Source: https://www.legalbites.in/law-notes-constitution-state-article-12/
Timestamp: 2019-04-25 02:00:37+00:00

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Most of the Fundamental rights provided to the citizens are claimed against the State and its instrumentalities and not against the private bodies. Art. 13(2), bars the ‘state’ from making any ‘law’ infringing a Fundamental Right. Art. 12 gives an extended significance to the term ‘state’. Art. 12 clarifies that the term ‘state’ occurring in Art. 13(2), or any other provision concerning Fundamental Rights, has an expansive meaning. The framers of the Constitution used the words ‘the State’ in a wider sense than what is understood in the ordinary or narrower sense. The word ‘includes’ suggests that the definition is not exhaustive. The expanding dimension of the words ‘the State’ through the judicial interpretation must be within the limitation otherwise the expansion may go much beyond what even the framers of Article 12 may have thought of.
Article 12 reads as: In this part, unless the context otherwise requires, “the State” includes 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.
(ii) The Government and the Legislature of a State i.e., the State Executive and the legislature of each state.
(iv) Other authorities within the territory of India; or under the control of the Central Government.
Territory of India: Territory of India should be taken to mean territory of India as defined in Article 1(3). According to Article 1(3) the territory of India shall comprise the territories of the States, the Union Territories specified in the first schedule and such other territories as may be acquired.
Local Authority: according to sub-section (31) of Section 3 of the General Clauses Act, 1897 “Local Authority” shall mean a municipal committee, district board, body of commissioner or other authority legally entitled to or entrusted by the Government within the control or management of a municipal or local fund. According to Entry 5 of the List II of 7th Schedule ‘ local government’ includes municipal corporation, improvement trust, district boards, mining settlement authorities and other local authorities for the purpose of local self-government or village administration. Village panchayat is also included within the meaning of the term local authority. In Mohammad Yasin v. Town Area Committee , the Supreme Court held that the Bye-laws of a Municipal Committee charging a prescribed fee on the wholesale dealer was an order by the State Authority contravened Article 19(1) (g). These bye-laws in effect and in substance have brought about a total stoppage of the wholesale dealers’ business in the commercial sense. The Supreme Court has ruled that to be characterized as a ‘local authority’ the authority concerned must have separate legal existence as a corporate body, it must not be a mere government agency but must be legally an independent entity; it must function in a defined area and must ordinarily, wholly or partly, directly or indirectly, be elected by the inhabitants of the area. It must also enjoy a certain degree of autonomy either complete or partial, must be entrusted by statute with such governmental functions and duties as are usually entrusted to locally like health and education, water and sewerage, town planning and development roads, markets, transportation, social welfare services, etc. Finally, such body must have the power to raise funds for furtherance of its activities and fulfilment of its objectives by levying taxes, rates, charges or fees.
Other Authorities: The term ‘other authorities’ in Article 12 has nowhere been defined. Neither in the Constitution nor in the general clauses Act, 1897 nor in any other statute of India. Therefore, its interpretation has caused a good deal of difficulty, and judicial opinion has undergone changes over time.
Today’s government performs a large number of functions because of the prevailing philosophy of a social welfare state. The government acts through natural persons as well as juridical persons. Some functions are discharged through the traditional governmental departments and officials while some functions are discharged through autonomous bodies existing outside the departmental structure, such as, companies, corporations etc. Hence, the term ‘other authorities’ has been interpreted by the following judicial pronouncements in accordance with the facts and circumstances of different cases.
In the case of University of Madras v. Santa Bai, the Madras High Court held that ‘other authorities’ could only indicate authorities of like nature, i.e., ejusdem generis. So construed it could only mean authorities exercising governmental or sovereign functions. It cannot include persons, natural or juristic. Such as, a university unless it is ‘maintained by the State’.
But in Ujjammabai v. State of U.P., The Court rejected this restrictive interpretation of the expression ‘other authorities’ given by the Madras High Court and held that the ejusdem generis rule could not be resorted to the in interpreting tis expression. In Article 12 the bodies specifically named are the Government of Union and the States, the Legislature of the Union and States and local authorities. There is no common genus running through these named bodies nor can these bodies so placed in one single category on any rational basis.
In Electricity Board, Rajasthan v. Mohan Lal, the Supreme Court held that ‘other authorities’ would include all authorities created by the constitution or statute on whom powers are conferred by law. It was not necessary that the statutory authority should be engaged in performing government or sovereign functions. The court emphasized that it is not material that some of the power conferred on the concerned authority are of commercial nature. This is because under Art. 298 the government is empowered to carry on any trade or commerce. Thus, the court observed : “ The circumstances that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore give any indication that the ‘Board” must be excluded from the scope of the word ‘State’ is used in Article 12.
The next important case relating to the interpretation of the term ‘other authorities’ is, Sukhdev Singh V. Bhagatram, The Supreme Court, following the test laid down in Electricity Board Rajasthan’s Case by 4:1 majority has stated that the three statutory bodies viz., LIC, ONCG & FCI were held to be ‘authorities’ and thus fall within the term ‘State’ in Article 12. These corporations were created by the statutes, had the statutory power to make binding rules & regulations and were subject to the pervasive governmental control. These corporations do have independent personalities in the eyes of law, but that does not mean that “they are not subject to the control of the government or they are not instrumentalities of the government. The employees of these statutory bodies have a statutory status and they are entitled to declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. The employees are entitled to claim protection of Articles 14 and 16 against the corporations. Mathew, J., in a separate but concurring judgement, held that the Public Corporations is a new type of institution which sprang from the new social and economic functions of the government, and instead of classifying it into old legal category, it should be adopted to the changing time and conditions. The State being an abstract entity, could undertake trade or business as envisaged under Article 298 through an agency, instrumentality or juristic person. He preferred a broader test that if the functions of the Corporation are of public importance and closely related to governmental functions it should be treated an agency or instrumentality of government and hence a ‘State’ within the ambit of Article 12 of the Constitution.
In simple terms, Statutory corporations are agencies or instrumentalities of the state for carrying on trade or business which otherwise would have been carried out by the state departmentally. Therefore it has to be seen whether a body is acting as an agency or instrumentality of the state.
The approach in Sukhdev Singh case, was reiterated with approval in R D Shetty V. International Airport Authority, Bhagwati, J., speaking for the Court, pointed out the corporations acting as instrumentality or agency of government would obviously be subject to the same limitation in the field of constitutional or administrative as the government itself, though in the eye of the law they would be distinct and independent legal entities. If the government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori, that government acting through the instrumentality or agency of corporations should equally be subject to the same limitations.
1. if the entire share capital of the corporation is held by the government, it would go a long way towards indicating that the corporation is an instrumentality or authority of the government.
Where the financial assistance of the state is so much as to meet almost entire expenditure of the corporation it would afford some indication of the corporation being impregnated with government character.
Whether the corporation enjoys monopoly status which is state conferred or state protected.
Existence of deep and pervasive state control may afford an indication of that the corporation is a state agency or instrumentality.
If the functions of the corporation are of public importance and closely related to government functions it would be relevant factor in classifying a corporation as an instrumentality or agency of government.
If a department of the government is transferred to corporation it would be a strong factor supporting the inference of the corporation being an instrumentality or agency of government.
The Supreme Court ruled in the instant case that where a corporation in an instrumentality or agency of the government, it must be held to be an authority under Article 12.However, these tests are not conclusive or clinching, and it must be realised that it would not be stretched so far as to bring in every autonomous body which has some nexus with the government within the sweep of the expression. Following this approach, it was held that the international Airport Authority constituted under the International Airport Agency Act, 1971 was an authority and, therefore, ‘State’ within the meaning of Article 12.
This line of approach to the meaning of other authorities has been finally confirmed in Som Prakash Rekhi V. Union of India. Applying the criteria laid down in the International Airport Authority case, the Supreme Court reached the conclusion that there is enough material to hold that the Bharat Petroleum Corporation registered as a company under the Companies Act, is State within the enlarged meaning of Art. 12. Consequent upon takeover of Burmah Shell under the Burmah Shell (Acquisition of Undetakings in India) Act, 1976, the right, title and interest of the company stood transferred and vested in the Government of India. Thereafter, the Central Government took necessary steps for vesting the undertaking in the BPC Ltd. which became the statutory successor of the petitioner employer. Krishna Iyer, J., speaking for himself and Chinnapa Reddy. J., Pathak, J. concurring, observed that the various provisions of the Act of 1976 have transformed the corporation into an instrumentality of the Central Government with a strong statutory flavour super-added are clear indicia of power to make it an ‘authority’. Although registered as a company under the Companies Act, the BPC is clearly a creature of the statute, a limb of government, an agency of the State and is recognized and clothed with rights and duties by the Statute.
In Ajay Hasia v. Khalid Mujib, the question arose whether the Regional Engineering College, Srinagar, established, administered and managed by a society registered under the J & K Registration of Societies Act, was a State within the meaning of Article 12. Bhagwati, J., speaking for the unanimous five judge-bench, reiterated that the tests for determining as to when a corporation falls within the definition of State in Article 12 is whether it is an instrumentality or agency of government. The enquiry must be not how the juristic person is born but why it has been brought into existence. It is, therefore, immaterial whether the corporation is created by the statute or under a statute. The concept of instrumentality or agency of government, is not limited to a corporation created by the statute but is equally applicable to a company or society considering the relevant factors as explained in the International Airport Authority case. Applying this criterion, it was held that the Society registered under the J&K Registration of Societies Act was an instrumentality or agency of the State and the Central Government, for the reason that these governments had full control of the working of the society and the society was merely a projection.
Following the law laid down in the Ajay Hasia case, the Indian Statistical Institute, Indian Council of Agricultural Research, Sainik School Society, U.P. State Cooperative Land Development Bank Ltd., all societies registered under the Societies Registration Act; Project and Equipment Corporation of India Ltd., a Government of India Undertaking; Food Corporation of India, a statutory corporation; the Steel Authority of India Ltd., a public limited company owned, controlled and supervised by the Central Government; the Indian Oil Corporation, a company registered under the Companies Act of 2013, a State-aided school, whose employees enjoy statutory protection and which is subject to regulations made by the State education department; a medical college run by a municipal corporation; several electricity boards created on the lines of Rajasthan Electricity Board; Central Government and two State Governments; a Government Company constituted as a development authority under a State town Planning Act; regional rural banks established under the Regional Rural Banks Act, 1976; port trusts created under the Major Port Trusts Act, 1889 or 1963 have been held to be “other authorities” within the meaning of Article 12.
In this expansive trend, there have been some discordant notes as well. One such example is furnished by Tekraj Vasandi v. U.O.I., where the Supreme Court held the ‘Institute of Constitutional and Parliamentary Studies’, a society registered under the Societies Registration Act, 1860, as not being an ‘authority’ under Article 12, The Institute is a registered society receiving grants from the Central Government and having the President of India, Vice-President and the Prime Minister among its honorary members. The Central Government exercises a good deal of control over the Institute. Inspite of the government funding and control, the court has refused to hold it as an authority.
On the same basis, in the case of Chandra Mohan Khanna v. NCERT, NCERT, has been held to be outside the scope of Article 12. NCERT is a society registered under Societies Registration Act. It is largely an autonomous body; its activities are not wholly related to governmental functions; governmental control is confined mostly to ensuring that its funds are properly utilized; its funding is not entirely from government sources.
Another example of the expansive interpretation of the expression ‘other authorities’ in Art. 12 is furnished by the decision of the Supreme Court in Pradeep Kr. Biswas V. Indian Institute of Chemical Biology. In this case, the Supreme Court held that the Council of Scientific and Industrial Research (CSIR) is an authority under Art. 12 and was bound by Art. 14. The Court has ruled that the “Control of the Government in CSIR is ubiquitous. The court has now laid down the following proposition for identification of ‘authority’ within Art. 12.
The question in each case would be – whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a state within Article 12. On the other hand, when control is merely regulatory whether under statute or otherwise it would not serve to make the body a state.
IS JUDICIARY INCLUDED IN THE WORD ‘STATE’?
Unlike in U.S.A, where the judicial decision implies ‘ State action’ for the purposes of enforcement of fundamental rights, in India the ‘judiciary’ is not specifically mentioned in Art. 12. The judicial view is that the judgements of courts cannot be challenged on the ground that hey contravene fundamental rights. Now, the question arises does it mean that the term judiciary is not be included in the concept of ‘state’? The answer depends upon the distinction between the judicial and non-judicial functions of the courts. In the exercise of the non-judicial functions, the courts fall within the definition of the ‘State’. The exercise of judicial functions will not occasion the infringement of fundamental rights and, therefore, the question of bringing the courts within the definition of the ‘state’ would not arise.
In Naresh v. State of Maharashtra, it was held that even if a court is thee State a writ under Art. 32 cannot be issued to a High Court of competent jurisdiction against its judicial orders, because such orders cannot be said to violate the fundamental rights. What the judicial decisions purports to do is to decide the controversy between the parties and nothing more. The court said that the ‘judiciary’ while exercising its rule-making power under Art. 145 would be covered by the expression ‘State’ within the meaning of Art. 12, but while performing its judicial functions, it is not so included.
In Rupa Ashok Hurra v. Ashok Hurra, the apex court has re-affirmed and ruled that no judicial proceeding could be said to violate any of the fundamental rights. It was said to be settled position of law that the superior courts of justice did not fall within the ambit of ‘State’ or ‘other authorities’ under Art. 12.
In A. R. Antulay v. R.S. Nayak, it was held that the court could not pass an order or issue a direction which would be violative of the fundamental rights, thus, it can be said that the expression ‘state’ includes judiciary also.
It is submitted that the judiciary, though not expressly mentioned in Art. 12, it should be included so, since the courts are set up by statute and exercise power conferred by law. It is so suggested that discrimination may be brought about… even (by) judiciary. The courts, like any other organ of the state, are limited by the mandatory provisions of the Constitution.
 (1981) 1 SCC 449; AIR 1981 SC 212. In Som Prakash these factors are laid down in SCC p. 471 and in AIR at 225. It may be noted that Krishna Iyer, J., who wrote Som Prakash opinion, was common to both the cases and since the decision in both the cases were pronounced on the same day it is natural, that Krishna Iyer, J., fully knew what was being said by his brother Bhagwati, J., in Ajay Hasia.

References: Art. 13
 Art. 12
 Art. 12
 Art. 13
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 Art. 298
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 Art. 12
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 Art. 12
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 Art. 12
 Art. 14
 Art. 12
 Art. 12
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 Art. 32
 Art. 145
 Art. 12
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 Art. 12
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 Art. 12