# PRADEEP KUMAR BISWAS AND ORS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY AND ORS

- **Citation:** [2002] 3 S.C.R. 100
- **Court:** Supreme Court of India
- **Decided:** 2002-04-16
- **Bench:** S.P. Bharucha, Syed Shah Mohammed Quadri, R.C. Lahoti; N. Santosh Hegde, Doraiswamy Raju, Ruma Pal, Arijit Pasayat
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/pradeep-kumar-biswas-and-ors-v-indian-institute-of-chemical-biology-and-ors-18675
- **Pages:** 49

## Headnote

Constitution of India, I950-Article I2-Council of Scientific and
C Industrial Research (CSIR)-Whether a 'State '-Held, it is 'State' falling within
the range of the Article as per the t~ts judicially evolved for the purposeNotification bringing CSIR within purview of Section 14(2) of Administrative
Tribunals Act, I985 is conclusive of the fact that CSIR is a state within the
meaning of Article I 2.
D
E
Precedent-Normally a precedent which has stood for a length of time
should not be reversed however erroneous the reasoning is, if it has stood
unquestioned-But in the facts .of the case, Sabhajit Tewary' case cannot
stand as an authority since the decision was plainly erroneous-It is Court's
duty not to perpetuate its mistake.
Appellants-employees of a Unit of Council of Scientific and Industrial
Research (CSIR) had filed Writ Petition challenging their termination from
service. High Court dismissed the same in view of Sabhajit Tewary 's case
wherein it was held that writ petition against CSIR was not maintainable as
F
it was not an authority within the meaning of Article 12 of the Constitution
of India.
In appeal to this Court, the matter was refered to the Constitution Bench
for reconsideration of Sabhajit Tewary's case having regard to the
pronouncement of this Court in several subsequent decisions in respect of
G several other institutes of similar nature set up by Union of India.
H
Thus the question for consideration was whether CSIR is a State within
the meaning of Article 12 of the Constitution.
Answering the question, the Court
100
.4'.
PRADEEP KUMAR BISWAS "'· INDIAN INSTITUTE OF CHEMICAL BIOLOGY
10}
HELD: Per Ruma Pal, J. (For herself. CJ/, Quadri, Hedge and Pasayat, A
JJ.)
1.1. In view of the facts relating the CSIR, it Is well within the range of
Article 12, a conclusion which is sustainable when judged according to the
tests judicially evolved for the purpose. The tests formulated in Ajay Basia's
case are not a rigid set of principles so that if a body falls within any one of B
them it must, ex hypothesi, 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
1 cumulative facts as established, th~ 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 C
this is found then the body is a State within Article 12. On the other hand,
. when the control is merely regulatory whether under statute or otherwise, it
would not serve to make the body a State. [119-A, 118-F, G, H]
Sabhajit Tewary v. Union of India, [1975] 3 SCR 616, overrnled.
Rqiasthan Electricity Board v. Mohan Lal and Ors., [1967] 3 SCR 377;
" Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Ors., (1975]
3 SCR 619; Ramana v. International Airport Authority of India, (1979) SC 1628;
Ajay Basia v. Khalid Mujib Sebravardi, (1981] l SCC 722; Som Prakash Rekhi
v. Union of India, AIR (1981) SC 212; P.K. Ramachandra Iyer and Ors. v. Union
D
of India and Ors., [1984] 2 SCC 141; B.S. Minhas v. Indian Statistical Institute E
and Ors., (1984] 1 SCR 395; CenJral Inland Water Transport Corporation ltd
v. Brojo Nath Ganguli, AIR (1986) SC 1571; All India Sainik &hoo/s Employees'
Association v. Defence Minister-cum-Chairman Board of Governors, Sainik
&hoo/s Society, New Delhi and Ors., [1989] Supp. 1 SCC 205 and Mysore Paper
~ Mills ltd v. The Mysore Paper Mills Officers Association, JT (2000) 1 SC 61, F
relied on.
Tekraj Vasandi alias K.S. Basandhi v. Union of India and Ors., [1988] 1
SCC 237; Chander Mohan Khanna v. National Council of Educational research
and Training and Ors., [1991 [ 4 SCC 578; E.P. Royappa v. State of Tamil Nadu,
[1974] 2 SCR 348; Maneka Gandhi v. Union of India, [1978[ 1 SCC 248 and G
Praga Tools Corporation v. Shri C.A. /manual and Ors., [1969) 3 SCR 773,
· ,_ referred to.
1.2. Normally, a precedent which has stood for a length of t

## Text

_Characters 0–39,937 of 124,684. This is a partial read: ask again with offset=39937 for what follows._

A
PRADEEP KUMAR BISWAS AND ORS.
v.
INDIAN INSTITUTE OF CHEMICAL BIOLOGY AND ORS.
APRIL 16, 2002
B
[S.P. BHARUCHA, CJ., SYED SHAH MOHAMMED QUADRI, R.C.
LAHOTI; N. SANTOSH HEGDE, DORAISWAMY RAJU, RUMA PAL
AND ARIJIT PASAYAT, JJ.]
Constitution of India, I950-Article I2-Council of Scientific and
C Industrial Research (CSIR)-Whether a 'State '-Held, it is 'State' falling within
the range of the Article as per the t~ts judicially evolved for the purposeNotification bringing CSIR within purview of Section 14(2) of Administrative
Tribunals Act, I985 is conclusive of the fact that CSIR is a state within the
meaning of Article I 2.
D
E
Precedent-Normally a precedent which has stood for a length of time
should not be reversed however erroneous the reasoning is, if it has stood
unquestioned-But in the facts .of the case, Sabhajit Tewary' case cannot
stand as an authority since the decision was plainly erroneous-It is Court's
duty not to perpetuate its mistake.
Appellants-employees of a Unit of Council of Scientific and Industrial
Research (CSIR) had filed Writ Petition challenging their termination from
service. High Court dismissed the same in view of Sabhajit Tewary 's case
wherein it was held that writ petition against CSIR was not maintainable as
F
it was not an authority within the meaning of Article 12 of the Constitution
of India.
In appeal to this Court, the matter was refered to the Constitution Bench
for reconsideration of Sabhajit Tewary's case having regard to the
pronouncement of this Court in several subsequent decisions in respect of
G several other institutes of similar nature set up by Union of India.
H
Thus the question for consideration was whether CSIR is a State within
the meaning of Article 12 of the Constitution.
Answering the question, the Court
100
.4'.
PRADEEP KUMAR BISWAS "'· INDIAN INSTITUTE OF CHEMICAL BIOLOGY
10}
HELD: Per Ruma Pal, J. (For herself. CJ/, Quadri, Hedge and Pasayat, A
JJ.)
1.1. In view of the facts relating the CSIR, it Is well within the range of
Article 12, a conclusion which is sustainable when judged according to the
tests judicially evolved for the purpose. The tests formulated in Ajay Basia's
case are not a rigid set of principles so that if a body falls within any one of B
them it must, ex hypothesi, 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
1 cumulative facts as established, th~ 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 C
this is found then the body is a State within Article 12. On the other hand,
. when the control is merely regulatory whether under statute or otherwise, it
would not serve to make the body a State. [119-A, 118-F, G, H]
Sabhajit Tewary v. Union of India, [1975] 3 SCR 616, overrnled.
Rqiasthan Electricity Board v. Mohan Lal and Ors., [1967] 3 SCR 377;
" Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Ors., (1975]
3 SCR 619; Ramana v. International Airport Authority of India, (1979) SC 1628;
Ajay Basia v. Khalid Mujib Sebravardi, (1981] l SCC 722; Som Prakash Rekhi
v. Union of India, AIR (1981) SC 212; P.K. Ramachandra Iyer and Ors. v. Union
D
of India and Ors., [1984] 2 SCC 141; B.S. Minhas v. Indian Statistical Institute E
and Ors., (1984] 1 SCR 395; CenJral Inland Water Transport Corporation ltd
v. Brojo Nath Ganguli, AIR (1986) SC 1571; All India Sainik &hoo/s Employees'
Association v. Defence Minister-cum-Chairman Board of Governors, Sainik
&hoo/s Society, New Delhi and Ors., [1989] Supp. 1 SCC 205 and Mysore Paper
~ Mills ltd v. The Mysore Paper Mills Officers Association, JT (2000) 1 SC 61, F
relied on.
Tekraj Vasandi alias K.S. Basandhi v. Union of India and Ors., [1988] 1
SCC 237; Chander Mohan Khanna v. National Council of Educational research
and Training and Ors., [1991 [ 4 SCC 578; E.P. Royappa v. State of Tamil Nadu,
[1974] 2 SCR 348; Maneka Gandhi v. Union of India, [1978[ 1 SCC 248 and G
Praga Tools Corporation v. Shri C.A. /manual and Ors., [1969) 3 SCR 773,
· ,_ referred to.
1.2. Normally, a precedent which has stood for a length of time should
not be reversed, however erroneous the reasoning if it bas stood unquestioned,
without its reasoning being distinguished' out of aU recognition by subsequent H
102
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A decisions and if the principles enunciated in the earlier decision can stand
consistently and be reconciled with subsequent decisions of this Court, some
equally authoritative. Sabhajit Tewary 's case cannot still stand as an authority
even on the facts merely because it has stood for 25 years. Parallels may be
drawn even on the facts leading to an untenable interpretation of Article 12
B and a consequential denial of the benefits offundamental rights to individuals
who would otherwise be entitled to them. Since on a re-examination of the
question, it is concluded that the decisions was plainly erroneous, it is the
Court's duty to say so and not perpetuate its mistake. [112-D-E; 126-B-D]
Bengal Immunity Co Ltd v, State of Bihar and Ors., AIR (1955) SC 661,
C relied on.
1.3. That 'inclusive' definition is generally not exhaustive, is a statement
of the obvious and is so as far as Article 12 of the Constitution is concerned.
The words 'State' and 'Authority' used in Article 12, therefore, remain, among
"the great generalities of the Constitution", the contents of which have been
D and continue to be supplied by Courts from time to time. [107-C]
Smt. Ujjain Bai v. State of Uttar Pradesh, [1963] 1 SCR 778, referred to.
'The Nature of the Judicial Process' by Benjamin Cardozo, referred to.
E
2. The Notification bringing CSIR within perview of S.14(2) of
Administrative Tribunals Act, 1985 was conclusive of the fact that CSIR was
a State within the meaning of Article 12. Reading Article 323 A of the
Constitution and Section 14 of the 1985 Act, it is clear that no notification under
S.14(2) of the Administrative Tribunals Act could have been issued by the
Central Government unless the employees of the CSIR were either appointed ·.
F to public services and posts in connection with the affairs of the Union or of
'f'
any State or of any local or other authority within the territory of India or
under the control of the Government oflndia or of any corporation owned or
. controlled by the Government. Once such a notification has been issued in
respect of CS/R, the consequence will be that an application would lie at the
G instance of the appellants at least before the Administrative Tribunals. No new
jurisdiction was created in the Administrative Tribunal The notification which
was issued by the Central Government merely served to shift the service·
disputes of the employees of CSIR from the constitutional jurisdiction of the
-1
High Court under Article 226 to the Administrative Tribunals on the factual
basis that CSIR was amenable to the writ jurisdiction as a State or other
H authority under Article 12 of the Constitution. [126-F, G; 127-A, B, C]
I
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY
1 QJ
SRS Kumar v. Union of India, AIR (1987) SC 386 and L. Chandra AKumar v. Union of India, (1997( 3 SCC 261, referred to.
Per Lahoti, J. (For himself and Raju, J.)-(Dissenting):
1.1. Council for Scientific and Industrial Research (CSIR) is not a State
within the meaning of Article 12 of the Constitution. It is not an 'authority' B
so as to fall within the meaning of expression 'other authorities' under Article
12. It bas no statutory flavour-neither it owes its birth to a statute nor is
there any other statute conferring it with such powers as would enable it being
branded an authority. The indicia of power is absent. It does not discharge
such functions as are governmental or closely associated therewith or being C
fundamental to the life of the people. (148-C; 145-E]
1.2. Though the fundamental and basic principles for determining
whether a particular body is 'the State' or not, substantially remain the same
but the emphasis on their applicability to the facts found is diferred from. A
distinction bas to be home in mind between an instrumentality or agency .of D
'the State' and an authority includible in 'other authorities'. The distinction
cannot be obliterated. (127-G, H; 128-A]
1.3. An authority must be an authority sui Juris to fall within the
meaning of the expression 'other authorities' under Article 12. A juridicial
entity, though an authority, may also satisfy the test of being an instru- E
mentality or agency of the State in which event such authority may be held
to be an instrumentality or agency of the State but not vice versa. (144-A]
1.4. Simply by holding a legal entity to be an instrumentality or agency
of the State it does not necessarily become an authority within the meaning
of 'other authorities' in Article 12. To be an authority, the entity should have F
been created by a statute or under a statute and functioning with liability
and obligations to public. Further the statute creating the entity should have
vested that entity with power to make law or issue binding directions
amounting to law within the meaning of Article 13(2) governing its
relationship with other people or the affairs of other people-their rights, duties, G
liabilities or other legal relations. If created under a statute, then there must
exist some other statute conferring on the entity such powers. In either case,
it should have been en trusted with such functions as are governmental or
closely associated therewith by being of public importance or being
fundamental to the life of the people and hence governmental Such authority
would be the State, for one who enjoys the powers or privileges of the State H
f04
SUPREME COURT REPORTS
[2002] 3 S.C.R.
- A must also be subjected to limitations and obligations of the State. It is this
strong statutory flavour and clear indicia of power-constitutionally or
-.r
statutol"Y,, and its potential or capability to act to the detriment of fundamental
rights of the people, which makes it an authority; though in a given case,
depending on the facts and circumstances, an authority may also be found to
B be an instrumentality or agency c>f the State and to that extent they may
overlap. [144-B-FJ
1.5. In view of the meaning which 'authority' carries, the question
whether an entity is an 'authority' cannot be answered by applying Ajay Hasia
tests. The tests laid down in Ajay Hasia 's case are relevant for the purpose of
C determining whether an entity is an instrumentality or agency of the State.
Neither all the tests are required to be answered in positive nor a positive
answer to one or two tests would suffice. It will depend upon a combination
of one or more of the relevant factors depending upon the essentiality and
overwhelming nature of such factors in identifying the real source of
governing power, if need be by removing the mask or piercing the veil
D disguising the entity concerned. When an entity has an independent legal
existence, before it is held to be State, the person alleging it to be so must
satisfy the Court of brooding presence of government or deep and pervasive
control of the government so as to hold it to be an instrumentality or agency
of the State. (145-A-D]
E
1.6. Framers of the Constitution used the word "the State" in a wider
sense than what is understood in the ordinary or narrower sense. So far as
'other authorities' are concerned they were included subject to their satisfying
the test of being 'within the territory of India' or being 'under the control of
the Government of India'. The expression 'under the control of the
p Government of India' in Article 12 does not qualify the word 'territory', it
qualifies 'other authorities'. (129-C, D]
1.7. Expanding dimension of 'the State' doctrine through judicial
wisdom ought to be accompanied by wise limitations else the expansion may
go much beyond what even the framers of Article 12 may have thought of.
G
(129-E, F]
1.8. The definition of the State as contained in Article 12 is inclusive
and not conclusive. The net of Article 12 has been expanded by 'progressive' __ .
-~
judicial thinking, so as to include within its ken several instrumentalities and
-1
agencies performing State functions or entrusted with State action. The width
H of expansion and the wisdom of limitations both have to be spelled out from
~
__,
<
->
,..
·,
PRADEEP KUMAR BISWAS v. IND IAN INSTITUTE OF CHEMICAL BIOLOGY
} 05
Article 12 itself and the fundamentals of constitutional jurisprudence.
A
(130-G, H; 131-AI
1.9. The terms instrumentality or. 'agency' of the State are not to be
.found mentioned in Article 12 of the Constitution. Nevertheless they fall within
the ken of Article 12 of the Constitution for the simple reason that if the
State chooses.' to set up an instrumentality or agency and entrust it with the B
same power, function or action which would otherwise have been exercised
or undertaken by itself there is no reason why such instrumentality or agency
should not be subject to same constitutional and public law limitations as the
State would have been. Any company, corporation, society or any other entity
having a juridical existence if it has been held to be an instrumentality or C
agency of the State, it has been so held only on having found to be an alter
ego, a double or a proxy or a limb or an off-spring or a mini-incarnation or
a vicarious creature· or a surrogate and so on-by whatever name called-of
the State. In short, the material available must justify holding of the entity
wearing a mask or a veil worn only legally and outwardly which on piercing
fails to obliterate the true character of the State in disguise. Then it is an D
instrumentality or agency of the State. (143-E-GI
Sahhajit Tiwary v. Union of India. [1975] 3 SCR 616, affirmed.
Tekraj Vasandi@K.L. Basandhiv. UnionoflndiaandOrs., (198811 sec
236 and Chander Mohan Khanna v. NCERT. (1991) 4 sec 578, relied on.
E
N. Masthan Sahib v. The Chief Commissioner, Pondicherry and Anr., [1962)
Supp. 1 SCR 981; KS. Ramamurthy Reddiar v. Chief Commissioner, Pondicherry
and Anr., (1964) l SCR 656; Rajasthan State Electricity Board Jaipur v. Mohan
Lal and Ors., (1967) 3 SCR 377; Sukhdev Singh and Ors. v. Bhagatram Sardar
Singh Raghuvanshi and Anr., (19751 1 SCC 421, Ramana Dayaram Shelly v. The F
International Airport Authority of India and Ors., (1979) 3 SCC 489; Ajay Hasia
etc. v. Khalid Mujib Sehravardi and Ors. etc., (1981) l SCC 722; Som Prakash
Rekhi v. Union of India and Anr., (198111 sec 449; Smt. Ujjam Bai v. State of
Uttar Pradesh and Anr., (1963) 1 SCR 778; Praga Tools Corporation v. V.
!manual and Ors., (196911 SCC 585; The Workmen, Food Corporation of India
v. Food Corporation of India, (1985( 2 SCC 136 and Mysore Paper Mills ltd v. G
The Mysore Paper Mills Officers Association and Anr. JT (2002) I SC 61,
referred to.
Black's law Dictionary (Seventh Edition); Webster Comprehensive
Dictionary (International &Jition); Webster's Third New International Dictionary,
H
referred to.
106
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 992 of '
2002.
~
From the Judgment and Order dated 12.2.86 of~e Kolkata High Court
in F.M.A.T. No. 314 of 1986.
B
Soli J. Sorabjee, Attorney General, Mukul Rohtagi, R.N. Trivedi,
Additional Solicitor General, Sanjoy Kumar Ghosh, Deba Prasad Mukherjee,
B.D. Sharma, Narottam Vyas, S.N. Tiwari, Ms. Deepshikha Bharti, Mrs.
Madhu Sikri, V.K. Rao, Ms. Piyush Sharma, Ravi Sikri, Ajay Verma, Ms.
Anuradha Priyadarshni, Prateek Jalan, Manish Singhvi and S.N. Terdol for
the appearing parties.
-;.
c
The Judgment of the Court were delivered by
RUMA PAL, J. In 1972 Sabhajit Tewary, a Junio~ Stenographer with
the Council of Scientific and Industrial Research (CSIR) filed a writ petition
under Article 32 of the Constitution claiming parity of remuneration with th_e
D stenographers who were newly recruited to the C.SIR. His claim was based
on Article 14 of the Constitution. A Bench of five judges of this Court denied
him the benefit of that Article because they held in Sabhajit Tewary v. Union
of India that the writ application was not maintainable against CSIR as it was
not an "authority" within the meaning of Article 12 of the Constitution. The
~
correctness of the decision is before .us for re-consideration. The immediate
•
E cause for such re-consideration is a writ application filed by the appellants in
the Calcutta High Court challenging the termination of their services by the
respondent No. I which is a unit of CSIR. They prayed for an interim order
before the learned Single Judge. That was refused by the Court on the prima
_,
view that the writ application was itself not maintainable against the respondent
F
No. l. The appeal was also dismissed in view of the decision of this Court
in Sabhajit Tewary's2 case.
Challenging the order of the Calcutta High Court, the appellants filed
an appeal by way of special leave before this Court. On 5th August, 1986 a
Bench of two Judges of this Court referred the matter to a Constitution Bench
G
being of the view that the decision in Sabhajit Tewary required re-consideration
"having regard to the pronouncement of this Court in several subsequent
decisions in respect of several other institutes of similar nature set up by the
Union of India". The questions therefore before us are - is the CSIR a State
~
within the meaning of Article 12 of the Constitution and if it is should this
-1
I.
[1975] 3 S<;:R 616.
H
2.
(Supra)
PRADEEPKUMAR BlSWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [RUMA PAL, J.]
107
Court reverse a decision which has stood for over a quarter of a century?
A
The Constitution has to an extent defined the word 'State' in Article 12
itself as including:
"the Government and Parliament of India and the Government and
the Legislature of each of the States and all local or other authorities B
within the territory of India or under the control of the Government
of India" .
./
That an 'inclusive' definition is generally not exhaustive is a statement
of the obvious and as far as Article 12 is concerned, has been so held by this
Court.' The words 'State' and 'Authority' used in Article 12 therefore remain, C
to use the words of Cardozo', among ''the great generalities of the Constitution"
the content of which has been and continues to be supplied by Courts from
time to time.
It would be a practical impossibility and an unnecessary exercise to
note each of the multitude of decisions on the point. It is enough for our D
present purposes to merely note that the decisions may be categorized broadly
into those which express a narrow and those that express a more liberal view
and to consider some decisions of this Court as illustrative of this apparent
. divergence. In the ultimate analysis the difference may perhaps be attributable
to different stages in the history of the development of the law by judicial
decisions on the subject.
E
But before considering the decisions it must be emphasized that the
significance of Article 12 lies in the fact that it occurs in Part JII of the
Constitution which deals with fundamental rights. The various Articles in
Part-lll have placed responsibilities and obligations on the 'State' viz-a-vis F
the individual to ensure constitutional protection of the individual's rights
against the State, including the right to equality under Article 14 and equality
of opportunity in matters of public employment under Article 16 and most
importantly the right to enforce all or any of these fundamental rights against
the 'State' as defined in Article 12 either under Article 32 by this Court or
under Article 226 by the High Courts by issuance of writs or directions or G
orders.
~
The range and scope of Article 14 and consequently Article .16 have
3.
Sm/. Ujjam Bai v. State of Uttar Pradesh. [1963] I SCR 778 at 968.
4.
Benjamin Cardozo : 'The Nature of the Judicial Process.
H
108
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A been widened by a process of judicial interpretation so that the right to
equality now not only means the right not to be discriminated against but also
protection against any arbitrary or irrational act of the State. It has been said
that:
"Articles 14 and 16 strike at arbitrariness in State action and ensure
B
fairness and equality of treatment".5
c
Keeping pace with this broad approach to the concept of equality under
Articles 14 and 16, Courts have whenever possible, sought to curb an arbitrary
exercise of power against individuals by 'centres of power', and there was
correspondingly an expansion in the judicial definition of 'State' in Article
12.
Initially the definition of State was treated as exhaustive and confined
to the authorities or those which could be read ejusdem generis with the
authorities mentioned ii;i the definition of Article 12 itself. The next stage was
D reached when the definition of 'State' came to be understood with reference
to the remedies available· against it. For example, historically, a writ of
mandamus was available for enforcement of statlitory duties or duties of a
public natlire.6 Thus a statlitory corporation, with regulations framed by such
Corporation pursuant to statutory powers was considered a State, and the
public duty was limited to those which were created by statute.
E
The decision of the Constitution Bench of this Court in Rajasthan
Electricity Board v. Mohan Lal and Ors., (1967] 3 SCR 377 is illustrative of
this. The question there was whether the Electricity· Board - which was a
Corporation constituted under a statute primarily for the purpose of carrying
on commercial activities could come within the definition of' State' in Article
F
12. After considering earlier decisions, it was said:
G
"These decisions of the Court support our view that the expression
"other authorities" in Article 12 will include all constitutional or
statutory authorities on whom powers are conferred by law. It is not
at all material that some of the powers conferred may be for the
purpose of carrying on commercial activities".
It followed that since a Company incorporated under the Companies
5.
E.P. Royappa v. State of Tamil Nadu, (1974) 2 SCR 348: (1974) 4 SCC 3: (1974) SCC (L
& S) 165: (See also Maneka Gandhi v. Union of India, (1978) I SCC 248;
J
6.
See Praga Tools Corporation v. lmanua/, (1969) 3 SCR 773,.
,.
PRADEEP KUMAR BISWAS "· INDIAN INSTITUTE OF CHEMICAL BIOLOGY [RUMA PAL, J.]
109
-
>-
Act is not formed statutorily and is not subject to any statutory duty vis a vis A
an individual, it was excluded from the purview of 'State' In Praga Tools
Corporation V. Shri C.A. /manual and Ors. 7 where the question was whether
an application under Article 226 for issuance of a writ of mandamus would
lie impugning an agreement arrived at between a Company and its workmen,
-
the Court held that:
B
"there was neither a statutory nor a public duty imposed on it by a
statute in respect of which enforcement could be sought by means of
a mandamus, nor was there in its workmen any corresponding legal
right for enforcement of any such statutory or public duty. The High
Court, therefore, was right in holding that no writ petition for a c
.mandamus or an order in the nature of mandamus could lie against
the company".
By 1975 Mathew, J. in Sukhdev Singh and Ors. v. Bhagatram Sardar
Singh Raghuvanshi and Ors.• noted that the concept of"State" in Article 12
had undergone "drastic changes in recent years". The question in that case D
was whether the Oil and Natural Gas Commission, the Industrial Finance
Corporation and the Life Insurance Corporation each of which were public
~
corporations set up by statutes were authorities and therefore within the
defmition of State in Article 12. The Court affirmed the decision in Rajasthan
. '
...
State Electricity Board v. Mohan Lal (supra) and held that the Court could
compel compliance of statutory rules. But the majority view expressed by E
A.N. Ray, CJ also indicated that the concept would include a public authority
which:
"is a body which has public or statutory duties to perform and which
performs those duties and carries out its transactions for the benefit
F
of the public and. not for private profit. Such an authority is not
precluded from making a profit for the public benefit".
(emphasis added)
The use of the alternative is significant. The Court scrutinised the
history of the formation of the three Corporations, the financial support given G
by the Central Government, the utilization of the finances so provided, the
'
nature of service rendered and noted that despite the fact that each of the
)--
Corporations ran on profits earned by it nevertheless the structure of each of
7.
[1969] 3 SCR 773.
8.
[1975] 3 SCR 619.
H
4
110
SUPREME COURT REPORTS
(2002] 3 S.C.R.
A the Corporations showed that the three Corporations represented the 'voice
-< -
. and hands' of the Central Government. The Court came to the conclusion
that although the employees of the three Corporations were not servants of
the Union or the State, "these statutory bodies are 'authorities' within the
meaning of Article 12 of the Constitution".
-
B
Mathew J in his concurring judgment went further and propounded a
view which presaged the subsequent developments in the law. He said:
"A state is an abstract entity. It can only act through the instrumentality
or agency of natural or juridical persons. Therefore, there is nothing
c
strange in the notion of the state acting through a corporation and
making it an agency or instrumentality of the State. . "
For identifying such an agency or instrumentality he propounded four
indicia:
D
(l) "A finding of the state financial support plus an unusual degree
of control over the management and policies might lead one to
'
characterize an operation as state action. "
(2) ........... "Another factor which might be considered is whether the
..-
operation is an important public function. "
...
E
(3) "The combination of state aid and the furnishing of an important
public sef\'.ice may result in a conclusion that the operation should be
classified as a state agency. If a given function is of such public
importance and so closely related to a governmental functions as to
be classified as a .government agency, then even the presence or
F
absence of state financial aid might be irrelevant in making a finding
of state action.' If the function does not fall within such a description
then mere addition of state money would not influence the conclusion."
( 4) "The ultimate question which is relevant for our purpose is whether
such a corporation is an agency or instrumentality of the government
G
for carrying on a business for the benefit of the public. In other
words, the question is, for whose benefit was the corporation carrying
on the business?"
Sabhajit Tewary was decided by the same Bench on the same day as
~
Sukhdev.Singh (supra). The contentions of the employee was that CSIR is an
H agency of .~he Central Government on the basis of the CSIR Rules which, it
,
PRADEEP KUMAR BISWAS v. lNDIAN INSTITUTE OF CHEMICAL BIOLOGY {RUMA PAL, J.J
111
>-
was argued, showed that the Government controlled the functioning of CSIR A
in all its aspects. The submission was somewhat cursorily negatived by this
Court on the ground that all this
~~
............ "will not establish anything more than the fact that the
Government takes special care that the promotion, guidance and cooperation of scientific and industrial research, the institution and B
financing of specific researches, establishment or development and
"
assistance to special institutions or departments of the existing
institutions fur scientific study of problems affecting particular industry
in a trade, the utilisation of the result of the researches conducted
•
under the auspices of the Council towards the development of c
industries in the country are carried out in a responsible manner. "
Although the Court noted that it was the Government which was taking
the "special care" nevertheless the writ petition was dismissed ostensibly
because the Court factored into its decision two premises:
(i)
"The society does not have a statutory character like the Oil and D
...
Natural Gas Commission or the Life Insurance Corporation or
Industrial Finance Corporation. It is a Society incorporated in
~
accordance with the provisions of the Society's Registration Act",
and
(ii) "This Court has held in Praga Tools Corporation v. Shri C.A. E
__.,
/manual and Ors., [1969] 3 SCR 773, Heavy Engineering Mazdoor
Union v. The State of Bihar and Ors., [1969] 3 SCR 995 and in
S.L. Agarwal v. General Manager Hindustan Steel Ltd., [1970] 3
SCR 363 that the Praga Tools Corporation, Heavy Engineering
Mazdoor Union and Hindustan Steel Ltd. are all companies F
incorporated under the Companies Act and the employees of these
companies do not enjoy the protection available to Government
servants as contemplated in Article 311. The companies were
held in these cases to have independent existence of the
Government and by the law relating to corporations. These could
not be held to be departments of the Government".
G
...-
With respect, we are of the view that both the premises were not really
relevant and in fact contrary to the 'voice' and 'hands' approach in Sukhdev
Singh. Besides reliance by the Court on decisions pertaining to Article 3 J J
which is contained in Part XIV of the Constitution was inapposite. What was
under consideration was Art. 12 which by definition is limited to Part III and H
112
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A by virtue of Art. 36 to Part IV of the Constitution.
---('
As said ·by another
Constitution Bench later in this context:9
~
"Merely because a juristic entity may be an "authority" and therefore
t.~
"State" within the meaning of Article 12, it may not be elevated to
.,_
the position of "State" for the purpose of Articles 309, 310 and 3 ll
B
which find a place in Part XIV. The definition of "State" in Article
12 which includes an "authority" within the territory of India or
under the control of the Government of Indfa is limited in its
application only to Part III and by virtue of Article 36, to Part N: it
"
does no~ extend to the other provisions of the Constitution and hence
c
a juristic entity which may be "State" for the purpose of Parts III and
}:;::::
IV would not be so for the purpose of Part XIV or any other provision
of the Constitution. This is why the decisions of this Court in S.L.
Aggarwal v. Hindustan Steel Ltd, and other cases involving the
,....
applicability of Article 31 l have no relevance to the issue before us".
D
Nonnally, a precedent like Sabhajit Tewary which has stood for a
length of time should. not be reversed, however erroneous the reasoning if it
has stood unqqestioned, without its reasoning being 'distinguished' out of all
~
recognition by subsequent decisions and if the principles enunciated in the
,----
earlier decision can stand consistently and be reconciled with subsequent
~~
E
decisions of this Court, some equally authoritative. In our view Sabhajit
Tewary fulfills both conditions.
'
Side-stepping the majority approach in Sabhajit Tewary, the 'drastic
!om
changes' in the perception of 'State' heralded in Sukhdev Singh by Mathew,
J and the tests fonnulated by him were affinned and amplified in Ramana v.
F
International Airport Authority of India."'0 Although the International Airport
Authority oflndia is a statutory corporation· and therefore within the accepted
connotation of State, the Bench of three Judges developed the concept of
State. The rationale for the approach was the one adopted by Mathew J in
Sukhdev Singh:
G
............... "In the early days, when the Government had limited
functions, it could operate effectively through natural persons
constituting its civil service and they were found adequate to discharge
-i
governmental functions, which were of traditional vintage. But as the ..
9.
Ajay Hasia v. Khalid Mujib Sehravardi, [ 1981] I SCR 722'.
H
10. AIR (1979) SC 1628.
'
,,
,
PRADEEP KUMAR Bl SW AS "· INDIAN INSTITUTE Of CHEMICAL BIOLOGY [RUMA PAL, I.)
) ] J
tasks of the Government multiplied with the advent of the welfare A
State, it began to be increasingly felt that the frame work of civil
service was not sufficient to handle the new tasks which were often
of specialised and highly technical character. The inadequacy of the
civil service to deal with these new problems came to be realised and
it became necessary to forge a new instrumentality or administrative B
device for handling these new problems. It was in these circumstances
and with a view to supplying this administrative need that the public
corporation came into being as the third arm of the Government".
From this perspective, the logical sequitur is that it really does not
matter what guise the State adopts for this purpose, whether by a Corporation C
established by statute or incorporated under a law such as the Companies Act
or formed under the Societies Registration Act, 1860. Neither the form of the
Corporation, nor its ostensible autonomy would take away from its character
as 'State' and its constitutional accountability under Part II! vis-a-vis the
individual if it were in fact acting as an instrumentality or agency of
Government.
As far as Sabhajit Tewary was concerned it was 'explained' and
distinguished in Romana saying:
"The Court no doubt took ihe view on the basis of facts relevant to
D
the constitution and functioning of the Council that it was not an E
'authority', but we do not fmd any discussion in this case as to what
are the feanires which must be present before a corporation can be
regarded as an 'authority' within the meaning of Art. 12. This decision
does not lay down any principle or test for the purpose of determining
when a corporation can be said to be an 'authority'. !fat all any test
can be gleaned from the decision, it is whether the Corporation is F
'really an agency of the Government'. The Court seemed to hold on
the facts that the Council was not an agency of the Government and
was, therefore, not an 'authority' ".
The tests propounded by Mathew, J in Sukhdev Singh were elaborated G
in Ramana and were re-formulated two years later by a Constitution Bench
in Ajay Hasia v. Khalid Mujib Sehravardi. 11 What may have been technically
characterised as 'obiter dicta' in Sukhdev Singh and Ramana (since in both
cases the "authority" in fact involved was a statutory corporation), formed
11. 119s111sec122,
H
114
SUPREME COURT REPORTS
[2002] 3 S.C.R.
A the ratio decidendi of Ajay Hasia. The case itself dealt with a challenge under
Article 32 to admissions made to a college established and administered by
a Society registered under the Jammu & Kashmir Registration of Societies
Act 189'8. The contention of the Society was that even if there were an
arbitrary procedure followed for selecting candidates for admission, and that
this may have resulted in denial of equality to the petitioners in the matter
B of admission in violation of Article 14, nevertheless Article 14 was not
available to the petitioners because the Society was not a State within Art. 12.
c
D
E
F
G
The Court recognised that:
........... "Obviously the Society cannot be equated with the Government
of India or the Government of any State nor can it be said to be a
local authority and therefore, it must come within the expression
"other authorities" if it is to fall within the definition of 'State' ". But
it said that:
"The courts should be anxious to enlarge the scope and width of the
Fundamental Rights by bringing within their sweep every authority
which is an instrumentality or agency of the government or through
the corporate personality of which the government is acting, so as to
subject the government in all its myriad activities, whether through
natural persons or through corporate entities, to the basic obligation
of the Fundamental Rights".
It was made clear that the genesis of the corporation was immaterial
and that:
.............. "The concept of instrumentality or agency of the government
is not limited to a corporation created by a statute but is equally
applicable to a company or society and in a given case it would have
to be decided, on a consideration of the relevant factors, whether the
company or society is an instrumentality or agency of the government
so as to come within the meaning of the expression "authority" in
Article 12".
Ramana was noted and quoted with approval in extenso and the tests
propounded for determining as to when a corporation can be said to be an
instrumentality or agency of the Government therein were culled out and
summarised as follows:
H
(1) One thing is clear that ifthe entire share capital of the corporation
·"
,
PRADEEPKUMAR Bl SW AS"· INDIAN INSTITUTE OF CHEMICAL BIOLOGY [RUMA PAL, J.J
) } 5
is held by Government, it would go a long way towards indicating A
that the corporation is an instrumentality or agency of Government.
(2) Where the fmancial 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 governmental
character.
B
(3) It may also be a relevant factor ........ whether the corporation enjoys
monopoly status which is State conferred or State protected
(4) Existence of deep and pervasive State control may afford an
indication that the corporation is a State agency or instrumentality. c
(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 D
corporation, it would be a strong factor supportive of this inference
of the corporation being an instrumentality or agency of
Government.
In dealing with Sabhajit Tewary the Court in Ajay Hasia noted that
since Sabhajit Tewary was a decision given by a Bench of Five Judges of this E
Court it was undoubtedly binding. The Court read Sabhajit Tewary as implicity
assenting to the proposition that CSIR could have been an instrumentality of
agency of the Government even though it was a Registered Society and
limited the decision to the facts of the case. It held that the Court in Sabhajit
Tewary:
F
"did not rest its conclusion on the ground that the council was a
society registered under the Societies Registration Act, 1860, but
proceeded to consider various other features of the council for arriving
at the conclusion that it was not an agency of the government and
therefore not an 'authority"'.
The conclusion was then reached applying the tests formulated to the
G
r
facts that the Society in Ajay Hasia was an authority falling within the
defmition of "State" in Article 12.
On the same day that the decision in Ajay Hasia was pronounced came H
?
116
SUPREME COURT REPORTS
[2002) 3 S.C.R.
A the decision of Som Prakash Rekhi v. Union of India. 12 Here too, the reasoning
"(
" ..
in Ramona was followed and Bharat Petroleum Corporation was held to be
a 'State' within the "enlarged meaning of Art. 12". Sabhajit Tewary was
criticised and distinguished as being limited to the facts of the case. It was
said:
~
B
"The rulings relied on are, unfortunately, in the province of Art. 311
and it is clear that a body may be 'State' under Part III but not under
Part XIV. Ray, C.J., rejected the argument that merely because the
Prime Minister was the President or that the other members were
appointed and removed by Government did not make· the Society a
c
'State'. With great respect, we agree that in the absence of the other
features elaborated in Airport Authority case [ 1979] 3 SCC 489: (AIR
1979 SC 1628) the composition of the Government Body alone may
not be decisive.