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Issues Involved:
1. Whether Mysore Paper Mills is a 'State' under Article 12 of the Constitution of India. 2. Whether the transfer order of the 2nd respondent is vitiated by mala fides, arbitrariness, and illegality. Issue-wise Detailed Analysis: 1. Whether Mysore Paper Mills is a 'State' under Article 12 of the Constitution of India: The Court examined several leading Supreme Court decisions to determine whether Mysore Paper Mills (MPM) falls within the definition of 'State' under Article 12. The key tests from cases like Ajay Hasia v. Khalid Mujib Sehravard and Som Prakash Rekhi v. Union of India were applied. These tests include factors such as the extent of government control, financial assistance, and whether the entity performs public functions. The Court found that MPM satisfies these criteria: - Government Control: The Government of Karnataka holds more than 97% of the share capital, and the company is managed by a board of directors, the majority of whom are government nominees. - Public Functions: MPM is involved in manufacturing newsprint, a state monopoly, and undertakes rural development and social welfare activities, which are governmental functions. - Financial Assistance: The company operates with significant financial support from government-controlled institutions. Given these factors, the Court concluded that MPM is indeed a 'State' under Article 12 of the Constitution. 2. Whether the transfer order of the 2nd respondent is vitiated by mala fides, arbitrariness, and illegality: The respondents argued that the transfer order was issued to victimise the 2nd respondent due to his involvement in trade union activities. They cited several instances of alleged victimisation, including a previous termination without inquiry and a transfer to an isolated department. The Court, however, found no substantial evidence supporting the claim of mala fides: - Chronological Events: The Court noted that the 2nd respondent had been promoted and reinstated after previous disputes, indicating no continuous victimisation. - Transfer as an Incident of Service: The Court emphasized that transfer is a normal incident of service, and the 2nd respondent's appointment terms included a transfer clause. - Administrative Grounds: The Court accepted the appellant's explanation that the transfer was necessitated by business exigencies, including addressing quality complaints from the Calcutta region and improving market conditions. The Court also dismissed the significance of subsequent events, such as the 2nd respondent's health issues and the fire incident at his residence, as they occurred after the transfer order and did not influence its issuance. Conclusion: The Court concluded that MPM is a 'State' under Article 12, and the transfer order of the 2nd respondent was not vitiated by mala fides or arbitrariness. The writ petitions were dismissed, and the appeals were allowed.
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