w w w . L a w y e r S e r v i c e s . i n

K.V. Xavier & Others v/s State of Kerala, Represented by The Secretary, Department of Health & Family Welfare, Thiruvananthapuram & Others

Company & Directors' Information:- S. O. HEALTH CORPORATION PRIVATE LIMITED [Active] CIN = U74999TG2017PTC119704

Company & Directors' Information:- V-FAMILY PRIVATE LIMITED [Active] CIN = U93090MP2020PTC051385

Company & Directors' Information:- WELFARE PVT LTD [Active] CIN = U74999WB1946PTC014414

Company & Directors' Information:- E-HEALTH INDIA PRIVATE LIMITED [Strike Off] CIN = U85110DL2001PTC113461

Company & Directors' Information:- HEALTH & WELFARE PVT LTD [Strike Off] CIN = U85110WB1954PTC021479

    WP(C). Nos. 33329 of 2018 (M) & 15749 of 2019 (P)

    Decided On, 16 September 2020

    At, High Court of Kerala


    For the Appearing Parties: Gens George Elavinamannil, R.S. Kalkura, M.S. Kalesh, Harish Gopinath, R. Bindu, P. Anjana, Johnson Jose Panjikkaran, P.I. Najumal Hussain, Neenu Pavithran, R. Harikrishnan (Kambisseril), Nikhil K. Gopinath, K.M. Rashmi, Government Pleader, R.S. Kalkura, Gopakumar R. Thalayil, M.S. Vijayachandran Babu, Advocates.

Judgment Text

1. W.P.(C) No.33329 of 2018 has been filed by three Ex-servicemen, seeking to direct respondents 1 to 3 to comply with the directions contained in Exts.P1 to P4 and to employ to the post of Guards in the establishment of the second respondent only persons deployed through the fourth respondent. W.P.(C) No.15749 of 2019 has been filed by Kerala Ex-servicemen Welfare and Rehabilitation Corporation (the fourth respondent in W.P.(C) No.33329/2018) seeking to direct respondents 1 and 2 to comply with the directions contained in Exts.P1 to P4 and employ to the post of Guards in the establishment of the second respondent at the rates prescribed under prevailing Government Orders for personnel deployed through the petitioner-Corporation. Since W.P.(C) No.15749 of 2019 contains more materials to decide the issues involved, it is considered as the main case and the parties are referred to as contained in the cause title to W.P. (C) No.15749 of 2019.2. The petitioner is a Corporation registered under Section 25 of the Companies Act, 1956. The object of the petitioner-Corporation is to formulate, promote and implement any Scheme aimed at the welfare of the Ex-servicemen. The petitioner is represented by its Administrative Officer, who is a Deputy Secretary to the Government of Kerala, on deputation to the Corporation. The petitioner- Corporation has been established by the Kerala State Government to rehabilitate the Ex-servicemen, war widows and their dependents. The main object of the Corporation is to provide Ex-servicemen for various organisations including Central and State Public Sector Undertakings as security personnel. The petitioner though owned by the Government of Kerala, does not receive any financial assistance from the Government.3. The second respondent is Trivandrum Medical College Hospital Development Society. The petitioner and second respondent have entered into a contract for supply of manpower as per Ext.P5 agreement dated 01.12.2015. In Ext.P5, it was agreed that the second respondent-Hospital Development Society would engage Security Guards from the petitioner-Corporation for daily wage of Rs. 400/- per day plus 5% service charge and service tax as applicable. The said rate was fixed based on Ext.P6 G.O. dated 28.10.2014, contends the petitioner. Subsequently, the rates prescribed in Ext.P6 were revised by the Government as per Ext.P7 G.O. dated 26.02.2016. By Ext.P7, the daily wage of Security Guards was fixed as Rs. 675/-.4. On the expiry of the period of contract, the petitioner sought for renewal of contract, as per wages fixed under Ext.P7. However, the second respondent refused to accept the said wage rate. The contract was, however, renewed for three months from 10.12.2017, as per Ext.P8. Under compulsions, the petitioner renewed the contract for one more year and a fresh contract, Ext.P9, was entered into for the period up to 09.03.2019.5. In the meanwhile, the Government revised the rates of wages covered by Exts.P6 and P7, as per Exts.P10 and P11. By Ext.P11, the daily wage of Security Guards was revised as Rs. 725/- per day. In spite of such enhancement in daily wages in respect of Security Guards engaged in other arms of the Government, the second respondent did not care to extend the same wages to the Ex-servicemen employed through the petitioner-Corporation. The second respondent, however, stated as per Ext.P12 that contract with the petitioner can be renewed at a consolidated wage rate of Rs. 550/- inclusive of 18% GST, 13% EPF and 5% Service Charges. The petitioner was not ready to accept the said amount. If the said rate is accepted, a Security Guard would get only a wage of Rs. 310/- per day, which is less than the minimum wages prescribed, contended the petitioner.6. On an application made under the Right to Information Act, the petitioner was informed as per Ext.P15 that the second respondent has appointed certain Guards at daily wage of Rs. 722/- per day. It is under such circumstances that the petitioner-Corporation has approached this Court. W.P.(C) No.33329 of 2018 has been filed by three Ex-servicemen Security Guards with similar prayers and on similar grounds.7. The counsel for the petitioners argued that the 2nd respondent is bound to engage Security Guards through the petitioner-Corporation and such engagement should be based on the rates of wages prescribed as per Exts.P1 to P4 and revisions made by the Government thereafter. The action of the second respondent in engaging daily wage Security Guards from other sources is illegal. The petitioners contended that the respondents are compellable to engage Security Guards on daily wages only through the petitioner- Corporation and to pay wages to them as prescribed by the Government in Exts.P1 to P4.8. The second respondent-Hospital Development Society filed a counter affidavit. The second respondent stated that it is a Society registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. The primary object of the Society functioning in Government Medical College Hospital, is to ensure better services to the public without any financial commitment to the Government. The Society has been imparting its service for the last 24 yeaRs. The Society appointed several employees on daily wage basis in different categories, to operate many units under the Society, such as Hospital Laboratory, CT/MRI Scan units, X-Ray units and also appointed cleaning staff, security staff etc., to make good the deficiency of Government staff in the hospital.9. The Society has no financial aid from the Government, contended the 2nd respondent. The Society is functioning for the welfare of the public especially for critically ill patients, with limited income. In such a situation, employees engaged by the Society cannot aspire for pay scales, wages etc. as applicable to government servants. The petitioner is supplying Security Guards to the Hospital Development Society only from the year 2015, based on a bipartite agreement for a limited period. The Hospital Development Society is not in a financial position to pay remuneration to the Security Guards at the rates prescribed by the Government. The second respondent stated that the dispute has been reported to the higher authority of Hospital Development Society, namely the Chairman and District Collector, Thiruvananthapuram, for final decision.10. The additional third respondent–Government Medical College Hospital represented by its Superintendent, filed a statement. The additional third respondent contended that KEXCON was entrusted to supply security staff with an assumption that their rates are competitive and services are good. But, the Security Guards deputed by the petitioner were arrogant to the patients, bystanders and even to the hospital staff. Hence, the third respondent was constrained not to renew the agreement. According to the additional third respondent, the Government Circular dated 05.10.2019 is not applicable to the Society.11. Heard learned counsel for the petitioners, learned counsel appearing for the Hospital Development Society and learned Government Pleader representing other respondents.12. The questions involved in these writ petitions are whether the Medical College Hospital Development Societies are obliged to recruit security staff/guards exclusively from the Kerala Ex-servicemen Welfare and Rehabilitation Corporation and whether the Hospital Development Societies are bound to pay wages to the Security Guards as per Exts.P1 to P4 orders, revised from time to time. An incidental question also arises whether the Hospital Development Society is a private entity or whether it is an instrumentality of the State.13. The Government of Kerala has issued Ext.P1 GO(MS)179/2005/GAD dated 04.06.2005 wherein it has been made clear that all Departments, Public Sector Undertakings, local bodies, other quasi-government organisations and establishments will engage security personnel sponsored by the petitioner-Corporation for security related duties on contract basis. The Government of India, Ministry of Defence has issued Ext.P2 Office Memorandum stating that in order that larger number of individual Ex-servicemen (ESMs) can avail sponsorship from Director General of Resettlement (DGR) and also ensure reasonable income to the ESMs, provisions are made to make the process of sponsorships for security agencies more transparent. The State ESM Corporations/Nigams will operate in respective States only as per Department of Public Enterprises O.M. dated 04.10.2005.14. The Government of Kerala as per Ext.P3 Circular dated 12.12.2005 has ordered that in order to support Ex-servicemen, Government have issued instructions to all heads of Departments, Public Sector Undertakings, local bodies and other quasi-government organisations and establishments, asking them to approach the Corporation and receive security services sponsored by the Corporation only and not from any other private agencies/Ex-servicemen sponsored by private agencies, for any contract job/employment. All Heads of Departments, Managing Directors/Chief Executives of Public Sector Undertakings and Head of the institutions of local bodies and other quasigovernment organisations were directed to engage security personnel from the KEXCON for security related duty and not to invite tender/quotation from private agencies for that purpose.15. By Ext.P4 Circular dated 01.10.2012, the Government of Kerala again ordered that engagement of personnel should be from KEXCON for security related duties and not to invite tender/quotation from private agencies. From the pleadings in the writ petition, it is evident that the petitioner-Corporation is the one described in various Government Orders as KEXCON. The Administrative Officer who has sworn affidavit in support of WP(C) No.15749/2019, is stated to be Deputy Secretary to Government of Kerala, who is on deputation to the petitioner-Corporation. Therefore, it is clear that Exts.P1, P2 and P3 Government Orders/Circulars put the petitioner-Corporation on a privileged position inasmuch as for recruitment of Security Guards on daily wages, the departmental authorities and other quasigovernment organisations have to approach the petitioner- Corporation and can engage Ex-servicemen as security staff only through the petitioner-Corporation.16. The question then arises whether the Hospital Development Society is a Governmental or quasi-government institution so as to attract Exts.P1 to P3. The Society is registered under Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. On a pointed question, the learned counsel for the Hospital Development Society submitted that the Chairman of the Society is District Collector (Ex-officio). Other members of the Society are Director of Medical Education, Principal of Govt. Medical College, Superintendent of Government Medical College, Superintendent of SAT, Superintendent of Ophthalmic Department, Professor and the Head of Dental College, Director of Pharmacy College, Director of Priyadarshini Institute, four Heads of Departments of the Medical College, by rotation, the Executive Engineer PWD, the Executive Engineer KWA, the Executive Engineer KSEB, etc., all in their Ex-officio capacity. The Mayor/Chairman of the local body, local MP/MLA, one representative of recognised political parties, representatives of Rotary Club/Lions Club and two independent persons from the public nominated by the Government, are also made members of the Society. A perusal of the above list would show that the Hospital Development Society is predominantly controlled by Government officials and the District Collector acts as its Chairman.17. The Honourable Justice Mathew in his concurring judgment in Sukhdev Singh v. Bhagatram Sardar Singh Rahuvanshi [(1975) 1 SCC 421] held that a State is an abstract entity. It can only act through the instrumentality or agency of natural or juridical persons. Therefore, there is nothing strange in the notion of the State acting through a Corporation and making it an agency or instrumentality of the State.18. For identifying such an agency or instrumentality, His Lordship laid down four Indicia as follows:-1. A finding of the State financial support plus an unusual degree of control over the management and policies might lead one to characterise an operation as State action.2. Another factor which might be considered is whether the operation is an important public function.3. The combination of State aid and furnishing of an important public service may result in a conclusion that the operation should be classified as State agency. If a given function is of such public importance and so closely related to a governmental function as to be classified as a government agency, then even the presence or absence of State financial aid might be irrelevant in making a finding of State action. If the function does not fall within such description then mere addition of state money would not influence the conclusion.4. The ultimate question which is relevant for our purpose is whether such a Corporation is an agency or instrumentality of the government for carrying on a business for the benefit of the public. In other words, the question is, for whose benefit what is the corporation carrying on the business?19. In Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489], the Hon'ble Apex Court laid down the following tests:-(1) One thing is clear that if the entire share capital of the Corporation is held by Government, it would go a long way towards indicating that the Corporation is an instrumentality or agency of Government.(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the Corporation, it would afford some indication of the Corporation being impregnated with governmental character.(3) It may also be a relevant factor … whether the corporation enjoys monopoly status which is Stateconferred or State-protected.(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality.(5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality of agency of Government.(6) 'Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government.The question in each case would be whether in the light of cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. When the control is merely regulatory, whether under statute or otherwise, it would not make the body a State.20. The status of the second respondent–Hospital Development Society has to be considered in the backdrop of criteria laid down by the Honourable Apex Court. The Society is registered under the Travancore Cochin Literary, Scientific and Charitable Societies Registration Act, 1955. From the constitution of the managing body of the Society, it can be seen that the administration of the Society is in effect with various government officials working in their Ex-officio capacity. The District Collector concerned is the Chairman of the Society. It may be true that the Government is not directly providing any financial assistance to the Society. However, the Society is permitted to run Laboratories, CT/MRI Scan units, X-Ray units, etc. in the Medical College Hospital premises levying fees from patients. This is an exclusive privilege given to the Hospital Development Society, from which the Society raises funds. Furthermore, the Society raises funds only through this privilege granted. It is with these funds that the Society engages cleaning staff and security staff for the maintenance and protection of the Medical College Hospital. The second respondent, in its counter affidavit, has categorically stated that the Society is intended to rectify the deficiency of government staff in the hospital and that the primary object of establishing Hospital Development Society in Government Medical College Hospitals, is to ensure better services to the public without any financial commitment to the Government.21. Running a Government Medical College is the function of the Government. The Government is expected to provide health services such as CT/MRI Scan, X-Ray units and Laboratories in the Government Medical College Hospital. Providing security to the Government Medical College Hospital is also a responsibility of the Government.22. The second respondent-Society, with the privilege conferred on it, is functioning within the Medical College Hospital premises. The Society levy fees though it may not be for profiteering. It is with the fees so levied that the Society provides such services. These services are otherwise expected to be extended and provided by the Government. The pervasive control over the society arising from its control and administration by a body dominated by various governmental authorities, the important public functions which it discharge, the exclusive privilege conferred on the Society by the Government and the indirect monetary support given to the Society by the Government, would all indicate and establish that the second respondent-Hospital Development Society is an instrumentality of the State. It is a quasigovernment body.23. By Ext.P1 Government Order, the Government of Kerala has directed all Departments, Public Sector Undertakings, local bodies, other quasi-government organisations and establishments that they should engage security personnel sponsored by the Kerala State Ex-servicemen Development and Rehabilitation Corporation only, for security related duties. This order has been followed by Exts.P3 and P4 Circulars wherein also the Government of Kerala has directed all Heads of Departments, Managing Directors/Chief Executives of Public Sector Undertakings and Head of the institutions of local bodies and other quasigovernment organisations, to engage personnel from KEXCON for security related duties and not to invite tender/quotation from private agencies for the purpose. As long as Exts.P1, P3 and P4 stand, the second respondent which is a quasi-government institution, is bound to engage security staff exclusively from the petitioner-Corporation.24. The question then arising is whether Exts.P6, P7, P10 and P11 orders issued by the Government of Kerala prescribing wages for daily rated employees, would apply to the second respondent-Society and whether the second respondent-Society, which is held to be an instrumentality of the State, is bound to pay wages to its daily rated employees including security staff at the rates specified in the afore ordeRs. Ext.P6 Government Order fixing daily wage of Security Guards at Rs. 400/- would show that the said order is intended for daily wage workers engaged by the Government. Ext.P7 order by which daily wage of Security Guards is fixed as Rs. 675/- is intended to apply only to Government Departments, Educational Institutions and grant-in-aid institutions. By Ext.P11 order, the daily wage of Security Guards has been revised to

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Rs. 725/-. Ext. P11 would show that such rates of wages prescribed under it would apply to certain other institutions/categories also.25. However, it is not clear whether the Government has intended to take in the second respondent-Society within the ambit of Ext.P11. In the circumstances, the prayer of the petitioners to pay wages to security staff deployed by the petitioners as per the rates prescribed in Ext.P11 cannot be allowed as such. But at the same time, it is necessary that the first respondent-State of Kerala pay its attention to this issue and give a clarification as to whether Ext.P11 order revising rates of wages of daily rated employees is to be applied to the security staff engaged by the second respondent-Society through the petitioner in W.P.(C) No.15749/2019. Therefore, the first respondent is directed to issue necessary instructions/pass appropriate orders clarifying the applicability or otherwise of Ext.P11 order to the security staff engaged by the second respondent-Society. This shall be done within a period of three months.26. The 2nd respondent is presently paying wages to security staff at the rate of Rs. 400/- plus service charges @ 5% per day. The wages paid to daily rated security staff in Government Departments, educational institutions and grant-in-aid institutions are at the rate of Rs. 725/- per day. The second respondent during negotiations, had offered to pay wages at the rate of Rs. 500/- plus 5% service charges. In the facts of the case, this Court is of the opinion that some interim measures have to be made in the matter of payment of wages to the security staff engaged by the 2nd respondent through the petitioner-Corporation, till the first respondent-State takes a final decision as directed hereinabove. Therefore, the second respondent is directed to pay daily wages to the security staff deployed by the petitioner in W.P.(C) No.15749/2019 at the rate of Rs. 500/- plus 5% service charges and GST as applicable, with effect from 10.03.2020 as an interim measure and till the Government of Kerala takes a final decision in the matter, as directed above.The writ petitions are disposed of as above.