the question
related to parenting and residence were asked, but nothing was asked related to the
subject.
o The petitioner found that there were few students who secured very poor marks in the
written but got selected for the admission in the college merely because they obtained
high marks in the viva voce.
o The petitioner aggrieved by the selection procedure of the candidates in the Regional
Engineering College and filed writ petition under Article 32 of Indian Constitution
claiming that he was denied Right to Equality and the selection procedure was arbitrary
as the selection criteria was relied on the viva voce examination and by holding viva
voce test lasting by 2-3 minutes and asking questions which had no significance in
changing the intellect of the candidate.

FACTS IN ISSUE

 Whether the Regional Engineering College is a “State” as defined in Article 12

 Whether the Selection Procedure was violative of Article 14 of the Constitution of
India?

ARGUMENTS

 Arguments on behalf of the Petitioner: The petitioner contended through

various clause of Memorandum of Association the college is an
instrumentality of government.
 The Society is empowered by clause 3 sub- clause II of the Memorandum of
Association to make rules for the conduct of the affairs of the Society and to,
 amend, them from time to time with the approval of the Government of Jammu
and Kashmir and the Central Government.
 Clause 3 sub-clause III of the Memorandum of Association confers power on
the Society to acquire and hold property in the name of the State Government.
• Clause 3 sub clause V of the Memorandum of Association contemplates that
the monies required for running the college would be provided by the State and
Central Governments.
 Clause 3 sub clause VI requires the Society to deposit all the money credited to
its fund to invest them in such manner as the State Government decide.
 Clause 3 subclause IX states that the accounts of the Society as certified by a
duly appointed auditor are mandatorily to be forwarded annually to the State
and Central Governments.
 Clause 6 of the Memorandum of Association gives the State Government the
power to appoint persons to review the working and progress of the Society.
State Government has power, with the approval of the Central Government, to
take action and issue such directions as it may consider necessary in respect of
any of the matters of the College.
 Clause 7 of the Memorandum of Association has provision that in case the
Society or the college is not functioning properly, the State Government will
have the power to take over the administration and assets of the college with the
prior approval of the Central Government.
 Clause 9 of the Memorandum of Association provides that the Chairman and
other founding members are to be appointed by the State Government with the
approval of the Central Government.
 Thus, the petitioner contended that college falls within the definition of State as
defined under Article 12 of the Constitution.

Important Cases:

R.D Shetty v. International Airport Authority1-

The court laid down the test to determine whether the body is agency or instrumentality of the
Government. The test is:

1
1979 SCC (3) 489
 1. Entire share capital is owned or managed by State i.e., financial resources
of the State is the chief funding source.
2. Enjoys monopoly status, whether it is State conferred or State protected.
3. If a department of Government is transferred to a corporation.
4. Functional character being governmental in essence i.e., if the functions of
the corporation are of public importance and closely related to governmental functions.
5. Existence of deep and pervasive State control.

The Court said that these tests to determine whether any corporation can be said to be an
instrumentality or agency of Government is not conclusive but merely illustrative and have to
be used with caution and care.

Som Prakash v. Union of India2-

The Court held that a government company BHARAT PETROL PUMP fell within the
meaning of expression the State used in Article 12. The Court held that the expression
other authorities comprise of all statutory authorities on whom powers are conferred for
carrying commercial activities. It was also held that the expression other authorities are
not confined to statutory corporation also include a government company, a registered
society or bodies which have some nexus and interrelation with the government.
U.P Warehousing Corporation v. Vijay Narain3-
It was held that U. P Warehousing Corporation is a State within the meaning of Article
12 as it was formed through a statue and managed by the government .and the
ownership lies with State. Justice Chinnapa Reddy in his separate justice in this case
summed up the position as the position and function of State has completely changed.
it is a welfare state which has increased the government activity in manifold ways. Its
activities have touched many aspects of citizens life. If a corporation is owned by the
government or controlled by the government or is an instrumentality or agency of the
government, it must be held to be an authority within the ambit of Article 12.

The petitioner also explained that how society acted arbitrarily in selection procedure of the
candidates., firstly by ignoring the marks obtained by the candidates at the qualifying written
test and secondly by allocating as many as 50 marks for the viva voce examination as against

2
1981 SCC (1) 449
3
1980 SCC (3) 459
100 marks allocated for the written test and by asking questions which had no relevance to
determine intellectual capacity of a candidate.

Arguments of Respondent:

The Respondent strongly contended that the college would not fall within the scope of Article
12 as it was not created under a statue but was a society registered under the Society
Registration Act 1860. Hence, the defendant claimed that the writ petition is not maintainable.

The Respondent claimed that since Fundamental Rights are available only against the State
there was no question of violation of Article 14 of the Constitution.

The respondent relied on the case of Sarabjit Tewary v. Union of India.

Sarabjit Tewary vs. Union of India4-

The court in this case observed that the bodies who are not incorporated through a statue
and are registered under the Companies Act 1956 and the Societies Registration Act
1860 are not considered to be a state under Article 12 of the Constitution. These could
not be held to be departments of government.
However later this decision was reversed in Pradeep Kumar Biswas v Institute of
Chemical Biology.5

JUDGMENT

The Hon’ble Supreme Court held that with regard to the Memorandum of Association and the
Rules of the Society, the respondent college was a State within the meaning of Article 12 of
the Constitution. The composition of the Society was dominated by the representatives
appointed by the Central Government and the Governments of Jammu & Kashmir, Punjab,
Rajasthan and Uttar Pradesh with the approval of the Central Government. The money required
for running the college were provided entirely by the Central Government and the Government
of Jammu & Kashmir and even if any other money was to be received by the Society, it could
be done only with the approval of the State and the Central Governments. The Rules to be made
by the Society were also required to have the prior approval of the State and the Central
Governments. The State Government and by reason of the provision for approval, the Central
Government also, had full control of the working of the Society. Hence, the Society was an

4
1975 AIR 1329, 1975 SCC (1) 485
5
Appeal (civil) 992 of 2002
instrumentality or agency of the State and the Central Governments and it was an ‘authority’
within the meaning of Article 12 of the Constitution.

ANALYSIS

As far as India is concerned, the genesis of the emergence of corporations as instrumentalities

or agencies of Government is to be found in the Government of India Resolution on Industrial
Policy dated 6th April, 1948 where it was stated inter alia that “management of State enterprises
will as a rule be through the medium of public corporation under the statutory control of the
Central Government who will assume such powers as may be necessary to ensure this.” It was
in pursuance of the policy envisaged in this and subsequent resolutions on Industrial policy that
corporations were created by Government for setting up and management of public enterprises
and carrying out other public functions. Ordinarily these functions could have been carried out
by Government departmentally through its service personnel but the instrumentality or agency
of the corporation was resorted to in these cases having regard to the nature of the task to be
performed. The corporations acting as instrumentality or agency of Government would
obviously be subject to the same limitations in the field of constitutional and administrative
law as Government itself, though in the eye of the law, they would be distinct and independent
legal entities. If Government acting through its officers is subject to certain constitutional and
public law limitations, it must follow a fortiori that Government acting through instrumentality
or agency of corporations should equally be subject to the same limitations.

By way of the present case, the Supreme Court laid down the following tests to adjudge whether
a body is an instrumentality of the government or not:

 If the entire share capital of the body is held by the government, it goes a long way
towards indicating that the body is an instrumentality of the government.
 Where the financial assistance given by the government is so large as to meet almost
entire expenditure of the body, it may indicate that the body is impregnated with
governmental character.
 It is relevant factor-if the body enjoys monopoly status which is conferred or protected
by the state.
 Existence of deep and pervasive state control may afford an indication that the body is
a state instrumentality.
  If the functions performed by the body are of public importance and closely related to
governmental functions, it is a relevant factor to treat the body as an instrumentality of
the government.

CONCLUSION

It is immaterial for this purpose whether the corporation is created by a statute or under a
statute. The test is whether it is an instrumentality or agency of the Government and not as to
how it is created. The inquiry has to be not as to how the juristic person is born but why it has
been brought into existence. The corporation may be a statutory corporation created by a statute
or it may be a Government Company or a company formed under the Companies Act, 1956 or
it may be a society registered under the Societies Registration Act, 1860 or any other similar
statute.

Whatever be its genetic origin, it would be an “authority” within the meaning of Article 12 if
it is an instrumentality or agency of the Government and that would have to be decided on a
proper assessment of the facts in the light of the relevant factors. The concept of instrumentality
or agency of the Government is not limited to a corporation created by a statute but is equally
applicable to a company or society and in a given case it would have to be decided, on a
consideration of the relevant factors, whether the company or society is an instrumentality or
agency of the Government so as to come within the meaning of the expression “authority” in
Article 12.

REFERENCE

1. https://indiankanoon.org/doc/1186368/
2. https://www.jusdicere.in/ajay-hasia-ors-v-khalid-mujib-sehravadi-ors/
3. https://thecompany.ninja/ajay-hasia-1985/
4. Justice PN Bhagwati Archives | SCC Blog (scconline.com)

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