1984 (8) TMI 278 - HC - Companies Law

Issues Involved:
1. Whether Jammu and Kashmir Industries (Private) Ltd. is an "authority" under Article 12 of the Constitution.
2. Whether the Full Bench judgment in Abdul Ahad Loan v. Manager, Government Woollen Mills, AIR 1979 J & K 57, is still good law in light of the Supreme Court judgment in Ajai Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487.
3. Whether the writ petition against Jammu and Kashmir Industries (Private) Ltd. is maintainable.

Issue-Wise Detailed Analysis:

1. Whether Jammu and Kashmir Industries (Private) Ltd. is an "authority" under Article 12 of the Constitution:

The court examined whether Jammu and Kashmir Industries (Private) Ltd. could be considered an "authority" under Article 12 of the Constitution. The Full Bench in Abdul Ahad's case, AIR 1979 J & K 57, had previously held that a company incorporated under the Companies Act cannot be characterized as an "authority" or "State" and is not amenable to the writ jurisdiction of the court. However, the Supreme Court in Ajai Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487, provided guidelines to determine if a corporation is an instrumentality or agency of the Government, making it an "authority" under Article 12. These guidelines included factors like the holding of the entire share capital by the Government, financial assistance from the State, monopoly status, deep and pervasive State control, public importance of the functions, and transfer of a Government department to the corporation.

Applying these tests, the court found that Jammu and Kashmir Industries Pvt. Ltd. was created by transferring certain industrial undertakings previously run by the Government. The company's memorandum and articles of association showed extensive control by the Governor in both financial and administrative matters. The Governor had significant powers, including the approval of share transfers, raising or borrowing funds, appointing and removing directors, and issuing directions regarding the company's affairs. The shareholders were the Governor and State Government officers, with no private shareholders. This deep and pervasive control indicated that the company was an instrumentality or agency of the Government, making it an "authority" under Article 12 and amenable to writ jurisdiction.

2. Whether the Full Bench judgment in Abdul Ahad Loan v. Manager, Government Woollen Mills, AIR 1979 J & K 57, is still good law in light of the Supreme Court judgment in Ajai Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487:

The Full Bench judgment in Abdul Ahad's case had held that a company incorporated under the Companies Act is not an "authority" under Article 12. However, the Supreme Court in Ajai Hasia's case provided a broader interpretation, stating that the test is whether the corporation is an instrumentality or agency of the Government, regardless of how it is created. This includes companies formed under the Companies Act if they meet the relevant factors indicating Government control. The court concluded that in light of Ajai Hasia's case, the Full Bench judgment in Abdul Ahad's case was no longer good law.

3. Whether the writ petition against Jammu and Kashmir Industries (Private) Ltd. is maintainable:

Given that Jammu and Kashmir Industries Pvt. Ltd. was found to be an instrumentality or agency of the Government and thus an "authority" under Article 12, the court held that a writ petition against the company was maintainable. The writ petition was directed to be listed for further proceedings before a learned single judge of the court.

Conclusion:

The court held that Jammu and Kashmir Industries Pvt. Ltd. is an instrumentality or agency of the Government, making it an "authority" under Article 12 of the Constitution and amenable to writ jurisdiction. The Full Bench judgment in Abdul Ahad's case was no longer good law in light of Ajai Hasia's case. Consequently, the writ petition against Jammu and Kashmir Industries Pvt. Ltd. was maintainable.

← Previous Next →