KITCO, A Company Incorporated With Public Entities, Is A State Under Article 12: Kerala High Court
The Kerala High Court held that Kerala Industrial and Technical Consultancy Organisation (KITCO) is a ‘State’ under Article 12 of the Constitution as it is a company incorporated with public entities.
The Court held thus in an appeal filed by Welfare Association of KITCO Employees (WAKE) 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.
A Division Bench comprising Justice Anu Sivaraman and Justice Pratheep Kumar observed, “We, therefore, deem it necessary to consider the contentions and the materials on record with regard to the 1 st 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.”
The Bench added that the affairs of the company are being run under the directions and supervision of its shareholders who are public sector undertakings.
Advocate Abraham Joseph Markos appeared for the appellants while Advocate M. Gopikrishnan Nambiar appeared for the respondents.
In this case, a decision of a Single Judge in K.J. Johnson v. Kerala Industrial and Technical Consultancy and others [ILR 1992 (1) Kerala 808] was relied on by the Single Judge to hold that the writ petition was not maintainable. It was contended on behalf of the appellants that the share holding by the State of Kerala and the control exercised by the State were only considered in the said judgment and that the deep and pervasive control exercised by the State through its instrumentalities on KITCO was completely lost sight of. It was, therefore, submitted that the said finding of the Single Judge requires a reconsideration.
Though an appeal was taken against the judgment, the Division Bench did not answer the question whether KITCO is State or not but proceeded by assuming that it is State for the purpose of Article 12 of the Constitution. KITCO was a Public Sector Undertaking/Government Company which was established by the Industrial Development Bank of India (IDBI) and the Government of Kerala along with other public sector banks/financial institutions/statutory corporations. About 95% of shares in KITCO were held by either Government or statutory company and hence it was a government company.
The High Court after hearing the contentions of the counsel said, “The Government of Kerala habitually nominates two of the Directors of the Company. The provisions of the Memorandum and Articles of Association would make it clear that the SIDBI has a decisive opinion in all matters of policy of the company.”
Furthermore, the Court noted that the large majority of shares of the KITCO are held by admitted instrumentalities of the Central Government and though the State Government has only 3% share in KITCO, it has a decisive representation in the Board by sending two directors out of twelve.
“… the policy decisions of the 1st respondent are controlled by the SIDBI which nominates 1/3rd of the Directors including the Chairman and the Managing Director. It is clear from a reading of the Articles of Association and the documents produced in the writ petition and in this writ appeal that the State and Central Governments themselves specifically consider the 1st respondent as a Central Government company. It is also discernible that the accounts of the 1st respondent are audited by the Comptroller and Auditor General of India treating it as a deemed Government company. It is recognised as an accredited Government agency for the purpose of public works in the State”, it observed.
The Court concluded that 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.
Accordingly, the High Court set aside the judgment under appeal.
Cause Title- Welfare Association of KITCO Employees (WAKE) & Ors. v. Kerala Industrial and Technical Consultancy Organisation (KITCO) & Ors. (Neutral Citation: 2024:KER:5327)
Appearance:
Appellants: Advocates V. Abraham Markos, Isaac Thomas, P.G. Chandapillai Abraham, Alexander Joseph Markos, Sharad Joseph Kodanthara, John Vithayathil, and Aibel Mathew Siby.
Respondents: Advocates B. Ashok Shenoy, K. John Mathai, Joson Manavalan, Kuryan Thomas, Paulose C. Abraham, Raja Kannan, Pooja Menon, P.S. Gireesh, Arjun R Naik, Thejalakshmi R.S., Aaron Zacharias Benny, and E.K.Nandakumar.
