STATE" UNDER ARTICLE 12 OF INDIAN CONSTITUTION

By : M. PIRAVI PERUMAL on 22 February 2009 Print this

PRO CHAT CA LL

Article 12: Scope As Exp !"e" #$ %u"ici r$ The Constitution o In!ia has !e ine! the "or! #$tate% or the &ur&ose o Part 'III an! Part ' IV .In $tate o (est Ben)a* +,s $ubo!h -o&a* Bose . the $u&re/e Court obser+e! that the ob0e1t o Part 'III is to &ro+i!e &rote1tion to the ri)hts an! ree!o/s )uarantee! un!er this &art by the in+asion o #$tate% Text O& Article 12 $tate as &ro+i!e! un!er Arti1*e 22 o the Constitution has our 1o/&onents: 3 a 4 The -o+ern/ent an! Par*ia/ent o In!ia5 -o+ern/ent /eans any !e&art/ent or institution o !e&art/ent. Par*ia/ent sha** 1onsist o the Presi!ent. the 6ouse o Peo&*e an! Coun1i* o $tates 3 b 4 The -o+ern/ent an! Le)is*ature o ea1h $tate. $tate Le)is*atures o ea1h $tate 1onsist o the -o+ernor. Le)is*ati+e Coun1i* an! Le)is*ati+e Asse/b*y or any o the/. 314 Lo1a* Authorities "ithin the territory o In!ia Authority /eans 3 i 4 Po"er to /a7e ru*es. bye5 *a"s. re)u*ations. noti i1ations an! statutory or!ers. 3 ii 4 Po"er to en or1e the/. Lo1a* Authority /eans Muni1i&a* Boar!s. Pan1hayats. Bo!y o Port Co//issioners an! others *e)a**y entit*e! to or entruste! by the )o+ern/ent. /uni1i&a* or *o1a* un!. 3 ! 4 8ther Authorities Authorities other than *o1a* authorities "or7in) 3 i 4 (ithin the territory o In!ia or9 3 ii 4 8utsi!e the territory o In!ia. %u"ici l Scruti!$ To )i+e a "i!er !i/ension to Fun!a/enta* Ri)hts. the 0u!i1iary has inter&rete! #$tate% in !i erent 1onte:ts at !i erent ti/es. 3 a 4 Prin1i&*e o E0us!e/ )eneris In Uni+ersity o Ma!ras +,s $anta Bai .the Ma!ras 6i)h Court e+o*+e! the &rin1i&*e o e0us!e/ )eneris i.e. o the *i7e nature. It /eans that those authorities are 1o+ere! un!er the e:&ression #other authorities "hi1h &er or/ )o+ern/enta* or so+erei)n un1tions. 3 b 4 In U00a/ Bai +,s Union o In!ia the $u&re/e Court re0e1te! the &rin1i&*e o e0us!e/ )eneris .It obser+e! that there is no 1o//on )enus bet"een the authorities /entione! in Arti1*e 22. 3 1 4 Per or/an1e o 1o//er1ia* a1ti+ities 9 or &ro/otion o e!u1ationa* or e1ono/i1 interests

In Ra0asthan $tate E*e1tri1ity Boar! +,s Mohan La* it "as he*! that to be $tate. it is not ne1essary that the authority /ust be &er or/in) )o+ern/enta* or so+erei)n un1tions .It shou*!5 3i4 Be 1reate! by the Constitution o In!ia9 3ii 4 6a+e &o"er to /a7e *a"s9 3!4 Per or/an1e o un1tions +ery 1*ose to )o+ern/enta* or so+erei)n un1tions In $u7h!e+ +,s Bha)atra/ . LIC . 8;-C A;<IFC "ere he*! to be $tate as &er or/in) +ery 1*ose to )o+ern/enta* or so+erei)n un1tions. The Cor&orations are $tate "hen they en0oy 3 i 4 Po"er to /a7e re)u*ations9 3 ii 4 Re)u*ations ha+e or1e o *a". 3 e 4 C*earan1e o i+e tests In R.<.$hetty +,s Internationa* Air&ort Authority. the Court *ai! !o"n i+e tests to be an other authority5 3 i 4 Entire share 1a&ita* is o"ne! or /ana)e! by $tate. 3 ii 4 En0oys /ono&o*y status. 3 iii 4 <e&art/ent o -o+ern/ent is trans erre! to Cor&oration. 3 i+ 4 Fun1tiona* 1hara1ter )o+ern/enta* in essen1e. 3+4 <ee& an! &er+asi+e $tate 1ontro*. 3 4 8b0e1t o Authority In A0ay 6asia +,s =ha*i! Mu0ib the Court obser+e! that the test to 7no" "hether a 0uristi1 &erson is $tate is not ho" it has been brou)ht but "hy it has been brou)ht. 3 ) 4 C*earan1e o i+e tests In Union o In!ia +,s R.C.>ain . to be a *o1a* authority. an authority /ust u* i** the o**o"in) tests5 3 i 4 $e&arate *e)a* e:isten1e. 3 ii 4 Fun1tion in a !e ine! area. 3 iii 4 6as &o"er to raise un!s. 3 i+ 4 En0oys autono/y. 3+4 Entruste! by a statute "ith un1tions "hi1h are usua**y entruste! to /uni1i&a*ities. '(et(er %u"ici r$ Is St te >urists *i7e 6.M.$eer+ai. V.;.$hu7*a 1onsi!er 0u!i1iary to be $tate. Their +ie" is su&&orte! by Arti1*es 2?@ an! 2?A o the Constitution o In!ia.

3 i 4 The $u&re/e Court is e/&o"ere! to /a7e ru*es &ro1e!ure o Courts.

or re)u*atin) the &ra1ti1e an!

3 ii 4 The $u&re/e Court is e/&o"ere! to /a7e a&&oint/ents o its sta an! ser+ants9 !e1i!e the its ser+i1e 1on!itions. In Pre/ -ar) +,s E:1ise Co//issioner 6.P. the $u&re/e Court he*! that "hen ru*e /a7in) &o"er o 0u!i1iary is 1on1erne!. it is $tate. 8ther 0urists say that sin1e 0u!i1iary has not been s&e1i i1a**y /entione! in Arti1*e 22. it is not $tate. In Rati La* +,s $tate o Bo/bay . it "as he*! that 0u!i1iary is not $tate or the &ur&ose o Arti1*e22. In A.R.Antu*ay +,s R.$.;aya7 an! ;.$.Mira07ar +,s $tate o Maharashtra . it has been obser+e! that "hen ru*e /a7in) &o"er o 0u!i1iary is 1on1erne! it is $tate but "hen e:er1ise o 0u!i1ia* &o"er is 1on1erne! it is not $tate. Co!clusio!

The "or! #$tate% un!er Arti1*e 22 has been inter&rete! by the 1ourts as &er the 1han)in) ti/es .It has )aine! "i!er /eanin) "hi1h ensures that Part5III 1an be a&&*ie! to a *ar)er e:tent. (e ho&e that it "ou*! 1ontinue to e:tent its "i!th in 1o/in) ti/es.

Meaning of State as per Constitution Of IndiaArticle 12

The term 'state' has occurred at many places in many rulings. The follo ing is an e!tract that e!plains the meaning of 'state' in so far as the constitution of India in reference to Article 12 is concerned. I am gi"ing the lin# of the ruling at the end of the post. My Indian friends ould $e interested in this ruling as the same discusses many aspects of statutory interpretation and contracts hen the parties ha"e different $argaining po er. The ruling has also $een called as a land mar# ruling as it is fairly e!tensi"e. %&logger' (in# to )uling.. Meaning of State as per Constitution of India

Article 12 of Constitution

The ord *State* has different meanings depending upon the conte!t in hich it is used. The e!pression *The State* hen used in +arts III , I- of the Constitution is not confined to only the federating States or the .nion of India or e"en to $oth. &y the e!press terms of Article 12/ the e!pression *the State* includes 0

1i2

the 3o"ernment of India4

1ii2

+arliament of India4

1iii2

the 3o"ernment of each of the States hich constitute the .nion of India4

1i"2

the (egislature of each of the States hich constitute the .nion of India4

1"2

all local authorities ithin the territory of India4

1"i2

all local authorities under the control of the 3o"ernment of India4

1"ii2

all other authorities ithin the territory of India4 and 1"iii2 all other authorities under

the control of the 3o"ernment of India.

The definition of the e!pression *the State* in Article 12/ is ho e"er/ for the purposes of +arts III and I- of the Constitution/ hose contents clearly sho that the e!pression *the State* in Article 12 as also in Article 56 is not confined to its ordinary and constitutional sense as e!tended $y the inclusi"e portion of Article 12 $ut is used in the concept of the State in relation to the 7undamental )ights guaranteed $y +art III of the Constitution and the 8irecti"e +rinciples of State +olicy contained in +art I- of the Constitution hich principles are declared $y Article 59 to $e fundamental to the go"ernance of the country and en:oins upon the State to apply ma#ing la s.

Article 2;< of the Constitution e!pands the e!ecuti"e po er of the .nion of India and of each of the States hich collecti"ely constitute the .nion to carry on any trade or $usiness. &y e!tending the e!ecuti"e po er of the .nion and of each of the States to the carrying on of any trade or $usiness Article 2;< does not/ ho e"er/ con"ert either the .nion of India or any of the States hich collecti"ely form the .nion into a Merchant $uying and selling goods or carrying on either trading or $usiness acti"ity/ for A the e!ecuti"e po er of the .nion and of the States

hether in the field of trade or $usiness or in any other field/ is al ays su$:ect to constitutional limitations and particularly the pro"isions relating to 7undamental )ights in +art III of the Constitution and is e!ercisa$le in accordance ith and for the furtherance of the 8irecti"e +rinciples of State +olicy prescri$ed $y +art I- of the Constitution. The State is an a$stract entity and it can/ therefore only act through its agencies or instrumentalities/ hether such agency or instrumentality $e human or :uristic. The trading and $usiness acti"ities of the State constitute *pu$lic enterprise*. The structural forms in hich the 3o"ernment operates in the field of pu$lic enterprise are many and "aried. These may consist of 3o"ernment departments/ statutory $odies/ statutory corporations/ 3o"ernment companies etc. The immunities and pri"ileges possessed $y $odies so set up $y the 3o"ernment in India cannot/ ho e"er/ $e the same as those possessed $y similar $odies esta$lished in the pri"ate sector $ecause the setting up of such $odies is refera$le to the e!ecuti"e po er of the 3o"ernment under Article 2;< to carry on any trade or $usiness.

State Instrumentalities

Authorities constituted under and corporations esta$lished $y statutes ha"e $een held to $e instrumentalities and agencies of the 3o"ernment in a long catena of decisions of the Supreme Court. The o$ser"ations in se"eral of these decisions are general in nature and ta#e in their s eep all instrumentalities and agencies of the State/ hate"er $e the form hich such instrumentality or agency may ha"e assumed. If there is an instrumentality or agency of the State hich has assumed the gar$ of a 3o"ernment company as defined in section 619 of the Companies Act%1'/ it does not follo that it there$y ceases to $e an instrumentality or agency of the State. 7or the purposes of Article 12 one must necessarily see through the corporate "eil to ascertain hether $ehind that "eil is the face of an instrumentality or agency of the State. The corporation s=uarely falls ithin these o$ser"ations and it also satisfies the "arious tests hich ha"e $een laid do n. Merely $ecause it has so far not the monopoly of inland ater transportation is not sufficient to di"est it of its character of an instrumentality or agency of the State. It is nothing $ut the 3o"ernment operating $ehind a corporate "eil/ carrying out a go"ernmental acti"ity and go"ernmental functions of "ital pu$lic importance. There can thus $e no dou$t that the corporation is *the State* ithin the meaning of Article 12 of the Constitution.

In relation to the particular Case0

The Central Inland >ater Transport Corporation is not only a 3o"ernment company as defined in section 619 of the Companies Act 1;?6/ $ut is holly o ned $y the three 3o"ernments Central 3o"ernment and the 3o"ernments of >est &engal and Assam :ointly. It is financed entirely $y these three 3o"ernments and is completely under the control of the Central 3o"ernment/ and is managed $y the Chairman and &oard of 8irectors appointed $y the Central 3o"ernment and remo"a$le $y it. In e"ery respect it is thus a "eil $ehind hich the Central 3o"ernment operates through the instrumentality of a 3o"ernment company. The acti"ities carried on $y the Corporation are of "ital national importance. There can thus $e no dou$t that the corporation is a 3o"ernment underta#ing in the pu$lic sector. The corporation itself has considered that it is a 3o"ernment of India .nderta#ing. The complete heading of the impugned )ule is *The Central Inland >ater Transport Corporation (td. 1A 3o"ernment of India .nderta#ing2 Ser"ice/ 8iscipline and Appeal )ules/ 1;9;.* In the face of so much e"idence it is ridiculous to descri$e the corporation as a trading company. The acti"ities of the corporation are of great importance to pu$lic interest/ concern and elfare and are acti"ities of the nature carried on $y a modern State and particularly a modern elfare State.% Su#hde" Singh , Ors. ". &hagat )am Sardar Singh )aghu"anchi , Anr./ %1;9?' 5 S.C.). 61;4)amana 8ayaram Shetty ". The International Airport Authority of India , Anr./ %1;9;' 5 S.C.). 1@1A4 Managing 8irector/ .ttar +radesh >are Bousing Corporation , Anr. ". -inay Carain -a:payee/ %1;<@' 2 S.C.). 9954 A:ay Basia etc. ". Dhalid Mu:i$ Sehra"ardi , Ors. etc./ %1;<1' 2 S.C.). 9;4 +ra#ash )e#hi ". .nion of India , Anr./ %1;<1' 2 S.C.). 1114 &.S. Minhas ". Indian Statistical Institute , Ors %1;<5' A S.C.C. ?<24 Manmohan Singh Eaitla ". Commissioner/ .nion Territory of Chandigarh , Ors./ %1;<A' Supp. S.C.C. ?A@4 >or#men of Bindustan Steel (td. , Anr. ". Biodustan Steel (td. , Ors./ %1;<A' Supp. S.C.C. ??A/ ?6@4 - +.D. )amachandra Iyer , Ors. ". .nion of India , Ors./ %1;<A' 2 S.C.). 1A14 A.(. Dalra ". +ro:ect and F=uipment Corporation of India (td./ %1;<A' 5 S.C.). 516 and >est &engal State Flectricity &oard , Ors. ". 8esh &andhu 3hosh , Ors./ %1;<?' 5 S.C.C. 116 follo ed. +raga Tools Corporation ". C.A. Imanual , Ors./ %1;6;' 5 S.C.). 9954 State of &ihar ". .nion of India , Anr./ %1;9@' 2 S.C.). ?224 S.(. Agar al ". 3eneral Manager/ Bindustan Steels (td./ %1;9@' 5 S.C.). 5654 Sa$ha:it Te ary ". .nion of India , Ors./%1;9?' 5 S.C.). 6164 and S.C. 8hanoa ". Municipal Corporation 8elhi ,

Ors./ %1;<1' 5 S.C.C. A51 distinguished.)ai Sahi$ )am Ee aya Dapur , Ors. ". State of +un:a$/ %1;??' 2 S.C.). 22?4 )a:asthan State Flectricity &oard/ Eaipur ". Mohan (al , Ors./ %1;69' 5 S.C.). 5994 3urugo$inda &asu ". San#ari +rasad 3hosal , Ors./ %1;6A' A S.C.). 511/ 51?4 )ylands ". 7letcher/ %1<6< (.). 5 B.(. 55@ and 8onoghue ". Ste"enson/ %1;52' A.C. ?62 referred to.'

1.As the corporation is *the State* ithin the meaning of Article 12/ it as amena$le to the rit :urisdiction of the Bigh Court under Article 226.

2. It is no

ell-esta$lished that an instrumentality or agency of the State $eing *the State*

under Article 12 of the Constitution is su$:ect to the Constitutional limitations/ and its actions are State actions and must $e :udged in the light of the 7undamental )ights guaranteed $y +art III of the Constitution. The actions of an instrumentality or agency of the State must/ therefore/ $e in conformity ith Article 1A of the Constitution. %Su#hde" singh , Ors. ". &hagatram Sardar Singh )aghu"anshi , Anr./ %1;9?' 5 S.C.). 61;4)amana 8ayaram Shetty ". The International Airport Authority of India , Ors./ %1;9; 5 S.C.). 1@1A4 A:ay Basia etc. ". Dhalid Mu:i$ Sehra"ardi , Ors. etc./ %1;<1' 2 S.C.). 9;4 and .nion of India ". Thulsiram +atel etc./ %1;<?' 5 S.C.C. 5;< referred to. )adha#rishna Agar al , Ors. ". State of &ihar , Ors./ %1;99' 5 S.C.). 2A; distinguished.' the purposes of $oth +art III and +art I- of the Constitution/ State actions/ including actions of the instrumentalities and agencies of the State/ must not only $e in conformity ith the 7undamental )ights guaranteed $y +art III $ut must also $e in accordance ith the 8irecti"e +rinciples of State +olicy prescri$ed $y +art I-. Clause 1a2 of Article 5; pro"ides that the State shall/ in particular/ direct its policy to ards *securing that the citiGens/ men and omen/ e=ually ha"e the right to ade=uate means of li"elihood.* Article A1 re=uires the State/ ithin the limits of its economic capacity and de"elopment/ to *ma#e effecti"e pro"ision for securing the right to or#.* An ade=uate means of li"elihood cannot $e secured to the citiGens $y ta#ing a ay ithout any reason the means of li"elihood. The mode of ma#ing *effecti"e pro"ision for securing the right to or#* cannot $e $y gi"ing employment to a person and then ithout any reason thro ing him out of employment. The action of an instrumentality or agency of the State/ if it frames a ser"ice rule such as clause 1a2 of )ule ; or a rule analogous

thereto ould/ therefore/ not only $e "iolati"e of Article 1A $ut ould also $e contrary to the 8irecti"e +rinciples of State +olicy contained in clause 1a2 of Article 5; and in Article A1

8uties of State

>hen our Constitution states that it is $eing enacted to gi"e to all the citiGens of India *Eustice/ Social/ economic and political*/ hen clause 1I2 of Article 5< of the Constitution directs the State to stri"e to promote the elfare of the people $y securing and protecting as effecti"ely as it may a social order in hich social/ economic and political :ustice shall inform all the institutions of the national life/ hen clause 122 of Article 5< directs the State in particular/ to minimise the ine=ualities in income/ not only amongst indi"iduals $ut also amongst group of people residing in different areas or engaged in different "ocations and hen Article 5; directs the State that it shall/ in particular/ direct its policy to ards securing that the citiGens men and omen e=ually/ ha"e the right to an ade=uate means of li"elihood and that the operation of the economic system does not result in the concentration of ealth and reasons of production to the common detriment and that there should e=ual pay for e=ual or# for $oth men and omen/ it is the doctrine of distri$uti"e :ustice hich is spea#ing through the ords of the Constitution. %(ingappa +ochanna Appel ar ". State of Maharashtra , Anr./ %1;<?' 1 S.C.C. A9; referred to.' %=uoted from0 Central Inland >ater ... "s &ro:o Cath 3anguly , Anr 4 1;<6 AI) 1?91/ 1;<6 SC) 122 29< Supreme Court of India'

Constitution-I+ HHHHHHHHHHHHHHHHHHHHHHHHHHHHHHHH %1' *619. 8efinition of '3o"ernment Company'.-

7or the purposes of this Act 3o"ernment company means any company in hich not less than fifty-one per cent of the paid-up share capital is held $y the Central 3o"ernment/ or $y any State

3o"ernment or 3o"ernments/ or partly $y the Central 3o"ernment and partly $y one or more State 3o"ernments and includes a company hich is a su$sidiary of a 3o"ernment company as thus defined.* http://lawmanblog.blogspot.in/