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TMI Blog1995 (7) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... red under clause 303 of the bye- laws of the 1st respondent. The appellant later received information to the effect that the 1st respondent management had condoned the delay in filing the arbitration complaint. Before the commencement of the arbitration proceeding the appellant approached this Court seeking for the issue of a writ of certiorari to quash the notices and the complaints contained in Exts. P1, P2, P4 and P5. The learned Judge dismissed the O.P. holding that the writ petition is not maintainable and that the claim is purely based on contractual obligation, besides holding that the peti- tioner has got alternative effective remedies. The appeal is filed against this order. 4. O.P. No. 6957 of 1995: The petitioner who joined the 1st respondent Cochin Stock Exchange Ltd. as a trainee in the Administrative Depart-ment, was working as General Manager (Finance, Auditing Listing). Disciplinary proceedings were initiated against the petitioner on the ground of dereliction, collusion and negligence in the discharge of duties and functions and failure to maintain surveillance, in April 1995 culmi-nating in the termination of services of the petitioner, which was communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e articles are subject to the approval and provisions of the Securities Contracts (Regulation) Act. By taking through these articles, the submission is that the management and the power of the Cochin Stock Exchange are virtually under the control of the Central Govern- ment. 8. Coming to the control under the Act, it is argued that there is a deep and pervasive control over the activities of the Stock Exchange. Section 4 dealing with recognition, section 5 dealing with withdrawal of recogni-tion, section 7 dealing with annual reports and section 7A dealing with power of stock exchanges to make rules restricting voting rights, section 8 dealing with the power of Central Government to direct rules to be made or to make rules, section 9 dealing with the power of stock exchanges to make bye-laws, section 11 dealing with the power of the Central Government to supersede governing body of a recognised stock exchange and section 12 dealing with the power to suspend the business of stock exchanges, would clearly establish that the Central Government has complete and total control over the functioning of the stock exchanges, so as to make them as an agency of the Central Government and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Anadi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna Jayanti Mahotsav Smarak Trust's case ( supra ) the Supreme Court held that there are two exceptions for the issuance of a writ of mandamus. ( 1 ) If the rights are of a purely private character. (2) If the management is purely a private body with no public duty. But once these are absent and when the party has no other equally efficacious remedy, mandamus cannot be denied. Article 226 confers power on the High Court to issue writs for enforce- ment of the fundamental rights as well as non-fundamental rights. The words 'any person or authority' used in article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. In the case before the Supreme Court the appellant-trust was managing the affiliated college to which public money is paid as Government aid and that plays a major role in the control, maintenance and working of educational institutions. The aided institutions like Government institu- tions discharge public function by way of imparting education to stu- dents. They are subject to the rules a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and there is no material to say that the stock exchange is an agency of the Government. 13. In Unni Krishnan's case ( supra ) the Constitution Bench of the Supreme Court held as follows: "83. The emphasis in this case is as to the nature of duty imposed on the body. It requires to be observed that the meaning of authority under article 226 came to be laid down distinguishing the same term from article 12. In spite of it, if the emphasis is on the nature of duty on the same principle it has to be held that these educational institutions discharge public duties. Irrespective of the educational institutions receiving aid it should be held that it is public duty. The absence of aid does not detract from the nature of duty." (p. 2208) Referring to this decision the learned counsel submits that the stock exchange discharges public duty and, therefore, amenable to Article 226. But we are unable to find from the Memorandum of Association that the stock exchange discharges any public duty. Public education is the duty of a welfare State and if the said duty is performed by a private institution it could be held to be discharging a public duty. But in this case there is no duty c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government. (6) Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference of the corporation being an instrumentality or agency of Government." (p. 496) By applying this principle the Supreme Court in that decision held that the society is an instrumentality or the agency of the State and the Central Governments and it is an 'authority' within the meaning of article 12. The Supreme Court found in that case that having regard to the Memoran- dum of Association and the Rules of the Society, the composition of the Society is dominated by the representatives appointed by the Central Government and the Governments of Jammu Kashmir, Punjab, Rajasthan and Uttar Pradesh with the approval of the Central Govern- ment. The monies required for running the colleges are provided entirely by the Central Government and the Government of Jammu Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments. The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article 12, held that the combination of State aid coupled with an unusual degree of control over the management and policies of the body, and rendering of an important public service being the obligatory functions of the State may largely point out that the body is 'State'. The Supreme Court further held that article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression 'State'. A wide enlargement of the meaning must be tempered by a wise limitation. It must not be lost sight of that in the modern concept of Welfare State, independent institution, corpora- tion and agency are generally subject to State control. 18. In Tekraj Vasandi v. Union of India AIR 1988 SC 469 the Supreme Court held that the Institute registered under the Societies Registration Act, 1860 is not 'State' within the meaning of article 12. The Supreme Court further held that in a Welfare State, governmental control is very pervasive and in fact touches all aspects of social existence. In the absence of a fair application of the tests to be made, there is possibility of turning every non-governmental society into an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t agency or instrumentality. This can be gathered from the following surrounding circumstances as well: ( i )Domination in the composition of the Society or company by the representatives of the Government. ( ii )Subject to the directions of the Government for the perfor-mance of its functions. ( iii )The concurrence or approval of the Government for making rules and regulations. (i v )The accounts requiring scrutiny and satisfaction of the Government. ( v )The effective control of the affairs of the Society/Corporation by the Government. ( c )Substantial financial assistance by the Government meeting prac-tically the entire expenditure of the company gives an added colour and favour of governmental agency. ( d )the public importance of the functions in its nature allied to govern-mental activity, is also yet another vital indication. ( e ) Monopoly status of the Corporation either conferred or protected by the State. ( f )Statutory, origin of the Corporation/Company may be the hallmark of 'State', but the absence of this birth mark need not exclude it from the expansive area of 'State' within Article 12." By applying these tests we are unable to find any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The bye-laws and the rules of the company shall be subject to the provisions of the SCRA. Similarly, the Act provides for regulatory measures like recognition, withdrawal of recognition, direction to make rules, power to suspend business and power to supersede the governing body. As it could be seen in the preamble to the Act, the Securities Contracts (Regulation) Act is an Act to prevent undesirable transactions in securities by regu- lating the business of dealing therein, by prohibiting options and by providing for certain other matters connected therewith. Thus, the said Act is purely regulatory in character. 26. Applying the tests laid down by the series of the Supreme Court decisions, we do not find that these regulatory measures by itself are sufficient in the absence of any other factors like financial assistance, control of management and policies, State-protected monopoly status and public functions, so as to come to the conclusion that the 1st respondent company is an authority amenable to writ jurisdiction under article 226. 27. The subject-matter in both the matters are purely contractual in character. Therefore, in any event, the issue relating to the violati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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