Supreme Court judgment involving the Indian Council of Social Science Research (ICSSR) as the appellant against Neetu Gaur &Ors. (employees) and the Centre for Research in Rural and Industrial Development (CRRID). The central issue revolves around ICSSR’s decision to withhold grants from CRRID due to alleged financial irregularities and non-compliance with grant conditions by CRRID. The High Court had previously ruled that ICSSR had “deep and pervasive” control over CRRID and was therefore obligated to release funds for employee salaries. However, the Supreme Court overturns this decision, asserting that ICSSR’s control is not “deep and pervasive” and that CRRID is ultimately responsible for its employees’ salaries, regardless of external grants, and instructs CRRID to pay its employees from its own funds.
(A) Constitution of India, Article 14 and 226 – Rules and Regulations of CRRID, Rule 22(a (i), Rule 22(d), 17 – Grant-in-Aid Rules of ICSSR, Rule 3, 4, 16, 17 – Service Law – Grant in aid – Non release of by ICSSR to CRRID – Withholding of salary of employees – Challenge as to – A reading of these Grant-in-Aid Rules makes it clear that the grants by ICSSR are discretionary and institutions like CRRID cannot claim grants as a matter of right – It is made more apparent by Rule 11 which explicitly states that ‘all grants under these rules are discretionary and cannot be claimed as a matter of right.’ – Further, Rule 16(3) of said Rules even empowers ICSSR to the extent that, in cases of violation of conditions of grants by any institution, ICSSR can demand the refund of grants from such institution and can stop any further grant to such an institution – The financial control by both ICSSR and the State of Punjab is limited only to their grant-in-aid. ICSSR does not have any power to interfere with the day-today functions of CRRID. Under these circumstances, it cannot be said that CRRID is under a ‘deep and pervasive’ control of the State – All three committees constituted by ICSSR: the enquiry committee, the factfinding committee and the High-Level Committee, had given reports against CRRID, highlighting anomalies in the working of CRRID – CRRID was provided with ample opportunities to improve its functioning by rectifying the deficiencies, but CRRID failed to do so – In such circumstance, see no fault on the part of ICSSR if it has withheld the grant from April 2021 to March 2023, after which the grant was again released by ICSSR in favour of CRRID – By withholding the grant, ICSSR has only taken recourse to the law which allowed it to exercise such power in case of detection of anomalies in the functioning of the beneficiary research institution, which is CRRID in the present case – This withholding of grants for a certain period was even suggested by the High-Level Committee as a punitive measure – CRRID has, in its account, funds which it has received from sources other than Punjab Government or ICSSR as grants – The audited balance sheet also indicates sufficient funds being available with CRRID to settle the dues of the employees – It is the submission of the learned counsel for CRRID that the funds shown in the balance sheet are those available with CRRID for the other assignments – If that is so, definitely CRRID cannot claim that the salary of the employees is only dependent on the grant in aid made by the appellant ICSSR – Ultimately, the responsibility to pay the salary to its employees, lies on CRRID and not on ICSSR or Government of Punjab – Order of learned Single Judge as well as the impugned order passed by the Division Bench of the High Court liable to be set aside – This would not mean that now respondent Nos. 1 to 17 will not be given their salaries for the period they worked – CRRID directed to ensure payment of salaries to all its employees which were withheld between April, 2021 to March, 2023 from its own resources within a period of three weeks from the date of this order – In case, CRRID fails to release this amount in favour of the employees, direct ICSSR to withhold all further grant in aid in favour of CRRID.
(Para 21, 22, 27 and 28)
(B) Constitution of India, Article 12 – State – ICSSR authority – Held that presence of one or even two members of ICSSR in a Governing Body of twelve does not amount to ‘deep and pervasive’ control of the State – Even assuming an additional two nominees from the Government of Punjab in the Governing Body will at best make four such members in a Governing Body of twelve – ICSSR is indeed an “authority”, within the purview of Article 12 of the Constitution of India – It also controls CRRID to an extent inasmuch as CRRID depends on the funds released by ICSSR as grants – But this itself cannot be called a ‘deep and pervasive’ control – A ‘deep and pervasive’ control would require much more than just financing an institution or a body – Even guiding, controlling or regulating affairs of an institution will not be called a ‘deep and pervasive’ control – The ‘deep and pervasive’ control requires administrative, financial and functional control of such a body to a much higher degree including interference into its day to day working, and mere regulatory control cannot mean ‘deep and pervasive’ control.
(Para 16)
(C) Constitution of India, Article 12 – State – ICSSR – CRRID – Authority – Simply because ICSSR has some control over CRRID and ICSSR gives its grant to CRRID it does not have much interference in the management of these funds – Nor is the administration of CRRID controlled by ICSSR – Held that CRRID is not an authority within the purview of Article 12 of the Constitution of India – Merely because CRRID is under the control of an authority (as defined under Article 12) will not make CRRID an authority.
(Para 18)
Indian Council Of Social Science Research (Icssr) V. Neetu Gaur
Supreme Court: 2025 INSC 374: (DoJ 20-03-2025)
