Holding

The Haryana Housing Board is not a local authority for the purposes of the Payment of Bonus Act, 1965.

Summary

The Supreme Court examined whether the Haryana Housing Board (HHB) qualifies as a "local authority" under section 32(iv) of the Payment of Bonus Act, 1965. The Board is a statutory corporation whose members are appointed by the State Government and whose functions are subject to extensive governmental control, including financial supervision and the power of the Government to give directions. The Court compared the attributes of a local authority—elected representation, autonomy, control of a local fund—with those of the HHB and found the Board lacking these essential features. It held that the deeming provision in the HHB Act, which treats the Board as a local authority only for the purposes of the Haryana Housing Board Act and the Land Acquisition Act, does not extend to the Payment of Bonus Act. Consequently, the Board is not exempt from the bonus liability, and the appeal challenging the lower court’s decision was dismissed.

Issues considered

Whether the Haryana Housing Board is a "local authority" within the meaning of section 32(iv) of the Payment of Bonus Act, 1965.
Whether the deeming clause in the Haryana Housing Board Act, 1971, which treats the Board as a local authority for the Land Acquisition Act, can be extended to the Payment of Bonus Act.
Whether the definition of "local authority" in the General Clauses Act, 1897 and the Haryana Housing Board Act, 1971, together with principles of statutory interpretation (including ejusdem generis), encompass the HHB.

Legislation cited

Constitution of Indias. Article 12
General Clauses Act, 1897s. 3(31)
Haryana Housing Board Act, 1971s. 2(1), s. 24, s. 3(3), s. 56, s. 71, s. 72, s. 72A, s. 72B
Land Acquisition Act, 1894
Payment of Bonus Act, 1965s. 32(iv)

Subjects

local authorityPayment of Bonus Actstatutory interpretationejusdem generisHaryana Housing Boardgovernment controlemployment bonus liabilitydeeming provision

Judgment

HOUSING BOARD OF HARYANA A
v.
HARYANA HOUSING BOARD EMPLOYEES UNION AND ORS.

OCTOBER 30, 1995

[KULDIP SINGH AND S. SAGHIR AHMAD, JJ.j
B

Payment of Bonus Act, 1965-Section 32(iv}-Local authorif}-Mean-
ing of-Whether Haryana Housing Board is a local authmity-Deep and per-
vasive control of Government over the functioning of the Board-Members of
the Board appointed by the Government-Held, the Board is not a Local C
authority-General Clauses Act, 1897-Section 3(31).

Words and Phrases-Local Authmity-Meaning of-Oiaracteristics
of-Statutory body consisting of members appointed by the Government and
under pervasive control of the Government-Whethe,.._A local authority. D

Haryana Housing Board Act, 1971-Section 2(1}-Local Authority--
Deeming provisiol!-'lmplication of-Held, Haryana Housing Board is a local
authority only for the purpose of the Land Acquisition Act and the Haryana
Housing Board Act-Not a local Authority othe1wise--Land Acquisition Act,
1894. E

Interpretation of Statute-Ejusdem geneiis-Meaning of-Necessary
requisites fo,.._aeneral words following the specific word-Specific words
must fonn the same genus for applicability of 1ule of ejusdem generis cannot
be applied to A1ticle 12 of Constitution of India-Words and Phrases. F
. The Haryana Housing Board was constituted under section 3 of the
Haryana Housing Board Act, 1971. Its main object was to implement the
housing programmes. It was a body corporate having perpetual succession
and a common seal and had power to acquire, hold, administer and
transfer property-movable or immovable, and to enter into contracts. The G
members of the Board were appointed by the State Government and were
to hold office for a period of three years from the date of their appoint-
ment, The members were to hold office during the pleasure of the State
1
Govern ment. The exercise of power by the Board was subject to the control
of the State Government apart from the provisions of the Act. The H
533
534 SUPREME COURT REPORTS (1995] SUPP. 4 S.C.R.

A expenditure incurred by the Board was also subject to the control of the
State Government. The accounts of the Board were subject to audit by
persons deputed by the Government and the Board was bound to comply
with the directions of the State Government in respect of financial matters.
The Board was duty bound to comply \\ilh the directions of the Govern-
ment although it had a right to state its objections to any such directions.
B
Under section 72 of the Haryana Housing Board Act, the State Govern-
ment was given power of superintendence and control over the Board and
its olliccs. The Board had a fund called the Housing Board Fund which
consisted of money received from sale of land and property, rents interest,
profits, grants, donation and gifts under section 72A. The Government
C could suo moto or on an application of a party, call for and examine any
record of any proceedings, decisions and orders passed by the ollicers of
the Board and could pass order as deemed fit by it modifying, anulling or
revising the order of the officer of the Board.

A question arose as to whether the Board was a "Local Authority"
D within the meaning of section 32(iv) of the Payment of Bonus Act, 1965.
Local authority has not been defined in Payment of Bonus Act, 1965 but
in section 3(31) of the General Clauses Act, 1897 "Local authority" has been
defined as meaning a Municipal Committee, district board, body of port·
commissioners or other authority legally entitled to, or entrusted by the
E Government with, the control and management of a Municipal or local
fund. The Haryana Housing Board Act, 1971 in section 2(j) also defines
"Local authority" as meaning a municipality, Gram Panchayat, Zilla
Parishad, an Improven.ent Trust. The word "Local authority is also men-
tioned in Entry 5 list II of the Seventh Schedule of the Constitution of
India. Under section 3(3) of the HaryJna Housing Board Act, the Board
F has been deemed to be a local authority for the purpose of the Haryana
Housing Board Act and the Land Acquisition Act 1894.

The Hig:h Court ·held that the Haryana Housing Board was not a
"Local authority" for the purpose of payment of Bonus Act. 1965. Hence
G the present appeal.

Dismissing the appeal, this Court

HELD : I.I. The Municipal Committees, the District Boards, Gram
Panchayats and Panchayat Samities etc., represent the units of Local self
H Government where people of a local area govern themselves through their
HSNG. BD. i·. HARYANA HSNG. BO. EMPLOYEES UNION [S. SAGHJRAHMAD. .l.! 535

elected representatives in respect of a large number of matters including A
construction of buildings, roads, parks, lighting or streets, sewerage, con-
servancy and water \Vorks etc. T~ese local self Governn1eilts, namely, the
•
Municipal Boards and the District Board etc. are constituted under
statutory provisions which elaborately provide for the election, through
adult franchise, of persons who, on being elected, becon1e men1hers of the B
Municipal Boards, or the District Board. These· Boards are basically
independent bodies with very little or Minimal Government Control and
that too in the limited field. They formulate their own policies and imple-
ment these policies through the machinery provided under law. They have
power to levy panchayat, municipal or other local taxes and have also the
power to realise those taxes through coercive processes, if they are not paid C
immediately on demand. They have also the right to raise, build up and
manage their "Local fund". (539-B-E]

1.2. Under the basic principle of statutory interpretation the words
"other Authority", having been placed in the company of "Municipal Coun- D
cir' and uDistrict Boards" etc, in the definition of "Local Authority" in the
General Clauses Act, 1897 can be interpreted to mean a "Body" having and
possessing, practically all the attributes of a Municipal Board or the
District Board so far as their independent existence is concerned. (539-F]

1.3. The Haryana Housing Board which is basically and essentially E
a creation of the State Legislature, consists of persons appointed by the
State Government on salary basis. The Board's personnel are not elected
by the people and there is no element of people's choice being represented
in any n1anner in the constitution of the Board. The Board functions
strictl)' under the supervision and control of the State (iovernment and F
does not hold or possess a "local fund". The extent of control of the State
Government under which the Board has to function is so prominently
pervasive that it is almost destructive of its independence which is also
apparent from the fact that in the matter or settlement of its Annual
Programmes, Budget and Establishment schedule, the Board has to obtain
the sanction of the State Government under Section 24 of the Haryana G
Housing Board Act. The supplementary budget and programme, if any,
has also to be sanctioned by the State Government. The Haryana Housing
Board does not have even the semblance of inde11endence which are
normally possessed by local self Governments, like Municipal Boards or
District Board etc. The Board, no doubt, has the power to levy and realise H
536 SUPREME COURT REPORTS [1995) SUPP. 4 S.C.R.

A Betterment charges and various amount of money due from persons in
possession of the properties of the Board by way or rent etc. are recoverable
as arrears or land revenue but that by itself is not suflicient to clothe the
Board with the status of a "local authority". [544-H, 545-A-F]

Municipal Cmporation of Delhi v. Bir/a Cotton Spinning and Weaving
B Mills, Delhi and Anr, (1968] 3 SCR 251; Valjibhai Muljiblwi Soney and Anr.
v. The State of Bombay (New Gujarat) and 01:1'., (1964] 3 SCR 686; Union
of India and o,,._ v. R.C. Jain and 01s., [1981] 2 SCR 854 and K1i.1hi
Uttpanna Bazar Samiti v. Income Tax Officer and Othe1s, 158 ITR 742, relied
on.
c Swya Kant Roy v. lmamul Hak Khan, [1975] 1 SCC 531; Kendraiya
Nagrik Samiti, Kanpur and Others v. Jal Sansthan, Kanpur and Others, AIR
(1982) All 406; Mahavir and Othe1s v. State of U.P. and Others, AIR (1979)
All 3; Workmen of Mangalore Pon Trnst v. Management of the Mangalore
Pon and Ors., (1973) Lab l.C. 1536; Official Assignee of Madras v. Trnstees
D of (he Post of Trnst, Madras, AIR (1936) Mad 789; Manoranjan Das v.
Commissioner Presidency Division, AIR (1970) Cal 179; Budha Veerinaidu
v. State of Andhra Pradesh andAnr., 143!TR1021and12.l.C. Bose, Road,
Tenants Association v. Collector of Howrah and Ors. AIR (1977) Cal.437,
distinguished.
E
2. The legislature itself has given the Haryana Housing Board
Limited status of "Local Authority" only for the purpose of Land Acquisi-
tion Act as also the Haryana Housing Board Act. The Legislature has given
this status only fictionally as the Board, in reality is not a "Local Authority"
and that too only for a limited purpose. The Legislature could well have
F given this status to the Board for the purposes of other Act also including
the Payment of Bonus Act but this has not been done and consequently the
Board cannot, specially in view of what has been stated above, be treated
as "Local Authority" under the Payment of Bonus Act. [546-D]

3.1. When particular words pertaining to a class of genus are fol-
G lowed by genera.I words, the latter, namely, the general words are construed
as limited to things of the same kind as those specified. This is known as
the rule of ejusdem generis reflecting an attempt to reconcile incom-
patibility between the specific and general words. It is essential for applica-
tion of ejusdem generis rule that enumerated things before the general
H words must constitute a category on a genus. (551-B-E]
HSNG. BO. v. HARYANA HSNG. BO. EMPLOYEES UNION fS. SAGHIRAH.MAD. J.J 537

AmarClwndra v. Collector of Excise. T1ipura, AIR (1972) SC 1863 and A
Russai v. Scott, (1948) 2 All E.R.I, relied on.

Kuvalappanu Kottaralhil Kochuni v. Slale of Madras, AIR (1960) SC
1080 and Tlibuvuu Prakash Nayyar v. Union of India, AIR (1970) SC 540,
referred to.
B
3.2. Article 12 of the Constitution of India contains the definition of
"State" which is an inclusive definition and includes Government and
Parliament of India, Government and the Legislature of each of the State
as also all local or other Authorities. Article 12 does not define "Local
Authorities" but defines "State". [550-H, 551-A] C
33. The rule of ejusdem generis cannot be applied to Article 12 of
the Constitution of India as the defination of "State" in this Article includes
several bodies \l'hich are heterogeneous in character and there is no genus
in the definition. [551-G]
D
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 173-74
of 1995.

From the .Judgment and Order dated 27.7.94 of the Punjab &
Haryana High Court in L.P.A. No. 364 & 365 of 1986.
E
Ms. lndu Malhotra and Ms. Jayshree Suryanarayanan for the Ap-
pellant.

Rajinder Sachar, Tarun Dua and K.C. Dua for the Respondents.

The Judgment of the Court was delivered by F

S. SAGHIR AHMAD, J. Whether the Haryana Housing Board is a
"Local Authority" within the meaning of section 32(iv) of the Payment of
Bonus Act, 1965 is the question to be decided in these appeals. If it is held
that it is a "Local Authority", this Act, namely, the Payment of Bonus Act, G
would not apply to its employees, as it is provided in section 32(iv) that it
would not apply to those categories of employees (including the employees
of the ''Local Authority" enumerated, specifie.d and categorised therein.

"Local Authority" has not been defined in the Payment of Bonus Act,
1965 but it has been defined in section 3(31) of the General Clauses Act, H
538 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A 1897 as under :

'"Lncgl authority' .'-.hall 111can a Municipal Co111111it.tee, District
Board body of port Cnn1n1issioncr..., or other authorily legally
entitled to, or entrusted by the Gover11111cnt \Vith, the control of
n1anagc1nent of 111unicipal or local fund."
B
Incidentally, "local authority" has also hcen defined in section 2(J) of
the Haryana Housing Board Act, 1971 as under :

"(.I) 'Local authority' means a municipality constituted under the
Punjab Municipal Act, 1911 (Punjab Act 3 of 1911), or a Gram
c Panchayat constituted under the Punjab Gram Panchayat Act, 1952
(Punjab Act 4 of 1953), or a Panchayat Samiti or a Zilla Parishad
constituted under the Punjab Panchayat Samities and Zilla
Parishad Act, 1961 (Punjab Act 3 of 1961), or an improvement
Trusl conslitutcd under the Punjab Town Improvement Act, 1922
D (Punjab Act 4 of 1922)."

Both the definitions are conclusive in nature and only those bodies
including the Municipal Board or a Gram Panchayat etc. will be treated as
11
Local Authority11 as are mentioned therein. But there is a significant
difference in as much as the words "Authority legally entitled to or
E entrusted by the Government with, the control or management of a
Municipal or Local Fund'' which arc found in the definition contained in
the General Clauses Act are not found in the definition of "Local
Authority" in the Haryana Housing Board Act, 1971.

Concept of ''1..,ocal Authority'' is also foun<l contained in Enlry 5, List
F 11 of the Seventh Schedule of the Constitution which provides as under :

5. Local government, that is to say~ the constitution and powers
11

of municipal corporations, improvement trusts, district boards,
mining settlement authorities and other local authorities for the
purpose of local self-government or village adn1inistration."
G
The Entry empowers the State Legislature lo make law with. respect
to any subject relating to Local Government including the Constitution of
Local Authorities". The Slate Legislature can also confer such powers as
it itself possesses upon a "Local Authority", including the power of taxation
H (within the limits of List IJ) for the purposes of Local Self Government.
HSNG. BO. v. HARYANA HSNG. BO. EJ\1PLOYEES UNION [S. SAGHIRAHt\1AD. J.] 539

The "Local Authority", undoubtedly, is a representative body hut not- A
withstanding its representative character, it remains a sub- ordinate
Authority created hy a statute and, therefore, it cannot claim the po\vcr of
taxation which belongs to the State Legislature except to the extent it is
conferred upon it by the statute which creates it.

The Municipal Committees, the District Boards, Gram Panchayats B
and Panchayat Samitis etc. represent the units of Local self Government
where people of a local area govern themselves through their elected
representatives in respect of a large number of matters including construc-
tion of buildings, roads, parks, lighting of streets, se\verage, conservancy
and water works etc. These Local Self Governments, namely, the Municipal c
Boards and the District Board etc. are constituted under statutory
provisions which elaborately provide for the election, through adult
franchise, of persons who, on being elected, become members of the
Municipal Boards or the District Board. These Boards are basically inde-
pendents bodies with very little or minimal of Government control and
that too in the limited field. They formulate their own policies and imple- D
mcnt those policies through the machinery provided under law. They have
power to levy Panchayat, Municipal or other local taxes and have also the
pO\ver to realise those taxes through coercive processes, if they are not paid
immediately on demand. They have also the right to raise, built up and
manage their "local funds." E
Under the basic principle of statutory interpretation, the words
"Other Authority", having been placed in the company of "Municipal
1 11
Council" and 'District tsoards etc. in the definition of Local Authority!! in
11

the General Clauses Act can be interpreted to mean a 'Bo<ly" having and
1

possessing, practically all the attributes of a Municipal Board or the F
District Board so far as their independent Existence is concerned.

Similarly in the definition of "Local Authority" in the Haryana Hous-
ing Board Act, 1971, it has been provided that it shall mean the
Municipality, Gram Panchayats, Panchayat Samitis, Zilla Parishads and G
Improvement' Trusts.

It hardly requires to be mentioned that the Municipal Board, the
Gram Panchayat or a Panchayat Samiti or a Zilla Parishad, or for that
matter, ln1proverncnt Trust, referred to in this definition arc, at least,
partially, if not wholly elected bodies. H
540 SUPREME COURT REPORTS [1995[ SUPP. 4 S.C.R.

A In Municipal Cmporation of Delhi v. Bir/a Cotton Spinning and Weav-
ing Mills, Delhi and Anr., II968J 3 s:c.R. 251, Hidayatullah, .r. (as he then
was) observed as under :

"Local bodies are subordinate branches of governmental activity.
They are democratic institutions managed by the representatives
B of the people. They function for public purposes and take away a
part of the government affairs in local areas, They are political
sub-divisions and agencies which exercise a part of state functions.
As they are intended to carry on local self-government the power
of taxation. is a necessary adjunct lo their other powers. They
c function under the supervision of the Government."

In Valjiblwi Muljibhai Son<y and Anr. v. T71e State of Bombay (New
Gujarat) and 010-., [l964J 3 SCR 686 the State Trnding Corporation was
held not to be a local authority within the meaning of section 3(31) of the
General Clauses Act.
D
The· aforesaid two cases came to be considered by this Court in
Union of India and OJS. v. R.C. Jain and Ors., [1981] 2 SCR 854 in which
the question whether the Delhi Development Authority created under the
Delhi Development Act, 1957 was a "local authority" within the meaning of
section 32(iv) of the Payment of Bonus Act or not, vvas involved and on a
E consideration of all the attributes of the Delhi Development Authority, it
was held to be a "local authority". This Court speaking through 0. Chin-
nappa Reddy, J. observed as under :

What then are the distinctive attrihutes and characteristics, all or
11

F many of which a Municipal Committee, District Board or Body of
Port Commissioners shares with any other local authority? First,
the authorities must have separate, legal existence as corporate
bodies. They must not be mere governmental agencies but must
be legally independent entities. Next, they must function in a
defined area and must ordinarily, wholly or partly, directly or
G indirectly, be elected by the inhabitants of the area. Next, they must
enjoy a certain degree of autonomy, with freedom to decide for
themselves questions of policy affecting the area administered by
them. The autonomy may not be complete and the degree of the
dependents may vary considerably but, an appreciable measure of
H autonomy there must be. Next, they must be entrusted by statute
HSNG. RD. v. HARYANAl-ISNG. BD. EivIPLOYEES UNION IS. SAUHIRAHMAD. J.] 541

\vith such governmental functions and duties a~ are usually A
entrusted to n1unicipal bodies, such as those connected \vith
providing an1enitics 10 the inhabitants of the locality, like health
ant.I education .-.crvices, \Vater and sc\vcrage, tO\Vll planning an<l
development, roads, markets, transportation, social welfare ser-
vices etc. etc. Broadly, we may say that they may be entrusted with
B
the performance of civic duties and functions which would other-
wise be governmental duties and functions. Finally, they must have
the power to raise funds for the furtherance of their activities and
.the fulfilment of their projects by levying taxes, rates, charges, or
fees. This may be in addition to monies provided by government
or obtained by borrowing or otherwise. What is essential is that c
control or management of the fund must vest in the authority."

Since this decision will equally apply to the definition of "Local
Authority" set out in the Haryana Housing Board Act, 1971 as that defini-
tion is substantially similar to the definition of "Local Authority" in the
General Clauses Act, it is in the light of the above principles that it has to D
be seen whether the Haryana Housing Board answers the attributes
11
specified above SO as to be treated a Joca} authority" \Vithin the meaning
of section 32 (iv) of the Payment of Bonus Act.

The Haryana Housing Board Act, 1.971 in its preamble states that it E
is "an Act to provide for measures to be taken lo deal with and satisfy the
need of housing accommo<lation. 11

The Statement of 11 0bjects and Reasons" set out at the tin1e of
introduction of the Bill in the Legislative Assembly indicate, ;nter alia, as
under: F

"Next to food and clothing, housing is the basic necessity of
mankind. The housing problem has become serious on account of
the phenon1inal increase in population. Rapid industrialisation has
led to the congestions in urban areas. The concentration of aln1ost G
all industries in urban areas and the comparative high \Vages paid
to the factory workers coupled with the lack of sufficient oppor-
tunities in the rural areas have resulted in a large scale shift of
population from villages ........

With a view to achieve the aforesaid object the matter was H

-
542 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A consi<lerc<l !n the conference of Ministers f0r Housing, Urban
Development and Town Planning held at a Bangalore from 18th
to 20th June, 1969. The consensus of opinion Wf'S that the statutory
State Housing Boards are the best agencies for tentative and
speedy implementation of the housing programmes. Accordingly,
It is proposed to constitute a Haryana State Housing Board. Hence
B
the Haryana Housing Board Bill, 1971."

The Haryana Housing Board (for short, 'the Board' has been estab-
lished and constituted under section 3 of the Act which, inter a/ia, provides
that the Board shall be a body corporate having perpetual succession and
c a common seal and shall have the power lo acquire, hold, administer and
transfer property, movable or immovable, and to enter into contracts.

Sub-section ( 4) of section 3 provides that the Board shall consist of
a Chairman. a Chief Administrator and such other Members, not more
than 12 and not less than 6, as the State Government may, from time to
D time, by Notification appoint. Under section 5 of the Act, the State Govern-
ment has the power to grant such leave to the Chairman and the Chief
Administrator as may be admissible lo them under the Rules made under
the Act.

Section 7 provides that every Member of the Board shall hqld office
E for a period of three years from the date of his appointment and shall be
paid such salary and allowances as may be prescribed. Conditions of
service are also required to be prescribed by Rules made under the Act.
It is also provided in this section that on the expiry of the term of 3 years,
a Member shall be eligible for re-appointment. Section 7-A indicates that
F the C:hairman, Chief Adn1inistrator and other Mcn1bcrs of the Board shall
hold office during the pleasure of the Slate Government.

Section 14 provides for the appointment of one or mere committees
for any particular local area for purpose of discharging such duties or
performing such functions of the Board as may be delegated lo them with
G due-regard to the circumstances and requirements of that area.

Chapter Ill of the Act deals with the Housing Schemes.

Section 20 provides as under :

H "20. Duty of Board to undenake housing schemes. - Subject to the
HSNG. BO. v. HARYAKA HSNU. BD. EMPLOYEES UNION [S. SAGHIR AHMAD, J.J 543

provisions of this Act and subject to the control of the State A
Governtnent, the Board may incur expenditure and undertake
\Vorks in any area for the fra111ing and execution of such housing
schemes as it n1ay consider necessa;y from time to tin1e or as may
be entrusted lo it by the Stale Government."

The exercise of power by the Board in framing and executing Hous- B
ing Schemes is not only subject to the provisions of the Acl but also subject
to the control of the State Government.

The matters which may be provided for in a Housing Scheme are
indicated in section 21 which include laying or re-laying of the land,
construction and re-construction of buildings, construction and alteration
c
of streets and back lanes, drainage, water supply and lighting of the area
included in the Scheme, Parks, playing fields sanitary arrangements etc.

The accounts of the Board are to be audited by such persons as are
deputed by the Government (See sub-section (2) of section 61) and the D
Board does not seem to have any choice in the matter except to submit its
accounts to that person. The Board has also to comply with such directions
as may be issued to it by the State Government after a perusal of the
auditor's report. Special audit may also be made of the Board's accoun'.s
under the directions of the State Government.
E
Other statutory provisions indicating control of the Slate Govern-
ment over the Board are contained in sections 71 and 72 of the Act relevant
portions of which are re-produced below :

"71. Po~vcr of goven1111cnt to give direction to Board. - The Slate F
Government may give the Board such directions as in its opinion
ar.e necessary lo expedient for carrying out the purposes of this
Act, after giving an opportunity to the Board to state its objections,
if any, to such directions and after considering the said objections
and it shall be the duty of the Board to comply with such directions.
G.
72. Control.of State Govemment over Board. (1) The State Govern-
ment shall exercise superintendence and control over the Board
and its officer::; and may call for such infor1nat.ion as it may deem
necessary and, in the event of its being satisfied that the Board is
not functioning properly and is abusing its powers and is guilty of H
544 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.
.
A corruption of n1isn1anagement, it may, hy notification, suspend the
Board:

Provided that the Board shall he rernnstituteJ, within a period of
one year from the date of its suspcnsion in the prescribed manner.
1

B (2) When the Board is suspended under sub-section (l), the
following consequence shall ensue, namely :

(a) ·················

(b) ·················
c
Chapter IV deals with the acquisition and disposal of land. Chapter
VII deals with the Board's finance, accounts and audit. Section 56 provides
that the Board shall have a fund called the Housing Board Fund which
shall consist of all moneys received by or on behalf of the Board as also
all proceeds of land or any other kind of properly sold by the Board,
D including all rents, interest, profits and other moneys accruing to the Board
which has also been authorised by sub-section (2) to accept grants, dona-
tions and gifts from the Central Government or the State Government or
a local authority or any individual or body, whether incorporated or not,
for all or any of the purposes of this Act.
E
Section 72A provides for appeals against orders passed by the of-
ficers of the Board or the Chairman. Section 72B which provides for a
revision to the State Government lays down as under :

728. Revision. - The Government may either suo n1otu or on an
F application of a party, call for an<l exan1inc the record of any
proceedings or decision or order passed by the Board, Chairman,
· Chief Administrator or competent authority or Deputy Commis-
sioner or any other.officer appointed by the State Government for
the purpose of satisfying itself as lo the legality or propriety of any
decision or order passed and if in any case it shall appear to the
G
government that any such decision or order should be modified,
annulled or revised, the Governn1ent may, after giving the persons
affected thereby an opportunity of being heard, pass such order
thereon as it may deem fit.' 1

H The above provisions clearly spell out that the Board which is basi-
HSNG. BD. '·HAR YAN A HSNG. BIJ EMPLOYEE.' UNION [S. SAGH!R AHMAD. J.[ 545

cally and essentially a creation of the Act of Stale Legislature consists of A
persons appointed by the Slate Government on salary basis. The Board's
personnel are not elected by the people and there is no element of people's
c~oice being represented in any manner in the constitution of the Boa·r<l.
The Board functions strictly under the supervision and control of the Stale
Governn1ent and docs not hold or possess a l!local fund 11 • What constitutes
B
the fund of the Board has already been specified above.

These functions as are indicated in a Housing Schen1e are essentially
performed by Municipal Boards or Municipal Council which, undoubtedly,
are "Local Authorities" but on that analogy the Haryana Housing Board
cannot be treated to be a "local authority" as the extent of control of the C
State Government under which the Board has to function is so prominently
pervasive that it is almost destructive of its independence which will also
be apparent from the fact that in the matter of settlement of its Annual
Programmes, Budget and Establishment schedule, the Board has to obtain
the sanction of the State Government under section 24 of the Act. The
supplementary budget and programme, if any, has also to be sanctioned by D
the State Government.

We need not refer to other proV1s10ns as the provisions already
referred to above are sufficient to bring home the point that Haryana
Housing Board does not have even the semblance of independence which E
are normally possessed by local self Governments, like Municipal Boards
or District Boards etc. The Board also does not even partially consist of
elected representatives of the people.

The Board, no doubt, has the power to levy and realise Betterment
Charges (See section 40 lo section 43 of the Act) and various amount of F
' money due from persons in possession of the properties of the Board by
way of rent etc. are recoverable as arrears of land revenue but that by itself
is not sufficient to clothe the Board with the status of a "local authority".

It is contended by the learned counsel for the appellant that since it
has already been provided in sub-section (3) of section 3 of the Haryana G
Housing Board Act, 1971 that for purposes of this Act, namely, the
Haryana Housing Board Act, 1971 and the Land Acquisition Act, 1894,
the Board shall be deemed to be a "Local Authority", it cannot but be
treated to be a "Local Authority" with the consequence that it is not liable
to pay bonus to its employees as it would squarely fall within the exceptions H
546 SUPREME COURT REPORTS [1995] SUPP. 4 S.C.R.

A set out in section 32(iv) of the Payment of Bonus Act. We do not agree.

Sub-section (3) of section 3 provides as under :

"(3) For the purposes of this Act and the Land Acquisition Act,.
1894, the Board shall be deemed to be a local authority.
B
Explanation - The purpose of this Act referred to in sub-section
(3) include the management and use of lands and building belong-
ing to or vesting in the Board under or for the purposes of this
Act and the exercise of its rights over and with respect to such
lands and buildings for the purposes of this Act."
c
It will be seen that the Legislature itself has given the Board limited
status of "Local Authority" only for the purpose of Land Acquisition Act
as also the parent Act, namely, the Haryana Housing Board Act, 1971,
under which the Board has been constituted and established. The Legisla-
D ture has given this status only fictionally as the Board, in reality, is not a
"Local Authority" and that too only for a limited purpose. The Legislature
could well have given this status to the Board for purposes of other Acts,
also including the Payment of Bonus Act but this has not done and
consequently the Board cannot, specially in view of what has been stated
above, be treated as "local authority'', under the Payment of Bonus Act.
E
There does not, therefore, appear to be any reason to differ from the
view expressed by the learned Single Judge or by the Division Bench (in
appeal) of the Punjab and Haryana High Court that the Board is not a
"local authority" as it does not possess the attributes indicated by this Court
in the case of R.C. Jain (supra).
F
Learned counsel for the appellant referred to the decision of this
Court in Surya Kant Roy v. Imamul Hak Khan, [1975] 1 SCC 531 wherein
it was found that :

"Mines Board of Health constituted under the Bihar and Orissa
G Mining Settlement Act, 1920 is a body corporate having perpetual
succession and a common seal with power lo hold and acquire
property. It consists of not less than seven and not more than
eleven members of whom not less than two and not more than four
are elected by owners of mines within the Mining Settlement, three
H non-officials selected by the State Government and two or more
HSNG. BD. OFHARYANA , .. HARYANA HSNG. BO. EMPLOYEES UNION [S. SAGHIR AHMAD. ll 547

members but not exceeding four nominated by the Stale Govern- A
ment. The Chairman of the Board is to be appointed by the State
Government from among the members of the Board. A fund called
'The Mining Settlement Funds' i~ formed for every n1ining settle-
ment and the fund vests in the Board. The fund consists of sums
charged hy the Board under the Act from land-owner>, etc. as also
B
sun1s allotted to the Board from the State Revenues; su1ns bor-
rowed by the Board under the Local Authorities Loans Act; Grants
received from local authorities, associations an<l private persons,
etc. The Board appoints Health Officers as well as Sanitary In-
spectors. The Board can impose taxes like Latrine taxes and also
make yearly assessment. There are certain powers conferred on c
the State Government under the Act but they are no more than
the power conferred on State Government's in respect of various
local bodies. The respondent was appointed by the Government
as the Chairman of the .Jharia Mines Board of Health. We agree
with the learned .I udge of the High Court that it is difficult to
D
accept the argument that the Board is wholly under the control of
the State Government in all its functions. The Board levies taxes
and other assessments and has got its own funds. The fact that the
Government and other local authorities might make grants to the
Board does not mean that all the funds of the Board are Govern-
ment funds or Government properties. The provisions \Ve have set E
out above are enough to establish that the Board is a 'local
authority' within the meaning of that expression as defined m
clause (31) of section 3 of General Clauses Act, 1897."

Jt will he relevanl to point out the further observations of the
F
Supreme Court as under :

11
Indeed, this position does not seen1 lo have been disputed by the
petitioner before the High Court in the course of his arguments.
We do not, therefore, think that the mere fact that the respondent
was appointed as Chairman of the Board hy the government would G
n1ake him a person holding an office under the State Government. 11

Thus, the decision that the Mines Board was a local authority was
not disputed. In any case, this Court, on the basis of relevant statutory
provisions specially that the Board has power to levy l<Lxes and other H
548 SUPREME COURT REPORTS jl995) SUPP.4S.C.R.

A assessments and has got its own fund, found it to be a local authority. It
may be pointcJ out that the decision \Vas ren<lercd not in connection with
the provision of Payment of Bonus Act but under provisions of the Rep-
resentation of People Act to find out whether an office of profit under the
State Government was held by the respondent.

B Learned counsel for the appellant then cited Kc11d1iya Na!jlik Samili,
Kanpur and Oiheis v. Jul Sansthan, Kanpur and OthC1:1" AIR (1982) Al-
lahabad 406 in which it was held that Jal Sansthan constituted by the State
Government under the U.P. Water Supply and Sewerage Act, 43 of 1975
was a "Local Authority", although, the Court had also found it to be an
c instrumentality of the State Government. The High Court noticed that .I al
Sansthan as defined in section 2(9) of the Act meant "a Local Authority
constituted by the State Government under secticin 18 to perform its
functions under the Act in one or more local areasn and on account of this
definition, the High Court, after referring to the definition of the "Local
Authority" in section 4(25) of the U.P. General Clauses Act, held that Jal
D Sansthan was a "Local Authority" which was to be treated .at par with
Municipal Corporation etc. for the purpose of Local Self-Government. It
may be pointed out that under section 18 of the Act, Jal Sansthan consists
· of, amongst others, three Sabhasads of the Nagar Mahapalika nominated
by the State Government. Sabhasads, under the U.P. Nagar Mahapalika
E Adhiniyam, are directly elected by the people as members of the Municipal
Corporation.

Learned counsel for the appellant also relied upon the decision of
Mahavir and Others v. State of U.P. and OtllCI>", AIR (1979) Allahabad 3 in
which Mandi Samiti constituted under the U.P. Krishi Utpadan Mandi
F Adhiniyam was held to be a Local Authority for purposes of Land Acquisi- .
tion Act.

Significantly, section 12(2) of the Adhiniyam contains a deeming
provision that "the Committee shall be deemed to he a Local Authority
G for purposes of Land Acquisition Act, 1894 and any oilier law for the
time being in force". (Emphasis supplied). This case is, therefore, clearly
distinguishable.

Our attention was next drawn to the decision of the Mysore High
Court in Worknten of Mangalore Po1t Trust v. Ma11agen1e111 of the Mangalore
H Pmt and Ors., (1973) Lah. J.C. 1536 in which Board of Trustees of the Port
HSNG. BD. OF 1-!ARYANA r. HARYANA !iSNG. BD. EMP!..OYEES UNION [S. SAGHIR AH~1AD.J.I 549

of Mangalorc was held lo be a "Local Authority'' within the meaning of A
section 32(iv) of the Payment of Bonus Act. The Judges of the Mysore
High Court relied upon the definition of "Local Authority" contained in
section 3(31) of the General Clauses Acl in which the Municipal Commit-
tee, District Board and a Body of Port Commissioners are indicated to be
Local Authorities and then they observed thal there was no difference
B
between the Body of Port Commissioners and the Board of Trustees of the
Port of Mangalore and, therefore, the latter has also lo be treated as the
"Local Authority". They also relied upon lhe decision of the Madras High
Court in Official Assignee of Madras v. Tnistees of the Port of Tmst, Madras,
AIR (1936) Madras 789 in which the Trustees of the Port Trust, Madras,
on account of the definition of "Local Authority" in the General Clauses C
Act were held to be "Local Authority". A decision of the Calculla High
Court in Manoranjan Das v. Commissioner Presidency Division, AIR 1970
Calcutta 179 which was cited before us also by the learned counsel for the
appellant, was considered by the Mysore High Court and it was noticed by
them that the Calcutta High Court held that since the Calcutta Dock D
Labour Board had to control and manage its fund which was a local fund,
it was a "Local Authority" within the meaning of the General Clauses Act.
This decision is, therefore, of no help to the appellant as the concept
regarding control and management of a "Local Fund" is outside the scope
of the definition of "Local Authority" in the Haryana Housing Board Act,
1971. E:
A decision of the Andhra Pradesh High Court in Budha Veerinaidu
v. State of Andhra Pradesh and Anr., 143 !TR 1021 has been cited to
indicate that Agricultural Market Committee functioning under the
(Andina Pradesh Agricultural Produce and Live Stock) Markets Act, 1966
was held to be a "Local Authority" as it was found that the Market F
Committee was entrusted by the Government with the control and manage-
ment of "Local Fund". This decision is also distinguishable on the ground
that definition of Local Authority in the Haryana Housing Board Act, 1971
does not refer to entrustment, control or management of !!Local Fund!!.
G
In 12, J.C. Bose Road Tenants' Association v. Collector of Howrah and
Ors. AIR (1977) Calcutta 437 which was next cited before us, it was not
disputed that Calculla Metropolitan Development Authority was a "Local
Authority" within the meaning of section 3(31) of the General Clauses Act.

All the aforesaid decisions of various High Court, therefore, do not H
550 SUPREME COURT REPORTS (1995) SUPP. 4 S.C.R.

A help counsel for the appellant as all of them are clearly distinguishable.
Moreover, the decision of this Court in Union of India and Ors. v. R.C. lain
a11d A11r., [1981] 2 SCR 854 which has already been referred to ahove hy
us \Vas nol referred to in any of these decisions as those decisions were
rendered prior to the decision of this Court except the Allahabad decision
in Kembiya Nawik Samiti, Ka11pur (supra) in which also this decision was
B
not noticed.

R.C. Jai11's case (supra) was, however, noticed by the Bomhay High
Court in Klishi Utpanna Bazar Samiti v. Income Tax Officer and Othe1:1·, 158
!TR 742 in which the Hon'ble Judges after considering the scheme of the
c Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963 and
after scrutinizing the tests laid down by this Court in R.C. Jain's case
observed as under :

"The Market Committee clearly satisfies all these tests. It is a body
corporate having separate legal existence and autonomous status.
D It is independent of the Government and operates in a defined
area. Its office-bearers are elected and are free to take their own
policy decision. It performs governmental functions such as run-
ning market, providing civil amenities and doing civil duties. It also
performs judicial, legislative, executive and fiscal functions."
E
Learned counsel for the appellant lastly contended that the Haryana
Housing Board being an instrumentality of the Government or, in any case,
being a statutory body is an "Authority" within the meaning of Article 12
of the Constitution and since Local Authorities have also been referred to
in Article 12, the Board should also be treated as a Local Authority. The
F argument is fallacious.

Article 12 provides as under :

12. Definition. - ln Lhis part) unless the context otherwise requires,
11

• 'the State' includes the Government and Parliament of India and
G the Government and the Legislature of each of the States and all
local or other authorities within the territory of India or under the
Control of the Government of India."

This Article contains the definition of "State" which is an inclusive
H definition and includes Government and Parliament of India, Government
HSNG. BO. OF HAR YANA ''· HARYANA HS ..... G. BD. EMPLOYEES UN!ON [S. SAGHJR Al-!!vlAD.J.] 551
\
and the Legislature of each of the State as also all local or other A
Authorities. Artick~ 12 does not define "Local Authority" hut defines
"State''. The attempt of the learned counsel for the appellant is to invoke
the rule of ejusdem gcncris \vhich cannot he permitted.

When particular words pertaining to a class of genus arc followed by
general words, the latter, namely, the general words are construed as B
limited to things of the same kind as those specified. See : Kavalappara
Kottarathil Koclwni v. State of Madras, AIR (1960) SC 1080; T7wkur
Amarasi11ghji v. State of Rajastha11, AIR (1955) SC 504. This is known as
the rule of ejusdem generis reflecting an attempt to reconcile incom-
patibility between the specific and general words T1iblmwan Parkash c
Na}ya1· v. Unio11 of India, AIR (1970) SC 540.

This Court in Amar Chandra v. Collector of Excise, T1ipura, AIR·
(1972) SC 1863 laid down that the rule applies when "(1) the statute
contains an enumeration of specific words; (2) the subjects of enumeration
constitute a class or category; (3) that class or category is not exhausted by D
the enumeration; ( 4) the general terms follow the enumeration; and (5)
there is no indication of a different legislative intent''.

Thus, it is essential for application of the ejusdem generis rule that
enumerated things bdore the general words must constitute a category or
E
a genus. It was, therefore, pointed out by Lord Simonds in Russel v. Scott,
[1948) 2 All. E.R. I (HL) that " indeed if a collection of items is
heterogeneous, it almost seems a conflict in words to say that they belong
to the same genusn.

While interpreting the definitions of ''Local Authority'' contained in F
the aforesaid two Acts, namely, the General Clauses Act and the Haryana
Housing Board Act, 1971, we invoked the rule of ejusdem gcneris but this
rule cannot be applied to Article 12 as the definition of "State" in this
Article includes several bodies which are heterogeneous in character and,
there is no genus in the definition.
G
For the reasons stated above, we find no merit in these appeals which
are hereby dismissed but without any order as to costs.

B.K.M. Appeal dismissed.