Holding

CSIR is not a State within the meaning of Article 12, and the decision in Sabhajit Tewary remains binding.

Summary

The appellants, former employees of the Council of Scientific and Industrial Research (CSIR), challenged their termination, arguing that CSIR is a "State" within Article 12 of the Constitution and therefore subject to fundamental rights protections. The High Court dismissed the writ petition relying on Sabhajit Tewary, which held CSIR not to be an authority under Article 12. On appeal, the Supreme Court considered whether CSIR qualifies as a State, examining the tests for "instrumentality or agency" and the effect of the 1986 notification under the Administrative Tribunals Act. A majority opinion held CSIR to be a State, but a dissenting judgment, which formed the basis of the final order, concluded that CSIR lacks the statutory flavour, pervasive control, and governmental functions required to be an authority under Article 12. Consequently, the Court affirmed the earlier decision that CSIR is not a State, leaving Sabhajit Tewary undisturbed. The appeal was dismissed.

Issues considered

Whether the Council of Scientific and Industrial Research (CSIR) is a "State" within the meaning of Article 12 of the Constitution.
Whether the 1986 notification under Section 14(2) of the Administrative Tribunals Act, 1985, conclusively makes CSIR a State.
Whether the precedent set in Sabhajit Tewary v. Union of India should be overruled in light of subsequent jurisprudence.

Legislation cited

Administrative Tribunals Act, 1985s. 14(2), s. 14(3)
Constitution of Indias. Article 12, s. Article 13(2), s. Article 14, s. Article 16, s. Article 323A
Societies Registration Act, 1860

Subjects

Article 12State definitionCSIRWrit jurisdictionAdministrative Tribunals ActPrecedent overruleInstrumentalityAgencyFundamental rights

Judgment

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 purpose-
Notification 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
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.
E
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.

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
H 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
cumulative facts as established, th~ body is financially, functionally and
1

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 ofIndia, [1975] 3 SCR 616, overrnled.
D
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 ofIndia, (1979) SC 1628;
Ajay Basia v. Khalid Mujib Sebravardi, (1981] l SCC 722; Som Prakash Rekhi
v. Union ofIndia, AIR (1981) SC 212; P.K. Ramachandra Iyer and Ors. v. Union
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]
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY 1QJ

SRS Kumar v. Union of India, AIR (1987) SC 386 and L. Chandra A-
Kumar 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
I
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 ChiefCommissioner, Pondicherry and Anr., [1962)
Supp. 1 SCR 981; KS. Ramamurthy Reddiar v. ChiefCommissioner, 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 ofIndia 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 ofIndia 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 ofIndia
v. Food Corporation ofIndia, (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,
referred to. H
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.

Soli J. Sorabjee, Attorney General, Mukul Rohtagi, R.N. Trivedi,
B 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
stenographers who were newly recruited to the C.SIR. His claim was based
D 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
No. l. The appeal was also dismissed in view of the decision of this Court
F in Sabhajit Tewary's 2 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
being of the view that the decision in Sabhajit Tewary required re-consideration
G "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

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
c 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:

"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
G 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 ofIndia, (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
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
A

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:

"there was neither a statutory nor a public duty imposed on it by a
B
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
.mandamus or an order in the nature of mandamus could lie against
c
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
of the public and. not for private profit. Such an authority is not F
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
strange in the notion of the state acting through a corporation and
c making it an agency or instrumentality of the State. . "

For identifying such an agency or instrumentality he propounded four
indicia:

(l) "A finding of the state financial support plus an unusual degree
D 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
absence of state financial aid might be irrelevant in making a finding
F 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
for carrying on a business for the benefit of the public. In other
G 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 co-
operation 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
industries in the country are carried out in a responsible manner. "
c
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
"State" within the meaning of Article 12, it may not be elevated to
.,_t.~
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 "
a juristic entity which may be "State" for the purpose of Parts III and
c 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
decisions of this Court, some equally authoritative. In our view Sabhajit
E 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.
International Airport Authority ofIndia."' 0 Although the International Airport
F 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:

............... "In the early days, when the Government had limited
G 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. But as the .. -i
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. D
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
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.

The Court recognised that:

........... "Obviously the Society cannot be equated with the Government
c 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
D 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
·"
E 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
F 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".
G
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"'. G
The conclusion was then reached applying the tests formulated to the
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 ofIndia. 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. The laconic discussion and the limited ratio in Tewary
[1975] 3 SCR 616 : (AIR 1975 SC 1329) hardly help either side
here."
D
The tests to determine whether a body falls within the definition of
'State' in Article 12 laid down in Romana with the Constitution Bench
imprimatur in Ajay Hasia form the keystone of the subsequent jurisprudential -~
superstructure judicially crafted on the subject which is apparent from a
chronological consideration of the authorities cited.
E
In P.K Ramachandra Iyer and Ors. v. Union of India and Ors., [1984]
2 SCC 141, it was held that both the Indian Council of Agricultural Research
(ICAR) and its affiliate Indian Veterinary Research Institute were bodies as
would be comprehended in the expression 'other authority' in Article 12 of
the Constitution. Yet another judicial blow was dealt to the decision in Sabhajit
F Tewary when it was said:

"Much water has flown down the Jamuna since the dicta in Sabhajit
Tewary case and conceding that it is not specifically overruled in
later decision, its ratio is considerably watered down so as to be a
decision confined to its own facts. "
G
B.S. Minhas v. Indian Statistical Institute and Ors. 13 held that the Indian
Statistical Institute, a registered Society is an instrumentality of the Central
Government and as such is an 'authority' within the meaning of Article 12 .. 1
12. AIR (1981) SC 212.
H 13. (1984) 1 SCR 395.
PRADEEPKUMAR Bl SW AS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [RUMA PAL, J.] 117

of the Constituiion. The basis was that the composition of respondent No. I A
is dominated by the representatives appointed by the Central Government.
The money required for running the Institute is provided entirely. by the
Central Government and even if any other moneys are to be received by the
Institute it can be done only with the approval of the Central Government,
and the accounts of the Institute have also to be submitted to the Central
Government for its scrutiny and satisfaction. The Society has to comply with B
all such directions as may be issued by the Central Government. It was held
that the control of the Central Government is deep and pervasive.

The decision in Central Inland Water Transport Corporation Ltd. v.
Brojo Nath Ganguliu held that the appellant company was covered by Article C
12 because it is financed entirely by three Governments and is completely
under the control of the Central Government and is managed by the Chairman
and Board of Directors appointed by the Central Government and removable
by it and also that the activities carried on by the Corporation are of vital
national importance. However, the tests propounded in Ajay Hasia were not
applied in Tekraj Vasandi alias K.S. Basandhi v. Union of India and Ors. D
[1988) 1 SCC 237, where the Institute of Constitutional and Parliamentary
Studies (JCPS), a society registered under the Societies Registration Act,
' 1860 was held not to be an "other authority" within the meaning of Article
12. The reasoning is not very clear. All that was said was :
E
"Having given our anxious consideration to the facts of this case, we
are not in a position to hold that ICPS is either an agency or
instrumentality or the State so as to come within the purview of
'other authorities' in Article 12 of the Constitution"

However, the Court was careful to say that "JCPS is a case of its type F
typical in many ways and the normal tests may perhaps not properly apply
to test its character".

All India Sainik Schools Employees' Association v. Defence Minister-
cum-Chairman Board of Governors, Sainik Schools Society, New Delhi and
Ors. [1989) Supp. 1 SCC 205 held applying the tests indicated in Ajay Hasia G
that the Sainik School Society is a 'State'. •

Perhaps this rather over - enthusiastic application of the broad limits set
by Ajay Rasia may have persuaded this Court to curb the tendency in Chander
14. AIR (1986) SC 1571. H
118 SUPREME COURT REPORTS [2002] 3 S.C.R.

A Mohan Khanna v. National Council of Educational Research and Training
and Ors., (1991] 4 SCC 578. The Court referred to the tests formulated in
Sukhdev Singh, Ramana, Ajay Hasia, and Som Prakash Rekhi but striking a
note of caution said that "these are merelr indicative indicia and are by no
means conclusive or clinching in any case". In that case, the question arose
B whether the National Council of Educational Research (NCERT) was a 'State'
as defined under Article 12 of the Constitution. The NCERT is a society
registered under the Societies Registration Act. After considering the provisions
of its Memorandum of Association as well as the rules of NCERT, this Court
came to the conclusion that since NCERT was largely an autonomous body "\
and the activities of the NCERT were not wholly related to governmental
C functions and that the Government control was confined only to the proper
utilisation of the grant and since its funding was not entirely from Government
resources, the case did not satisfy the requirements of the State under Article
12 of the Constitution. The Court relied principally on the decision in Tekraj
Vasandi@ K.L. Basandhi v. Union of India (supra) However, as far as the
D decision in Sabhajit Tewary v. Union of India (supra) was concerned, it was
noted that "the decision has been distinguished and watered down in the
subsequent decisions".
.t-
Fresh off the judi_cial anvil is· the decision in the Mysore Paper Mills
Ltd v. The Mysore Paper Mills Officers Association, JT (2002) 1 SC 61
E which fairly represents what we have seen as a continuity of thought
commencing from the decision in Rajasthan Electricity Board in 1967 upto
the present time. It held that a company substantially financed and financially
controlled by the Government, managed by a Board of Directors nominated
and removable at the instance of the Government and carrying on important
functions of public interest under the control of the Government is 'an
F authority' within the meaning of Art. 12.

The picture that ultimately emerges is that the tests formulated in Ajay
Hasia are not a rigid set of principles so that if a body falls within any one
of them it must, ex hypothesi, be considered to be a State within the meaning
G of 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
admir:iistratively dominated by or under the control of the Government. Such
control must be particular to the body in question and must be pervasive. If
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
H would not serve to make the body a State.
PRADEEP KUMAR BISWAS \'.INDIAN INSTITUTE OF CHEMIC AL BIOLOGY [RUMA PAL, J.] 119

"' Coming now to the facts relating to CSIR, we have no doubt t!Jat it is A
well within the range of Article 12, a conclusion which is sustainable when
judged according to the tests judicially evolved for the purpose.

The Formation of CSIR

On 27th April 1940 the Board of Scientific and Industrial Research and B
on !st February 1941, the Industrial Research Utilisation Committee were set
up by the Department of Commerce, Government of India with the broad
, objective of promoting industrial growth in this country. On 14th November
1941, a resolution was passed by the Legislative Assembly and accepted.by
the Government of India to the following effect:
c
"This Assembly recommends to the Governor General in Council
that a fund called the Industrial Research Fund be constituted, for the
purpose of fostering industrial development in this country and that
provision be made in the Budget for an annual grant of rupees ten
lakhs to the fund for a period of five years. "
D
For the purpose of coordinating and exercising administrative control
over the working of the two research bodies already set up by the Department
of Commerce, and to oversee the proper utilisation of the Industrial Research
Fund, by a further resolution dated 26th September 1942, the Government of
India decided to set up a Council of Industrial Research on a permanent E
footing which would be a registered society under the Registration of Societies
Act, 1860. Pursuant to the resolution, on 12th March, 1942 the CSIR was
duly registered. Bye-laws and Rules were framed by the Governing Body of
the Society in 1942 which have been subsequently revised and amended.
Unquestionably this shows that the CSIR was 'created' by the Government
to carry on in an organized manner what was being done earlier by the F
Department of Commerce of the Central Government. In fact the two research
bodies which were part of the Department of Commerce have since been
subsumed in the CSIR.

Objects and Functions:
G
The 26th September 1942 Resolution had provided that the functions
of the CSIR would be:
i
(a) to implement and give effect to the following resolution moved
by the Hon'ble Dewan Bahadur Sir A.R. Mudaliar and passed by
the Legislative Assem.bly on the 14th Nov' 1941 and accepted by H
120 SUPREME COURT RE~ORTS [2002] 3 S.C.R.

-A the Government of India........ (quote~ earlier in this Judgment)
(b) the promotion, guidance and co-ordination of scientific and
industrial research in India including the institution and the
financing of specific researches;
(c) the establishment or development and assistance to special
B institutions or Department of existing institutions for scientific
study of problems affecting particular industries and trade;
(d) the establishment and award of research student-ships and
fellowships;
C (e) the utilisation of the results of the researches conducted under the
auspices of the Council towards the development of industries in
the country and the payment of a share of royalties arising out of
the development of the results of researches to those who are
considered as having contributed towards the pursuit of such
researches;
D
(f) the establishment, maintenance and management of laboratories,
".Vorkshops, institutes, and organisation to further scientific and
industrial research and utilise and exploit for purposes . of
experiment or otherwise any discovery or invention likely to be
of use of Indian Industries;
E
(g) the collection and dissemination or information in regard not only
to research but to industrial matters generally;
· (h) publication of scientific papers and a journal of industrial research
and development, and
F (i) any other activities to promote generally the objects of the y

resolution mentioned in (a) above.

These objects which have been incorporated in the Memorandum of
' Association of CSIR manifestly demonstrate that CSIR was set up in the
national interest to further the economic welfare of the society by fostering
G planned industrial development in the country. That such a function is
fundamental to the governance of the country has already been held by a
Constitution Bench of this Court as far back as in 1967 in Rajasthan Electricity
Board v. Mohan Lal, (Supra) where it was said:

"The State, as defined in Art. 12, is thus comprehended to include
H bodies created for the purpose of promoting the educational and
•
,..

PRADEEP KUMAR Bl SW AS "· INDIAN INSTITUTE Of CHEMICAL BIOLOGY {RVMA PAL. J.] 121
. T •. economic interests of the people". A
We are in respectful agreement with this statement of the law. The
observations to the contrary in Chander Mohan Khanna v. NCERT (supra)
relied on by the Learned Attorney General in this context, do not represent
the correct legal position.
B
Incidentally; the CSIR was and continues to be a non-profit making
organization and according to clause (4) of CSIR's Memorandum of
, Association, all its income and property, however derived shall be applied
only 'towards the promotion of those objects subject nevertheless in respect
-- of the expenditure to such limitations as the Government of India may from
time to time impose'. c
Management and Control:

When the Government of India resolved to set up the

CSIR on 26th February, 1942 it also decided that the Governing Body D
would consist of the following members:
., (I) The Honourable Member of the Council of His Excellency the
J
Governor General in charge of the portfolio of Commerce (Ex-
officio).
E
(2) A representative of the Commerce Department of the Government
~
.- of India, appointed by the Government of India.
(3) A representative of the Finance Department of the Government
of India, appointed by the Government of India.
(4) Two members of the Board of Scientific and Industrial Research F
elected by the said Board.
(5) Two members of the Industrial Research Utilisation committee
elected by the said Committee.
(6) The Director of Scientific and Industrial Research.
G
4
(7) One or more members to be nominated by the Government of
India to represent interests not otherwise represented.
r
The present Rules and Regulations 1999 of CSIR provide that :

...... (a) The Prime Minister of India shall be the ex-officio President of H
122 SUPREME COURT REPORTS (2002] 3 S.C.R.

A the Society. 'f \.

(b) The Minister-in-Charge of the Ministry or Deptt. dealing with the
Council of Scientific & Industrial Research shall be the ex-officio
Vice President of the Society.

Provided that during any period when the P~ime Minister is also
B
such Minister, any person nominated in this behalf by the Prime
Minister shall be the Vice-President.

(c) Ministers Incharge of Finance and Industry (ex-officio). _,

--~
(d) The members of the Governing Body.
c
(e) Chairman, Advisory Board.

(f) Any other person or persons appointed by the President, CSIR. " ... &·~

The Governing Body of the Society is constituted by the:
D
(a) Di~ector General,

(b) Member Finance, 't-

(c) Directors of two National Laboratories, ....
E (d) Two eminent Scientists/ Technologists, one of whom shall be
from Academia; (e) Heads of two Scientific Departments/Agencies
of the Government of India.
The dominant role played by the Government of India in the Governing
--
Body of CSIR is evident. The Director-General who is ex-officio Secretary
F of the Society is appointed by the Government of India [Rule 2. (iii) ]. The
submission of the learned Attorney General that the Governing Body consisted
of members, the majority of whom were non-governmental members is, having
regard to the facts on record, unacceptable. Furthermore, the members of the
Governing Body who are not there ex officio are nominated by the President
and their membership can also be terminated by him and the Prime Minister
G is the ex-officio President of CSIR. It was then said that although the Prime
Minister was ex-officio President of the Society but the power being exercised ..
by the Prime Minister is as President of the Society. This is also the reasoning
in Sabhajit Tewary. With respect, the reasoning was and the submission is
1
erroneous. An ex-officio appointment means that the appointment is by virtue
H of the office; without any other warrant or appointment than that resulting
. ~
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [RUMA PAL, J.}

· - from the holding of a particular office. Powers may be exercised by an
officer, in this case the Prime Minister, which are not specifically conferred
.upon him, but are necessarily implied in his office (as Prime Minister), these
123
A

are ex-officio."

The control of the Government in the CSIR is ubiquitous. The Governing
Body is required to administer, direct and control the affairs and funds of the B
Society and shall, under Rule 43, have authority 'to exercise all the powers
.
of the Society subject nevertheless in respect of expenditure to such limitations
as. the Government of India may from time to time impose'. The aspect of
i
financial control by the Government is not limited to this and is considered
-- separately. The Governing Body also has the power to frame, amend or
c
rellf'al the bye-laws of CSIR but only with the sanction of the Government
of India. Bye-law 44 of the 1942 Bye-laws had provided 'any alteration in
the bye-Jaws shall require the prior approval of the Governor General in
Council'.

Rule 41 of the present Rules provide that: D
"The President may review/amend/vary any of the decisions of the
1
Governing Body and pass such orders as considered necessary to be
communicated to the Chairman of the Governing Body within a month
of the decision of the Governing Body and such order shall be binding
on the Governing Body. The Chairman may also refer any question E
which in his opinion is of sufficient importance to justify such a
reference for decision of the President, which shall be binding on the
"- Governing Body. "

(emphasis added)
F
' Given the fact that the President of CSIR is the Prime Minister, under
this Rule the subjugation of the Governing Body to the will of the Central
Government is complete.

As far as the employees of the CSIR are concerned the Central Civil
Services (Classification, Control & Appeal) Rules and the Central Civil G
Services (Conduct) Rules, for the time being in force, are from the outset
applicable to them subject to the modification that references to the 'President'
r and 'Government Servant' in the Conduct Rules would be construed as
'President of the Society' and 'Officer & establishments in the service of the
15. Black's Law Dictionary H
124 SUPREME COURT REPORTS [2002) 3 S.C.R.

A Society' respectively. (Bye Law 12). The scales of pay applicable to all the
employees of CSIR are those prescribed by the Government of India for
similar personnel, save in the case of specialists (Bye Law 14) and in regard
to all matters concerning service conditions of employees of the CSIR, the
Fundamental and Supplementary Rules. framed by the Govt. of India and
B such other rules and orders issued by the Govt. of Indi~ from time to time
are also, under Bye Law 15 applicable to the employees of the CSIR. Apart
from this, the rules/Orders issued by Government of India regardirig reservation
of posts for SC/ST apply in regard to appointments to posts to be made in
CSIR. (Bye Law 19) The CSIR cannot lay down or change the terms and
conditions of service of its employees and any alteration in the bye-laws can
C be carried out only with the approval of Government of India. (Bye Law 20).

Financial Aid

The initial capital of the CSIR was Rs. I 0 lakhs, made available pursuant
to the Resolution of the Legislative Assembly on 14th November, 1941.
D Paragraph 5 of the 26th September, 1942 Resolution of the Government of
India pursuant to which CSIR was formed reads:

"The Government of India have decided that a fund, viz., the Industrial
Research Fund, should be constituted by grants from the Central
Revenues to which additions are to be made from time to time as
E moneys flow in from other sources. These 'other sources' will comprise
grants, if any, by Provincial Governments by industrialists for special
or general purposes, contributions from Universities or local bodies,
donations or benefactions, royalties, etc., received from the
development of the results of industrial research, and miscellaneous
receipts. The Council of Scientific and Industrial Research will exercise
F
full powers in regard to the expenditure to be met out of the Industrial
Research Fund subject to its observing the Bye-laws framed by the
Governing Body of the Council, from time to time, with the approval
of the Governor General-in-Council, and to its annual budget being
approved by the Governor General-in-Council."
G
As already noted, the initial capital of Rs. I 0 lakhs was made available
by the Central Government. According to the statement handed up to the
Court on behalf of CSIR the present financial position of CSIR is that at least
70% of the funds of CSIR are available from grants made by the Government
of India. For example out of the total funds available to CSIR for the years
H 1998-99, 1999-2000, 2000-01 of Rs. 1023. 68 crores, Rs. 1136.69 crores and I-
- I'

PRADEEP KUMAR BISWAS "· INDIAN INSTITUTE Of CHEMICAL BIOLOGY {RUMA PAL, J.) } 25

Rs. 1219. 04 crores respectively, the Government of India has contributed A
Rs. 713.32 crores, Rs. 798.74 crores and Rs. 877.88 crores. A major portion
of the balance of the funds available is generated from charges for rendering
research and development works by CSIR for projects such as the Rajiv
Gandhi Drinking Water Mission Technology Mission on oilseeds and pulses
and maize or grant in aid projects from other Government Departments.
Funds are also received by CSIR from sale proceeds of its products, B
publications, royalties etc. Funds are also received from investments but
under Bye-Law 6 ofCSIR, funds of the Society may be invested only in such
manner as prescribed by the Government of India. Some contributions are
made by the State Governments and to a small extent by 'individuals,
institutions and other agencies'. The non-governmental contributions are a C
pittance compared to the massive governmental input.

As far as expenditure is concerned, under Bye-law (I) as it stands at
present, the budget estimates of the Society are to be prepared by the Governing
Body 'keeping in view the instructions issued by the Government of India
from time to time in this regard'. Apart from an internal audit, the accounts D
of the CSIR are required to be audited by the Controller and Auditor General ·
and placed before the table. of both Houses of Parliament (Rule 69).

In the event of dissolution, unlike other registered societies which are
governed by Section 14 of the Societies Registration Act, 1860, the members
of CSIR have no say in the distribution of its assets and under clause (5) of E
the Memorandum of Association of CSIR, on the winding up or dissolution
of CSIR any property remaining after payd\ent of all debts shall have to be
dealt with "in such manner as the Government of India may determine".
CSIR is therefore both historically and in its present operation subject to the
financial control of the Government of India. The assets and funds of CSIR F
r though nominally owned by the Society are in the ultimate analysis owned
by the Government. From whichever perspective the filcts are considered
there can be no doubt that the conclusion reached in Sabhajit Tewary was
erroneous. If the decision of Sabhajit Tewary had sought to lay down as a
legal principle that a society registered under the Societies Act or a company
incorporated under the Companies Act is, by that reason alone, excluded G
from the concept of State under Article 12, it is a principle which has long
since been discredited. "Judges have made worthy, if shamefaced, efforts,
while giving lip service to the rule, to riddle it with exceptions and by
distinctions reduce it to a shadow". 16
16. Benjamin Cardozo: 'The Nature of the Judicial Process 1921. H
126 SUPREME COURT REPORTS (2002] 3 S.C.R. ·

A In the assessment of the facts, the Courti had assumed certain principles,
and sought precedential support from decisions which were irrelevant and
had "followed a groove chased amidst a context which has long since
-r
-
crumbled". 17 Had the facts been closely scrutinised in the proper perspective,
it could have led and can only lead to the conclusion that CSIR is a State <:!'>-
within the meaning of Art. 12.
B
Should Sabhajit Tewary still stand as an authority even on the facts
merely because it has stood for 25 years? We think not. Parallels may be
drawn even on the facts leading to an untenable interpretation of Art. 12 and ...
a consequential denial of the benefits of fundamental rights to individuals
c who would otherwise be entitled to them and "there is nothing in our
Constitution which prevents us from departing from a previous decision if we
are convinced of its error and its baneful effect on the general interests of the
public. 18" Since on a re-examination of the question we have come to the
conclusion that the decision was plainly erroneous, it is our duty to say so
and not perpetuate our mistake.
D
Besides a new fact relating to CSIR has come to light since the decision
in Sabhajit Tewary which unequivocally vindicates the conclusion reached
by us and fortifies us in delivering the coup de grace to the already attenuated ~

decision in Sabhajit Tewary. On 31st October 1986 in exercise of the powers
conferred by sub-section (2) of Section 14 of the Administrative Tribunals
E Act, 1985, the Central Government specified 17th November 1986 as the
date on. and from which the provisions of sub-section (3) of Section 14 of the
~

1985 Act would apply to CSIR 'being the Society owned and controlled by r\
<

Government'.

F The learned Attorney General contended that the notification was not
conclusive of the fact that the CSIR was a State within the meaning of Article
12 and that even if an entity is not a State within the meaning of Article 12,
it is open to the Government to issue a notification for the purpose of ensuring
the benefits of the provisions of the Act to its employees.

G We cannot accept this. Reading Art. 323 (A) of the Constitution and
Section 14 of the 1985 Act it is clear that no notification under section 14(2)
of the Administrative Tribunals Act could have been issued by the Central
17. Union of India and Anr., v. RaghubirSingh (dead) by Lrs. etc. [1989] 2 SCC 754 at 768;·-
769 and Magan/al Chhaganlal (P) Ltd. v. Municipal Corporation ofGreater Bombay etc.,
[19741 2 sec 402.
H 18. Bengal Immunity Co Ltd. v. State of Bihar and Ors., AIR (1955] SC 661, 672.
l PRADEEPKUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R_C. LAHOTl.J] -127
'
Government unless the employees of the CSIR were either appointed to A
"A
public services and posts in connection with the affairs of the Union or of
any State or of any local or other authority within the territory of India or
under the control of the Government of India or of any corporation owned
or controlled by the Government. Once such a notification has been issued
' in respect of CSIR, the consequence will be that an application would lie at B
the instance of the appellants at least before the Administrative Tribunal. 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 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 C
other authority under Article 12 of the Constitution. 1'

Therefore, the notification issued in 1986 by the Central Government
' under Article 14 (2) of the Administrative Tribunals Act, 1985 serves in
_, removing any residual doubt as to the nature of CSIR and decisively concludes
the issues before us against it D
Sabhajit Tewary's decision must be and is in the circumstances overruled.
Accordingly the matter is remitted back to the appropriate Bench to be dealt
with in the light of our decision. There will be no order as to costs.

R.C. LAHOTI, J. (for self and on behalf of Doraiswamy Raju, J.) E
We have had the advantage of reading the judgment proposed by our
-.<f!
learned sister Ruma Pal, J. With greatest respect to her, we find ourselves not
persuaded to subscribe to her view overruling Sabha}it Tewary 's case and
holding Council for Scientific and Industrial Research (CSIR) 'the State'
r within the meaning of Article 12 of the Constitution. The development oflaw F
has travelled through apparently a zig-zag track of judicial pronouncements,
rhythmically traced by Ruma Pal, J. in her judgment. Of necessity, we shall
have to retread the track, for, we find that though the fundamentals and basic
principles for determining whether a particular body is 'the State' or not may
substantially remain the same but we differ in distributing the emphasis within G
the principles in their applicability to the facts found. We also feel that a
distinction has to be borne in mind between an instrumentality or agency of
'the State' and an authority includible in 'other authorities'. The distinction

19. S.R.S. Kumar v. Union of India, AIR (1987) SC 386 and L. Chandra Kumar v. Union of
India, (I 997) 3 sec 261. H
~
A\

128 SUPREME COURT REPORTS (2002) 3 S.C.R.
t::
A cannot be obliterated. ..,,..
-.,
Article 12 of the Constitution reads as under:

"12. In this part, unless· the context otherwise requires, "the State"
includes the Government and Parliament of India and the Government ,. ' I

B 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. "

This definition is for the purpose of attracting applicability of the
provisions contained in Part III of the Constitution dealing with fundamental "
c rights. It is. well-settled that the definition of 'the State' in Article 12 has ""
nothing to do with Articles 309, 310 and 311 of the Constitution which find
place in Part XIV. Merely because an entity is held t9 be the State within the
meaning of Article 12, its employees do not ipso facto become entitled to
protection of Part XIV of the Constitution. -- .
D Dr. B. R. Ambedkar explaining the scope of Article 12 and reason why
this Article was placed in the Chapter on Fundamental Rights so spoke in the
Constituent Assembly :
~

"The object of the fundamental rights is two-fold. First, that every ~

citizen must be in a position to claim those rights. Secondly, they
E ·must be binding upon every authority-I shall presently explain what
L
the word "au!Qority" means upon every authority which has got either
,,.
the power to make laws or the power to have discretion vested in it. .,....
Therefore, it is quite clear that if the Fundamental Rights are to be
clear, then they must be binding not only upon the Central
F Government, they must not only be binding the Provincial
Government, they must not only be binding upon the Governments
established in the Indian States, they must also be binding upon District
Local Boards, Municipalities, even village panchayats and taluk boards,
in fact, every authority which has been created by law and which has
got certain power to make laws, to make rules, or make bye-laws.
G

-
If that proposition is accepted-and I do not see anyone who cares
for Fundamental Rights can object to such a universal obligation
being imposed upon every authority created by /aw-then, what are
we to do to make our intention clear? There are two ways of doing
1
it. One way is to use a composite phrase such as "the State", as we
H
> '"

PRADEEPKUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LA.HOT!, J.]
129
~

have done in article 7; or, to keep on repeating every time, "the A
Central Government, the Provincial Government, the State
Government, the Municipality, the Local Board, the Port Trust, or
any other authority". It seems to me not only most cumbersome but
stupid to keep on repeating this phraseology every time we have to
make a reference to some authority. The wisest course is to have this
comprehensive phrase and to economise in words". B

(1948 (Vol. VII) CAD 610)

• [emphasis supplied]
'
Thus the 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
c
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'. It is settled that the expression 'under
the control of the Government of India' in Article 12 does not qualify the
word 'territory'; it qualifies 'other authorities'. D
.. -I The terms - 'instrumentality' or 'agency' of the State are not to be
found mentioned in Article 12. It is by the process of judicial interpretation-
nay, expansion - keeping in view the sweep of Article 12 that they have been
included as falling within the net of Article 12 subject to satisfying certain
tests. While defining, the use of 'includes' suggest what follows is not E
exhaustive. The definition is expansive of the meaning of the term defined.
However, we feel that 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. F
Instrumentality, Agency, Authority - meaning of

It will be useful to understand what the terms - instrumentality, agency
and authorities mean before embarking upon a review of judicial decisions
dealing with the principal issue which arises for our consideration. G
Black's Law Dictionary (Seventh Edition) defines 'instrumentality' to
mean "a means or agency through which a function of another entity is
accomplished, such as a branch of a governing body. " 'Agency' is defined
as "a fiduciary relationship created by express or implied contract or by law,
in which one party (the agent) may act on behalf of another party (the principal) H
130 SUPREME COURT REPORTS [2002) 3 S.C.R.
~

A and bind that other party by words or actions. " Thus instrumentality and
agency are the tw~ terms which to some extent overlap in their meaning;
'instrumentality' includes 'means' also, which 'agency' does not, in its
..
}
meaning. 'Quasi- governmental agency' is "a government - sponsored
enterprise or Corporation (sometimes called a government-controlled
corporation)". Authority, as Webster Comprehensive Dictionary (International
B Edition) defines, is "the person. or persons in whom government or command
is vested; often in the plural". The applicable meaning of the word "authority"
given in Webster's. Third New International Dictionary, is 'a public 'Y
administrative agency or corporation having quasi-governmental powers and
authoriied to administer a revenue-producing public enterprise'. This was ,_
c quoted with approval by Constitution Bench in RSEB 's case (infra) wherein )
the Bench held - "This dictionary meaning of the word "authority" is clearly
wide enough to include all bodies created by a statute on which powers are
conferred to carry out governmental or quasi-governmental functions. 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
D under the control of the Government of India; and we do not see any reason
to narrow down this meaning in the context 1in which the words "other ,..i
authorities" are used in Art. 12 of the Constitution". (emphasis added)

With the pronouncements in N. Masthan Sahib v. The Chief
{

Commissioner, Pondicherry and Anr., (1962] Supp. 1 SCR 981 and KS. )~
E
Ramamurthy Reddiar v. Chief Commissioner, Pondicherry and Anr., (1964]
1 SCR 656 it is settled that Article 12 of the Constitution has to be so read:

"12. In this part, unless the context otherwise requires, the 'State'
includes
~
F
(i) the Government and Parliament of India,

(ii) the Government and the Legislature of each State,

(iii) (a) all local or other authorities within the territory of India,
(b) all local or other authorities under the control of the
G
Government of India. "

The definition of the State as contained in Article 12 is inclusive and not 1
conclusive. The net of Article 12 has been expanded by 'progressive' judicial
thinking, so as to include within its ken several instrumentalities and agencies
H performing State function or entrusted with State action. To answer the
l~
PRADEEP KUMAR BIS WAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LAHOTI, J ] 131

principal question in the context in which it has arisen, incidental but A
inseparable issues do arise: Wide expansion but how far wide? Should such
wide expansion be not subject to certain wise limitations? True, the width of
expansion and the wisdom of limitations both have to be spelled out from
Article 12 itself and the fundamentals of constitutional jurisprudence.

We now deal with a series of decisions wherein tests were propounded, B
followed (also expanded) and applied to different entities so as to find out
whether they satisfied the test of being 'the State'.
' A review of judicial opinion

Though judge-made law is legend on the issue, we need not peep too C
much deep in the past unless it becomes necessary to have a glimpse of a few
illuminating points thereat. It would serve our purpose to keep ourselves

..
confined, to begin with, to discerning the principles laid down in Rajasthan
State Electricity Board, Jaipur v. Mahal Lal and Ors., (1967] 3 SCR 377,
Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr.,
[1975] 1 SCC 421, Ramana Dayaram Shetty v. The International Airport D
Authority of India and Ors., (1979] 3 SCC 489, Ajay Hasia etc. v. Khalid
Mujib Sehravardi and Ors. etc., [ 1981] I SCC 722 and Som Prakash Rekhi
v. Union ofIndia and Anr., (1981] I SCC 449 which have come to be known
as landmarks on the State conceptualisation. Out of these five decisions,
RD. Shetty and Som Prakash are three-Judges Bench decisions; the other 3 E
are each by Constitution Bench of five-Judges.

The Constitution Bench decision in Rajasthan State Electricity Board
(RSEB) 's case was delivered by a majority of 4: I. V. Bhargava, J. spoke for
himself and K. Subba Rao, C.J. and M. Shela! and G.K. Mitter, JJ., J.C. Shah,
J. delivered his dissenting opinion. We will refer to majority opinion only. F
The Court quoted the interpretation placed by Ayyangar, J. from the
pronouncement of seven-Judges Bench of this Court in Smt. Ujjam Bai v.
State of Uttar Pradesh and Anr., (1963] 1 SCR 778 that the words 'other
authorities' employed in Article 12 are of wide amplitude and capable of
comprehending every authority created under a statute and though there is no G
characterisation of the nature of the "authority" in the residuary clause of
Article 12 it must include every authority set up under a statute for the
). purpose of administering laws enacted by the Parliament or by the State
including those vested with the duties to make decisions in order to implement
those laws. The Court refused to apply the doctrine of ejusdem generis for
interpretation of the 'other authorities' in Article 12. "Other authorities" in H
132 SUPREME COURT REPORTS [2002] 3 S.C.R.

A Article 12 include, held the Court, "all constitutional or statutory authorities
on whom powers are conferred by. law" without regard to the fact that some
of the powers conferred may be for the purpose of carrying on commercial
activities or promoting the educational and economic interests of the people.
Regard must be had (i) not only to the sweep of fundamental rights over the
B power of the authority, (ii) but also to the restrictions which may be imposed
upon the exercise of certain fundamental rights by the authority. This dual
phase of fundamental rights would determine "authority". Applying the test
formulated by it to Rajasthan State Electricity Board, the Court found that the
Board though it was required to carry on some activities of the nature of '
trade or commerce under the Electricity Supply Act, yet the statutory powers
C conferred by the Electricity Supply Act on the Board included power to give
directions, the disobedience of which is punishable as a criminal office and
therefore the Board was an authority for the purpose of Part III of the
Constitution.

Praga Tools Corporation v. C. V. /manual and Ors., [1969] l SCC 585
D may not be of much relevance. The question posed before the Court was not
one referable to Article 12 of the Constitution. The question was whether a
prayer seeking issuance of a mandamus or an order in the nature of mandamus
could lie against a company incorporated under the Companies Act wherein
the Central and the State Governments held respectively 56 and 32 per cent
E shares. The two-Judge Bench of this Court held that the company was a
separate legal entity and could not be said to be either a government
Corporation or an industry run by or under the authority of the Union
Government. A mandamus lies to secure the performance of a public or
statutory duty in the performance of which the petitioner has a sufficient
legal interest. A mandamus can issue to an official or a society to compel him
F to carry out the terms of the Statute under or by which the society is constituted
or governed and also to companies or Corporations to carry out duties placed
on them by the Statute authorizing their undertaking. A mandamus would
also lie against a company constituted by a Statute for the purpose of fulfilling
public responsibilities. The Comt held that the company being a non-statutory
G body with neither a statutory nor a public duty imposed on it by a Statute,
a writ petition for mandamus did not lie against it. The limited value of this
decision, relevant for our purpose, is that because a writ of mandamus can
issue against a body solely by this test it does not become 'State' within the
meaning of Article 12.

H In Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LAHOTI, J.] 133
and Anr., (supra), question arose whether Oil and Natural Gas Commission, A
the Industrial Finance Corporation and Life Insurance Corporation are
'authorities' within the meaning of Article 12. The case was decided by a
majority of 4:1. A.N. Ray, CJ speaking for himself and on behalf of Y.V.
Chandrachud and A.C. Gupta, JJ. held that all the three were statutory
Corporations, i.e., given birth by Statutes. The circumstance that these statutory • B
bodies were required to carry on some activities of the nature of trade or
commerce did not make any difference. The Life Insurance Corporation is (i)
an agency of the Government (ii) carrying on the exclusive business of Life
Insurance (i.e. in monopoly), and (iii) each and every provision of the Statute
creating it showed in no uncertain terms that the Corporation is the voice and
the hands of the Central Government. The Industrial Financial Corporation is C
in effect managed and controlled by the Central Government, citizens cannot
be its shareholder. ONGC (i) is owned by the Government, (ii) is a statutory
body and not a company and (iii) has the exclusive privilege of extracting
petroleum. Each of the three, respectively under the !hree Acts under which
they are created, enjoy power to do certain acts and to issue directions
obstruction in or breach whereofis punishable as an offence. These distinguish D
them from a mere company incorporated under the Indian Companies Act.
The common features of the three are (i) rules and regulations framed by
them have the force of law, (ii) the employees have a statutory status, and
(iii) they are entitled to declaration of being in employment when the dismissal
or re!Iloval is in contravention of statutory provisions. The learned Chief' E
Justice added, by way of abundant caution, that these provisions did not
however make the employees as servants of the Union or the State though the
three statutory bodie~ are authorities within the meaning of Article 12 of the
Constitution.

Mathew, J. recorded his separate concurring opinion. As to ONGC he F
> hastened to arrive at a conclusion that the Commission was invested with
sovereign power of the State and could issue binding directions to owners of
land and premises, not to prevent employees of the Commission from entering
upon their property if the Commission so directs. Disobedience of its directions
is punishable under the relevant provisions of the Indian Penal Code as the G
employees are deemed to be public servants. Hence the Commission i~ an
authority. As to the other two Corporations, viz., LIC and IFC, Mathew, J.
entered into a short question and began by observing that in recent years the
concept of State has undergone drastic change. "Today State cannot be
conceived of simply as a coercive machinery wielding the thunderbolt of
authority". Having reviewed some decisions of United States and English H
134 SUPREME COURT REPORTS [2002) 3 S.C.R.

i A decisions and· some other authorities, he laid down certain principles with--~·
which we will deal with a little later and at appropriate place. He observed
that institutions engaged in matters of high public interest or performing
public functions are, by virtue of the nature of the function performed by
them, governmental agencies. He noticed the difficulty in separating vital
government functions from non-governmental functions in view of the contrast
B between governmental activities which are private and private activities which
are governmental. For holding Life Insurance Corporation "the State" he
relied on the following features : (i) the Central Government has contributed
the original capital of the Corporation, (ii) part of the profit of the Corporation
goes to Central Government, (iii) the Central Government exercises control
C over the policy of the Corporation, (iv) the Corporation carries on a business
having great public importance, and (v) it enjoys a monopoly in the business.
As to Industrial Financial Corporation he relied on the circumstances
catalogued in the judgment of A.N. Ray, J. The common feature of the two
Corporations was that they were instrumentalities or agencies of the State for
carrying on business which otherwise would have been run by the State
D departmentally and if the State had chosen to carry on these businesses through
the medium of government departments, there would have been no question
that actions of these departments would be "state actions". At the end Mathew,
J. made it clear that he was expressing no opinion on the question whether
private Corporations or other like organizations though they exercise power
E over their employees which might violate their fundamental rights would be
the State within the meaning of Article 12. What is 'state action' and how far
the concept of 'state action' can be expanded, posing the question, Mathew
J. answered". it is against State action that fundamental rights are guaranteed.
Wrongful individual acts unsupported by State authority in the shape of laws,
customs, or judicial or executive proceeding are not prohibited. Articles 17,
F 23 and 24 postulate that fundamental rights can be violated by private
individuals and that the remedy under Article 32 may be available against
them. But by and large, unless an act is sanctioned in some way by the State,
the action would not be State action. In other words, until some law is passed
or some action is taken through officers or agents of the State, there is no
G action by the State." So also commenting on the relevance of 'state help' and
'state control' as determinative tests, Mathew, J. said "It may be stated
generally that State financial aid alone does not render the institution receiving
s.uch aid a state agency. Financial aid plus some additional factor might lead
to a different conclusion. A mere finding of state control also is not
determinative of the question, since a state has considerable measure of control
H under its police power over all types of business operations."
PRADEEP KUMAR BIS WAS 11. INDIAN INSTITUTE OF CHEMICAL BIOLOGY (R.C. LAH OT I, J.) } J5
Alagiriswam~ J. recorded a dissenting opinion which however we A
propose to skip over. It is pertinent to note that the dispute in Sukhdev Singh
v. Bhagat Ram was a service dispute and the employees were held entitled
to a declaration of being in employment when their dismissal or removill was
in contravention of statutory provisions; the rules and regulations framed by
corporations or commission were found having the force of law, being
delegated legislation and these statutory bodies were held to be 'authorities' B
within the meaning of Article 12.

In Ramanna Dayaram Shetty v. The International Airport Authority of
• India and Ors., (supra), the dispute related to trends within the domain of

. administrative law. A question arose whether International Airport Authority C
of India (IA, for short) was within the scope of 'other authorities' in Article
12 so as to be amenable to Article 14 of the Constitution. P. N. Bhagwati,
J. who delivered the judgment for the three-Judge Bench stated the ratio of
Raj0$_than State Electricity Board's case, in these words :

"The ratio of this decision may thus be stated to be that a D
constitutional or statutory authority would be within the meaning of
the expression 'other authorities', 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". E
He then referred to what he termed as a 'broader test' laid down by
Mathew, J. in Sukhdev Singh 's case and said that judgment by Mathew, J.
provided 'one more test and perhaps a more satisfactory one' for determining
whether a statutory corporation, body or other authority falls within the
definition of 'the State' and the test is-"If a statutory corporation, body or F
other authority is an instrumentality or agency of government, it would be an
authority and therefore 'the State' within the meaning of the expression in
Article 12. " Having minutely examined the provisions of the International
Airport Authority Act, 1971 he found out the following features of IA :- (i)
The Chairman and Members are all persons nominated by the Central
Government and Central Government has power to terminate the appointment G
or remove them; (ii) The Central Government is vested with the power to
take away the management of any airport from the IA; (iii) The Central
Government has power to give binding directio(IS in writing on ques\ions of
policy; (iv) The capital of IA needed for carrying out its functions is wholly
provided by Central Government; (v) The balance of net profit made by IA, H
~·

136 SUPREME COURT REPORTS [2002] 3 S.C.R.

A after making certain necessary provisions, does not remain with the IA and
~
is required to be taken over to the Central Government; (vi) The financial
estimates, expenditure and programme of activities can only be such as
approved by Central Government; (vii) The Audit Accounts and the Audit ......
'
Report of IA, forwarded to the Central Government, are required to be laid
before both· Houses of Parliament; (viii) It was a department of the Central
B Government along with its properties, assets, debts, obligations, liabilities,
contracts, cause of action and pending litigation taken oyer by the IA; (ix) IA
was charged with carrying out the same functions which were being carrying
out by the Central Government; (x) The employees and officials of IA are
public servants and enjoy immunity for anything done or intended to be done,
c in good faith, in pursuance of the Act or any rules or regulations made by
it; (xi) IA is given (delegated) power to legislate and contravention of certain ~

specified regulations entails penal consequences. Thus, in sum, the IA was
held to be an instrumentality or agency of the Central Government falling
within the definition of the State both on the narrower view propounded in
the judgment of A. N. Ray, CJ and broader view propounded by Mathew, J.
D in Sudhdev Singh 's case.

" Ajay Hasia etc. v. Khalid Mujib Sehravardi and Ors. etc., (supra), is a
Constitution Bench judgment wherein P. N. Bhagwati, J. spoke for the Court.
The test which he had laid down in Ramanna's case were summarized by him
as six in number and as under:
E
"I. 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.
F 2. 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.
3. It may also be a relevant factor whether the corporation enjoys
G monopoly status which is the 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".
~
5. If the functions of the Corporation of public importance and closely
H related to government functions, it wouJd be a relevant factor in
-+
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LAHOTI, J.) 137

-' ~
classifying the ·corporation as an instrumentality or agency of A
Gpvernment.

-
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. " B
The footnote to the tests, as put by him, is "if on a consideration of all these
relevant factors it is found that the corporation is an instrumentality or agency
of government, it would.......... be an authority, and therefore, 'the State' within
• the meaning of Article 12. Bhagwati, J. placed a prologue to the above said
tests emphasizing the need to use care and caution, "because while stressing c
the necessity of a wide meaning to be placed on the expression "other
authorities", it must be realized that it should not ~e stretched so far as to
bring in every autonomous body which has some nexus with the Government
within the sweep of the expression. A wide enlargement of the meaning must
. be tempered by a wise limitation. "
D
In Ajay Rasia, the 'authority' under consideration was a society
registered under the Jammu & Kashmir Registration of Societies Act, 1898,
.... administering and managing the Regional Engineering College, Srinagar. The
College was sponsored by th.e Government of India. The prominent features
of the society indicated complete financing and financial control of the
E
Government, complete administrative control over conducting of the affairs
of the society and administration and assets of the College being taken aver
by the State Government with the prior approval of the Central Government.
These are some of the material features. Some of the observations made by
the Court during the course of its judgment are pertinent and we proceed to
notice them quickly. The society could not be equated with the Government F
of India or the Government of any State nor could it be said to be 'local
authority', and therefore, should have come within the expression of 'other
authorities' to be 'the State'. The Government 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. With
the enlargement of governmental activities, specially those in the field of
G
trade and commerce and welfare, corporation is most resourceful legal
contrivance resorted to frequently by the Government. Though a distinct
,.. juristic entity came into existence because of its certain advantages in the

-
field of functioning over a department of the Government but behind the
formal ownership cast in the corporate mould, the reality is very much the H
138 SUPREME COURT REPORTS [2002] 3 S.C.R.
*--
A deeply pervasive presence of the Government. It is really the Government
which acts threugh the instrumentality or agency of the Corporation an~ the ... .,,.
juristic veil of corporate personality is worn for the purpose of convenience
of management and administration which cannot be allowed to obliterate the

B
true nature of the reality behind which is the Government. Dealing at length
with the corporate contrivance, the Court summed up its conclusion by saying
that if a Corporation is found to be a mere agency or surrogate of the
...
Government, 3 tests being satisfied viz., (i) in fact, owned by the Government,
(ii) in truth; control by the Government, and (iii) in effect, an incarnation of
the Government, then the Court would hold the Corporation to be Government,
and therefore, subject to constitutional limitations including for enforcement ~

c of fundamental rights. The Court went on to say that where a Corporation is
an instrumentality or agency of the Government, it must be held to be an
'authority' for Article 12.

Here itself we have few comments to offer. Firstly, the distinction /
between 'instrumentality and agency' on the one hand, and 'authority (for the
D purpose of 'other authorities') ' on the other, was totally obliterated. In our
opinion, it is one thing to say that if an entity veiled or disguised as a
Corporation or a society or in any other form is found to be an instrumentality
or agency of the State then in that case it will be the State itself in narrower
~
sense acting through its instrumentality or agency and therefore, included in
'the State' in the wider sense for the purpose of Article 12. Having found an
E entitY whether juristic or natural to be an instrumentality or agency of the
State, it is not necessary to caJI it an 'authority'. It would make a substantial
difference to find whether an entity is an instrumentality or agency or an
authority. Secondly, Ajay Hasia was the case of a registered society; it was
not an appropriate occasion for dealing with corporations or entities other
F than society. On the inferences drawn by reading of the Memorandum of
Association of the society and rules framed thereunder, and subjecting such
inferences to the tests laid down in the decision itself, it was found that the
.
society was an instrumentality or agency of the State and on tearing the veil
of society what was to be seen was the State itself though in disguise. It was
not thereafter necessary to hold the society an 'authority' and proceed to
G record "that the society is an instrumentality or the agency of the State and
the Central Government and it is an 'authority' within the meaning of Article
12", entirely obliterating, the dividing line between 'instrumentality or agency
of the State' and 'other authorities'. This has been a source of confusion and
~ '·
misdirection in thought process as we propose to explain a little later. Thirdly,
H though six tests are laid down but there is no clear indication in the judgment
--
-+
PRADEEP KUMAR Bl SW AS "· INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LAHOTl, J.J 139

whether in order to hold a legal entity the State, all the tests must be answered A
~ ~
positively and it is the cumulative effect of such positive answers which will
solve the riddle or positive answer to one or two or more tests would be
enough to find out a solution. It appears what the court wished was reaching
a final decision on an overall view of the result of the tests. Compare this
-- with what was said by Bhagwat~ J. in Ramanna's case. We have already
noticed that in Ajay Hasia, Bhagwati, J. has in his own words summarized B
the test laid down by him in Ramanna 's case. In Ramanna 's case he had said
that the question whether a corporation is governmental instrumentality or
agency would depend on a variety of factors which defy exhaustive
enumeration and moreover even amongst these factors described in Ramanna's
case "the Court will have to consider the cumulative effect of these various c·
factors and arrive at its decision." "It is the aggregate or cumulative effect of
all the relevant factors that is controlling".

Criticism of too broad a view taken of the scope of the State under
Article 12 in Ramanna 's case invited some criticism which was noticed in
Som Prakash Re/chi's case (infra). It was pointed out that the observations in D
Ramanna 's case spill over beyond the requirements of the case and must be
dismissed as obiter; that IA is a Corporation created by a statute and there
-< was no occasion to go beyond the narrow needs of the situation and expand

-· the theme of the State in Article 12 vis-a-vis government companies, registered
society, and what not; and that there was contradiction between Sukhdev
Singh 's case and Ramanna 's case.
E
On 13.11.1980, the Constitutional Bench presided over by Y.V.
Chandrachud, C.J. and consisting of P.N. Bhagwati, V.R. Krishna Iyer, S.
Murtaza Fazal Ali and A.O. Koshal, JJ. delivered the judgment in Ajay Hasia s
case, speaking through P.N. Bhagwati, J. It is interesting to note that on the
F
same day another three-Judges Bench consisting V.R. Krishna Iyer, O.
Chinnappa Reddy and R.S. Pathak, JJ. delivered judgment in Som Prakash
Rekhi v. Union of India and Anr., (supra). V.R. Krishna Iyer, J. speaking for
himself and 0. Chinnappa Reddy, J. delivered the majority opinion. R.S.
Pathak, J. delivered a separate opinion.
G
The Court in Som Parkash Rekhi v. Union of India and Anr., (supra),
was posed with the question-whether Bharat Petroleum Corporation Ltd., a
statutory corporation, was an 'authority', and therefore 'the State' under Article
... 12. Certain observations made by Krishna Iyer, J. are pertinent. To begin
with, he said, "any authority under control of the Government of India comes
within the definition. " While dealing with the corporate personality, it has H
140 SUPREME COURT REPORTS [2002] 3 S.C.R.

A to be remembered that "while the formal ownership is cast in the corporate ~
~
mould, the reality reaches down to State control". The core fact is that the
· Central Government chooses to make over, for better management, its. own
property to its own offspring. A Gov~rnment Company is a mini-incarnation
of Government itself, made up of its plood and bones and given corporate
shape and status for defined objectives and not beyond. The device is too ~--
B obvious for deception. A Government Company though, is but the alter ego
of the Central Government and tearing of the juristic veil worn, would bring
out the ttue character of the entity being 'the State'. Krishna Iyer, J. held it
to be immaterial whether the Corporation is formed by a statute or under a
statute, the true test is functional. "Not how the legal person is born but why
c it is created. "He further held that both the things are essential: (i) discharging
functi~ns or doing business as the proxy of the State by wearing the corporate
mask, and (ii) an element of ability to affect legal relations by virtue of
power vested in it by law. These tests, if answered in positive, would entail
the Corporation being an instrumentality or agency of the State. What is an
'authority'? Krishna Iyer, J. defined 'authority' as one which in law belongs
D to the province of power and the search here must be to see whether the Act
vests authority, as agent or instrumentality of the State, to affect the legal
relations of oneself or others. He quoted the definition of 'authority' from the
Law Lexicon by P. Ramnath Iyer to say "Authority is a body having ~
jurisdiction in certain matters of a public nature" and from Salmond's ·.(

E Jurisprudence, to say that the "ability conferred upon a person by the law to
alter, by his own will directed to that end, the rights, duties, liabilities or
other legal relations, either of himself or of other persons,' must be present
ab extra to make a person an 'authority'. " He held BPL to be "a limb of
Government and agency of the State, a vicarious creature of statute", because
of these characteristics, which he found from the provisions of the Act which
F created it and other circumstances, viz., (i) it is not a mere company but
much more than that, (ii) it has a statutory flavour in its operations and
functions, in its powers and duties and in its personality itself, (iii) it is
functionally and administratively under the thumb of Government; and (iv)
the Company had stepped into the shoes of the executive power of the State
G and had unique protection, immunity and powers. In conclusion Krishna
Iyer, J. held that the case of BPL was a close parallel to the Airport Authority's
case (Ramanna 's case) excepting that Airport Authority is created by a statute
while BPL is recognized by and clothed with rights and duties by the statute.
Krishna Iyer, J. having culled out the several tests from Ramanna 's case ~
added a clinching footnote the finale is reached when the cumulative effect
H of all the relevant factors above set out is assessed and once the body is
"".'
PRADEEP KUMAR BIS WAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LAH OT I, J] 141
•-
found to be an instrumentality or agency of Government, the further conclusion A
emerges that it is 'the State' and is subject to the same constitutional limitations

-
as Government and it is this divagation which explains the ratio of Ramanna 's
case

The three-Judges Bench in The Workmen, Food Corporation of India
v. Food Corporation of India, [1985] 2 SCC 136, held Food Corporation of B
India to be an instrumentality of the State covered by the expression 'other
authority' in Article 12. It was found : (i) FCI was set up under the Food
Corporation Act, 1964 (ii) initial capital was provided by Central Government
and capital could be increased in such manner as the government may
determine; (iii) the Board of Directors in whom the management of the C
Corporation is to vest shall act according to instructions on question of policy
given by the Central Government; (iv) the annual net profit of FCI is to be
paid to the Central Government; (v) annual report of its working and affairs
is to be laid before the Houses of Parliament; (vi) statutory power conferred
to make rules and regulations for giving effect to the provisions of the parent
act as also to provide for service matters relating to officers and employees. D

The Mysore Paper Mills Ltd. has been held by a two-Judges Bench in
Mysore Paper Mills Ltd. v. The Mysore Paper Mills Officers Association and
Anr., JT (2002) 1 SC 61, to be an instrumentality and agency of the State
Government, the physical form of company being a mere cloak or cover for
the Government. What is significant in this decision is that the conclusion E
whether an independent entity satisfies the test of instrumentality or agency
of the government is not whether it owes its origin to any particular Statute
or Order but really depends 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 F
piercing the corporate veil of the entity. concerned.

What is 'Authority' and when inc/udible in 'other authorities', re: Article
I2

We have, in the earlier part of this judgment, referred to the dictionary G

- meaning of 'authority', often used as plural, as in Article 12 viz. 'other
authorities'. Now is the time to find out the meaning to be assigned to the
term as used in Article 12 of the Constitution.

A reference to Article 13 (2) of the Constitution is apposite. It provides
-"The State shall not make any law which takes away or abridges the right H
142 SUPREME COURT REPORTS [200~] 3 S.C.R.

A conferred by this part and any law made in contravention of this clause shall,
to the extent of the contravention, be void". Clause (3) of Article 13 defines
'law' as including any Ordinance, order, bye-law, rule, regulation, notification,
custom or u~age having in the territory of India the force of law. We have
also referred to the speech of Dr. B.R. Ambedkar in Constituent Assembly
explaining the purpose sought to be achieved by Article 12. In RSEB 's case,
B the majority adopted the test that a statutory authority "would be within the
-
meaning of 'other authorities' if it has been invested with statutory power to
issue binding directions to the parties, disobedience of which would entail
penal consequences or it has the sovereign power to make rules and regulations
having the force of law". In Sukhdev Singh 's case, the principal reason which
C prevailed with A.N. Ray, CJ for holding ONGC, LIC and IFC as authorities
and hence 'the State' was that rules and regulations framed by them have the
force of law. In Sukhdev Singh 's case, Mathew J. held that the test laid down
in RSEB's case was satisfied so far as ONGC is concerned but the same was
not satisfied in the case of LIC and IFC and, therefore, he added to the list
of tests laid down in RSEB 's case, by observing that though there are no
D statutory provisions, so far as LIC and IFC are concerned, for issuing binding
directions to third parties, the disobedience of which would entail penal
consequences, yet these corporations (i) set up under statutes, (ii) to carry on
business of public importance or which is fundamental to the life of the '
people-<;an be considered as the State within the meaning of Article 12.
E Thus, it is the functional test which was devised and utilized by Mathew J.
and there he ·said, "the question for consideration is whether a public
corporation set up under a special statute to carry on a business or service
which Parliament thinks necessary to be carried on in the interest of the
nation is an agency or instrumentality of the State and would be subject to
the limitations expressed in Article 13 (2) of the Constitution. The State is an
F abstract Gntity. It can only act through the instrumentality or agency of natural
or juridicial persons. Therefore, there is nothing strange in the notion of the
State acting through a corporation and making it an agency or instrumentality
of the State". It is pertinent to note that functional tests became necessary
because of the State having chosen to entrust its own functions to an
G instrumentality or agency in absence whereof that function would have been
a State activity on account of its public importance and being fundamental
to the life of the people.

The philosophy underlying the expansion of Article 12 of the
Constitution so as to embrace within its ken such entities which would not
H otherwise be the State within the meaning of Article 12 of the Constitution
PRADEEP KUMAR BISWAS v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY (R.C. LAHOTl. l.} - 143
~
' has been pointed out by the eminent jurist H. M. Seervai in Constitutional A
Law of India (Silver Jubilee Edition, Vol. I). "The Constitution should be so

.. interpreted that the governing power, wherever located, must be subjected to
fundamental constitutional limitations ............. Under Article 13 (2)
it is State action of a particular kind that is prohibited. Individual invasion of
individual rights is not, generally speaking, covered by Article 13 (2). For,
although Articles 17, 23 and 24 show that fundamental rights can be violated
B
by private individuals and relief against them would be available under Article
32, still, by and large, Article 13 (2) is directed against State action. A public
corporation being the creation of the State, is subject to the same constitutional
limitations as the State itself. Two conditions are necessary, namely, that the
Corporation must be created by the State and it must invade the constitutional c
rights of individuals" (Para 7.54). "The line ofreasoning developed by Mathew
J. prevents a large-scale evasion of fundamental rights by transferring work
done in Qovt. Departments to statutory Corporations, whilst retaining Govt.
control. Company legislation in India permits tearing of the corporate veil in
certain cases and to look behind the real legal personality. But Mathew J.
achieved the same result by a different route, namely, by drawing out the D
implications of Article 13 (2)" (Para 7. 57 ibid).

- -<
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
E
chooses to set up an instrumentality or agency and entrusts it with the 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. In different judicial pronouncements, some of which
we have reviewed, any company, corporation, society or any other entity F
having a juridical existence if it has been held to be an instrumentality or
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 G
fails to obliterate the true character of the State in disguise. Then it is an
instrumentality or agency of the State.

It is this basic and essential distinction between an 'instrumentality or
>
agency' of the State and 'other authorities' which has to be borne in mind. H
144 SUPREME COURT REPORTS (2002] 3 S.C.R.

A An authority must be an authority sui juris to fall within the meaning of the ~ ~
expression 'other authorities' under Article 12. A juridical entity, though an
authority, may also satisfy the test of being an instrumentality or agency of
the State in which event such authority may be held to be an instrumentality
~
or agency of the State but not the vice versa. (.

B We sum up our conclusions as under:-

(1) 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,
c the entity should have 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 ri~hts,
D duties, 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 entrusted with

E
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
~

- >-.___
r

State, for, one who enjoys the powers or privileges of the State
must also be subjected to limitations and obligations of the State.
It is this strong statutory flavour and clear indicia of power ~
constitutional or statutory, and its potential or capability to act to
the detriment of fundamental rights of the people, which makes
F it an authority; though in a given case, depending on the facts and
circumstances, an authority may also be found to be an
instrumentality or agency of the State and to that extent they may
overlap. Tests I, 2 and 4 in Ajay Hasia enable determination of
Governmental ownership or control. Tests 3, 5 and 6 are
'functional' tests. The propounder of the tests himself has used
G the words suggesting relevancy of those tests for finding out if an
entity was instrumentality or agency of the State. Unfortunately
thereafter the tests were considered relevant for testing if an ~
authority is the State and this fallacy has occurred because of
difference between 'instrumentality and agency' of the State and
H an 'authority' having been lost sight of sub-silentio, unconsciously
f
PRADEEP KUMAR BIS WAS.-. INDIAN INSTITUTE OF CHEMICAL BIOLOGY [R.C. LA HOT I, J.)
145
~
~
and un-deliberated. In our opinion, and keeping in view the A
'· meaning which 'authority' carries, the question whether an entity
is an 'authority' cannot be answered by applying Ajay Hasia
tests.

•,
I
(2) The tests laid down in Ajay Basia's case are relevant for the
purpose of determining whether an entity is an instrumentality or B
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 disguising c
the entity concerned. When an entity has an independent legal
existence, before it is held to be the 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. D
CSIR, if 'the State'?

Applying the tests formulated hereinabove, we are clearly of the opinion
that CSIR is not an 'authority' so as to fall within the meaning of expression
'other authorities' under Article 12. It has no statutory flavour - neither it E
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 fundamental to the life of the people.

We may now examine the characteristics of CSIR. On a careful F
-.:
examination of the material available consisting of the memorandum of
association, rules and regulations and bye-laws of the society and its budget
and statement of receipts and outgoings, we proceed to record our conclusions;
The Government does not hold the entire share capital of CSIR. It is not
owned by the Government. Presently, the Government funding is about 70%
and grant by Government of India is one out of five categories of avenues
G
to derive its funds. Receipts from other sources such as research, development,
consultation activities, monies received for specific projects and job work,
)< assets of the society, gifts and donations are permissible sources of funding .
of CSIR without any prior permission/consent/sanction from the Government
of India. Financial assistance from the Government does not meet almost all H
146 SUPREME COURT REPORTS (2002) 3 S.C.R.

A expenditure of the CSIR and apparently it fluctuates too depending upon
variation from its own sources of income. It does not enjoy any monopoly ""
status, much less conferred or protected by Government. The governing body
does not consist entirely of Government nominees. The membership of the
society and the manning of its governing body - both consist substantially of
B private individuals of eminence and independence who cannot be regarded as (
hands and voice of the State. There is no provision in the rules or the bye
laws that the government can issue such directives as it deems necessary to
CSIR and the latter is bound to carry out the same. The functions of the CSIR
cannot be regarded as governmental or of essential public importance or as
closely related to governmental functions or being fundamental to the life of ~
C the people or duties and obligations to public at large. The functions entrusted
to CSIR can as well be carried out by any private person or organization.
Historically it was not a department of government which was transferred to
CSIR. There was a Board of Scientific and Industrial Research and an Industrial
Research Utilisation Committee. The CSIR was set up as a society registered
under the Societies Registration Act, 1860 to coordinate and generally exercise
D administrative control over the two organizations which would tender their
advice only to CSIR. The membership of the society and the governing body
of the council may be terminated by the President not by the Government of
India. The governing body is headed by the Director General of C~IR and
not by the President of Society (i.e. the Prime Minister). Certainly the board
E and the committee, taken over by CSIR, did not discharge any regal,
governmental or sovereign functions. The CSIR is not the offspring or the
blood and bones or the voice and hands of the government. The CSIR does
not and cannot make law.

However, the Prime Minister of India is the President of the society.
F Some of the members of the society and of the governing body are persons
appointed ex-officio by virtue of their holding some office under the
Government also. There is some element of control exercised by the
government in matters of expenditure such as on the quantum and extent of
expenditure more for the reason that financial assistance is also granted by
G the Government of India and the later wishes to see that its money is properly
used and not misused. The President is empowered to review, amend and
vary any of the decisions of the governing body which is in the nature of
residual power for taking corrective measures vesting in the President but
then the power is in the President in that capacity and not as Prime Minister
of India. On winding up or dissolution of CSIR any remaining property is not
H available to members but 'shall be dealt with in such manner as Government
PRADEEPKUMAR BISWA.S v. INDIAN INSTITUTE OF CHEMICAL BIOLOGY (R.C. LA.HOT!, J.J } 47

of India may determine'. There is nothing special about such a provision in A
Memorandum of Association of CSIR as such a provision is a general Dile
applicable to all societies under Section 14 of the Societies Registration Act,
1860. True that there is some element of control of the government but not
a deep and pervasive control. To some extent, it may be said that Government's
presence or participation is felt in the sociefy but such presence cannot be B
called a brooding presence or the overlordship of government. We are satisfied
that the tests in Ajay Hasia 's case are not substantially or on essential aspects
even satisfied to call CSIR an instrumentality or agency of the State. A mere
governmental patronage, encouragement, push or recognition would not make
an entity 'the State'.

On comparison, we fmd that in substance CSIR stands on a footing
c
almost similar to the Institute of Constitutional and Parliamentary Studies (in
Tekraj Vasandi@ K.L. Basandhi v. Union of India and Ors., [1988) 1 SCC
236) and National Council ofEducational Research and Training (in Chander
Mohan Khanna v. NCERT, [1991) 4 SCC 578, and those cases were correctly
decided. . .· D

Strong reliance was placed by the learned counsel for the appellants on
a notification dated 31. 10. 1986 issued in exercise of the powers conferred
by sub-Section (2) of Section 14 of the Administrative Tribunals Act, 1985
whereby the provisions of sub-Section (3) of Section 14 of the said Act have
been made applicable to the Council of Scientific and Industrial Research, E
"being the society owned or controlled by government". On point of fact we
may state that this notification, though of the year 1986, was not relied on
or referred to in the pleadings of the appellants. We do not find it mentioned
anywhere in the proceedings before the High Court and not even in the SLP
filed in this Court. Just during the course of hearing this notification was F
taken out from his brief by the learned counsel and shown to the Court and
the opposite counsel. It was almost sprung as a surprise without affording the
opposite party an opportunity of giving an explanation. The learned Attorney
General pointed out that the notification was issued by Ministry of Personnel,
Public Grievances and Pensions (Department of Personnel and Training) and
he appealed to the Court not to overlook the practical side in the working of G
the government where at times one department does not know what the other
department is doing. We do not propose to enter into a deeper scrutiny of the
notification. For our purpose, it would suffice to say that Section 14 of the
Administrative Tribunals Act, 1985, and Article 323A of the Constitution to
which the Act owes its origin, do not apparently contemplate a society being H
148 SUPREME COURT REPORTS [2002] 3 S.C.R.

A brought within the ambit of the Act by a notification of Central Government.
Though, we guardedly abstain from expressing any opinion on this issue as ",
the present one cannot be an occasion for entering into that exercise. Moreover,
on the material available, we have recorded a positive finding that CSIR is
not a society "owned or controlled by Government" .. We cannot ignore that
B finding solely by relying on the contents of the notification wherein we find
the user of relevant expression having been mechanically copied but factually
unsupportable.

For the foregoing reasons, we are of the opinion that Council for
Scientific and Industrial Research (CSIR) is not the State within the meaning
C of Article 12 of the Constitution. Sabhajit Tewary's case was correctly decided
and must hold the field. The High Court has rightly followed the decision of
this Court in Sabhajit Tewary. The appeal is liable to be dismissed.

K.K.T. Appeal dismissed.