Supreme Court To Consider Whether A Company Whose Shares Are Held By Public Sector Undertakings Would Be Instrumentality Of State Under Article 12
The Supreme Court has agreed to decide whether companies like Kerala Industrial and Technical Consultancy Organisation (KITCO) which is a company in which shares are held by several Public Sector Undertakings, is a State under Article 12 of the Constitution.
The Special Leave Petition was filed by KITCO assailing the judgment passed by the Kerala High Court which held that KITCO is a ‘State’ under Article 12 of the Constitution as it is a company incorporated with public entities.
The Bench of Justice Hrishikesh Roy and Justice Prashant Kumar Mishra ordered, “The basic issue in these cases is whether a company where the shares are held by various Public Sector Undertakings, would be an instrumentality of the State, under Article 12 of the Constitution or not…Issue notice… In the meantime, there shall be stay of operation of the impugned judgment of the High Court.”
Advocate Vikas Upadhyay appeared on behalf of KITCO.
The Counsel submitted that KITCO was held to be a State under Article 12 of the Indian Constitution as an instrumentality of the Union of India under the impugned judgment. The Division Bench of the Kerala High Court relied on the judgment of the Madhya Pradesh High Court in Shanti Construction v. Avantika Gas Limited & Ors. (2021) and also the ratio of Patna High Court in Ashok Kumar Singh & Anr. v. Bihar Industrial and Technical Consultancy Organisation Ltd. & Ors. (1997).
The High Court had observed, “We, therefore, deem it necessary to consider the contentions and the materials on record with regard to the 1st respondent. We notice that the Memorandum and Articles of Association of the 1st respondent company would make it clear that it is a company incorporated with public entities, including the SIDBI, IFCI, ICICI Public Sector Banks and Government of Kerala as its share holders. There is, admittedly, no private share holding in the company. The company is recognised as a public sector enterprise by the Central Government and the Government of Kerala and is listed as a Central Government company.”
An appeal by the Welfare Association of KITCO Employees and others was filed before the Division Bench against the judgment of the Single Judge refusing to consider the matter on merits on the ground that the writ petition was not maintainable against KITCO as it was not State.
As per the High Court, about 95% of shares in KITCO were held by either the Government or a statutory company and hence it was a government company. The High Court had held that the respondent company i.e., KITCO is an instrumentality of the Union of India under Article 12 of the Constitution and is, therefore, amenable to writ jurisdiction.
Cause Title: Kerala Industrial and Technical Consultancy Organisation (KITCO) v. Welfare Association of KITCO Employees & Ors.
Appearances:
Petitioner: Advocates Vikas Upadhyay, Ankita Kashyap, Nimish Swarup, Arjun Singh Tomar, Nitin Gaur, Alok Shankar and Ashwin Kumar Nair.