Supreme Court Allows Withdrawal of Petitions on NCCF’s Status as ‘State’ in Service Law Matters (07 January 2022)

Date of the Judgment: 07 January 2022

Citation: Not Available

Judges: Uday Umesh Lalit, J. and S. Ravindra Bhat, J.

Can an organization like the National Co-operative Consumers’ Federation of India Limited (NCCF) be considered a ‘State’ under the Constitution, making it subject to the High Court’s writ jurisdiction? The Supreme Court addressed this question indirectly by allowing the withdrawal of petitions seeking to declare NCCF as a ‘State’ and claim various service benefits. This case revolves around the long-standing debate on whether NCCF’s employees can enforce their service-related claims through writ petitions under Article 226 of the Constitution. The bench comprised Justices Uday Umesh Lalit and S. Ravindra Bhat.

Case Background

The case originated from a dispute regarding whether NCCF is a ‘State’ under Article 12 of the Constitution. The employees of NCCF sought various service benefits, including arrears from the 6th and 7th Pay Commissions, dearness allowance, leave encashment, and other retirement benefits. The petitioners, N.C.C.F. Employees Union, contended that NCCF should be considered a ‘State’ to enforce these claims through writ jurisdiction. This was due to conflicting judgments from the High Court of Judicature at Patna and the High Court of Delhi. The High Court of Judicature at Patna had previously held NCCF to be a ‘State’, while the High Court of Delhi had taken the opposite view.

Timeline

Course of Proceedings

The High Court of Delhi had ruled that NCCF was not a ‘State’ in J.S. Arneja vs. N.C.C.F.. However, the High Court of Judicature at Patna, in two separate cases, held that NCCF is a ‘State’ and thus subject to writ jurisdiction. A Division Bench of the High Court of Judicature at Patna upheld the decision of the Single Judge. The NCCF then appealed to the Supreme Court, which granted leave but did not stay the Patna High Court’s judgment. Subsequently, NCCF withdrew its appeals, leading the petitioners to argue that NCCF had accepted the Patna High Court’s decision, thus making NCCF a ‘State’. The present writ petitions were filed seeking a declaration that NCCF is a ‘State’ and for consequential service benefits.

Legal Framework

The core legal issue revolves around Article 12 of the Constitution of India, which defines the term ‘State’ for the purpose of enforcing fundamental rights. Article 12 states, “In this part, unless the context otherwise requires, the State includes the Government and Parliament of India and 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.” The petitioners argued that NCCF falls within the ambit of ‘other authorities’ under Article 12, making it amenable to writ jurisdiction under Article 226 of the Constitution. The interpretation of ‘State’ under Article 12 determines whether an entity can be compelled through writ jurisdiction to fulfill its obligations, including service-related benefits for its employees.

Arguments

Arguments of the Petitioners:

• The petitioners argued that the NCCF should be declared a ‘State’ under Article 12 of the Constitution.
• They contended that the NCCF had implicitly accepted the Patna High Court’s decision by withdrawing its appeals in the Supreme Court.
• They sought liberty to file fresh proceedings under Article 226 of the Constitution to claim service benefits, including:
  • 80% arrears of the 6th Pay Commission.
  • Arrears of dearness allowance from July 2015.
  • Revised pay scales as per the 7th Pay Commission with arrears from 01.01.2016.
  • Payment of leave encashment for the years 2015 and 2016.
  • Pay fixation, upgradation, and promotion of Class IV employees.
  • Payment of Tea Allowance and Medical Reimbursement to Head Office employees.
  • Arrears of Leave Travel Concession from 2005.
  • Retiral benefits/dues to retired employees.

Arguments of the Respondents:

• The Union of India argued that no relief could be claimed against the Central Government in this case.

Issues Framed by the Supreme Court

The Supreme Court did not frame specific issues for adjudication as it allowed the withdrawal of the petitions. However, the core issue was whether the NCCF is a ‘State’ under Article 12 of the Constitution, which would determine if the High Court’s writ jurisdiction could be invoked to enforce the service-related claims of its employees.

Treatment of the Issue by the Court

Authorities

The following authorities were mentioned in the judgment:

Judgment

The Supreme Court allowed the withdrawal of both writ petitions. The Court did not express any opinion on whether NCCF is a ‘State’ under Article 12. The Court granted liberty to the petitioners to file fresh proceedings under Article 226 of the Constitution to agitate their claims. All issues were left open for future adjudication.

How each authority was viewed by the Court:

• The High Court of Delhi’s decision in J.S. Arneja vs. N.C.C.F.* was noted as holding that NCCF is not a ‘State’.
• The Patna High Court’s decisions in Civil Writ Jurisdiction Case No.7042 of 1995* and Civil Writ Jurisdiction Case No.9940 of 1996* and the subsequent upholding of the same in Letters Patent Appeal No.926 of 2008* and Letters Patent Appeal No.863 of 2008* were noted as holding that NCCF is a ‘State’. However, the Supreme Court did not express any opinion on the correctness of either of these views.

What weighed in the mind of the Court?

The Supreme Court’s decision to allow the withdrawal of the petitions indicates a desire to avoid a premature ruling on the complex issue of whether NCCF is a ‘State’ under Article 12. The Court’s primary consideration was to allow the petitioners the opportunity to seek relief through a fresh petition under Article 226 of the Constitution, leaving all issues open for future adjudication. The Court did not delve into the merits of the case, focusing instead on procedural fairness and allowing the petitioners to pursue their claims in an appropriate forum.

The Court’s reasoning was primarily focused on procedural aspects rather than substantive legal analysis. The Court noted the conflicting decisions of the High Courts and the subsequent withdrawal of appeals by NCCF. The Court’s decision to allow withdrawal was based on the principle that the petitioners should have the opportunity to litigate their claims in a proper forum. The Court did not provide a detailed analysis of the legal principles involved in determining whether an entity is a ‘State’ under Article 12.

The Court did not delve into the merits of the case, focusing instead on procedural fairness and allowing the petitioners to pursue their claims in an appropriate forum. The Court’s decision was primarily driven by the need to ensure that the petitioners had the opportunity to seek relief through a fresh petition, while avoiding a premature ruling on the complex issue of NCCF’s status as a ‘State’.

“We need not go into rival contentions. We allow the instant writ petition to be withdrawn, with liberty as prayed for by Mr. Dhingra. All the issues are left open to be decided in an appropriately instituted proceedings.”

“In the circumstances, the writ petition is allowed to be withdrawn, with liberty as prayed for.”

Key Takeaways

• The Supreme Court did not decide whether NCCF is a ‘State’ under Article 12 of the Constitution.
• The Court allowed the withdrawal of the writ petitions, granting liberty to the petitioners to file fresh proceedings under Article 226 of the Constitution.
• All issues related to the status of NCCF as a ‘State’ and the service benefits of its employees were left open for future adjudication.
• The decision highlights the ongoing debate about the definition of ‘State’ under Article 12 and its implications for various organizations.
• The case underscores the importance of procedural fairness and the right of parties to litigate their claims in an appropriate forum.

Directions

The Supreme Court did not issue any specific directions, except to grant liberty to the petitioners to file fresh proceedings under Article 226 of the Constitution.

Development of Law

The case does not establish any new legal principle or change the existing law. The ratio decidendi of this case is that the Supreme Court allowed the withdrawal of the writ petitions, with liberty to the petitioners to file fresh proceedings under Article 226 of the Constitution, leaving all issues open for future adjudication. The case highlights the ongoing debate about the definition of ‘State’ under Article 12 and its implications for various organizations.

Conclusion

The Supreme Court’s decision in this case did not resolve the core issue of whether NCCF is a ‘State’ under Article 12 of the Constitution. Instead, it facilitated the petitioners’ ability to pursue their claims through fresh proceedings in the High Court. The Court’s decision underscores the importance of procedural fairness and the right of individuals to seek redressal for their grievances. The legal question of NCCF’s status remains open for future determination.