Summary
The High Court erred in directing the ICSSR to release withheld grant-in-aid so that employees of the Centre for Research in Rural and Industrial Development (CRRID) could be paid, on the footing that ICSSR had 'deep and pervasive' control over CRRID. ICSSR's grants are discretionary under its Grant-in-Aid Rules and may be stopped for violation of conditions; one or two nominees on a twelve-member governing body and funding alone do not amount to deep and pervasive control; CRRID is not an Article 12 authority; and there is no employer-employee relationship between ICSSR and CRRID's staff, so the liability to pay salaries rests on CRRID, which was directed to pay the withheld salaries from its own resources.
Issues
- Whether ICSSR's nominee on CRRID's Governing Body and its grant funding amount to 'deep and pervasive' control such that ICSSR could be directed to release withheld grants for the salaries of CRRID's employees.
- Whether ICSSR was justified in withholding its grant-in-aid to CRRID from April 2021 to March 2023 for non-compliance with the corrective measures recommended after enquiries into irregularities.
- Whether ICSSR, as a grant-giving body, is liable to pay the salaries of CRRID's employees in the absence of any employer-employee relationship.
Provisions considered
- Article 12, Constitution of IndiaICSSR, under the full financial and administrative control of the Ministry of Education, is an 'authority' within Article 12; but CRRID is not, and being under some control of an Article 12 authority does not make CRRID one. 'Deep and pervasive' control requires administrative, financial and functional control of a high degree including interference in day-to-day working; mere financing or regulatory control is not enough. (¶¶ 16, 17, 18, 21)
- Rules 3, 4, 6, 11, 16(2), 16(3), 16(10) and 17, ICSSR Rules of Grant-in-Aid to Societies and Institutions Doing Research in the field of Social SciencesGrants are extended only to institutions fulfilling the Rule 4 conditions; Rule 11 declares all grants discretionary and not claimable as of right; Rule 16(3) lets the Council demand refund and stop further grants for non-compliance with conditions; Rule 6 permits withdrawal of assistance after notice for persistent violation; Rule 17 limits the Council to nominating not more than two representatives on the governing body and requires prior approval for constitutional changes. These Rules showed that ICSSR's only control over CRRID was through grant conditions and that stopping the grant was within its powers. (¶¶ 14, 19, 20, 21, 22)
- Rule 22(a)(i) and Rule 22(d), Rules and Regulations of CRRIDThe Governing Body has at most twelve members including seven life members; it may accept nominees deputed by ICSSR or State Governments but may also reject or refer back any proposed nominee without giving reasons, showing that CRRID is an autonomous body not under much control of ICSSR. (¶¶ 14, 15, 16)
- Registration of societies, Societies Registration Act, 1860Both ICSSR and CRRID are registered societies; CRRID, a private society, is to be governed only by its own Rules and the general law applicable to such societies and has absolute authority over its financial and administrative matters. (¶¶ 3, 4, 21)
Held
- The presence of one or two ICSSR nominees (at most four together with State nominees) on a Governing Body of twelve, where the Governing Body can reject nominees without reasons, does not amount to 'deep and pervasive' control. Such control requires administrative, financial and functional control of a much higher degree including interference in day-to-day working; financing, guiding or regulating an institution is not enough. CRRID is not an authority under Article 12 merely because it is under some control of ICSSR, which is one. (¶¶ 15, 16, 17, 18, 21)
- The crucial question was not the degree of control but whether ICSSR was justified in withholding the grant, which the High Court failed to address. Grants under the ICSSR Grant-in-Aid Rules are discretionary and cannot be claimed as of right; ICSSR may demand refund and stop further grants for violation of conditions. Where three committees reported irregularities and CRRID failed, despite ample opportunity, to implement corrective measures, ICSSR committed no fault in withholding the grant from April 2021 to March 2023, a measure the High-Level Committee itself suggested. The withholding decision was never challenged by CRRID, whose counsel conceded it could not compel release. (¶¶ 18, 20, 22, 23, 25)
- There is no employer-employee or master-servant relationship between ICSSR and CRRID's employees; the employees may have rights against CRRID but cannot claim salary from a body that merely gives grant-in-aid to their employer. The responsibility to pay salaries lies on CRRID irrespective of whether it receives the grant, and cannot be shifted to ICSSR or the Government of Punjab, particularly where CRRID's audited balance sheet shows funds from other sources. (¶¶ 24, 25, 26, 27)
- Setting aside the High Court's orders does not deprive the employees of salaries for work done: CRRID was directed to pay from its own resources the salaries withheld between April 2021 and March 2023 within three weeks and file a compliance report with ICSSR, failing which ICSSR is to withhold all further grant-in-aid. The determination as to ICSSR's liability for grants applies equally to the State of Punjab. (¶¶ 28, 30)
Result
Delay condoned; leave granted; appeals allowed. Single Judge's order dated 17.10.2023 and Division Bench's order dated 16.05.2024 set aside. CRRID to pay the salaries withheld from April 2021 to March 2023 from its own resources within three weeks and report compliance to ICSSR, failing which ICSSR to withhold all further grants. Registry to refund ICSSR's deposit with interest within a week; ICSSR and the State of Punjab at liberty to apply to the High Court for refund of amounts deposited there. Connected matters disposed of on the same terms.