SC upholds Delhi HC ruling on National Book Trust’s status

The Supreme Court has held that the National Book Trust is a ‘State’ under Article 12 of the Constitution, citing extensive government control over its governance, appointments, executive functioning, finances, audit and administrative framework

New Delhi: The Supreme Court on Friday held that the National Book Trust (NBT) is a ‘State’ under Article 12 of the Constitution, saying that the government exercises “deep and pervasive” control over the institution.

Article 12 of the Constitution defines the term “State” specifically for the purposes of fundamental rights. Consequently, a person can approach a court of law, a high court or the Supreme Court to seek enforcement of their fundamental rights against an institution that falls within the definition of ‘State’.

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A bench of Justices Prashant Kumar Mishra and Augustine George Masih dismissed an appeal filed by the chairman of the National Book Trust, India, and another person, challenging a 2012 judgment of a full bench of the Delhi High Court, which had held that the Trust qualified as an instrumentality of the State.

“We, therefore, find that the full bench of the high court was correct in placing emphasis not upon any one individual factor but upon the cumulative effect of the government’s control over the Trust.

“The government’s role begins with the creation of the Trust, extends to its governing composition and appointment of its principal functionary, permeates its executive and financial administration, and continues through audit, reporting and governmental approval over aspects of its governing framework. This is not the limited or general regulatory supervision which can be excluded from the ambit of Article 12 of the Constitution,” Justice Mishra, who authored the judgment, said.

The verdict said that the NBT satisfied the test of being “financially, functionally and administratively dominated by or under the control of the Government”, with that control being particular to the Trust and pervasive in character.

“We, therefore, uphold the conclusion of the full bench of the high court that National Book Trust is an ‘other authority’ within the meaning of Article 12 of the Constitution and is consequently a ‘State’ for that purpose,” the verdict held.

It said that the government’s involvement in the Trust was not confined to ordinary regulatory supervision but extended to its creation, governing structure, executive functioning, financial administration, audit and approval of changes to its governing framework.

The judgment said that the NBT was established through Government of India resolutions dated June 15, 1957, and September 28, 1962, to promote good literature and make books available to the public at moderate prices.

Under its governing rules, the chairman is appointed by the central government and holds office at its pleasure, it said.

The verdict further said that government representatives play a significant role in the executive committee, which exercises administrative, managerial and decision-making powers.

The Finance Ministry’s representative also functions as the financial adviser to the Trust, it added.

Highlighting the extent of financial oversight, the verdict said that the Trust is required to submit its annual reports and audited accounts to the government.

Relying on earlier judgments, including the Ajay Hasia case, the verdict reiterated that an institution can be treated as ‘State’ if the government exercises pervasive financial, functional and administrative control over it.