# BALMER LAWRIE & CO. LTD. & ORS v. PARTHA SARATHI SEN ROY & ORS

- **Citation:** [2013] 4 S.C.R. 1018
- **Court:** Supreme Court of India
- **Decided:** 2013-02-20
- **Case number:** Civil Appeal Nos. 419-426 of 2004
- **Bench:** Dr. B.S. Chauhan, V. Gopala Gowda
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/balmer-lawrie-co-ltd-ors-v-partha-sarathi-sen-roy-ors-28954
- **Pages:** 35

## Headnote

Constitution of India, 1950 -Art. 12 - Instrumentality and
agency of Government - Determination - Criteria - Discussed
C and held: The Company in question is an authority u/Art. 12.
Contract - Contract of employment - Amenability to
judicial review - Held: Unfair, untenable, irrational or unjust
clause in a contract hit by s.23 of Contract Act and against
0 public policy, is amenable to judicial review - In the present
case employment contract providing termination of service of
employee at the sole discretion of the employer is not
justifiable - Hence the contract held void to that extent -
Contract Act - s. 23 - Judicial Review.
E
Service Law - Termination of Service - By the State or
State instrumentality - As per clause in appointment letter
providing sole discretion to the employer to terminate the
services of employees - Held: State itself or a State
instrumentality cannot impose unconstitutional conditions in
F statutory rules/regulations vis-a-vis its employees, in order to
terminate the services of its permanent employees in
accordance with such terms and conditions - The alleged
clause of the appointment letter is unconscionable and thus
Service Condition Rules held violative of Art. 14 of the
G Constitution to this extent.
Words and Phrases:
'Control' and 'Pervasive control' - Meaning of.
H
1018
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1019
SARATHI SEN ROY & ORS.
The appellant-Company was a Government company
A
and subsidiary of a Government Company. Responden~
employees joined the services of the Company at
different times. Services of the respondent-employees
were terminated in view of a clause in the letter of
appointment which provided that the company would
have a right which would be exercised at its so.le
discretion to terminate the services of such employees
without assigning any reason.
B
In a writ petition challenging the same the appellantCompany contested the writs contending that it was not C
an authority within the meaning of Article 12 of the
Constitution and therefore was not amenable to writ
jurisdiction. The Single Judge of the High Court held that
the Company was not a State within meaning of Art. 12,
however, in another case the learned Single Judge held
0
that the Company was a State within meaning of Article
12. In writ appeals, held that the Company was a 'State'
within meaning of Article 12 of the Constitution. Hence
the present appeals.
Disposing of the appeals, the Court
HELD: 1.1. It is difficult to provide an exhaustive
definition of the term "authorities", which would fall within
E
the ambit of Article 12 of the Constitution. This is precisely
why, only an inclusive definition is possible. It is in order
F
to keep pace with the broad approach adopted with
respect to the doctrine of equality enshrined in Articles
14 and 16 of the Constitution. There has been a
corresponding expansion of the judicial definition of the
term State, as mentioned in Article 12 of the Constitution.
In light of the changing socio-economic policies of the
G
country, and the variety of methods by which government
functions are usually performed, the court must examine,
whether an inference can be drawn to the effect that such
an authority is intact an instrumentality of the State under
Article 12 of the Constitution. It may not be easy for the
H
1020
SUPREME COURT REPORTS
[2013) 4 S.C.R.
A court, in such a case, to determine which duties form a
part of private action, and which form a part of State action,
for the reason that the conduct of the private authority,
may have become so entwined with governmental
policies, or so impregnated with governmental character,
8 so as to become subject to the constitutional limitations
that are placed upon State action. Therefore, the court
must determine whether the aggregate of all relevant
factors once considered, would compel a conclusion as
regards the body being bestowed with State
C responsibilities. [Para 12] [1038-C-G]
1.2. In order to determine whether an authority

## Text

_Characters 0–39,987 of 65,372. This is a partial read: ask again with offset=39987 for what follows._

A
B
[2013] 4 S.C.R. 1018
BALMER LAWRIE & CO. LTD. & ORS.
v.
PARTHA SARATHI SEN ROY & ORS.
(Civil Appeal Nos. 419-426 of 2004 etc.)
FEBRUARY 20, 2013
[DR. B.S. CHAUHAN AND V. GOPALA GOWDA, JJ.]
Constitution of India, 1950 -Art. 12 - Instrumentality and
agency of Government - Determination - Criteria - Discussed
C and held: The Company in question is an authority u/Art. 12.
Contract - Contract of employment - Amenability to
judicial review - Held: Unfair, untenable, irrational or unjust
clause in a contract hit by s.23 of Contract Act and against
0 public policy, is amenable to judicial review - In the present
case employment contract providing termination of service of
employee at the sole discretion of the employer is not
justifiable - Hence the contract held void to that extent -
Contract Act - s. 23 - Judicial Review.
E
Service Law - Termination of Service - By the State or
State instrumentality - As per clause in appointment letter
providing sole discretion to the employer to terminate the
services of employees - Held: State itself or a State
instrumentality cannot impose unconstitutional conditions in
F statutory rules/regulations vis-a-vis its employees, in order to
terminate the services of its permanent employees in
accordance with such terms and conditions - The alleged
clause of the appointment letter is unconscionable and thus
Service Condition Rules held violative of Art. 14 of the
G Constitution to this extent.
Words and Phrases:
'Control' and 'Pervasive control' - Meaning of.
H
1018
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1019
SARATHI SEN ROY & ORS.
The appellant-Company was a Government company
A
and subsidiary of a Government Company. Responden~
employees joined the services of the Company at
different times. Services of the respondent-employees
were terminated in view of a clause in the letter of
appointment which provided that the company would
have a right which would be exercised at its so.le
discretion to terminate the services of such employees
without assigning any reason.
B
In a writ petition challenging the same the appellantCompany contested the writs contending that it was not C
an authority within the meaning of Article 12 of the
Constitution and therefore was not amenable to writ
jurisdiction. The Single Judge of the High Court held that
the Company was not a State within meaning of Art. 12,
however, in another case the learned Single Judge held
0
that the Company was a State within meaning of Article
12. In writ appeals, held that the Company was a 'State'
within meaning of Article 12 of the Constitution. Hence
the present appeals.
Disposing of the appeals, the Court
HELD: 1.1. It is difficult to provide an exhaustive
definition of the term "authorities", which would fall within
E
the ambit of Article 12 of the Constitution. This is precisely
why, only an inclusive definition is possible. It is in order
F
to keep pace with the broad approach adopted with
respect to the doctrine of equality enshrined in Articles
14 and 16 of the Constitution. There has been a
corresponding expansion of the judicial definition of the
term State, as mentioned in Article 12 of the Constitution.
In light of the changing socio-economic policies of the
G
country, and the variety of methods by which government
functions are usually performed, the court must examine,
whether an inference can be drawn to the effect that such
an authority is intact an instrumentality of the State under
Article 12 of the Constitution. It may not be easy for the
H
1020
SUPREME COURT REPORTS
[2013) 4 S.C.R.
A court, in such a case, to determine which duties form a
part of private action, and which form a part of State action,
for the reason that the conduct of the private authority,
may have become so entwined with governmental
policies, or so impregnated with governmental character,
8 so as to become subject to the constitutional limitations
that are placed upon State action. Therefore, the court
must determine whether the aggregate of all relevant
factors once considered, would compel a conclusion as
regards the body being bestowed with State
C responsibilities. [Para 12] [1038-C-G]
1.2. In order to determine whether an authority is
amenable to writ jurisdiction except in the case of habeas
corpus or quo warranto, it must be examined, whether the
company/corporation is an instrumentality or an agency
D of the State, and if the same carries on business for the
benefit of the pubic; whether the entire share capital of
the company is held by the Government; whether its
administration is in the hands of a Board of Directors
appointed by the Government; and even if the Board ,,f
E Directors has been appointed by the Government.
whether it is completely free from governmental control
in the discharge of its functions; whether the company
enjoys monopoly status; and whether there exists within
the company, deep and pervasive State control. The
F other factors that may be considered are whether the
functions carried out by the company/corporation are
closely related to governmental functions, or whether a
department of Government has been transferred to the
company/corporation, and the question in each case,
G would be whether in light of the cumulative facts as
established, the company is financially, functionally and
administratively under the control of the Government. In
the event that the Government provides financial support
to a company, but does not retain any control/watch over
H how it is spent, then the same would not fall within the
. BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1021
SARATHI SEN ROY & ORS.
ambit of exercising deep and pervasive control. Such
A
control must be particular to the body in question, and
not general in nature. It must also be deep and pervasive.
The control should not therefore, be merely regulatory.
[Para 17] [1040-H; 1041-A-E]
1.3. When 'pervasive control' is discussed, the term
'control' is taken to mean check, restraint or influence.
Control is intended to regulate, and to hold in check, or
to restrain from action. The word 'regulate', would mean
B
to control or to adjust by rule, or to subject to governing
C
principles. [Para 13] [1038-H; 1039-A]
State of Mysore vs. Allum Karibasauppa and Ors., AIR
1974 SC 1863: 1975 (1) SCR 601; UP. Cooperative Cane
Unions Federations vs. West UP. Sugar Mills Association
and Ors. etc.etc., AIR 2004 SC 3697: 2004 (2) Suppl. SCR
D
238; Union of India (UOI) and Ors. vs. Asian Food Industries
AIR 2007 SC 750: 2006 (8) Suppl. SCR 485; K. Ramanathan
vs. State of Tamil Nadu and Anr. AIR 1985 SC 660: 1985 (2)
SCR 1028; Vodafone International Holdings B. VS. vs. Union
of India and Anr. (2012) 6 SCC 613: 2012 (1) SCR 573;
E
Steel Authority of India Ltd. and Ors. etc. vs. National Union
Water Front Workers and Ors. etc.etc. AIR 2001 SC 3527:
2001 (2) Suppl. SCR 343; Mis. Star Enterprises and Ors. vs.
City and Industrial Development Corpn. of Maharashtra Ltd.
and Ors. (1990) 3 sec 280: 1990 (2) SCR 826; uc of India
F
and Anr. vs. Consumer Education and Research Centre and
Ors. AIR 1995 SC 1811: 1995 (1) Suppl. SCR 349; Mysore
Paper Mills Ltd. vs. Mysore Paper Mills Officers' Assn. and
Anr. 2002 (1) SCR 37 - relied on.
1.4. A public authority is a body which has public or G
.statutory duties to perform, and which performs such
duties and carries out its transactions for the benefit of
the public, and not for private profit. Article 298 of the
Constitution provides that the executive power of the
Union and the State extends to the carrying on of any
H
1022
SUPREME COURT REPORTS
12013] 4 S.C.R.
A business or trade. A public authority is not restricted to
the Government and the legislature alone, and it includes
within its ambit, various other instrumentalities of State
action. The law may bestow upon such organization, the
power of eminent domain. The State in this context, may
B be granted tax exemption, or given monopolistic status
for certain purposes. The State being an abstract entity,
can only act through an instrumentality or an agency of
natural or juridical persons. The concept of an
instrumentality or agency of the Government is not limited
c to a corporation created by a statute, but is equally
applicable to a company, or to a society. In a given case,
the court must decide, whether such a company or
society is an instrumentality or agency of the
Government, so as to determine whether the same falls
0 within the meaning of expression 'authority', as
mentioned in Article 12 of the Constitution, upon
consideration of all relevant factors. [Para 12] [1037-E-H;
1038-A-B]
1.5. In view of factors like the formation of the
E appellant company, its objectives, functions, its
management and control, the financial aid received by it,
its functional control and administrative control, the
extent of its domination by the Government, and also
whether the control of the Government over it is merely
F regulatory, and the cumulative effect of all the aforesaid
facts in reference to a particular company i.e. the
appellant, would render it as an authority amenable to the
writ jurisdiction of the High Court. [Para 27] [1050-D-E]
Virendra Kumar Srivastava vs. U.P. Rajya Karmachari
G Kalyan Nigam and Anr. AIR 2005 SC 411: 2004 (6) Suppl.
SCR 304; Lt. Governor of Delhi and Ors. vs. V.K. Sodhi and
Ors. AIR 2007 SC 2885: 2007 (8) SCR 1027; Pradeep
Kumar Biswas vs. Indian Institute of Chemical Biology and
Ors. (2002) 5 SCC 111: 2002 (3) SCR 100; Ramana
H Dayaram Sheffy vs. International Airport Authority of India and
--
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1023
SARATHI SEN ROY & ORS.
Ors. AIR 1979 SC 1628: 1979 (3) SCR 1014 - relied on.
A
Rajasthan State Electricity Board Jaipur vs. Mohan Lal
and Ors. AIR 1967 SC 1857: 1967 SCR 377; Sukhdev Singh
and Ors. vs. Bhagatram Sardar Singh Raghuvanshi and Anr.
AIR 1975 SC 1331: 1975 (3) SCR 619; Ajay Hasia etc. vs.
Khalid Mujib Sehravardi and Ors. etc. AIR 1981 SC 487:
1981 (2) SCR 79; Mysore Paper Mills Ltd. vs. Mysore Paper
Mills Officers' Assn. and Anr. AIR 2002 SC 609: 2002 (1) SCR
B
37; Mis. Zee Telefilms Ltd. and Anr. vs. Union of India and
Ors. AIR 2005 SC 2677: 2005 (1) SCR 913; N. Nagendra
Rao and Co. vs. State of A.P. AIR 1994 SC 2663: 1994 (3)
C
Suppl. SCR 144; Chief Conservator of Forests and Anr. vs.
Jagannath Maruti Kondhare etc.etc., AIR 1996 SC 2898:
1995 (6) Suppl. SCR 259; Bangalore Water Supply and
Sewerage Board vs. A. Rajappa and Ors., AIR 1978 SC 548:
1978 (3) SCR 207; Agricultural Produce Market Committee
D
vs. Ashok Harikuni and Anr. etc. AIR 2000 SC 3116: 2000
(3) Suppl. SCR 379; State of U.P. vs. Jai Bir Singh (2005) 5
SCC 1: 2005 (1) Suppl. SCR 20; Assam Small Scale Ind.
Dev Corporation Ltd. and Ors. vs. Mis. J.D. Pharmaceuticals
and Anr. AIR 2006 SC 131: 2005 (4) Suppl. SCR 232; M.D.,
H.S.l.D.C. and Ors. vs. Mis. Hari Om Enterprises and Anr. AIR
2009 SC 218: 2008 (9) SCR 821 - referred to.
2.1. Where the actions of an employer bear public
character and contain an element of public interest, as
regards the offers made by him, including the terms and
conditions mentioned in an appropriate table, which invite
the public to enter into contract, such a matter does not
relegate to a pure and simple private law dispute, without
E
F
the insignia of any public element whatsoever. Where an
unfair and untenable, or an irrational clause in a contract,
G
is also unjust, the same is amenable to judicial review.
The Constitution provides for achieving social and
economic justice. Article 14 of the Constitution
guarantees to all persons, equality before the law and .
H
1024
SUPREME COURT REPORTS
[2013] 4 S.C.R.
A equal protection of the law. Thus, it is necessary to strike
down an unfair and unreasonable contract, or an unfair
or unreasonable clause in a contract, that has been
entered into by parties who do not enjoy equal
bargaining power, and are hence hit by Section 23 of the
8 Contract Act, and where such a condition or provision
becomes unconscionable, unfair, unreasonable and
further, is against public policy. Where inequality of
bargaining power is the result of great disparity between
the economic strengths of the contracting parties, the
C aforesaid principle would automatically apply for the
reason that, freedom of contract must be founded on the
basis of equality of bargaining power between such
contracting parties, and even though ad idem is
assumed, applicability of standard form of contract is the
rule. Consent or consensus ad idem as regards the
D weaker party may therefore, be entirely absent. Thus, the
existence of equal bargaining power between parties,
becomes largely an illusion. The State itself, or a State
instrumentality cannot impose unconstitutional
conditions in statutory rules/regulations vis-a-vis its
E employees, in order to terminate the services of its
permanent employees in accordance with such terms and
conditions. [Para 19] [1042-C-H; 1043-A-B]
West Bengal State Electricity Board and Ors. vs. Desh
F Bandhu Ghosh and Ors. (1985) 3 SCC 116: 1985 (2) SCR
1014; Worl<men vs. Hindustan Steel Ltd. AIR 1985 SC 251:
1985 SCR 428; Central Inland Water Transport Corporation
Ltd. vs. Brojo Nath Ganguly AIR 1986 SC 1571: 1986 (2)
SCR 278; D. T.C. vs. D. T.C. MazdoorCongress, AIR 1991 SC
G 101: 1990 (1) Suppl. SCR 142; K.C. Sharma vs. Delhi Stock
Exchange and Ors., AIR 2005 SC 2884: 2005 (4) SCC 4;
Punjab National Bank by Chairman and Anr. vs. Astamija
Dash, AIR 2008 SC 3182: 2008 (7) SCR 365 • relied on.
2.2. The "hire and fire" policy adopted by the
H
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1025
SARATHI SEN ROY & ORS.
appellant- company cannot be approved, and the terms
A
and conditions incorporated in the Manual of Officers in
1976, cannot be held to be justifiable, and the same being
arbitrary, cannot be enforced. In such a fact-situation,
clause 11 of the appointment letter is held to be an
unconscionable clause, and thus the Service Condition
B
Rules are held to be violative of Article 14 of the
Constitution to this extent. [Para 28] [1051-B-D]
Rajesh D. Darbar and Ors. vs. Narasingrao Krishnaji
Kulkarni and Ors. (2003) 7 SCC 219: 2003 (2) Suppl. SCR c
273 - referred to.
Case Law Reference:
2004 (6) Suppl. SCR 304
relied on
Para 7
2007 (8) SCR 1027
relied on
Para 8
D
2002 (3) SCR 100
relied on
Para 9
1967 SCR 377
referred to
Para 9
1975 (3) SCR 619
referred to
Para 9
E
1979 (3) SCR 1014
relied on
Para 9
1981 (2) SCR 79
referred to
Para 9
2002 (1) SCR 37
referred to
Para 9,16
F
2005 (1) SCR 913
referred to
Para 10
1994 (3) Suppl. SCR 144
referred to
Para 11
1995 (6) Suppl. SCR 259
referred to
Para 11
1978 (3) SCR 207
referred to
Para 11
G
2000 (3) Suppl. SCR 379
referred to
Para 11
2005 (1) Suppl. SCR 20
referred to
Para 11
2005 (4) Suppl. SCR 232
referred to
Para 11
H
1026
SUPREME COURT REPORTS
[2013] 4 S.C.R.
A
2008 (9) SCR 821
referred to
Para 11
1975 (1) SCR 601
relied on
Para 13
2004 (2) Suppl. SCR 238
relied on
Para 13
B
2006 (8) Suppl. SCR 485
relied on
Para 13
1985 (2) SCR 1028
relied on
Para 14
2012 (1) SCR 573
relied on
Para 15
2001 (2) Suppl. SCR 343
relied on
Para 16
c
1990 (2) SCR 826
relied on
Para 16
1995 (1) Suppl. SCR 349
relied on
Para 16
1985 (2) SCR 1014
relied on
Para 18
D
1985 SCR 428
relied on
Para 18
1986 (2) SCR 278
relied on
Para 19
1990 (1) Suppl. SCR 142
relied on
Para 19
E
2005 (4) sec 4
relied on
Para 19
2008 (7) SCR 365
relied on
Para 19
2003 (2) Suppl. SCR 273
referred to
Para 20
F
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 419426 of 2004.
From the Judgment & Order dated 30.01.2002 &
24.12.2001 of the High Court at Calcutta in FMA No. 301 of
2001, C.O. No. 2038(W) of 1993, W.P. Nos. 778 of 1992,
G 2613, 2798, 3169 of 2000, W.P. No. 1109of1998 & 1739 of
1996.
WITH
C.A. Nos. 926 of 2013.
H
Sudhir Chandra, Parijat Sinha, Reshmi Rea Sinha, Anil
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1027
SARATHI SEN ROY & ORS.
Kumar Mishra, S.C. Ghosh, Snehashish Mukherjee,
A
Rameshwar Prasad Goyal for the Appellants.
Sangram Patnaik, Umesh Yadav, Swayam Siddha,
Naresh Kumar, Pijush K. Roy, Kakali Roy, C. Balakrishna, Bijan
Kumar Ghosh, Sarla Chandra, Abhisth Kumar for the
Respondents.
The Judgment of the Court was delivered by
B
DR. B.S. CHAUHAN, J. 1. These appeals have been
preferred against the impugned judgments and orders of the
C
High Court of Calcutta dated 30.1.2002 and 24.12.2002 in FMA
No. 301/2001, CO. 2038/1993, WP. Nos. 778/1992, 2613,
2798 & 3169/2000, 1109/1998 and 1739/1996, by which the
Calcutta High Court by a majority decision held that the Balmer
Lawrie & Co. Ltd. - appellant, is a State within the purview of D
Article 12 of the Constitution of India, 1950 {hereinafter referred
to as, the 'Constitution'), and is thus, amenable to writ
jurisdiction.
2. Facts and circumstances giving rise to these appeals
E
are:
A. The appellant is a public limited company incorporated
under the Indian Companies Act, 1956. The shares of the
appellant company were originally held by lndo-Burma
Petroleum Co. Ltd., Life Insurance Corporation, Unit Trust of
F
India, General Insurance Corporation and its subsidiaries,
Nationalised Banks and also by the public. Subsequently, in
2001 its majority equity shares, i.e. 61.8% of its shareholding,
which was held by IBP Co. Ltd., was transferred to Balmer
Lawrie Investments Ltd. {BLIL), a Govt. company in which 59%
G
shares are held by the government.
B. The appellant company carries on business in diverse
fields through various Strategic Business Units {SBUs). None
of these SB Us have monopoly in any business. The said SBUs
H
1028
SUPREME COURT REPORTS
[2013] 4 S.C.R.
A are involved in the manufacturing of packing materials, i.e. steel
drums and LPG cylinders, grease and lubricants. They also
provide air freight services, ocean freight services, and project
cargo management. They operate under a broader segment
classified as 'Logistic Services', providing space and scope
B for segregation, storage and aggregation of containerized
cargo, i.e. an infrastructural service carried on outside the port
premises for handling, loading/unloading and storage of
containerized import, as well as export cargo. The appellant
company also deals with leather chemicals and tea blending
c and packaging.
D
C. The respondents-employees joined the services of the
company at different times. However, for the purpose of
deciding this case it would be convenient to take up the facts
presented by respondent, Partha Sarathi Sen Roy.
The said respondent joined the appellant - company in May
1975 as a Management Trainee, and was later on confirmed
vide order dated 1.6.1976 as an officer in Grade-Ill, subject to
the terms and conditions mentioned in the letter of confirmation
E w.e.f. 20.5.1976. He had previously worked in different
branches of the company in Dubai, the United Arab Emirates
etc. as an Accountant-cum-Administrative Officer. His services
were terminated vide order dated 27.2.1981, in view of Clause
11 (a) of the letter of appointment which provided that the
F company would have a right, which would be exercised at its
sole discretion, to terminate the services of such employees
by giving them three calendar months' notice in writing, w;thout
assigning any reason for such decision. The respondent
challenged the said termination order by filing writ petition (C.R.
G No. 1562 (W) of 1981) in the High Court of Calcutta, praying
for the issuance of a writ of mandamus, directing that the said
termination order be quashed.
H
D. The appellant company contested the said writ petition
contending that it was not an authority within the meaning of
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1029
SARATHI SEN ROY & ORS. [DR. B.S. CHAUHAN, J.]
Article 12 of the Constitution, and therefore was not amenable
A
to writ jurisdiction. The terms and conditions of contractual
rights and obligations could therefore, not be enforced through
writ jurisdiction. The matter was decided by the learned Single
Judge vide judgment and order dated 19.12.2000, holding that
the appellant was neither a State, no.r any other authority within
B
the meaning of Article 12 of the Constitution, and thus the writ
petition itself was not maintainable.
E. Aggrieved, the respondent filed an appeal (FMA. No.
301/2001), against the said judgment and order of the learned
C
Single Judge. However, in the meantime, another writ petition
No. 778/1992 was decided by another learned Single Judge
of the same High Court, holding that the appellant was intact a
State within the meaning of Article 12 of the Constitution. Thus,
the appellant preferred an appeal against the said judgment and
D
order dated 27.3.2001, and the matters were heard together
by a Division Bench. Both the Judges delivered their judgment
on 30.1.2002 taking different views on the aforesaid issue. The
matter was referred to a third Hon'ble Judge, who vide judgment
and order dated 24.12.2002, held the appellant to be a State
within the meaning of Article 12 of the Constitution, and directed
E
that the matter be placed before an appropriate bench for
decision of the writ petitions on merits.
Hence, these appeals.
3. Shri Sudhir Chandra, learned senior counsel appearing
for the State, has submitted that the appellant company cannot
be held to be a State within the meaning of Article 12 of the
Constitution, or any other authority for that matter, as there is
F
no deep and pervasive control exercised by the government
over the company, though certain financial aid was given by ii
G
for specific purposes. The government however, does not have
control over the day-to-day functioning of the company. Merely
because the appellant company is a subsidiary of a
government company, and is itself a government company, the
same would not make the appellant company fall within the
H
1030
SUPREME COURT REPORTS
[2013] 4 S.C.R.
A purview of the word 'State' as intended by Article 12 of the
Constitution. Moreover, it does not carry out any public function
which could render it as, 'any other authority', for the purposes
of Article 226 of the Constitution. It also does not have any kind
of monopoly over its business, in fact, it carries on a variety of
B business activities and faces competition from all the other
industries that operate in the same fields as it does. The terms
of employment therefore, cannot be enforced through writ
jurisdiction. Thus, the only remedy available to the respondent
was to file a suit for damages. The appeals deserve to be
c allowed.
4. Per contra, Shri Sangaram Patnaik, Mr. Bijan Kumar
Ghosh and Mr. P.K. Roy, the learned counsel appearing for the
respondents have submitted that the appellant company is a
government company, and is a subsidiary of a government
D company, which is controlled entirely by the government and that
the government has absolute control over the company. The
majority judgment of the Calcutta High Court, holding the
appellant company to be a State within the meaning of Article
12 of the Constitution cannot be found fault with. Even
E otherwise, law does not permit an employer, particularly the
State or its instrumentalities, to terminate the services of its
employees by adopting a "hire and fire" approach, as it would
be hit by the equal protection clause enshrined in Article 14 of
the Constitution of India (hereinafter referred to as, the
F 'Constitution'). Additionally, the respondent died long ago, and
no attempt was ever made by the appellant company to
substitute him with his legal heirs. Thus, the appeal stands
abated qua him. The facts and circumstances of the case do
not warrant any interference by this court, and the appeals are
G therefore, liable to be dismissed.
5. We have considered the rival submissions made by
learned counsel for the parties and perused the record.
There is sufficient material on record, and the
H Memorandum and Articles of Association of the appellant
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1031
SARATHI SEN ROY & ORS. [DR. B.S. CHAUHAN, J.]
company make it abundantly clear, that the same is a
A
government company and is a subsidiary of IBP, which is also
a government company. The share holding of the appellant
company has been referred to hereinabove, and more than
61.8% shares are held by IBP, a government company.
However, the question for consideration before us is, whether
B
in light of the aforementioned facts and circumstances, the
appellant company is, in fact, a State within the meaning of
Article 12 of the Constitution.
6. The said issue has been considered by various larger
C
benches, and it has been held that in order to meet the
requirements of law with respect to being a State, the
concerned company must be under the deep and pervasive
control of the government. The dictionary meaning of 'pervasive'
has been provided hereunder:
"It means that which pervades/tends to pervade in such a
way, so as to be, or become, prevalent or dominant."
"Extensive or far reaching, spreading through every part
of something."
7. In Virendra Kumar Srivastava v. U.P. Rajya
Karmachari Ka/yan Nigam and Anr. AIR 2005 SC 411, this
court held, that in order to examine whether or not an authority
is a State within the meaning of Article 12 of the Constitution,
D
E
the court must carry out an in depth examination of who has
F
administrative, financial and functional control of such a
company/corporation, and then assess whether the State in
such a case is only a regulatory authority, or if it has deep and
pervasive control over such a company/corporation, whether
such company is receiving full financial support from the
G
government, and whether administrative control over it has been
retained by the State and its authorities, and further, whether it
is supervised, controlled and watched over by various
departmental authorities of the State, even with respect to its
day-to-day functioning. If it is so, then such company/corporation
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[2013) 4 S.C.R.
A can be held to be an instrumentality of the State under Article
12 of the Constitution and therefore, will be amenable to the
writ jurisdiction of the High Court under Article 226 of the
Constitution.
8
8. In Lt. Governor of Delhi & Ors. v. V.K. Sodhi & Ors. AIR
2007 SC 2885, a similar test was applied, and it was held that
once finances are made available to the company, and the
administration of such finances is left to that company,
and there is no further governmental control or
interference with respect to the same, such company/
C corporation or society cannot be held to be a State, or a State
instrumentality within the meaning of Article 12 of the
Constitution. In this case, this court came to the conclusion that
the very formation of an independent society under the Societies
Registration Act, may be suggestive of the intention that such
D a society, could not be a mere appendage to the State.
9. A Seven-Judge Bench of this Court in Pradeep Kumar
Biswas v. Indian Institute of Chemical Biology & Ors. (2002)
5 sec 111 held, that while examining such an issue, the court
E must bear in mind whether in the light of the cumulative facts
as established, the body is financially, functionally and
administratively, dominated by, or is under the control of the
Government. Such control must be particular to the body in
question, and must be pervasive. If it is found to be so, then
F the body comes within the purview of State within the meaning
of Article 12 of the Constitution. On the other hand, when the
control exercised is merely regulatory, whether under a statute
or otherwise, the same would not be adequate, to render the
body a State. The court, while deciding the said issue placed
G reliance upon its earlier judgments in Rajasthan State
·Electricity Board Jaipur v. Mohan Lal & Ors. AIR 1967 SC
1857; and Sukhdev Singh & Ors. v. Bhagatram Sardar Singh
Raghuvanshi & Anr. AIR 1975 SC 1331, wherein it was held
that such a body must perform certain public or statutory duties,
and that such duties must be carried out for the benefit of the
H
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1033
SARATHI SEN ROY & ORS. [DR. B.S. CHAUHAN, J.]
public, and not for private profit. Furthermore, it was also laid
A
down that such an authority is not precluded from making a
profit for pubic benefit. The court came to the conclusion, that
although the employees of the Corporation may not be servants
of either the Union, or of the State, at the same time, such a
company/corporation must not represent the "voice and hands"
B
of the government. Therefore, this court in Pradeep Kumar
Biswas {supra), held that financial support of the State, coupled
with an unusual degree of control over the management and
policies of a body, may lead to an inference that it is a State.
Additionally, other factors such as, whether the company/ c
corporation performs important public functions, whether such
public function {s) are closely related to governmental function,
and whether such function {s) are carried out for the benefit of
the public, etc. are also considered. The court also considered
the case of Ramana Dayaram Shetty v. International Airport
D
Authority of India & Ors. AIR 1979 SC 1628, wherein it was
held that a corporation can be said to be an instrumentality or
agency of the government therein under certain conditions, and
the same are summarised below:
"(1) One thing is clear that if the entire share capital of E
the corporation is held by Government, it would go a long
way towards indicating that the corporation is an
instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much
F
as to meet almost entire expenditure of the corporation,
it would afford some indication of the corporation being
impregnated with governmental character.
(3) It may also be a relevant factor ... whether the
corporation enjoys monopoly status which is StateG
confen-ed or State-protected.
(4) Existence of deep and pervasive State control may
afford an indication that the corporation is a State agency
or instrumentality.
H
A
B
c
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SUPREME COURT REPORTS
[2013] 4 S.C.R.
(5) If the functions of the corporation are of public
importance and closely related to governmental
functions, it would be a relevant factor in classifying the
corporation as an instrumentality or agency of
Government.
(6) 'Specifically, if a department of Government is
transferred to a corporation, it would be a strong factor
supportive of this inference' of the corporation being an
instrumentality or agency of Government."
The Court also considered the cases of Ajay Hasia etc.
v. Khalid Mujib Sehravardi & Ors. etc. AIR 1981 SC 487; and
Mysore Paper Mills Ltd. v. Mysore Paper Mills Officers' Assn.
& Anr. AIR 2002 SC 609.
0
10. In Mis. Zee Telefilms Ltd. & Anr. v. Union of India &
Ors., AIR 2005 SC 2677, this Court, after applying tests laid
down in various cases, examined the facts of that case and
came to the conclusion that the body was not a State within the
meaning of Article 12 of the Constitution, or for that matter, 'any
E other authority' for the purposes of Article 226 of the
Constitution, while observing as under:
F
G
H
"23. The facts established in this case show the following:
1. The Board is not created by a statute.
2. No part of the share capital of the Board is held by the
Government.
3. Practically no financial assistance is given by the
Government to meet the whole or entire expenditure of
the Board.
4. The Board does enjoy a monopoly status in the field
of cricket but such status is not State-conferred or Stateprotected.
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1035
SARATHI SEN ROY & ORS. [DR. B.S. CHAUHAN, J.]
5. There is no existence of a deep and pervasive State
A
control. The control if any is only regulatory in nature as
applicable to other similar bodies. This control is not
specifically exercised under any special statute
applicable to the Board. All functions of the Board are not
public functions nor are they closely related to
B
governmental functions.
6. The Board is not Cffjated by transfer of a governmentowned corporation. It is an autonomous body. "
This Court further observed:
"35. In conclusion, it should be noted that there can
be no two views about the fact that the Constitution of this
country is a living organism and it is the duty of Courts
c
to interpret the same to fwfil the needs and aspirations
D
of the people depending on the needs of the time. It is
noticed earlier in this judgment that in Article 12 the term
•other authorities" was introduced at the time of framing
of the Constitution with a limited objective of granting
judicial review of actions of such authorities which are
E
created under the Statute and which discharge State
functions. However, because of the need of the day this
Court in Rajasthan State Electricity Board (supra) and
Sukhdev Singh (supra) noticing the socio- economic
policy of the country thought it fit to expand the definition
F
of the term •other authorities" to include bodies other than
statutory bodies. This development of law by judicial
interpretation culminated in the judgment of the 7-Judge
Bench in the case of Pradeep Kumar Biswas (supra). It
is to be noted that in the meantime the socio-economic
policy of the Government of India has changed [See
G
Ba/co Employees' Union (Regd.) v. Union of India and
Ors. (2002 2 SCC 333)] 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 (supra)
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SUPREME COURT REPORTS
[2013] 4 S.C.R.
A
is not in existence at least for the time being, hence, there
seems to be no need to further expand the scope of
"other authorities" in Article 12 by judicial interpretation
at least for the time being. It should also be borne in mind
that as noticed above, in a democracy there is a dividing
B
line between a State enterprise and a non- State
enterprise, which is distinct and the judiciary should not
be an instrument to erase the said dividing line unless,
of course, the circumstances of the day require it to do
so."
c
(Emphasis added)
11. Often, there is confusion when the cor>cept of sovereign
functions is extended to include all welfare activities. However,
the court must be very conscious whilst taking a decision as
D regards the said issue, and must take into consideration the
nature of the body's powers and the manner in which they are
exercised. What functions have been approved to be sovereign
are, the defence of the country, the raising of armed forces,
making peace or waging war, foreign affairs, the power to
E acquire and retain territory etc. and the same are not amenable
to the jurisdiction of ordinary civil courts. (Vide: N. Nagendra
Rao & Co. v. State of A.P., AIR 1994 SC 2663; and Chief
Conservator of Forests & Anr. v. Jagannath Maruti Kondhare
etc.etc., AIR 1996 SC 2898).
F
In Bangalore Water Supply & Sewerage Board v. A.
Rajappa & Ors., AIR 1978 SC 548, this Court dealt with the
terms "Regal" and "Sovereign" functions, and held that such
terms are used to define the term "governmental" functions,
despite the fact that there are difficulties that arise while giving
G such a meaning to the said terms, for the reason that the
government has now entered largely the field of industry.
Therefore, only those services, which are governed by separate
rules and constitutional provisions such as Articles 310 and
311, should strictly speaking, be excluded from the sphere of
H industry by necessary implication.
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1037
SARATHI SEN ROY & ORS. [DR. B.S. CHAUHAN, J.]
Every governmental function need not be sovereign. State
A
activities are multifarious. Therefore, a scheme or a project,
sponsoring trading activities may well be among the State's
essential functions, which contribute towards its welfare
activities aimed at the benefit of its subjects, and such activities
can also be undertaken by private persons, corporates and
companies. Thus, considering the wide ramifications,
sovereign functions should be restricted to those !unctions,
which are primarily inalienable, and which can be performed
B
by the State alone. Such functions may include legislative
functions, the administration of law, eminent domain, c
maintenance of law and order, internal and external security,
grant of pardon etc. Therefore, mere dealing in a subject by the
State, or the monopoly of the State in a particular field, would
not render an enterprise sovereign in nature. (Vide: Agricultural
Produce Market Committee v. Ashok Harikuni & Anr. etc. AIR
D
2000 SC 3116; State of U.P. v. Jai Bir Singh, (2005) 5 SCC
1; Assam Small Scale Ind. Dev Corporation Ltd. & Ors. v. Ml
s. J.D. Pharmaceuticals & Anr., AIR 2006 SC 131; and M.D.,
H.S.l.D.C. & Ors. v. Mis. Hari Om Enterprises & Anr., AIR 2009
SC 218).
12. A public authority is a body which has public or
statutory duties to perform, and which performs such duties and
carries out its transactions for the benefit of the public, and not
for private profit. Article 298 of the Constitution provides that
E
the executive power of the Union and the State extends to the
F
carrying on of any business or trade. A public authority is not
restricted to the government and the legislature alone, and it
includes within its ambit, various other instrumentalities of State
action. The law may bestow upon such organization, the power
of eminent domain. The State in this context, may be granted
G
tax exemption, or given monopolistic status for certain
purposes. The State being an abstract entity, can only act
through an instrumentality or an agency of natural or juridical
persons. The concept of an instrumentality or agency of the
government is not limited to a corporation created by a statute,
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SUPREME COURT REPORTS
[2013] 4 S.C.R.
A but is equally applicable to a company, or to a society. In a
given case, the court must decide, whether such a company
or society is an instrumentality or agency of the government,
so as to determine whether the same falls within the meaning
of expression 'authority', as mentioned in Article 12 of the
B Constitution, upon consideration of all relevant factors.
In light of the aforementioned discussion, it is evident that
it is rather difficult to provide an exhaustive definition of the term
"authorities", which would fall within the ambit of Article 12 of
C the Constitution. This is precisely why, only an inclusive
definition is possible. It is in order to keep pace with the broad
approach adopted with respect to the doctrine of equality
enshrined in Articles 14 and 16 of the Constitution, that
whenever possible courts have tried to curb the arbitrary
0 exercise of power against individuals by centres of power, and
therefore, there has been a corresponding expansion of the
judicial definition of the term State, as mentioned in Article 12
of the Constitution.
In light of the changing socio-economic policies of this
E country, and the variety of methods by which government
functions are usually performed, the court must examine,
whether an inference can be drawn to the effect that such an
authority is infact an instrumentality of the State under Article
12 of the Constitution. It may not be easy for the court, in such
F a case, to determine which duties form a part of private action,
and which form a part of State action, for the reason that the
conduct of the private authority, may have become so entwined
with governmental policies, or so impregnated with
governmental character, so as to become subject to the
G constitutional limitations that are placed upon State action.
Therefore, the court must determine whether the aggregate of
all relevant factors once considered, would compel a conclusion
as regards the body being bestowed with State responsibilities.
13. When we discuss 'pervasive control', the term 'control'
H is taken to mean check, restraint or influence. Control is
BALMER LAWRIE & CO. LTD. & ORS. v. PARTHA 1039
SARATHI SEN ROY & ORS. [DR. B.S.