The modern concept of definition of state under Article 12 of the Constitution
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Article 12 of the Constitution reads as under;
“In this part unless the context otherwise requires “the State” includes the (1) Government and Parliament of India and the (2) Government and the legislature of each State or (3) all Local or (4) other authorities within the territory of India or under the control of the Government of India.”
The restrictive interpretation of principle of ejusdem generis was mentioned in University of Madras v. Shantha Bai, [AIR 1954 Mad 67], the Madras High Court held that other authorities could only indicate authorities of a like nature i.e, ejusdem generis. So construed, it could only mean authorities exercising Governmental or Sovereign function. This restrictive interpretation of Madras High Court was rejected by the Supreme Court in Ujjambai v. State of U.P. [AIR 1962 SC 1621]. It was held that ejjusdem generis rule could not be resorted in interpreting this expression as there is no common genus running through these named bodies in Article 12 nor can these bodies be so placed in one single category or any rational basis.
In Electricity Board Rajasthan v. Mohan Lal, [AIR 1967 SC 1857], a narrow interpretation was done by the Supreme Court in earlier cases was refuted.
The modern concept of State given by Justice Matthew was finally summarised by Justice P.N. Bhagwati in R.D. Shetty v. Airport Authority, [AIR 1979 SC 1628], where is was held that if a body is an agency or instrumentality of Government it may be an “authority” within the meaning of Article 12 whether it is a statutory corporation, a Government Company or even a registered Society. the Court laid down the following tests for determining whether a body is an agency or instrumentality of the Government.
- Financial resources of the State in the chief funding source.
- Existence of deep and pervasive State control.
- Functional character being governmental in essence i.e, if the functions of the corporation are of public importance and closely related to governmental function.
- If a department of government is transferred to a Corporation.
- Whether the corporation enjoys monopoly status which is State conferred or State protected.
The Court said these tests are not conclusive but illustrative only and will have to be used with care and caution.
Some landmark judgment in defining State under Article 12 of the Constitution of India
In Ajay Hasia v. Khalid Mujib [AIR 1981 SC 487], it was held that a society registered under the Societies Registration Act, 1898 is an agency or instrumentality of the State and hence a State within the meaning of Article 12.
In M.C. Mehta v. Union of India [AIR 1987 SC 1086], without deciding the question, finally in an unanimous opinion of the Supreme Court, Chief Justice P.N. Bhagwati has advanced, strong arguments for including the non-government companies within the meaning of “State”, if for reasons of State control of registration & the kind of public function they are performing satisfy the test of being an instrumentality or agency of the Government. Article 12 should not be stretched so as to bring in every autonomous body which has some nexus with the Government within the sweep of the expression “state”.
In Lt. Governor Delhi v. V.K. Sodhi [(2007) 10 SCALE 41], it was held that the entity which is under Article 12 does not become the State Government. The employees of such body are not holders of civil post or employees of the State Government.
In Pradeep Kumar Biswas v. Indian Institute of Chemical biology, the seven Judge Bench by majority 5:2 overruled Sabhajit tewary case relying upon the instrumentality or agency test formulated in Ajay Hasia, the Court observed as under;
“Not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesis, be considered to be a State within the meaning of Article 12. The question in each case would be, whether in the light of the cumulative facts as established, the body is financially, functionally and administrative 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 the Article 12. On the Other hand, when the control is merely regulatory whether under or otherwise, it would not serve to make the body a State.’
In Rajasthan SEB v. Mohan Lal and Sukhdev Sinngh v. Bhagat ram Sardar Singh Raghuvanshi, the Supreme Court noticing the socio-economic policy of the country thought it fit to expand the term “other authorities” to include bodies other than statutory bodies. The development of law of judicial interpretation culminated in the judgment of the seven Judge Bench in the case of Pradeep Kumar Bishwas case. it has also been noted that in the meantime the socio-economic policy of the Government has changed and the State is today distancing itself from commercial activities and concentrating on governance rather than on business. Therefore, the situation prevailing at the time of Sukhdev Singh case is not in existence at least for the time being. It shall be borne in mind that in a democracy there is a dividing line between a State enterprise and a non-state enterprise, which is distinct, and the judiciary should not be an instrumental to erase the said dividing line unless required.