# Sanjay Srivastava & Ors v. Punjab National Bank New Delhi & Ors

- **Citation:** (2019) 2 ILRA 1594
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019-10-17
- **Case number:** Service Single No. 24558 of 2019
- **Bench:** Abdul Moin
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sanjay-srivastava-ors-v-punjab-national-bank-new-delhi-ors-44612
- **Pages:** 14

## Headnote

A. Constitution of India - Article 12 - PNB -
Nationalized bank - instrumentality of
Government - Punjab
National
Bank
Institute of Information Technology set
up which was governed by a society -
Whether the society falls within the
ambit of State or "other authority" as
provided
under
Article
12
of
the
Constitution or not - PNB given a corpus
of Rs. 2 crores for starting the society -
designated post holder of PNB are
member of Society - PNB has persuasive
and financial control over Society -
Government of India has deep and
persuasive control over the PNB - test
laid down in Ajay Hasia case applied -
only where entire share capital of the
corporation is held by Government then
only
Society
is
said
to
be
the
instrumentality
or
agency
of
the
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1595
Government - entire Governing Body of
the Society is not comprised of the
officers of PNB - PNB and Society are
distinct entities

On applying the test laid down in Ajay Hasia's
case the Court came to the conclusion that there
is no deep and persuasive control of the PNB
over the Society in question, the corpus cannot
be said to be entire share capital contributed by
the PNB, the grant/financial assistance being
given by the PNB is not so much as to meet out
almost all or substantial portion of the expenses
of the Society. (Para 29)

Writ Petition dismissed (E-10)
Cases cited:-

## Text

_Characters 0–39,766 of 46,880. This is a partial read: ask again with offset=39766 for what follows._

1594 INDIAN LAW REPORTS ALLAHABAD SERIES
Bank of Commerce and Another) was
initially filed only against the sale notice
issued by the Bank and not against any
orders passed under Section 13 or 14 of
the Act. He has referred to the amendment
application which was moved by the
petitioner which also has only challenged
the order passed by the District Magistrate
under Section 14 but has not challenged
the order passed under Section 13 (4) and
13 (2) of the Act, 2002.

(15). This Court is convinced that
when the statutory remedy is available, no
writ petition can be entertained, as
statutory remedy is different from the
alternative remedy. The right of Appeal is
a remedy created under the Statute i.e. the
Act of 2002 has not been availed of by the
petitioners. The petitioners can move an
appropriate application for exemption
from the condition of pre-deposit as given
in the Proviso of Section 18 of the Act.

(16). The writ petition stands
disposed of with a direction to the
petitioners to approach the Debt Recovery
Appellate Tribunal, Lucknow, within a
period of two weeks from today. If such
an application is moved within a period of
two weeks from today, the Debt Recovery
Appellate Tribunal shall also consider the
application made by the petitioner for
exemption from pre-deposit as the Bank
had initially issued demand notice for
only Rs.60 lacs, which has been deposited
by the petitioner, and pass appropriate
orders thereon within a further period of
two weeks.

(17). Till 30.10.2019 or till disposal
of petitioner's application as aforesaid,
whichever is earlier, the petitioner shall
not be dispossessed from his residential
house. It is evident from page no.73 of the
paperbook that the petitioner has still not
been dispossessed from the house in
question.
----------

(2019)10ILR A 1594

ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 17.10.2019

BEFORE

THE HON'BLE ABDUL MOIN, J.

Service Single No. 24558 of 2019

Sanjay Srivastava & Ors. ...Petitioners
Versus
Punjab National Bank New Delhi & Ors.
 ...Respondents

Counsel for the Petitioners:
Sri Amrendra Nath Tripathi, Sri Ashutosh
Shahi.

Counsel for the Respondents:
C.S.C., Sri Mayank Pathak, Sri Prashant
Kumar.

A. Constitution of India - Article 12 - PNB -
Nationalized bank - instrumentality of
Government - Punjab
National
Bank
Institute of Information Technology set
up which was governed by a society -
Whether the society falls within the
ambit of State or "other authority" as
provided
under
Article
12
of
the
Constitution or not - PNB given a corpus
of Rs. 2 crores for starting the society -
designated post holder of PNB are
member of Society - PNB has persuasive
and financial control over Society -
Government of India has deep and
persuasive control over the PNB - test
laid down in Ajay Hasia case applied -
only where entire share capital of the
corporation is held by Government then
only
Society
is
said
to
be
the
instrumentality
or
agency
of
the
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1595
Government - entire Governing Body of
the Society is not comprised of the
officers of PNB - PNB and Society are
distinct entities

On applying the test laid down in Ajay Hasia's
case the Court came to the conclusion that there
is no deep and persuasive control of the PNB
over the Society in question, the corpus cannot
be said to be entire share capital contributed by
the PNB, the grant/financial assistance being
given by the PNB is not so much as to meet out
almost all or substantial portion of the expenses
of the Society. (Para 29)

Writ Petition dismissed (E-10)
Cases cited:-

1. Ajay Hasia & ors Vs Khalid Mujib Sehravardi
& ors (1981) 1 SCC 722

2. Rajbir Surajbhan Singh Vs The Chairman,
Institute of Banking Personnel Selection
Mumbai (1981) 1 SCC 722

3. Pradeep Kumar Biswas & ors. Vs Indian
Institute of Chemical Biology & ors (2002) 5
SCC 111

4. R.D. Shetty Vs I.A.A.I. (1979) 3 SCC 489

5. Sabhajit Tewary Vs U.O.I. AIR 1975 SC
1329

6. General Manager, Kisan Sahkari Chini Mills
Ltd., Sultanpur Vs Satrughan Nishad & ors
(2003) 8 SCC 639

7. Federal Bank Vs Sagar Tomas (2003) 10
SCC 733

(Delivered by Hon'ble Abdul Moin, J.)

1. Heard Sri Amrendra Nath
Tripathi,
learned
counsel
for
the
petitioners, Sri D.K. Pathak, learned
Senior Advocate assisted by Sri Mayank
Pathak, learned counsel for respondent
No.1,
Sri
Prashant
Kumar,
learned
counsel appearing for respondents No.2 to
4 and the learned Standing Counsel on the
question of maintainability of the petition
against the Punjab National Bank Institute
of Information Technology (hereinafter
referred to as "Society") i.e. respondent
No.2 to 4 in the writ petition.

2. By means of the present petition,
the petitioners have prayed for quashing
of the order dated 3.5.2019, a copy of
which is Annexure-1 to the writ petition
and
the
consequential
impugned
termination
notices
dated
31.7.2019,
copies of which are cumulatively annexed
as Annexure-2 to the writ petition. Further
prayer is for a mandamus commanding
and directing the respondents to allow the
petitioners to work and pay them salary.

3. Annexure 1 dated 3.5.2019 are the
minutes of the 33rd meeting of the
Governing Body held on 3.5.2019 of the
Society for closure of the operations of
the Society and for termination of the
services of the employees on the roll of
the Society after following the required
legal process. The orders/notices dated
31.7.2019 have been issued by the
Director of the Society by which the
petitioners have been given a notice of
closure of operation of the Society and
have been informed that after three
months of the notice, the services of the
petitioners
shall
stand
ceased
on
31.10.2019.

4. A preliminary objection has been
raised by Sri D.K. Pathak, learned Senior
Advocate assisted by Sri Mayank Pathak,
learned counsel for respondent No.1 and
Sri Prashant Kumar, learned counsel
appearing for respondents No.2 to 4 i.e.
the Society, of the writ petition being not
maintainable as the Society does not fall
within the ambit of being a State or 'Other
1596 INDIAN LAW REPORTS ALLAHABAD SERIES
Authority' and thus it is prayed that the
writ petition be dismissed on the ground
of maintainability.

5. Arguing on the question of
maintainability,
Sri
Amrendra
Nath
Tripathi,
learned
counsel
for
the
petitioners submits that the Society would
fall within the ambit of being "other
authority" as provided in Article 12 of the
Constitution and in this regard reliance
has been placed on the Constitution
Bench judgment of the Hon'ble Apex
Court in the case of Ajay Hasia and
others vs. Khalid Mujib Sehravardi and
others reported in (1981)1 SCC 722.

6. Sri Tripathi, placing reliance on
paragraph 9 of the aforesaid judgment
contends that the Apex Court has
summarised the relevant tests to hold as to
when a society or a corporation can be
said to be an instrumentality or agency of
the Government.

7. Sri Tripathi argues that the
respondent No.1 is a public sector
banking company and is governed by the
Banking Regulation Act, 1949 and the
Government of India has a direct,
pervasive and financial control over its
affairs and thus is a State within the
meaning of Article 12 of the Constitution
of India. The respondent No.1/Bank in
order to ensure smooth banking business
and its functioning and for keeping track
with the technological advances in the
banking industry has taken decision to set
up its own institute of information
technology at Lucknow known as Punjab
National Bank Institute of Information
Technology which was to be governed by
the Governing Body and Academic
Council to be constituted by its decision
dated 4.12.2001. In pursuance of the
decision of the respondent No.1, a society
was
formed
under
the
Societies
Registration
Act,
1860
vide
file
No.133987 in the office of the Registrar,
Firms and Societies, Lucknow Division,
Lucknow on 14.3.2002. The said Society
has been renewed from time to time and
its last renewal was made vide order dated
22.3.2017 which is valid for 5 years i.e.
upto 14.3.2022. It is contended that the
Society has its own aims and objects as
per the Memorandum of Association, a
copy of which has been filed as
Annexure-5 to the writ petition.

8. Placing reliance on the tests as
enumerated in the case of Ajay Hasia
(supra), it is contended that the corpus of
the Society had been given by the Punjab
National Bank (hereinafter referred to as
the PNB) and the financial assistance
from the PNB is so much as to meet the
entire expenditure of the Society. It has
also been contended that there is deep and
pervasive control of the PNB over the
Society and thus the Society is an
instrumentality of the State. It is also
contended that PNB would fall within the
ambit of Article 12 of the Constitution
being a Nationalised Bank and thus as the
entire
control
over
the
Society
is
exercised by the PNB consequently ,the
society would be covered under Article 12
of the Constitution of India. It is
contended that taking into consideration
the aforesaid parameters as laid down in
the case of Ajay Hasia (supra), it can
safely be said that the Society would fall
within
the
ambit
of
being
"other
authority" as contemplated under Article
12 of the Constitution and accordingly the
present petition would be maintainable.

9. Elaborating this, Sri Tripathi
argues that so far as the seeding capital of
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1597
the Society is concerned, the PNB had
given a corpus of Rs.2 crores for starting
the Society which is clearly reflected in
the balance sheet of the Society as on
31.3.2018, a copy of which is Annexure20 to the writ petition, wherein against the
corpus fund, an amount of Rs.2 crores has
been indicated. It is also contended that
the PNB has been regularly giving grant
to the Society as would be apparent from
a perusal of the details of grant received, a
copy of which is Annexure-6 to the writ
petition, as issued from the office of the
Deputy Registrar, Firms Societies and
Chits, Lucknow. It is contended that a
perusal of the said details would indicate
that every year the PNB has been giving a
grant
starting
from
approximately
Rs.19.64 lakhs in the year 2002-03 to an
amount of Rs.35 lakhs in the year 201516. Placing reliance on minutes of the
22nd meeting of the Governing Body of
the Society dated 14.11.2011, a copy of
which is Annexure-7 to the writ petition,
it is contended that Clause 11 Bullet 2
duly records that the PNB is the promotor
bank. Thus it is contended that so far as
the first two criteria, as laid down by the
Hon'ble Supreme Court in the case of
Ajay Hasia (supra) pertaining to share
capital of the Society and financial
assistance of the State are concerned, the
aforesaid details would suffice to indicate
that finance is being given by the PNB so
as to bring the Society within the ambit of
Article 12 of the Constitution.

10. So far as the deep and pervasive
control is concerned, which is one of the
criteria laid down by the Hon'ble Apex
Court in the case of Ajay Hasia (supra),
Sri Tripathi contends that a perusal of the
Memorandum of Association of the
Society, a copy of which is Annexure-5 to
the writ petition, would indicate that the
Governing
Body,
as
per
Clause-5,
comprises of 14 members of which 13
members are all officers of the PNB while
14th member is the PNB itself as a
corporate member. It is also contended
that a perusal of the list of members of the
Governing Body would indicate that the
same read with the Memorandum of
Association of the Society leaves no
scope for any outsider to be member of
the Governing Body. It is also contended
that the Chairman of the Society is the
Chairman and Managing Director of the
PNB itself which are all indicative of
deep and pervasive control of the PNB in
the affairs of the Society. It is also
contended that the Society has issued the
amended rules/bye-laws (hereinafter refer
to as "Rules") and in terms of Rule 5(vi)
of the said Rules, the Society or Institute
means the Punjab National Bank Institute
of Information Technology and further in
terms of Rule 6, the Society has two
bodies namely (i) General Body and (ii)
Governing Body while in terms of Rule 8,
the General Body will consist of the
members of the Society while in terms of
Rule
7(i)
the
Signatories
to
the
Memorandum of Association shall be the
members of the Society. Thus, by natural
corollary,
the
Signatories
to
the
Memorandum
of
Association
would
become Members of the Society and the
General Body is to consist of all the
members of the Society meaning thereby
again all the signatories to the Member of
Association would also be members of the
General Body. Placing reliance on Rule
7(v), it is contended that the members
other than the Corporate member will
cease to be members on account of death,
resignation or ceasing to be in service of
the Bank meaning thereby that whoever
holds the designated post in the PNB
would automatically become a member of
1598 INDIAN LAW REPORTS ALLAHABAD SERIES
the Society and his membership would
cease as soon as he ceases to hold the said
post in PNB which are all indicative of
the deep and pervasive control that PNB
is exercising over the Society in question.
Thus, it is contended that the criterion laid
down in the case of Ajay Hasia (supra)
stand fulfilled in view of the deep and
pervasive control being exercised by the
PNB over the affairs of the Society.

11. In this regard, Sri Tripathi has
also invited attention of this Court
towards
the
appointment
order
of
petitioner No.3 Sri Rakesh Jayaswal
which has been sent for vetting by the
Society to the Chief Manager of the PNB.
It is contended that all these factors would
primarily indicate that the Society is
operating under the control of the PNB
and thus once the PNB falls within the
ambit of being a State and the Society is
controlled by the PNB, as per details
given above, consequently the Society
would be the "other authority" under
Article 12 of the Constitution of India and
hence the present petition would be
maintainable before this Court against the
Society.

12. Controverting this, Sri D.K.
Pathak, learned Senior Advocate assisted
by Sri Mayank Pathak, learned counsel
appearing for the PNB argues that so far
as the finance is concerned, no doubt the
PNB is the promoter Bank yet the Society
has been set up with the aims and
objective as set forth in the Memorandum
of Association in order to promote the
Society as a premier institution of
international standards, meeting ISO 9000
series
certification
requirements,
for
assimilating,
developing
and
disseminating knowledge and expertise in
the field of information technology (IT)
with particular reference to the banking
and financial sectors and in order to
organize training programmes, seminars,
conference, encompassing all facets of IT
driven banking both operational and
functional as also management of IT. The
other aims and objectives are to adopt
or/and use latest technological aids like
internet etc. for assimilation or/and
dissemination of knowledge and expertise
and various other objectives as have been
spelt
out
in
the
Memorandum
of
Association. Placing reliance on the
balance-sheets of the Societies, copies of
which have been filed in the short counter
affidavit filed on behalf of respondents
No.2 to 4, Sri Pathak has argued that a
perusal of the balance-sheets of all the
relevant years starting from the year 2008
would indicate that though for a few years
the PNB has given the grant yet the grant
only comprises of minimal amount and
almost the entire income of the Society is
being generated by the Society itself
including the income from interest on
F.D.R., interest on Saving Bank Account,
miscellaneous sources, rent received and
tender application money. As an example,
Sri Pathak submits that against the total
expenditure of Rs.2,63,64,228/- in the
year ended on 31.3.2008, the grant from
PNB
was
only
Rs.16,59,380/-
and
likewise in the subsequent years which is
a small percentage. It is also contended
that no grant was given to the Society for
the year 2011-12 and 2014-15 as would
be apparent from the perusal of the
income and expenditure account which
has been annexed by the petitioners
themselves. It is also contended that even
when the grant has not been given to the
Society, it had sufficient income to
sustain itself and thus merely because the
grant has been given by the Bank and it is
the promoter bank, the same will not and
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1599
cannot bring the Society, which has its
own
individual
and
autonomous
existence, as being "other authority" so as
to maintain a writ petition before the writ
Court.

13. Placing reliance on one of the
conditions as have been specified in the
case of Ajay Hasia (supra), it is
contended that the Hon'ble Apex Court
has clearly laid down that it is only where
the entire share capital of the corporation
is held by Government it can be said that
the Society is an instrumentality or
agency of the Government which is not
the case here. Likewise the grant being
given by the PNB is not so much to meet
the entire expenditure of the Society as
laid down in the case of Ajay Hasia
(supra).

14. So far as the deep and pervasive
control over the Society by the PNB is
concerned, Sri D.K. Pathak argues that a
perusal of the minutes of the meeting
dated 3.5.2019, so far as it pertains to the
members alone, would itself indicate that
four of the members are not directly
associated with the PNB namely Sri R.I.S.
Sidhu, who is a retired Chief General
Manager of the PNB, Sri A.P. Hota, who
is Ex. Managing Director and Chief
Executive Officer of the NPCI, Sri Ashok
Mukund, who is retired D.B.D. of the
State Bank and India as well as Dr.
Hemand Darbari, who is Executive
Director, CDAC, Pune. Placing reliance
on the said annexure, it is contended that
a perusal of the members of the
Governing Body, a copy of which has
been
annexed
by
the
petitioners
themselves, would indicate that though
large number of members may be of the
PNB yet it cannot be said that the entire
Governing Body comprises of the officers
of the PNB. It is also contended that once
the Society is running training programme
and issuing tenders as such it is an
independent Society, consequently it
cannot be said that there is deep and
pervasive control of the PNB so as to
bring it within the ambit of the Article 12
of the Constitution Sri Pathak has also
placed reliance on the judgment of the
Apex Court in the case of Rajbir
Surajbhan Singh vs. The Chairman,
Institute
of
Banking
Personnel
Selection, Mumbai reported in (2019) 7
SCALE 23.

15. Sri Prashant Kumar, learned
counsel appearing for the respondents
No.2 to 4/Society argues that the Society
on its own has introduced as many as 20
courses but no student offered himself for
admission for even a single course. It is
contended that the PNB and the Society
are distinct and separate legal entities.
The vacancies available in the PNB are
filled through their board while the
employees
recruited
by
different
subsidiaries etc. are governed by the
policies of respective subsidiaries. It is
also contended that the Society was set up
in terms of the aims and objectives as
detailed
in
the
memorandum
of
association and the main course of the
Society was an Advance Diploma in
Banking Technology which is also the
main source of revenue for the Society. It
is contended that the Society has got its
independent existence and though it may
have been promoted by the PNB, which is
a commercial Bank, yet it is set up in a
autonomous manner catering to the needs
of banking industry in order to ensure
availability
of
trained
information
technology
manpower.
It
is
also
contended that in order to ensure that the
Society works autonomously, the first
1600 INDIAN LAW REPORTS ALLAHABAD SERIES
director was appointed from outside the
PNB, who was an Ex. Executive Director
of the Reserve Bank of India, the Deputy
Director has always been an independent
professional and the Academic Council
had, inter alia, the outside professionals as
its members.

16. Sri Prashant Kumar, learned
counsel for the Society argues that none
of the criteria as specified by the Apex
Court in the case of Ajay Hasia (supra)
are attracted so far as the Society is
concerned i.e. neither there is any deep
and pervasive control of the PNB in the
affairs of the Society nor the financial
assistance is so large so as to meet the
entire expenditure of the Society. Thus it
is contended that the Society does not fall
within
the
ambit
of
being
"other
authority" so as to bring it within the
ambit of Article 12 of the Constitution of
India and consequently the present
petition against the Society would not be
maintainable.

17. Heard learned counsel for the
parties and perused the record.

18. From a perusal of the pleadings
of the parties and the arguments raised on
behalf of the contesting parties, it comes
out that the Society had been formed with
certain aims and objectives as have been
set
out
in
the
Memorandum
of
Association.
The
Memorandum
of
Association provides for establishment of
a governing body. The first members of
the governing body have been set out in
Clause V of the Memorandum of
Association. The amended rules of the
Society also indicate about the aims and
objectives of the Society which are given
in the Memorandum of Association. As
per the rules of the Society, the Society
comprises of two bodies namely the
General Body and the Governing Body.

19. The preliminary objection raised
on behalf of the respondents is that the
Society does fall within the ambit of
being "Other Authority" so as to bring it
within the ambit of Article 12 of the
Constitution of India and, consequently
the present against the Society would not
be maintainable.

20. The thrust of arguments of
learned counsel for the petitioner in order
to bring the Society within the ambit of
"Other Authority" so as to bring it under
Article 12 of the Constitution of India is
the judgment of the Constitution Bench in
the case of Ajay Hasia (supra). Para 9 of
the Ajay Hasia (supra) lays down the
relevant test for determining as to when a
Corporation or a Society can be said to be
an instrumentality or agency of the
Government so as to bring it within the
ambit of Article 12 of the Constitution of
India for the purpose of maintainability of
the petition, which for the sake of
convenience is being reproduced below:-

"9. The tests for determining as
to when a corporation can be said to be a
instrumentality or agency of Government
may now be called out from the judgment
in the International Airport Authority's
case. These tests are not conclusive or
clinching, but they are merely indicative
indicia which have to be used with care
and caution, because while stressing the
necessity of a wide meaning to be placed
on the expression "other authorities", it
must be realised that it should not be
stretched so far as to bring in every
autonomous body which has some nexus
with the Government within the sweep of
the expression. A wide enlargement of the
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1601
meaning must be tempered by a wise
limitation.
We
may
summarise
the
relevant tests gathered from the decision
in the International Airport Authority's
case as follows

(1) "One thing is clear that if the
entire share capital of the corporation is
held by Government it would go a longway
towards indicating that the corporation is
an
instrumentality
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."

If on a consideration of these
relevant factors it is found that the
corporation is an instrumentality or
agency of government, it would, as
pointed out in the International Airport
Authority's case, be an 'authority' and,
therefore, 'State' within the meaning of the
expression in Article 12."

21. Being armed with the aforesaid,
the Court now proceeds to consider as to
whether the aforesaid test as laid down in
the case of Ajay Hasia (supra) are
attracted so far as the present Society is
concerned.

22. The first argument of the learned
counsel for the petitioner is that the PNB
has given a corpus of Rs. 2 Crores for
starting the Society. Whether the corpus is
the entire share capital of the Society and
the entire share capital of the Society is
being held by the PNB would be a factor
to indicate that the Society is an
instrumentality of the PNB.

23. A perusal of the balance sheet as
on 31.03.2018 over which reliance has
been placed by the learned counsel for the
petitioner to contend about the corpus fund
of an amount of Rs. 2 Crores indicates that
it does not come out that the said corpus
fund is the share capital or rather the entire
share capital of the Society which is held
by the PNB. There is no pleading to the
effect that Rs. 2 Crores is the entire share
capital of the Society and in absence of any
such pleadings, mere argument to the said
effect would not bring the said corpus
within the ambit of being entire share
capital as is being sought to be made out
by the learned counsel for the petitioner.
Even otherwise, the balance sheet as on
31.03.2018 and for various other years as
have been annexed by the respondents no.
2 to 4, would indicate that the Society is
having a corpus fund, the general fund,
loan account towards the liabilities in the
balance sheets of various years and apart
from that the Society is also having
independent income as would be apparent
from a perusal of the Income and
Expenditure account of various years.
Thus, the said argument is rejected.
1602 INDIAN LAW REPORTS ALLAHABAD SERIES

24. As regards the grant of
financial assistance of the PNB to the
Society, based on second criteria laid
down in Ajay Hasia (supra), a perusal of
the balance sheets for the years starting
2008 onwards, as have been annexed
along with the short counter affidavit filed
by the respondents no. 2 to 4 would
indicate the grant being given by the
PNB. Placing reliance on the details of
grants received, which is a certificate
issued by the Deputy Registrar, Farm
Society, Lucknow, a copy of which is
annexure 6 to the petition, it has been
contended that almost every year the PNB
has given a grant to the Society. However,
the test laid down in the case of Ajay
Hasia (supra) is that the financial
assistance of the State should be so
much as to meet almost the entire
expenditure of the Corporation which
would afford some indication of the
Corporation being impregnated with
Governmental character. A perusal of
the balance sheet starting from the year
2008 onwards would indicate that it is not
only the grant which has been given by
the PNB which goes towards the
expenditure but the Society is also
generating its own income as would be
apparent from a perusal of the income and
expenditure account starting from the year
31.03.2008 and onwards which indicates
that the Society is generating income from
training, interest on FDR, interest on SB
Account, Miscellaneous Income, Rent
Income
and
income
from
Tender
Application Money. If only the year 2008
is taking into consideration then the grant
from PNB amounts to approximately
16.59 Lacs viz-a-viz the total expenditure
of 2.63 Crores and thus it cannot be said
that the financial assistance from PNB is
so much as to meet the entire expenditure
of the Society. Thus, when the financial
assistance given by PNB is tested viz-aviz the total expenditure of the Society as
per one of the test laid down in the case of
Ajay Hasia (supra) the said test fails to
bring the Society within the ambit of the
Society
to
be
impregnated
with
Governmental
character.
The
Court
hastens to add that the income and
expenditure accounts for the subsequent
years indicate a similar position viz-a-viz
the grant given by the PNB and the total
expenditure of the Society. Thus, the said
argument is also rejected.

25. The other thrust of argument of
the learned counsel for the petitioner is
the deep and pervasive control of the PNB
over the affairs of the Society through its
governing members, which is another test
as laid down in the case Ajay Hasia
(supra).

26. A perusal of the Memorandum
of Association would indicate that the
governing body, as per Clause V of the
Memorandum of Association, has been
indicated which comprises primarily of
the staff of the PNB. However, the said
clause of governing body gives the details
of the first members of the Society and
not for all members for times to come. As
per clause 6 of the Rules of the Society,
the Society comprises of two bodies
namely the General Body and the
Governing Body. Rule 7 (vi) spells out
that
"any
person/corporate/organization/institute
who wants to be a member of the Society
shall apply to the Society and governing
body shall take decision in the matter....".
A perusal of the said rule would indicate
that membership of the Society is not
confined to only the staff of the PNB
rather any person or corporate or
organization or institute who wants to be a
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1603
member of the Society can apply to the
Society and the governing body shall take
decision in the matter. Further, Rule 7 (vi) (a)
of the Rules also indicates about the terms of
the members. So far as the governing body is
concerned, Rule 9 (a) (ii) and (iii) (a) indicate
that "the signatories to the Memorandum of
Association shall be the members of the
Governing Body till it is re-constituted by
the general body" and " the Governing Body
may be re-constituted from time to time by
the general body...". A perusal of the
aforesaid
Rule
clearly
indicate
that
signatories
to
the
Memorandum
of
Association shall be the members of the
governing body till it is re-constituted by
the general body meaning thereby that first
signatory members or the first signatories of
the governing body, despite being the staff
members of the PNB, can always be reconstituted by the general body and the
general body, as already indicated above can
also
comprise
of
any
person/corporate/organization/ institute who
wants to be a member of the Society.

27. Thus, merely because the first
signatories of the governing body comprised
of the staff of the PNB, the same does not
take away the right of the individuals to
apply for the membership of the Society who
can become of the member of the Society
and thereafter re-constitute the governing
body. This would also be apparent from the
fact that the impugned minutes of the general
body
meeting
dated
03.05.2019
also
comprise of four members who are not
associated with the PNB in the capacity of
being the staff members inasmuch as they
comprise of retired Chief General Manager
of PNB, of the NPCI, of the State Bank of
India and of the CDAC, Pune.

28. Another aspect of the matter is
that in terms of Rule 10 of the Rules, the
governing body has been given the power
to determine the financial and managerial
polices,
priorities
for
the
Societies
different activities, duties and conduct,
salary
and
allowances
and
other
conditions of the service of the officers
and other employee of the Society and to
appoint staff in accordance with the rules
of the society. In terms of Rule 10 (xii) of
the Rules, the governing body has also
been given the power to make rule and
bye-laws for the conduct of the affairs of
the Society and to add, amend, vary or
rescind Rules from time to time in
accordance with the provision of Section
12 of the Societies Registration Act, 1860
(hereinafter referred to as "Act, 1860".).
Thus, a perusal of all the said powers as
given to the governing body indicates that
the said power are being exercised
independently by the Society without any
interference or control of the PNB which
itself is indicative of the fact that the
Society is functioning and working
independently. Thus, the ground of deep
and pervasive control of the PNB over the
affairs of the society is rejected.

29. From the aforesaid discussions,
it clearly comes out that factors as have
been enumerated in the case of Ajay
Hasia (supra) and has have been applied
to the facts of the present case by the
Court all have led to the conclusion that
there is no deep and pervasive control of
the PNB over the Society in question, the
corpus cannot be said to be entire share
capital contributed by the PNB, the
grant/financial assistance being given by
the PNB is not so much as to meet out
almost all or substantial portion of the
expenses of the Society. Even otherwise,
the functions of the Society are not related
to any Governmental function and neither
the Society seems to be enjoying
1604 INDIAN LAW REPORTS ALLAHABAD SERIES
monopoly status which is State conferred
or State protected. So far as the deep and
pervasive control is concerned, as already
indicated above, there is governing body
which also comprises of independent
members and further the governing body
is to be re-constituted by the general body
with the membership of the Society being
not confined to only the staff of the PNB
rather any person or Corporate or
organization or institute can apply to the
Society to become a member. The Rules
of the society also indicate about its
independent functioning the Society the
power of framing its rules for the purpose
of appointment of its employee and other
service conditions of its employees.

30. Thus, none of the criteria as has
been laid down in the case of Ajay Hasia
(supra) are attracted so as to persuade
this Court to hold the Society to be 'Other
Authority' as contemplated under Article
12 of the Constitution of India.

31. The Apex Court in the case of
Pradeep Kumar Biswas and Ors. vs.
Indian Institute of Chemical Biology
and Ors reported in (2002) 5 SCC 111
after adverting to various authorities
including R.D.Shetty Vs. International
Airport Authority of India reported in
(1979) 3 SCC 489, Ajay Hasia (supra)
as well as Sabhajit Tewary vs. Union of
India (UOI) and Ors reported in AIR
1975 SC 1329 has laid down that only
where a body is financially, functionally
and administratively dominated by or
under the control of the Government on
established facts alone would be "State"
under Article 12 of the Constitution of
India.

32. The Apex Court has also
considered all the aforesaid aspects of the
matter
and
after
considering
the
parameters as laid down in the case of
Ajay Hasia (supra) has held in the case
of General Manager, Kisan Sahkari
Chini
Mills
Ltd.,
Sultanpur
Vs.
Satrughan Nishad and Ors reported in
(2003) 8 SCC 639 as under:-

'"8. From the decisions referred
to above, it would be clear that the form
in which the body is constituted namely,
whether it is a society or co-operative
society or a company, is not decisive. The
real status of the body with respect to the
control of government would have to be
looked into. The various tests, as
indicated above, would have to be applied
and considered cumulatively. There can
be no hard and fast formula and in
different facts/situations, different factors
may be found to be overwhelming and
indicating that the body is an authority
under Article 12 of the Constitution. In
this context, Bye Laws of the Mill would
have to be seen. In the instant case, in one
of the writ applications filed before the
High Court, it was asserted that the
Government of Uttar Pradesh held 50%
shares in the Mill which fact was denied
in the counter affidavit filed on behalf of
the State and it was averred that majority
of the shares were held by cane growers.
Of course, it was not said that the
Government of Uttar Pradesh did not
hold any share. Before this Court, it was
stated on behalf of the contesting
respondents in the counter affidavit that
the Government of Uttar Pradesh held
50% shares in the Mill which was not
denied on behalf of the Mill. Therefore,
even if it is taken to be admitted due to
non traverse, the share of the State
Government would be only 50% and not
entire. Thus, the first test laid down is not
fulfilled by the Mill. It has been stated on
2 All. Sanjay Srivastava & Ors. Vs Punjab National Bank New Delhi & Ors.
1605
behalf of the contesting respondents that
the Mill used to receive some financial
assistance
from
the
Government.
According to the Mill, the Government
had advanced some loans to the Mill. It
has no where been stated that the State
used to meet any expenditure of the Mill
much less almost the entire one, but, as a
matter of fact, it operates on the basis of
self generated finances. There is nothing
to show that the Mill enjoys monopoly
status in the matter of production of
sugar. A perusal of Bye-Laws of the Mill
would show that its membership is open
to cane growers, other societies, Gram
Sabha, State Government, etc. and under
Bye-Law 52, a committee of management
consisting of 15 members is constituted,
out of whom, 5 members are required to
be elected by the representatives of
individual members, 3 out of co-operative
society and other institutions and 2
representatives of financial institutions
besides 5 members who are required to be
nominated by the State Government which
shall be inclusive of the Chairman and
Administrator. Thus, the ratio of the
nominees of State Government in the
committee
is
only
1/3rd
and
the
management
of
the
committee
is
dominated by 2/3rd non-government
members. Under the Bye-Laws, the State
Government
can
neither
issue
any
direction to the Mill nor determine its
policy as it is an autonomous body. The
State has no control at all in the
functioning of the Mill much less deep
and pervasive one. The role of the
Federation, which is the apex body and
whose
ex-officio
Chairman-cumManaging
Director
is
Secretary,
Department of Sugar Industry and Cane,
Government of Uttar Pradesh, is only
advisory and to guide its members. The
letter sent by Managing Director of the
Federation on 22nd November, 1999 was
merely by way of an advice and was in the
nature of a suggestion to the Mill in view
of its deteriorating financial condition.
From the said letter, which is in the
advisory capacity, it cannot be inferred
that the State had any deep and pervasive
control over the Mill. Thus, we find none
of the indicia exists in the case of Mill, as
such
the
same
being
neither
instrumentality nor agency of government
cannot be said to be an authority and,
therefore, it is not State within the
meaning
of
Article
12
of
the
Constitution."

33. Likewise the Apex Court in the
case of Federal bank Vs. Sagar Tomas
reported in (2003) 10 SCC 733 has held
as under:-

"28.