Understanding 'State' in Fundamental Rights

• Need to delve into the definition of State because fundamental rights are claimed against the State unlike other legal rights claim by individuals against one another, though some can be claimed against non-state actors.
• The main question to consider is against which entities can fundamental rights be invoked.

Issues to Consider

• Article 12 was drafted in the middle of the 20th century.
• Over the years its interpretation has undergone some expansions and even limitations.
• Immense power rests with private individuals and companies in an increasingly globalized and privatized world.
• It must be considered if the ability to exercise fundamental rights largely against the State alone is enough.
• In the wake of privatization/globalization, there is a question of whether fundamental rights can be claimed against non-state actors/private persons, and if the concept of State needs expansion.

Article 12 Definition

• "In this part, unless the context otherwise requires, the State includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India."
• The definition is inclusive as the Constitution makers did not want to create an exhaustive list of entities against who FR (Fundamental Rights) can be claimed.
• Must consider what the term 'other authorities' means

Rajasthan State Electricity Board v. Mohan Lal, (1967) 3 SCR 377

• This case involved a promotion dispute between workmen and the Rajasthan State Electricity Board.
• The workmen raised Articles 14 and 16.
• The Court had to determine whether the Board came within the purview of Part III, by virtue of being "State" (other authority) under Article 12.
• Argument: the Board could not be covered by the authorities named therein viz. the Government and Parliament of India and the Government and the Legislature of each of the States and local authorities as the Board is a body corporate having a separate existence and has been constituted primarily for the purpose of carrying on commercial activities.
• The expression "other authorities”, if read ejusdem generis with those named, cannot cover the Board.
• Court's holding: for the application of ejusdem generis rule, there must be a distinct genus or category running through the bodies already named:
• In Article 12 of the Constitution, the bodies specifically named are the Executive Governments of the Union and the States, the Legislatures of the Union and the States, and local authorities.
• No common genus running through these named bodies nor can these bodies be placed in one single category on any rational basis found. As such the doctrine of ejusdem generis could not be, applied to the interpretation of the expression “other authorities” in this article.
• The expression “other authorities” is wide enough to include within it every authority created by a statute and functioning within the territory of India, or under the control of the Government of India.
• The expression “other authorities” in Article 12 includes 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.
• The circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word “State” as used in Article 12.
• Powers conferred on the Board include power to give directions, the disobedience of which is punishable as a criminal offence.
• Provisions of Part III of the Constitution were applicable since the Board was clearly an authority.
• Justice Shah's concurring opinion: the Board has the power of promoting coordinated development, generation, supply and distribution of electricity: and to make rules and regulations and to administer the Electricity (Supply) Act, 1948.
• The Board is an authority invested by statute with certain sovereign powers of the State.
• The Electricity (Supply) Act, 1948 is in substance the sovereign power of the State delegated to the Board.
• In its etymological sense, "authority" means a body invested with power to command or give an ultimate decision, or enforce obedience, or having a legal right to command and be obeyed.
• Fundamental rights within their allotted fields transcend the legislative and executive power of the sovereign authority.
• However some of the important fundamental rights are liable to be circumscribed by the imposition of reasonable restrictions by the State.
• The true content of the expression “other authority” in Article 12 must be determined in the light of this dual phase of fundamental rights.
• Authorities constitutional or statutory invested with power by law but not sharing the sovereign power do not fall within “State” as defined in Article 12.
• Constitutional or statutory bodies which do not share that sovereign power of the State are not, "State" within the meaning of Article 12.
• The test can be combining the view of the majority and Justice Shah: a constitutional or statutory authority would be within the meaning of "other authorities", only if it has been invested with statutory power to issue binding directions to third parties, the disobedience of which would entail penal consequence or it has the sovereign power to make rules and regulations having the force of law.

Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, (1975) 1 SCC 421

• Determination of whether an employee of a statutory corporation is entitled to claim protection of Articles 14 and 16 against the Corporation.
• The question is whether these statutory corporations are authorities within the meaning of Article 12.
• Authorities in this case: LIC, ONGC, Industrial Financial Corporation.
• On behalf of the State it is contended that these Corporations cannot be said to be "other authority" for two principal reasons:
  • One of the attributes of a State is making laws. The State exercises governmental functions and the executive power of the State is co-extensive with the legislative power of the State.
  • Authority as contemplated in Article 12 means a body of persons established by statute who are entitled as such body to command obedience and enforce directions issued by them on pain of penalty for violation.
• Assertion: these corporations cannot make laws like a State and cannot enforce directions.
• Governmental function must be authoritative and able to impose decision by or under law with authority.
• The element of authority is of a binding character.
• The rules and regulations are authoritative because these rules and regulations direct and control not only the exercise of powers by the Corporations but also all persons who deal with these corporations.
• Authorities envisaged in Article 12 are described as instrumentalities of State action.
• The Court held that each of the three organisations, respectively under the three Acts under which they are created, enjoy power to do certain acts and to issue directions obstruction in or breach whereof is punishable as an offence and that these distinguish them from a mere company incorporated under the Indian Companies Act.
• The court saw the financial support given 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 the Corporations showed that the three Corporations represented the 'voice and hands' of the Central Government.
• These statutory bodies are "authorities" within the meaning of Article 12 of the Constitution.
• Justice Mathew's concurrence:
• A State is an abstract entity thus it can only act through the instrumentality or agency of natural or juridical persons, there is nothing strange in the notion of the State acting through a corporation and making it an agency or instrumentality of the State.
• A finding of 'State' financial support plus an unusual degree of control over the management and policies might lead one to characterise an operation as State action.
• The combination of State aid and the furnishing of an important public service may result in a conclusion that the operation should be classified as a State agency.
• Another factor which might be considered is whether the operation is an important public function.
• If a given function is of such public importance and so closely related to governmental functions as to be classified as a governmental agency, then even the presence or absence of State financial aid might be irrelevant in making a finding of State action.
• The Commission has the exclusive privilege of extracting petroleum and the management is by the Government.
• The Oil and Natural Gas Commission is owned by the Government and is a statutory body, not a company.
• The Commission can issue binding directions and the Oil and Natural Gas Commission Act confers power of entry on employees of the Commission upon any land or premises for the purpose of lawfully carrying out works by the Commission.
• Also provides that whoever in an instrument given to the Corporation whereby security is given to the Corporation for accommodation granted by it wilfully makes any false statement or knowingly permits any false statement to be made shall be punishable with imprisonment for a term which may extend to two years or with fine which may extend to two thousand rupees or with both.
• Citizens cannot be shareholders since the Industrial Finance Corporation is under the complete control and management of the Central Government.

Ramana Dayaram Shetty v. International Airport Authority of India, (1979) 3 SCC 489

• Question if the International Airport Authority of India a State under Article 12?
• Case focused on tenders for putting up and running a restaurant and two Snack bars at the International Airport at Bombay.
• Allegation that the authority had departed from the eligibility condition it had laid out in the tender.
• IAA is a body constituted under the International Airport Authority Act 1971.
• 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 governmental functions, which were of traditional vintage.
• The Government which represents the executive authority of the State, may act through the instrumentality or agency of natural persons or it may employ the instrumentality or agency of juridical persons to carry out its functions.
• As the tasks of the Government multiplied with the advent of the welfare State, it began to be increasingly felt that the framework of civil service was not sufficient to handle the new tasks which were often of specialised and highly technical character.
• It became necessary to force a new instrumentality or administrative device for handling these new problems and the public corporation came into being as the third arm of the Government.
• The parameters for determining whether a corporation is acting as instrumentality or agency of Government include such factors as the financial assistance given by the State, the magnitude of such assistance and whether there is any other form of assistance, the control of the management and policies of the corporation by the State and the extent of such control, whether the corporation enjoys State conferred or State protected monopoly status and whether the functions carried out by the corporation are public functions closely related to governmental functions.
• The court recognized that it is not easy to determine the public character of a function.
• If the public nature of function is impregnated with governmental character or "tied or entwined with Government" or fortified by some other additional factor, it may render the corporation an instrumentality or agency of Government. In the first place, the chairman and members of the 1st respondent are all persons nominated by the Central Government and the Central Government has also the power to terminate their appointment as also to remove them in certain specified circumstances.
• If Government acting through its officers is subject to certain constitutional and public law limitations, it must follow a fortiori that Government acting through the instrumentality or agency of corporations should equally be subject to the same limitations.
• The Central Government has also power to give directions in writing from time to time on questions of policy and these directions are declared binding on the 1st respondent.
• The 1st respondent has no share capital but the capital needed by it for carrying out its functions is provided wholly by the Central Government. The audited accounts of the 1st respondent together with the audit report have to be forwarded to the Central Government and they are required to be laid before both Houses of Parliament.
• There is no doubt that the 1st respondent is an instrumentality or agency of the Central Government and falls within the definition of 'State'.

Ajay Hasia v. Khalid Mujib Sehravardi, (1981) 1 SCC 722

• Question if a Society is a state based on the Jammu and Kashmir Registration of Societies Act, 1898 and whether the Regional Engineering College in Srinagar was administered and managed by a Society.
• The composition of the Society is dominated by the representatives appointed by the Government.
• The monies required for running the college are provided entirely by the Central Government and the Government of Jammu & Kashmir and even if any other monies are to be received by the Society, it can be done only with the approval of the State and the Central Governments.
• The Rules to be made by the Society are also required to have the prior approval of the State and the Central Governments and the accounts of the Society have also to be submitted to both the Governments for their scrutiny and satisfaction.
• This determines if the corporation can be said to be a instrumentality or agency of Government using the standard from the judgment in the International Airport Authority's case.
• One thing is clear that if the entire share capital of the corporation is held by Government it would go a long way towards indicating that the corporation is an instrumentality or agency of Government
• The State Government and by reason of the provision for approval, the Central Government also, have full control of the working of the Society.
• The tests for determining as to when a corporation can be said to be a instrumentality or agency of Government which may now be called out from the judgment in the International Airport Authority's case.
• Where the financial 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.
• If the functions of the corporation 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.
• Existence of deep and pervasive State control may afford an indication that the Corporation is a State agency or instrumentality.
• 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.
• If on a consideration of these relevant factors it is found that the corporation is an instrumentality or agency of government, it would, as pointed out in the International Airport Authority's case, be an 'authority' and, therefore, 'State' within the meaning of the expression in Article 12.

Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111

• Significance of Article 12 lies in the fact that it occurs in Part III of the Constitution which deals with fundamental rights since the various Articles in Part-III have placed responsibilities and obligations on the 'State' vis-a-vis the individual to ensure constitutional protection of the individual's rights against the state.
• The SC referred to various precedents on the meaning of 'other authorities' in Article 12.
• The question in each case would be - whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government.
• If this is found then the body is a State within Article 12.

Zee Telefilms Ltd. v. Union of India, (2005) 4 SCC 649

• BCCI is a registered under the Societies Registration Act 1860.
• The Board has extensive powers in selecting players for the Indian National team representing India in test matches domestically and internationally.
• The Board does enjoy a monopoly status in the field of cricket but such status is not State conferred or State protected.
• The Board has the authority to determine whether a player would represent the country or not.
• The Board is the sole authority for organising major cricketing events in India and has the disciplinary power over the players/umpires and other officials involved in the game.
• The facts established do not cumulatively show that the Board is financially, functionally of administratively dominated by or is under the control of the Government.
• Be that as it may, it cannot be denied that the Board does discharge some duties like the selection of an Indian cricket team, controlling the activities of the players and others involved in the game of cricket.
• These activities can be said to be akin to public duties or State functions and if there is any violation of any constitutional or statutory obligation or rights of other citizens, the aggrieved party may not have a relief by way of a petition under Article 32.
• The remedy under Article 32 is not available but an aggrieved party can always seek a remedy under the ordinary course of law or by way of a writ petition under Article 226 of the Constitution which is much wider than Article 32.
• BCCI cannot be held to be a State for the purpose of Article 12.

Janet Jeyapaul v. SRM University, (2015) 16 SCC 530

• Once Respondent No. 1 is declared as "Deemed University" whose all functions and activities are governed by the UGC Act, alike other universities then it is an"authority" within the meaning of Article 12 of the Constitution since it is discharging public function by way of imparting education.
• Respondent No. 1 is engaged in imparting education in higher studies to students at large and is notified as a "Deemed University" by the Central Government Under Section 3 of the UGC Act.
• As a necessary consequence, it becomes amenable to writ jurisdiction of High Court Under Article 226 of the Constitution since it is held to be an "authority" as provided in Article 12.
• Due to Zee Telefilms Ltd., it is held that the BCCI discharges public duties, an aggrieved party can seek a public law remedy against the BCCI Under Article 226 of the Constitution of India.

Discussion on SC's Article 12 decisions

• A narrow structuralist approach could exclude actors which without a formal ‘functional. financial and administrative control' still manage to wield significant power over citizens because of direct or indirect State authorization.
• Actors will be able to get away with their actions despite the public impact caused by them because of a structuralist approach to Article 12.
• A more open ended functionalist approach could also lead to uncertainty especially given the way it is articulated by the Supreme Court causing it to end up being very discretionary.
• Issues become even more exacerbated in the context of a liberalized and privatizing India where there is a chance of fundamental rights being violated by private enterprises.