2007 (5) TMI 674 - HC - Companies Law

Summary

Issues Involved:
1. Whether Capexil is amenable to writ jurisdiction.
2. Formation and control of Capexil.
3. Financial aid and control over Capexil.
4. Applicability of Central Administrative Tribunal jurisdiction.
5. Dissolution clause relevance.
6. Whether Capexil qualifies as a "State" under Article 12 of the Constitution of India.

Summary:

1. Whether Capexil is amenable to writ jurisdiction:
The primary issue in this appeal is whether Capexil, previously known as Chemical & Allied Products Export Promotion Council, is amenable to writ jurisdiction. The appellant challenged the order of suspension and chargesheet issued by Capexil. The learned Single Judge held that Capexil was not amenable to writ jurisdiction, prompting this appeal.

2. Formation and control of Capexil:
The appellant argued that Capexil was an autonomous body set up with the patronage of the Ministry of Commerce, Union of India, for promoting the export of chemical and allied products. The appellant highlighted deep and pervasive control by the Central Government over Capexil, including the requirement for Central Government approval to alter the Memorandum of Association and the nomination of members by the Central Government. The respondent contended that Capexil was an autonomous body with no Central Government control, registered under the Companies Act, 1956, and operated independently.

3. Financial aid and control over Capexil:
The appellant argued that Capexil received financial grants from the Central Government, indicating government control. The respondent countered that the financial grant was insignificant compared to Capexil's total expenditure, and Capexil was primarily funded by its members through subscriptions and other financial resources. The court noted that the projects were funded by the Central Government, and the funds were used as subsidies and financial incentives to encourage export.

4. Applicability of Central Administrative Tribunal jurisdiction:
The learned Single Judge relied on the fact that CSIR was amenable to the jurisdiction of the Central Administrative Tribunal, whereas Capexil was not. The court noted that the Central Government could bring any of its allied organizations within the purview of the Central Administrative Tribunal Act, and this factor alone could not determine government control.

5. Dissolution clause relevance:
The learned Single Judge placed reliance on the dissolution clause, but the court found no relevance in this factor.

6. Whether Capexil qualifies as a "State" under Article 12 of the Constitution of India:
The court referred to the tests laid down in the case of Jogesh Chandra Mondal to determine whether a body corporate is a "State" under Article 12. These tests include the origin of the company, nature of business, monopoly business, financial aid, and deep and pervasive control of the Government. The court concluded that Capexil was set up with the active patronage of the Department of Commerce, discharging public duty on behalf of the Union, and had substantial government control. Therefore, Capexil qualifies as a "State" under Article 12 and is amenable to writ jurisdiction.

Conclusion:
The appeal succeeds, and the judgment and order of the learned Single Judge are quashed and set aside. The matter is remanded back to the learned Single Judge for a decision on merits. There would be no order as to costs.