In Ancient times, when kings and emperors ruled us they do used to recognise certain rights and liberties, and these rights and liberties were in the form of assurance that the king would protect. It goes without saying that same king had reserved the right to take away it without proper justification or at least need not prove his justification that he stated. As the human civilization grew and minds evolved, things started to change with regards to rights and liberties. People started to observe that there are certain rights and liberties that should not be curtailed at any cost by the state. No state can take away certain basic fundamental rights, freedom and liberties. These rights and freedom shall be protected at any cost. Finally, this observation led to Magna Carta initially, then bill of rights and finally consolidation of fundamental rights. In India, it is well established that under no circumstances fundamental rights can be taken away from citizens and under some circumstances from non-citizens as well. By slightly diverting from the topic, it is pertinent to note that the state can take away some fundamental rights for some time under the procedure established by law. Coming back to the topic, whenever the State infringes these fundamental rights against any subject (citizen), the subject (the aggrieved party) reserves the right to sue the state for curtailing these fundamental rights (Basic Rights). Another vital thing to note here is that we can only sue the state for violation of our fundamental rights, not any private entities. For this purpose it is important to know what State is. In this article, using different verdicts delivered by the Apex Court of India we will understand what constitute state and what not.
The term “State” has been defined under Article 12 of the Indian Constitution. For the purpose of part III and IV, the State comprises of i) Government and Parliament of India i.e the Executive and Legislature of the union, ii) Government and legislature of the state i.e the Executive and Legislature of the various States of India, iii) All local authorities and iv) other authorities within the territory of India or under the control of the government of India. The problematic part is 3 rd and 4 th . There is no clear domain to it. Nevertheless, the Section 3 clause 31 of the General Clauses Act, 1897 defines “local authority”. Section 3(31) give reference of municipality, district board, village panchayat and others as local authority. Basically all those local self-governing bodies comes under local authority. The only more ambiguous part is other authority.
In the case of University of Madras V. Shanta Bai , the question that was raised is whether the university can be held to be “local or other authority” as defined under Article 12. The Court held that the “other authority” must construed ‘ejusdem generis’ with government or Legislature. This means that any authority to fall under other authority needs to exercise governmental functions or sovereign functions. The court made things further clear by stating that University of madras is a body corporate under Madras Act VII of 1923, hence it is not charged with any sovereign function. The whole purpose of it is to promote education. Though the university is financially aided by state but the university is authorised to raise its own funds of income from fees. This is state aided institution but not a State under Article 12.
In this case the principle of ejusdem generis was evolved. Then in the case of Ujjam Bai v. state of U.P , the Supreme Court rejected the principle of ejusdem generis and held that the approach of the principle is narrow and restrictive. The court further held that there is no common thread between the authorities that has been mentioned under Article 12.
Now as the principle of ejusdem generis had been rejected, so in the case of Rajasthan Electricity Board V. Mohanlal the Supreme Court decided to make a new principle to decide what government is and what is not. In this case, the court said that when a body corporate has been created under any statute or constitution, then it is by default that the body corporate has been conferred with many powers that can affect our fundamental rights. When such authority have been conferred with such power, then it is necessary that such authorities shall qualify as other authorities. The court further said that it is immaterial that some of the powers conferred may be for the purpose of carrying on commercial activities. It said that under Constitution, the state itself envisaged as having the right to carry on trade or business as mentioned under Article 19(1)(g). The court also said that it is not at all necessary that the body corporate perform sovereign or governmental function. In Part IV, the State has been as in Article 12 and one of the Directive principles laid down in Article 46 is that the State shall promote with special care the educational and economic interests of the Weaker sections of the People. The State, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interest of the people. The State, as constituted by our Constitution, further specifically empowered under Article 298 to carry on any trade or business. So as per this judgement university shall be considered as “State”.
In the Case of Sukhdev V Bhagatram , the question that arose before the Hon’ble Supreme Court was whether corporations like LIC, ONGC and IFC which were set up under certain statute would be considered State or not. While answering this case, the Court held rules and regulations framed by the Oil and Natural Gas Commission, Life Insurance Corporation and Industrial Finance Corporation have force of law and so these statutory bodies are “authorities” within the meaning of Article 12 of the Constitution. As per this judgement it is clear that all PSUs are considered State under Article 12 of the Indian Constitution.
Now, we will talk about the case of R.D Shetty V. International Airport Authority , this case is important under Article 12, as Supreme Court changes the optics through which it used to decide what authority is state or not. Till Sukhdev V. Bhagatram, the Supreme Court used the “functionality” test or conception to determine whether an entity is a state or not, but in this case the Apex Court set up a new conception to determine whether an organisation/authority/entity is a state or not. The new test that developed in that case is “Instrumentality and Agency test”. So in the case the question that came before the Court was that whether the International Airport Authority is State or not for the purpose of subjecting it to the obligations of Article 14 of the Constitution. The International Airport Authority was a body constituted under the International Airport Authority Act, 1971. The IAA invited tenders to run businesses like restaurants, snacks and bars at the Bombay International Airport and finally it awarded the tender to business who had the highest bid. The decision of the IAA was challenged. The petition said that the IAA failed to abide by its own order. To address this petition the court first undertook the question that the IAA is state or not. The Court held that the State/Government is providing “extensive and unusual financial assistance” and is having “unusual degree of control over the policies and management” of the IAA, so the IAA is a state under Article 12 of Constitution. The noteworthy thing is the matter that the International Airport Authority was established under a statute did not play a detrimental role in deciding whether the Authority is state or not as it had earlier cases. Hence, in the case of R.D Shetty what played a prominent role while deciding whether an authority is state or not was the degree of financial control and administrative control. The test was to know whether the authority is an instrumentality or agency of the state. So from this judgement the test of “Instrumentality and Agency” evolved. In furtherance to this case in the case Ajay Hasia V. Khalid Mujib , six tests were developed to know whether an authority is an “instrumentality or agency” of the state (this test was called Detrimental test). The test were, I) Entire share capital is owned or managed by State, II) Enjoys monopoly status, III) Department of Government is transferred to Corporation, IV) Functional character governmental in essence, V) Deep and pervasive State control, VI) Object of Authority.
At last, it is vital to note that with change in the economic and governance policies, the state is retreating from many vital functions that it used to do in earlier times. So the concept of the “state” will be ever changing and we cannot ever say that the issue is settled for once and all. In this neo-liberal model of development, the definition of “State” will always mean in dynamic state.
– Arijit Nayak
- AIR 1954 Mad 67
- 1962 AIR 1621
- 3 1967 AIR 1857
- AIR 1975 SC 1331
- AIR 1979 SC 1628;
- 1981 AIR 487