In 1972, Sabhajit Tewary, a Junior Stenographer with the Council of Scientific and Industrial Research (CSIR) filed a writ petition under Article 32 of the Constitution claiming parity of remuneration with the Stenographers who were newly recruited to CSIR. His claim was based on Article 14. A Bench of five Judges of Supreme Court denied him the benefit of that article because they held in Sabhajit Tewary v. Union of India  that the writ application was not maintainable against CSIR as it was not an “authority” within the meaning of Art 12.
The correctness of the decision is before us for reconsideration. The immediate cause for such reconsideration is a writ application filed by the appellants in the Calcutta High Court challenging the termination of their services by Respondent 1 which is a unit of CSIR.
The question before the Bench:
Is CSIR a State within the meaning of Article 12 of the Constitution and if it is, should this Court reverse a decision which has stood for over a quarter of a century?
Initially the definition of State was treated as exhaustive and confined to the authorities or those which could be read ejusdem generis with the authorities mentioned in the definition of Article 12 itself. The next stage was reached when the definition of “State” came to be understood with reference to the remedies available against it. For example, historically, a writ of mandamus was available for enforcement of statutory duties or duties of a public nature. Thus a statutory corporation, with regulations framed by such corporation pursuant to statutory powers was considered a State, and the public duty was limited to those which were created by statute.
It really does not matter what guise the State adopts for this purpose, whether by a corporation established by statute or incorporated under a law such as the Companies Act or formed under the Societies Registration Act, 1860. Neither the form of the corporation, nor its ostensible autonomy would take away from its character as “State” and its constitutional accountability under Part III vis-à-vis the individual if it were in fact acting as an instrumentality or agency of the Government.
The tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be – whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive.
If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State.
Coming now to the facts relating to CSIR, we have no doubt that it is well within the range of Article 12, a conclusion which is sustainable when judged according to the tests judicially evolved for the purpose.
For coordinating and exercising administrative control over working of the two research bodies already set up by the Department of Commerce, and to oversee the proper utilisation of the Industrial Research Fund, Government of India decided to set up a Council of Industrial Research on a permanent footing which would be a registered society under the Registration of Societies Act, 1860.
Unquestionably this shows that CSIR was “created” by the Government to carry on in an organized manner what was being done earlier by the Department of Commerce of the Central Government. In fact the two research bodies which were part of the Department of Commerce have since been subsumed in CSIR.
CSIR was set up in national interest to further economic welfare of the society by fostering planned industrial development in the country. That such a function is fundamental to the governance of the country has already been held by a Constitution Bench of this Court as far back as in 1967 in Rajasthan SEB v. Mohan Lal where it was said:
“The State, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting educational and economic interests of the people.”
Governing Body of the Society is constituted by the:
Control of the Government in CSIR is ubiquitous. The Governing Body also has the power to frame, amend or repeal the bye-laws of CSIR but only with the sanction of the Government of India. Bye-law 44 of the 1942 Bye-laws had provided “any alteration in the bye-laws shall require the prior approval of the Governor-General-in-Council”.
Rule 41 of the present Rules provides that:
“The President may review/amend/vary any of the decisions of the Governing Body and pass such orders as considered necessary and such order shall be binding on the Governing Body. The Chairman may also refer any question which in his opinion is of sufficient importance to justify such a reference for decision of the President, which shall be binding on the Governing Body.”
Given the fact that President of CSIR is the Prime Minister, subjugation of the Governing Body to the will of the Central Government is complete.
As far as the employees of CSIR are concerned the Central Civil Services (Classification, Control and Appeal) Rules and the Central Civil Services (Conduct) Rules, for the time being in force, are from the outset applicable to them
The initial capital of CSIR was Rs 10 lakhs, made available pursuant to the Resolution of the Legislative Assembly on 14-11-1941. Non-governmental contributions are a pittance compared to the massive governmental input.
In the event of dissolution, unlike other registered societies which are governed by Section 14 of the Societies Registration Act, 1860, the members of CSIR have no say in the distribution of its assets. The assets and funds of CSIR though nominally owned by the Society are in the ultimate analysis owned by the Government.
From whichever perspective the facts are considered, there can be no doubt that the conclusion reached in Sabhajit Tewary was erroneous. Sabhajit Tewary decision must be and is in the circumstances overruled.