Mere Regulation Of A Body By A Statute Does Not Mean That The Body Is Discharging 'Public Function': Delhi High Court

The Delhi High Court has reiterated that merely because a body is obligated to comply with various statutory requirements, that cannot be conclusive to answer the question of whether it is discharging a public function.

Justice Yashwant Varma observed,

"The fact that the cooperative society is registered under the Act or that the Byelaws or the procedure of elections owe their genesis to the Act and the Rules, would not be sufficient to hold that it would be amenable to the writ jurisdiction of the Court. This Court also bears in mind the principles enunciated by the Full Bench of the Allahabad High Court in Vijay Behari Srivastava where it was pertinently observed that merely because the affairs of a society are controlled by the Registrar that would not make that body "State" as contemplated under Article 12 of the Constitution."

The Court was dealing with a case where it was called to decide whether a cooperative society, governed by the Multi State Cooperative Societies, Act 2002, could be termed as State within the meaning of Article 12 of the Indian Constitution.

The court opined that merely because the affairs of a particular body are regulated by a statute, it did not mean that the body was discharging a public function. The court further noted that the Byelaws of a society constituted a contract between the society and its members and a mere infraction of the same would not justify the invocation of Article 226 of the Constitution.

The writ petitions in question challenged the steps initiated by the Registrar of cooperative societies for the purposes of election of delegates of the Northern Zone Railway Employees Thrift and Credit Society Limited. The issue arose when a communication was set out for the election process to be commenced and a number of members of the cooperative society came to raise various objections to the appointment of Returning Officers as well as to the procedure as adopted for the purposes of election of delegates.

Vide an interim order passed by the Court, the entire process of elections came to be brought to a halt. It is that position which was continued till the Court took up the writ petitions for final disposal.

The court noted that the contentions of parties could only be considered if the writ petition was maintainable. As per the arguments raised by the parties, the writ petition would only be maintainable if the cooperative society was termed as State within the meaning of Article 12 of the Constitution or could be described as being a public body. 

On the question of maintainability of the writ petition, the court found that the cooperative society was neither substantially financed nor funded by the Government. It was also not administratively controlled by the Government and there was no dominant or overriding power that the Government could utilise to wield over the affairs of the cooperative society. The Court also noted that the cooperative society had not been conferred with any monopoly status. Thus, it came across as an autonomous body formed by employees of the Indian Railways as a part of their to intent to adopt "cooperative principles" for the promotion of the welfare and well-being of its members.

The Court thus came to the conclusion that the cooperative society failed to satisfy the test of "deep and pervasive control" of the Government on it. As per Ajay Hasia v. Khalid Mujib Sehravard, deep and pervasive state control by government may afford an indication that the corporation is a State agency or instrumentality.

Turning to the registration of the cooperative society under the Act, the Court observed that the affairs of the body were regulated by a statute. However, it opined that–

"Merely because the affairs of a particular body may be regulated by statute, that cannot be determinative of the question that stands raised. As was aptly observed by the Supreme Court in Ramakrishna Mission and Anr. vs. Kago Kunya and Ors., law is a "ubiquitous phenomenon" and touches various aspects of the functioning of a body. It was observed that merely because a body is obligated to comply with various statutory requirements, that cannot be conclusive to answer the question of whether it is discharging a public function."

The court also cited the decision of the Supreme Court in A. Umarani vs. Cooperative Society which stated that a writ petition would be maintainable when the action of the cooperative society is violative of mandatory statutory provisions. Here, the Court noted that the present writ petition neither rested on an allegation of a statutory provision having been violated nor did it impugn a decision or action of a public authority.

It further observed that Byelaws constitute a contract between the society and its members and members inter se. A mere infraction of those Byelaws would not justify the invocation of Article 226 of the Constitution. 

Thus, it was held that the writ petition would not be maintainable.

CASE TITLE: SUSHIL KUMAR v. CENTRAL REGISTRAR OF COOP SOCY AND ORS

Citation: 2022 LiveLaw (Del) 710

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