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TMI Blog1984 (8) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... whether or not the aforesaid (F.B.) authority still holds the field in view of the judgment of the Supreme Court in Ajai Hasia v. Khalid Mujib Sehravardi, AIR 1981 SC 487, and, therefore, he referred the case for an authoritative pronouncement before a Full Bench as it involved the reconsideration of the Full Bench of this court in Abdul Ahad Loan v. Manager, Govt. Woollen Mills AIR 1979 J K 57. The Full Bench in Abdul Ahad's case, AIR 1979 J K 57, to which one of us, namely, Anand J., was a party and who had authored the judgment, considered a catena of authorities and opined that a company registered under the Companies Act and incorporated in accordance with the provisions of the Companies Act cannot be treated as a statutory body because it is not created by a statute. The Full Bench opined (at p. 65): "There is thus a well marked distinction between a body created by a statute and a body which after having come into existence is governed in accordance with the provisions of the statute. Only such institutions, which owe their very existence to a statute can be considered as ' statutory' institutions or 'authorities' within the meaning of article 12, because the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions entrusted to it by the law establishing it or by the charter of its incorporation, there can be no doubt that it would be an instrumentality or agency of Government. But ordinarily where a corporation is established by statute, it is autonomous in its working, subject only to a provision, often times made, that it shall be bound by any directions that may be issued from time to time by Government in respect of policy matters. So also a corporation incorporated under law is managed by a board of directors or committee of management in accordance with the provisions of the statute under which it is incorporated. When does such a corporation become an instrumentality or agency of Government ? Is the holding of the entire share capital of the corporation by Government enough or is it necessary that in addition, there should be a certain amount of direct control exercised by the Government and, if so, what should be the nature of such control ? Should the functions which the corporation is charged to carry out possess any particular characteristic or feature, or is the nature of the functions immaterial ? Now, one thing is clear that if the entire share capital of the corporation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir Lordships opined that if on a consideration of various factors detailed in International Airport's case, AIR 1979 SC 1628, it is found that the corporation is an instrumentality or an agency of the Government, then it would be an "authority" and, therefore, "State" within the meaning of the expression in article 12. Their Lordships went on to point out (at p. 496 of AIR 1981 SC): "that it is immaterial for this purpose whether the corporation is created by a statute or under a statute. The test is whether it is an instrumentality or agency of the Government and not as to how it is created. The inquiry has to be not as to how the juristic person is born but why it has been brought into existence. The corporation may be a statutory corporation created by a statute or it may be a Government company or a company formed under the Companies Act, 1956, or it may be a society registered under the Societies Registration Act, 1860, or any other similar statute. Whatever be its genetical origin, it would be an ' authority' within the meaning of article 12 if it is an instrumentality or agency of the Government and that would have to be decided on a proper assessment of the facts in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 41, the directors of the company may, from time to time, with the previous sanction of the Governor raise or borrow or secure payments of any sum or sums of money for the purpose of the company. Article 42 also provides that the directors may, subject to the approval of the Governor, raise or secure the payment or repayment of such sum or sums in such manner and upon such terms and conditions as they think fit. Under article 68, it is provided that until otherwise determined by the Governor, the number of directors shall not be less than 5 and not more than 12. One of the directors shall be appointed by the Governor as the chairman. The Governor has also been vested with the power to remove any director, including the chairman, vice-chairman and the managing director, from the office at any time in his absolute discretion and has a right to fill any vacancy in the office of a director caused by retirement, removal, resignation, death or otherwise in his sole discretion. Article 73 places an embargo on the exercise of power by the director and provides that the powers conferred by the articles shall be exercised by the directors with the sanction of the Governor. Article 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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