Review of “State” under Article 12 of Constitution of India

Dr. Ravishankar K. Mor, Asst. Prof., Dept. of Law, Yeshwant Mahavidyalaya, Wardha

Part III of the Constitution deals with Fundamental Rights which are the restrictions on the powers of the legislature, executive and judiciary, that no one can encroach upon the rights conferred under this part. In order to define the scope of these rights and the scope of remedy under article 32, constitution makers have defined “State”  in the beginning of this chapter as under,

“the Government and Parliament of India and the Government and the Legislature of each of the State and all local or other authorities within the territory of India or under the control of the Government of India”.

Therefore, to understand the expanded meaning of the term “other authorities” in Article 12, it is necessary to trace the origin and scope of Article 12 in the Indian Constitution. Present Article 12 was introduced in the Draft Constitution as Article 7. While initiating a debate on this Article in the Draft Constitution in the Constituent Assembly, Dr. Ambedkar described the scope of this Article and the reasons why this Article was placed in the Chapter on fundamental rights as follows :-

“The object of the fundamental rights is twofold. First, that every citizen must be in a position to claim those rights. Secondly, they must be binding upon every authority – I shall presently explain what the word ‘authority’ means – upon every authority which has got either the power to make laws or the power to have discretion vested in it. Therefore, it is quite clear that if the fundamental rights are to be clear, then they must be binding not only upon the Central Government they must not only be binding upon the Provincial Government, they must not only be binding upon the Governments established in the Indian States, they must also be binding upon District Local Boards, Municipalities, even village Panchayats and taluk boards, in fact every authority which has been created by law and which has got certain power to make laws, to make rules, or make bye-laws.

If that proposition is accepted – and I do not see anyone who cares for Fundamental Rights can object to such a universal obligation being imposed upon every authority created by law then, what are we to do to make our intention clear? There are two ways of doing it. One way is to use a composite phrase such as ‘the State’, its we have done in Article 7; or, to keep on repeating every time, the Central Government the Provincial Government the State Government the Municipality, the Local Board, the Port Trust or any other authority’. It seems to me not only most cumbersome but stupid to keep on repeating this phraseology every time we have to make a reference to some authority. The wisest course is to have this comprehensive phrase and to economise in words ((1948 (7) CAD 610)).”

From the above, it is seen that the intention of the Constitution framers in incorporating this Article was to treat such authority which has been created by law and which has got certain powers to make laws to make rules and regulations to be included in the term “other authorities” as found presently in Article 12.

This definition has given birth to series of judgments and cases primarily due to inclusion of words “authority” in the last part of the definition.

Attempts have been made to determine the scope this word initially the definition of State was treated as exhaustive and confined to the authorities or those which could be read  ejusdemgeneris with the authorities mentioned in the definition of Article 12 itself.

The next stage was reached when the definition of ‘State’ came to be understood with reference to the remedies available against it. For example, historically, a writ of mandamus was available for enforcement of statutory duties or duties of a public nature. Thus a statutory corporation, with regulations farmed by such Corporation pursuant to statutory powers was considered a State, and the public duty was limited to those which were created by statute.

The decision of the Constitution Bench of this Court in Rajasthan Electricity Board v. Mohan Lal and Ors (([1968]ILLJ257SC)), is illustrative of this. The question there was whether the Electricity Board – which was a Corporation constituted under a statute primarily for the purpose of carrying on commercial activities could come within the definition of ‘State’ in Article 12.

After considering earlier decisions, it was said:

“These decisions of the Court support our view that the expression “other authorities” in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities”.

It followed that since a Company incorporated under the Companies Act is not formed statutorily and is not subject to any statutory duty via a vis an individual, it was excluded from the preview of ‘State’.

In Praga Tools Corporation v. Shri C.A. Imanual and Ors ((MANU/SC/0327/1969)), where the question was whether an application under Article 226 for issuance of a writ of mandamus would lie impugning an agreement arrived at between a Company and its workmen, the Court held that:

“….there was neither a statutory nor a public duty imposed on it by a statute in respect of which enforcement could be sought by means of a mandamus, nor was there in its workmen any corresponding legal right for enforcement of any such statutory or public duty. The High Court, therefore, was right in holding that no writ petition for a mandamus or an order in the nature of mandamus could lie against the company”.

By 1975 Mathew, J. in Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Ors ((AIR1975SC1331)), noted that the concept of “State” in Article 12 had undergone “drastic changes in recent year”. The question in that case was whether the Oil and Natural Gas Commission, the Industrial Finance Corporation and the Life Insurance Corporation each of which were public corporations set up by statutes were authorities and therefore within the definition of State in Article 12.

The Court affirmed the decision in Rajasthan State Electricity Board v. Mohan Lal ((supra))and held that the Court could compel compliance of statutory rules. But the majority view expressed by A.N. Ray, CJ also indicated that the concept would include a public authority which:

“is a body which has public or statutory duties to perform and which performs those duties and carries out its transactions for the benefit of the public and not for private profit. Such an authority is not precluded from making profit for the public benefit”.

The use of the alternative is significant. The Court scrutinized the history of the formation of the three Corporations, the financial support given by the Central Government, the utilization of the finances so provided, the nature of service rendered and noted that despite the fact that each of the Corporations on profits earned by it nevertheless the structure of each of the Corporation showed that the three Corporations represented the ‘voice and hands’ of the Central Government. The Court came to the conclusion that although the employees of the three Corporations were not servants of the Union or the State, “these statutory bodies are ‘authorities’ within the meaning of Article 12 of the Constitution”.

Mathew J in his concurring judgment went further and propounded a view which presaged the subsequent development sin the law. He said: “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…..”

For identifying such an agency or instrumentality he propounded four indicia:

(1) “A finding of the state financial support plus an unusual degree of control over the management and policies might lead one to characterize 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 the furnishing of an important public service may result in a conclusion that the operation should be classified as a state agency. If a given function is of such pubic importance and so closely related to a governmental functions 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 a 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 was the corporation carrying on the business?”

Sabhajit Tewary Vs union of India ((AIR1975SC1329))was decided by the same Bench on the same day as Sukhdev Singh (supra). The contentions of the employee was the CSIR is an agency of the Central Government on the basis of the CSIR Rules which, it was argued, showed that the Government controlled the functioning of CSIR in all its aspect. The submission was somewhat cursorily negatived by this Court on the ground that all this

…..”will not establish anything more than the fact that the Government takes special care that the promotion, guidance and co-operation of scientific and Industrial Research, the institution and financing of specific researches, establishment or development and assistance to special institutions or departments of the existing institutions for scientific study of problems affecting particular industry in a trade, the utilisation of the result of the researches conducted under the auspices of the Council towards the development of industries in the country are carried out in a responsible manner.” And held that CSIR is not a authority as not an agent or instrumentality of the state.

This was challenged in Pradeep Kumar Biswas and Ors. vs. Indian Institute of Chemical Biology and Ors (([2002]5SCC111)). This case is considered to be final leading case on the issue of determining true scope of the term state till date. In this case though court distinguished from the case of Sabhjit Tewari Vs UOI but recognized the test of agency or instrumentality as laid down in Sukhdeo Vs Bhagatram. This is the law in this regard prevailing today, whereby court laid down the test of instrumentality of the state, and assert the method of function performed by the authority in determining the nature of the body, if the function is of national importance or can be classified as an essential governmental function, even if a private body is treated as “state” within the meaning of article 12 of the constitution.

Again with the adoption of privatization, globalization and liberalization this issue of determining scope of article 12 has once again got importance, as functions performed by the state has undergone tremendous changes so also the manner of performance of state functions have got different mechanisms and methods like PPP, Public Private Partnerships, contracting out the implementation of various schemes, Build operate and Toll (BOT) etc. In these changed circumstances ascertaining true scope has become more difficult and more essential. If rights under part three are most dear to all and considered to be heart and sole of the constitution, these rights may be denied if court fails to decide, an authority is whether or whether not a state under article 12 of the constitution.

In this article an attempt is made to understand the judicial development in this regard, so as to reach at most precise conclusion as to the scope of state under article 12 in the changed socio, economic political conditions in India.

Again there are some recent decisions of the various high courts wherein thereby have ventured to protect the fundamental rights even against private bodies and companies saying that article 226 permits issuance of writ even against private bodies, question arises if fundamental rights are available against the state and if a body do not fall within the meaning of state under article 12 does this view taken by the courts is sustainable?

Yes, looking at the modern development this shift in the approach of the Courts is welcome rather essential, today by way of privatization state is rapidly dissolving its departments by creating corporation, companies, government companies have been privatized or stakes in such companies have sold to private players, private companies are allowed to run businesses and functions which were once considered to be essential governmental function, like mineral exploration etc. under such circumstances following are some recent decisions which must be taken into consideration while deriving meaning of state under article 12 of the constitution.

In Smt. Asha Vij & Ors. vs. The Chief of Army Staff & Ors ((MANU/DE/4012/2012)). Court has taken a view contrary to its earlier view; therefore a short discussion on this case is called here,

The appellants in the present case were working as teaching / non-teaching staff of Delhi Area Primary School at Noida and had filed the writ petition aggrieved from the notices issued by the Chief of Army Staff intimating them that they would be relieved from their duties with effect from 31.03.1999 and would be paid three months salary i.e. upto 30.06.1999 in lieu of three months notice period. The respondents took a preliminary objection as to the maintainability of the writ petition on the ground that Army Welfare Educational Society which was managing the school in question was neither a State nor an Authority as envisaged under Article 12 of the Constitution of India. In order to substantiate its argument reliance was place on attention is invited to Air Vice Marshal J.S. Kumar Vs. Governing Council of Air Force ((126 (2006) DLT 330 (DB).))where a Division Bench of this Court had held the writ petition to be not maintainable against the Air Force Sports Complex and held that merely because Government had provided some benefits and facilities like land for the golf course or concession in liquor would not make such complex a ‘State’ under Article 12 of the Constitution of India and the complex remains a private body only, providing recreation to Armed Forces officers and not discharging any public function or public duty. Again case of UOI Vs. Chotelal ((JT 1998 (8) SC 497))holding that the regimental funds are not public funds and a person paid out of such regimental funds cannot be said to be holder of civil post within the Ministry of Defence. While dismissing this appeal court made following observation we, “in the entirety of the facts aforesaid particularly considering that several of the appellants are re-employed elsewhere, the whereabouts of others are not known and the remaining also having attained the age of superannuation, are not inclined, in exercise of jurisdiction under Article 226 of the Constitution of India to interfere with the order of the learned Single Judge.” Thus though court refuse to interfere but it was not because respondent school is not a state within the meaning of article 12 but on other consideration, this reveals that there is a change in approach of the court.

Another case call for discussion here is:

The case of VST Industries Ltd (([(2001) 1 SCC 298 : 2001 SCC (L&S) 227))also needs mention here as the question of maintainability of writ petition was dealt here against VST Industries Ltd. Which was a limited company, and was not a State or an instrumentality of a State as contemplated under Article 12 of the Constitution, hence, in the normal course, no writ could have been issued against the said industry. But it was the contention of the writ petitioner in that case that the said industry was obligated under the statute concerned to perform certain public functions; failure to do so would give rise to a complaint under Article 226 against a private body. While considering such argument, Hon’ble Supreme Court held that when an authority has to perform a public function or a public duty, if there is a failure a writ petition under Article 226 can be entertained.

The issue of maintainability of writs are regularly challenged before court of law on the ground that respondents are not state within the meaning of article 12 of the constitution, following are some of the cases wherein court declares that writs an be entertained even against private bodies.

Also in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Ors. v. V.R. Rudani and Ors (([(1989) 2 SCC 691)). It was argued that the management of the college being a trust registered under the Public Trust Act is not amenable to the writ jurisdiction of the High Court. The contention in other words, is that the trust is a private institution against which no writ of mandamus can be issued. While answering the question “Whether a trust can be compelled to pay the arrears of salary by way of mandamus? ” Court responded in following words

If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to Mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied. It has to be appreciated that the appellants-trust was managing the affiliated college to which public money is paid as Government aid. Public money paid as Government aid plays a major role in the control, maintenance and working of educational institutions. The aided institutions like Government institutions discharge public function by way of imparting education to students. They are subject to the rules and regulations of the affiliating University. Their activities are closely supervised by the University authorities. Employment in such institutions, therefore, is not devoid of any public character. (See-The Evolving Indian Administrative Law by M.P. Jain (1983) p. 266). So are the service conditions of the academic staff. When the University takes a decision regarding their pay scales, it will be binding on the management. The service conditions of the academic staff are, therefore, not purely of a private character. It has super-added protection by University decisions creating a legal right-duty relationship between the staff and the management. When there is existence of this relationship, mandamus can not be refused to the aggrieved party.

Thus it was answered in positive that writ can be issued even against a private body. Another important case in this regard is

Unni Krishnan J.P. and Ors. v. State of Andhra Pradesh and Ors (([(1993) 1 SCC 645)). this case is well known for recognizing right to education as a fundamental right but this was declare much before this in Francis Coral case so also in Mohini Jain case, what is important here is, in this case court held that Private colleges as performing important state function of imparting education can be amenable to minimum standards of fairness this means are amenable to interference by way of mandamus if failed to observed this minimum standards of fairness in admissions etc. Thus in addition to recognize right to established educational institution as an occupation court has also hinted at subjection of such institution by writ jurisdiction on observation of minimum standards of fairness as education is one of the important state function.

Ma. Gouthaman vs. The State of Tamilnadu, Rep. by its Secretary to Government ((MANU/TN/1546/2012))Issue involve was whether a writ petition is maintainable against a Hindu “Mutt” from the definition of “Mutt”, we find that Madathipathi has a dual role in managing the Mutt, one as a Religious Head connected with religious administration and another in administering the properties attached to the Mutt. Hence, if any irregularities committed by the religions institution in administering the properties attached to the Mutt, which is a secular act and not connected with religious activities, and if there is any delay on the part of the State to take action, Public Interest Litigation could be entertained for the limited purpose to give a direction to the supervisory authority to initiate action so far as secular act is concerned.

On the other hand there are instances when court refuse to entertain petition on the ground that particular body do not fall with in the purview of state under article 12 of the constitution. Some of the recent decisions are discussed here

N.K. Aggarwal vs. UOI & Ors ((MANU/DE/4321/2012)). In this writ petition the issue involve was Whether (KRIBCO) Krishak Bharati Cooperative Ltd. Is discharging any public function and, thus, amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India?

Court reproduced and stated the main objective of KRIBHCO. And held Merely because KRIBHCO is involved in philanthropic activities as well that would not change the main character of KRIBHCO. Those activities are in the nature of voluntary social  responsibility, which term for private corporation is known as “Corporate Social Responsibility”. Such types of philanthropic and charitable activities are organized by private entrepreneurs as well. In order to determine the character of KRIBHCO and to ascertain whether it is discharging public function or public duty, it is the main activity carried on by the KRIBHCO which has been the focal point. Examined from that angle, we do not find that KRIBHCO is covered by the test laid down.

 We are, therefore, of the opinion that KRIBHCO is not discharging any public functions or any public duties and, hence, is not amenable to the writ jurisdiction of this Court under Article 226 of the Constitution of India.

This case more important from our point of discussion, as corporate social responsibility in the era of privatization and globalization plays pivotal role wherein rights of citizen are involved and by virtue of this judgment companies have are now immune from being answerable to the court in writ jurisdiction on this issue.

 Another case which call for our attention is

Shri L.M. Khosla vs. Thai Airways International Public Company Limited ((MANU/DE/3868/2012)). Issue involve was can an employee invoke writ jurisdiction against termination of services by respondent Company? In response to this court issued following directions:

(i) A contract of private employment is not similar to the public employment and in such private employment there is no scope of applicability of the principles of administrative law/public law.

(ii) A contract of employment which provides termination of services by one month’s notice, then, at best the employee will only be entitled to one month’s pay in terms of the employment contract. An employee is not entitled to any relief of continuation in services or pay with consequential benefits for alleged remaining period of services till the date of his superannuation.

(iii) As per the provision of Section 14(1)(c) of the Specific Relief Act, 1963, a contract which is determinable in nature cannot be specifically enforced. Since the service contract in the present case is determinable by one month’s notice there does not arise the question of giving of any relief’s which tantamount to enforcement of a determinable contract. As per Section 14(1)(b), a contract of personal service cannot be enforced when the employer is not the Government or “State” as per Article 12 of the Constitution of India.

In another case Zee Telefilms Ltd. and Anr. vs. Union of India (UOI) and Ors ((AIR2005SC2677)). Hon’ble Supreme Court held that BCCI (Board of Cricket Control of India) is not a State under article 12.

The term State under article 12 has undergo drastic changes in last many decades, the test of instrumentality and test of public duty performed by a private body have crossed miles to reach its present status but biggest blow all the efforts of judiciary in making it more real and dynamic come to an halt when in Balco Employees Union Vs. UOI ((AIR2002SC350))court held that disinvestment by the government in public company to the highest bidder was held valid. This was nothing bud endorsing the view taken in International airport authority case, “no further development in the direction of including various bodies within the meaning of term “other authorities”  is required as Government have started distancing itself form commercial activities and have decided to concentrate on governance”. This case needs serious review by academician and jurist so that growth in realizing fundamental rights shall not come to a halt in the era of privatization and globalization.

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