Holding

The corporation is an instrumentality and agency of the State, thus falling within Article 12 and subject to the writ jurisdiction of Article 226.

Summary

V.K. Srivastava, a salesman employed by Uttar Pradesh Rajya Karmachari Kalyan Nigam, was terminated and filed a writ petition under Article 226 of the Constitution. The corporation contended that it was not a "State" within Article 12, rendering the petition non‑maintainable; the Allahabad High Court dismissed the petition on that ground. On appeal, the Supreme Court examined whether the corporation, a society registered under the Societies Registration Act, 1860 and not created by statute, was an instrumentality or agency of the State. The Court found that the corporation was under deep and pervasive administrative, financial and functional control by the State, with its officers serving ex‑officio as board members and the State providing full funding and supervision. Consequently, the corporation falls within the definition of "State" under Article 12 and is amenable to writ jurisdiction. The appeal was allowed, the High Court order set aside, and the matter remitted for merits, with each party bearing its own costs.

Issues considered

Whether Uttar Pradesh Rajya Karmachari Kalyan Nigam, a society registered under the Societies Registration Act, 1860, qualifies as an 'instrumentality or agency of the State' within the meaning of Article 12 of the Constitution.
Whether the corporation's status as a 'State' makes the writ petition under Article 226 maintainable.

Legislation cited

Constitution of Indias. Article 12, s. Article 226
Societies Registration Act, 1860s. 14
Uttar Pradesh Shops and Commercial Establishments Act, 1962s. 3(3)

Subjects

Article 12Article 226State definitioninstrumentalityagencywrit jurisdictionSocieties Registration Actadministrative controlfinancial controlfunctional controlpublic corporationemployee termination

Judgment

A VIRENDRA KUMAR SRIVASTAVA
v.
U.P. RAJYA KARMACHARI KALYAN NIGAM AND ANR.

NOVEMBER 23, 2004
B
[Y.K. SABHARWAL AND D.M. DHARMADHIKARI, JJ.]

Constitution of India, 1950-Articles 12 and 226- 'State '-Definition-
Whether covers a C01poration registered under Societies Registration Act- (

Administrative and functional control of and full financial support to the
C Corporation by the State-Held by High Court not covered under definition
of State-On appeal, held : The Corporation is covered as an agency and
instrumentality of the State in the definition of 'State '-Hence amenable
to writ jurisdiction-The relief against the bodies covered by the definition
'state' would be based on the structure of the society and its financial
D capability and viability-Societies Registration Act, 1860-Service Law.

The services of the appellant, an employee of the respondent-
Corporation was terminated. In his Writ Petition before High Court
challenging the termination, Corporation raised preliminary objection
as to maintainability of the Petition on the ground that the Corporation
E did not fall within the definition of 'State' under Article 12 of the
Constitution of India. High Court dismissed the petition as not
maintainable. Hence the present appeal.

The objects and the provisions in the memorandum and rules of
F the Corporation show administrative control of the Corporation is
vested in the Executive Officers representing different departments of
the State. There is total financial support to the Corporation by the State
and that the functional control of the Corporation was with the State
as the Executive Officers of the State were the ex officio members and
office bearers of the Corporation.
G
The question for determination in the present appeal was whether
the respondent-Corporation, a so~iety registered under Societies
Registration Act, 1860 and not created by any Statute, is an
'instrumentality' or 'agency' of the State and can claim the status of
H 'State' as defined in Article 12 of the Constitution of India and is thus
304
V.K. SRIVASTAVA v. U.P. RAJYA KARMACHARI KAL YAN NIGAM 305

amenable to jurisdiction u/s. 226 of the Constitution. A

Allowing the appeal, the Court

HELD : 1. In view of administrative, financial and functional
control of the Corporation being with the State, the Corporation is an
'instrumentality and agency of the State'. The control of the State is not
B
only 'regulatory' but it is 'deep and pervasive'. The Corporation is
formed with the object of catering to the needs of the Government
employees for supplementing their salaries and other perks. The top
executives of the Government department ex officio are members and
office bearers of the Corporation. The Corporation is fully supported C
financially and administratively by the State and its authorities. Even
day-to-day functioning _of the Corporation is watched, supervised and
controlled by the various departmental authorities of the State "'
particularly the Department of Food and Civil Supplies. The Corporation
being an 'agency and instrumentality of the State' is covered by the D
definition of 'State' under Article 12 of the Constitution. It is, therefore,
amenable to the Writ jurisdiction of the High Court under Article 226
of the Constitution. [318-C-D-E-F]

Pradeep Kumar Biswas v. Indian Institute ofChemical Biology, [2002]
s sec 111, ronowed. E

2. Even though a body, entity or Corporation is held to be a 'State'
within the definition of Article 12 of the Constitution what relief to the
aggrieved person or employee of such a body or entity is to be granted is
a subject matter in each case for the Court to determine on the basis of the F
structure of that society and also its financial capability and viability. The
subject of denial or grant of relief partially or fully has to be decided in
each particular case by the Court dealing with the grievances brought by
an aggrieved person against the bodies covered by the definition of 'State'
under Article 12 of the Constitution. [318-F-G-H)
G
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5047 of
2000.

From the Judgment and Order dated 30.9.99 of the Allahabad High
Court in S.A. No. 60 (SB) of 1995. H
306 SUPREME COURT REPORTS [2004] Sl::J.PP. 6 S.C.R.

A Mrs. Shobha Dikshit and Pradeep Misra for the Appellant.

Aarohi Bhalla, Mrs. Sujatha Kurdukar and Mahabir Singh for the
Respondents.

B The Judgment of the Court was delivered by

DHARMADHIKARI, J. : The sole point that arises for decision in
this appeal before us is whether U.P. Rajya Karmachari Kalyan Nigam [for
short 'the Corporation'] is covered by the definition of"State" under Article
12 of the Constitution of India and is amenable to writ jurisdiction of the
C High Court under Article 226 of the Constitution of India.

The services of the petitioner from the post of Salesman in one of the
stores of the Corporation have been terminated against which he approached_
the High Court of Allahabad. A preliminary objection was raised by the
D Corporation to the maintainability of writ petition on the ground that the
Corporation does not fall in the definition of"State" under Article 12 of the
Constitution.

Relying on decisions of the Lucknow Bench of the same Court in the
case of Vijay Kumar Verma v. U.P. Government Employees Welfare
E Corporation [Writ Petition No. 8246 (ss) of 1992 decided on 13.4.1993],
the writ petition filed by the petitioner in the High Court was dismissed as
not maintainable against which the -petitioner has preferred the present
appeal.

F After passing of the impugned judgments by the High Court, the scope
of Article 12 came up for consideration before a Constitution Bench
comprising seven judges of this Court in the case of Pradeep Kumar Biswas
v. Indian Institute ofChemica/Biology, [2002] 5 SCC 111. The seven judges
Constitution Bench in the case of Pradeep Kumar Biswas (supra) overruled
the decision of five judges Constitution Bench in the case of Sabhajit
G Tewary V. Union of India, [1975] I sec 485. By explaining and relying on
Constitution Bench decision in the case of Ajay Hasia v. Khalid Mujid
Sehravardi, [1981] I SCC 722 by a majority of five against two this Court
has laid down a multiple test for determining whether a particular Corporation
or Body can be held to be included within the definition of "State" under ,
H Article 12 of the Constitution. Learned Sister Ruma Pal J., expressing the
V.K. SRIVASTAVA'" U.P. RANA KARMACHARI KALYAN NIGAM [DHARMADHIKARI, J.]307

opinion of majority of Judges in the case of Pradeep Kumar Biswas (supra) A
on re-examination of all previous cases decided by this Court on the subject,
laid down the multiple test in the following words : -

"The picture that ultimately emerges is that the tests formulated in
Ajay Hasia 's case (supra) are not a rigid set of principles so that B
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 isfinancially,functionally
and administratively dominated by or under the control of the
Government. Such control must be particular to the body in question c
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.
D
[Emphasis supplied]

We may also refer to the minority view expressed by learned Brother
Lahoti J. [as he then was] in the case of Pradeep Kumar Biswas (supra)
because the examination of nature of difference in opinion between majority
and minority view, for the purpose of present case, may be of some relevance. E
In the minority view, different tests are required to be applied in each
particular case. The claim of a body as included within the definition of
"State" based on it being a statutory body falling in the expression 'other
authorities' is to be considered differently from claim of a body based on
the principles propounded in the case of Ajay Hasia (Supra), that it is an
F
'instrumentality or agency' of the State. In the opinion of minority, the tests
laid down in the case of Ajay Hasia (supra) are relevant only for the purpose
of determining whether an entity is 'an instrumentality or an agency of the
State'. The minority view is expressed thus :-

- "Simply by holding a legal entity to be an instrumentality or agency
of the State it does not necessarily become an authority within the
meaning of "other authorities" in Article 12. To be an authority,
G

the entity should have been created by a statute or under a statute
and functioning with liability and obligations to the public ................ .
........................ It is this strong statutory flavour and clear indicia H
308 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A of power-constitutional or statutory, and its potential or capability
to act to the detriment of fundamental rights of the people, which
makes it an authority; though in a given case, depending on the
facts and circumstances, an authority may also be found to be an
instrumentality or agency of the State and to that extent they may
B overlap ........... ..

The tests laid down in the case of Ajay Hasia (supra) are relevant (',-

for the purpose of determining whether an entity is an instrumentality
c or agency of the State. Neither all the· tests are required to be
answered in the positive nor a positive answer to one or two tests
would suffice. It will depend upon a combination of one or more
of the relevant factors depending upon the essentiality and
overwhelming nature of such factors in identifying the real source ·("

D of governing power, if need be by removing the mask or piercing
the veil disguising the entity concerned. When an entity has an
independent legal existence, before it is held to be the State, the
person alleging it to be so must satisfy the court of brooding
presence of the Government or deep and pervasive control of the
Government so as to hold it to be an instrumentality or agency of
E the State.

In the background of the views expressed by majority and minority of
the judges in the case of Pradeep Kumar Biswas (supra), we have to apply
the laid down tests for determining the character Of the Corporation involved
F in this case. We may clarify at the outset that the Corporation herein has
not been created by any statute. It is merely a society registered under the
Societies Registration Act of 1860. We will confine, therefore, our enquiry
and decision as to whether the present Corporation is an 'instrumentality'
or 'agency' of the State and can claim the status of 'State' as defined in
Article 12 of the Constitution.
G
Object for which the Corporation was formed :- ~

The object of formation of the Corporation can be gathered from a
letter dated 20.3.1965 sent by Chief Secretary of the State of Uttar Pradesh
~
H to all Heads of Departments, District Magistrates and Commissioners of
V.K. SRIVASTAVA r. U.P. RAJYA KARMACHARI KALYAN NIGAM [DHARMADHIKARI, J.)309

Divisions, District Sessions Judges and all Principal Heads of the Offices A
in the State of Uttar Pradesh. In the contents of the letter, the object of
formation of Corporation is stated to be as under : -

"I am directed to say that of late, there has been an abnormal rise
in prices of almost all consumer goods, including food grains and B
being persons of fixed and inelastic income government servants
are finding it difficult to balance their budget. One of the methods
by which real and substantial relief can be given to them is to
provide them with articles of daily requirement at reasonable rates.

Government have, therefore, decided to set up a corporation wholly C
financed by government for establishing a chain of stores throughout
the State for supply of essential commodities to the State Government
employees at normal rates. It is hoped that the scheme will not only
provide substantial relief to the families of government employees,
but will also help in bringing down prices generally. The salient D
features of the scheme are given in the attached note.

In the meantime the scheme will function under the supervision and
management of a staff welfare Board at the Headquarters of
Government. The Board will consist of the following : -
E
i) Chief Secretary .... President

ii) Commissioner and Secretary, Finance Department

iii) Commissioner and Secretary, Food & Civil Supplies Deptt. F

iv) Secretary, Industries Department

v) Secretary, Appointment Department

vi) Director of Industries, U.P. G

vii) Deputy Secretary, Welfare Scheme, Chief Secretary's Branch
...... Secretary

To fulfil the above object contained in the letter of the Chief Secretary H
310 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A which was addressed to all departments of the State, a society was formed
and registered under the Societies Registration Act, 1860 with the name of
the society as Uttar Pradesh Rajya Karamchari Kalyan Nigam. In the
Memorandum of Association of the Corporation in clause (3), objects of the
Corporation are stated to be as uncler : -
B
i) To carry on and promote activities aimed at the welfare of the
employees of the State Government and to equip itself with
capital, credit, means, resources and technical and managerial
assistance for this purpose.

C ii) To provide and help for the welfare of the employees, the places
of interests, recreation, sports and medical attendance and to
subscribe money to or for, or otherwise help any other charitable
and benevolent object which is in the opinion of the Corporation
useful to the employees.
D
iii) To establish and run stores, shops, canteens for carrying on retail
business in essential commodities of daily use and other consumer
goods without profit motive in such localities within the State of
Uttar Pradesh as the Board of Directors of the Corporation may
decide from time to time.
E
iv) To help by planning sales of the said commodities in a no profit,
no loss basis as a whole in maintaining the prices of such
commodities at a reasonable level to the advantage of the
community as a whole.
F
v) To act as an agent or stockist on behalf of any government or any
institution, manufacturer or concern for procurement, supply and
distribution of consumer goods.

vi) To make or enter into arrangements for transport, processing,
G manufacturing, grading, packing and distribution of consumer
goods.

j
vii) To acquire by purchase or on lease or hire or by licences or
otherwise, buildings and premises required for the activities of the
H Corporation.
V.K. SRIVASTAVA,._ U.P. RAJYA KARMACHARI KALYAN NIGAM [DHARMADHIKARI, J.]311

viii) To lease or let on hire, mortgage, sale, pledge or transfer by A
licence or otherwise and lands, buildings or other property
moveable or immoveable.

ix) To enter into any arrangements with the Union or the State
Government or any local authority or any person for the purpose
of carrying out the objects of the Corporation or furthering its
B
interests and to obtain from such government of authority or
person subsiding, loans, indemnities, grants, contract licences
rights, concessions, privileges or immunities which the Corporation
may think it derisable to obtain and exercise and comply with any
such arrangements, rights privileges and concessions. c
x) To erect buildings or other structures on lands acquired by the
Corporation in any manner.

xi) To accept gifts, donations etc., of any nature, whatsoever.
D
xii) To lend or borrow money on such terms and conditions as it
thinks fits.

xiii) To draw, make, accept, endorse, discount, execute, and issue
cheques, promissory notes, bills of exchange or other negotiable
or transferable instruments. E

xiv) To do all such other matters and things as may appear to be
incidental or conducive to the attainment of the above objects or
any of them or consequential upon the exercise of its powers or
discharge of its duties. F
The first members including office bearers of the governing body with
the names, addresses and occupation indicate that they are working for the
Corporation ex officio holding different executive posts in different
departments of the State of Uttar Pradesh. The Rules of the Association of
the Corporation are also registered. Rule 5 makes it clear that members of G
the Corporation or the Board who are members by virtue of their offices
which they hold in the State shall stand terminated when they cease to hold
the office in the State and their successors to that office shall become
members. The names of the members and office bearers of the governing
body are as under :- H
312 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A 1. Shri K. K. Dass
Chief Secretary to Govt. Chairman of the
Ex officio Board Board

2. Shri V. M. Bhide
B Commissioner & Secretary, Finance
Deptt. UP Govt. Ex officio Director

3. Shri H. C. Saxena
Secretary, Industries Deptt.
Ex officio Director
c
4. Shri Bhagwant Singh
Commissioner & Secretary,
P&C Deptt. UP Govt. Ex. Officio Director

D 5. Shri B. B. Malik
Director of Industries,
UP Ex officio Director

6. Shri B. L. Chak
E Secretary, Appt. & G.A.D.
Ex officio Director

7. Shri S. B. Saran
Dy. Secretary, Chief Secretaries
Branch, UP Govt. Ex officio Exe. Director
F
of the Board

The most important is clause 4 of the Memorandum of Association of
the Corporation which reads thus :-

G "If on the winding up or dissolution of the Corporation there shall
remain, after the satisfaction of its debts and liabilities, any property,
the same shall not be paid to any of its members or distributed
amongst them but subject to the provisions of section 14 of the Act
shall be disposed of in such manner as the State Government may
H determine."
V.K. SRIVASTAVA "· U.P. RAJY A KARMACHARI KAL YAN NIGAM [DHARMADHIKARI, J.) 313

Rule 4 of the Rules of Association of the Corporation is also relevant A
· for the purpose of finding out the real nature of the Corporation. It reads
thus :-

"The Board may with the previous approval of the State Government
admit any employee of the State Government as member of the B
Corporation."

Similarly, rule 6 is also relevant and reads thus : -

"The Board may, subject to its general control and supervision anci
subject to such restrictions as it may like to impose, delegate all or C
any of its powers to any one or more members of the Board. The
Board may, likewise delegate any of its powers, not being the
powers under clause (b), (c), (h), (i) and (k) of sub-rule 5 of rule
3 of the said Rules in favour of any officer of the Corporation or
to an officer of the State Government, not below the rank of a D
District Magistrate (which will include an Additional District
Magistrate also)."

[Emphasis supplied]

Similarly, rule 12 confers powers of the delegation on Executive E
Director in favour of any officer of the Corporation or the State. It reads
thus :-

"The Executive Director may, subject to his general control and
supervision and such restrictions as he may like to impose delegate F
all or any of his powers to any officer of the Corporation or of the
State Government."

Rule 17 dealing with amendments of the rules puts restriction on
amendments or variation of the rules which can be done only with prior
approval of the State Government :- G

Rule 17 "The Corporation may add to, amend, vary or delete the
rules.
.••
Provided that no such rules shall be added to, amended, varied and H
314 SUPREME COURT REPORTS (2004) SUPP. 6 S.C.R.
•
A deleted unless a resolution to that effect has been passed by not less
than 3/5th of the members present in the meeting of the Corporation
specially called for that purpose and provided further that no such
rules shall be added to, amended, varied or deleted without the
prior approval of the State Government. "
[Emphasis supplied]
B
So far as funding and financing of the Corporation are concerned,
petitioner has filed additional documents in this appeal containing various
grants annually made from time to time by the State Government to the
Corporation. Letter dated 14.1.1992 of Joint Secretary, Govt. of U.P. to the
C Executive Director of the Corporation informed that additional grant of 50
lacs was granted for the financial year l 991-92 for expenditure of I 00%
amount on the salary allowances of employees working in the Headquarters
of the Corporation and 50% of the amount spent on salaries and allowances
of employees working at the canteens. By letter dated 15.9.1994 the State
D Government granted sanction for revival of the post of Assistant Director
earlier sanctioned in the year 1980 for the Corporation. By letter_6.9.1997,
the earlier grant of 75% in the year 1996-97 was increased to .cent percent
to meet the expenditure of salaries and allowances of employees ofcanteens
run by the Corporation. By letter dated 16.12.1999, the Secretary of
Government ofUttar Pradesh wrote to the Commissioner, Food and Supplies
E ·Deptt. And the Executive Director of the Corporation that to solve the
problem of pending bills of the Corporation with the Secretariat
Administrative Department, against the total bill of Rs. 1.12 crores, the Food
Department will immediately pay the amount from its trading account which
will be reimbursed to the Department on receipt of budget. It was also
F directed that a sum of Rs. 45 lacs every quarter shall be made available by
the Food Department to the Corporation on which the Corporation will pay
interest at the rate of 12.34%. By letter dated 16.9.1999, the Secretary
informed the Commissioner ofFood and Supplies Department and Executive
Director of the Corporation that the Food Department will provide amount
up to Rs. 10 crores from its trading account to the Corporation as working
G capital for its business and Food Department will be responsible for return
of the working capital made available to the Corporation within time. The
letter, however, directs the Corporation to return the said amount with
interest through a cheque to Commissioner, Department of Food and Civil
Supplies before 31.3.2000. On the expenditure of the working capital provided
H some restrictions have been placed which read thus:-
V.K. SRIVASTAVA v. U.P. RANA KARMA CHARI KALYAN NIGAM [DHARMADHIKARI, J.] 315

"Out of this working capital, the Corporation will purchase products A
already approved or to be approved in future by the Product Approval
Committee ofU .P. State Employees Welfare Corporation constituted
vide GO dated 4.9.1999. The Food Commissioner will separately
maintain account for the arrangement and will ensure that it functions
smoothly." B
Letter sent on 7 .3.2001 by the Executive Director of the Corporation
to all District Magistrates indicates overall control on the activities of the
Corporation by the functionaries of the State. The contents of the letter
directing physical verification of stocks of essential commodities in variol!s
stores of the Corporation through the Commissioner and Secretary of Food C
and one gazetted officer nominated by District Magistrate is a clear pointer
to the pervasive control exercised by the State and its officers on the
functioning and activities of the Corporation.

The multiple test which is to be applied to ascertain the character of D
a body as falling within Article 12 or outside as laid down by majority view
in Pradeep Kumar Biswas case (supra) is to ascertain nature of financial,
functional and administrative control of the State over it and whether it is
dominated by the State Government and the control can be said to be so deep
and pervasive as described the minority view in Pradeep Kumar Biswas case
(supra) so as to satisfy the court 'of brooding presence of the government' E
on the activities of the Corporation.

We may, therefore, briefly indicate the evidence produced· by the
parties relevant to the mu Itip le test to determine the composition and character
of the Corporation : - F

Administrative Control :-

The Corporation was formed by a decision of the government with the
object of providing articles of daily requirement to the government servants
at reasonable rates. In this respect, the contents of the minutes of the meeting G
held on 1.10.1971 in the Chairmanship of Minister of Food for considering
the note prepared by the Cabinet of the Government with Chief Secretary,
Commissioner and Secretary to Food and Commissioner and Secretary,
finance is revealing. In the course of meeting, the Chief Secretary suggested
that the finances of the Corporation can be raised by raising share capital H
316 SUPREME COURT REPORTS [2004] SUPP. 6 S.C.R.

A to be sold to the government employees. The Food Secretary thereupon
objected to the proposal saying that the Corporation is a government
organization and raising of share capital would change its character froiµ
government institution to a cooperative institution. The minutes also record
the suggestion of the Chief Secretary that as the government employees are
B being provided facility of making them available articles of daily need on
reasonable price apart from dearness allowance in cash, the activities of the
Cprporation and the object for which its set up, should be made known to
the Pay Commission.

By notification dated 0 I .4.1987, issued in exercise of powers under
c sub-section (3) of section 3 of the U.P. Shops and Commercial Establishments
Act, 1962, all stores, depots and canteens run by the Corporation have been '
exempted from the provisions of section 4(b) of the said Act.

From the memorandum of the Articles of Association, it is clear that
D one of its objects is that it can act as an agent or stockist on behalf of the
government. The members and office bearers of the Corporation are all
executive officers of the State representing different departments concerned
with civil supplies. They are on the management of the Corporation in their
capacity as officers of the State Government. In accordance with Rule 4 of
the Rules of Association, other employees of the State Government can be
E included as members of the Corporation only with the previous approval of
the State Government. In accordance with rule 6, the Board may delegate
specified powers to the officers of the State Government not below the rank
of District Magistrate or Addi. District Magistrate. Similarly, in accordance
with rule 12, Executive Director can delegate his powers to any officers of
F the State Government. The rules of the Corporation can be added to, amended,
varied or deleted only with prior approvul of the State Government. The
above mentioned objects and the provisions in the memorandum and. rules
of the Corporation clearly go to show that the administrative control of the
Corporation vests in the Executive Officers representing different departments
of the State.
G
Financial Control :-

The financial control of the Corporation is to a large extent with the.,
State Government. Hundred percent grant is made for payment of the salary
H of employees at the Headquarters of the Corporation and initially 50% grant
V.K. SRIVASTAVA 1•. U.P. RANA KARMACHARI KAL YAN NIGAM [DHARMADHIKARI, J.] 317

was given for employees working in the canteens which was later increased A
to 75% and lastly cent percent. Working capital to the Corporation was made
available by the Food Department to the extent of I 0 crores and although
the amount is returnable but its expenditure and reimbursement is to be
ensured by Secretariat Administrative Department of the State ofU.P. In the
letter dated 16.9.1999, working capital of 10 crores is provided to the B
Corporation with the responsibility placed on the Food Department for its
return. Admittedly, therefore, there is total financial support to the Corporation
of the State ofU.P. although it is expected that the Corporation will generate
sufficient amount to be able to run on 'no profit no loss' basis.

Functional Control :- c
There is complete functional control of the Corporation by the State
which is evident from the fact that Executive Officers of the State are ex
officio members and office bearers of the Corporation. From the minute$ of
the meeting held in the Chairmanship of Minister for Food with Commissioner D
and Secretary of Food and Civil Supplies Department, there is an indication
that the government has taken responsibility to finance and fund the
Corporation. The proposal, therefore, to raise share capital was declined. For
auditing the accounts of the Corporation, services of Chief Finance Officer
of the State were made available to the Corporation.
E
Most revealing is the letter dated 07.3.2000 mentioned above which
describes the Corporation as an undertaking of the State and directs physical
verification of the stocks in stores of the Corporation to be done by Gazetted
Officer or Incharge Officer to be nominated by District Magistrate for the
District in which the depot or store is operated. More important to indic~te F
administrative and functional control is clause (4) of the Memorandum of
Association which provides that on winding up or dissolution of the
Corporation, the property available after satisfaction of debts and liabilities
will not go to its members but shall be at the disposal of the State Government.
As observed in the minority view in the case of Pradeep Kumar Biswas
(supra) ifthe corporate mask of the registered society is removed it clearly
exposes the real nature of the Corporation as entity of the State.

On behalf of the Corporation, learned counsel highlighted the

... Constitution of the Corporation and the Articles of the Association which
regulate its affairs. It is submitted that it is an autonomous body. The H
318 SUPREME COURT REPORTS (2004] SUPP. 6 S.C.R.

A Corporation is not engaged in any State function of vital importance making
available daily needs of the government servants which is an activity like
any other commercial activity. It is also submitted that merely because there
is 'patronage', encouragement, push or recognition to the Corporation of the
State, it would not make it as an entity following within the definition of
B 'State' under Article 12 of the Constitution.

We have in detail and very carefully examined the Constitution and
Articles of Association of the Corporation by which it is regulated.

On detailed examination of the administrative, financial and functional
c control of the Corporation, we have no manner of doubt that it is nothing
but an 'instrumentality and agency of the State' and the control of the State
is_ not only 'regulatory' but it is 'deep and pervasive' in the sense that it is
formed with the object of catering to the needs of the government employees
as a supplement to their salaries and other perks. The top executives of the
D government department ex officio are members and office bearers of the
Corporation. The Corporation is fully supported financially and
administratively by the State and its authorities. Even day-to-day functioning
of the Corporation is watched, supervised and controlled by the various
departmental authorities of the State particularly the Department of Food
and Civil Supplies. The multiple test indicated to be applied both by the
E majority and minority view in Pradeep Kumar Biswas (supra) is fully
satisfied in the present case for recording a conclusion by us that the
Corporation is covered as an 'agency and instrumentality of the State' in
the definition of'State' under Article 12 of the Constitution. It is, therefore,
amenable to the writ petition of the High Court under Article 226 of the
F Constitution.

Before parting with the case, it is necessary for us to clarify that even
though a body, entity or Corporation is held to be a 'State' within the
definition of Article 12 of the Constitution what relief to the aggrieved
person or employee of such a body or entity is to be granted is a subject
G matter in each case for the court to determine on the basis of the structure
of that society and also its financial capability and viability. The subject of
denial or grant of relief partially or fully has to be decided in each particular
case by the court dealing with the grievances brought by an aggrieved
person against the bodies covered by the definition of 'State' under Article
H 12 of the Constitution.
V.K. SRIVASTAVA'" U.P. RANA KARMACHARI KALYAN NIGAM [DHARMADHIKARI, J.] 319

In the result, the appeal is allowed. The impugned order dated A
30.9 .1999 of the High Court dismissing the writ petition on the preliminary
ground based on Article 12 of the Constitution is set aside. The case is
remitted to the High Court for taking a decision on the merits of the case.
In the circumstances, the parties shail bear their own costs in this Court.
B
K.K.T. Appeal allowed.