Article 12 of the Indian Constitution defines the term ‘State’ for the purpose of enforcing Fundamental Rights. Fundamental Rights are primarily enforceable against the ‘State’ and its instrumentalities, rather than private individuals or bodies, as elucidated in Shamdasani v. Central Bank of India, AIR 1952.
Article 13(2) prohibits the State from enacting any law that infringes upon Fundamental Rights, making it imperative to understand the scope of the term ‘State’.
Scope and Significance of Article 12
Article 12 provides an extended definition of the term ‘State’ to ensure the widest possible application of Fundamental Rights. It clarifies that the term ‘State’ includes:
The Government and Parliament of India,
The Government and Legislature of each State,
All local authorities,
Other authorities within the territory of India or under the control of the Government of India.
The inclusion of the term “other authorities” in Article 12 is crucial as it has allowed the courts to interpret a wide variety of bodies and entities as falling under the definition of 'State'.
This extended interpretation aims to prevent any arbitrary exercise of power by entities that, while not strictly part of the government, exercise public functions or governmental powers.
Understanding “Other Authorities” in Article 12
The most significant and contentious part of the definition of ‘State’ is the expression “other authorities.” This term has not been defined in the Constitution, leaving its interpretation to the judiciary.
Over time, the courts have evolved a broad and dynamic understanding of this phrase, especially in response to the growing functions of the State in the modern welfare society.
The interpretation of “other authorities” has undergone significant judicial evolution, starting from a limited view to a more expansive approach, keeping pace with the changing role of government and the increasing involvement of statutory and non-statutory bodies in discharging public functions.
Judicial Interpretation of “Other Authorities”
Early Approach: Rajasthan Electricity Board Case
In the early years, the Supreme Court adopted a narrow interpretation of “other authorities.”
The landmark case of Rajasthan State Electricity Board v. Mohan Lal, AIR 1967 expanded the meaning of the term by ruling that statutory corporations, such as the Rajasthan State Electricity Board, were considered authorities under Article 12.
The court emphasized that it did not matter whether the authority performed commercial functions; the essential factor was that it was set up under a statute and performed public duties.
The Court observed that commercial nature of the functions was irrelevant to whether an entity could be considered an authority.
The government, under Article 298, has the power to engage in trade and commerce, and thus entities performing such activities could still be subject to the restrictions of Fundamental Rights.
Expansion in Sukhdev Singh and Ramana Dayaram Shetty
The scope of “other authorities” was further broadened in Sukhdev v. Bhagatram, AIR 1975, where the Supreme Court held that statutory corporations like the Life Insurance Corporation of India (LIC), Oil and Natural Gas Commission (ONGC), and Industrial Finance Corporation were also considered ‘State’ under Article 12.
These entities were statutory in nature and performed important public functions, making them accountable to the discipline of Fundamental Rights.
In Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979, the Court established a crucial principle by developing the concept of “instrumentality” or “agency” of the government.
It ruled that even if a body was not created by statute, it could still be regarded as an ‘authority’ if it was an instrumentality or agency of the government.
Instrumentality or Agency of the Government: Ajay Hasia Case
The test for determining whether a body is an instrumentality or agency of the government was refined in Ajay Hasia v. Khalid Mujib Sehravardi, AIR 1981.
In this case, a society registered under the Societies Registration Act, which managed a regional engineering college, was held to be an authority under Article 12.
The Court laid down several tests to determine whether a body is an instrumentality of the government:
If the entire share capital of the body is held by the government,
If the financial assistance given by the government is so significant that it meets almost the entire expenditure of the body,
If the body enjoys a monopoly status conferred or protected by the State,
If there is deep and pervasive State control,
If the functions of the body are of public importance and closely related to governmental functions.
The Court ruled that even a non-statutory body could be classified as ‘State’ under Article 12 if it satisfied these criteria.
This landmark judgment paved the way for an expansive interpretation of the term “other authorities” and allowed for more bodies to be brought within the purview of Article 12.
Non-Statutory Bodies and the Evolution of the Concept
The evolution of the term “other authorities” did not stop with statutory bodies. A critical turning point was Som Prakash Rekhi v. Union of India, AIR 1981, where Bharat Petroleum Corporation, a government company incorporated under the Indian Companies Act, was held to be an authority under Article 12.
The Court emphasized the functional aspect of the body, stating that the “brooding presence of the State” behind the operations of the body was a key factor in determining whether it was an instrumentality of the government.
Final Consolidation: Pradeep Kumar Biswas Case
The question of whether non-statutory bodies could be considered ‘State’ under Article 12 was finally settled in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, AIR 2002, where the Supreme Court overruled its earlier decision in Sabhajit Tewary v. Union of India, AIR 1975 and held that the Council of Scientific and Industrial Research (CSIR), a society registered under the Societies Registration Act, was an authority under Article 12.
The Court reaffirmed the tests laid down in Ajay Hasia and further emphasized the need for financial, functional, and administrative control by the government to determine whether a body could be considered an instrumentality of the State.
The cumulative nature of the control exercised by the government over a body was seen as the determining factor in classifying it as ‘State’ under Article 12.
The Court in Pradeep Kumar Biswas ruled that:
If the body is financially, functionally, and administratively dominated by the government,
If the control exercised by the government is pervasive, then the body would be considered a State under Article 12.
Limitations: Regulatory Control vs. Pervasive Control
While the courts have taken an expansive view of “other authorities” under Article 12, they have also established clear limitations. Mere regulatory control by the government is not enough to classify a body as ‘State’.
The control must be pervasive and affect the functioning of the body in a substantial manner.
In Zee Telefilms Ltd. v. Union of India, AIR 2005, the Board of Control for Cricket in India (BCCI) was held to be not an authority under Article 12, as it was neither created by a statute nor was it financially or administratively controlled by the government.
Expansive Interpretation and Judicial Creativity
The interpretation of “other authorities” in Article 12 has undergone significant judicial transformation. Initially limited to statutory bodies, the courts have expanded the term to include non-statutory bodies, corporations, and societies that act as instrumentalities or agencies of the government.
The rationale for this expansive interpretation is rooted in the need to protect Fundamental Rights from arbitrary action by bodies that, though not part of the traditional government structure, exercise public functions.