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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2147 OF 2010
Jatya Pal Singh & Ors.
...Appellants
VERSUS
Union of India & Ors.
...Respondents
WITH
CIVIL APPEAL NO.3933 OF 2013
(Arising out of S.L.P.(C) No. 4619 of 2011
M.P. Singh
...Appellant
VERSUS
Union of India & Ors.
...Respondents
WITH
CIVIL APPEAL NO. 425 OF 2012
Vijay Thakur ...Appellant
VERSUS
1Page 2
VSNL & Anr.
...Respondents
WITH
WRIT PETITION (C) NO. 689 OF 2007
Videsh Sanchar Nigam Scheduled Castes/Tribes
Employees Welfare
Samiti (Regd.) & Anr.
...Petitioners
VERSUS
Union of India & Ors.
...Respondents
WITH
CIVIL APPEAL NO. 5740 OF 2012
Ram Prakash
...Appellant
VERSUS
Union of India & Ors.
...Respondents
J U D G M E N T
SURINDER SINGH NIJJAR,J.
1. Leave granted in SLP© No.4619 of 2011.
2Page 3
2. This judgment will dispose of a group of appeals,
details of which are given hereunder, as they raise only
one question of law :
Proceedings before the Bombay High Court :-
3. Writ Petition No.2139 of 2007 titled as Mahant Pal
Singh vs. Union of India dismissed in limine by the
Division Bench on 7th September, 2009. Civil Appeal
No.3933 of 2013 @ Special Leave Petition (C) No.4619 of
2011 titled as M.P.Singh vs. Union of India & Ors. has
been filed challenging the aforesaid order of the Division
Bench. Writ Petition No.2652 of 2007 titled as Jatya Pal
Singh & Ors. vs. Union of India & Ors. was dismissed in
limine by the Division Bench on 8th September, 2009 in
view of the order dated 7th September, 2009 passed in
Writ Petition No.2139 of 2007. The aforesaid order has
been impugned by the appellants (writ petitioners in the
High Court) Jatya Pal Singh & Ors. vs. Union of India &
Ors. in C.A.No.2147 of 2010.
Proceedings in the Delhi High Court :-
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4. Ten writ petitions were filed by the former employees
of the Videsh Sanchar Nigam Limited (VSNL). The
common question of law raised in all the appeals relates
to the very maintainability of the writ petitions. VSNL had
raised a preliminary objection that a writ petition would
not be maintainable against it as it is neither a State
within the meaning of Article 12 of the Constitution of
India nor is it performing any public function. The learned
Single Judge accepted the aforesaid preliminary objection
and dismissed the writ petitions by judgment and order
dated 29th August, 2011. Letters Patent Appeal No.924 of
2011 challenging the aforesaid order was dismissed by
the Division Bench on 14th November, 2011. LPA Nos.
930 of 2011 and 931 of 2011 were dismissed by the
common order dated 15th November, 2011.
4A. Only two of the original writ appellants have
approached this Court in the civil appeals against the
judgment of the learned Single Judge and the Division
Bench of the Delhi High Court by way of civil appeals.
These are Ram Prakash vs. Union of India & Ors. in
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C.A.No.5740 of 2012 and Vijay Thakur vs. V.S.N.L. and
Anr. in C.A.No.425 of 2012.
5. For the purpose of this order, we shall make a
reference to the facts as pleaded in C.A.No.2147 of 2010.
All the appellants in writ petitions had been working in the
Ministry of Communication, in particular, Department of
Overseas Communication Service (OCS) from 1st March,
1971 onwards. Their dates of appointment on various
posts are as under :
6. Appellant Nos. 1 and 2 were appointed as Assistant
Engineer on 16th May 1983 and 1st September, 1983,
respectively. Appellant Nos. 3 and 4 were appointed as
Junior Technical Assistant on 1st March, 1971 and 13th
January, 1976 and appellants 5 and 6 were appointed on
8
th January, 1980. During their continuous service with
respondent No.1, they had earned promotions at due time
on merit. They have a clean record of service. Till 31st
March, 1986, they were holding responsible posts in the
OCS.
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Background of VSNL:
A) Origin of Overseas Communication Service (in
short OCS) -
7. On 1st of January, 1947 ‘Indian Radio and
Telecommunication company Ltd.’ a Private Company
operating India’s external telecommunication service was
taken over by the Govt. along with its employees on the
terms and conditions as they had with the private
company.
8. The Govt. created a department in ministry of
telecommunication known as Overseas Communication
Service (OCS) that dealt communication of India subjects
with the rest of the world.
9. The OCS department of Ministry of
telecommunication continued till 31st of March, 1986.
B) Conversion of OCS into VSNL -
10. Ministry of Communication took a decision to convert
its OCS Department into a Public Sector Corporation
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(PSC). A notification to this effect was issued on 19th
March, 1986 and the Corporation was named as VSNL.
Accordingly, w.e.f. 1st April, 1986, all international
telecommunication services of the country handled by the
Govt. stood transferred to VSNL. All the employees were
deemed to have been transferred to the VSNL on the
existing terms and conditions till their case for absorption
or otherwise are decided upon by the VSNL in consultation
with the cadre controlling authority and other concerned
Govt. Departments. They were to be treated on
deputation on Foreign Service to VSNL without deputation
allowance. These employees also were to be treated as
though on the strength of OCS as on 31st March, 1986 till
their cases were finalized by the VSNL. Those who do not
opt for absorption will be treated as on deputation on
foreign service with the Corporation for a period of 2
years without deputation allowance. The Corporation
(VSNL) would finalise the terms and conditions for
employment in the Corporation within a period of 12
months or on any specified date as may be agreed upon
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by the Government. It was provided that the employees
will be asked to exercise their option for being absorbed
in the company or otherwise within the stipulated period.
The date of induction of the employees in the Corporation
will be the date from which they have exercised the
option to be absorbed in the Company with the approval
of the competent authority. The notification also provided
that pensionary and other retirement benefits to the
employees on their absorption in the Corporation will be
determined in accordance with the Department of
Pensions and Pensioners Welfare O.M. No.4(8)-85-P & PW
dated 13th January, 1986 and as amended from time
to time.
11. Thereafter on 11th December, 1989, VSNL issued
STAFF NOTICE on the subject ‘Absorption of OCS
Employees in VSNL’. In this notice, it is mentioned that
date of absorption of OCS employees in the VSNL has
been approved by the Ministry of Communication on 1st
January, 1990. It is further mentioned that accordingly
from that date, the OCS employees transferred to VSNL
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on deputation basis without deputation allowance on
foreign service terms will cease to be government
servants. The aforesaid notice of absorption including the
terms and conditions of absorption was also issued
individually to each employee. On 5th July, 1989, the
Government had issued Office Memorandum No.4/18/87-
P&PW (D) on the subject ‘Settlement of Pensionary terms
etc. in respect of Government employees transferred en
masse to Central Public Sector Undertakings/Central
Autonomous Bodies’. Under this, the employees were
given the option to retain the pensionary benefits
available to them under the Government rules or be
governed by the rules of the Public Sector
Undertaking/Autonomous Bodies. The Government also
assured that the employees of the OCS will not be
removed by the VSNL unless their case was placed before
the competent authority in the Government. Finally, the
VSNL absorbed en-masse the erstwhile employees of OCS
with effect from 1st January, 1990. The solemn promise of
not being removed was incorporated in the Conduct
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Discipline and Appeal Rules framed by the VSNL in the
year 1992. It is pertinent to note here that all the
appellants had opted to join VSNL.
C. Disinvestment
12. Between 1992 and 2000, Government of India
divested a portion of its share holding in VSNL by sale of
equity to certain funds, banks and financial institutions
controlled by the Government in 1992 and to the general
public in 1999. Thereafter, the company was listed on
Indian Stock Exchange. In 1997, the Government of India
sold some of its equity holdings by issuing Global
Depository Receipts (GDRs) following which VSNL was
listed on the London Stock Exchange. On 15th August,
2000, VSNL became first Public Sector Undertaking of
India to be listed on the New York Stock Exchange
through conversion of underlying GDRs to American
Depository Receipts (ADRs). However on 13th February,
2002, Government of India which till then held 52.97% of
shares in VSNL, divested 25% shares in favour of
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Panatone Finvest Limited, (comprising of 4 companies of
the Tata Group) and 1.85% in favour of its employees
after following due process in accordance with its
disinvestment policy. This brought the share holding of
the Government of India to 26.12 %. Tata Group also
made a public offer for acquiring a further 20% of the
share capital of the VSNL, from the public in terms of SEBI
(Substantial Acquisition of Share and Takeover)
Regulations 1997. Consequently, the total holding of the
Tata Group in VSNL increased to 44.99 % of the paid up
share capital in 2002. Presently, Tata Group holdings in
VSNL is about 50.11%.
13. As per the share holding agreement and share
purchase agreement, the Government of India mandated
the Tata Group to ensure that none of the employees
should be retrenched for a period of one year. Clause
5.13 of the aforesaid agreement was as under :-
“5.13 Employees.
(a) Notwithstanding anything to the contrary in
this Agreement, the Strategic Partner shall not
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cause the Company to retrench any of the
employees of the Company for a period of 1
(one) year from the closing other than any
dismissal or termination of employees of the
company from their employment in accordance
with the applicable staff regulations and
standing orders of the Company or applicable
law.”
14. It appears that the Tata Group by a letter dated 14th
April, 2002 to ensure that the morale of the present
employees of the VSNL is maintained at a high level and
that they continue to deliver their best performance,
decided that it shall cause VSNL not to retrench any of
the employees of VSNL for a period of two years from 13th
February, 2002.
15. On 5th February, 2004, VSNL was granted a non
exclusive licence by the Government of India pursuant to
the disinvestment. Clause (1) of the non exclusive licence
reads as under :-
“1. In view of the fact that the LICENSEE is the
INCUMBENT OPERATOR and in consideration of
the payments including LICENCE FEE and due
performance of all the terms and conditions
mentioned in the SCHEDULE on the part of the
LICENSEE, the Licensor does, hereby grant,
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under Section 4 of the Indian Telegraph Act,
1885, on a non-exclusive basis, this Licence
to establish, install, operate and maintain
INTERNATIONAL LONG DISTANCE SERVICE on
the terms and conditions contained in the
SCHEDULE and ANNEXURES appended to this
LICENCE AGREEMENT.” (emphasis added)
16. Prior to disinvestment, VSNL enjoyed the monopoly
in respect of international long distance service (ILDS),
which ceased with effect from 5th February, 2004.
Thereafter other telecom licensees like Reliance, Airtel,
Idea, Aircel, HFCL and even Government companies like
MTNL and BSNL became competitors in respect of ILDS.
17. It appears that on 16th July, 2007 and 4th October,
2007, the services of 20 managerial employees were
terminated after paying them 3 months’ salary in lieu of
notice. The aforesaid termination was said to have been
effected in terms of Clause 1.6 of the appointment letter
which reads as under :
“1.6 After confirmation, your appointment may
be terminated by either side at any time by
giving three months notice in writing. VSNL
however, reserve the right of terminating your
services forthwith or before expiry of the
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stipulated period of notice of 3 months by
making payment to you of a sum equivalent to
the pay and allowances for the period of notice
or unexpired portion thereof. The decision of the
management shall not be question.”
18. The orders of termination issued to the aforesaid 20
employees were identical. Meanwhile on 28th January,
2008, subsequent to the disinvestment in 2002, the name
of VSNL being a Tata Group Company was changed to
“Tata Communications Limited”. Ten writ petitions were
filed by the employees before the Delhi High Court and 2
writ petitions were filed before the Bombay High Court
challenging the orders of termination. On 29th August,
2011, learned Single Judge of the Delhi High Court vide
common order dismissed the 10 writ petitions, as not
maintainable against TCL, the reconstituted entity of
VSNL after disinvestment. The aforesaid order was
challenged by four of the writ appellants in LPA which was
dismissed by separate orders on 14th November, 2011,
15th November, 2011 and 17th February, 2012. Out of the
said four persons Ram Prakash and Vijay Thakur have
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filed Civil Appeal No.5740 of 2012 and Civil Appeal No.
425 of 2012 before this Court.
19. As noticed earlier, Division Bench of the Bombay
High Court also dismissed the writ petitions by order
dated 7th September, 2009 and 8th September, 2009
against which the appellant herein have filed Special
Leave Petition (C) No. 4619 of 2011 and Civil Appeal No.
2147 of 2010.
Submissions:
20. We have heard the learned counsel for the parties.
21. Mr. T.N. Razdan, learned counsel for the appellants
has submitted that VSNL cannot be said to have become
an absolute private entity after Union of India sold its 25%
shares out of 52.97% to Panatone Finvest Ltd. Union of
India still holds 26.97% shares in VSNL. Other
Government Companies hold 17.35 % shares in VSNL.
Therefore, VSNL cannot be said to be not amenable to the
writ jurisdiction. Furthermore, VSNL is under the complete
control of Telecom Regulatory Authority of India (TRAI)
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Act, 1997 and the Telegraph Act, 1948. Therefore, the
writ petition would lie in cases where the services of the
employees were terminated in breach of the rules
governing the service conditions of the employees.
Referring to the share holding pattern in VSNL, it is
claimed that Union of India is the single large shareholder
holding 26.12% shares in VSNL. It is further the case of
the appellant that Panatone Finvest Ltd. having stepped
into the shoes of erstwhile shareholder and is bound by
the commitments and obligations, rights and liabilities
arising from the sale/purchase of shares.
22. Dr. K.S. Chauhan, learned counsel, also reiterated
the aforesaid submissions. In addition, he submitted that
Central Government still has pervasive control over the
VSNL/TCL. The strategic partner i.e. Panatone Finvest
Limited/TATAs have been bound by the Government
agreement in relation to divestment of the 25% stakes,
and there is a further condition that if the strategic
partner wish to sell its stakes in the VSNL/TCL, it is not
free for the strategic partner to sell off the same in the
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open market, but the shares can be sold off back to the
Government only. It clearly, according to learned counsel,
buttresses the fact that the Government consider the
function/activity so sacrosanct and of such public
importance that it does not wish to alter the nature of the
functions of VSNL/TCL. However, there is no such
condition precedent in the agreement with the other
telecommunication companies which are merely service
providers. Thus, both the learned counsel have reiterated
the submission that VSNL would be covered by the term
“other authority” within the scope and ambit of Article 12.
Nature of the Functions performed by the VSNL:-
23. According to Mr. Razdan, the right to communication
is a facet of freedom of speech and expression under
Article 19(1) (a) of the Constitution of India. The
Government of India is duty bound to provide
uninterrupted Telecommunication Services to enable its
citizen to effectively exercise the aforesaid right. This
public duty was being provided through one of the
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departments i.e. Department of Telecommunication, in
particular, the OCS. The same function was subsequently
performed by the VSNL, a wholly owned government
enterprises, till disinvestment. Even after disinvestment,
VSNL continues to perform the same functions by
connecting its subscribers to their receivers in India as
well as abroad. VSNL performs the aforesaid functions
under license in terms of Section 4 of Indian Telegraph
Act, 1948. Being the licensee, VSNL is under the control of
TRAI for all its activities of ILDS. After disinvestment, VSNL
has spread its ILDS activities to 52 locations and has
increased the strength of its employees from 3000 to
7000. It has been located in prime areas in all the cities
like Delhi, Pune, and Kolkata. The aforesaid land belongs
to Union of India and is in the possession of VSNL. Union
of India is the licensor of all the lands, assets, equipment
machine and tools under the license of VSNL. Land
belonging to Union of India is worth lakhs of crores of
rupees. In the face of this, the High Court would not have
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concluded that Government of India has no control over
the activities of VSNL.
24. This submission was also reiterated by Dr. K.S.
Chauhan, learned counsel. Dr. Chauhan, in addition to the
aforesaid arguments, submitted that Respondents herein
have monopoly over the international communication, as
VSNL/TCL is the gateway of the world. VSNL can
communicate worldwide for India which facility is not
available to any other communication company.
Companies, such as Vodafone etc., are only transferring
speech whereas VSNL is providing value added service. It
provides EMER Set service to Defence Forces including
Merchant Navy. VSNL/TCL is specially catering to the
requirement of the President and Prime Minister of India
for preparation of hotline, etc. Further, learned counsel
submitted that even a private function which is performed
for public benefit would be a public function. He submitted
that in the case of Delhi Science Forum vs. Union
of India1
that telecommunication has been
1
(1996 (2) SCC 405)
19Page 20
internationally recognized as a public utility of strategic
importance. Therefore, it cannot be said that VSNL is not
performing public functions.
25. The High Court, it was submitted, was unduly
influenced by the fact that the VSNL does not enjoy a
monopolistic character. Further more, it was wrongly held
that services provided by other telecom operators are no
different to the service provided by VSNL. Mr. Razdan
further submitted that the High Court has failed to
distinguish the expression ‘other authority’ as defined in
Article 12 of the Constitution of India from that of ‘any
person or authority’ in Article 226 of the Constitution. In
fact, the High Court totally ignored the submission that
the definition of other authority would now have to be
seen by taking into account the mixed economy of State
and the private enterprises. The High Court, however,
confined itself only to the issue as to whether VSNL after
disinvestment is State within Article 12 of the
Constitution. He submitted that it is important to have a
re-look at the definition of State/other authorities under
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Article 12 of the Constitution. In view of the present set up
of mixed economy i.e. where the State is in partnership
with semi-government/private corporations that take over
the Government companies in part or full. In support of
his submission, he relies on the judgment of this Court in
the case of Air India Statutory Corporation vs.
United Labour Union & Ors. 2
26. Dr. Chauhan further submitted that when the
Government, in the exercise of its executive power by
way of a policy decision, creates an entity or divests its
functions, which may have a bearing upon the
Fundamental Rights, in favour of a private body or
transfer of public entity to a private body, in such an
eventuality, the functions earlier discharged by the
Government cannot be termed as purely a private
function. He submitted that realizing the necessity to
promote, protect and enjoyment of human rights,
including the right to freedom of expression, on the
internet and in other technologies, the U.N. Human Rights
2
(1997 (9) SCC 377)
21Page 22
Council has passed a resolution with regard to the same.
Similarly, the right to telecommunication (Overseas), a
service exclusively provided by Government of India
before disinvestment has the public law element and,
therefore, nature of work performed by VSNL/TCL
continued to remain the same. He submits that the
functions performed by VSNL would satisfy all the tests for
determining whether a function is a public function
provided under the Human Rights Act, 1998. Learned
counsel has submitted that it is necessary to look at the
nature of the public functions which have been
transferred. He submits that the meaning of public
function would have to be determined by taking into
account the effect of transfer of the public function from a
public body to a private body. Learned counsel submitted
that in view of the above, it can be safely concluded that
VSNL is performing a public function. He relied on the
observations made by this Court in the case of Binny
Ltd. vs. Sadasivan.3
Besides, he relied on the judgment
3
(2005) 6 SCC 657
22Page 23
of this Court in Federal Bank Ltd. vs. Sagar Thomas
and Ors.
4
Learned counsel also relied on a judgment of
the Supreme Court of South Africa in Appeal of South
Africa in Mittal Steel South Africa Limited
(previously known as ISCOR Limited) vs. Mondli
Shadrack Hlatshwayo, rendered in case No.326 of 2005
on 31st August, 2006.
27. Another submission made by Mr. Razdan is that the
High Court has wrongly held that the functions performed
by VSNL are not sovereign functions and, therefore, it
cannot be said to be performing public functions. He
submitted that the so called dichotomy between
sovereign and non-sovereign functions of the State does
not really exist. The question that whether a particular
function of the State is a sovereign function depends on
the nature of the power and manner of its exercise.
Relying on the judgment of this Court in Secretary,
Ministry of Information and Broadcasting vs.
4
(2003) 10 SCC 733).
23Page 24
Cricket Association of Bengal5
, he submitted that
airwaves or frequencies are public property. Their use has
to be controlled and regulated by a public authority in the
interest of the public and to prevent the invasion of their
rights. The right to impart and receive information is a
species of the right of freedom of speech and expression
guaranteed under Article 19(1)(a) of the Constitution.
Therefore, it cannot be said that VSNL is not performing a
public function. Learned counsel also relied on the
judgment of this Court in Andi Mukta Sadguru Shree
Muktaji Vandas Swami Suverna Jayanti Mahotsav
Smarak Trust & Ors. vs. V.R.Rudani & Ors.
6
. Learned
counsel has also placed reliance on the judgment of this
Court in Unni Krishnan J.P. & Ors. vs. State of
Andhra Pradesh & Ors.
7
.
Employees Structure:
5
(1995) 2 SCC 122
6
(1989) 2 SCC 691
7
(1993) 1 SCC 645
24Page 25
28. It was also submitted by Mr. Razdan that the
Government had assured that the employees of the OCS
will not be removed by the VSNL unless their case was
placed before the competent authority in the
Government. The solemn promise of not being removed
was incorporated in the Conduct Discipline and Appeal
Rules framed by the VSNL in the year 1992.
29. According to the appellants, the employees of the
VSNL fall into three categories which are as under :
(a) The employees that were transferred to VSNL by
notification dated 19th March, 1986 i.e. erstwhile
employees of OCS.
(b) The employees who are recruited directly under the
VSNL Recruitment and Promotion Rules, 1983 dated 21st
May, 1993, subject to the rules of Conduct Discipline and
Appeal Rules of 1992 framed by VSNL.
(c) The employees recruited after the disinvestment on
13th February, 2002. The employees of TATA are guided
by TATA Conduct Rules. It is pointed out that VSNL was
25Page 26
granted a licence by the Ministry of Communication for
short distance service and long distance service.
International Long Distance Service (ILDS) was granted by
the Department of Telecommunication, Government of
India under Section 4 of the Indian Telegraph Act. The
licences of VSNL for ILDS which expired on 31st March,
2004 has been re-granted for another 20 years.
The brief factual matrix of case:
30. Civil Appeal No.2147 of 2010 pertains to the group
of employees detailed in category ‘a’ above. The
appellants in C.A.No.425 of 2012 are from category ‘b’. In
C.A.No.2647 of 2010, the VSNL terminated the services of
appellants 2, 3, and 4 on 13th July, 2007 and those of
appellants 1, 5, and 6 on 16th July, 2007. The termination
letter of appellant Nos. 2, 3, and 4 is issued by Vice
President while as those of appellant Nos. 1 and 5 is
issued by the Chief Officer Global operation. The
termination order of appellant No.6 is issued by the Chief
International Facilities Officer.
26Page 27
31. According to the appellants, none of these officers
were either competent or authorised officers to terminate
the services of appellants in terms of Conduct Discipline
and Appeal Rules of VSNL. Similarly, in C.A.No.421 of
2012, the services of the appellants were terminated by
the Vice President without any authority of law.
Challenging the order of the Division Bench in
C.A.No.2147 of 2010, it is submitted that the Division
Bench has erroneously held that the service rules
governing the appellants do not have any statutory force
and the status of the rules of a contract between the
employer and the employee. The High Court failed to
appreciate the issue raised in the writ petition that VSNL
has breached the fundamental rules and regulations
contained in its Conduct Discipline and Appeal Rules,
1992 which had the force of law. It was also pointed out
that the Corporation (VSNL) being in partnership with
Union of India is duty bound to uphold the rule of law.
Learned Counsel submitted that the aforesaid judgment is
27Page 28
liable to be set aside on the short ground that it is cryptic
and non-speaking.
32. This submission was also reiterated by Dr.K.S.
Chauhan, learned counsel. He submitted that the powers
of the High Court under Article 226 is much wider than
the powers of this Court under Article 32 of the
Constitution of India. He relied on the Constitution Bench
judgment of this Court in Zee Telefilms Ltd. vs. Union
of India8
. In this case, the activities of Board of Cricket
Control of India were held to be akin to public duties or
State functions. On the basis of the above, he submitted
that when a private body exercises public functions even
if it is not a State, the aggrieved person would have a
remedy by way of a writ petition under Article 226. Dr.
Chauhan relied on a judgment of this Court in Ramesh
Ahluwalia vs. State of Punjab & Ors. in C.A.No.6634
of 2012 decided on 13th September, 2012.
33. In response, Mr. C.U. Singh, learned senior counsel
appearing for the respondent has submitted that the tests
8 2005 (4) SCC 649.
28Page 29
for determining as to whether a particular body would fall
within the definition of State or other authority have been
well defined by this Court in a number of judgments.
Therefore, there is no scope for enlarging the time tested
definitions rendered by this Court. In support of the
submissions, he relied on All India ITDC Workers Union
& Ors. v. ITDC & Anr.9
; Pradeep Biswas v. Indian
Inst. of Chemical Biology10; G.Bassi Reddy vs.
International Corps Research Institute11; Balco
Employees Union vs. Union of India & Ors.12;
Agricultural Produce Market Committee vs. Ashok
Harikunj & Anr.13
34. On the basis of the tests laid down in the aforesaid
judgments, learned counsel submitted that VSNL is not a
State or other authority under Article 226 of the
Constitution. Therefore, both the High Courts have
9 2006 (10) SCC 66
10 2002 (5) SCC 111]
11 2003 (4) SCC 225
12 2002 (2) SCC 333
13 2000 (8) SCC 61.
29Page 30
correctly held that the writ petitions would not be
amenable against the VSNL.
35. Learned senior counsel then submitted that TCL
erstwhile VSNL is not performing a public function or a
mandatory public duty and, therefore, would not be
amenable to the writ jurisdiction of the High Court under
Article 226 of the Constitution. In support of the
submission, learned counsel relied on G. Bassi Reddy
(supra), and Binny Ltd. (supra).
36. He further submitted that without prejudice to the
aforesaid two submissions, so far as employment/service
contract is concerned, a writ petition would not be
maintainable. The appellants would have to first exhaust
the alternative remedies available. In support of this
submission, he relied on Radhakrishna Agarwal vs.
State of Bihar14; Binny Ltd. (supra), Kulchinder
14 1977 (3) SCC 457
30Page 31
Singh vs. Hardayal Singh Brar15 and Praga Tools
Corp. vs. C.A.Imanual & Ors.16
37. In view of the above, learned senior counsel
submitted that all these appeals deserve to be dismissed.
38. We have considered the submissions made by the
learned counsel for the parties. In essence, learned
counsel for the appellants have made only two
submissions –
(i) That inspite of the Government of India holding only
26.97 % shares in VSNL now TCL, it would still fall in the
definition of State or other authority within the ambit of
Article 12 of the Constitution.
(ii) Even if it is held that VSNL/TCL is a purely private
entity, it would be amenable to the writ jurisdiction of the
High Court under Article 226 of the Constitution of India
as it is performing a public function/public duty.
15 [1976 (3) SCC 828]
16 [1969 (1) SCC 585].
31Page 32
39. We are unable to accept the aforesaid submissions.
We have earlier set out in detail the manner in which the
function which was earlier being performed by OCS which
were gradually transferred with effect from 1st April, 1986
to VSNL. Since 13th February, 2002, Government of India
holds only 26.12 % shares of TCL. Therefore, it can be
safely concluded that on the basis of the shareholding,
the Government of India would not be in control of the
affairs of TCL. In order for TCL to be declared as a State or
other authority within the meaning of Article 12 of the
Constitution of India, it would have to fall within the well
recognized parameters laid down in a number of
judgments of this Court. In the case of Pradip Kumar
Biswas (supra), a Seven Judge Bench of this Court
considered the question as to whether Indian Institute of
Chemical biology would fall within the definition of State
or other authority under Article 12. Ruma Pal, J. speaking
for the majority considered the manner in which the
aforesaid two expressions have been construed by this
Court in the earlier cases. The tests propounded for
32Page 33
determining as to when the Corporation will be said to be
an instrumentality or agency of the Government as
stated, Ramana Dayaram Shetty vs. International
Airport Authority of India17 were summarized as
follows :
“(1) One thing is clear that if the entire share
capital of the corporation is held by
Government, it would go a long way towards
indicating that the corporation is an
instrumentality or agency of Government.
(SCC p. 507, para 14)
(2) Where the financial assistance of the
State is so much as to meet almost entire
expenditure of the corporation, it would
afford some indication of the corporation
being impregnated with governmental
character. (SCC p. 508, para 15)
(3) It may also be a relevant factor …
whether the corporation enjoys monopoly
status which is State-conferred or Stateprotected. (SCC p. 508, para 15)
(4) Existence of deep and pervasive State
control may afford an indication that the
corporation is a State agency or
instrumentality. (SCC p. 508, para 15)
(5) If the functions of the corporation are of
public importance and closely related to
governmental functions, it would be a
relevant factor in classifying the corporation
as an instrumentality or agency of
Government. (SCC p. 509, para 16)
17 (1979) 3 SCC 489
33Page 34
(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.
(SCC p. 510, para 18)”
40. The aforesaid ratio in Ramana Dayaram Shetty
(supra) has been consistently followed by this Court, as is
evident from paragraph 31 of the judgment in Biswas
(supra). Para 31 reads as under :
“31. The tests to determine whether a
body falls within the definition of “State” in
Article 12 laid down in Ramana with the
Constitution Bench imprimatur in Ajay
Hasia form the keystone of the subsequent
jurisprudential superstructure judicially
crafted on the subject which is apparent
from a chronological consideration of the
authorities cited.”
41. The subsequent paragraphs of the judgment noticed
the efforts made to further define the contours within
which to determine; whether a particular entity falls
within the definition of other authority, as given in Article
12. The ultimate conclusion of the Constitution Bench are
recorded in paragraph 39 and 40 as under :-
34Page 35
“39. Fresh off the judicial anvil is the decision in
Mysore Paper Mills Ltd. v. Mysore Paper Mills
Officers' Assn. which fairly represents what we
have seen as a continuity of thought
commencing from the decision in Rajasthan
Electricity Board in 1967 up to the present time.
It held that a company substantially financed
and financially controlled by the Government,
managed by a Board of Directors nominated
and removable at the instance of the
Government and carrying on important
functions of public interest under the control of
the Government is “an authority” within the
meaning of Article 12.
40. The picture that ultimately emerges is
that 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.”
42. In view of the aforesaid authoritative decision of the
Constitution Bench (Seven Judges), it would be wholly
35Page 36
unnecessary for us to consider the other judgments cited
by the learned counsel for the parties.
43. If one examines the facts in the present case on the
basis of the aforesaid tests, the conclusion is inescapable
that TCL cannot be said to be other authority within
Article 12 of the Constitution of India. As noticed above,
the share holding of Union of India would not satisfy test
principles 1 and 2 in the case of Ramana Dayaram
Shetty (supra).
44. On perusal of the facts, it would be evident that test
No.3 would also not be satisfied as TCL does not enjoy a
monopoly status in ILDS. So far as domestic market is
concerned, there is open competition between the
numerous operators, some of which have been
enumerated earlier namely, MTNL, Airtel, Idea, Aircel, etc.
This brings us to the 4th test and again we are unable to
hold that the Government of India exercises deep and
pervasive control in either the management or policy
making of TCL which are purely private enterprises. We
36Page 37
may also notice that in fact even Government Companies
like MTNL and BSNL are competitors of TCL, in respect of
ILDS. We are, therefore, of the firm opinion that the High
Court of Delhi and the High Court of Bombay were fully
justified in rejecting the claim of the appellants that TCL
would be amenable to writ jurisdiction of the High Court
by virtue of the other authority within the purview of
Article 12 of the Constitution of India.
Is TCL performing a public function :-
45. It has been noticed earlier that ILDS functions, prior
to 1986, were being performed by OCS, a Department of
Ministry of Communications. VSNL was incorporated
under the Indian Companies Act, 1956 as a wholly owned
Government company to take over the activities of
erstwhile OCS with effect from 1st April, 1986. The
employees of erstwhile OCS continue to work for VSNL on
deputation till 1st January, 1990. However, as noticed
earlier, an option was given in 1989 to the pre 1986
employees for permanent absorption in VSNL. It was
37Page 38
made clear to all the employees that they would be
permanently absorbed in VSNL upon resigning from the
Government of India. It was also made clear that these
employees had the choice to remain as Government
employees but they would be transferred to surplus staff
cell of Government of India for re-deployment against the
vacancies in other government offices. It is an accepted
fact before us that all the appellants opted to be absorbed
in VSNL. They were, in fact, absorbed in VSNL with effect
from 1st January, 1990. In the staff notice issued on 11th
December, 1989, it was also made clear that OCS
employees transferred to VSNL on deputation basis
without deputation allowance on foreign service terms
will cease to be government servants. It is, therefore,
patent that the appellant accepted the absorption
voluntarily. Therefore, it would be difficult to accept the
submission of the learned counsel for the appellants that
even after absorption in VSNL, the appellants continued
to enjoy the protection available to them in the OCS as
government servants. The appellants have, however,
38Page 39
sought to rely on the memorandum No.4/18/87–P &PWD
dated 5th July, 1989 of the Department of Pension and
Pensioners’ Welfare, Government of India. In the said
letter, certain safeguards have been granted to ex-OCS
employees which are as under:
“Dismissal/removal from the service of a public
sector undertaking/autonomous body after
absorption for any subsequent misconduct shall
not amount to forfeiture of his retirement
benefits for the service rendered in the Central
Government. Also in the event of
Dismissal/removal of a transferred employee
from the public sector undertaking/autonomous
body the employee concerned will be allowed
protection to the extent that the administrative
Ministry/Department will review such order
before taking a final decision.”
46. In our opinion, the aforesaid condition would make
no difference to the legal status of the appellants within
VSNL. It was only an assurance that the rights to pension
which had already accrued to them on the basis of their
service in OCS shall be protected. Undoubtedly, this
assurance was accepted by VSNL on 1st May, 1992. It was,
in fact, incorporated in the rules governing the service
39Page 40
conditions of these employees in VSNL. It is a matter of
record that with effect from 13th February, 2002, the
shareholding of Government of India is 26.97 %. Soon
thereafter, the total shareholding of TATA Group in VSNL
increased to 44.99% of the paid up share capital in 2002.
It is also an accepted fact that shareholding of the TATA
Group in VSNL is 15.11%. It is also noteworthy that since
2002, VSNL was a TATA Group Company and accordingly
on 28th January, 2008 its name was changed to ‘TATA
Communication Limited”. In our opinion, the aforesaid
facts make it abundantly clear that the Government of
India did not have sufficient interest in the control of
either management or policy making functions of TATA
Communication Limited.
47. Merely because TATA Communication Limited is
performing the functions which were initially performed
by OCS would not be sufficient to hold that it is
performing a public function. It has been categorically
held in the case of Ramana Dayaram Shetty (supra) if
only the functions of the Corporation are of public
40Page 41
importance and closely related to Government functions,
it would be a relevant factor in classifying the Corporation
as an instrumentality or agency of the Government.
48. As noticed above, the functions performed by
VSNL/TCL are not of such nature which could be said to
be a public function. Undoubtedly, these operators
provide a service to the subscribers. The service is
available upon payment of commercial charges. Learned
counsel for the appellants had placed strong reliance on
the judgment of this Court in Air India Statutory
Corporation (supra). However, the aforesaid judgment is
of no assistance to the appellants as it was subsequently
overruled by a Constitution Bench in Steel Authority of
India Ltd. & Ors. vs. National Union Waterfront
Workers & Ors.
18. Dr. K.S. Chauhan had also relied on
the Human Rights Act, 1998 (Meaning of Public Function)
Bill which sets out the factors to be taken into account in
determining whether a particular function is a public
function for the purpose of sub-section (3)(b) of Section 6
18 (2001 (7) SCC 1)
41Page 42
of the aforesaid Act. Section (1) enumerates the following
factors which may be taken into account in determining
the question as to whether a function is a function of
public nature.
“(a) the extent to which the state has assumed
responsibility for the function in question ;
(b)the role and responsibility of the state in
relation to the subject matter in question ;
(c) the nature and extent of the public interest in
the function in question ;
(d) the nature and extent of any statutory power
or duty in relation to the function in question ;
(e) the extent to which the state, directly or
indirectly, regulates, supervises or inspects the
performance of the function in question ;
(f) the extent to which the state makes payment
for the function in question ;
42Page 43
(g) whether the function involves or may involve
the use of statutory coercive powers ;
(h) the extent of the risk that improper
performance of the function might violate an
individual’s Convention right.
Performance of public function by private provider –
49. For the avoidance of doubt, for the purposes of
Section 6(3)(b) of the Human Rights Act 1998, a function
of a public nature includes a function which is required or
enabled to be performed wholly or partially at public
expense, irrespective of –
(a) the legal status of the person who performs
the function, or
(b) whether the person performs the function by
reason of a contractual or other agreement or
arrangement”.
50. In our opinion, the functions performed by VSNL/TCL
examined on the touchstone of the aforesaid factors
43Page 44
cannot be declared to be the performance of a public
function. The State has divested its control by
transferring the functions performed by OCS prior to 1986
on VSNL/TCL. Dr. Chauhan had also relied on Binny Ltd.
(supra) wherein this Court reiterated the observations
made by this Court in Dwarkanath vs. Income-tax
Officer, Special Circle, D-ward, Kanpur & Anr. 19, it
was observed that :
“It is difficult to draw a line between the public
functions and private functions when it is being
discharged by a purely private authority. A body
is performing a “public function” when it seeks
to achieve some collective benefit for the public
or a section of the public and is accepted by the
public or that section of the public as having
authority to do so. Bodies therefore exercise
public functions when they intervene or
participate in social or economic affairs in the
public interest.”
51. This Court also quoted with approval the
Commentary on Judicial Review of Administrative Action
(Fifth Edn.) by de Smith, Woolf & Jowell in Chapter 3 para
0.24 therein it has been stated as follows :
19 (1965 (3) SCR 536)
44Page 45
“A body is performing a “public function” when
it seeks to achieve some collective benefit for
the public or a section of the public and is
accepted by the public or that section of the
public as having authority to do so. Bodies
therefore exercise public functions when they
intervene or participate in social or economic
affairs in the public interest.
Public functions need not be the exclusive
domain of the state. Charities, self-regulatory
organizations and other nominally private
institutions (such as universities, the Stock
Exchange, Lloyd’s of London, churches) may in
reality also perform some types of public
function. As Sir John Donaldson M.R. urged, it is
important for the courts to “recognize the
realities of executive power” and not allow
“their vision to be clouded by the subtlety and
sometimes complexity of the way in which it
can be exerted.” Non-governmental bodies such
as these are just as capable of abusing their
powers as is government.”
52. These observations make it abundantly clear that in
order for it to be held that the body is performing a public
function, the appellant would have to prove that the body
seeks to achieve some collective benefit for the public or
a section of public and accepted by the public as having
authority to do so. In the present case, as noticed earlier,
all telecom operators are providing commercial service
45Page 46
for commercial considerations. Such an activity in
substance is no different from the activities of a bookshop
selling books. It would be no different from any other
amenity which facilitates the dissemination of information
or DATA through any medium. We are unable to
appreciate the submission of the learned counsel for the
appellants that the activities of TCL are in aid of enforcing
the fundamental rights under Article 21(1)(a) of the
Constitution. The recipients of the service of the telecom
service voluntarily enter into a commercial agreement for
receipt and transmission of information. The function
performed by VSNL/TCL cannot be put on the same
pedestal as the function performed by private institution
in imparting education to children. It has been repeatedly
held by this Court that private education service is in the
nature of sovereign function which is required to be
performed by the Union of India. Right to education is a
fundamental right for children upto the age of 14 as
provided in Article 21A. Therefore, reliance placed by the
learned counsel for the appellants on the judgment of this
46Page 47
Court in Andi Mukta (supra) would be of no avail. In any
event, in the aforesaid case, this Court was concerned
with the non-payment of salary to the teachers by the
Andi Mukta Trust. In those circumstances, it was held that
the Trust is duty bound to make the payment and,
therefore, a writ in the nature of mandamus was issued.
Mr. C.U.Singh, senior counsel relied on Binny Ltd. (supra)
in support of the submissions that VSNL/TCL is not
performing a public function. In our opinion, the
observations made by this Court in the aforesaid
judgment are fully applicable in the facts and
circumstances of this case.
53. In these appeals, the claim of the appellants is that
their services have been wrongly terminated by VSNL/TCL
in breach of the assurances given by the Government of
India and VSNL in clause 5.13 of the share holding
agreement. If that be so, they would be at liberty to seek
redress by taking recourse to the normal remedies
available under law.
47Page 48
54. A perusal of the aforesaid documents, however,
would show that VSNL had merely promised not to
retrench any employee who had come from OCS for a
period of two years from 13th February, 2002. Such a
condition, in our opinion, would not clothe the same with
the characteristic of a public duty which the employer was
bound to perform. The employees had individual contacts
with the employer. In case the employer is actually in
breach of the contract, the appellants are at liberty to
approach the appropriate forum to enforce their rights.
55. We see no merit in the appeals and the same are
accordingly dismissed.
Writ Petition No.689 of 2007 -
56. This writ petition has been moved by the VSNL
Scheduled Castes/Tribes employees Welfare Samiti
(Regd.) (Petitioner No.1) and Scheduled Castes and
Schedule Tribes Employees Welfare Association of VSNL
(Regd.)-Petitioner No.2.
48Page 49
57. The prayer in this writ petition is inter alia for the
issuing a writ in the nature of mandamus directing the
official respondents to safeguard the fundamental rights
of the members of the appellant as per the undertaking
given on 16th March, 2001, 9th October, 2001 and 30th
April, 2002. For the reasons already stated in the earlier
part of the judgment relating to the civil appeals, we are
unable to entertain the present writ petition. In our
opinion, it is not maintainable and accordingly dismissed.
………………………….J.
[Surinder Singh
Nijjar]
…..……………………….J.
[Anil R. Dave]
New Delhi;
April 17, 2013.
49
