Jatya Pal Singh Vs Union of India .

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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.2147 OF 2010

Jatya Pal Singh & Ors. ...Appellants

VERSUS

Union of India & Ors. ...Respondents

WITH

CIVIL APPEAL NO.3933 OF 2013 (Arising out of S.L.P.(C) No. 4619 of 2011

M.P. Singh ...Appellant

VERSUS

Union of India & Ors. ...Respondents

WITH

CIVIL APPEAL NO. 425 OF 2012

Vijay Thakur ...Appellant

VERSUS

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VSNL & Anr. ...Respondents

WITH

WRIT PETITION (C) NO. 689 OF 2007

Videsh Sanchar Nigam Scheduled Castes/Tribes Employees Welfare Samiti (Regd.) & Anr. ...Petitioners

VERSUS

Union of India & Ors. ...Respondents

WITH

CIVIL APPEAL NO. 5740 OF 2012

Ram Prakash ...Appellant

VERSUS

Union of India & Ors. ...Respondents

J U D G M E N T

SURINDER SINGH NIJJAR,J.

1. Leave granted in SLP© No.4619 of 2011.

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2. This judgment will dispose of a group of appeals,

details of which are given hereunder, as they raise only

one question of law :

Proceedings before the Bombay High Court :-

3. Writ Petition No.2139 of 2007 titled as Mahant Pal

Singh vs. Union of India dismissed in limine by the

Division Bench on 7th September, 2009. Civil Appeal

No.3933 of 2013 @ Special Leave Petition (C) No.4619 of

2011 titled as M.P.Singh vs. Union of India & Ors. has

been filed challenging the aforesaid order of the Division

Bench. Writ Petition No.2652 of 2007 titled as Jatya Pal

Singh & Ors. vs. Union of India & Ors. was dismissed in

limine by the Division Bench on 8th September, 2009 in

view of the order dated 7th September, 2009 passed in

Writ Petition No.2139 of 2007. The aforesaid order has

been impugned by the appellants (writ petitioners in the

High Court) Jatya Pal Singh & Ors. vs. Union of India &

Ors. in C.A.No.2147 of 2010.

Proceedings in the Delhi High Court :-

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4. Ten writ petitions were filed by the former employees

of the Videsh Sanchar Nigam Limited (VSNL). The

common question of law raised in all the appeals relates

to the very maintainability of the writ petitions. VSNL had

raised a preliminary objection that a writ petition would

not be maintainable against it as it is neither a State

within the meaning of Article 12 of the Constitution of

India nor is it performing any public function. The learned

Single Judge accepted the aforesaid preliminary objection

and dismissed the writ petitions by judgment and order

dated 29th August, 2011. Letters Patent Appeal No.924 of

2011 challenging the aforesaid order was dismissed by

the Division Bench on 14th November, 2011. LPA Nos.

930 of 2011 and 931 of 2011 were dismissed by the

common order dated 15th November, 2011.

4A. Only two of the original writ appellants have

approached this Court in the civil appeals against the

judgment of the learned Single Judge and the Division

Bench of the Delhi High Court by way of civil appeals.

These are Ram Prakash vs. Union of India & Ors. in

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C.A.No.5740 of 2012 and Vijay Thakur vs. V.S.N.L. and

Anr. in C.A.No.425 of 2012.

5. For the purpose of this order, we shall make a

reference to the facts as pleaded in C.A.No.2147 of 2010.

All the appellants in writ petitions had been working in the

Ministry of Communication, in particular, Department of

Overseas Communication Service (OCS) from 1st March,

1971 onwards. Their dates of appointment on various

posts are as under :

6. Appellant Nos. 1 and 2 were appointed as Assistant

Engineer on 16th May 1983 and 1st September, 1983,

respectively. Appellant Nos. 3 and 4 were appointed as

Junior Technical Assistant on 1st March, 1971 and 13th

January, 1976 and appellants 5 and 6 were appointed on

8th January, 1980. During their continuous service with

respondent No.1, they had earned promotions at due time

on merit. They have a clean record of service. Till 31st

March, 1986, they were holding responsible posts in the

OCS.

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Background of VSNL:

A) Origin of Overseas Communication Service (in

short OCS) -

7. On 1st of January, 1947 ‘Indian Radio and

Telecommunication company Ltd.’ a Private Company

operating India’s external telecommunication service was

taken over by the Govt. along with its employees on the

terms and conditions as they had with the private

company.

8. The Govt. created a department in ministry of

telecommunication known as Overseas Communication

Service (OCS) that dealt communication of India subjects

with the rest of the world.

9. The OCS department of Ministry of

telecommunication continued till 31st of March, 1986.

B) Conversion of OCS into VSNL -

10. Ministry of Communication took a decision to convert

its OCS Department into a Public Sector Corporation

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(PSC). A notification to this effect was issued on 19th

March, 1986 and the Corporation was named as VSNL.

Accordingly, w.e.f. 1st April, 1986, all international

telecommunication services of the country handled by the

Govt. stood transferred to VSNL. All the employees were

deemed to have been transferred to the VSNL on the

existing terms and conditions till their case for absorption

or otherwise are decided upon by the VSNL in consultation

with the cadre controlling authority and other concerned

Govt. Departments. They were to be treated on

deputation on Foreign Service to VSNL without deputation

allowance. These employees also were to be treated as

though on the strength of OCS as on 31st March, 1986 till

their cases were finalized by the VSNL. Those who do not

opt for absorption will be treated as on deputation on

foreign service with the Corporation for a period of 2

years without deputation allowance. The Corporation

(VSNL) would finalise the terms and conditions for

employment in the Corporation within a period of 12

months or on any specified date as may be agreed upon

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by the Government. It was provided that the employees

will be asked to exercise their option for being absorbed

in the company or otherwise within the stipulated period.

The date of induction of the employees in the Corporation

will be the date from which they have exercised the

option to be absorbed in the Company with the approval

of the competent authority. The notification also provided

that pensionary and other retirement benefits to the

employees on their absorption in the Corporation will be

determined in accordance with the Department of

Pensions and Pensioners Welfare O.M. No.4(8)-85-P & PW

dated 13th January, 1986 and as amended from time

to time.

11. Thereafter on 11th December, 1989, VSNL issued

STAFF NOTICE on the subject ‘Absorption of OCS

Employees in VSNL’. In this notice, it is mentioned that

date of absorption of OCS employees in the VSNL has

been approved by the Ministry of Communication on 1st

January, 1990. It is further mentioned that accordingly

from that date, the OCS employees transferred to VSNL

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on deputation basis without deputation allowance on

foreign service terms will cease to be government

servants. The aforesaid notice of absorption including the

terms and conditions of absorption was also issued

individually to each employee. On 5th July, 1989, the

Government had issued Office Memorandum No.4/18/87-

P&PW (D) on the subject ‘Settlement of Pensionary terms

etc. in respect of Government employees transferred en

masse to Central Public Sector Undertakings/Central

Autonomous Bodies’. Under this, the employees were

given the option to retain the pensionary benefits

available to them under the Government rules or be

governed by the rules of the Public Sector

Undertaking/Autonomous Bodies. The Government also

assured that the employees of the OCS will not be

removed by the VSNL unless their case was placed before

the competent authority in the Government. Finally, the

VSNL absorbed en-masse the erstwhile employees of OCS

with effect from 1st January, 1990. The solemn promise of

not being removed was incorporated in the Conduct

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Discipline and Appeal Rules framed by the VSNL in the

year 1992. It is pertinent to note here that all the

appellants had opted to join VSNL.

C. Disinvestment

12. Between 1992 and 2000, Government of India

divested a portion of its share holding in VSNL by sale of

equity to certain funds, banks and financial institutions

controlled by the Government in 1992 and to the general

public in 1999. Thereafter, the company was listed on

Indian Stock Exchange. In 1997, the Government of India

sold some of its equity holdings by issuing Global

Depository Receipts (GDRs) following which VSNL was

listed on the London Stock Exchange. On 15th August,

2000, VSNL became first Public Sector Undertaking of

India to be listed on the New York Stock Exchange

through conversion of underlying GDRs to American

Depository Receipts (ADRs). However on 13th February,

2002, Government of India which till then held 52.97% of

shares in VSNL, divested 25% shares in favour of

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Panatone Finvest Limited, (comprising of 4 companies of

the Tata Group) and 1.85% in favour of its employees

after following due process in accordance with its

disinvestment policy. This brought the share holding of

the Government of India to 26.12 %. Tata Group also

made a public offer for acquiring a further 20% of the

share capital of the VSNL, from the public in terms of SEBI

(Substantial Acquisition of Share and Takeover)

Regulations 1997. Consequently, the total holding of the

Tata Group in VSNL increased to 44.99 % of the paid up

share capital in 2002. Presently, Tata Group holdings in

VSNL is about 50.11%.

13. As per the share holding agreement and share

purchase agreement, the Government of India mandated

the Tata Group to ensure that none of the employees

should be retrenched for a period of one year. Clause

5.13 of the aforesaid agreement was as under :-

“5.13 Employees. (a) Notwithstanding anything to the contrary in this Agreement, the Strategic Partner shall not

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cause the Company to retrench any of the employees of the Company for a period of 1 (one) year from the closing other than any dismissal or termination of employees of the company from their employment in accordance with the applicable staff regulations and standing orders of the Company or applicable law.”

14. It appears that the Tata Group by a letter dated 14th

April, 2002 to ensure that the morale of the present

employees of the VSNL is maintained at a high level and

that they continue to deliver their best performance,

decided that it shall cause VSNL not to retrench any of

the employees of VSNL for a period of two years from 13 th

February, 2002.

15. On 5th February, 2004, VSNL was granted a non

exclusive licence by the Government of India pursuant to

the disinvestment. Clause (1) of the non exclusive licence

reads as under :-

“1. In view of the fact that the LICENSEE is the INCUMBENT OPERATOR and in consideration of the payments including LICENCE FEE and due performance of all the terms and conditions mentioned in the SCHEDULE on the part of the LICENSEE, the Licensor does, hereby grant,

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under Section 4 of the Indian Telegraph Act, 1885, on a non-exclusive basis , this Licence to establish, install, operate and maintain INTERNATIONAL LONG DISTANCE SERVICE on the terms and conditions contained in the SCHEDULE and ANNEXURES appended to this LICENCE AGREEMENT.” (emphasis added)

16. Prior to disinvestment, VSNL enjoyed the monopoly

in respect of international long distance service (ILDS),

which ceased with effect from 5th February, 2004.

Thereafter other telecom licensees like Reliance, Airtel,

Idea, Aircel, HFCL and even Government companies like

MTNL and BSNL became competitors in respect of ILDS.

17. It appears that on 16th July, 2007 and 4th October,

2007, the services of 20 managerial employees were

terminated after paying them 3 months’ salary in lieu of

notice. The aforesaid termination was said to have been

effected in terms of Clause 1.6 of the appointment letter

which reads as under :

“1.6 After confirmation, your appointment may be terminated by either side at any time by giving three months notice in writing. VSNL however, reserve the right of terminating your services forthwith or before expiry of the

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stipulated period of notice of 3 months by making payment to you of a sum equivalent to the pay and allowances for the period of notice or unexpired portion thereof. The decision of the management shall not be question.”

18. The orders of termination issued to the aforesaid 20

employees were identical. Meanwhile on 28th January,

2008, subsequent to the disinvestment in 2002, the name

of VSNL being a Tata Group Company was changed to

“Tata Communications Limited”. Ten writ petitions were

filed by the employees before the Delhi High Court and 2

writ petitions were filed before the Bombay High Court

challenging the orders of termination. On 29th August,

2011, learned Single Judge of the Delhi High Court vide

common order dismissed the 10 writ petitions, as not

maintainable against TCL, the reconstituted entity of

VSNL after disinvestment. The aforesaid order was

challenged by four of the writ appellants in LPA which was

dismissed by separate orders on 14th November, 2011,

15th November, 2011 and 17th February, 2012. Out of the

said four persons Ram Prakash and Vijay Thakur have

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filed Civil Appeal No.5740 of 2012 and Civil Appeal No.

425 of 2012 before this Court.

19. As noticed earlier, Division Bench of the Bombay

High Court also dismissed the writ petitions by order

dated 7th September, 2009 and 8th September, 2009

against which the appellant herein have filed Special

Leave Petition (C) No. 4619 of 2011 and Civil Appeal No.

2147 of 2010.

Submissions:

20. We have heard the learned counsel for the parties.

21. Mr. T.N. Razdan, learned counsel for the appellants

has submitted that VSNL cannot be said to have become

an absolute private entity after Union of India sold its 25%

shares out of 52.97% to Panatone Finvest Ltd. Union of

India still holds 26.97% shares in VSNL. Other

Government Companies hold 17.35 % shares in VSNL.

Therefore, VSNL cannot be said to be not amenable to the

writ jurisdiction. Furthermore, VSNL is under the complete

control of Telecom Regulatory Authority of India (TRAI)

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Act, 1997 and the Telegraph Act, 1948. Therefore, the

writ petition would lie in cases where the services of the

employees were terminated in breach of the rules

governing the service conditions of the employees.

Referring to the share holding pattern in VSNL, it is

claimed that Union of India is the single large shareholder

holding 26.12% shares in VSNL. It is further the case of

the appellant that Panatone Finvest Ltd. having stepped

into the shoes of erstwhile shareholder and is bound by

the commitments and obligations, rights and liabilities

arising from the sale/purchase of shares.

22. Dr. K.S. Chauhan, learned counsel, also reiterated

the aforesaid submissions. In addition, he submitted that

Central Government still has pervasive control over the

VSNL/TCL. The strategic partner i.e. Panatone Finvest

Limited/TATAs have been bound by the Government

agreement in relation to divestment of the 25% stakes,

and there is a further condition that if the strategic

partner wish to sell its stakes in the VSNL/TCL, it is not

free for the strategic partner to sell off the same in the

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open market, but the shares can be sold off back to the

Government only. It clearly, according to learned counsel,

buttresses the fact that the Government consider the

function/activity so sacrosanct and of such public

importance that it does not wish to alter the nature of the

functions of VSNL/TCL. However, there is no such

condition precedent in the agreement with the other

telecommunication companies which are merely service

providers. Thus, both the learned counsel have reiterated

the submission that VSNL would be covered by the term

“other authority” within the scope and ambit of Article 12.

Nature of the Functions performed by the VSNL:-

23. According to Mr. Razdan, the right to communication

is a facet of freedom of speech and expression under

Article 19(1) (a) of the Constitution of India. The

Government of India is duty bound to provide

uninterrupted Telecommunication Services to enable its

citizen to effectively exercise the aforesaid right. This

public duty was being provided through one of the

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departments i.e. Department of Telecommunication, in

particular, the OCS. The same function was subsequently

performed by the VSNL, a wholly owned government

enterprises, till disinvestment. Even after disinvestment,

VSNL continues to perform the same functions by

connecting its subscribers to their receivers in India as

well as abroad. VSNL performs the aforesaid functions

under license in terms of Section 4 of Indian Telegraph

Act, 1948. Being the licensee, VSNL is under the control of

TRAI for all its activities of ILDS. After disinvestment, VSNL

has spread its ILDS activities to 52 locations and has

increased the strength of its employees from 3000 to

7000. It has been located in prime areas in all the cities

like Delhi, Pune, and Kolkata. The aforesaid land belongs

to Union of India and is in the possession of VSNL. Union

of India is the licensor of all the lands, assets, equipment

machine and tools under the license of VSNL. Land

belonging to Union of India is worth lakhs of crores of

rupees. In the face of this, the High Court would not have

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concluded that Government of India has no control over

the activities of VSNL.

24. This submission was also reiterated by Dr. K.S.

Chauhan, learned counsel. Dr. Chauhan, in addition to the

aforesaid arguments, submitted that Respondents herein

have monopoly over the international communication, as

VSNL/TCL is the gateway of the world. VSNL can

communicate worldwide for India which facility is not

available to any other communication company.

Companies, such as Vodafone etc., are only transferring

speech whereas VSNL is providing value added service. It

provides EMER Set service to Defence Forces including

Merchant Navy. VSNL/TCL is specially catering to the

requirement of the President and Prime Minister of India

for preparation of hotline, etc. Further, learned counsel

submitted that even a private function which is performed

for public benefit would be a public function. He submitted

that in the case of Delhi Science Forum vs. Union

of India 1 that telecommunication has been

1 (1996 (2) SCC 405)

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internationally recognized as a public utility of strategic

importance. Therefore, it cannot be said that VSNL is not

performing public functions.

25. The High Court, it was submitted, was unduly

influenced by the fact that the VSNL does not enjoy a

monopolistic character. Further more, it was wrongly held

that services provided by other telecom operators are no

different to the service provided by VSNL. Mr. Razdan

further submitted that the High Court has failed to

distinguish the expression ‘other authority’ as defined in

Article 12 of the Constitution of India from that of ‘any

person or authority’ in Article 226 of the Constitution. In

fact, the High Court totally ignored the submission that

the definition of other authority would now have to be

seen by taking into account the mixed economy of State

and the private enterprises. The High Court, however,

confined itself only to the issue as to whether VSNL after

disinvestment is State within Article 12 of the

Constitution. He submitted that it is important to have a

re-look at the definition of State/other authorities under

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Article 12 of the Constitution. In view of the present set up

of mixed economy i.e. where the State is in partnership

with semi-government/private corporations that take over

the Government companies in part or full. In support of

his submission, he relies on the judgment of this Court in

the case of Air India Statutory Corporation vs.

United Labour Union & Ors. 2

26. Dr. Chauhan further submitted that when the

Government, in the exercise of its executive power by

way of a policy decision, creates an entity or divests its

functions, which may have a bearing upon the

Fundamental Rights, in favour of a private body or

transfer of public entity to a private body, in such an

eventuality, the functions earlier discharged by the

Government cannot be termed as purely a private

function. He submitted that realizing the necessity to

promote, protect and enjoyment of human rights,

including the right to freedom of expression, on the

internet and in other technologies, the U.N. Human Rights

2 (1997 (9) SCC 377)

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Council has passed a resolution with regard to the same.

Similarly, the right to telecommunication (Overseas), a

service exclusively provided by Government of India

before disinvestment has the public law element and,

therefore, nature of work performed by VSNL/TCL

continued to remain the same. He submits that the

functions performed by VSNL would satisfy all the tests for

determining whether a function is a public function

provided under the Human Rights Act, 1998. Learned

counsel has submitted that it is necessary to look at the

nature of the public functions which have been

transferred. He submits that the meaning of public

function would have to be determined by taking into

account the effect of transfer of the public function from a

public body to a private body. Learned counsel submitted

that in view of the above, it can be safely concluded that

VSNL is performing a public function. He relied on the

observations made by this Court in the case of Binny

Ltd. vs. Sadasivan. 3 Besides, he relied on the judgment

3 (2005) 6 SCC 657

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of this Court in Federal Bank Ltd . vs. Sagar Thomas

and Ors.4 Learned counsel also relied on a judgment of

the Supreme Court of South Africa in Appeal of South

Africa in Mittal Steel South Africa Limited

(previously known as ISCOR Limited) vs. Mondli

Shadrack Hlatshwayo , rendered in case No.326 of 2005

on 31st August, 2006.

27. Another submission made by Mr. Razdan is that the

High Court has wrongly held that the functions performed

by VSNL are not sovereign functions and, therefore, it

cannot be said to be performing public functions. He

submitted that the so called dichotomy between

sovereign and non-sovereign functions of the State does

not really exist. The question that whether a particular

function of the State is a sovereign function depends on

the nature of the power and manner of its exercise.

Relying on the judgment of this Court in Secretary,

Ministry of Information and Broadcasting vs.

4 (2003) 10 SCC 733).

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Cricket Association of Bengal 5 , he submitted that

airwaves or frequencies are public property. Their use has

to be controlled and regulated by a public authority in the

interest of the public and to prevent the invasion of their

rights. The right to impart and receive information is a

species of the right of freedom of speech and expression

guaranteed under Article 19(1)(a) of the Constitution.

Therefore, it cannot be said that VSNL is not performing a

public function. Learned counsel also relied on the

judgment of this Court in Andi Mukta Sadguru Shree

Muktaji Vandas Swami Suverna Jayanti Mahotsav

Smarak Trust & Ors. vs. V.R.Rudani & Ors.6. Learned

counsel has also placed reliance on the judgment of this

Court in Unni Krishnan J.P. & Ors. vs. State of

Andhra Pradesh & Ors.7.

Employees Structure:

5 (1995) 2 SCC 122 6 (1989) 2 SCC 691 7 (1993) 1 SCC 645

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28. It was also submitted by Mr. Razdan that the

Government had assured that the employees of the OCS

will not be removed by the VSNL unless their case was

placed before the competent authority in the

Government. The solemn promise of not being removed

was incorporated in the Conduct Discipline and Appeal

Rules framed by the VSNL in the year 1992.

29. According to the appellants, the employees of the

VSNL fall into three categories which are as under :

(a) The employees that were transferred to VSNL by

notification dated 19th March, 1986 i.e. erstwhile

employees of OCS.

(b) The employees who are recruited directly under the

VSNL Recruitment and Promotion Rules, 1983 dated 21st

May, 1993, subject to the rules of Conduct Discipline and

Appeal Rules of 1992 framed by VSNL.

(c) The employees recruited after the disinvestment on

13th February, 2002. The employees of TATA are guided

by TATA Conduct Rules. It is pointed out that VSNL was

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granted a licence by the Ministry of Communication for

short distance service and long distance service.

International Long Distance Service (ILDS) was granted by

the Department of Telecommunication, Government of

India under Section 4 of the Indian Telegraph Act. The

licences of VSNL for ILDS which expired on 31st March,

2004 has been re-granted for another 20 years.

The brief factual matrix of case:

30. Civil Appeal No.2147 of 2010 pertains to the group

of employees detailed in category ‘a’ above. The

appellants in C.A.No.425 of 2012 are from category ‘b’. In

C.A.No.2647 of 2010, the VSNL terminated the services of

appellants 2, 3, and 4 on 13th July, 2007 and those of

appellants 1, 5, and 6 on 16th July, 2007. The termination

letter of appellant Nos. 2, 3, and 4 is issued by Vice

President while as those of appellant Nos. 1 and 5 is

issued by the Chief Officer Global operation. The

termination order of appellant No.6 is issued by the Chief

International Facilities Officer.

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31. According to the appellants, none of these officers

were either competent or authorised officers to terminate

the services of appellants in terms of Conduct Discipline

and Appeal Rules of VSNL. Similarly, in C.A.No.421 of

2012, the services of the appellants were terminated by

the Vice President without any authority of law.

Challenging the order of the Division Bench in

C.A.No.2147 of 2010, it is submitted that the Division

Bench has erroneously held that the service rules

governing the appellants do not have any statutory force

and the status of the rules of a contract between the

employer and the employee. The High Court failed to

appreciate the issue raised in the writ petition that VSNL

has breached the fundamental rules and regulations

contained in its Conduct Discipline and Appeal Rules,

1992 which had the force of law. It was also pointed out

that the Corporation (VSNL) being in partnership with

Union of India is duty bound to uphold the rule of law.

Learned Counsel submitted that the aforesaid judgment is

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liable to be set aside on the short ground that it is cryptic

and non-speaking.

32. This submission was also reiterated by Dr.K.S.

Chauhan, learned counsel. He submitted that the powers

of the High Court under Article 226 is much wider than

the powers of this Court under Article 32 of the

Constitution of India. He relied on the Constitution Bench

judgment of this Court in Zee Telefilms Ltd. vs. Union

of India 8 . In this case, the activities of Board of Cricket

Control of India were held to be akin to public duties or

State functions. On the basis of the above, he submitted

that when a private body exercises public functions even

if it is not a State, the aggrieved person would have a

remedy by way of a writ petition under Article 226. Dr.

Chauhan relied on a judgment of this Court in Ramesh

Ahluwalia vs. State of Punjab & Ors. in C.A.No.6634

of 2012 decided on 13th September, 2012.

33. In response, Mr. C.U. Singh, learned senior counsel

appearing for the respondent has submitted that the tests 8 2005 (4) SCC 649.

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for determining as to whether a particular body would fall

within the definition of State or other authority have been

well defined by this Court in a number of judgments.

Therefore, there is no scope for enlarging the time tested

definitions rendered by this Court. In support of the

submissions, he relied on All India ITDC Workers Union

& Ors. v. ITDC & Anr.9; Pradeep Biswas v. Indian

Inst. of Chemical Biology10; G.Bassi Reddy vs.

International Corps Research Institute11; Balco

Employees Union vs. Union of India & Ors.12;

Agricultural Produce Market Committee vs. Ashok

Harikunj & Anr.13

34. On the basis of the tests laid down in the aforesaid

judgments, learned counsel submitted that VSNL is not a

State or other authority under Article 226 of the

Constitution. Therefore, both the High Courts have

9 2006 (10) SCC 66 10 2002 (5) SCC 111] 11 2003 (4) SCC 225 12 2002 (2) SCC 333 13 2000 (8) SCC 61.

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correctly held that the writ petitions would not be

amenable against the VSNL.

35. Learned senior counsel then submitted that TCL

erstwhile VSNL is not performing a public function or a

mandatory public duty and, therefore, would not be

amenable to the writ jurisdiction of the High Court under

Article 226 of the Constitution. In support of the

submission, learned counsel relied on G. Bassi Reddy

(supra), and Binny Ltd. (supra).

36. He further submitted that without prejudice to the

aforesaid two submissions, so far as employment/service

contract is concerned, a writ petition would not be

maintainable. The appellants would have to first exhaust

the alternative remedies available. In support of this

submission, he relied on Radhakrishna Agarwal vs.

State of Bihar14; Binny Ltd. (supra), Kulchinder

14 1977 (3) SCC 457

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Singh vs. Hardayal Singh Brar15 and Praga Tools

Corp. vs. C.A.Imanual & Ors.16

37. In view of the above, learned senior counsel

submitted that all these appeals deserve to be dismissed.

38. We have considered the submissions made by the

learned counsel for the parties. In essence, learned

counsel for the appellants have made only two

submissions –

(i) That inspite of the Government of India holding only

26.97 % shares in VSNL now TCL, it would still fall in the

definition of State or other authority within the ambit of

Article 12 of the Constitution.

(ii) Even if it is held that VSNL/TCL is a purely private

entity, it would be amenable to the writ jurisdiction of the

High Court under Article 226 of the Constitution of India

as it is performing a public function/public duty.

15 [1976 (3) SCC 828]

16 [1969 (1) SCC 585].

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39. We are unable to accept the aforesaid submissions.

We have earlier set out in detail the manner in which the

function which was earlier being performed by OCS which

were gradually transferred with effect from 1st April, 1986

to VSNL. Since 13th February, 2002, Government of India

holds only 26.12 % shares of TCL. Therefore, it can be

safely concluded that on the basis of the shareholding,

the Government of India would not be in control of the

affairs of TCL. In order for TCL to be declared as a State or

other authority within the meaning of Article 12 of the

Constitution of India, it would have to fall within the well

recognized parameters laid down in a number of

judgments of this Court. In the case of Pradip Kumar

Biswas (supra), a Seven Judge Bench of this Court

considered the question as to whether Indian Institute of

Chemical biology would fall within the definition of State

or other authority under Article 12. Ruma Pal, J. speaking

for the majority considered the manner in which the

aforesaid two expressions have been construed by this

Court in the earlier cases. The tests propounded for

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determining as to when the Corporation will be said to be

an instrumentality or agency of the Government as

stated, Ramana Dayaram Shetty vs. International

Airport Authority of India 17 were summarized as

follows :

“(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government. (SCC p. 507, para 14)

(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. (SCC p. 508, para 15)

(3) It may also be a relevant factor … whether the corporation enjoys monopoly status which is State-conferred or State- protected. (SCC p. 508, para 15)

(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality. (SCC p. 508, para 15)

(5) If the functions of the corporation are 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. (SCC p. 509, para 16)

17 (1979) 3 SCC 489

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(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. (SCC p. 510, para 18)”

40. The aforesaid ratio in Ramana Dayaram Shetty

(supra) has been consistently followed by this Court, as is

evident from paragraph 31 of the judgment in Biswas

(supra). Para 31 reads as under :

“31. The tests to determine whether a body falls within the definition of “State” in Article 12 laid down in Ramana with the Constitution Bench imprimatur in Ajay Hasia form the keystone of the subsequent jurisprudential superstructure judicially crafted on the subject which is apparent from a chronological consideration of the authorities cited.”

41. The subsequent paragraphs of the judgment noticed

the efforts made to further define the contours within

which to determine; whether a particular entity falls

within the definition of other authority, as given in Article

12. The ultimate conclusion of the Constitution Bench are

recorded in paragraph 39 and 40 as under :-

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“39. Fresh off the judicial anvil is the decision in Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers' Assn. which fairly represents what we have seen as a continuity of thought commencing from the decision in Rajasthan Electricity Board in 1967 up to the present time. It held that a company substantially financed and financially controlled by the Government, managed by a Board of Directors nominated and removable at the instance of the Government and carrying on important functions of public interest under the control of the Government is “an authority” within the meaning of Article 12.

40. 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.”

42. In view of the aforesaid authoritative decision of the

Constitution Bench (Seven Judges), it would be wholly

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unnecessary for us to consider the other judgments cited

by the learned counsel for the parties.

43. If one examines the facts in the present case on the

basis of the aforesaid tests, the conclusion is inescapable

that TCL cannot be said to be other authority within

Article 12 of the Constitution of India. As noticed above,

the share holding of Union of India would not satisfy test

principles 1 and 2 in the case of Ramana Dayaram

Shetty (supra).

44. On perusal of the facts, it would be evident that test

No.3 would also not be satisfied as TCL does not enjoy a

monopoly status in ILDS. So far as domestic market is

concerned, there is open competition between the

numerous operators, some of which have been

enumerated earlier namely, MTNL, Airtel, Idea, Aircel, etc.

This brings us to the 4th test and again we are unable to

hold that the Government of India exercises deep and

pervasive control in either the management or policy

making of TCL which are purely private enterprises. We

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may also notice that in fact even Government Companies

like MTNL and BSNL are competitors of TCL, in respect of

ILDS. We are, therefore, of the firm opinion that the High

Court of Delhi and the High Court of Bombay were fully

justified in rejecting the claim of the appellants that TCL

would be amenable to writ jurisdiction of the High Court

by virtue of the other authority within the purview of

Article 12 of the Constitution of India.

Is TCL performing a public function :-

45. It has been noticed earlier that ILDS functions, prior

to 1986, were being performed by OCS, a Department of

Ministry of Communications. VSNL was incorporated

under the Indian Companies Act, 1956 as a wholly owned

Government company to take over the activities of

erstwhile OCS with effect from 1st April, 1986. The

employees of erstwhile OCS continue to work for VSNL on

deputation till 1st January, 1990. However, as noticed

earlier, an option was given in 1989 to the pre 1986

employees for permanent absorption in VSNL. It was

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made clear to all the employees that they would be

permanently absorbed in VSNL upon resigning from the

Government of India. It was also made clear that these

employees had the choice to remain as Government

employees but they would be transferred to surplus staff

cell of Government of India for re-deployment against the

vacancies in other government offices. It is an accepted

fact before us that all the appellants opted to be absorbed

in VSNL. They were, in fact, absorbed in VSNL with effect

from 1st January, 1990. In the staff notice issued on 11th

December, 1989, it was also made clear that OCS

employees transferred to VSNL on deputation basis

without deputation allowance on foreign service terms

will cease to be government servants. It is, therefore,

patent that the appellant accepted the absorption

voluntarily. Therefore, it would be difficult to accept the

submission of the learned counsel for the appellants that

even after absorption in VSNL, the appellants continued

to enjoy the protection available to them in the OCS as

government servants. The appellants have, however,

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sought to rely on the memorandum No.4/18/87–P &PWD

dated 5th July, 1989 of the Department of Pension and

Pensioners’ Welfare, Government of India. In the said

letter, certain safeguards have been granted to ex-OCS

employees which are as under:

“Dismissal/removal from the service of a public sector undertaking/autonomous body after absorption for any subsequent misconduct shall not amount to forfeiture of his retirement benefits for the service rendered in the Central Government. Also in the event of Dismissal/removal of a transferred employee from the public sector undertaking/autonomous body the employee concerned will be allowed protection to the extent that the administrative Ministry/Department will review such order before taking a final decision.”

46. In our opinion, the aforesaid condition would make

no difference to the legal status of the appellants within

VSNL. It was only an assurance that the rights to pension

which had already accrued to them on the basis of their

service in OCS shall be protected. Undoubtedly, this

assurance was accepted by VSNL on 1st May, 1992. It was,

in fact, incorporated in the rules governing the service

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conditions of these employees in VSNL. It is a matter of

record that with effect from 13th February, 2002, the

shareholding of Government of India is 26.97 %. Soon

thereafter, the total shareholding of TATA Group in VSNL

increased to 44.99% of the paid up share capital in 2002.

It is also an accepted fact that shareholding of the TATA

Group in VSNL is 15.11%. It is also noteworthy that since

2002, VSNL was a TATA Group Company and accordingly

on 28th January, 2008 its name was changed to ‘TATA

Communication Limited”. In our opinion, the aforesaid

facts make it abundantly clear that the Government of

India did not have sufficient interest in the control of

either management or policy making functions of TATA

Communication Limited.

47. Merely because TATA Communication Limited is

performing the functions which were initially performed

by OCS would not be sufficient to hold that it is

performing a public function. It has been categorically

held in the case of Ramana Dayaram Shetty (supra) if

only the functions of the Corporation are of public

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importance and closely related to Government functions,

it would be a relevant factor in classifying the Corporation

as an instrumentality or agency of the Government.

48. As noticed above, the functions performed by

VSNL/TCL are not of such nature which could be said to

be a public function. Undoubtedly, these operators

provide a service to the subscribers. The service is

available upon payment of commercial charges. Learned

counsel for the appellants had placed strong reliance on

the judgment of this Court in Air India Statutory

Corporation (supra). However, the aforesaid judgment is

of no assistance to the appellants as it was subsequently

overruled by a Constitution Bench in Steel Authority of

India Ltd. & Ors. vs. National Union Waterfront

Workers & Ors.18. Dr. K.S. Chauhan had also relied on

the Human Rights Act, 1998 (Meaning of Public Function)

Bill which sets out the factors to be taken into account in

determining whether a particular function is a public

function for the purpose of sub-section (3)(b) of Section 6

18 (2001 (7) SCC 1)

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of the aforesaid Act. Section (1) enumerates the following

factors which may be taken into account in determining

the question as to whether a function is a function of

public nature.

“(a) the extent to which the state has assumed

responsibility for the function in question ;

(b)the role and responsibility of the state in

relation to the subject matter in question ;

(c) the nature and extent of the public interest in

the function in question ;

(d) the nature and extent of any statutory power

or duty in relation to the function in question ;

(e) the extent to which the state, directly or

indirectly, regulates, supervises or inspects the

performance of the function in question ;

(f) the extent to which the state makes payment

for the function in question ;

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(g) whether the function involves or may involve

the use of statutory coercive powers ;

(h) the extent of the risk that improper

performance of the function might violate an

individual’s Convention right.

Performance of public function by private provider –

49. For the avoidance of doubt, for the purposes of

Section 6(3)(b) of the Human Rights Act 1998, a function

of a public nature includes a function which is required or

enabled to be performed wholly or partially at public

expense, irrespective of –

(a) the legal status of the person who performs

the function, or

(b) whether the person performs the function by

reason of a contractual or other agreement or

arrangement”.

50. In our opinion, the functions performed by VSNL/TCL

examined on the touchstone of the aforesaid factors

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cannot be declared to be the performance of a public

function. The State has divested its control by

transferring the functions performed by OCS prior to 1986

on VSNL/TCL. Dr. Chauhan had also relied on Binny Ltd.

(supra) wherein this Court reiterated the observations

made by this Court in Dwarkanath vs. Income-tax

Officer, Special Circle, D-ward, Kanpur & Anr. 19, it

was observed that :

“It is difficult to draw a line between the public functions and private functions when it is being discharged by a purely private authority. A body is performing a “public function” when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest.”

51. This Court also quoted with approval the

Commentary on Judicial Review of Administrative Action

(Fifth Edn.) by de Smith, Woolf & Jowell in Chapter 3 para

0.24 therein it has been stated as follows :

19 (1965 (3) SCR 536)

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“A body is performing a “public function” when it seeks to achieve some collective benefit for the public or a section of the public and is accepted by the public or that section of the public as having authority to do so. Bodies therefore exercise public functions when they intervene or participate in social or economic affairs in the public interest.

Public functions need not be the exclusive domain of the state. Charities, self-regulatory organizations and other nominally private institutions (such as universities, the Stock Exchange, Lloyd’s of London, churches) may in reality also perform some types of public function. As Sir John Donaldson M.R. urged, it is important for the courts to “recognize the realities of executive power” and not allow “their vision to be clouded by the subtlety and sometimes complexity of the way in which it can be exerted.” Non-governmental bodies such as these are just as capable of abusing their powers as is government.”

52. These observations make it abundantly clear that in

order for it to be held that the body is performing a public

function, the appellant would have to prove that the body

seeks to achieve some collective benefit for the public or

a section of public and accepted by the public as having

authority to do so. In the present case, as noticed earlier,

all telecom operators are providing commercial service

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for commercial considerations. Such an activity in

substance is no different from the activities of a bookshop

selling books. It would be no different from any other

amenity which facilitates the dissemination of information

or DATA through any medium. We are unable to

appreciate the submission of the learned counsel for the

appellants that the activities of TCL are in aid of enforcing

the fundamental rights under Article 21(1)(a) of the

Constitution. The recipients of the service of the telecom

service voluntarily enter into a commercial agreement for

receipt and transmission of information. The function

performed by VSNL/TCL cannot be put on the same

pedestal as the function performed by private institution

in imparting education to children. It has been repeatedly

held by this Court that private education service is in the

nature of sovereign function which is required to be

performed by the Union of India. Right to education is a

fundamental right for children upto the age of 14 as

provided in Article 21A. Therefore, reliance placed by the

learned counsel for the appellants on the judgment of this

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Court in Andi Mukta (supra) would be of no avail. In any

event, in the aforesaid case, this Court was concerned

with the non-payment of salary to the teachers by the

Andi Mukta Trust. In those circumstances, it was held that

the Trust is duty bound to make the payment and,

therefore, a writ in the nature of mandamus was issued.

Mr. C.U.Singh, senior counsel relied on Binny Ltd. (supra)

in support of the submissions that VSNL/TCL is not

performing a public function. In our opinion, the

observations made by this Court in the aforesaid

judgment are fully applicable in the facts and

circumstances of this case.

53. In these appeals, the claim of the appellants is that

their services have been wrongly terminated by VSNL/TCL

in breach of the assurances given by the Government of

India and VSNL in clause 5.13 of the share holding

agreement. If that be so, they would be at liberty to seek

redress by taking recourse to the normal remedies

available under law.

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54. A perusal of the aforesaid documents, however,

would show that VSNL had merely promised not to

retrench any employee who had come from OCS for a

period of two years from 13th February, 2002. Such a

condition, in our opinion, would not clothe the same with

the characteristic of a public duty which the employer was

bound to perform. The employees had individual contacts

with the employer. In case the employer is actually in

breach of the contract, the appellants are at liberty to

approach the appropriate forum to enforce their rights.

55. We see no merit in the appeals and the same are

accordingly dismissed.

Writ Petition No.689 of 2007 -

56. This writ petition has been moved by the VSNL

Scheduled Castes/Tribes employees Welfare Samiti

(Regd.) (Petitioner No.1) and Scheduled Castes and

Schedule Tribes Employees Welfare Association of VSNL

(Regd.)-Petitioner No.2.

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57. The prayer in this writ petition is inter alia for the

issuing a writ in the nature of mandamus directing the

official respondents to safeguard the fundamental rights

of the members of the appellant as per the undertaking

given on 16th March, 2001, 9th October, 2001 and 30th

April, 2002. For the reasons already stated in the earlier

part of the judgment relating to the civil appeals, we are

unable to entertain the present writ petition. In our

opinion, it is not maintainable and accordingly dismissed.

………………………….J. [Surinder Singh Nijjar]

…..……………………….J. [Anil R. Dave]

New Delhi; April 17, 2013.

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