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2021 (7) TMI 472 - HC - CustomsScope of an entity - GJEPC - comes under definition of 'State' or under 'other authority' - GJEPC functions under the sponsorship of the Ministry of Commerce and Industry (MOCI) and the said Ministry has effective and all pervasive control over the GJEPC - substantial degree of control and regulation over the trading activities of GJEPC - funding of GJEPC - whether the respondent No.2 GJEPC falls under the definition of other Authority within Article 12 of the Constitution of India? HELD THAT - It is not disputed that GJEPC is a Company registered under Section 25 of the Companies Act, 1956 and as such, not a statutory body. It was established by eight persons, not connected with the Government. It has a voluntary Membership and is not controlled by any State. The functions of GJEPC are primarily to support, protect, maintain increase and promote the export of gems and jewellery, a function, which is not a governmental function. As of today, there are 6506 Members, none of whom are representatives of the Central Government. The Committee of administration manages GJEPC consisting of 24 Members, who are neither appointed nor nominated by respondent No.1. The nominated Members of the Government cannot exceed three in number. The nominated Members have no voting rights and therefore, cannot participate in the decision making process of the Committee. The Committee controls the finances, staff and appointments, renewal, cancellation, suspension and termination of its Members. It is the Committee which make Rules in relation to conditions of service, appointment, promotion, dismissal etc. The primary source of funds is the subscription of Membership, which are sufficient for the proper functioning of the GJEPC. It is stated that no funding is provided by respondent No.1. The only funding received by GJEPC from the respondent No.1 is for a particular project as and when certain specific export, promotion activities under the MAI scheme and MDA scheme are taken up, and the said funds are used for the specific use and no portion is utilized for any other activity beyond the scheme - The respondent No.1 states that the only power exercised by the government is enumerated in clause 47 of the AoA. The said clause empowers the Central Government to give direction to the Council in the interest of national security, national economy and public interest. Surely the Government can have such a control on any person / entity within the country in the larger public interest. Connected to such a power is the power of the Central Government to call for reports with respect to property; affairs of the Council, foreign collaboration etc. Similarly, the alteration of AoA or MoA with the approval of the Central Government has to be read in conjunction with clause 47 of the AoA. Mr. Mishra is justified in stating that at no point of time, the grants exceeded more than 27%. GJEPC is not discharging any public / state functions and as such not an other Authority within the meaning of Article 12 of the Constitution of India and as such, the present petition under Article 226 of the Constitution of India is not maintainable. The plea of maintainability of the petition, advanced by learned counsel for the respondent No.2 need to be accepted and without going into the merits of the challenge to the termination of the petitioner, and the Judgments relied upon by the petitioner on the merits of the case, the present petition is liable to be dismissed. Petition dismissed - decided against petitioner.
Issues Involved:
1. Maintainability of the petition against GJEPC under Article 12 of the Constitution. 2. Whether GJEPC qualifies as an "instrumentality of State" under Article 12. 3. The degree of control and financing by the Ministry of Commerce and Industry (MOCI) over GJEPC. 4. The nature of the functions performed by GJEPC and whether they are public or governmental functions. 5. The legal implications of the termination of the petitioner's employment. Detailed Analysis: 1. Maintainability of the Petition Against GJEPC Under Article 12: The primary issue addressed was whether the Gem and Jewellery Export Promotion Council (GJEPC) falls under the definition of 'other authority' within Article 12 of the Constitution. The court examined the nature of GJEPC, its formation, and its functions to determine its status. 2. Whether GJEPC Qualifies as an "Instrumentality of State" Under Article 12: The court applied the tests laid down by the Supreme Court in Ajay Hasia and Pradeep Kumar Biswas to determine if GJEPC is an instrumentality of the State. These tests include: - Entire share capital held by the government. - Financial assistance meeting almost entire expenditure. - Monopoly status conferred or protected by the State. - Deep and pervasive State control. - Functions of public importance closely related to governmental functions. - Transfer of a government department to the corporation. The court found that GJEPC, a company registered under Section 25 of the Companies Act, 1956, does not meet these criteria. It was established by private individuals, has voluntary membership, and is not controlled by the State. The primary source of funds is membership subscriptions, not government grants, which are project-specific and do not exceed 27% of total revenue. 3. Degree of Control and Financing by MOCI Over GJEPC: The petitioner argued that GJEPC functions under the sponsorship of MOCI and is substantially financed by it. However, the court found that the funding received from MOCI is conditional and project-specific, not substantial enough to indicate pervasive control. The court also noted that the Committee of Administration of GJEPC, which manages its affairs, consists mostly of members not appointed by the government. 4. Nature of Functions Performed by GJEPC: The petitioner claimed that GJEPC performs public duties, such as promoting exports and implementing the Kimberley Process Certification Scheme. The court, however, concluded that these functions are not governmental but are carried out by a body of individuals for their benefit. The court emphasized that GJEPC's functions do not have a public law character and are not akin to state functions. 5. Legal Implications of the Termination of the Petitioner's Employment: The petitioner argued that her termination was arbitrary and without due process. The court, however, did not delve into the merits of the termination, as it concluded that the petition itself was not maintainable under Article 226. The court noted that the petitioner could seek appropriate remedies available in law. Conclusion: The court concluded that GJEPC is not an 'instrumentality of State' under Article 12 of the Constitution and, therefore, the petition under Article 226 is not maintainable. The petition was dismissed, with the court granting the petitioner the liberty to seek other legal remedies.
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